<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 5, 1994
REGISTRATION NO. 33-50733
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
RESORTS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7011 59-0763055
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
</TABLE>
<TABLE>
<S> <C>
1133 BOARDWALK CHRISTOPHER D. WHITNEY, ESQ.
ATLANTIC CITY, NEW JERSEY 08401 RESORTS INTERNATIONAL, INC.
(609) 344-6000 1133 BOARDWALK
(Address, including Zip code, and telephone number, ATLANTIC CITY, NEW JERSEY 08401
including area code, of registrant's principal executive (609) 344-6000
offices) (Name, address, including Zip code, and
telephone number, including area code, of agent for
service)
</TABLE>
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6719 APPLIED FOR
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
</TABLE>
<TABLE>
<S> <C>
1133 BOARDWALK CHRISTOPHER D. WHITNEY, ESQ.
ATLANTIC CITY, NEW JERSEY 08401 RESORTS INTERNATIONAL, INC.
(609) 344-6000 1133 BOARDWALK
(Address, including Zip code, and telephone number, ATLANTIC CITY, NEW JERSEY 08401
including area code, of registrant's principal executive (609) 344-6000
offices) (Name, address, including Zip code, and
telephone number, including area code, of agent for
service)
</TABLE>
RESORTS INTERNATIONAL HOTEL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW JERSEY 7011 21-0423320
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
</TABLE>
<TABLE>
<S> <C>
1133 BOARDWALK CHRISTOPHER D. WHITNEY, ESQ.
ATLANTIC CITY, NEW JERSEY 08401 RESORTS INTERNATIONAL, INC.
(609) 344-6000 1133 BOARDWALK
(Address, including Zip code, and telephone number, ATLANTIC CITY, NEW JERSEY 08401
including area code, of registrant's principal executive (609) 344-6000
offices) (Name, address, including Zip code, and
telephone number, including area code, of agent for
service)
</TABLE>
P. I. RESORTS LIMITED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
THE COMMONWEALTH OF THE
BAHAMAS 7011 98-0137084
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
</TABLE>
<TABLE>
<S> <C>
P.O. BOX N-4777 CHRISTOPHER D. WHITNEY, ESQ.
PARADISE ISLAND RESORTS INTERNATIONAL, INC.
NASSAU, THE BAHAMAS 1133 BOARDWALK
(809) 363-3000 ATLANTIC CITY, NEW JERSEY 08401
(Address, including Zip code, and telephone number, (609) 344-6000
including area code, of registrant's principal executive (Name, address, including Zip code, and
offices) telephone number, including area code, of agent for
service)
</TABLE>
------------------------
COPIES TO:
STEVEN R. FINLEY
GIBSON, DUNN & CRUTCHER
200 PARK AVENUE
NEW YORK, NEW YORK 10166-0193
------------------------
Approximate date of commencement of proposed sale of the securities to the
public.
As soon as practicable after the registration statement becomes effective.
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH AMOUNT MAXIMUM AGGREGATE AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT PRICE (1) FEE
<CAPTION>
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11% Mortgage Notes due 2003 (2).... $125,000,000
11.375% Junior Mortgage Notes due
2004 (2).......................... $35,000,000
Common Stock, par value $.01 per
share (3)......................... 20,000,000
Class B Redeemable Common Stock,
par value $.01 per share (3)...... 80,000 * $306,926,657 $95,915
Ordinary Shares, par value $.01 per
share (4)......................... 25,000,000
Guarantees relating to the 11%
Mortgage Notes due 2003 (5).......
Guarantees relating to the 11.375%
Junior Mortgage Notes due 2004
(5)...............................
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- -------------------------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of computing the registration fee. The
proposed maximum aggregate offering price is based upon, pursuant to Rule
457(f): (i) the market value of $183,772,709 of Resorts International,
Inc.'s Series A Senior Secured Redeemable Notes due April 15, 1994, as
established by the average of the high and low prices thereof on October
21, 1993, as quoted on the American Stock Exchange, Inc.; plus (ii) the
market value of $153,153,948 of Resorts International, Inc.'s Series B
Senior Secured Redeemable Notes due April 15, 1994, as established by the
average of the high and low prices thereof on October 21, 1993, quoted on
the American Stock Exchange, Inc.; less (iii) the value of cash payments by
Resorts International, Inc. estimated to be not less than $30,000,000.00
(2) Issued by Resorts International Hotel Financing, Inc.
(3) Issued by Resorts International, Inc.
(4) Issued by P. I. Resorts Limited.
(5) Issued by Resorts International Hotel, Inc.
* Not applicable.
</TABLE>
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
RESORTS INTERNATIONAL, INC.
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
RESORTS INTERNATIONAL HOTEL, INC.
P. I. RESORTS LIMITED
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K, SHOWING THE LOCATION IN THE
INFORMATION STATEMENT/PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM
S-4
<TABLE>
<CAPTION>
S-4 ITEM NUMBER AND CAPTION LOCATION OR HEADING IN INFORMATION STATEMENT/PROSPECTUS
- ------------------------------------------------------------ ------------------------------------------------------------
<S> <C> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................... Facing Page of Registration Statement; Cross Reference
Sheet; Outside Front Cover Page of Information
Statement/Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Available Information; Enforceability of Civil Liabilities;
Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information............................ Summary; Risk Factors; Selected Historical Financial Data;
Pro Forma Financial Data; Market Prices of Old Series
Notes; Market Prices of RII Common Stock
4. Terms of the Transaction.......................... Summary; Risk Factors; The Restructuring; The Plan;
Accounting Treatment; Description of New RIHF Mortgage
Notes; Description of New RIHF Junior Mortgage Notes;
Description of RIHF Senior Facility Notes; Description of
New Equity Securities; Description of Paradise Island
Purchase Agreement; Description of PIRL Standby
Distribution Agreement; Description of the Caesars Payment;
Description of Deferred Cash; Description of Excess Cash;
Description of Litigation Trust Units; Description of Net
Reserved Cash; Description of Net Plan Consummation Cash
and Plan Expenses; Description of Griffin Warrants;
Description of Old Series Notes; Certain Federal Income Tax
Considerations
5. Pro Forma Financial Information................... Summary; The Restructuring; Capitalization of RII;
Capitalization of PIRL; Pro Forma Financial Data
6. Material Contracts with the Company Being
Acquired......................................... *
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters.... *
</TABLE>
- ------------------------
* Item is omitted because the answer is negative or the Item is inapplicable.
<PAGE>
<TABLE>
<CAPTION>
S-4 ITEM NUMBER AND CAPTION LOCATION OR HEADING IN INFORMATION STATEMENT/PROSPECTUS
- ------------------------------------------------------------ ------------------------------------------------------------
<S> <C> <C> <C>
8. Interests of Named Experts and Counsel............ Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... *
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants....... *
11. Incorporation of Certain Information by
Reference........................................ *
12. Information with Respect to S-2 or S-3
Registrants...................................... *
13. Incorporation of Certain Information by
Reference........................................ *
14. Information with Respect to Registrants Other than
S-3 or S-2 Registrants........................... Summary; Risk Factors; The Restructuring; Selected
Historical Financial Data; Pro Forma Financial Data; Market
Prices of Old Series Notes; Market Prices of RII Common
Stock; Management's Discussion and Analysis of Financial
Condition and Results of Operations; Business of the
Company; Management of RII; Management of RIHF; Management
of RIH; Management of PIRL; Security Ownership; Certain
Transactions; Description of New Equity Securities; Index
to Financial Statements and Supplementary Data
C. INFORMATION ABOUT THE COMPANY
BEING ACQUIRED
15. Information with Respect to S-3 Companies......... *
16. Information with Respect to S-2 or S-3
Companies........................................ *
17. Information with Respect to Companies Other Than
S-3 or S-2 Companies............................. *
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations
are to be Solicited.............................. Outside Front Cover Page of Information
Statement/Prospectus; Summary; The Plan; The Solicitation;
Management of RII; Management of RIHF; Management of RIH;
Management of PIRL; Security Ownership; Certain
Transactions
19. Information if Proxies, Consents or Authorizations
are not to be Solicited or in an Exchange
Offer............................................ *
</TABLE>
- ------------------------
* Item is omitted because the answer is negative or the Item is inapplicable.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 5, 1994
RESORTS INTERNATIONAL, INC.
1133 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(609) 344-6000
January , 1994
To: The Shareholders and Creditors of Resorts International, Inc. and GGRI,
Inc.
We are pleased to deliver to you the accompanying Information
Statement/Prospectus (together with the related ballots, the SIHL Prospectus and
other materials), pursuant to which Resorts International, Inc. ("RII") and
GGRI, Inc. ("GRI") are soliciting votes for the acceptance or rejection of a
"prepackaged" Plan of Reorganization and certain related consents for use by RII
and GRI in contemplated voluntary cases under chapter 11 of the Bankruptcy Code.
The Plan provides, among other things, for a restructuring of RII's and GRI's
debt and equity capitalization as described in the accompanying Information
Statement/Prospectus. Management of RII believes that the Restructuring will
improve RII's financial position and allow management to create long-term value
for the creditors and shareholders of RII and strengthen RII's position in the
gaming industry. OTHER THAN GRI, RII DOES NOT INTEND TO INCLUDE ANY OF ITS
SUBSIDIARIES IN ITS BANKRUPTCY CASE, NOR DOES RII INTEND TO CAUSE ANY OF ITS
SUBSIDIARIES TO FILE ITS OWN BANKRUPTCY CASE. NEITHER RII NOR GRI CURRENTLY IS
IN BANKRUPTCY. All capitalized terms not otherwise defined in this letter are
defined in the accompanying Information Statement/Prospectus.
RII believes that the Restructuring will improve its long-term liquidity and
enhance its ability to meet its financial obligations as they become due. The
Restructuring is intended, among other things, to reduce RII's financial
obligations on its outstanding Old Series Notes due April 15, 1994, which were
issued in two series, by exchanging the Old Series Notes for: (i) $125,000,000
principal amount of new mortgage notes issued by RIHF, a wholly owned subsidiary
of RII, and guaranteed by RIH, a wholly owned subsidiary of RII that owns the
Resorts Casino Hotel in Atlantic City, each of which is secured by a lien on the
Resorts Casino Hotel; (ii) $35,000,000 principal amount of new junior mortgage
notes issued by RIHF and guaranteed by RIH, each of which is secured by a lien
on the Resorts Casino Hotel; (iii) 40% of the RII Common Stock on a fully
diluted basis (excluding outstanding options issued pursuant to the 1990 Stock
Option Plan and options to be issued under the 1994 Stock Option Plan); and (iv)
either (A) $65,000,000 in cash, plus interest thereon at an annual rate of 7.5%
from January 1, 1994 to the SIHL Closing Date, plus 40% of the capital stock of
Sun International Hotels Limited ("SIHL"), representing the consideration
received from the proposed sale of the Paradise Island Business to SIHL (the
"SIHL Sale"), or (B) if the proposed SIHL Sale is not consummated on or before
the Effective Date and the PIRL Spin-Off is consummated on or prior to the
Effective Date, 100% of the common equity of PIRL, a wholly owned and newly
formed subsidiary of RII, which through its subsidiaries will own and operate
the Paradise Island Business. In addition, the holders on the Distribution
Record Date of the Old Series Notes will receive (1) cash payments of Excess
Cash which are projected to be at least $30,000,000 in the aggregate and (2)
non-transferable rights to receive (a) payments from Net Reserved Cash, if any,
resulting from any Reserved Cash in excess of that actually required to fund
certain adjustments under either the proposed SIHL Sale of the Paradise Island
Business pursuant to the Paradise Island Purchase Agreement or the PIRL Spin-Off
of the Paradise Island Business pursuant to the PIRL Standby Distribution
Agreement, (b) payments of Net Plan Consummation Cash, if any, resulting from
any Plan Consummation Cash in excess of that actually required to pay Plan
Expenses, and (c) payments of Deferred Cash, projected to total $2,500,000,
resulting from distributions in respect of the Litigation Trust Units owned by
RII.
By proposing the Plan and conducting the Solicitation in advance of
commencing chapter 11 cases, which is known as a "prepackaged bankruptcy", RII
and GRI anticipate that the pendency of their chapter 11 cases will be shortened
significantly and the administration of such cases will be simplified and less
costly.
<PAGE>
The Plan is a result of months of negotiation by RII, Fidelity and TCW. In
addition, discussions were held with the Griffin Group regarding the New Griffin
Services Agreement and with representatives of SIHL regarding the Paradise
Island Purchase Agreement. RII and GRI believe that the Plan is in the best
interests of RII, GRI, and their respective shareholders and creditors.
FIDELITY AND TCW, WHICH SEPARATELY ADVISE AND MANAGE VARIOUS FUNDS AND
ACCOUNTS THAT AS OF OCTOBER 21, 1993 HELD IN THE AGGREGATE APPROXIMATELY
$309,926,000 PRINCIPAL AMOUNT OF THE OLD SERIES NOTES, OR APPROXIMATELY 64% OF
THE OUTSTANDING OLD SERIES NOTES, HAVE AGREED TO CONTINUE TO HOLD AN AGGREGATE
OF AT LEAST 50.1% OF THE OLD SERIES NOTES THROUGH THE VOTING RECORD DATE
(PROVIDED THAT THE VOTING RECORD DATE IS ON OR BEFORE JANUARY 10, 1994).
FIDELITY AND TCW HAVE ENGAGED IN EXTENSIVE NEGOTIATIONS WITH RII AND GRI WITH
RESPECT TO THE RESTRUCTURING AND HAVE AGREED, SUBJECT TO CERTAIN CONDITIONS, TO
VOTE ALL OLD SERIES NOTES OWNED BY FUNDS AND ACCOUNTS MANAGED BY THEM AS OF THE
VOTING RECORD DATE FOR ACCEPTANCE OF THE PLAN AND TO CONSENT TO THE TERMINATION
AND RELEASE OF THE OLD SECURITY DOCUMENTS IN CONNECTION THEREWITH. PURSUANT TO
THE PLAN, RIHF AND ONE OR MORE FUNDS MANAGED BY FIDELITY WILL ENTER INTO THE
RIHF SENIOR FACILITY DESCRIBED BELOW.
MERV GRIFFIN, WHO HOLDS 4,398,115 SHARES OF RII COMMON STOCK, OR
APPROXIMATELY 21.82% OF THE OUTSTANDING RII COMMON STOCK, HAS AGREED TO VOTE FOR
THE PLAN. IN CONNECTION WITH THE PLAN, THE NEW GRIFFIN SERVICES AGREEMENT WILL
REMAIN IN PLACE, THE GRIFFIN GROUP WILL PAY THE GRIFFIN GROUP NOTE PROCEEDS TO
RII AND THE GRIFFIN GROUP WILL RECEIVE THE GRIFFIN WARRANTS.
THE HOLDERS OF 1,307,300 1990 STOCK OPTIONS ISSUED UNDER THE 1990 STOCK
OPTION PLAN, OR APPROXIMATELY 74% OF THE OUTSTANDING 1990 STOCK OPTIONS, HAVE
AGREED TO VOTE FOR THE PLAN.
RII HAS AGREED TO VOTE ITS INTERCOMPANY CLAIM AGAINST GRI AND ITS EQUITY
INTEREST IN GRI FOR ACCEPTANCE OF THE PLAN.
To ensure that RII and RIH have adequate cash for working capital and
general corporate purposes, one or more funds managed by Fidelity will enter
into the RIHF Senior Facility with RIHF, which will allow RIHF to borrow up to
$20,000,000 through the issuance of RIHF Senior Facility Notes. Any amount
borrowed by RIHF under the RIHF Senior Facility will be loaned by RIHF to RIH,
and possibly by RIH to RII, through intercompany transactions. The RIHF Senior
Facility will be available for a single borrowing during the one-year period
from the Effective Date, provided that, among other conditions, the public
resale of the RIHF Senior Facility Notes by the purchasers thereof is
registered, if required, under the Securities Act, and the RIHF Senior Facility
Indenture has been qualified under the TIA. The RIHF Senior Facility Notes will
by guaranteed by RIH and RII.
Under the Bankruptcy Code, to confirm the Plan on a consensual basis, the
holders of at least 66 2/3% in principal amount and more than 50% in number of
the claims that vote in each impaired class of creditors, and the holders of at
least 66 2/3% of the outstanding interests that vote in each impaired class of
interests must vote to accept the Plan. No minimum number of votes is required
for confirmation of the Plan and only those who affirmatively vote to accept or
reject the Plan will be counted for purposes of determining acceptance or
rejection of the Plan by any impaired class of claims or interests. Unexecuted
ballots will not be counted. ANY EXECUTED BALLOT WITH RESPECT TO THE PLAN
RETURNED WITHOUT AN INDICATION TO ACCEPT OR REJECT THE PLAN WILL BE DEEMED AN
ACCEPTANCE THEREOF.
In addition to the vote required by the Bankruptcy Code, a condition to
confirmation of the Plan is the entry of an order declaring that, as of the
Effective Date, the Old Security Documents under which the liens on the property
securing the Old Series Notes were granted or created shall be deemed released
and terminated. To effectuate such termination and release consensually, the
record holders of at least 66 2/3% in aggregate principal amount of the
outstanding Old Series Notes and the record holders of at least a majority in
aggregate principal amount of each series of the Old Series Notes must execute
consents pursuant to the terms of the Old Series Note Indenture. Accordingly,
RII and GRI are seeking consents to terminate and release the Old Security
Documents from the holders of Old Series Notes. Such consents must be evidenced
by record holders separately from their vote on the Plan. The ballots for the
holders of Old Series Notes permit holders to give or withhold such consent.
2
<PAGE>
ANY EXECUTED BALLOT OF A HOLDER OF OLD SERIES NOTES RETURNED WITHOUT AN
INDICATION TO WITHHOLD SUCH CONSENT WILL BE DEEMED TO GIVE SUCH CONSENT. If
sufficient consents are received from the holders of Old Series Notes, RII and
GRI will request the Bankruptcy Court to confirm release of the Old Security
Documents by entry of an appropriate order. If insufficient consents are
received from holders of Old Series Notes to effectuate a consensual termination
and release of the Old Security documents, RII and GRI intend to request the
Bankruptcy Court to order the release of the Old Security Documents; however,
there can be no assurance that such an order will be entered.
In no event will the consents to release the Old Security Documents be used
to effectuate the termination and release of the Old Security Documents in the
absence of the confirmation and consummation of the Plan. If RII and GRI fail to
receive the Requisite Acceptances, notwithstanding receipt of sufficient
consents to release and terminate the Old Security Documents pursuant to the Old
Series Note Indenture, such consents will only be used in the event that RII and
GRI continue to pursue confirmation and consummation of the Plan. In the event
that RII and GRI elect or are required to resolicit Acceptances of the Plan,
however, they reserve the right not to resolicit with respect to the consents to
release the Old Security Documents and to use consents received from the initial
Solicitation.
The Plan is also subject to approval by the Casino Control Commission and
the government of the Commonwealth of The Bahamas.
RII and GRI have fixed the close of business on January 10, 1994 as the
record date for the determination of holders of claims and of holders of
interests to whom the accompanying Information Statement/Prospectus and related
ballots, the SIHL Prospectus and other materials are being furnished and from
whom votes to accept or reject the Plan will be accepted and consents to release
the Old Security Documents are sought. TO BE COUNTED, BALLOTS MUST BE RECEIVED
BY HILL AND KNOWLTON, THE SOLICITATION AGENT, NO LATER THAN 5:00 P.M., NEW YORK
CITY TIME, ON [ ], 1994 (or such later time and date to which
RII and GRI may extend the Solicitation in the manner described in the
Information Statement/Prospectus). If you are being asked to vote on the Plan, a
ballot (together with certain related materials) and a postage-paid pre-
addressed return envelope have been enclosed for your convenience. As soon as
practicable after the Confirmation Date, RII will furnish to each holder of Old
Series Notes a letter of transmittal for remittance of such holder's Old Series
Notes. Such holders should not send their Old Series Notes to RII at this time.
THE BOARD OF DIRECTORS OF EACH OF RII AND GRI HAS UNANIMOUSLY APPROVED THE
RESTRUCTURING, THE PLAN AND THE SOLICITATION AND RECOMMENDS THAT ALL IMPAIRED
CREDITORS AND EQUITY INTEREST HOLDERS SUBMIT BALLOTS ACCEPTING THE PLAN AND, IF
APPLICABLE, CONSENTING TO THE RELEASE OF THE OLD SECURITY DOCUMENTS.
IT IS OF THE UTMOST IMPORTANCE THAT YOU READ AND CAREFULLY CONSIDER THE
MATTERS DESCRIBED IN THE ACCOMPANYING INFORMATION STATEMENT/PROSPECTUS (TOGETHER
WITH THE RELATED BALLOTS, THE SIHL PROSPECTUS AND OTHER MATERIALS) AND THAT YOU
VOTE ON THE PLAN IN SUFFICIENT TIME TO ENSURE THAT YOUR VOTE CAN BE TRANSMITTED
TO HILL AND KNOWLTON, THE SOLICITATION AGENT, BY THE VOTING DEADLINE.
FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND
PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE
ACCOMPANYING SIHL PROSPECTUS RELATING TO THE SIHL SERIES A SHARES. RII HAS
SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS
FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN
INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN
THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT
FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES
3
<PAGE>
ACT). RII AND ITS ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY,
COMPLETENESS, NATURE AND FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN
THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS
MADE IN THE PARADISE ISLAND PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND
WARRANTIES TO SIHL AS TO THE ACCURACY OF THE INFORMATION SUPPLIED BY RII
SPECIFICALLY FOR INCLUSION IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION
STATEMENT).
Very truly yours,
Christopher D. Whitney
OFFICE OF THE PRESIDENT,
EXECUTIVE VICE PRESIDENT AND CHIEF OF
STAFF
Matthew B. Kearney
OFFICE OF THE PRESIDENT,
EXECUTIVE VICE PRESIDENT-FINANCE,
CHIEF FINANCIAL OFFICER AND TREASURER
4
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 5, 1994
INFORMATION STATEMENT/PROSPECTUS
AND
SOLICITATION OF PLAN ACCEPTANCES
RESORTS INTERNATIONAL, INC.
GGRI, INC.
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
RESORTS INTERNATIONAL HOTEL, INC.
P.I. RESORTS LIMITED
Resorts International, Inc., a Delaware corporation ("RII"), and GGRI, Inc.,
a Delaware corporation formerly known as Griffin Resorts Inc. ("GRI"), upon the
terms and subject to the conditions set forth in this Information
Statement/Prospectus and Solicitation of Plan Acceptances (this "Information
Statement/Prospectus") and the accompanying forms of Ballot and Master Ballot,
hereby solicit (the "Solicitation") from: (a) each owner of RII's Senior Secured
Redeemable Notes due April 15, 1994 (and beneficiary of the related GRI Guaranty
described below), which were issued in two series, the Series A Senior Secured
Redeemable Notes (the "Old Series A Notes") and the Series B Senior Secured
Redeemable Notes (the "Old Series B Notes"; and collectively with the Old Series
A Notes, the "Old Series Notes"); (b) each owner of shares of RII's common
stock, par value $.01 per share (the "RII Common Stock"); (c) RII, as the owner
of all the outstanding common stock, par value $.01 per share, of GRI (the "GRI
Common Stock"); (d) RII, as the holder of the RII Intercompany Claims (as
defined below) against GRI; and (e) each holder of stock options (the "1990
Stock Options") issued under RII's Senior Management Stock Option Plan (the
"1990 Stock Option Plan"), each as of the close of business in New York City on
January 10, 1994 (the "Voting Record Date"), an acceptance (an "Acceptance") of
that certain Joint Plan of Reorganization for RII and GRI proposed by RII, GRI,
Resorts International Hotel, Inc., a New Jersey corporation and a wholly owned
subsidiary of RII ("RIH"), P. I. Resorts Limited, a corporation organized under
the laws of the Commonwealth of The Bahamas and a wholly owned subsidiary of RII
("PIRL"), and Resorts International Hotel Financing, Inc., a Delaware
corporation and a wholly owned subsidiary of RII ("RIHF"), dated January __,
1994, a copy of which is attached hereto as Appendix A (the "Plan"), to be filed
pursuant to chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code") and the rules promulgated thereunder (the "Bankruptcy Rules"). GRI has
guaranteed payment of the Old Series Notes (the "GRI Guaranty"). Thus, the
owners of the Old Series Notes are beneficiaries of the GRI Guaranty which is
endorsed on the Old Series Notes. The term "Company" as used herein includes RII
and/or one or more of its subsidiaries, as the context may require.
From each holder of Old Series Notes (and beneficiary of the related GRI
Guaranty endorsed thereon), RII and GRI hereby also solicit pursuant to this
Information Statement/Prospectus consents to terminate and release the Old
Security Documents (as defined below) so that certain of the collateral covered
thereby, including the Resorts Casino Hotel, can be pledged to secure the New
Debt Securities.
The Plan will be consummated on the Effective Date. Consummation of the Plan
will result in a restructuring of RII's debt and equity capitalization in the
manner described below and the consummation of certain other transactions,
including either (i) the sale (the "SIHL Sale") of the Company's operations and
properties on or relating to Paradise Island, The Bahamas (the "Paradise Island
Business") to Sun International Hotels Limited, a corporation organized under
the laws of the Commonwealth of The Bahamas ("SIHL") and not affiliated with
RII, or (ii) if the SIHL Sale is not consummated on or before the Effective Date
and certain other conditions are satisfied, the spin-off to the holders of the
Old Series Notes of the Paradise Island Business (the "PIRL Spin-Off"). The
Paradise Island Business includes all of the outstanding capital stock (the
"Paradise Island Shares") of Resorts International (Bahamas) 1984 Limited, a
corporation organized under the laws of the Commonwealth of The Bahamas ("RIB"),
substantially all of the real property owned by RII in the State of Florida and
used primarily in connection with RII's operations on Paradise Island, The
Bahamas (the "RII Real Estate Assets"), and substantially all of the assets of
the U.S. Paradise Island Subsidiaries (the "RII Paradise Assets"). Such
restructuring and such other transactions collectively are referred to herein as
the "Restructuring".
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The Plan provides, among other things, that record holders of the Old Series
Notes as of the distribution record date (the "Distribution Record Date"), which
is defined as the close of business in New York City on the date that the Plan
becomes effective (the "Effective Date"), will receive the following
consideration on the relevant Distribution Date for each $1,000 of principal
amount of Old Series Notes outstanding on the Effective Date (and for any
accrued interest thereon):
<TABLE>
<S> <C> <C>
-- $259.38 principal amount of 11% Mortgage Notes due 2003 (the "New RIHF
Mortgage Notes") issued by RIHF and guaranteed (the "RIH Mortgage
Guaranty") by RIH;
-- One unit (a "Unit") comprised of (i) $72.63 principal amount of 11.375%
Junior Mortgage Notes due 2004 (the "New RIHF Junior Mortgage Notes")
issued by RIHF and guaranteed by RIH (the "RIH Junior Mortgage
Guaranty"), and (ii) .07263 share of RII's Class B Redeemable Common
Stock, par value $.01 per share (the "RII Class B Common Stock");
-- 35.33 shares of RII Common Stock;
-- Either (A) $134.88 in cash, plus interest on such amount at an annual
rate of 7.5% from January 1, 1994 to the closing date of the SIHL Sale
(the "SIHL Closing Date"), plus 4.15 Series A Ordinary Shares, par
value $.01 per share (the "SIHL Series A Shares"), issued by SIHL,
representing a pro rata share of the consideration received from the
SIHL Sale, or (B) if the SIHL Sale is not consummated on or before the
Effective Date, 10.375 Ordinary Shares, par value $.01 per share (the
"PIRL Ordinary Shares"), issued by PIRL pursuant to the PIRL Spin-Off;
-- A pro rata share of Excess Cash, which pro rata share is projected to be
a minimum of $62.25. "Excess Cash" means the amount by which RII's
Available Cash exceeds the sum of: (i) $20,000,000 (the "RII Retained
Cash"); (ii) Target Adjusted Cash, as defined in either (a) the
Purchase Agreement dated as of October 11, 1993, between RII and SIHL,
as amended (the "Paradise Island Purchase Agreement") or (b) the
Standby Distribution Agreement dated as of October 15, 1993, between
RII and PIRL, as amended (the "PIRL Standby Distribution Agreement"),
as appropriate; (iii) such cash as RII reasonably estimates will be
required to fund certain adjustments (including but not limited to any
adjustment related to "Adjusted Working Capital") under either the
Paradise Island Purchase Agreement or the PIRL Standby Distribution
Agreement, as the case may be (the "Reserved Cash"); (iv) such cash as
RII reasonably estimates will be necessary to pay Plan Expenses (as
defined below) (the "Plan Consummation Cash"), and (v) a $400,000 cash
payment to be made to Caesars World, Inc. on the Distribution Date (the
"Caesars Payment"). "Available Cash" means all cash of RII and its
subsidiaries on the Effective Date, including but not limited to cash
deposited in depository accounts, cash on hand and cage cash, before
giving effect to the SIHL Sale or PIRL Spin-Off, as the case may be,
and the distributions under the Plan, but specifically excluding (1)
any cash actually received by RII on or prior to the Effective Date,
from Atlantic City Showboat, Inc., as tenant under the Showboat Lease
(as defined below), which has been escrowed by RII to pay its current
obligations with respect to the Showboat Notes (as defined below), (2)
any restricted cash relating to the Litigation Trust or to the proceeds
of the November 1993 sale of a .63 acre tract of land on Paradise
Island, The Bahamas and (3) any portion of the SIHL Aggregate Cash
Purchase Price;
-- The non-transferable right to receive a pro rata share of Net Reserved
Cash and Net Plan Consummation Cash; "Net Reserved Cash" means the
amount of the Reserved Cash in excess of that required to fund certain
adjustments under
</TABLE>
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<TABLE>
<S> <C> <C>
either the Paradise Island Purchase Agreement or the PIRL Standby
Distribution Agreement, as the case may be, together with interest
thereon at the average rate of return received by RII and its
subsidiaries on invested cash from the Effective Date to but excluding
the Distribution Date. "Net Plan Consummation Cash" means the amount of
Plan Consummation Cash in excess of that required to pay Plan Expenses,
together with interest thereon at the average rate of return received
by RII and its subsidiaries on invested cash from the Effective Date to
but excluding the Distribution Date; and
-- The non-transferable right to receive a pro rata share of payments of
Deferred Cash, which pro rata share is projected to be a minimum of $5.
"Deferred Cash" means the aggregate amount of distributions (the
"Litigation Trust Distributions") by the Litigation Trust from time to
time after the Effective Date in respect of units of beneficial
interest (the "Litigation Trust Units") in the Litigation Trust
currently owned by RII.
</TABLE>
Notwithstanding the foregoing, no fractional shares of New Equity Securities
(as defined below) will be issued on the Distribution Date. Also, New RIHF
Mortgage Notes and New RIHF Junior Mortgage Notes will be issued only in
denominations of $1,000 or integral multiples thereof. Pursuant to the Plan, the
disbursing agent for the holders of Old Series Notes will aggregate and sell all
fractional amounts of New Equity Securities and New Debt Securities (as defined
below) and distribute the net proceeds to the holders of Old Series Notes
entitled thereto.
If the SIHL Sale is consummated, assuming a reorganization enterprise value
of approximately $225 million for RII and a reorganization enterprise value for
SIHL of $150 million, the estimated recovery for holders of Old Series Notes is
projected to be approximately 70% of the principal amount of Old Series Notes
outstanding on October 15, 1993. If the SIHL Sale is not consummated and the
PIRL Spin-Off is effected, assuming a reorganization enterprise value of
approximately $225 million for RII and an assumed reorganization enterprise
value of PIRL of $125 million, the estimated recovery for holders of Old Series
Notes is projected to be approximately 70% of the principal amount of Old Series
Notes outstanding on October 15, 1993. There can be no assurance that the
assumed reorganization enterprise values of RII, of SIHL in the event of the
SIHL sale or of PIRL in the event of the PIRL Spin-Off will be realized.
The "Distribution Date" for any Claim that is an Allowed Claim on the
Effective Date will be the Effective Date or as soon thereafter as practicable,
but in no event later than 20 days after the Effective Date (except as described
below). For any Claim that is a Disputed Claim on the Effective Date, the
Distribution Date will be the date as soon as practicable, but in no event later
than 30 days after the date upon which such Claim becomes an Allowed Claim.
Notwithstanding the foregoing, the Distribution Date with respect to
distribution to the disbursing agent for holders of Old Series Notes is as
follows: (a) for distribution of the SIHL Aggregate Cash Purchase Price, the New
Debt Securities and the New Equity Securities, the Effective Date; (b) for
payments of Net Reserved Cash, as soon as practicable after the Effective Date,
but in no event later than 90 days after the Effective Date; (c) for payments of
Net Plan Consummation Cash, as soon as practicable but no later than 90 days
after the Effective Date; provided, however, that if all Plan Expenses have not
been paid by the 90th day after the Effective Date, RII and GRI may continue to
hold back for an additional 60 days the portion of Net Plan Consummation Cash
deemed by the Bankruptcy Court to be necessary to satisfy remaining Plan
Expenses, after which time the remaining Net Plan Consummation Cash shall be
distributed, unless otherwise ordered by the Bankruptcy Court; (d) for payments
of Deferred Cash, within three business days after receipt by RII of the
Litigation Trust Distributions in immediately available funds; and (e) for
payments of Excess Cash, the Effective Date or as soon thereafter as is
practicable, but in no event later than 20 days after the Effective Date.
Distributions will be made by the disbursing agent only to holders of Old Series
Notes that comply with the procedures for surrender of Old Series Notes set
forth in section 6.11.5 of the Plan.
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Existing holders of RII Common Stock and of 1990 Stock Options will be
impaired by the Plan. Generally speaking, a claim or interest is impaired under
a plan of reorganization if the plan provides that such claim or interest will
not be repaid in full or that the legal, equitable or contractual rights of the
holder of such claim or interest will be altered. Only classes of claims or
interests that are impaired are entitled to vote on the Plan.
Pursuant to the Plan, each holder of RII Common Stock will retain its shares
of RII Common Stock and each holder of 1990 Stock Options will retain his or her
stock options. As a result of the issuance of the shares of RII Common Stock and
RII Class B Common Stock to the holders of the Old Series Notes, the Griffin
Warrants and the options to be granted pursuant to the 1994 Stock Option Plan,
the resulting ownership interest in RII represented by the currently outstanding
shares of RII Common Stock and the currently outstanding 1990 Stock Options will
be substantially diluted and, therefore, the holders of such equity interests
will be impaired within the meaning of the Bankruptcy Code.
All intercompany claims against GRI will be resolved pursuant to the Plan.
The intercompany claims against GRI consist of the intercompany debt obligations
owing from GRI to RII (the "RII Intercompany Claim"). The RII Intercompany Claim
against GRI will be impaired by the Plan. Pursuant to the Plan, RII will
contribute the RII Intercompany Claim to the capital of GRI. RII has agreed to
vote for the Plan in respect of the RII Intercompany Claim.
Also, as a result of the Plan, RII's equity interest in GRI, as the holder
of all the outstanding GRI Common Stock, will be impaired. RII has agreed to
vote for the Plan in respect of its equity interest in GRI.
SIHL SALE. SIHL, a corporation not affiliated with RII, was incorporated in
the Commonwealth of The Bahamas in 1993 for the purpose of acquiring the
Paradise Island Business pursuant to the terms of the Paradise Island Purchase
Agreement. Pursuant to the Paradise Island Purchase Agreement, in exchange for
2,000,000 SIHL Series A Shares, representing 40% of the capital stock of SIHL to
be outstanding after the SIHL Sale, and $65,000,000 in cash plus interest
thereon at an annual rate of 7.5% from January 1, 1994, to the SIHL Closing Date
(the "SIHL Aggregate Cash Purchase Price"), SIHL (i) will purchase from RII all
the capital stock of RIB and (ii) directly or through subsidiaries of SIHL will
purchase substantially all the assets of the U.S. Paradise Island Subsidiaries
(as defined below) and the RII Real Estate Assets, and will assume substantially
all the non-intercompany liabilities relating to such assets. If the SIHL Sale
is consummated on the Effective Date, such SIHL Series A Shares and the SIHL
Aggregate Cash Purchase Price will be distributed, as described above, to the
disbursing agent on behalf of the holders of the Old Series Notes pursuant to
the Plan. The remaining 60% of the capital stock of SIHL will be owned by Sun
International Investments Limited ("SIIL"), which 60% equity interest in SIHL
will be purchased by SIIL from SIHL for $90,000,000 plus interest at an annual
rate of 7.5% on $65,000,000 from January 1, 1994 (the "SIIL Subscription
Amount") on or prior to the SIHL Closing Date. SIHL will use $65,000,000 of the
SIIL Subscription Amount plus interest at 7.5% per year from January 1, 1994, to
fund the SIHL Aggregate Cash Purchase Price; the remaining $25,000,000 of the
SIIL Subscription Amount will, as of the Effective Date, remain in SIHL. RII
understands that the portion of the SIIL Subscription Amount which remains in
SIHL ($25,000,000) will be used by SIHL to fund a capital expenditure and
redevelopment program for the Paradise Island Business. The $25,000,000 of the
SIIL Subscription Amount which remains in SIHL will increase the equity value of
SIHL and, in effect, represents additional consideration in the amount of
$10,000,000 (40% of $25,000,000) to RII for sale of the Paradise Island
Business. Such consideration is realized by the holders of the Old Series Notes
through the increased value of the 40% equity interest in SIHL to be distributed
to such holders in the form of the Series A Shares. The holder of each Series A
Share will be entitled to sell, and require SIHL to purchase on the fifth
4
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anniversary of the consummation of the SIHL Sale, such Share at a price equal to
$35 per share (the "Put Right"). SIHL has pledged its 60% equity interest in
SIHL to secure its obligation to make such purchase.
In conjunction with the proposed SIHL Sale, RII placed $4,000,000 in escrow
to fund, if necessary, any obligations of RII under the Paradise Island Purchase
Agreement to reimburse SIHL for its reasonable out-of-pocket costs and expenses
incurred in connection with the proposed SIHL Sale in the event of certain
termination events identified in the Paradise Island Purchase Agreement (the
"SIHL Buyer Expense Escrow"). Also in conjunction with the proposed SIHL Sale,
SIHL placed $5,000,000 in escrow to secure SIHL's obligations under the Paradise
Island Purchase Agreement (the "SIHL Escrow"). For a further description of the
material terms of Paradise Island Purchase Agreement, see "Description of the
Paradise Island Purchase Agreement".
FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND
PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE
ACCOMPANYING PROSPECTUS, DATED [ ], 1994, OF SIHL RELATING TO THE SIHL
SERIES A SHARES (THE "SIHL PROSPECTUS"). RII HAS SUPPLIED CERTAIN INFORMATION
REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS FOUND IN RII'S REPORTS FILED
WITH THE COMMISSION), AS WELL AS CERTAIN INFORMATION CONCERNING THE
RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN THE PREPARATION OF THE SIHL
PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT FILED BY SIHL WITH THE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED). RII AND ITS ADVISERS
DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND FORM OF
PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND RELATED
REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND
PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE
ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE
SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT).
PIRL SPIN-OFF. PIRL, a wholly owned subsidiary of RII, was incorporated in
the Commonwealth of The Bahamas in 1993 for the purpose of acquiring the
Paradise Island Business pursuant to the terms of the PIRL Standby Distribution
Agreement if the SIHL Sale is not consummated on or before the Effective Date.
The closing under the PIRL Standby Distribution Agreement is subject to the
satisfaction or waiver of certain conditions precedent. Pursuant to the PIRL
Standby Distribution Agreement, in exchange for 5,000,000 PIRL Ordinary Shares,
representing 100% of the PIRL Ordinary Shares to be outstanding after the PIRL
Spin-Off, (i) PIRL will purchase from RII all the capital stock of RIB and (ii)
subsidiaries of PIRL will purchase substantially all the assets of the U.S.
Paradise Island Subsidiaries and the RII Real Estate Assets, and will assume
substantially all the non-intercompany liabilities relating to such assets. If
the PIRL Spin-Off is consummated on the Effective Date, all of the PIRL Ordinary
Shares will be distributed, as described above, to the holders of the Old Series
Notes pursuant to the Plan. For a further description of the material terms of
the PIRL Spin-Off and the PIRL Standby Distribution Agreement, see "Description
of PIRL Standby Distribution Agreement". For a discussion of the risks
associated with the PIRL Spin-Off, see "Risk Factors -- Risks Associated with
the Paradise Island Business".
RIHF SENIOR FACILITY. As part of the implementation of the Restructuring,
Fidelity Management & Research Company ("Fidelity"), which advises and manages
various funds and accounts that hold Old Series Notes, will cause one or more of
the funds it manages to enter into a senior secured note purchase agreement with
RIHF (the "RIHF Senior Facility"), which will allow RIHF to borrow up to
$20,000,000 through the issuance of notes issued under the RIHF Senior Facility
(the "RIHF Senior Facility Notes"). Any amount borrowed by RIHF under the RIHF
Senior Facility will be loaned by RIHF to RIH, and possibly by RIH to RII,
through intercompany transactions for working capital and general corporate
purposes. The RIHF Senior Facility will be available for a single borrowing
during the one-year period from the Effective Date, provided that, among other
conditions, the public
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resale of the RIHF Senior Facility Notes by the purchasers thereof upon a resale
is registered, if required, under the Securities Act of 1933, as amended (the
"Securities Act"), and the indenture under which the RIHF Senior Facility Notes
(the "RIHF Senior Facility Note Indenture") has been qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"). The RIHF Senior Facility Notes
and the RIH Senior Facility Guaranty (as defined below) are not included among
the securities registered under the Registration Statement (as defined below),
nor has the RIHF Senior Facility Note Indenture yet been qualified under the
TIA. Any public offering of the RIHF Senior Facility Notes and RIH Senior
Facility Guaranty will be made only by means of a prospectus pursuant to a
separate registration statement to be filed by RIHF and RIH under the Securities
Act. Information concerning the RIHF Senior Facility is included in this
Information Statement/Prospectus because the RIHF Senior Facility is an integral
part of the Restructuring and because execution of the RIHF Senior Facility and
related documents and instruments is a condition precedent to the Effective Date
of the Plan.
All principal payments on the RIHF Senior Facility Notes will be due July
15, 2002. Interest on the RIHF Senior Facility Notes will accrue at the rate of
11% per year and will be payable in cash, semi-annually on January 15 and July
15 of each year, commencing on the January 15 or July 15 next following the date
of the initial borrowing under the RIHF Senior Facility. The RIHF Senior
Facility Notes will be secured by (i) a secured senior promissory note of RIH
(the "RIH Senior Facility Note") in an aggregate principal amount of up to
$20,000,000 payable in amounts and at times necessary to pay the principal of
and interest on the RIHF Senior Facility Notes and (ii) a lien on all real
property, improvements thereon and certain other property and equipment
described below constituting Merv Griffin's Resorts Casino Hotel in Atlantic
City, New Jersey (the "Resorts Casino Hotel"). The RIH Senior Facility Note and
the Resorts Casino Hotel collectively are referred to as the "RIHF Senior
Facility Trust Estate". The Resorts Casino Hotel is owned, and the liens will be
granted, by RIH. In addition, RIH will issue a guaranty (the "RIH Senior
Facility Guaranty") of the payment of principal of and interest on the RIHF
Senior Facility Notes. The liens on the Resorts Casino Hotel securing the
payment of the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty
will be senior to the liens securing the payment of the New RIHF Mortgage Notes,
the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior
Mortgage Guaranty. RII also will issue a guaranty of the payment of principal
and interest on the RIHF Senior Facility Notes.
NEW RIHF MORTGAGE NOTES. Interest on the New RIHF Mortgage Notes will
accrue from the Effective Date at the rate of 11% per year and will be payable
in cash, semi-annually on March 15 and September 15 of each year, commencing on
the March 15 or September 15 next following the Effective Date. See "Description
of New RIHF Mortgage Notes." The New RIHF Mortgage Notes will be secured by (i)
a secured senior promissory note of RIH (the "RIH Promissory Note") in the
original principal amount of $125,000,000, payable in amounts and at times
necessary to pay the principal of and interest on the New RIHF Mortgage Notes
and (ii) a lien on the Resorts Casino Hotel. The RIH Promissory Note and the
Resorts Casino Hotel collectively are referred to as the "New RIHF Mortgage
Trust Estate". In addition, RIH will issue the RIH Mortgage Guaranty of the
payment of principal of and interest on the New RIHF Mortgage Notes. The liens
on the Resorts Casino Hotel securing the payment of the New RIHF Mortgage Notes
and the RIH Mortgage Guaranty will be junior to the liens securing payment of
the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty and senior
to the liens securing payment of the RIHF Junior Mortgage Notes and the RIH
Junior Mortgage Guaranty.
NEW RIHF JUNIOR MORTGAGE NOTES. Interest on the New RIHF Junior Mortgage
Notes will accrue from the Effective Date at the rate of 11.375% per year and
will be payable in cash or, at RIHF's option and subject to certain limitations,
additional Units comprised of New RIHF Junior Mortgage Notes and RII Class B
Common Stock, semi-annually on June 15 and December 15 of each year, commencing
on the June 15 and December 15 next following the Effective Date. Interest may
be paid in additional Units ("Payments-In-Kind") on any interest payment date on
which RIH's Consolidated
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Cash Flow for the most recently completed four fiscal quarters is less than
$35,000,000. Upon the redemption, or cancellation following the purchase
thereof, of each $1,000 principal amount of New RIHF Junior Mortgage Notes, RII
will redeem, at $0.01, the one share of RII Class B Common Stock issued as a
Unit with each $1,000 principal amount of New RIHF Junior Mortgage Notes. THE
NEW RIHF JUNIOR MORTGAGE NOTES AND THE RII CLASS B COMMON STOCK COMPRISING THE
UNITS MAY NOT BE TRANSFERRED SEPARATELY. The New RIHF Junior Mortgage Notes will
be secured by (i) a secured junior promissory note of RIH (the "RIH Junior
Promissory Note") in the original principal amount of $35,000,000, payable in
amounts and at times necessary to pay the principal of and interest on the New
RIHF Junior Mortgage Notes and (ii) a lien on the Resorts Casino Hotel. The RIH
Junior Promissory Note and the Resorts Casino Hotel collectively are referred to
as the "New RIHF Junior Mortgage Trust Estate". In addition, RIH will issue the
RIH Junior Mortgage Guaranty of the payment of principal of and interest on the
New RIHF Junior Mortgage Notes. The liens on the Resorts Casino Hotel securing
the payment of the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage
Guaranty will be junior to the liens securing payment of the RIHF Senior
Facility Notes, the RIH Senior Facility Guaranty, the New RIHF Mortgage Notes
and the RIH Mortgage Guaranty.
GRIFFIN GROUP TRANSACTIONS. The Griffin Group, Inc., a company controlled
by Merv Griffin (the "Griffin Group"), entered into a License and Services
Agreement in April 1993, but dated and effective as of September 17, 1992 (as
amended, the "New Griffin Services Agreement"), with RII and RIH. On September
17, 1993, RII paid $2,205,000 to the Griffin Group for the third year of the New
Griffin Services Agreement, by reducing the principal amount of a $7,523,333
promissory note issued by the Griffin Group to RII (the "Griffin Group Note") in
an equal amount. On or prior to the Effective Date, RII will pay $2,310,000 to
the Griffin Group for the fourth year of the New Griffin Services Agreement also
by reducing the principal amount of the Griffin Group Note in an equal amount.
After payment of the $2,310,000 referenced above, but no later than the
Effective Date, the Griffin Group will pay RII the remainder of the Griffin
Group Note (approximately $3,000,000). RII will distribute the proceeds of such
payment to the holders of the Old Series Notes as part of Excess Cash. Payment
in full of the outstanding amounts under the Griffin Group Note is a condition
to consummation of the Plan.
The New Griffin Services Agreement also provides that, as additional
compensation pursuant to the New Griffin Services Agreement, RII will issue
warrants (the "Griffin Warrants") to the Griffin Group to purchase 4,665,000
shares of RII Common Stock, or approximately 10% of the RII Common Stock on a
fully diluted basis. The Griffin Warrants will be exercisable on the Effective
Date at an exercise price of the lesser of $1.875 and the average closing price
of RII Common Stock for the 20 trading days following the Effective Date.
TERMINATION AND RELEASE OF THE OLD SECURITY DOCUMENTS. RII is soliciting
the consents of the record holders of outstanding Old Series Notes pursuant to
the terms of the indenture under which the Old Series Notes were issued (the
"Old Series Note Indenture") to terminate and release the Old Security Documents
under which the liens on the property, including the Resorts Casino Hotel,
securing the Old Series Notes were granted or created. Such consents must be
evidenced by such record holders separately from their vote on the Plan. The
ballots for the holders of Old Series Notes permit holders to give or withhold
such consent. ANY EXECUTED BALLOT OF A HOLDER OF OLD SERIES NOTES RETURNED
WITHOUT AN INDICATION TO WITHHOLD SUCH CONSENT WILL BE DEEMED TO GIVE SUCH
CONSENT.
RII is requesting the consents for the purposes of: (i) releasing the
Resorts Casino Hotel from the liens of the Old Security Documents so that it may
be encumbered to secure the RIHF Senior Facility Notes, the RIH Senior Facility
Guaranty, the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF
Junior Mortgage Notes and the RIH Junior Mortgage Guaranty in connection with
the Restructuring; (ii) effecting either the SIHL Sale or the PIRL Spin-Off; and
(iii) releasing the Non-Operating Real Property from the liens of the Old
Security Documents. Absent a release of the Old Security Documents either
through consent or an appropriate Bankruptcy Court order, the
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transactions contemplated by the Plan cannot be consummated because RII will be
unable to pledge the requisite collateral for repayment of the New Debt
Securities and the RIHF Senior Facility. In no event will the consents to
release the Old Security Documents be used to effectuate the termination and
release of the Old Security Documents in the absence of the confirmation and
consummation of the Plan. If RII and GRI fail to receive the Requisite
Acceptances (as defined below), notwithstanding receipt of sufficient consents
to release and terminate the Old Security Documents pursuant to the Old Series
Note Indenture, such consents will only be used in the event that RII and GRI
continue to pursue confirmation and consummation of the Plan. In the event that
RII and GRI elect or are required to resolicit Acceptances of the Plan, however,
they reserve the right not to resolicit with respect to the consents to release
the Old Security Documents and to use consents received from the initial
Solicitation.
1994 STOCK OPTION PLAN. As part of the Restructuring, the 1990 Stock Option
Plan will be terminated and no further 1990 Stock Options will be issued.
Existing holders of 1990 Stock Options will retain their options under the Plan
and the exercise price for outstanding 1990 Stock Options shall remain fixed at
the exercise price at the time of the grant thereof. In conjunction with the
Restructuring, the Company will implement as of the Effective Date a new senior
management stock option plan (the "1994 Stock Option Plan") for RII and its
subsidiaries to attract, retain and motivate their officers, directors and key
employees. TO THE EXTENT THAT SHAREHOLDER APPROVAL OF THE 1994 STOCK OPTION PLAN
IS REQUIRED UNDER RULE 16B-3 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED (THE "EXCHANGE ACT"), IF SUFFICIENT ACCEPTANCES ARE RECEIVED
FROM HOLDERS OF RII COMMON STOCK AND OLD SERIES NOTES (INCLUDING THE RELATED GRI
GUARANTY), RII AND GRI INTEND TO USE SUCH ACCEPTANCES, ALONG WITH THE
CONFIRMATION ORDER (AS DEFINED BELOW), TO CONSTITUTE APPROVAL OF THE 1994 STOCK
OPTION PLAN IN COMPLIANCE WITH RULE 16B-3. The form of the 1994 Stock Option
Plan is attached as Exhibit C to the Plan.
POST-RESTRUCTURING RII BOARD OF DIRECTORS. Pursuant to the Restructuring, a
new classified Board of Directors of RII will be named. After the Restructuring,
the holders of the RII Common Stock, voting as a class, will be entitled to
elect four directors of RII and the holders of the RII Class B Common Stock,
voting as a class, will be entitled to elect two directors of RII (the "Class B
Directors"). Pursuant to the Plan, on the Effective Date the initial
post-Restructuring board of directors of RII will be composed of directors
designated by RII. If on more than six occasions (which need not be
consecutive), RIHF either (i) makes Payments-In-Kind in respect of the New RIHF
Junior Mortgage Notes or (ii) fails to make interest payments in respect of the
New RIHF Junior Mortgage Notes (the "Class B Triggering Event"), the holders of
the RII Class B Common Stock, voting as a class, will elect that number of
additional Class B Directors such that the total number of Class B Directors
will constitute, from time to time, a majority of the entire Board of Directors
of RII.
------------------------
OTHER THAN GRI, RII DOES NOT INTEND TO INCLUDE ANY OF ITS SUBSIDIARIES IN
THE BANKRUPTCY CASES, NOR DOES RII INTEND TO CAUSE ANY OF ITS SUBSIDIARIES TO
FILE ITS OWN BANKRUPTCY CASE. NEITHER RII NOR GRI CURRENTLY IS IN BANKRUPTCY.
The Old Series Notes and the RII Common Stock are traded on the American
Stock Exchange (the "AMEX"). The closing prices for the Old Series A Notes
(Symbol: RTG.A), the Old Series B Notes (Symbol: RTH.A), and the RII Common
Stock (Symbol: RT) on April 15, 1993 (the last trading day prior to RII's public
announcement of the initial proposed terms of the Restructuring) and January __,
1994 (the last trading day prior to the date of this Information
Statement/Prospectus) for which closing prices were available, were as follows:
<TABLE>
<CAPTION>
APRIL 15, JANUARY 4,
1993 1994
--------------- ---------------
<S> <C> <C>
Old Series A Notes (per $1,000 principal amount)....... $ 610.00 $ 700.00
Old Series B Notes (per $1,000 principal amount)....... 610.00 697.50
RII Common Stock (per share)........................... .8125 1.6875
</TABLE>
8
<PAGE>
(COVER PAGE CONTINUED)
In this Information Statement/Prospectus, (i) the New RIHF Mortgage Notes,
the New RIHF Junior Mortgage Notes and the RIHF Senior Facility Notes, if issued
on the Effective Date are sometimes referred to as the "New Debt Securities",
and (ii) the RII Common Stock issued on or after the Effective Date pursuant the
Plan, the RII Class B Common Stock and, if issued, the PIRL Ordinary Shares are
sometimes referred to as the "New Equity Securities".
The Company will apply to have the New RIHF Mortgage Notes, the Units
comprised of New RIHF Junior Mortgage Notes and the RII Class B Common Stock,
the RII Common Stock and (if issued) the PIRL Ordinary Shares listed on the
AMEX. It is a condition to consummation of the Plan that such securities be
listed on a national securities exchange or approved for quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market (subject to official notice of issuance). However, there can be
no assurance that an active trading market for any such securities will develop
on the AMEX, the Nasdaq National Market or otherwise, and no assurance can be
given as to the price at which any such securities might trade. The Company has
been informed that SIHL will apply to have the SIHL Series A Shares (if issued)
listed on the Nasdaq National Market. For information regarding the trading
market for the SIHL Series A Shares, see the accompanying SIHL Prospectus.
For the Plan to be confirmed, Acceptances must be received from the holders
of claims constituting at least 66 2/3% in principal amount and more than 50% in
number of the Allowed Claims in each impaired class of claims that votes to
accept or reject the Plan (the "Requisite Acceptances"). Although Acceptances
from holders of at least 66 2/3% in amount of the Allowed Interests in each
impaired class of interests that votes to accept or reject the Plan are
desirable, such Acceptances are not required as the Plan may be confirmed even
if an impaired class of interests votes to reject the Plan. See "The Plan --
Classification and Treatment of Claims and Interests". Pursuant to the
Bankruptcy Code, only votes to accept or reject the Plan, and not abstentions,
will be counted for purposes of determining acceptance or rejection of the Plan
by any impaired class of claims or interests. Therefore, the Plan could be
approved by any impaired class of claims with the affirmative vote of
significantly less than 66 2/3% in amount and 50% in number of the class of such
claims, or by any impaired class of interests with the affirmative vote of
significantly less than 66 2/3% in amount of the class of such interests.
IF THE REQUISITE ACCEPTANCES ARE OBTAINED, RII AND GRI CURRENTLY INTEND TO
COMMENCE CASES UNDER CHAPTER 11 OF THE BANKRUPTCY CODE IN THE UNITED STATES
BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE (THE "BANKRUPTCY COURT") AND TO
USE ALL OF THE ACCEPTANCES TO OBTAIN CONFIRMATION OF THE PLAN. IN ADDITION, RII
AND GRI RESERVE THE RIGHT TO USE THE ACCEPTANCES TO SEEK CONFIRMATION OF A PLAN
OF REORGANIZATION UNDER ANY OTHER CIRCUMSTANCE PERMITTED BY LAW, INCLUDING THE
FILING OF AN INVOLUNTARY BANKRUPTCY PETITION AGAINST RII AND GRI.
RII AND GRI RESERVE THE RIGHT TO WAIVE AT ANY TIME, WITHOUT NOTICE AND
WITHOUT LEAVE OF OR ORDER OF THE BANKRUPTCY COURT, ANY CONDITION TO CONFIRMATION
AND CONSUMMATION OF THE PLAN (SUBJECT IN EACH CASE TO THE APPROVAL OF FIDELITY
AND TCW SPECIAL CREDITS ("TCW"), SO LONG AS THE FUNDS AND ACCOUNTS MANAGED BY
EITHER OF THEM HOLD IN THE AGGREGATE AT LEAST 20% OF THE OUTSTANDING OLD SERIES
NOTES) OTHER THAN THE REQUIREMENT OF THE ENTRY OF AN ORDER OF THE BANKRUPTCY
COURT (THE "CONFIRMATION ORDER") CONFIRMING THAT THE PLAN HAS NOT BEEN STAYED.
____THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
[_____________], 1994, UNLESS RII AND GRI, IN THEIR SOLE DISCRETION, EXTEND THE
SOLICITATION TO A LATER TIME AND DATE (SUCH DATE AND ANY EXTENSION THEREOF BEING
REFERRED TO HEREIN AS THE "VOTING DEADLINE").
____RII and GRI can extend the Solicitation for that period of time necessary to
obtain the Requisite Acceptances. As a practical matter, however: (a) without
the consent of SIHL, the Solicitation cannot be extended beyond February 15,
1994, the date that Chapter 11 Cases must be filed (and the Solicitation thereby
terminated) by RII and GRI to avoid terminating SIHL's obligations under the
9
<PAGE>
Paradise Island Purchase Agreement; (b) if RII and GRI and unable to meet their
payment obligations under the Old Series Notes on April 15, 1994, foreclosure or
other collection actions may require RII and GRI to file chapter 11 cases and
thereby terminate the Solicitation; and (c) RII and GRI currently intend to
extend the Solicitation only if the Restructuring as proposed in the Plan is
achievable if the Solicitation is extended and there is a likelihood that the
extension will facilitate receipt of the Requisite Acceptances.
____Even if the Requisite Acceptances are obtained, the Plan will not be
consummated, and the Restructuring will not occur, unless the Plan is confirmed
as to both RII and GRI by the United States Bankruptcy Court or any court of
competent jurisdiction exercising jurisdiction over RII's and GRI's chapter 11
cases. There is no assurance that the Bankruptcy Court will confirm the Plan.
See "Risk Factors -- Certain Bankruptcy and Insolvency Considerations -- Certain
Risks of Non-Compliance with Confirmation Requirements". In addition, the Plan
is subject to the approval of the New Jersey Casino Control Commission (the
"Casino Control Commission"). See "Risk Factors -- New Jersey Regulatory
Matters". The SIHL Sale and the PIRL Spin-Off are subject also to the approval
of the government of the Commonwealth of The Bahamas. See "Risk Factors -- Risks
Associated with the Paradise Island Business -- Bahamas Regulatory Matters".
Finally, the Plan is subject to a number of other conditions precedent to
Confirmation and to the Effective Date, including but not limited to the
requirements that the RIHF Senior Facility Note Purchase Agreement shall have
been executed and delivered and that an order of the Bankruptcy Court be entered
declaring that, as of the Effective Date, the Old Security Documents will be
deemed released and terminated. See "The Plan -- Conditions Precedent to
Confirmation and Consummation of the Plan". With the approval of Fidelity and
TCW, so long as the funds and accounts managed by either of them hold in the
aggregate at least 20% of the outstanding Old Series Notes, RII and GRI at any
time, without notice, without leave of or order of the Bankruptcy Court, and
without any formal action other than proceeding to consummate the Plan, may
waive any condition precedent to confirmation or consummation of the Plan, other
than the condition requiring the entry of the Confirmation Order which has not
been stayed. As a practical matter, although the condition requiring the entry
of an order declaring that, as of the Effective Date, the Old Security Documents
shall be deemed released and terminated is waivable, the transactions
contemplated by the Plan cannot be consummated if the Old Security Documents are
not released and terminated. See "The Plan -- Conditions Precedent to
Confirmation and Consummation of the Plan". RII and GRI expressly reserve the
right, at any time and from time to time, to modify the terms of the
Solicitation or the Plan (subject to compliance with the requirements of section
1127 of the Bankruptcy Code and to the approval of Fidelity and TCW, so long as
the funds and accounts managed by either of them hold in the aggregate at least
20% of the outstanding Old Series Notes). See "The Plan -- Modifications of the
Plan".
____RII and GRI are soliciting Acceptances by means of ballots ("Ballots") and
master ballots ("Master Ballots"). Any holder of Old Series Notes (including the
related GRI Guaranty), RII Common Stock, GRI Common Stock, the RII Intercompany
Claim or 1990 Stock Options who wishes to vote with respect to the Plan should
complete and sign the applicable Ballot or Master Ballot in accordance with the
instructions set forth herein and return such Ballot or Master Ballot in
accordance with the instructions set forth therein. Ballots or Master Ballots
delivered to Hill and Knowlton (the "Solicitation Agent") may be withdrawn or
revoked, subject to the procedures described therein, at any time until the
Voting Deadline. Neither RII nor GRI intends to commence a case under chapter 11
of the Bankruptcy Code prior to the Voting Deadline, although either RII or GRI
may do so in its sole discretion. After the commencement of a case under the
Bankruptcy Code, Ballots and Master Ballots may be withdrawn or revoked only
with the approval of the Bankruptcy Court. Master Ballots are to be completed by
record holders, including nominees of beneficial owners of Old Series Notes or
RII Common Stock.
____FIDELITY AND TCW SEPARATELY ADVISE AND MANAGE VARIOUS FUNDS AND ACCOUNTS
THAT AS OF OCTOBER 21, 1993 HELD IN THE AGGREGATE APPROXIMATELY $309,926,000
PRINCIPAL AMOUNT OF THE OLD SERIES NOTES, OR APPROXIMATELY 64% OF THE
OUTSTANDING OLD SERIES NOTES. FIDELITY AND TCW HAVE AGREED TO CONTINUE TO HOLD
10
<PAGE>
AN AGGREGATE OF AT LEAST 50.1% OF THE OLD SERIES NOTES THROUGH THE VOTING RECORD
DATE (PROVIDED THAT THE VOTING RECORD DATE IS ON OR BEFORE JANUARY 10, 1994),
HAVE ENGAGED IN EXTENSIVE NEGOTIATIONS WITH RII AND GRI WITH RESPECT TO THE
RESTRUCTURING, AND HAVE AGREED TO VOTE ALL OLD SERIES NOTES OWNED BY FUNDS AND
ACCOUNTS MANAGED BY THEM AS OF THE VOTING RECORD DATE FOR ACCEPTANCE OF THE PLAN
AND TO CONSENT TO THE TERMINATION AND RELEASE OF THE OLD SECURITY DOCUMENTS IN
CONNECTION THEREWITH.
____MERV GRIFFIN, WHO HOLDS 4,398,115 SHARES OF RII COMMON STOCK, OR
APPROXIMATELY 21.82% OF THE OUTSTANDING RII COMMON STOCK, HAS AGREED TO VOTE FOR
ACCEPTANCE OF THE PLAN. IN CONNECTION WITH THE PLAN, THE NEW GRIFFIN SERVICES
AGREEMENT WILL REMAIN IN PLACE, THE GRIFFIN GROUP WILL PAY THE GRIFFIN GROUP
NOTE PROCEEDS (AS DEFINED IN THE PLAN) TO RII AND THE GRIFFIN GROUP WILL RECEIVE
THE GRIFFIN WARRANTS.
____THE HOLDERS OF 1,307,300 1990 STOCK OPTIONS, OR APPROXIMATELY 74% OF THE
OUTSTANDING 1990 STOCK OPTIONS, HAVE AGREED TO VOTE FOR ACCEPTANCE OF THE PLAN.
____RII HAS AGREED TO VOTE THE RII INTERCOMPANY CLAIM AND ITS EQUITY INTEREST IN
GRI FOR ACCEPTANCE OF THE PLAN.
____THE BOARD OF DIRECTORS OF EACH OF RII AND GRI HAS UNANIMOUSLY APPROVED THE
RESTRUCTURING, THE PLAN AND THE SOLICITATION AND RECOMMENDS THAT ALL IMPAIRED
CREDITORS AND EQUITY INTEREST HOLDERS SUBMIT BALLOTS ACCEPTING THE PLAN AND, IF
APPLICABLE, CONSENTING TO THE RELEASE OF THE OLD SECURITY DOCUMENTS.
------------------------
NO APPRAISAL RIGHTS ARE AVAILABLE TO IMPAIRED CREDITORS
OR EQUITY INTEREST HOLDERS IN CONNECTION WITH THE PLAN.
------------------------
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE SECURITIES
AND INVOLVE A HIGH DEGREE OF RISK. THE RESTRUCTURING
DESCRIBED HEREIN WILL RESULT IN DILUTION TO HOLDERS OF
RII COMMON STOCK AND 1990 STOCK OPTIONS. SEE "RISK FACTORS".
------------------------
NEITHER THE TRANSACTIONS DESCRIBED HEREIN NOR THE SECURITIES
OFFERED HEREBY HAVE 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 COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTIONS OR UPON THE ACCURACY OR ADEQUACY OF THIS
INFORMATION STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
NEITHER THE NEW JERSEY CASINO CONTROL COMMISSION
NOR THE COMMONWEALTH OF THE BAHAMAS
HAS PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS INFORMATION STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------
THIS INFORMATION STATEMENT/PROSPECTUS HAS NOT BEEN APPROVED BY THE
BANKRUPTCY COURT WITH RESPECT TO THE ADEQUACY OF THE
INFORMATION CONTAINED HEREIN. ONCE CHAPTER 11 CASES ARE
COMMENCED, RII AND GRI INTEND PROMPTLY TO SEEK AN ORDER OF THE
BANKRUPTCY COURT THAT THE SOLICITATION OF ACCEPTANCES TO THE PLAN
BY MEANS OF THIS INFORMATION STATEMENT/PROSPECTUS WAS IN
COMPLIANCE WITH SECTION 1126(B) OF THE BANKRUPTCY CODE.
------------------------
____THIS INFORMATION STATEMENT/PROSPECTUS IS FIRST BEING MAILED ON OR ABOUT
[JANUARY __], 1994 TO HOLDERS OF OLD SERIES NOTES, RII COMMON STOCK AND 1990
STOCK OPTIONS.
11
<PAGE>
AVAILABLE INFORMATION
____RII, RIHF, RIH and PIRL (collectively, the "Registrants") have filed a
Registration Statement on Form S-4 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") under the Securities Act
with respect to the securities offered hereby. As permitted by the rules and
regulations of the Commission, this Information Statement/Prospectus omits
certain information, exhibits and undertakings contained in the Registration
Statement. Such additional information, exhibits and undertakings can be
inspected at and obtained from the Commission in the manner set forth below. For
further information with respect to the securities offered hereby and the
Registrants, reference is made to the Registration Statement and the financial
schedules and exhibits filed as part thereof. Statements contained in this
Information Statement/Prospectus as to the terms of any contract or other
document are not necessarily complete, and, in each case, reference is made to
the copy of each such contract or other document that has been filed as an
exhibit to the Registration Statement.
____RII is subject to the informational requirements of the Exchange Act and, in
accordance therewith, files periodic reports and other information with the
Commission. If the SIHL Sale is consummated, SIHL will become subject to such
informational requirements. If the PIRL Spin-Off is effected, PIRL will become
subject to such informational requirements. After the issuance of the New Debt
Securities and the related RIH Mortgage Guaranty and RIH Junior Mortgage
Guaranty, RIH will become, and RIHF may become, subject to such informational
requirements. Reports and other information filed with the Commission, as well
as the Registration Statement, can be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and at 7 World Trade Center, New York, New York 10048. Copies of
such material also can be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Old Series Notes and the RII Common Stock are listed on the AMEX, and
such reports and other information regarding RII can be inspected and copied at
the offices of the AMEX, 86 Trinity Place, New York, New York 10006. Copies of
the various documents referred to herein may also be obtained from RII upon
request to RII at its principal executive offices.
------------------------
____NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS INFORMATION STATEMENT/PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON. THIS
INFORMATION STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH IT
RELATES, OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS INFORMATION
STATEMENT/PROSPECTUS NOR THE DISTRIBUTION OF ANY SECURITIES HEREUNDER, UNDER ANY
CIRCUMSTANCES, SHALL CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF RII OR ANY OF ITS SUBSIDIARIES OR IN THE INFORMATION CONTAINED HEREIN
SINCE THE DATE HEREOF.
------------------------
ENFORCEABILITY OF CIVIL LIABILITIES
____If the PIRL Spin-Off is effected, PIRL will become a Bahamian holding
company, and all or a substantial portion of PIRL's assets may be located
outside the United States. PIRL has appointed The Prentice-Hall Corporation
System, Inc., 15 Columbus Circle, New York, New York, as its agent to receive
service of process with respect to any action brought against it in the United
States District Court for the Southern District of New York under the securities
laws of the United States or any State, or any action brought against it in the
Supreme Court of the State of New York in the County of New York under the
securities laws of New York State. However, it may be difficult for investors to
enforce outside the United States judgments against PIRL obtained in the United
States in any such actions, including actions predicated upon the civil
liability provisions of the United States Federal
12
<PAGE>
securities laws. In addition, certain of the directors and officers of PIRL may
be residents of The Bahamas, and all or a substantial portion of the assets of
such persons are or may be located outside the United States. As a result, it
may be difficult for investors to effect service of process within the United
States upon such persons, or to enforce against them judgments obtained in
United States courts, including judgments predicated upon the civil liability
provisions of the United States Federal securities laws. PIRL has been advised
by its Bahamian counsel, Harry B. Sands & Company, that there is uncertainty as
to whether the courts of The Bahamas would enforce (i) judgments of United
States courts obtained against PIRL or such persons predicated upon the civil
liability provisions of the United States Federal securities laws or (ii) in
original actions brought in The Bahamas, liabilities against PIRL or such
persons predicated upon the United States Federal securities laws.
------------------------
____FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND
PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE
ACCOMPANYING SIHL PROSPECTUS RELATING TO THE SIHL SERIES A SHARES. RII HAS
SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS
FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN
INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN
THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT
FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES ACT). RII AND ITS
ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND
FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND
RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND
PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE
ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE
SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT).
13
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
---------
<S> <C>
AVAILABLE INFORMATION...................................................................................... 12
INDEX OF CERTAIN DEFINED TERMS............................................................................. 20
SUMMARY.................................................................................................... 24
General.................................................................................................. 24
The Registrants.......................................................................................... 25
Pre-and Post-Restructuring Ownership Structures.......................................................... 26
Background of the Restructuring.......................................................................... 29
Financial Forecasts for the Company...................................................................... 32
The Restructuring........................................................................................ 32
The Plan................................................................................................. 37
Comparison of New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes to Old Series Notes............. 47
Description of New Equity Securities..................................................................... 54
SIHL Series A Shares..................................................................................... 56
Voting Procedures........................................................................................ 56
Interests of Certain Persons in the Restructuring........................................................ 59
Solicitation Agent....................................................................................... 60
Other Elements of the Restructuring...................................................................... 61
Risk Factors............................................................................................. 64
Certain Federal Income Tax Considerations................................................................ 64
Summary Historical and Pro Forma Financial Data.......................................................... 65
Market Prices of Old Series Notes and RII Common Stock................................................... 67
Market and Trading....................................................................................... 68
RISK FACTORS............................................................................................... 69
Continuing High Leverage; Future Refinancings............................................................ 69
Recent Net Losses........................................................................................ 69
Lack of Market for New Debt Securities and New Equity Securities......................................... 70
Risks Relating to the Forecasts.......................................................................... 70
Interests of Certain Persons in the Restructuring........................................................ 71
Involvement of Merv Griffin.............................................................................. 72
Certain Federal Income Tax Considerations................................................................ 72
Certain Bankruptcy and Insolvency Considerations......................................................... 73
Certain Considerations Related to Original Issue Discount in the Event of Subsequent Bankruptcy.......... 79
Additional Senior Secured Debt; Subordination............................................................ 80
Security for the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes.......................... 80
Fidelity and TCW Not Fiduciaries......................................................................... 80
Competition.............................................................................................. 81
New Jersey Regulatory Matters............................................................................ 82
Potential Disqualification of Holders by the Casino Control Commission................................... 83
Certain Defaults......................................................................................... 83
Risks Associated with the Paradise Island Business....................................................... 84
THE RESTRUCTURING.......................................................................................... 85
Background............................................................................................... 85
Financial Forecasts for the Company...................................................................... 90
Forecast Financial Data.................................................................................. 90
Assumptions.............................................................................................. 93
Reorganization Values.................................................................................... 97
The Bondholders Support Agreement........................................................................ 100
Overview of the Restructuring............................................................................ 101
Certain Significant Effects of the Restructuring......................................................... 104
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
PAGE NO.
---------
<S> <C>
THE PLAN................................................................................................... 105
Brief Explanation of Chapter 11.......................................................................... 105
Solicitation of Acceptances of the Plan.................................................................. 106
Proponents of the Plan................................................................................... 106
Voting on the Plan....................................................................................... 107
Treatment of Trade Creditors and Employees............................................................... 108
Use of Cash for Operations............................................................................... 108
Other First Day Orders................................................................................... 108
Paradise Island Interim Order............................................................................ 109
Subsidiaries of RII...................................................................................... 110
Classification and Treatment of Claims and Interests..................................................... 110
Summary of Other Provisions of the Plan.................................................................. 117
Confirmation of the Plan................................................................................. 121
Conditions Precedent to Confirmation and Consummation of the Plan........................................ 120
Modifications of the Plan................................................................................ 127
Consent Rights of Fidelity and TCW....................................................................... 128
Alternatives to Consummation of the Plan................................................................. 128
Means for Implementation of the Plan..................................................................... 129
Effects of Plan Confirmation............................................................................. 140
THE SOLICITATION........................................................................................... 142
General.................................................................................................. 142
Persons Entitled to Vote; Voting Record Date............................................................. 142
Voting Deadline; Extensions; Modifications............................................................... 143
Agreements Upon Furnishing Ballots....................................................................... 143
Procedure For Voting on the Plan......................................................................... 143
Waivers of Defects, Irregularities, etc.................................................................. 145
Consents to Termination and Release of Old Security Documents............................................ 146
Withdrawal; Revocation Rights............................................................................ 146
Termination.............................................................................................. 147
Fees and Expenses........................................................................................ 147
Solicitation Agent....................................................................................... 147
Security Ownership of Certain Beneficial Owners and Management........................................... 147
Interests of Certain Persons in the Restructuring........................................................ 148
CAPITALIZATION OF RII...................................................................................... 150
CAPITALIZATION OF PIRL..................................................................................... 151
ACCOUNTING TREATMENT....................................................................................... 152
SELECTED HISTORICAL FINANCIAL DATA......................................................................... 153
RII...................................................................................................... 153
RIH...................................................................................................... 156
PIRL Group............................................................................................... 158
PRO FORMA FINANCIAL DATA................................................................................... 159
RIHF..................................................................................................... 159
RII...................................................................................................... 160
RIH...................................................................................................... 164
PIRL..................................................................................................... 167
MARKET PRICES OF OLD SERIES NOTES.......................................................................... 171
MARKET PRICES OF RII COMMON STOCK.......................................................................... 171
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................... 172
Financial Condition...................................................................................... 172
Results of Operations.................................................................................... 176
First Three Quarters 1993 Compared to First Three Quarters 1992.......................................... 177
Comparison of the Years 1992, 1991 and 1990.............................................................. 178
</TABLE>
15
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<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
First Three Quarters 1993 Compared to First Three Quarters 1992.......................................... 180
Comparison of the Years 1992, 1991 and 1990.............................................................. 181
BUSINESS OF THE COMPANY.................................................................................... 185
Atlantic City............................................................................................ 185
The Bahamas.............................................................................................. 189
Airline Operations....................................................................................... 193
Foreign Operations....................................................................................... 193
Regulation and Gaming Taxes and Fees..................................................................... 194
The Company's Properties................................................................................. 197
MANAGEMENT OF RII.......................................................................................... 199
Directors and Executive Officers......................................................................... 199
Executive Compensation................................................................................... 201
MANAGEMENT OF RIHF......................................................................................... 206
Directors and Executive Officers......................................................................... 206
MANAGEMENT OF RIH.......................................................................................... 206
Directors and Executive Officers......................................................................... 206
Executive Compensation................................................................................... 207
MANAGEMENT OF PIRL......................................................................................... 209
Directors and Executive Officers......................................................................... 209
SECURITY OWNERSHIP......................................................................................... 210
Security Ownership of Certain Beneficial Owners.......................................................... 210
Security Ownership of Management......................................................................... 211
CERTAIN TRANSACTIONS....................................................................................... 211
Transactions with Management and Others.................................................................. 211
DESCRIPTION OF NEW RIHF MORTGAGE NOTES..................................................................... 212
General.................................................................................................. 212
Interest................................................................................................. 212
Sinking Fund Requirements................................................................................ 212
Mandatory Redemption..................................................................................... 212
Optional Redemption...................................................................................... 212
Limitation on Open-Market Purchases...................................................................... 213
Casino Control Act Regulation............................................................................ 213
Intercreditor Agreement.................................................................................. 213
Collateral............................................................................................... 213
Release and Substitution of Collateral................................................................... 214
Limitations on Ability to Realize on Collateral.......................................................... 214
Guaranty................................................................................................. 215
Ranking.................................................................................................. 215
Payments of Net Proceeds of Asset Sales.................................................................. 215
Change of Control........................................................................................ 215
Covenants................................................................................................ 215
Events of Default........................................................................................ 220
Limitation on Consolidation, Merger, Conveyance, Transfer or Lease of Property and Assets................ 223
Discharge of New RIHF Mortgage Note Indenture; Defeasance................................................ 224
Modification of Indenture................................................................................ 225
Trustee.................................................................................................. 225
Reports to Holders....................................................................................... 225
Certain Definitions...................................................................................... 226
DESCRIPTION OF NEW RIHF JUNIOR MORTGAGE NOTES.............................................................. 230
General.................................................................................................. 231
Interest................................................................................................. 231
Sinking Fund Requirements................................................................................ 231
</TABLE>
16
<PAGE>
<TABLE>
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<S> <C>
Mandatory Redemption..................................................................................... 231
Optional Redemption...................................................................................... 231
Limitation on Open-Market Purchases...................................................................... 232
Casino Control Act Regulation............................................................................ 232
Intercreditor Agreement.................................................................................. 232
Collateral............................................................................................... 232
Release and Substitution of Collateral................................................................... 233
Limitations on Ability to Realize on Collateral.......................................................... 233
Guaranty................................................................................................. 233
Ranking.................................................................................................. 234
Payments of Net Proceeds of Asset Sales.................................................................. 234
Change of Control........................................................................................ 234
Covenants................................................................................................ 234
Events of Default........................................................................................ 239
Limitation on Consolidation, Merger, Conveyance, Transfer or Lease of Property and Assets................ 241
Discharge of New RIHF Junior Mortgage Note Indenture..................................................... 243
Modification of Indenture................................................................................ 243
Trustee.................................................................................................. 243
Reports to Holders....................................................................................... 244
Certain Definitions...................................................................................... 244
DESCRIPTION OF RIHF SENIOR FACILITY NOTES.................................................................. 249
General.................................................................................................. 249
Interest................................................................................................. 249
Sinking Fund Requirements................................................................................ 249
Mandatory Redemption..................................................................................... 249
Optional Redemption...................................................................................... 250
Limitation on Open-Market Purchases...................................................................... 250
Casino Control Act Regulation............................................................................ 250
Intercreditor Agreement.................................................................................. 250
Collateral............................................................................................... 250
Release and Substitution of Collateral................................................................... 250
Limitations on Ability to Realize on Collateral.......................................................... 250
Guaranty................................................................................................. 251
Ranking.................................................................................................. 251
Payment of Net Proceeds from Asset Sales................................................................. 251
Change of Control........................................................................................ 251
Covenants................................................................................................ 251
Events of Default........................................................................................ 251
Limitation on Mergers.................................................................................... 251
Discharge of RIHF Senior Facility; Defeasance............................................................ 251
Modification of RIHF Senior Facility..................................................................... 251
Trustee.................................................................................................. 251
Reports to Holders....................................................................................... 251
DESCRIPTION OF NEW EQUITY SECURITIES....................................................................... 252
General.................................................................................................. 252
Casino Control Act Regulation............................................................................ 252
Description of RII Common Stock.......................................................................... 252
Description of RII Class B Common Stock.................................................................. 253
Description of PIRL Ordinary Shares...................................................................... 253
DESCRIPTION OF PARADISE ISLAND PURCHASE AGREEMENT.......................................................... 254
General.................................................................................................. 254
Purchase and Sale of the Shares and the U.S. Paradise Island Assets...................................... 255
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
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---------
<S> <C>
Representations and Warranties........................................................................... 255
Handling of Cash and Working Capital..................................................................... 256
RII Covenants............................................................................................ 257
Additional Agreements.................................................................................... 257
Conditions to Closing.................................................................................... 260
Termination.............................................................................................. 262
Transfer Taxes........................................................................................... 263
Amendment and Waivers.................................................................................... 263
Indemnification.......................................................................................... 263
DESCRIPTION OF PIRL STANDBY DISTRIBUTION AGREEMENT......................................................... 263
General.................................................................................................. 263
Purchase and Sale of the Shares and the U.S. Paradise Island Assets...................................... 264
RII Representations and Warranties....................................................................... 264
Handling of Cash and Working Capital..................................................................... 265
RII Covenants............................................................................................ 265
Additional Agreements.................................................................................... 266
Conditions to Closing.................................................................................... 267
Termination.............................................................................................. 268
Transfer Taxes........................................................................................... 269
Amendment and Waivers.................................................................................... 269
Indemnification.......................................................................................... 269
DESCRIPTION OF THE CAESARS PAYMENT......................................................................... 269
DESCRIPTION OF DEFERRED CASH............................................................................... 270
DESCRIPTION OF EXCESS CASH................................................................................. 270
DESCRIPTION OF LITIGATION TRUST UNITS...................................................................... 270
DESCRIPTION OF NET RESERVED CASH........................................................................... 271
DESCRIPTION OF NET PLAN CONSUMMATION CASH AND PLAN EXPENSES................................................ 272
DESCRIPTION OF GRIFFIN WARRANTS............................................................................ 273
General.................................................................................................. 273
Exercise of Griffin Warrants............................................................................. 273
Adjustments.............................................................................................. 273
Limitation on Right to Vote or Receive Dividends......................................................... 274
Certain Definitions...................................................................................... 274
DESCRIPTION OF OLD SERIES NOTES............................................................................ 275
Certain Terms of the Old Series A Notes.................................................................. 276
Certain Terms of the Old Series B Notes.................................................................. 276
Mandatory Redemption..................................................................................... 277
Optional Redemption...................................................................................... 277
Limitation on Open-Market Purchases...................................................................... 277
Casino Control Act Regulation............................................................................ 277
Put Option Upon Change of Control........................................................................ 277
Collateral............................................................................................... 278
Negative Pledge Covenant................................................................................. 279
Release and Substitution of Collateral................................................................... 279
Limitations on Ability to Realize on Collateral.......................................................... 280
Guaranty................................................................................................. 281
Ranking.................................................................................................. 281
Payment of Net Proceeds of Asset Sales................................................................... 281
Restrictive Covenants.................................................................................... 281
Events of Default........................................................................................ 281
Limitation on Mergers.................................................................................... 282
Discharge of Old Series Note Indenture; Defeasance....................................................... 283
Modification of Indenture................................................................................ 283
</TABLE>
18
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<TABLE>
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<S> <C>
Trustee.................................................................................................. 283
Reports to Holders....................................................................................... 283
DESCRIPTION OF SHOWBOAT NOTES.............................................................................. 283
General.................................................................................................. 284
Interest................................................................................................. 284
Optional Redemption...................................................................................... 284
Casino Control Act Regulation............................................................................ 285
Collateral............................................................................................... 285
Certain Covenants........................................................................................ 286
Events of Default........................................................................................ 287
Modification of Indenture................................................................................ 287
Reports to Holders....................................................................................... 287
Limitation on Mergers.................................................................................... 287
Discharge of Showboat Note Indenture; Defeasance......................................................... 288
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.................................................................. 288
Treatment of New Debt Securities as Debt of RIH for Federal Income Tax Purposes.......................... 290
Classification of New Debt Securities as Debt Rather Than Equity......................................... 290
Exchange of Old Series Notes............................................................................. 291
OID With Respect to the New Debt Securities.............................................................. 292
Consequences if the New Debt Securities are Issued with OID.............................................. 294
Consequences of the Rights to Receive Payments from Deferred Cash........................................ 295
Consequences of Rights to Receive Payments from Net Reserved Cash and Net Plan Consummation Cash......... 296
Consequences of Holding the RII Common Stock and the RII Class B Common Stock............................ 296
Consequences of Holding the PIRL Ordinary Shares......................................................... 296
Certain Bahamian Tax Considerations...................................................................... 297
Sale, Exchange or Redemption............................................................................. 297
Market Discount.......................................................................................... 298
Tax Consequences to the Company.......................................................................... 298
Potential Application of High Yield Debt Obligation Rules................................................ 302
Backup Withholding....................................................................................... 302
APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS TO RESALES OF SECURITIES................................ 302
Issuance of Securities Under the Plan.................................................................... 303
Transfers of Securities.................................................................................. 303
Certain Transactions by Stockbrokers..................................................................... 304
Shares Eligible for Future Sale.......................................................................... 304
LEGAL MATTERS.............................................................................................. 304
EXPERTS.................................................................................................... 305
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................................................... F-1
APPENDIX A -- Plan of Reorganization....................................................................... A-1
APPENDIX B -- Liquidation Analyses......................................................................... B-1
APPENDIX C -- Amended RII Certificate of Incorporation..................................................... C-1
APPENDIX D -- Amended RII By-laws.......................................................................... D-1
</TABLE>
19
<PAGE>
INDEX OF CERTAIN DEFINED TERMS
____
<TABLE>
<CAPTION>
TERM PAGE
<S> <C>
1990 Letter Ruling................... 300
1990 Stock Option Plan............... 1
1990 Stock Options................... 1
1994 Stock Option Plan............... 7
Acceptance........................... 1
Acquisition Proposal................. 257
ACS.................................. 81
Adjusted Working Capital............. 2
Administrative Claim................. 38
Allowed Amount....................... 37
Allowed Claim........................ 37
Allowed Interest..................... 37
Alvarez & Marsal..................... 31
Amended RII By-laws.................. 61
Amended RII Certificate of
Incorporation....................... 61
AMEX................................. 8
AMT.................................. 96
Annual Limitation.................... 300
ANTL................................. 25
Available Cash....................... 2
Awards............................... 135
Bankruptcy Code...................... 1
Bankruptcy Court..................... 9
Bankruptcy Exception................. 301
Bankruptcy Rules..................... 1
Bear Stearns......................... 31
Best Interests Test.................. 121
Board of Education................... 190
Bondholders Support Agreement........ 100
Caesars Payment...................... 2
Carnival............................. 30
Cash Collateral...................... 108
Casino Control Act................... 82
Casino Control Commission............ 10
CFC.................................. 297
Change of Control Put Option......... 277
Class B Directors.................... 8
Class B Triggering Event............. 8
Closing Date Balance Sheet........... 256
Closing Date Operations Statement.... 256
COD.................................. 73
Collateral Account................... 48
<CAPTION>
TERM PAGE
<S> <C>
Combination Transaction.............. 51
Commission........................... 12
Company.............................. 1
Confirmation Date.................... 123
Confirmation Order................... 9
cram-down............................ 76
CRDA................................. 189
Crystal Palace....................... 30
Deferred Cash........................ 3
Disbursing Agent..................... 124
disqualifying disposition............ 130
Distribution Date.................... 3
Distribution Record Date............. 2
DLJ.................................. 31
EBITDA............................... 93
Effective Date....................... 2
Eligible Participants................ 128
ERISA................................ 131
Escrow Agent......................... 253
Escrow Agreement..................... 253
ESS.................................. 62
Excess Cash.......................... 2
Exchange............................. 282
Exchange Act......................... 8
Excluded Employees................... 254
executory contract................... 114
Feasibility Test..................... 118
Fidelity............................. 5
Final Order.......................... 133
Force Majeure Event.................. 256
FPHC................................. 291
GAAP................................. 93
Gaming Act........................... 83
Great Island Property................ 190
GRH.................................. 29
GRI.................................. 1
GRI Common Stock..................... 1
GRI Guaranty......................... 1
GRI Pledge Agreement................. 50
GRI Priority Claim................... 112
GRI Releases......................... 85
Griffco.............................. 29
Griffin Group........................ 7
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
Griffin Group Note................... 7
<S> <C>
Griffin Group Note Proceeds..........
Griffin Note......................... 30
GRI Release Shares................... 85
Griffin Warrants..................... 7
Hanlon Employment Agreement.......... 59
Hanlon Termination Agreement......... 59
HCB.................................. 31
Hill and Knowlton.................... 60
Holding company...................... 187
IHC.................................. 25
Incentive Option..................... 128
Indenture Trustee Charging Liens..... 108
Information Statement/Prospectus..... 1
Insider.............................. 131
Intercontinental..................... 193
Intercreditor Agreement.............. 206
investment obligation................ 189
ISI.................................. 25
January Enterprises.................. 193
Liquidation Analysis................. 73
Litigation Claims.................... 264
Litigation Trust..................... 30
Litigation Trust Agreement........... 86
Litigation Trust Distributions....... 3
Litigation Trust Units............... 3
Litigation Trustee................... 30
Losses............................... 257
Market Discount...................... 292
MD&A................................. 165
NASDAQ............................... 8
Net Plan Consummation Cash........... 3
Net Reserved Cash.................... 3
New Debt Securities.................. 8
New Equity Securities................ 8
New Griffin Services Agreement....... 7
New Jersey bankruptcy court.......... 29
New Proposed Regulations............. 286
New RIHF Junior Mortgage Indenture... 47
New RIHF Junior Mortgage Notes....... 2
New RIHF Junior Mortgage Note
Trustee............................. 224
New RIHF Mortgage Indenture.......... 47
New RIHF Mortgage Notes.............. 2
<CAPTION>
TERM PAGE
<S> <C>
New RIHF Mortgage Note Trustee....... 205
New RIHF Mortgage Trust Estate....... 6
New RIHF Junior Mortgage Trust
Estate.............................. 7
NOL.................................. 72
Non-Operating Real Property.......... 25
NPO.................................. 62
OID.................................. 71
Old Chapter 11 Cases................. 29
Old Debtors.......................... 29
Old Effective Date................... 30
Old Griffin Services Agreement....... 63
Old PIK Payments..................... 31
Old Plan............................. 29
Old Plan Disputed Claims............. 85
Old Proposed Regulations............. 286
Old Security Documents............... 51
Old Series A Notes................... 1
Old Series B Notes................... 1
Old Series Note Indenture............ 7
Old Series Notes..................... 1
Option Committee..................... 128
Old Series Note Trustee.............. 50
Overbid Transaction.................. 78
Paradise Employee.................... 254
Paradise Island Agreements........... 185
Paradise Approval Order.............. 121
Paradise Island Business............. 1
Paradise Island Interim Order........ 104
Paradise Island Purchase Agreement... 2
Paradise Island Resorts.............. 25
Paradise Island Shares............... 1
Payments-In-Kind..................... 6
PBI.................................. 25
PEL.................................. 25
Pending Contingent Debt Regulations.. 289
Petition Date........................ 37
PFIC................................. 291
PIA.................................. 25
PIB.................................. 25
PIL.................................. 25
PIRL................................. 1
PIRL Ordinary Shares................. 2
PIRL Group........................... 65
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
PIRL Spin-Off........................ 1
<S> <C>
PIRL Standby Distribution Agreement.. 2
PIVI................................. 25
Plan................................. 1
Plan Consummation Cash............... 2
Post Termination Sale................ 253
Priority Tax Claim................... 108
Proposed Contingent Debt
Regulations......................... 284
PSS.................................. 25
Purchase Price....................... 252
Put Right............................ 4
QSIPs................................ 287
Qualified Third Party................ 252
Radisson............................. 31
Registrants.......................... 12
Registration Statement............... 12
Requisite Acceptances................ 9
Reserved Cash........................ 2
Resorts Casino Hotel................. 6
Restoration Event.................... 293
Restructuring........................ 1
RIB.................................. 1
RIB Collateral....................... 50
RIB Collateral Assignment Agreement.. 50
RIB Gain............................. 293
RIB Mortgage......................... 273
RIB Note............................. 273
RIB Property......................... 273
RIB Stock............................ 50
RIB Subsidiary Guarantors............ 273
RIB Subsidiary Guaranty Agreements... 273
RIDI................................. 25
RIFI................................. 29
RIFI Releases........................ 85
RIFI Release Cash.................... 86
RIH.................................. 1
RIH Guaranty Mortgage................ 49
RIH Junior Guaranty Mortgage......... 49
RIH Junior Mortgage.................. 50
RIH Junior Mortgage Guaranty......... 2
RIH Junior Promissory Note........... 6
RIH Mortgage......................... 50
RIH Mortgage Guaranty................ 2
RIH Notes............................ 49
<CAPTION>
TERM PAGE
<S> <C>
RIH Pledge Agreement................. 50
RIH Promissory Note.................. 6
RIH Senior Facility Guaranty......... 6
RIH Senior Facility Mortgage......... 243
RIH Senior Facility Note............. 6
RIHF................................. 1
RIHF Senior Facility................. 5
RIHF Senior Facility Note
Indenture........................... 6
RIHF Senior Facility Notes........... 5
RIHF Senior Facility Trustee......... 242
RIHF Senior Facility Trust Estate.... 6
RII.................................. 1
RII Class B Common Stock............. 2
RII Common Stock..................... 1
RII Intercompany Claim............... 4
RII Mortgage......................... 50
RII Pledge Agreement................. 50
RII Priority Claim................... 112
RII Property......................... 50
RII Paradise Assets.................. 1
RII Real Estate Assets............... 1
RII Retained Cash.................... 2
RII Summary Compensation Table....... 205
RRII................................. 25
Rum Point............................ 197
Salomon Brothers..................... 31
Securities Act....................... 5
Service.............................. 73
Settlement Agreement................. 271
SFAS 96.............................. 155
SFAS 109............................. 166
Showboat Casino...................... 81
Showboat Lease....................... 81
Showboat Mortgage.................... 285
Showboat Note Trustee................ 283
Showboat Notes....................... 30
Showboat Property.................... 285
SIHL................................. 1
SIHL Aggregate Cash Purchase Price... 4
SIHL Buyer Expense Escrow............ 4
SIHL Closing Date.................... 2
SIHL Escrow.......................... 5
SIHL's Escrowed Property............. 253
SIHL Expense Reimbursement........... 252
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
SIHL Prospectus...................... 5
<S> <C>
SIHL Sale............................ 1
SIHL Series A Shares................. 2
SIHL Subscription Agreement.......... 250
SIIL................................. 4
SIIL Subscription Agreement.......... 250
SIIL Subscription Amount............. 4
Solicitation......................... 1
SOP 90-7............................. 145
Taj Mahal............................ 79
Tax Code............................. 64
TCW.................................. 7
TGC Holdings......................... 62
TIA.................................. 5
TIN.................................. 296
<CAPTION>
TERM PAGE
<S> <C>
Trading Testing Period............... 286
Trump Parties........................ 264
Trump Partnership.................... 29
Trust Beneficiaries.................. 264
Union................................ 250
Union Contract Dispute............... 250
Union Contract Dispute Amount........ 250
Unit................................. 2
United States Holder................. 290
United States Trustee................ 113
Unsurrendered Public Debt Claims..... 85
U.S. Government Obligations.......... 217
U.S. Paradise Island Subsidiaries.... 25
Voting Deadline...................... 9
Voting Record Date................... 1
</TABLE>
23
<PAGE>
SUMMARY
____THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS CONTAINED ELSEWHERE IN THIS INFORMATION
STATEMENT/PROSPECTUS. CERTAIN TERMS USED IN THE FOLLOWING SUMMARY AND ELSEWHERE
IN THIS INFORMATION STATEMENT/PROSPECTUS ARE DEFINED ON THE COVER PAGE OF THIS
INFORMATION STATEMENT/PROSPECTUS.
GENERAL
____RII and GRI, upon the terms and subject to the conditions set forth in this
Information Statement/Prospectus and the accompanying forms of Ballot and Master
Ballot, hereby solicit from (a) each owner of Old Series Notes (and the
beneficiary of the related GRI Guaranty endorsed thereon), (b) each owner of RII
Common Stock, (c) RII, as the owner of the GRI Common Stock, (d) RII, as the
holder of the RII Intercompany Claim against GRI, and (e) each holder of 1990
Stock Options, each as of the close of business in New York City on the Voting
Record Date (January 10, 1994), an Acceptance of the Plan of RII and GRI to be
filed pursuant to chapter 11 of the Bankruptcy Code and the Bankruptcy Rules.
From each holder of Old Series Notes (and beneficiary of the related GRI
Guaranty endorsed thereon), RII and GRI hereby solicit consents to terminate and
release the Old Security Documents so that certain of the collateral covered
thereby, including the Resorts Casino Hotel, can be pledged to secure the New
Debt Securities to be issued pursuant to the Plan.
____Consummation of the Plan on the Effective Date will result in a
restructuring of RII's debt and equity capitalization in the manner described
below and the consummation of certain other transactions, including either the
SIHL Sale or the PIRL Spin-Off. See "The Restructuring".
____The Solicitation will expire at 5:00 p.m., New York City time, on
[_____________], 1994, unless RII and GRI, in their sole discretion, extend the
Solicitation to a later time and date. RII and GRI can extend the Solicitation
for that period of time necessary to obtain the Requisite Acceptances. As a
practical matter, however: (a) without the consent of SIHL, the Solicitation
cannot be extended beyond February 15, 1994, the date that Chapter 11 Cases must
be filed (and the Solicitation thereby terminated) by RII and GRI to avoid
terminating SIHL's obligations under the Paradise Island Purchase Agreement; (b)
if RII and GRI and unable to meet their payment obligations under the Old Series
Notes on April 15, 1994, foreclosure or other collection actions may require RII
and GRI to file chapter 11 cases and thereby terminate the Solicitation; and (c)
RII and GRI currently intend to extend the Solicitation only if the
Restructuring as proposed in the Plan is achievable if the Solicitation is
extended and there is a likelihood that the extension will facilitate receipt of
the Requisite Acceptances.
____Even if the Requisite Acceptances are obtained, the Plan will not be
consummated, and the Restructuring will not occur, unless the Plan is confirmed
as to both RII and GRI by the Bankruptcy Court and certain other conditions are
satisfied. Subject to the approval of Fidelity and TCW, so long as the funds and
accounts managed by either of them hold in the aggregate at least 20% of the Old
Series Notes, RII and GRI at any time, without notice, without leave of or order
of the Bankruptcy Court and without any formal action other than proceeding to
consummate the Plan, may waive any condition precedent to confirmation or
consummation of the Plan, other than the condition requiring the entry of a
Confirmation Order which has not been stayed. As a practical matter, although
the condition to confirmation requiring the entry of an order declaring that, as
of the Effective Date, the Old Security Documents shall be deemed released and
terminated is waivable, the transactions contemplated by the Plan cannot be
consummated if the Old Security Documents are not released and terminated. See
"The Plan -- Conditions Precedent to Confirmation and Consummation of the Plan".
RII and GRI expressly reserve the right, at any time and from time to time, to
modify the terms of the Solicitation or the Plan (subject to compliance with the
requirements of section 1127 of the Bankruptcy Code and to the approval of
Fidelity and TCW, so long as the funds and accounts managed by either of them
hold in the aggregate at least 20% of the Old Series Notes). See "The Plan --
Modifications of the Plan".
24
<PAGE>
____EACH OF FIDELITY AND TCW, SOLELY ON BEHALF OF FUNDS AND ACCOUNTS MANAGED BY
THEM, HAS NEGOTIATED EXTENSIVELY WITH RII AND GRI REGARDING THE TERMS OF THE
RESTRUCTURING. All information contained in the Information Statement/Prospectus
other than information relating to Fidelity and TCW and the ownership of Old
Series Notes by Fidelity or TCW, or funds and accounts managed by either of
them, was prepared and furnished by RII and GRI. Fidelity and TCW are not
responsible for the accuracy, completeness, nature and form of presentation of
such information other than information related to Fidelity and TCW and the
holdings respectively managed by them. See "The Restructuring -- Background".
THE REGISTRANTS
____RESORTS INTERNATIONAL, INC.
____RII is a holding company which, through its subsidiaries, is principally
engaged in the ownership and operation of the Resorts Casino Hotel in Atlantic
City, New Jersey, and the Paradise Island Resort & Casino, the Ocean Club Golf &
Tennis Resort and the Paradise Paradise Beach Resort (collectively, the
"Paradise Island Resorts"), all located on Paradise Island, The Bahamas. In
addition, RII owns land in Atlantic City at various sites (the "Non-Operating
Real Property"), approximately 90 acres of which are available for development.
RII was incorporated in 1958 and is a Delaware corporation.
____RESORTS INTERNATIONAL HOTEL FINANCING, INC.
____RIHF was incorporated in Delaware in 1993 for the purpose of issuing the New
RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes pursuant to the Plan.
RIHF also will enter into the RIHF Senior Facility with Fidelity. RIHF is a
wholly owned subsidiary of RII.
____RESORTS INTERNATIONAL HOTEL, INC.
____RIH is the subsidiary of RII that owns and operates all the property and
improvements of the Resorts Casino Hotel. The Resorts Casino Hotel is located on
the Boardwalk in Atlantic City, New Jersey, and has approximately 670 guest
rooms, a 60,000-square-foot casino and related facilities. RIH was incorporated
in 1903 and is a New Jersey corporation. RIH will issue the RIH Senior Facility
Guaranty, the RIH Mortgage Guaranty and the RIH Junior Mortgage Guaranty.
____P. I. RESORTS LIMITED
____PIRL, a wholly owned subsidiary of RII, was incorporated in the Commonwealth
of The Bahamas in 1993 for the purpose of effecting the PIRL Spin-Off if the
SIHL Sale is not consummated on or prior to the Effective Date. If the PIRL
Spin-Off is effected, then (a) PIRL will acquire from RII all the capital stock
of RIB and (b) subsidiaries of PIRL will purchase the RII Real Estate Assets and
substantially all the assets of (i) Resorts International Disbursement, Inc.
("RIDI"), (ii) Paradise Island Vacations, Inc. ("PIVI"), (iii) Resorts
Representation International, Inc. ("RRII"), (iv) International Suppliers, Inc.
("ISI"), (v) Paradise Island Airlines, Inc. ("PIA"), and (vi) ANTL, Inc.
("ANTL"), and will assume substantially all the non-intercompany liabilities
relating to such assets, in exchange for the PIRL Ordinary Shares. RIDI, PIVI,
RRII, ISI, PIA and ANTL are all Florida corporations and are herein called the
"U.S. Paradise Island Subsidiaries".
____RIB is the holding company for the Paradise Island assets located in The
Bahamas, which are held in the following corporations organized under the laws
of the Commonwealth of The Bahamas: (a) Island Hotel Company Limited ("IHC");
(b) Paradise Enterprises Limited ("PEL"); (c) Paradise Island Bridge Management
Company Limited ("PIB"); (d) Paradise Island Limited ("PIL"); (e) Paradise Beach
Inn, Limited ("PBI"); and (f) Paradise Security Services Limited ("PSS"). On the
date hereof, RIB is a subsidiary of GRI. The Paradise Island Resort & Casino
includes two hotel towers totaling 1,186 guest rooms, the 30,000 square-foot
Paradise Island casino and related facilities. The Ocean Club Golf & Tennis
Resort is an exclusive 71-room hotel with premium room rates. The Paradise
Paradise Beach Resort is a 100-room hotel complex that offers more moderately
priced accommodations. RIB and its subsidiaries also own and operate convention
facilities, shops, restaurants, bars and lounges, tennis courts, an 18-hole golf
course, swimming pools, approximately six
25
<PAGE>
miles of beach and water frontage and other resort facilities on Paradise
Island. RIB and its subsidiaries also own approximately 219 acres of land not
used in the operation of the Paradise Island Resorts. The activities of the U.S.
Paradise Island Subsidiaries support the operations of the Paradise Island
Resorts.
____The principal executive offices of RII, RIHF and RIH are located at 1133
Boardwalk, Atlantic City, New Jersey 08401. The telephone number of RII, RIHF
and RIH is (609) 344-6000. The principal executive offices of PIRL are located
at P.O. Box N-4777, Paradise Island, Nassau, The Bahamas. The telephone number
of PIRL is (809) 363-3000.
PRE-AND POST-RESTRUCTURING OWNERSHIP STRUCTURES
____Set forth below is a chart summarizing the ownership structure of RII, GRI
and certain related entities as they currently exist.
[GRAPHIC]
26
<PAGE>
____Set forth below is a chart summarizing the ownership structure of RII, GRI
and certain related entities, and SIHL and certain related entities, as they
will exist after giving effect to the Restructuring assuming that the SIHL Sale
has been effected.
[GRAPHIC]
27
<PAGE>
____Set forth below is a chart summarizing the ownership structure of RII, GRI
and certain related entities, and PIRL and certain related entities, as they
will exist after giving effect to the Restructuring assuming that the PIRL
Spin-Off has been effected.
[GRAPHIC]
28
<PAGE>
BACKGROUND OF THE RESTRUCTURING
____In 1983, the Company commenced construction of the Taj Mahal project.
Although initially scheduled for completion in late 1986, the project
experienced cost overruns and construction delays and remained unfinished at the
time it was sold to a partnership controlled by Donald Trump (the "Trump
Partnership") in late 1988. By March 31, 1988, RII's total indebtedness for
borrowed funds exceeded $725,000,000.
____By the mid-1980s, the Company's position in the Atlantic City casino/hotel
industry was severely disadvantaged. In an atmosphere of increased competition,
the preoccupation of the Company's management with the Taj Mahal and several
bids for control of the Company caused the Company's then existing management to
neglect the Resorts Casino Hotel and allow its facilities to deteriorate and to
fail to respond to new trends in the industry.
____In late 1988, through a stock purchase and merger, Griffco Resorts Holding,
Inc., a corporation then wholly owned by Merv Griffin ("Griffco"), acquired RII
from Donald Trump, the then Chairman of the RII Board of Directors and its
controlling shareholder, and RII's other shareholders. The aggregate cost of
this acquisition was approximately $296,207,750, in cash, and was principally
funded by means of Merv Griffin's $50,000,000 investment in Griffco and the
issuance of two series of public debt by GRI.
____Immediately after Griffco's acquisition of RII, the Company entered into an
agreement pursuant to which it sold certain real and personal assets, including
the Taj Mahal, to the Trump Partnership for $273,000,000 in cash and the
assumption of approximately $19,000,000 of liabilities. In connection with the
foregoing transactions, RII also terminated that certain "Comprehensive Services
Agreement" which RII had entered into with the Trump Hotel Corporation and paid
such corporation an aggregate amount of $63,689,750 for such termination and
fees still owed under such agreement.
____In the period following the acquisition of RII from Donald Trump, the
Company experienced a substantial deterioration in its results of operations
from both the Resorts Casino Hotel and the Paradise Island Business. The
decrease in earnings of the Resorts Casino Hotel was attributable largely to
increased competition and, among other things, the disruption of operations and
patron and employee relationships caused by ongoing renovations and the
Company's financial difficulties. RII and its affiliates issued approximately
$600,000,000 of subordinated debentures prior to the acquisition by Griffco,
principally to fund the construction of the Taj Mahal, and issued $325,000,000
of additional notes to fund the acquisition. As a result, after certain
repayments, the Company had approximately $911,000,000 of long-term debt
outstanding in August 1989. In August 1989, faced with deteriorating results of
operations and substantial debt service, the Company announced a moratorium on
the payment of interest on its outstanding public debt.
____In late 1989, the Company embarked upon recapitalization negotiations with
two unofficial committees representing the holders of the Company's outstanding
public debt in respect of which the Company had declared the interest payment
moratorium. For various reasons, however, RII came to believe that it would not
be possible to achieve, on a solely out-of-court basis, the comprehensive
restructuring needed to assure continued viability. Moreover, the possibility of
an out-of-court settlement was adversely affected when involuntary petitions for
relief under chapter 11 of the Bankruptcy Code were filed against RII and its
former subsidiary, Resorts International Financing, Inc.("RIFI"), in November
1989.
____On December 22, 1989, RII and RIFI filed consents to the involuntary
petitions and GRI and its then immediate parent, Griffin Resorts Holding Inc.
("GRH"), another former subsidiary of RII, filed voluntary petitions for relief
under chapter 11 of the Bankruptcy Code (collectively, the "Old Chapter 11
Cases") in the United States Bankruptcy Court for the District of New Jersey
(the "New Jersey bankruptcy court"). RII, RIFI, GRI and GRH (collectively, the
"Old Debtors") filed the Second Amended Joint Plan of Reorganization dated as of
May 31, 1990 (the "Old Plan"), which was
29
<PAGE>
confirmed by the New Jersey bankruptcy court in August 1990. On September 17,
1990 (the "Old Effective Date"), all conditions to the effectiveness of the Old
Plan were either met or waived and the Old Plan became effective.
____Pursuant to the Old Plan, the previously outstanding public debt issued by
RII, RIFI and GRI was canceled, the Old Debtors were discharged from all other
claims arising prior to the commencement of the Old Chapter 11 Cases and all
previously outstanding shares of stock of RII were canceled. In exchange for
such previously outstanding public debt, RII issued (i) debt securities
consisting of $187,500,000 principal amount of the Old Series A Notes,
$137,500,000 principal amount of the Old Series B Notes and $105,333,000
principal amount of First Mortgage Non-Recourse Pass-Through Notes due June 30,
2000 (the "Showboat Notes") and (ii) 15,100,000 shares of RII Common Stock.
____Further, pursuant to the Old Plan, Merv Griffin acquired 4,400,000 shares of
RII Common Stock for which RII received $12,345,000 in cash and an $11,000,000
promissory note which bore interest at the rate of 8% per year (the "Griffin
Note") secured by a bank letter of credit. Merv Griffin entered into a two-year
contract with RII dated as of September 17, 1990, pursuant to which RII was
granted a non-exclusive license to use his name and likeness to promote its
facilities and operations, and Merv Griffin agreed to act as Chairman of the
Board of RII and to provide certain other services without compensation.
____The Old Plan further provided for the establishment of a litigation trust
(the "Litigation Trust") to pursue, for the benefit of certain classes of
general unsecured creditors of the Old Debtors, all claims the Old Debtors or
certain of their affiliates may have had against Donald J. Trump, the former
Chairman of the Board and controlling shareholder of RII, and certain of his
affiliates. In October 1990, RII funded the Litigation Trust by depositing with
the trustee under the Litigation Trust (the "Litigation Trustee") the sum of
$5,000,000 to cover expenses of the Litigation Trustee in pursuing such claims,
with any unused balance of such amount to be distributed to the beneficiaries of
the Litigation Trust. Under the Old Plan, the beneficiaries of the Litigation
Trust received the Litigation Trust Units to represent their beneficial
interests. Pursuant to the Old Plan, the holders of 1,785,000 Litigation Trust
Units (out of a total of at least 10,000,000 Litigation Trust Units) had the
right to require RII to purchase their Litigation Trust Units for approximately
$3,880,000 in the aggregate if certain conditions were not met by September 17,
1991. The $3,880,000 was deposited with the Litigation Trustee in October 1990.
The requisite conditions were not met and, as a result, approximately 1,760,000
Litigation Trust Units were purchased by RII in October 1991 for $3,831,000. See
"Description of Litigation Trust Units".
____RII's ability to pay cash interest on the Old Series Notes, and the ultimate
repayment of the Old Series Notes at maturity, was premised in large measure
upon RII's ability to sell the Paradise Island Business (excluding PIA) at its
then-estimated value, and to generate substantial excess cash flow from the
Company's operations and the contemplated sale on acceptable terms of the
Non-Operating Real Property. The recession in the United States, and more
specifically in the northeast sector, the acute competition in Atlantic City and
The Bahamas, and the impact of the conflict in the Persian Gulf in early 1991
and its effect on transportation and tourism, all adversely affected RII's
ability to sell the Paradise Island Business at its then-estimated value and to
generate substantial excess cash flow from operations. The Old Plan projected
the Company's excess cash flow from operations for the initial two years of the
Old Plan, net of capital expenditures and prior to the sale of the Paradise
Island Business, to be $8,300,000. The Company's actual excess cash flow was
$2,476,000. The Old Plan also contemplated additional cash flow in the amount of
$15,000,000 from the sale of the Non-Operating Real Property in the initial two
years of the Old Plan. However, such sales were never accomplished. Due to these
and other factors, RII has never paid interest in cash on the Old Series Notes.
____In addition, in late 1991 Carnival Cruise Lines, Inc. ("Carnival") announced
its plan to dispose of its Crystal Palace Resort and Casino (the "Crystal
Palace"), the Company's principal competition in The Bahamas. Carnival reported
operating losses on the Crystal Palace in excess of $60,000,000 in fiscal 1990
and 1991 combined, and in fiscal 1991 Carnival's investment in the Crystal
Palace was
30
<PAGE>
written down to its estimated net realizable value of approximately $90,000,000.
In early 1992, a portion of the Crystal Palace complex, which Carnival had been
leasing from The Hotel Corporation of The Bahamas ("HCB"), a corporation owned
by the government of the Commonwealth of The Bahamas, was returned to HCB. That
portion is now the HCB-owned Radisson Cable Beach Casino & Golf Resort (the
"Radisson"), which has 679 guest rooms. RII believes that the announcement of
the financial problems at Crystal Palace and the arrangements described above
have had a further adverse impact on RII's ability to sell the Paradise Island
Business. Carnival continues to operate the remainder of the Crystal Palace
complex under the Crystal Palace name and, in October 1993, announced that it
had signed an agreement in principle to sell an 81% interest in such complex to
a group of German investors. This investor group has announced that it plans to
increase the marketing of the Crystal Palace complex in Europe and will invest
additional capital in the complex to establish it as a high-end resort
destination. Although there can be no assurance that such sale will be
completed, an upgraded Crystal Palace complex may adversely affect the Company's
operations in The Bahamas.
____In addition to the Crystal Palace casino, the Bahamian government is
obligated to facilitate the grant of a casino license to the operators of the
Ramada Resort situated on the southwestern end of New Providence Island. The
Bahamian government is also obligated to support a proposal for the operation of
a slot machine casino at the Radisson resort on Cable Beach.
____RII's Business Plan and Financial Projections included in RII's Disclosure
Statement relating to the Old Plan stated that RII believed that the net
proceeds from the sale of the Paradise Island Business (excluding PIA) "could
range from $250,000,000 to $300,000,000". After interviewing several investment
banking firms, the Company retained Salomon Brothers Inc ("Salomon Brothers") on
October 29, 1990 to prepare sales materials and formally offer the Paradise
Island Business for sale. On August 1, 1991, the Company received an offer to
buy the Paradise Island Business for a purchase price of $160,000,000. The offer
was conditioned upon, among other things, satisfactory completion of due
diligence and execution of definitive documentation. Subsequent discussions with
the prospective purchaser did not lead to a definitive agreement. The Company
received no other offer to purchase the Paradise Island Business prior to the
proposed Restructuring. Based on the current economic climate, the events
described above regarding the Crystal Palace, the very limited amount of
interest indicated by prospective purchasers of the Paradise Island Business
and, in particular, the estimated net proceeds of the only offer received prior
to the proposed Restructuring ($150,000,000), RII does not believe that proceeds
of the magnitude originally contemplated in 1990 will be realizable prior to the
maturity date of the Old Series Notes on April 15, 1994.
____To facilitate the Company's capital expenditure program, which management
believes was necessary for the Company's operating properties to remain
competitive, and to conserve cash, RII elected to satisfy its interest
obligations on the Old Series Notes by issuing additional Old Series Notes (the
"Old PIK Payments") on October 15, 1990 and on April 15 and October 15 of 1991,
1992 and 1993. The aggregate face amount of Old Series Notes issued in lieu of
cash for the payment of interest on these seven payment dates was approximately
$156,000,000, which increased the outstanding principal amount of the Old Series
Notes to approximately $482,000,000. If there are no principal retirements, the
total obligation due on the Old Series Notes at maturity on April 15, 1994 will
be approximately $518,000,000.
____Although the Company's liquidity is satisfactory until the maturity of the
Old Series Notes in April 1994, the Company must reduce its debt to a level that
can be supported by cash flow reasonably anticipated on a continuing basis. The
effort to achieve that reduction through asset sales in the current economic
environment has been unsuccessful. The Company therefore attempted to develop
financial alternatives which could be coupled with continuing efforts to sell
the Paradise Island Business. The Company retained Bear, Stearns & Co. Inc.
("Bear Stearns"), Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ")
and Alvarez & Marsal, Inc. ("Alvarez & Marsal") on October 18, 1991, February
12, 1992 and March 1, 1992, respectively, as financial advisers to assist in the
development and analysis of financial alternatives as well as the development of
a long-term financial plan. Beginning in October 1991, the Company and its
financial and legal advisors examined and
31
<PAGE>
considered a number of financial alternatives, including continued pursuit of a
cash sale of all or a portion of the Paradise Island Business, a spin-off of the
Paradise Island Business, a transfer of the Paradise Island Business to the
holders of the Old Senior Notes in the context of a restructuring of the Old
Series Notes, and pursuit of an equity investment in the Company or the Paradise
Island Business. The analysis indicated, among other things, that a total debt
restructuring was necessary and that the separation of the Paradise Island
Business from the rest of the Company was advantageous and could be a key
component of a total financial restructuring of RII. In addition, the analysis
indicated that accomplishing the separation through a cash sale or a combination
cash and stock sale of the Paradise Island Business could provide additional
advantages if a satisfactory sale price could be obtained.
____Acting on behalf of the Company, Salomon Brothers in January 1992 provided
an affiliate of SIHL, World Leisure Group Limited, with information concerning
the Paradise Island Business. From time to time thereafter, representatives of
SIHL's affiliate expressed interest in buying all or a portion of the Paradise
Island Business but made no formal offers. Moreover, the discussions
contemplated prices which could only be considered by the Company in the context
of a restructuring of the Old Series Notes. In June 1993, affiliates of SIHL
began a series of discussions with representatives of Fidelity and TCW which
culminated in the negotiation of the Paradise Island Purchase Agreement.
____During the summer of 1992, RII began a series of discussions with Fidelity
and TCW, which represented to RII that various funds and accounts managed
separately by each of them owned in the aggregate over 60% of the Old Series
Notes. These discussions centered on RII's unsuccessful efforts to sell the
Paradise Island Business and the implications of such failure with respect to
the payment of the Old Series Notes upon their stated maturity in April 1994.
These discussions resulted in a preliminary agreement among RII, Fidelity and
TCW on December 14, 1992, which outlined a framework for the restructuring of
RII's business and obligations with respect to the Old Series Notes.
____To facilitate further discussions with Fidelity and TCW, RII agreed to pay
the cost of their retention of independent counsel. Negotiations resulted in the
agreement by Fidelity and TCW to the Restructuring described in this Information
Statement/Prospectus. The negotiations were frank, complex, comprehensive and
protracted and involved not only RII, Fidelity and TCW, but also SIHL and its
various advisers with respect to the sale of the Paradise Island Business and
the Griffin Group with respect to the New Griffin Services Agreement.
FINANCIAL FORECASTS FOR THE COMPANY
____The Company has prepared forecasts of certain financial data including net
revenues, EBITDA (earnings before deduction of interest, income taxes,
depreciation and amortization), net earnings, cash flow and condensed balance
sheets for the Company's remaining operations after giving effect to the
Restructuring. The forecasts project net earnings and positive cash flow
throughout the five-year forecast period. The forecasts assume the Restructuring
is completed as of December 31, 1993 and include no costs incurred or payments
made in connection with the Restructuring subsequent to that date. The forecasts
assume modest growth in revenues which are largely offset by increases in
operating costs. They also assume no significant capital additions; capital
expenditures are assumed to be primarily for maintenance projects. The forecasts
are based on these and a variety of other assumptions. The Company believes
these assumptions are reasonable; however, they are subject to significant
business, industry, economic, regulatory and competitive uncertainties, many of
which are beyond the control of the Company. See "The Restructuring -- Financial
Forecasts for the Company" and "Risk Factors -- Risks Relating to the
Forecasts".
THE RESTRUCTURING
The purpose of the Restructuring is to effect the changes to the Company's
capital structure that the Company believes are necessary to return to
profitability and to consummate the SIHL Sale (or, if the SIHL Sale is not
consummated on or before the Effective Date, to effect the PIRL Spin-Off).
Management of the Company believes that the Restructuring will improve the
Company's financial position and allow management to create long-term value for
the creditors and shareholders of the
32
<PAGE>
Company and strengthen the Company's position in the gaming industry. The
Restructuring is designed to alleviate the problems caused by the Company's
excessive debt service levels and will help assure the Company's long-term
viability. There can be no assurance, however, that implementation of the
Restructuring will result in the Company's return to profitability. Likewise,
there can be no assurance that, if the SIHL Sale is not consummated on or before
the Effective Date, PIRL's operations will be profitable once the PIRL Spin-Off
is effected. The Restructuring will be implemented pursuant to the Plan. The
terms of the Plan have resulted primarily from an analysis of the Company's
financial condition and operations conducted by RII and its financial advisers
and from the negotiations conducted by RII and its financial and legal advisers
with Fidelity and TCW.
The Plan provides, among other things, that the holders of the Old Series
Notes as of the Distribution Record Date, which will be the close of business in
New York City on the Effective Date, will receive the following consideration on
the relevant Distribution Date for each $1,000 of principal amount of Old Series
Notes outstanding as of October 15, 1993 (and for any accrued interest thereon):
<TABLE>
<S> <C> <C>
-- $259.38 principal amount of the New RIHF Mortgage Notes;
-- One Unit comprised of $72.63 principal amount of the New RIHF Junior
Mortgage Notes and .07263 share of RII Class B Common Stock;
-- 35.33 shares of RII Common Stock;
-- Either (A) $134.88 in cash, plus interest on such amount at an annual
rate of 7.5% from January 1, 1994 to the SIHL Closing Date, plus 4.15
SIHL Series A Shares, representing a pro rata share of the
consideration received from the SIHL Sale, or (B) if the SIHL Sale is
not consummated on the Effective Date, 10.375 PIRL Ordinary Shares
pursuant to the PIRL Spin-Off;
-- A pro rata share of Excess Cash, which pro rata share is projected to be
a minimum of $62.25;
-- The non-transferable right to receive a pro rata share of Net Reserved
Cash and Net Plan Consummation Cash; and
-- The non-transferable right to receive a pro rata share of payments from
Deferred Cash, which pro rata share is expected to be a minimum of $5.
See "Description of Litigation Trust Units".
</TABLE>
Notwithstanding the foregoing, no fractional shares of New Equity Securities
will be issued on the Distribution Date. Also, New RIHF Mortgage Notes and New
RIHF Junior Mortgage Notes will be issued only in denominations of $1,000 or
integral multiples thereof. Pursuant to the Plan, the disbursing agent for the
holders of Old Series Notes will aggregate and sell all fractional amounts of
New Equity Securities and New Debt Securities and distribute the net proceeds to
the holders of Old Series Notes entitled thereto.
If the SIHL Sale is consummated, assuming a reorganization enterprise value
of approximately $225 million for RII and a reorganization enterprise value for
SIHL of approximately $150 million, the estimated recovery for holders of Old
Series Notes is projected to be approximately 70% of the principal amount of Old
Series Notes outstanding on October 15, 1993. If the SIHL Sale is not
consummated and the PIRL Spin-Off is effected, assuming a reorganization
enterprise value of approximately $225 million for RII and a reorganization
enterprise value for PIRL of approximately $125 million, the estimated recovery
for holders of Old Series Notes is projected to be approximately 70% of the
principal amount Old Series Notes outstanding on October 15, 1993. There can be
no assurance that the projected enterprise values of RII, of SIHL in the event
of the SIHL Sale or of PIRL in the event of the PIRL Spin-Off will be realized.
The SIHL Aggregate Cash Purchase Price, the New Debt Securities and the New
Equity Securities will be distributed to the disbursing agent for distribution
to the holders of Old Series Notes on the Effective Date. Payments of Net
Reserved Cash will be made as soon as practicable after the Effective Date, but
in no event later than 90 days after the Effective Date. Payments of Net Plan
Consummation Cash will be made as soon as practicable but no later than 90 days
after the Effective Date; provided, however, that if all Plan Expenses have not
been paid by the 90th day after the Effective Date, RII and GRI may continue to
hold back for an additional 60 days the portion of Net
33
<PAGE>
Plan Consummation Cash deemed by the Bankruptcy Court to be necessary to satisfy
remaining Plan Expenses, after which time the remaining Net Plan Consummation
Cash will be distributed, unless otherwise ordered by the Bankruptcy Court.
Payments of Deferred Cash will be made within three business days after receipt
by RII of the Litigation Trust Distributions in immediately available funds.
Payments of Excess Cash will be made on the Effective Date or as soon thereafter
as is practicable, but in no event later than 20 days after the Effective Date.
As part of the implementation of the Restructuring, Fidelity, which advises
and manages various funds and accounts that hold Old Series Notes, will cause
one or more of the funds it manages to enter into the RIHF Senior Facility which
will allow RIHF to borrow up to $20,000,000 through the issuance of RIHF Senior
Facility Notes. Any amount borrowed by RIHF under the RIHF Senior Facility will
be loaned by RIHF to RIH, and possibly by RIH to RII, through intercompany
transactions and will be used for working capital and general corporate
purposes. All principal payments on the RIHF Senior Facility Notes will be due
July 15, 2002. Interest on the RIHF Senior Facility Notes will accrue at the
rate of 11% per year and will be payable in cash, semi-annually on January 15
and July 15 of each year, commencing on the January 15 or July 15 next following
the date of the initial borrowing under the RIHF Senior Facility. The RIHF
Senior Facility will be available for a single borrowing during the one-year
period from the Effective Date, provided that the public resale of the RIHF
Senior Facility Notes by the purchasers thereof upon a resale is registered, if
required, under the Securities Act and the RIHF Senior Facility Note Indenture
has been qualified under the TIA. The RIHF Senior Facility Notes will be secured
by a lien on the RIHF Senior Facility Trust Estate. In addition, RIH will issue
the RIH Senior Facility Guaranty that will guarantee the payment of principal of
and interest on the RIHF Senior Facility Notes. The liens on the Resorts Casino
Hotel securing the payment of the RIHF Senior Facility Notes and the RIH Senior
Facility Guaranty will be senior to the liens securing payment of the New RIHF
Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes
and the RIH Junior Mortgage Guaranty. RII also will issue a guaranty of the
payment of principal and interest on the RIHF Senior Facility Notes.
The following transactions, among others, will be effected in connection
with the Restructuring: (a) the holders on the Distribution Record Date of the
Old Series Notes will receive the New Debt Securities, the New Equity
Securities, Excess Cash and the right to payments from Net Reserved Cash, Net
Plan Consummation Cash and Deferred Cash in accordance with the terms of the
Plan; (b)(i) if the SIHL Sale is consummated on the Effective Date, the holders
on the Distribution Record Date of the Old Series Notes will receive the SIHL
Series A Shares and the SIHL Aggregate Cash Purchase Price in accordance with
the terms of the Plan; or (ii) if the SIHL Sale is not consummated on or before
the Effective Date, the holders on the Distribution Record Date of the Old
Series Notes will receive the PIRL Ordinary Shares and, at the election of PIRL,
the Interim Management Agreement (as defined below) will be executed; (c) the
RIHF Senior Facility will be executed and delivered; (d) the Amended RII
Certificate of Incorporation and the Amended RII By-laws (as such terms are
defined below) will be adopted; (e) the initial post-Restructuring directors of
RII will be named to RII's Board of Directors (including two Class B Directors);
(f) the Griffin Warrants will be issued; (g) various intercompany reorganization
transactions described on Schedule 6.3 to the Plan will be effected; (h) the
1990 Stock Option Plan will be terminated and the 1994 Stock Option Plan will be
implemented; and (i) the Old Security Documents will be released and terminated.
If sufficient Acceptances are received from the holders of Old Series Notes and
from the holders of RII Common Stock, such Acceptances will constitute approval
of the 1994 Stock Option Plan by such holders for purposes of compliance with
Rule 16b-3 promulgated under the Exchange Act. For information on the election
of directors after the Effective Date, see "The Restructuring -- Overview of the
Restructuring -- Post-Restructuring RII Board of Directors".
If the Requisite Acceptances are not received by the Voting Deadline, RII
and GRI will be forced to evaluate options then available to them. Pursuant to
the Paradise Island Purchase Agreement, RII has committed, notwithstanding the
failure to obtain the Requisite Acceptances, to continue to pursue confirmation
of the Plan until the Paradise Island Purchase Agreement is terminated. This
commitment could require RII to conduct a further solicitation with respect to
the Plan until December 31, 1994. Because the Paradise Island Purchase Agreement
can be terminated by SIHL if an RII
34
<PAGE>
Chapter 11 case is not commenced by February 15, 1994, RII might conduct such
solicitation after filing a chapter 11 case. RII's failure to abide by the terms
of the Paradise Island Purchase Agreement would, under certain circumstances,
give rise to a claim by SIHL for breach of such agreement and/or entitle SIHL to
reimbursement from the SIHL Buyer Expense Escrow. Moreover, such failure, if not
approved by Fidelity and TCW, may relieve Fidelity and TCW of their obligations
under the Bondholders Support Agreement (as described below). The Paradise
Island Purchase Agreement would remain in effect if RII filed for protection
under the Bankruptcy Code by February 15, 1994 without a preapproved or
consensual plan of reorganization, but thereafter could be terminated upon the
occurrence of certain events set forth in the agreement. See "Description of
Paradise Island Purchase Agreement -- Termination".
Other options available to RII and GRI if the Requisite Acceptances are not
obtained include submission of a revised prepackaged plan of reorganization or
filing for protection under the Bankruptcy Code without a preapproved or
consensual plan of reorganization. If bankruptcy cases were commenced without a
preapproved plan, no assurance can be given that a plan would be confirmed or
that any recovery would be realized by the existing holders of the RII Common
Stock and the holders of 1990 Stock Options. In such event, the holders of the
Old Series Notes might receive a substantially smaller recovery on their claims
than that proposed under the Plan. In connection with the formulation and
development of the Plan, RII and GRI and their financial advisors have explored
various alternative plan structures. RII and GRI believe the Plan enables
creditors and equity interest holders, including both the holders of Old Series
Notes and of Old RII Common Stock, to realize greater value than would be
realized under the alternatives which RII and GRI believe could be consensually
implemented. On the other hand, an alternative reorganization plan could be
formulated which would attempt to eliminate entirely the interests of equity
interest holders. RII and GRI believe that this form of alternative plan would
be vigorously contested by equity interest holders. The expense and delay
associated with this dispute, coupled with its potential adverse impact on the
operations of the Company and the morale of its employees, could substantially
impair reorganization value. If such an alternative plan were confirmed,
however, recoveries to holders of Old Senior Notes might, but not necessarily
would, be greater than those projected under the Plan and no recovery would be
available to holders of Old RII Common Stock. See "Risk Factors -- Certain
Bankruptcy and Insolvency Considerations".
Confirmation and consummation of the Plan is subject to certain conditions.
There can be no assurance that such conditions will be satisfied. While RII and
GRI (with the consent of Fidelity and TCW, so long as the funds and accounts
managed by either of them hold in the aggregate at least 20% of the outstanding
Old Series Notes) can waive many of such conditions, they cannot waive the
condition requiring the entry of a Confirmation Order which has not been stayed.
Absent satisfaction of this condition, the Restructuring cannot proceed. As a
practical matter, although the condition requiring the entry of an order
declaring that, as of the Effective Date, the Old Security Documents shall be
deemed released and terminated is waivable, the transactions contemplated by the
Plan cannot be consummated if the Old Security Documents are not released and
terminated. See "The Plan -- Conditions Precedent to Confirmation and
Consummation of the Plan".
Implementation of the Restructuring would have important effects on the
Company and on the current holders of the Old Series Notes, the RII Common Stock
and the 1990 Stock Options and would result in a significant reduction of RII's
financial obligations. The Restructuring would have the effect of reducing and
rescheduling RII's principal and interest payments. See "-- Comparison of New
RIHF Mortgage Notes and New RIHF Junior Mortgage Notes to Old Series Notes". The
Restructuring would result in the modification or elimination of certain
restrictive covenants now applicable to RII pursuant to the Old Series Note
Indenture. The Restructuring also would result in either the sale of the
Paradise Island Business to SIHL or the PIRL Spin-Off of the Paradise Island
Business to the holders of the Old Series Notes.
The following table shows, at the dates and for the periods shown, on a pro
forma basis, the impact of the Restructuring as it affects the replacement of
the Old Series Notes with the New Debt Securities. It should be noted that the
table excludes the Showboat Notes and capital leases as it is the
35
<PAGE>
Company's intention that such items will not be affected by the Restructuring.
The pro forma data for the principal amount of New Debt Securities at September
30, 1993 are based on the assumption that the Restructuring occurred on that
date. The pro forma data regarding the stated interest calculation for the New
Debt Securities for the fiscal year ended December 31, 1992, and the three
quarters ended September 30, 1993, are based on the assumption that the
Restructuring occurred on January 1, 1992.
<TABLE>
<CAPTION>
OLD SERIES NEW DEBT
NOTES SECURITIES
-------------- -----------
(IN THOUSANDS)
<S> <C> <C>
Principal amount outstanding at September 30, 1993 (1).......................... $ 448,572 $ 160,000
Stated interest calculation for the fiscal year ended December 31,
1992........................................................................... 50,686(2) 17,731
Stated interest calculation for the three quarters ended September 30, 1993..... 47,224(2) 13,298
<FN>
- ------------------------
(1) Represents the principal amount of the Old Series Notes on a historical
basis and the principal amount of the New Debt Securities on a pro forma
basis, exclusive of unamortized discounts. At October 15, 1993, giving
effect to the payment of PIK interest on that date, the principal amount
outstanding was approximately $482,000,000.
(2) The calculation of the interest on the Old Series Notes was based on the
stated interest rates with the principal amount increasing on April 15 and
October 15 due to the issuance of additional Old Series Notes in lieu of
paying cash interest.
</TABLE>
If the Restructuring were implemented, 17,025,000 shares of RII Common Stock
would be issued to holders of the Old Series Notes. Issuance of such number of
shares of RII Common Stock would dilute significantly the equity interests of
the existing holders of the RII Common Stock and the 1990 Stock Options. The
following table shows the percentage of beneficial ownership of the RII Common
Stock before and after consummation of the Restructuring by the holders of the
securities listed below, based on the assumptions set forth in the notes
thereto:
<TABLE>
<CAPTION>
POST-RESTRUCTURING
---------------------------------------
ASSUMING OPTIONS ASSUMING OPTIONS
PRE-RESTRUCTURING NOT EXERCISED EXERCISED
------------------ ------------------ ------------------
SHARES % SHARES % SHARES %
---------- ------ ---------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Holders of RII Common Stock (1)......... 20,157,234 92.0% 20,872,234 49.0% 20,872,234 44.7%
Holders of Old Series Notes (2)......... 17,025,000 40.0 17,025,000 36.5
Griffin Warrants (3).................... 4,665,000 11.0 4,665,000 10.0
1990 Stock Options (4).................. 1,758,800 8.0 1,758,800 3.8
1994 Stock Options (5).................. 2,333,000 5.0
---------- ------ ---------- ------ ---------- ------
21,916,034 100.0% 42,562,234 100.0% 46,654,034 100.0%
---------- ------ ---------- ------ ---------- ------
---------- ------ ---------- ------ ---------- ------
<FN>
- ------------------------
(1) Pre-Restructuring amount represents shares of RII Common Stock outstanding
on November 30, 1993. Post-Restructuring amount includes 715,000 shares of
RII Common Stock which are to be issued prior to the filing of RII's and
GRI's bankruptcy cases to DLJ and Alvarez & Marsal in settlement of
certain recapitalization costs.
(2) Assumes holders of Old Series Notes are issued shares in an amount that
would represent 40% of the shares of RII Common Stock outstanding assuming
the Griffin Warrants are exercised. Such ownership will be subject to
dilution by the exercise of the 1990 Stock Options outstanding as well as
options to be granted under the 1994 Stock Option Plan. Also assumes that
all holders of Unsurrendered Public Debt Claims (as defined in the Old
Plan) and of Old Series Notes timely comply with the provisions of the
Plan and the Old Plan that govern entitlement to distributions.
(3) Assumes the Griffin Warrants are granted and exercised.
(4) Represents shares of RII Common Stock which may be issued upon exercise of
the 1990 Stock Options outstanding on November 30, 1993; related
percentages assume all such options are exercised.
(5) The 1994 Stock Option Plan will allow for the granting of options to
purchase up to 5% of the outstanding RII Common Stock; related percentage
assumes all such options are granted and exercised.
</TABLE>
36
<PAGE>
THE PLAN
GENERAL. The Restructuring will be effected pursuant to the Plan. The Plan
is a plan of reorganization under chapter 11 of the Bankruptcy Code for RII and
GRI proposed by RII, GRI, RIH, RIHF and PIRL. If the Plan is confirmed and the
other conditions to the consummation of the Plan proposed by RII, GRI, RIH, RIHF
and PIRL are satisfied or waived, the Restructuring and each transaction
comprising it will be effected. Since RII and GRI believe that all the elements
of the Restructuring can be consummated only through reorganization under
chapter 11 of the Bankruptcy Code, RII and GRI are soliciting Acceptances of the
Plan, rather than approvals of an out-of-court restructuring. See "The
Restructuring -- Overview of the Restructuring".
For the Plan to be confirmed, Acceptances must be received from the holders
of claims constituting at least 66 2/3% in amount and more than 50% in number of
the Allowed Claims (as defined in the Plan) in each impaired class of claims
that vote to accept or reject the Plan. Although Acceptances from holders of at
least 66 2/3% in amount of the Allowed Interests (as defined in the Plan) in
each impaired class of Interests that votes to accept or reject the Plan are
desirable, such Acceptances are not required as the Plan may be confirmed even
if an impaired class of interests votes to reject the Plan. See "The Plan --
Classification and Treatment of Claims and Interests". Pursuant to the
Bankruptcy Code, only votes to accept or reject the Plan, and not abstentions,
will be counted for purposes of determining acceptance or rejection of the Plan
by any impaired class of claims or interests. Therefore, the Plan could be
approved by any impaired class of claims with the affirmative vote of
significantly less than 66 2/3% in amount and 50% in number of the class of such
claims. The Plan must be confirmed as to both RII and GRI. See "Risk Factors --
Certain Bankruptcy and Insolvency Considerations". For a discussion of the
procedures for voting on the Plan, see "The Solicitation". In addition, the Plan
is subject to the approval of the Casino Control Commission. See "Risk Factors
- -- New Jersey Regulatory Matters". The SIHL Sale and the PIRL Spin-Off are
subject to the approval of the government of the Commonwealth of The Bahamas.
See "Risk Factors -- Risks Associated with the Paradise Island Business --
Bahamas Regulatory Matters".
Claims of the holders of the Old Series Notes ("RII Class 2 Claims"), and
such holders' claims in respect of the GRI Guaranty ("GRI Class 2 Claims"), will
be impaired by the Plan. In addition, the RII Intercompany Claim against GRI
("GRI Class 4 Claim") will be impaired by the Plan. The holders of the Showboat
Notes ("RII Class 3 Claims") will not be impaired by the Plan. Creditors who
hold general unsecured claims ("RII Class 5 Claims" and "GRI Class 3 Claims")
will not be impaired by the Plan. Finally, intercompany claims against RII ("RII
Class 6 Claims") will not be impaired by the Plan.
Existing holders of RII Common Stock ("RII Class 7 Interests"), of 1990
Stock Options ("RII Class 8 Interests") and of GRI Common Stock ("GRI Class 5
Interests") will be impaired by the Plan. Pursuant to the Plan, each holder of
RII Common Stock will retain its shares of RII Common Stock and each holder of
1990 Stock Options will retain his or her stock options. The 1990 Stock Option
Plan will be terminated in conjunction with the consummation of the Plan. As a
result of the issuance of additional shares of RII Common Stock and RII Class B
Common Stock to the holders of the Old Series Notes and, the issuance of the
Griffin Warrants and options to be granted under the 1994 Stock Option Plan, the
resulting ownership interest in RII represented by the currently outstanding
shares of RII Common Stock and the currently issued 1990 Stock Options will be
substantially diluted. See the beneficial ownership table in "The Restructuring
- -- Certain Significant Effects of the Restructuring -- Significant Dilution of
Equity Interests".
RII and GRI reserve the right to modify the terms of the Plan (subject to
compliance with the requirements of section 1127 of the Bankruptcy Code and to
the approval of Fidelity and TCW, so long as the funds and accounts managed by
them hold in the aggregate at least 20% of the outstanding Old Series Notes), if
and to the extent that RII and GRI determine that such modifications are
necessary or desirable in order to complete the Restructuring. RII and GRI will
give notice of such modifications as may be required by applicable law. Prior to
the commencement of cases under chapter 11 of the
37
<PAGE>
Bankruptcy Code, the validity and the effectiveness of the notice of such
modifications of the Plan would be governed by applicable non-bankruptcy law;
following commencement of chapter 11 cases, such modifications would be subject
to the notice and approval requirements of the Bankruptcy Code and the
Bankruptcy Rules. Under the Bankruptcy Rules, such modifications may be approved
by the Bankruptcy Court without resolicitation of the votes of the members of
any class whose treatment is not materially and adversely affected by such
modifications. See "The Plan -- Modifications of the Plan".
If the Requisite Acceptances are obtained, RII and GRI currently intend to
file petitions for relief under chapter 11 of the Bankruptcy Code (the date on
which such petitions are filed being referred to as the "Petition Date") and to
use all of the Acceptances to obtain confirmation of the Plan. In addition, RII
and GRI reserve the right to use Acceptances to seek confirmation of a plan of
reorganization under any other circumstances permitted by law, including the
filing of involuntary bankruptcy petitions against RII and GRI. Neither RII nor
GRI intends to commence a case under chapter 11 of the Bankruptcy Code prior to
the Voting Deadline, although it may do so in its sole discretion. Any party in
interest, including any creditor, equity interest holder or indenture trustee,
has standing to appear and be heard on any issue in the chapter 11 case.
Other than GRI, RII does not intend to include any of its subsidiaries in
its bankruptcy case, nor does RII intend to cause any of its subsidiaries to
file its own bankruptcy case. Neither RII nor GRI currently is in bankruptcy.
PROVISIONS FOR TRADE CREDITORS AND EMPLOYEES. Since the Plan and the
chapter 11 filings will relate only to RII and GRI and not to RII's operating
subsidiaries, the claims of trade creditors and employees of such operating
subsidiaries will not be affected by such filings. GRI does not have any
employees and believes that it does not have any trade creditors. Because it is
a holding company RII has few trade creditors and employees. Nevertheless, to
the extent necessary, RII intends promptly following commencement of RII's
chapter 11 case to seek Bankruptcy Court approval of various measures designed
to ensure that the trade creditors of RII who hold Allowed (as defined in the
Plan) RII Class 5 Claims and employees of RII who hold Allowed Priority Claims,
as described below, also are unaffected by the filing.
Allowed RII Class 5 Claims will not be impaired by the Plan. An Allowed RII
Class 5 Claim is a Claim (as defined in the Plan) (a) proof of which was timely
filed and which is not disputed, (b) if no proof of claim was so filed, any
claim which has been listed in RII's or GRI's chapter 11 schedules as liquidated
in amount and not disputed or contingent, or (c) any claim otherwise allowed by
a final order of the Bankruptcy Court. Each such Allowed RII Class 5 Claim will
be treated on the Effective Date in the manner in which such RII Class 5 Claim
would have been treated if RII's chapter 11 case had not been commenced.
Pursuant to the Plan, RII and GRI have agreed not to pay, and not to cause their
subsidiaries to pay, any claim except in the ordinary course of business and
consistent with past practice and to collect, and to cause their subsidiaries to
collect, receivables in the ordinary course of business and consistent with past
practice. On the Effective Date, RII Retained Cash rather than Plan Consummation
Cash shall be used to pay any prepetition Allowed Claims or post-petition
Allowed Administrative Claims (as defined in the Plan) which, in the ordinary
course of business and consistent with past practice, would not have been paid
on or before the Effective Date.
38
<PAGE>
CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS. The following table
briefly summarizes the classification and treatment of claims and interests
under the Plan. For a complete description of the classification and treatment
of such claims and interests, including the definition of certain capitalized
terms used herein and not otherwise defined in this Information
Statement/Prospectus, see the Plan attached hereto as Appendix A and "The Plan".
<TABLE>
<CAPTION>
CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN:
<S> <C> <C> <C>
Administrative Claims -- Post-petition $ 10,000,000 -- Each holder will receive on the Distri-
costs and expenses of restructuring bution Date cash equal to the amount of
and operations its Allowed Administrative Claim, unless
Estimated Number of Holders:[] such holder shall have agreed to different
treatment of its Allowed Administrative
Claim; PROVIDED, HOWEVER, that (a) subject
to section 14.6 of the Plan, Allowed Ad-
ministrative Claims of Professional
Persons (as defined in the Plan) and of
the Indenture Trustees (identified below),
Fidelity and TCW (and their agents) shall
be paid within ten days after allowance by
Final Order and (b) Allowed Administrative
Claims representing obligations incurred
in the ordinary course of business or as-
sumed by either RII or GRI shall be paid
or performed by RII or GRI in accordance
with the terms and conditions of each
agreement relating thereto and consistent
with past practice.
-- Recovery: 100% of Claim.
Priority Tax Claims $ [ ] -- Unimpaired.
Estimated Number of Holders:[] -- Each holder will receive, at RII's or GRI's
option, as applicable: (1) cash in full
payment of such holder's Allowed Priority
Tax Claim (as defined in the Plan) on the
later of the Distribution Date and the
date such Claim becomes due and payable or
(2) the amount of such holder's Allowed
Priority Tax Claim, with post-confirma-
tion interest thereon at the rate of , in
equal annual cash installments on each
anniversary of the Effective Date, until
the earlier of the sixth anniversary of
the Effective Date and the sixth
anniversary of the date of assessment of
such Allowed Priority Tax Claim; provided,
however, that any distributions made on
account of Allowed Priority Tax Claims
shall be paid from RII Retained Cash.
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN:
<S> <C> <C> <C>
-- Recovery: 100% of Claim.
RII Class 1 -- Non-tax claims given $ [ ] -- Unimpaired.
priority under the Bankruptcy Code, -- Each holder of an Allowed RII Class 1
including employee claims for Claim, at RII's option, shall receive such
pre-petition wages not to exceed treatment as (1) will not alter the legal,
$2,000 per employee. equitable or contractual rights to which
Estimated Number of Holders:[] such Allowed RII Class 1 Claim entitles
the holder thereof, or (2) otherwise will
render such Allowed RII Class 1 Claim
unimpaired pursuant to section 1124(2) of
the Bankruptcy Code.
-- Recovery: 100% of claim.
RII Class 2 -- The Old Series Notes 482,$000,000 (as of October) -- Impaired.
Claims 15, 1993 -- For each $1,000 principal amount of Old
Estimated Number of Holders:[] Series Notes, holders as of the
Distribution Record Date will receive on
the relevant Distribution Date on account
of their Allowed RII Class 2 Claims, the
following:
-- $259.38 principal amount of New RIHF
Mortgage Notes;*
-- One Unit comprised of $72.63 principal
amount of the New RIHF Junior Mortgage
Notes and .07263 shares of RII Class B
Common Stock*;
-- 35.33 shares of RII Common Stock*;
-- Either (A) $134.88 in cash, plus in-
terest on such amount at an annual rate
of 7.5% from January 1, 1994 to the SIHL
Closing Date, plus 4.15 SIHL Series A
Shares, representing a pro rata share of
the consideration received from the SIHL
Sale, or (B) if the SIHL Sale is not
consummated on the Effective Date,
10.375 PIRL Ordinary Shares pursuant to
the PIRL Spin-Off;
-- A pro rata share of Excess Cash, which
pro rata share is projected to be a
minimum of $62.25;
<FN>
- ------------------------
* No New RIHF Mortgage Notes will be issued in a principal amount other than
$1,000 or an integral multiple thereof. No fractional shares of New Equity
Securities will be issued. All fractional interests will be aggregated and
sold at market; the proceeds therefrom will be distributed in lieu of such
fractional interests.
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN:
<S> <C> <C> <C>
-- The non-transferable right to receive a
pro rata share of Net Reserved Cash and
Net Plan Consummation Cash; and
-- The non-transferable right to receive a
pro rata share of payments from Deferred
Cash, which pro rata share is expected
to be a minimum of $5.
-- Post-Restructuring ownership interest
(fully diluted): 36.5%.
-- Estimated Recovery (including GRI Class 2
Claim and approximate reorganization value
of ownership interest):
70% of principal amount (SIHL Sale);
70% of principal amount (PIRL Spin-off).
RII Class 3 -- The Showboat Note Claims $ 105,333,000 -- Unimpaired.
Estimated Number of Holders:[] -- At RII's option, each holder of an Allowed
RII Class 3 Claim will receive such
treatment as (1) will not alter the legal,
equitable and contractual rights to which
such Allowed RII Class 3 Claim entitles
the holder thereof or (2) otherwise will
render such Claim unimpaired pursuant to
section 1124(2) of the Bankruptcy Code. To
the extent not previously paid when due,
interest shall be paid in cash on the
Distribution Date (at the applicable,
non-default contractual rate), together
with any additional amount required to be
paid to render such Allowed RII Class 3
Claim unimpaired pursuant to section
1124(2) of the Bankruptcy Code.
-- Recovery: 100% of Claim.
RII Class 4 -- Miscellaneous Secured $ [ ] -- Unimpaired.
Claims -- At RII's option, with respect to each
Estimated Number of Holders:[] Allowed RII Class 4 Claim, the Plan either
(1) will not alter the legal, equitable
and contractual rights to which such
Allowed RII Class 4 Claim entitles the
holder thereof, or (2) otherwise will
render such Allowed RII Class 4 Claim
unimpaired pursuant to section 1124(2) of
the Bankruptcy Code. To the extent not
previously paid when due, interest
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN:
<S> <C> <C> <C>
shall be paid in cash on the Distribution
Date (at the applicable, non-default
contractual rate), together with
any additional amount required to be paid
to render such Allowed RII Class 4 Claim
unimpaired pursuant to section 1124 of the
Bankruptcy Code.
-- Recovery: 100% of Claim.
RII Class 5 -- General Unsecured Claims $ [ ] -- Unimpaired.
Estimated Number of Holders: [] -- At RII's option, with respect to each
Allowed RII Class 5 Claim, the Plan either
(1) will not alter the legal, equitable or
contractual rights to which such Allowed
RII Class 5 Claim entitles the holder
thereof, or (2) otherwise will render such
Allowed RII Class 5 Claim unimpaired
pursuant to section 1124(2) of the
Bankruptcy Code.
-- Recovery: 100% of Claim.
RII Class 6 -- Paradise Subsidiary $ [2,342,000] -- Unimpaired.
Claims -- At RII's option, each holder of an Allowed
Estimated Number of Holders:[] RII Class 6 Claim will receive such
treatment as (1) will not alter the legal,
equitable and contractual rights to which
such Allowed RII Class 6 Claim entitles
the holder thereof or (2) otherwise will
render such Claim unimpaired pursuant to
section 1124(2) of the Bankruptcy Code.
-- Recovery: 100% of Claim.
RII Class 7 -- RII Common Stock -- -- Impaired.
Estimated Number of Record -- Each holder will retain its shares of RII
Holders:2,003 Common Stock held as of the Effective
Date; provided, however, that as a class
all shares of RII Common Stock held by
holders of RII Class 7 Interests will be
diluted by the issuance under the Plan of
(1) additional RII Common Stock to the
holders of RII and GRI Class 2 Claims, (2)
the Griffin Warrants, (3) options under
the 1994 Stock Option Plan and (4) the RII
Class B Common Stock.
-- Post-Restructuring ownership interest
(fully diluted): 44.7%.
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN:
<S> <C> <C> <C>
RII Class 8 -- 1990 Stock Options -- -- Impaired.
Estimated Number of Holders:37 -- Each holder retains his or her outstanding
1990 Stock Options and the exercise price
for the outstanding 1990 Stock Options
will remain fixed
at the exercise price at the time of grant;
provided, however, that as a class all
1990 Stock Options held by holders of RII
Class 8 Interests will be diluted by the
issuance under the Plan of (1) additional
RII Common Stock, (2) the Griffin
Warrants, (3) options under the 1994 Stock
Option Plan and (4) the RII Class B Common
Stock. The 1990 Stock Option Plan will be
terminated as of the Effective Date.
-- Post-Restructuring ownership interest
(fully diluted): 3.8%.
GRI Class 1 -- Non-tax Claims given $ [ ] -- Unimpaired.
priority under the Bankruptcy Code, -- Each holder of an Allowed GRI Class 1 Claim
including employee claims for shall, at GRI's option receive such
pre-petition wages not to exceed treatment as (1) will not alter the legal,
$2,000 per employee equitable or contractual rights to which
Estimated Number of Holders:[] such Allowed GRI Class 1 Claim entitles
the holder thereof, or (2) otherwise will
render such Allowed GRI Class 1 Claim
unimpaired pursuant to section 1124(2) of
the Bankruptcy Code.
-- Recovery: 100% of claim.
GRI Class 2 -- GRI Guaranty Claims $ 482,000,000 -- Impaired.
Estimated Number of Holders:[] -- The distribution to holders of Allowed RII
Class 2 Claims also will constitute the
Plan consideration to holders of Allowed
GRI Class 2 Claims.
-- Recovery: See RII Class 2 Recovery.
GRI Class 3 -- General Unsecured Claims $ [0] -- Unimpaired.
Estimated Number of Holders: None known -- At GRI's option, with respect to each
Allowed GRI Class 3 Claim, the Plan either
(1) will not alter the legal, equitable or
contractual rights to which such Allowed
GRI Class 3 Claim entitles the holder
thereof, or (2) otherwise will render such
Allowed GRI Class 3 Claim unimpaired
pursuant to section 1124(2) of the
Bankruptcy Code.
Recovery: 100% of Claim.
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN:
<S> <C> <C> <C>
GRI Class 4 -- RII Intercompany $40,196,000 -- Impaired.
Claims -- The RII Intercompany Claim will be
Estimated Number of Holders: 1 satisfied by the contribution by
RII of the RII Intercompany Claim
to the capital of GRI.
GRI Class 5 -- GRI Common Stock -- -- Impaired.
Estimated Number of Holders: 1 -- RII, as the holder of the GRI Class
5 Interest, will retain such
Interest which is impaired by
virtue of the transfer of a
substantial portion of GRI's
assets pursuant either to the
Paradise Island Purchase Agree-
ment or the PIRL Standby Distribu-
tion Agreement, as the case may
be.
</TABLE>
EFFECTIVE DATE AND DISTRIBUTION DATES. The Effective Date is the later of
(a) the first business day on which no stay of the Confirmation Order is in
effect and that is ten days after the Confirmation Date, and (b) the date on
which each of the conditions precedent to consummation of the Plan have been
either satisfied or waived. It is anticipated that the Effective Date will occur
on or around April 15, 1994, although no assurance can be given that Effective
Date will not be delayed, perhaps materially. Among other things, a relatively
brief delay in the Effective Date will delay distributions under the Plan and
increase the interest payable with respect to the SIHL Aggregate Cash Purchase
Price. Any delay in the Effective Date beyond June 30, 1994 could result in a
termination of the Paradise Island Purchase Agreement. See "Description of
Paradise Island Purchase Agreement -- Termination". In addition, a delay in the
Effective Date may result in a termination of the Bondholder Support Agreement
and would increase the risk that the Restructuring will not be consummated.
The Distribution Date for any Claim that is an Allowed Claim on the
Effective Date will be the Effective Date or as soon thereafter as practicable,
but in no event later than 20 days after the Effective Date. For any Claim that
is a Disputed Claim on the Effective Date, the Distribution Date will be the
date as soon as practicable, but in no event later than 30 days after the date
upon which such Claim becomes an Allowed Claim. Notwithstanding the foregoing,
the Distribution Date with respect to distribution to the disbursing agent for
holders of Old Series Notes is as follows: (a) for distribution of the SIHL
Aggregate Cash Purchase Price, the New Debt Securities and the New Equity
Securities, the Effective Date; (b) for payments of Net Reserved Cash, as soon
as practicable after the Effective Date but in no event later than 90 days after
the Effective Date; (c) for payments of Net Plan Consummation Cash, as soon as
practicable but no later than 90 days after the Effective Date; provided,
however, that if all Plan Expenses have not been paid by the 90th day after the
Effective Date, RII and GRI may continue to hold back for an additional 60 days
the portion of Net Plan Consummation Cash deemed by the Bankruptcy Court to be
necessary to satisfy remaining Plan Expenses, after which time the remaining Net
Plan Consummation Cash will be distributed, unless otherwise ordered by the
Bankruptcy Court; (d) for payments of Deferred Cash, within three business days
after receipt by RII of the Litigation Trust Distributions in immediately
available funds; and (e) for payments of Excess Cash, the Effective Date or as
soon thereafter as practicable, but in no event later than 20 days after the
Effective Date. See "Description of Litigation Trust Units".
CONFIRMATION REQUIREMENTS. If the Requisite Acceptances are received, RII
and GRI will seek to implement the Plan by commencing cases under chapter 11 of
the Bankruptcy Code and will request that the Bankruptcy Court as promptly as
practicable hold a hearing on the adequacy of the Information
Statement/Prospectus and on the Confirmation of the Plan. Parties in interest,
including all holders of claims and interests, will receive notice of the date
and time fixed by the Bankruptcy Court for the hearing on the adequacy of the
Information Statement/Prospectus and the confirmation hearing. The Bankruptcy
Code provides that any party in interest may object to the adequacy of the
44
<PAGE>
Information Statement/Prospectus or confirmation of the Plan. The Bankruptcy
Court will establish procedures for the filing and service of objections to the
adequacy of the Information Statement/ Prospectus and to confirmation of the
Plan.
For the Plan to be confirmed, and regardless of whether all impaired classes
of claims and interests vote to accept the Plan, the Bankruptcy Code requires
that the Bankruptcy Court determine that the Plan complies with the requirements
of section 1129 of the Bankruptcy Code. Section 1129 of the Bankruptcy Code
requires, among other things, that: (i) the Plan be accepted by the requisite
votes of holders of impaired claims and interests, except to the extent that the
Plan may be confirmed under section 1129(b) of the Bankruptcy Code without the
acceptance of each impaired class; (ii) the Plan be feasible under section
1129(a)(11) of the Bankruptcy Code (that is, there is a reasonable probability
that RII and GRI will be able to perform their obligations under the Plan and
continue to operate their businesses without further financial reorganization);
(iii) the Plan be accepted by at least one class of impaired creditors
(excluding insiders); and (iv) the Plan meet the "best interests of creditors"
test of section 1129(a)(7) of the Bankruptcy Code which requires that each
impaired holder of a claim or interest either accepts the Plan or receives at
least as much pursuant to the Plan as such holder would receive in liquidations
of RII and GRI under chapter 7 of the Bankruptcy Code. See "The Plan --
Confirmation of the Plan".
Although RII and GRI believe that the Plan will meet such tests, as well as
the other requirements of section 1129 of the Bankruptcy Code, there can be no
assurance that the Bankruptcy Court will reach the same conclusion. Furthermore,
even if the Requisite Acceptances have been received prior to the commencement
of the chapter 11 cases, the Bankruptcy Court may determine not to confirm the
Plan if the Bankruptcy Court finds that the Solicitation did not comply with all
the applicable provisions of the Bankruptcy Code and the Bankruptcy Rules
(including the requirement under section 1126(b) that the Solicitation comply
with any applicable non-bankruptcy law, rule or regulation governing the
adequacy of disclosure or that the Solicitation be made after disclosure of
adequate information). In such an event, the Bankruptcy Court might order RII
and GRI to resolicit Acceptances.
If any impaired class or classes reject the Plan, section 1129(b) of the
Bankruptcy Code provides that, so long as at least one impaired class has
accepted the Plan (excluding votes cast by insiders), RII and GRI may seek
confirmation of the Plan if they can demonstrate that the Plan "does not
discriminate unfairly" and is "fair and equitable" with respect to any
dissenting class. RII and GRI reserve the right to seek to apply section 1129(b)
of the Bankruptcy Code if the Plan is accepted by any, but not all, impaired
classes of claims or interests. See "The Plan -- Confirmation of the Plan --
Confirmation Without Acceptance by All Impaired Classes".
CONDITIONS TO CONFIRMATION. Confirmation of the Plan is subject to the
following conditions: (i) the Confirmation Date shall occur no later than
December 31, 1994; (ii) the Confirmation Order shall approve in all respects all
of the provisions, terms and conditions of the Plan; (iii) the Confirmation
Order shall provide for the confirmation of the Plan as to both RII and GRI;
(iv) the Confirmation Order shall be acceptable in form and substance to RII,
GRI, Fidelity and TCW (so long as the funds and accounts managed by either of
them hold in the aggregate at least 20% of the outstanding Old Series Notes),
and to SIHL (to the extent provided in the Paradise Island Purchase Agreement);
(v) the Confirmation Order shall contain a finding that, except as expressly
provided in the Plan, all of the property distributed under the Plan shall vest
in the recipients thereof free and clear of all liens, claims, encumbrances and
interests of any nature whatsoever and that consummation of the Plan shall not
result in a fraudulent transfer with respect to either RII or GRI or any of
their affiliates; and (vi) the Bankruptcy Court shall have entered an order
declaring that, as of the Effective Date, the Old Security Documents under which
the liens on the property securing the Old Series Notes were granted or created
shall be deemed released and terminated. Subject to the approval of Fidelity and
TCW, so long as the funds and accounts managed by them hold in the aggregate at
least 20% of the outstanding Old Series Notes, RII and GRI reserve the right at
any time, without notice, without leave or order of the Bankruptcy Court, to
waive any condition to confirmation of the Plan. As a practical
45
<PAGE>
matter, although the condition requiring the entry of an order declaring that,
as of the Effective Date, the Old Security Documents shall be deemed released
and terminated is waivable, the transactions contemplated by the Plan cannot be
consummated if the Old Security Documents are not released and terminated. To
effect such release, RII is soliciting the consents of the record holders of the
outstanding Old Series Notes pursuant to the terms of the Old Series Note
Indenture to terminate and release the Old Security Documents. The Old Series
Note Indenture requires that consents be obtained from the record holders of at
least 66 2/3% in aggregate principal amount of the outstanding Old Series Notes
and the record holders of at least a majority in aggregate principal amount of
each series of the Old Series Notes to terminate and release of the Old Security
Documents. Such consents must be evidenced by such record holders separately
from their vote on the Plan. The ballots for the holders of the Old Series Notes
permit holders to give or withhold such consent. ANY EXECUTED BALLOT WITH
RESPECT TO THE PLAN RETURNED WITHOUT AN INDICATION TO WITHHOLD SUCH CONSENT WILL
BE DEEMED TO GIVE SUCH CONSENT. IF SUFFICIENT CONSENTS ARE RECEIVED FROM HOLDERS
OF OLD SERIES NOTES, RII AND GRI WILL REQUEST THE BANKRUPTCY COURT TO CONFIRM
RELEASE OF THE OLD SECURITY DOCUMENTS, EFFECTIVE AS OF THE EFFECTIVE DATE, BY
ENTRY OF AN APPROPRIATE ORDER. IF INSUFFICIENT CONSENTS ARE RECEIVED FROM
HOLDERS OF OLD SERIES NOTES TO EFFECTUATE A CONSENSUAL TERMINATION AND RELEASE
OF THE OLD SECURITY DOCUMENTS BY THE HOLDERS OF OLD SERIES NOTES, RII AND GRI
INTEND TO REQUEST THE BANKRUPTCY COURT TO ORDER THE RELEASE OF THE OLD SECURITY
DOCUMENTS; HOWEVER, THERE CAN BE NO ASSURANCE THAT SUCH AN ORDER WILL BE
ENTERED.
In no event will the consents to release the Old Security Documents be used
to effectuate the termination and release of the Old Security Documents in the
absence of the confirmation and consummation of the Plan. If RII and GRI fail to
receive the Requisite Acceptances, notwithstanding receipt of sufficient
consents to release and terminate the Old Security Documents pursuant to the Old
Series Note Indenture, such consents will only be used in the event that RII and
GRI continue to pursue confirmation and consummation of the Plan. In the event
that RII and GRI elect or are required to resolicit Acceptances of the Plan,
however, they reserve the right not to resolicit with respect to the consents to
release the Old Security Documents and to use consents received from the initial
Solicitation.
CONDITIONS TO EFFECTIVE DATE. The Plan will be consummated on the Effective
Date. The occurrence of the Effective Date of the Plan is subject to the
following conditions: (i) the Confirmation Order shall have been entered and not
stayed; (ii) the New RIHF Mortgage Note Indenture and the New RIHF Junior
Mortgage Note Indenture shall have been qualified under the TIA; (iii) the
securities to be issued under the New RIHF Mortgage Note Indenture and the New
RIHF Junior Mortgage Note Indenture, the RII Class B Common Stock and the RII
Common Stock to be issued pursuant to the Plan, and the SIHL Series A Shares or
PIRL Ordinary Shares, as the case may be, shall be registered under the
Securities Act and accepted or admitted on a national securities exchange or
approved for quotation on the Nasdaq National Market (subject to official notice
of issuance); (iv) the Effective Date shall occur no later than January 31,
1995; (v) all required regulatory approvals shall have been obtained (including
without limitation any regulatory approvals from the Casino Control Commission,
the Bahamian Government and the U.S. Department of Transportation); (vi) all
indentures, mortgages, security agreements and other agreements and instruments
to be delivered under or necessary to effectuate the Plan, including without
limitation the RIHF Senior Facility Note Purchase Agreement, shall have been
executed and delivered; (vii) either (a) the closing of the SIHL Sale shall have
occurred or (b) the closing of the PIRL Spin-Off shall have occurred; and (viii)
all outstanding amounts under the Griffin Group Note shall have been paid in
full.
Subject to the approval of Fidelity and TCW, so long as the funds and
accounts managed by them hold in the aggregate at least 20% of the outstanding
Old Series Notes, RII and GRI reserve the right at any time, without notice,
without leave of or order of the Bankruptcy Court, and without any formal action
other than proceeding to consummate the Plan, to waive any condition precedent
to consummation of the Plan, other than the condition requiring the entry of the
Confirmation Order which has not been stayed.
46
<PAGE>
MODIFICATION OF THE PLAN. Subject to the approval of Fidelity and TCW, so
long as the funds and accounts managed by them hold in the aggregate at least
20% of the outstanding Old Series Notes, RII and GRI expressly reserve the right
to modify, at any time and from time to time, the terms of the Plan in
accordance with the provisions of section 1127 of the Bankruptcy Code if, and to
the extent that, RII and GRI determine that such modifications are necessary or
desirable in order to complete the Restructuring. After the date on which the
Plan is confirmed by the Bankruptcy Court, RII and GRI may institute proceedings
in the Bankruptcy Court to remedy any defects or omissions or reconcile any
inconsistencies in the Plan or the Confirmation Order as may be necessary to
carry out the purposes and intent of the Plan so long as the Plan as modified
meets the requirements of the Bankruptcy Code and prior notice of such
modification is served in accordance with Bankruptcy Rules 2002 and 9014. See
"The Plan -- Modifications of the Plan".
COMPARISON OF NEW RIHF MORTGAGE NOTES AND NEW RIHF JUNIOR MORTGAGE NOTES TO OLD
SERIES NOTES
The following is a brief comparison of the terms of the New RIHF Mortgage
Notes and New RIHF Junior Mortgage Notes to the terms of the Old Series Notes as
set forth in the Old Series Note Indenture, the indenture pursuant to which the
New RIHF Mortgage Notes will be issued (the "New RIHF Mortgage Indenture"), and
the indenture pursuant to which the New RIHF Junior Mortgage Notes will be
issued (the "New RIHF Junior Mortgage Indenture"). Certain capitalized terms
used in the following summary are defined below under the captions "Description
of Old Series Notes", "Description of New RIHF Mortgage Notes" and "Description
of New RIHF Junior Mortgage Notes".
The Company will apply to have the New RIHF Mortgage Notes, the Units
comprised of New RIHF Junior Mortgage Notes and the RII Class B Common Stock,
the newly issued RII Common Stock and (if issued) the PIRL Ordinary Shares
listed on the AMEX. The Company has been informed by SIHL that SIHL will apply
to have the SIHL Series A Shares (if issued) listed on the Nasdaq National
Market. It is a condition to consummation of the Plan that all of such
securities, if issued, be listed on a national securities exchange or approved
for quotation on the Nasdaq National Market (subject to official notice of
issuance). However, there can be no assurance that an active trading market for
any such securities will develop on the AMEX, Nasdaq National Market or
otherwise, and no assurance can be given as to the price at which any such
securities might trade. Moreover, subject to the consent of Fidelity and TCW (so
long as the funds and accounts managed by them hold in the aggregate at least
20% of the outstanding Old Series Notes), the condition requiring listing on a
national securities exchange or approval for quotation on the Nasdaq National
Market may be waived by RII and GRI. For more information regarding the trading
market for the SIHL Series A Shares, see the accompanying SIHL Prospectus.
<TABLE>
<CAPTION>
NEW RIHF NEW RIHF
MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
PRINCIPAL AMOUNT TO BE ISSUED: PRINCIPAL AMOUNT TO BE ISSUED: PRINCIPAL AMOUNT OUTSTANDING:
$125,000,000 will be issued by RIHF $35,000,000 will be issued by RIHF Approximately $482,000,000 as of
upon consummation of the upon consummation of the October 15, 1993, issued by RII.
Restructuring. Restructuring.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
NEW RIHF NEW RIHF
MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
INTEREST: INTEREST: INTEREST:
11% per year, payable in cash, semi- 11.375% per year, payable in cash, -- Old Series A Notes -- 6% per year
annually on March 15 and September or at RIHF's option and subject to from April 11, 1990 until April 15,
15 of each year. Interest will certain limitations, additional 1991, 9% in the year ended April
accrue from the Effective Date. Units comprised of New RIHF Junior 15, 1992, 12% in the year ended
Mortgage Notes and RII Class B April 15, 1993, and 15% in the year
Common Stock, semi-annually on June ending April 15, 1994, payable
15 and December 15 of each year. semi-annually on April 15 and
Interest will accrue from the October 15 of each year. Interest
Effective Date. Interest may be is payable, at the option of RII,
paid in additional Units on any in cash or in additional Old Series
interest payment date on which A Notes.
RIH's Consolidated Cash Flow for -- Old Series B Notes -- 11% per
the most recently completed four year from May 8, 1990 until April
fiscal quarters is less than 15, 1991, and thereafter 15% per
$35,000,000. year, payable semi-annually on
April 15 and October 15 of each
year. Interest is payable, at the
option of RII, in cash or in
additional Old Series B Notes.
MATURITY: MATURITY: MATURITY:
September 15, 2003. December 15, 2004. April 15, 1994.
SINKING FUND REQUIREMENTS: SINKING FUND REQUIREMENTS: SINKING FUND REQUIREMENTS:
None. None. None.
MANDATORY REDEMPTIONS: MANDATORY REDEMPTIONS: MANDATORY REDEMPTIONS:
In the event of an RIH Sale, all the In the event of an RIH Sale, all the Upon certain sales by RII or any of
New RIHF Mortgage Notes will be New RIHF Junior Mortgage Notes will its subsidiaries of any assets
redeemed by RIHF whether such RIH be redeemed by RIHF whether such listed in a schedule to the Old
Sale occurs before, on or after the RIH Sale occurs before, on or after Series Note Indenture, certain real
fifth anniversary of the Effective the fifth anniversary of the property or the capital stock of
Date, at par together with Effective Date, at par together any RII subsidiary, the proceeds
interest, if any, accrued and with interest, if any, accrued and are deposited in an account (the
unpaid thereon to the Redemption unpaid thereon to the Redemption "Collateral Account"). If the
Date; provided, however, that such Date; provided, however, that such balance in the Collateral Account
obligation of RIHF to redeem the obligation of RIHF to redeem the exceeds $15,000,000, RII is
New RIHF Mortgage Notes in the New RIHF Junior Mortgage Notes in required to redeem Old Series Notes
event of a proposed RIH Sale shall the event of a proposed RIH Sale with the entire balance in the
cease to exist if the Holders of shall cease to exist if the Holders Collateral Account at 100% of the
not less than 66- 2/3% in of not less than 66- 2/3% in principal amount thereof plus
Outstanding Amount of the Outstanding Amount of the accrued and unpaid interest to the
Outstanding New RIHF Mortgage Notes Outstanding New RIHF Junior redemption date.
have consented to such proposed RIH Mortgage Notes have consented to
Sale. such proposed RIH Sale.
OPTIONAL REDEMPTION: OPTIONAL REDEMPTION: OPTIONAL REDEMPTION:
The New RIHF Mortgage Notes are The New RIHF Junior Mortgage Notes The Old Series Notes are redeemable
redeemable at any time in whole, or are redeemable at any time in at any time in whole, or from time
from time to time in part, on or whole, or from time to time in to time in part, at the election of
after the fifth anniversary of the part, on or after the fifth RII, at 100% of their principal
Effective Date at the election of anniversary of the Effective Date amount plus accrued interest to the
RIHF, at 100% of the principal at the election of RIHF, at 100% of redemption date. Any such
amount thereof plus accrued the principal amount thereof plus redemption must be made of both Old
interest to the redemption date. accrued interest to the redemption Series A Notes and Old Series B
date. Notes, pro rata according to the
respective principal amounts of the
Old Series Notes of each such
Series then outstanding.
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
NEW RIHF NEW RIHF
MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
LIMITATION ON OPEN-MARKET PURCHASES: LIMITATION ON OPEN-MARKET PURCHASES: LIMITATION ON OPEN-MARKET PURCHASES:
Generally, none. See "-- Certain Generally, none, provided that See "-- Certain Other Covenants".
Other Covenants". interest on the New RIHF Junior
Mortgage Notes was paid in cash on
the interest payment date next
preceding the date of the
open-market purchase in question.
See "-- Certain Other Covenants".
GUARANTY: GUARANTY: GUARANTY:
RIH guarantees payment of principal RIH guarantees payment of principal GRI guarantees payment of principal
of and interest on the New RIHF of and interest on the New RIHF of and interest on the Old Series
Mortgage Notes pursuant to the RIH Junior Mortgage Notes pursuant to Notes pursuant to the GRI Guaranty.
Mortgage Guaranty. The RIH Mortgage the RIH Junior Mortgage Guaranty. GRI's assets consist principally of
Guaranty is secured by a lien on The RIH Junior Mortgage Guaranty is promissory notes made by RIH in the
the Resorts Casino Hotel pursuant secured by a lien on the Resorts aggregate principal amount of
to a mortgage and security Casino Hotel pursuant to a mortgage $325,000,000 (the "RIH Notes") and
agreement with an assignment of and security agreement with an the capital stock of RIB. RIB and
rents, and an assignment of leases assignment of rents, and an its subsidiaries own the Paradise
and rents (collectively, the "RIH assignment of leases and rents Island properties, including the
Guaranty Mortgage") between RIH, as (collectively, the "RIH Junior Paradise Island Resort & Casino,
mortgagor, and the New RIHF Guaranty Mortgage") between RIH, as the Ocean Club Golf & Tennis Resort
Mortgage Note Trustee for the mortgagor, and the New RIHF Junior and the Paradise Paradise Beach
benefit of the holders of the RIH Mortgage Note Trustee for the Resort, and all related furniture,
Mortgage Notes and is junior to the benefit of the holders of the RIH fixtures, machinery and equipment.
RIHF Senior Facility Guaranty. Junior Mortgage Notes and is junior The RIH Notes and the Paradise
to the RIHF Senior Facility Island properties, including all
Guaranty and the RIH Mortgage additions or improvements, directly
Guaranty. or indirectly, comprise part of the
collateral securing the Old Series
Notes. Such collateral also
includes the lien on the Resorts
Casino Hotel, owned by RIH,
together with all additions or
improvements thereto.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
NEW RIHF NEW RIHF
MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
COLLATERAL: COLLATERAL: COLLATERAL:
The New RIHF Mortgage Notes are The New RIHF Junior Mortgage Notes The Old Series A Notes and the Old
secured by a lien on the New RIHF are secured by a lien on the New Series B Notes rank PARI PASSU with
Mortgage Trust Estate comprised of RIHF Junior Mortgage Trust Estate respect to amounts realized upon
the assignment by RIHF to the New comprised of the assignment by RIHF the sale or other disposition of
RIHF Mortgage Note Trustee for the to the New RIHF Junior Mortgage the collateral (as described
benefit of the holders of the New Note Trustee for the benefit of the below).
RIHF Mortgage Notes, of (i) the RIH holders of the New RIHF Junior The collateral consists of: (i)
Promissory Note in the original Mortgage Notes, of (i) the RIH RII's fee and leasehold interests
principal amount of up to Junior Promissory Note in the in substantially all of its real
$125,000,000, payable in amounts original principal amount of up to properties, additions or all
and at times necessary to pay the $35,000,000, payable in amounts and improvements constructed thereon
principal of and interest on the at times necessary to pay the (other than the Showboat Lease and
New RIHF Mortgage Notes, and (ii) a principal of and interest on the the real property that is subject
lien on the Resorts Casino Hotel, New RIHF Junior Mortgage Notes, and to the Showboat Lease and an office
I.E., RIH's fee and leasehold (ii) a lien on the Resorts Casino building in Miami, Florida)
interests comprising the Resorts Hotel, I.E., RIH's fee and (collectively, the "RII Property"),
Casino Hotel, the contiguous leasehold interests comprising the pursuant to an indenture of
parking garage and property, all Resorts Casino Hotel, the mortgage and assignment of leases
additions or improvements contiguous parking garage and and rents (the "RII Mortgage")
constructed thereon (other than property, all additions or between RII and the trustee under
certain designated facilities) and improvements constructed thereon the Old Series Note Indenture (the
all furniture, fixtures, machinery (other than certain designated "Old Series Note Trustee"); (ii)
and certain other property and facilities) and all furniture, RIH's fee and leasehold interests
equipment of RIH related thereto, fixtures, machinery and certain comprising the Resorts Casino
encumbered pursuant to a mortgage other property and equipment of RIH Hotel, the contiguous parking
and security agreement with related thereto, encumbered garage and property, all additions
assignment of rents, and an pursuant to a mortgage and security or improvements constructed thereon
assignment of leases and rents agreement with assignment of rents, (other than certain designated
(collectively, the "RIH Mortgage") and an assignment of leases and facilities) and all furniture,
between RIH, as mortgagor, and rents (collectively, the "RIH fixtures, machinery and certain
RIHF, as mortgagee, securing the Junior Mortgage") between RIH, as other property and equipment of RIH
payment of the RIH Promissory Note. mortgagor, and RIHF, as mortgagee, related thereto, assignment of
Such lien is junior to the lien securing the payment of the RIH leases and rents and a security
securing the RIHF Senior Facility. Junior Promissory Note. Such lien agreement (collectively, the "RIH
is junior to the liens securing the Mortgage") between RIH and the Old
RIHF Senior Facility and the RIHF Series Note Trustee; (iii) all the
Mortgage Notes. outstanding capital stock of RIH,
GRI and all RII's other direct and
indirect domestic subsidiaries
pledged by RII to the Old Series
Note Trustee pursuant to a pledge
agreement (the "RII Pledge
Agreement") between RII and the Old
Series Note Trustee; (iv) the RIH
Notes, pledged by GRI to the Old
Series Note Trustee pursuant to a
pledge agreement (the "RIH Pledge
Agreement") between GRI and the Old
Series Note Trustee; (v) 66% of the
outstanding voting stock of RIB
(the "RIB Stock"), pledged by GRI
to the Old Series Note Trustee
pursuant to a pledge agreement (the
"GRI Pledge Agreement") between GRI
and the Old Series Note Trustee;
and (vi) the RIB Note, the RIB
Subsidiary Guaranty Agreements and
the RIB Mortgage (collectively, the
"RIB Collateral") pledged by RIH to
the Old Series Note Trustee
pursuant to a Pledge and Assignment
Agreement between RIH and the Old
Series Note Trustee (the "RIB
Collateral Assignment
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
NEW RIHF NEW RIHF
MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES
- ------------------------------------ ------------------------------------ ------------------------------------
Agreement" and, collectively with
the other documents described in
clauses (i) through (v), the "Old
Security Documents").
<S> <C> <C>
RANKING: RANKING: RANKING:
The New RIHF Mortgage Notes are The New RIHF Junior Mortgage Notes The Old Series Notes are senior
secured obligations of RIHF. are junior secured obligations of secured obligations of RII.
The RIH Mortgage and the RIH RIHF.
Guaranty Mortgage are PARI PASSU The RIH Junior Mortgage and the RIH
with each other and subordinated to Junior Guaranty Mortgage are PARI
the liens on the Resorts Casino PASSU with each other and
Hotel securing payment of the RIHF subordinated to the liens on the
Senior Facility Notes and the RIH Resorts Casino Hotel securing
Senior Facility Guaranty and any payment of the RIHF Senior Facility
other secured Working Capital Notes, the RIH Senior Facility
Facility and related guaranty. Guaranty, any other secured Working
Capital Facility and related
guaranty, the New RIHF Mortgage
Notes and the RIH Mortgage
Guaranty.
PAYMENT OF NET PROCEEDS OF ASSET PAYMENT OF NET PROCEEDS OF ASSET PAYMENT OF NET PROCEEDS OF ASSET
SALES: SALES: SALES:
None. None. See "-- Mandatory Redemption".
CHANGE OF CONTROL: CHANGE OF CONTROL: CHANGE OF CONTROL:
Neither RIHF nor RIH will Neither RIHF nor RIH will Any holder of Old Series Notes may
consolidate, combine or merge with consolidate, combine or merge with require RII to purchase its Old
or into any other Person or permit or into any other Person or permit Series Notes upon the occurrence of
any other Person to consolidate, any other Person to consolidate, any of the following events
combine or merge with or into RIHF combine or merge with or into RIHF (unless, in certain circumstances,
or RIH, as the case may be; and or RIH, as the case may be; and RII calls all the Old Series Notes
neither RIHF with respect to its neither RIHF with respect to its for redemption): (i) a
assets nor RIH with respect to the assets nor RIH with respect to the consolidation or merger of RII in
New RIHF Mortgage Trust Estate New RIHF Junior Mortgage Trust which RII is not the surviving
shall sell, assign, convey or Estate shall sell, assign, convey entity; (ii) the sale of all or
transfer its interest in such or transfer its interest in such substantially all of RII's assets;
assets or the New RIHF Mortgage assets or the New RIHF Junior (iii) the percentage of RII voting
Trust Estate, as the case may be, Mortgage Trust Estate, as the case stock held by Merv Griffin and
substantially as an entirety to any may be, substantially as an affiliates falls below 15%, other
other Person or group of Persons, entirety to any other Person or than because of RII's issuance of
in one transaction or series of group of Persons, in one additional voting stock; or (iv) a
related transactions, or permit any transaction or series of related person or group not affiliated or
other Person or group of Persons to transactions, or permit any other associated with Merv Griffin
convey or transfer all or Person or group of Persons to sell, acquires 50% or more of RII voting
substantially all of its assets, assign, convey or transfer all or stock.
subject to liabilities other than substantially all of its assets, RII is required to give to the
DE MINIMIS liabilities, to RIHF or subject to liabilities other than holders of Old Series Notes notice
RIH; and RIHF and RIH shall not DE MINIMIS liabilities, to RIHF or of any event described above within
transfer, convey, sell or otherwise RIH; and RIHF and RIH shall not 30 business days of the occurrence
dispose of to any other Person, or transfer, convey, sell or otherwise thereof. Such notice must specify
issue to any Person, any equity dispose of to any other Person, or the event, the repurchase date and
interest in RIHF or RIH, as the issue to any Person, any equity repurchase instructions. The
case may be (each such transaction interest in RIHF or RIH, as the repurchase price is 100% of the
referred to as a "Combination case may be (each such transaction principal amount plus accrued and
Transaction"); provided, however, referred to as a "Combination unpaid interest.
that (i) RIHF may engage in a Transaction"); provided, however,
Combination Transaction in which that (i) RIHF may engage in a
the only other party or parties is Combination Transaction in which
RIH or a direct or indirect wholly the only other party or parties is
owned Subsidiary of RIHF or RIH, RIH or a direct or indirect wholly
and (ii) RIHF or RIH may engage in owned Subsidiary of RIHF or RIH,
any other Combination Transaction, and (ii) RIHF or RIH may engage in
subject to certain conditions. any other Combination Transaction,
subject to certain conditions.
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
NEW RIHF NEW RIHF
MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
CERTAIN OTHER COVENANTS: CERTAIN OTHER COVENANTS: CERTAIN OTHER COVENANTS:
The New RIHF Mortgage Note Indenture The New RIHF Junior Mortgage Note The Old Series Note Indenture
will contain covenants on the part Indenture will contain covenants on contains certain restrictive
of RIHF, RIH and each of their the part of RIHF, RIH and each of covenants on the part of RII,
Subsidiaries, including without their Subsidiaries, including including, without limitation,
limitation restrictions (subject to without limitation restrictions restrictions (subject to certain
certain exceptions) on: (i) the (subject to certain exceptions) on: exceptions) on: (i) the payment of
ability of RIHF, RIH and each of (i) the ability of RIHF, RIH and cash dividends or redemptions of
their Subsidiaries to terminate each of their Subsidiaries to capital stock by RII (other than as
their corporate existence or the terminate their corporate existence required by the Casino Control
rights (charter and statutory), or the rights (charter and Act); (ii) the repurchase (other
licenses, permits, approvals and statutory), licenses, permits, than as required by the Casino
governmental franchises necessary approvals and governmental Control Act) of any Old Series
to the conduct of its and their franchises necessary to the conduct Notes other than at par unless all
respective businesses; (ii) the of its and their respective interest due on the Old Series
ability of RIHF, RIH and each of businesses; (ii) the ability of Notes on the immediately preceding
their Subsidiaries to make certain RIHF, RIH and each of their interest payment date was paid in
Restricted Payments; (iii) the Subsidiaries to make certain cash and the funds used for the
ability of RIHF, RIH and each of Restricted Payments; (iii) the repurchase are not the proceeds of
their Subsidiaries to incur any ability of RIHF, RIH and each of asset sales that are required to be
Indebtedness other than (a) the New their Subsidiaries to incur any deposited in the Collateral Account
RIHF Mortgage Notes, (b) the Junior Indebtedness other than (a) the New and that have not been so
Mortgage Facility, (c) the RIHF RIHF Mortgage Notes and the New deposited; (iii) the incurrence of
Senior Facility or any other RIHF Junior Mortgage Notes, (b) the additional indebtedness for
Working Capital Facility, (d) Junior Mortgage Facility, (c) the borrowed money, with exceptions for
Capitalized Lease Obligations in an RIHF Senior Facility or any other (A) certain purchase money
amount not in excess of $5,000,000 Working Capital Facility, (d) financing not to exceed $15,000,000
in the aggregate at any time Capitalized Lease Obligations in an in aggregate principal amount at
outstanding, (e) FF&E Financing amount not in excess of $5,000,000 any time outstanding, (B) financing
Agreements in an amount not in in the aggregate at any time to develop certain property in The
excess of $10,000,000 in the outstanding, (e) FF&E Financing Bahamas to fulfill RIB's obligation
aggregate at any time outstanding, Agreements in an amount not in to the Bahamian Government to
(f) certain unsecured Indebtedness excess of $10,000,000 in the construct at least 150 first-class
in an amount not in excess of aggregate at any time outstanding, hotel rooms or (after satisfaction
$5,000,000, (g) Non-Recourse (f) certain unsecured Indebtedness of such obligation) otherwise, not
Indebtedness in an amount not in in an amount not in excess of to exceed $20,000,000 in aggregate
excess of $25,000,000 in the $5,000,000, (g) Non-Recourse principal amount at any time
aggregate at any time outstanding, Indebtedness in an amount not in outstanding, and (C) after the sale
(h) After-Acquired Fee Mortgage excess of $25,000,000 in the of the Paradise Island Business and
Debt in an amount not in excess of aggregate at any time outstanding, application of such sale proceeds
$3,000,000 in the aggregate at any (h) After-Acquired Fee Mortgage to prepay Old Series Notes such
time outstanding, and (i) Debt in an amount not in excess of that the aggregate principal amount
Intercompany advances between RIH, $3,000,000 in the aggregate at any of Old Series Notes remaining
RIHF or any of their Subsidiaries time outstanding, and (i) outstanding does not exceed
on the one hand, and RII, on the Intercompany advances between RIH, $75,000,000, financing for the
other hand, in an aggregate amount RIHF or any of their Subsidiaries construction of new hotel
not to exceed $1,000,000; (iv) the on the one hand, and RII, on the facilities, including a parking
ability of RIHF, RIH and each of other hand, in an aggregate amount garage to serve the Resorts Casino
their Subsidiaries to repay the not to exceed $1,000,000; (iv) the Hotel, not to exceed $75,000,000 in
principal of any Indebtedness which ability of RIHF, RIH and each of aggregate principal amount at any
is subordinated in right of payment their Subsidiaries to repay the time outstanding; (iv) transactions
to the New RIHF Mortgage Notes, principal of any Indebtedness which with affiliates, with exceptions
except for certain repurchases or is subordinated in right of payment for transactions that RII's Board
redemptions under the Junior to the New RIHF Junior Mortgage of Directors determines to be on
Mortgage Facility; (v) the ability Notes; (v) the ability of RIHF, RIH terms as favorable as could be
of RIHF, RIH and each of their and each of their Subsidiaries to obtained from a non-affiliated
Subsidiaries to repurchase any New repurchase any New RIHF Junior party, certain transactions in
RIHF Mortgage Notes in the open Mortgage Notes in the open market regard to acquisition of and
market if an Event of Default shall if an Event of Default shall have financing for new hotel facilities,
have occurred and be continuing occurred and be continuing under and contribution by RII or any of
under the New RIHF Mortgage Note the New RIHF Mortgage Note its subsidiaries of undeveloped
Indenture, the New RIHF Junior Indenture, the New RIHF Junior land to joint ventures, provided
Mortgage Note Indenture or the RIHF Mortgage Note Indenture or the RIHF that neither RII nor any of its
Senior Facility Note Indenture; Senior Facility Note Indenture; subsidiaries may enter into any of
(vi) the ability of RIHF, RIH and (vi) the ability of RIHF, RIH and the foregoing transactions in
each of their Subsidiaries to each of their Subsidiaries to excess of $10,000,000 without a
engage in certain activities; (vii) engage in certain activities; (vii) fairness opinion of an independent
the ability of RIHF and RIH to the ability of RIHF and RIH to financial adviser; (vi) mergers and
create or acquire any additional create or acquire any additional consolidations with entities other
Subsidiaries; (viii) the creation Subsidiaries; (viii) the creation than affiliates of RII; and
of of
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
NEW RIHF NEW RIHF
MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES
- ------------------------------------ ------------------------------------ ------------------------------------
additional liens on the Mortgage (vii) the ability of RII and its
additional liens on the Mortgage Documents or the New RIHF Junior subsidiaries to sell their
Documents or the New RIHF Mortgage Mortgage Trust Estate with respective assets. The Old Series
Trust Estate with exceptions for, exceptions for, among other things, Note Indenture also requires RII,
among other things, liens created liens created in connection with at all times after December 31,
in connection with permitted permitted Indebtedness described in 1990, to maintain a consolidated
Indebtedness described in clause clause (iii) above; (ix) tangible net worth (as defined)
(iii) above; (ix) non-compliance non-compliance with all applicable equal to at least $50,000,000.
with all applicable statutes, statutes, rules, regulations and
rules, regulations and orders; (x) orders; (x) non-payment of taxes,
non-payment of taxes, (xi) (xi) maintenance of properties,
maintenance of properties, (xii) (xii) maintenance of insurance,
maintenance of insurance, (xiii) (xiii) the ability of RIHF, RIH and
the ability of RIHF, RIH and their their Subsidiaries to insist upon,
Subsidiaries to insist upon, plead plead or claim any stay or
or claim any stay or extension law extension law or usury law or other
or usury law or other law that law that would prohibit or forgive
would prohibit or forgive RIHF or RIHF or RIH from paying the
RIH from paying the principal of, principal of, or interest on the
or interest on the New RIHF New RIHF Junior Mortgage Notes or
Mortgage Notes or the RIH the RIH Junior Promissory Note or
Promissory Note or the RIH the RIH Junior Guaranty; (xiv) the
Guaranty; (xiv) the ability of ability of RIHF, RIH and their
RIHF, RIH and their Subsidiaries to Subsidiaries to engage in certain
engage in certain transactions with transactions with Affiliates.
Affiliates.
<S> <C> <C>
MODIFICATION OF INDENTURE: MODIFICATION OF INDENTURE: MODIFICATION OF INDENTURE:
Requirement of vote by two-thirds in Requirement of vote by two-thirds in Requirement of vote by two-thirds in
aggregate principal amount of New aggregate principal amount of New aggregate principal amount of Old
RIHF Mortgage Notes in order to RIHF Junior Mortgage Notes in order Series Notes (including the vote of
amend or supplement the New RIHF to amend or supplement the New RIHF a majority of each of the Old
Mortgage Note Indenture, the Junior Mortgage Note Indenture, the Series A Notes and the Old Series B
Mortgage Documents, the Assignment Mortgage Documents, the Assignment Notes) in order to amend the Old
Agreement or the New RIHF Mortgage Agreement or the New RIHF Junior Series Note Indenture or any Old
Notes, except no such amendment, or Mortgage Notes except no such Security Document, except no such
supplement without the consent of amendment or supplement, without amendment, without the consent of
the holder of each New RIHF the consent of the holder of each the holder of each Old Series Note
Mortgage Note affected may (i) New RIHF Junior Mortgage Note affected, may change the terms of
change the stated maturity of the affected may (i) change the stated payment of principal and interest,
principal, or any installment of maturity of the principal, or any adversely change the redemption
interest, reduce the principal installment of interest, reduce the provisions, waive payment defaults
amount, change any Place of Payment principal amount, change any Place thereon, or reduce the aforesaid
where, or the coin or currency in of Payment where, or the coin or voting amounts required for
which, principal or interest is currency in which, principal or amendments.
payable, or impair the right to interest is payable, or impair the
institute suit for the enforcement right to institute suit for the
of payment, (ii) reduce the enforcement of payment, (ii) reduce
aforesaid voting amount required the aforesaid voting amount
for amendments, (iii) modify the required for amendments, (iii)
term "Outstanding", (iv) modify the modify the term "Outstanding", (iv)
provisions described in this modify the provisions described in
paragraph or the provisions this paragraph or the provisions
regarding waiver of default, (v) regarding waiver of default, (v)
with certain exceptions, permit the with certain exceptions, permit the
creation of any lien ranking prior creation of any lien ranking prior
to the lien of the RIH Mortgage. to the lien of the RIH Junior
Mortgage. In addition, the holders
of two-thirds in aggregate
principal amount of New RIHF
Mortgage Notes must consent to any
amendment of the New RIHF Junior
Mortgage Note Indenture allowing
for redemption of the New RIHF
Junior Mortgage Notes prior to the
fifth anniversary of the Effective
Date unless such redemption is in
connection with an RIH Sale.
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
NEW RIHF NEW RIHF
MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
TRUSTEE: TRUSTEE: TRUSTEE:
State Street Bank and Trust Company U.S. Trust Company of California, Chemical Bank (successor to
of Connecticut, National N.A. Manufacturers Hanover Trust
Association. Company).
The New RIHF Mortgage Note Trustee The New RIHF Junior Mortgage Note The Old Series Note Trustee may
may require reasonable indemnity Trustee may require reasonable require reasonable indemnity before
before exercising any of its rights indemnity before exercising any of exercising any of its rights or
or powers under the New RIHF its rights or powers under the New powers under the Old Series Note
Mortgage Note Indenture. RIHF Junior Mortgage Note Indenture.
Indenture.
</TABLE>
See "Description of Old Series Notes", "Description of New RIHF Mortgage
Notes" and "Description of New RIHF Junior Mortgage Notes".
DESCRIPTION OF NEW EQUITY SECURITIES
RII COMMON STOCK
RII Common Stock will be issued to the holders of the Old Series Notes as of
the Distribution Record Date. The existing holders of RII Common Stock will
continue to hold their RII Common Stock.
<TABLE>
<S> <C>
Issuer............................ RII.
Number of shares.................. Up to 100,000,000 authorized, (i) 20,157,234 of which
are outstanding as of November 30, 1993, and (ii)
17,025,000 of which will be issued as of the
Distribution Date (assuming all distributions to be
made under the Plan are made on the Distribution Date
and no options and warrants to purchase RII Common
Stock have been exercised).
Dividends......................... Dividends may be declared by the RII Board of Directors
and would be payable from legally available funds.
Redemption........................ Subject to redemption if a holder required to qualify
under the New Jersey Casino Control Act and regulations
promulgated thereunder (the "Casino Control Act")
refuses or fails to so qualify and subsequently fails
to divest itself of such RII Common Stock.
Liquidation rights................ The net proceeds of any liquidation will be payable pro
rata to the holders of the RII Common Stock and the RII
Class B Common Stock to the extent of par value per
share of each such class (I.E., $.01), with the balance
of such proceeds payable pro rata to the holders of the
RII Common Stock.
Restrictions on transfer.......... None.
Election of directors............. Holders of the RII Common Stock are entitled to elect
two-thirds of the entire RII Board of Directors (or
following the Class B Triggering Event in respect of
the New RIHF Junior Mortgage Notes, one less than
one-half of the entire RII Board of Directors). Such
directors are divided into three classes of directors
serving staggered three-year terms. This classified
board provision could have the effect of making the
removal of incumbent directors more difficult and,
therefore, of discouraging a third party from
attempting to obtain control of RII, even though such
attempt might be beneficial to RII and its
shareholders.
</TABLE>
54
<PAGE>
<TABLE>
<S> <C>
Voting rights..................... One vote per share on all matters on which shareholders
are entitled to vote, other than the election of
directors by the holders of the RII Class B Common
Stock.
Preemptive rights................. None.
</TABLE>
See "Description of New Equity Securities".
RII CLASS B COMMON STOCK
The RII Class B Common Stock will be issued as part of the Units to the
holders of the Old Series Notes as of the Effective Date and is essentially a
non-participating stock that entitles its holders to elect the Class B
Directors.
<TABLE>
<S> <C>
Issuer............................ RII.
Number of shares.................. Up to 80,000 authorized, 35,000 of which will be issued
as of the Distribution Date (assuming all distributions
to be made under the Plan are made on the Distribution
Date).
Dividends......................... None.
Redemption........................ Upon redemption, or cancellation following the purchase
thereof, of each $1,000 principal amount of New RIHF
Junior Mortgage Notes, RII will redeem, at a price of
$.01 per share, the share of RII Class B Common Stock
issued as a Unit with each $1,000 principal amount of
New RIHF Junior Mortgage Notes. Subject to redemption
if a holder is required to qualify under the Casino
Control Act refuses or fails to so qualify and
subsequently fails to divest itself of such RII Class B
Common Stock.
Liquidation rights................ The net proceeds of any liquidation of RII will be
payable pro rata to the holders of the RII Class B
Common Stock to the extent of the $.01 par value per
share.
Restrictions on transfer.......... Each share of RII Class B Common Stock will be issued as
part of a Unit with each $1,000 principal amount of New
RIHF Junior Mortgage Notes and may not be transferred
separately from such New RIHF Junior Mortgage Note.
Election of directors............. Holders of the RII Class B Common Stock to elect
one-third of the entire RII Board of Directors (or
following the Class B Triggering Event in respect of
the New RIHF Junior Mortgage Notes, a majority of the
entire Board of Directors of RII (the "RII Board of
Directors").
Voting rights..................... None, other than (i) the election of directors by the
holders of RII Class B Common Stock, (ii) to the extent
required under Delaware law, and (iii) with respect to
certain amendments to the Amended RII Certificate of
Incorporation (as defined in the Plan) or the Amended
RII Bylaws (as defined in the Plan) that would impact
the RII Class B Common Stock.
Preemptive rights................. None.
See "Description of New Equity Securities".
</TABLE>
PIRL ORDINARY SHARES
If the SIHL Sale is not consummated on or before the Effective Date, then,
subject to the satisfaction of certain conditions, PIRL Ordinary Shares will be
issued to the holders of the Old Series Notes as of the Distribution Record Date
to effect the PIRL Spin-Off. The PIRL Ordinary Shares will be the only
outstanding class of capital stock of PIRL as of the Distribution Date.
<TABLE>
<S> <C>
Issuer............................ PIRL.
</TABLE>
h-TM-
55
<PAGE>
<TABLE>
<S> <C>
Number of shares.................. Up to 25,000,000 authorized, 5,000,000 of which will be
issued as of the Distribution Date (assuming all
distributions to be made under the Plan are made on the
Distribution Date).
Dividends......................... Dividends declared by the PIRL Board of Directors would
be payable from legally available funds.
Redemption........................ None.
Liquidation rights................ The net proceeds of any liquidation of PIRL will be
payable pro rata to the holders of the PIRL Ordinary
Shares.
Restrictions on transfer.......... None.
Election of directors............. Holders of the PIRL Ordinary Shares to elect all
directors of PIRL.
Voting rights..................... One vote per share on all matters on which shareholders
are entitled to vote.
Preemptive rights................. None.
</TABLE>
See "Description of New Equity Securities" and "Description of PIRL Standby
Distribution Agreement".
SIHL SERIES A SHARES
If the SIHL Sale is consummated on or before the Effective Date, then the
SIHL Series A Shares, representing 40% of the capital stock of SIHL to be
outstanding after the SIHL Sale, will be issued to the holders of the Old Series
Notes on the Distribution Date. Such shares are entitled to the benefit of the
Put Right. See "Description of Paradise Island Purchase Agreement."
FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND
PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE SIHL
PROSPECTUS RELATING TO THE SIHL SERIES A SHARES. RII HAS SUPPLIED CERTAIN
INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS FOUND IN RII'S
REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN INFORMATION CONCERNING
THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN THE PREPARATION OF THE
SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT FILED BY SIHL WITH THE
COMMISSION UNDER THE SECURITIES ACT). RII AND ITS ADVISERS DISCLAIM ANY
RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND FORM OF PRESENTATION
OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION
STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND PURCHASE AGREEMENT
CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE ACCURACY OF THE
INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE SIHL PROSPECTUS
(AND RELATED REGISTRATION STATEMENT).
VOTING PROCEDURES
GENERAL. RII and GRI, upon the terms and conditions set forth herein and in
the voting instructions set forth in the Ballots, are soliciting an Acceptance
of the Plan from each person that was a beneficial owner on the Voting Record
Date of (a) any Old Series Notes (and the beneficiary of the related GRI
Guaranty endorsed thereon), (b) any RII Common Stock, (c) the GRI Common Stock,
(d) the RII Intercompany Claim and (e) any 1990 Stock Options. A form of Ballot
to be used for voting to accept or reject the Plan (and, in the case of holders
of Old Series Notes, for indicating consents to the termination and release of
the Old Security Documents), together with a pre-addressed, postage-paid
envelope, has been provided with this Information Statement/Prospectus. The
terms of the Solicitation are for the sole benefit of RII and GRI and may be
asserted by RII and GRI regardless of the circumstances or may be waived by RII
and GRI, in whole or in part, at any time and from time to time, in their sole
discretion (subject to the approval of Fidelity and TCW so long as the funds and
accounts managed by them hold in the aggregate at least 20% of the outstanding
Old Series Notes). Any determination by RII and GRI concerning the terms of the
Solicitation will be final and binding upon all parties. Master Ballots, which
will be distributed separately to banks and brokerage firms, will be used to
record the votes of beneficial owners.
56
<PAGE>
The following classes of claims and interests are impaired under the Plan
and all holders of Allowed Claims or Interests in such classes as of the Voting
Record Date are entitled to vote to accept or reject the Plan:
RII Class 2 -- Claims of holders of Old Series Notes (use gray Ballot)
RII Class 7 -- Interests of holders of RII Common Stock (use blue Ballot)
RII Class 8 -- Interests of holders of 1990 Stock Options (use green Ballot)
GRI Class 2 -- Claims of holders of GRI Guaranty (use gray Ballot)
GRI Class 4 -- Claims of RII, as the holder of the RII Intercompany Claims
GRI Class 5 -- Interest of RII, as the holder of all GRI Common Stock
ANY HOLDER OF CLAIMS AND INTERESTS IN MORE THAN ONE CLASS IS REQUIRED TO
VOTE SEPARATELY WITH RESPECT TO EACH CLASS IN WHICH SUCH HOLDER HAS CLAIMS AND
INTERESTS. PLEASE USE A SEPARATE BALLOT OF THE APPROPRIATE FORM TO VOTE EACH
SUCH CLASS OF CLAIM AND INTEREST. Although RII Class 2 and GRI Class 2 Claims
are to be voted on the same Ballot, holders of such Claims must use a separate
Ballot for each series of Old Series Notes which they hold and for each account
in which Old Series Notes are held. In addition, banks and brokerage firms must
submit separate Master Ballots for each series of Old Series Notes for which
they have beneficial owners.
The Voting Record Date for voting on the Plan is the close of business in
The City of New York, State of New York on January 10, 1994. To be entitled to
vote to accept or reject the Plan, a holder of an RII Class 2 Claim, RII Class 7
Interest, RII Class 8 Interest, GRI Class 2 Claim, GRI Class 4 Claim, or GRI
Class 5 Interest must have been the beneficial owner of such claim or interest
at the close of business on the Voting Record Date. It is important that all
beneficial owners vote to accept or reject the Plan. Under the Bankruptcy Code,
for purposes of determining whether the Requisite Acceptances have been
received, only beneficial owners who vote will be counted. Each beneficial owner
electing to vote on the Plan should (i) carefully read the voting instructions
set forth in the applicable Ballot, (ii) complete the applicable Ballot, (iii)
mark the Ballot to indicate such holder's vote on the Plan, (iv) indicate in the
appropriate place on the Ballot whether such holder consents to the release of
the Old Security Documents (record holders of Old Series Notes only), and (v)
sign and return the Ballot in accordance with the instructions set forth
thereon. ANY BALLOT THAT IS EXECUTED BY A RECORD HOLDER AND DOES NOT INDICATE A
REJECTION OF THE PLAN WILL BE DEEMED AN ACCEPTANCE OF THE PLAN. See "The
Solicitation".
CONSENTS TO TERMINATE AND RELEASE OLD SECURITY DOCUMENTS. RII also is
soliciting the consents of the record holders of outstanding Old Series Notes
pursuant to the terms of the Old Series Note Indenture in order to effect the
termination and release of the Old Security Documents under which the liens on
the property securing the Old Series Notes were granted or created. The Old
Series Note Indenture requires that consents be obtained from the record holders
of at least 66 2/3% in aggregate principal amount of the outstanding Old Series
Notes and the record holders of at least a majority in aggregate principal
amount of each series of the Old Series Notes in order to terminate and release
the Old Security Documents. Such consents must be evidenced by such record
holders separately from their vote on the Plan. The Ballots for the holders of
Old Series Notes permit holders to give or withhold such consent. ANY BALLOT
EXECUTED BY A HOLDER OF OLD SERIES NOTES RETURNED WITHOUT AN INDICATION TO
WITHHOLD SUCH CONSENT WILL BE DEEMED TO GIVE SUCH CONSENT.
RII is soliciting these consents for the purposes of: (i) releasing the
Resorts Casino Hotel from the liens of the Old Security Documents so that it may
be encumbered to secure the RIHF Senior Facility Notes, the RIH Senior Facility
Guaranty, the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF
Junior Mortgage Notes and the RIH Junior Mortgage Guaranty; (ii) effecting
either the SIHL Sale or the PIRL Spin-Off; and (iii) releasing the Non-Operating
Real Property from the liens of the Old Security Documents. Absent a release of
the Old Security Documents through either consent or an appropriate Bankruptcy
Court order, the transaction contemplated by the Plan cannot be consummated
because RII will be unable to pledge the requisite collateral for repayment of
the New Debt Securities and the RIHF Senior Facility.
In no event will the consents to release the Old Security Documents be used
to effectuate the termination and release of the Old Security Documents in the
absence of the confirmation and
57
<PAGE>
consummation of the Plan. If RII and GRI fail to receive the Requisite
Acceptances, notwithstanding receipt of sufficient consents to release and
terminate the Old Security Documents pursuant to the Old Series Note Indenture,
such consents will only be used in the event that RII and GRI continue to pursue
confirmation and consummation of the Plan. In the event that RII and GRI elect
or are required to resolicit Acceptances of the Plan, however, they reserve the
right not to resolicit with respect to the consents to release the Old Security
Documents and to use consents received from the initial Solicitation.
VOTING DEADLINE; EXTENSIONS; WITHDRAWAL OR REVOCATION OF BALLOTS. The
Solicitation will expire at 5:00 p.m., New York City time, on the Voting
Deadline. Except to the extent RII and GRI so determine or as permitted by the
Bankruptcy Court, Ballots or Master Ballots that are received after the Voting
Deadline will not be accepted or used by RII and GRI in connection with RII's
and GRI's request for confirmation of the Plan (or any permitted modification
thereof). Pursuant to the instructions set forth in the Ballots and Master
Ballots, votes may be submitted prior to the Voting Deadline by facsimile.
RII and GRI expressly reserve the right, at any time or from time to time,
to extend the Voting Deadline by giving oral or written notice to the
Solicitation Agent of such extension. The Solicitation can be extended for that
period of time necessary to obtain the Requisite Acceptances. Any extension or
expiration of the Voting Deadline will be followed as promptly as practicable by
a public announcement made through the Dow Jones News Service. There can be no
assurance that RII and GRI will exercise their right to extend the Voting
Deadline. As a practical matter: (a) without the consent of SIHL, the
Solicitation cannot be extended beyond February 15, 1994, the date that Chapter
11 Cases must be filed (and the Solicitation thereby terminated) by RII and GRI
to avoid terminating SIHL's obligations under the Paradise Island Purchase
Agreement; (b) if RII and GRI are unable to meet their payment obligations under
the Old Series Notes on April 15, 1994, foreclosure or other collection actions
may require RII and GRI to file Chapter 11 Cases and thereby terminate the
Solicitation; and (c) RII and GRI currently intend to extend the Solicitation
only if the Restructuring as proposed in the Plan is achievable if the
Solicitation is extended and there is a likelihood that the extension will
facilitate receipt of the Requisite Acceptances. During any extension of the
Voting Deadline, all Ballots and Master Ballots previously given will remain
subject to all the terms and conditions of the Solicitation, including the
withdrawal and revocation rights specified herein.
At any time prior to the Voting Deadline, a party may withdraw or revoke a
Ballot that it has previously delivered; provided however, that a vote of a
beneficial owner evidenced by a Master Ballot which has been previously
delivered may be withdrawn or revoked only by the nominee completing such Master
Ballot. A Ballot may be revoked or withdrawn either by submitting a superseding
Ballot or by providing written notice to the Solicitation Agent. Neither RII nor
GRI intends to commence a case under chapter 11 of the Code prior to the Voting
Deadline, although they reserve the right to do so in their sole discretion.
After commencement of a case under the Bankruptcy Code, withdrawal or revocation
may be effected only with the approval of the Bankruptcy Court.
OWNERSHIP OF RII COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT. As of November 30, 1993, there were 2,003 record holders of RII
Common Stock.
The following table sets forth certain information as to the beneficial
ownership of RII Common Stock as of November 30, 1993, by persons known by RII
to be holders of 5% or more of RII Common Stock, by each director of RII, by
each executive officer named in the RII Summary Compensation
58
<PAGE>
Table (below), by all directors and officers of RII as a group and by all
persons expected to become holders of 5% or more of RII Common Stock when the
Restructuring is effected. Information as to the number of shares beneficially
owned has been furnished by the persons named in the table.
<TABLE>
<CAPTION>
PRE-RESTRUCTURING POST-RESTRUCTURING
-------------------------------------- ------------------------------------
AMOUNT AND AMOUNT AND
NATURE OF SHARES PERCENT OF NATURE OF SHARES PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS BENEFICIALLY OWNED CLASS(6)
- ---------------------------------------- --------------------- ------------ ------------------- ------------
<S> <C> <C> <C> <C>
Merv Griffin............................ 4,398,115 21.82% 9,063,115(4) 21.29%
Antonio C. Alvarez II................... 5,000 .02 5,000 .01
Warren Cowan............................ 5,000 .02 5,000 .01
Thomas E. Gallagher..................... -- -- -- --
Joseph G. Kordsmeier.................... -- -- -- --
Paul C. Sheeline........................ 5,000 .02 5,000 .01
Christopher D. Whitney.................. 100,000(1) .49 100,000 .26
Matthew B. Kearney...................... 87,500(1) .43 87,500 .23
David G. Bowden......................... 25,000(1) .12 25,000 .07
Directors and officers as a group (nine 4,625,615(2) 22.71 9,290,615(5) 21.72
persons)...............................
David P. Hanlon......................... 1,094,800(3) 5.15 1,094,800 2.81
Fidelity................................ -- -- 6,714,941(7) 17.72
TCW..................................... -- -- 4,234,733(7) 11.17
<FN>
- --------------------------
(1) Ownership represents shares issuable upon exercise of 1990 Stock Options.
Related percentages shown give effect to the exercise of all such stock
options.
(2) Includes 212,500 shares which are issuable upon exercise of 1990 Stock
Options. Related percentage shown gives effect to the exercise of all such
stock options.
(3) Ownership represents shares issuable upon exercise of certain fully vested
stock options issued pursuant to the 1990 Stock Option Plan. Related
percentages shown give effect to the exercise of all such stock options.
See Note (5) to RII Summary Compensation Table under "Management of RII --
Executive Compensation".
(4) Includes 4,665,000 shares issuable upon exercise of the Griffin Warrants
assuming that the Griffin Warrants are issued. Related percentage gives
effect to their exercise.
(5) Includes 212,500 shares which are issuable upon exercise of 1990 Stock
Options and 4,665,000 shares issuable upon exercise of the Griffin
Warrants. Related percentage shown gives effect to the exercise of all
such stock options and the Griffin Warrants.
(6) The percentages shown give effect to the issuance of 17,025,000 shares to
the holders of the Old Series Notes and 715,000 shares to financial
advisers in settlement of certain recapitalization costs.
(7) Assumes that the funds and accounts managed by Fidelity and TCW continue
to own on the Distribution Record Date all the Old Series Notes they own
as of October 21, 1993.
</TABLE>
INTERESTS OF CERTAIN PERSONS IN THE RESTRUCTURING
The following directors and officers of RII may have, to the extent
indicated, an interest in the Restructuring.
In April 1993, RII, RIH and the Griffin Group executed the New Griffin
Services Agreement to be effective as of September 17, 1992, the termination
date of the Old Griffin Services Agreement. Merv Griffin serves as a director
and the Chairman of the Board of RII; the Griffin Group is a company controlled
by Merv Griffin. The New Griffin Services Agreement will be assumed by RII and
remain in place after the Effective Date. The New Griffin Services Agreement has
a four-year term. Under certain circumstances, however, the New Griffin Services
Agreement could remain in force up to an additional year. Pursuant to the New
Griffin Services Agreement, Mr. Griffin and the Griffin Group will promote the
operations of the Company in Atlantic City and The Bahamas. Fees have already
been paid to the Griffin Group for the first three years of the term of the New
Griffin Services Agreement. In conjunction with the negotiations among Fidelity,
TCW and the Griffin Group relating to the Griffin Group's performance under the
New Griffin Services Agreement, certain modifications to the New Griffin
Services Agreement were negotiated. As a result of these modifications, the
following will occur: (1) on or prior to the Effective Date, RII will pay
$2,310,000 to the Griffin Group for the fourth year of the New Griffin Services
Agreement by reducing the principal amount of the Griffin Group Note in an equal
amount; (2) subsequent to such payment, but no later than the Effective Date,
the Griffin Group will pay the balance of the Griffin Group Note (approximately
$3.0
59
<PAGE>
million) to RII; and (3) on the Distribution Date, RII will issue to the Griffin
Group the Griffin Warrants to purchase 4,665,000 shares of RII Common Stock, or
approximately 10% of the RII Common Stock on a fully diluted basis. The Griffin
Warrants will be exercisable on the Effective Date at an exercise price of the
lesser of $1.875 and the average closing price of RII Common Stock for the 20
trading days following the Effective Date. In conjunction with the negotiations
among Fidelity, TCW and the Griffin Group, the Griffin Group negotiated a
reduction in the exercise price for the Griffin Warrants from the original
exercise price set forth in the New Griffin Services Agreement. The exercise
prices prior to such amendment were based upon percentages of the average
closing price of the RII Common Stock during the 20 trading days following the
Effective Date (with certain minimum prices) and ranged from the greater of
$1.00 or 125% of such price as to the first 25% of the Griffin Warrants up to
the greater of $1.75 or 200% of such price as to the final 25% of the Griffin
Warrants. The change in the exercise price was approved by RII, Fidelity and TCW
to provide additional incentives to the Griffin Group for its efforts to improve
the operations and value of RII.
Pursuant to an agreement dated as of September 27, 1993, between RII and
David P. Hanlon (the "Hanlon Termination Agreement"), RII and Mr. Hanlon
mutually agreed to the termination, as of October 31, 1993, of Mr. Hanlon's
September 17, 1992 employment agreement with RII (the "Hanlon Employment
Agreement"). Mr. Hanlon served as President and Chief Executive Officer of RII
and owns fully vested 1990 Stock Options to purchase 1,094,800 shares of RII
Common Stock (or 5.15% of the outstanding shares of the RII Common Stock
assuming such options were exercised). RII entered into the Hanlon Termination
Agreement to effectuate an orderly restructuring of its senior management.
Pursuant to the Hanlon Employment Agreement, Mr. Hanlon is entitled to $850,000
earned under the Hanlon Employment Agreement but not yet paid as of October 31,
1993. In addition, pursuant to the Hanlon Termination Agreement, Mr. Hanlon is
entitled to receive a total of $2,648,656, consisting of the present value of
future base salary under the Hanlon Employment Agreement as determined under the
Hanlon Termination Agreement in the sum of $1,303,076 and $1,345,580 in respect
of the performance bonuses for fiscal years ending 1994 and 1995 payable under
the Hanlon Employment Agreement, half of which was paid on October 31, 1993 and
half of which will be paid upon the earlier of (i) the acceptance of a
reorganization or recapitalization of RII by the requisite number and amount of
RII's creditors voting on such restructuring or reorganization and (ii) April
15, 1995. In addition, Mr. Hanlon will receive a bonus from RII in the amount of
$325,000 in connection with the reorganization or recapitalization of RII,
payable prior to any bankruptcy filing by RII. Finally, Mr. Hanlon will receive
a bonus of $300,000 upon the disposition of the Paradise Island Business.
Accordingly, Mr. Hanlon would receive a total of $625,000 in connection with the
Restructuring. The payment to be made to Mr. Hanlon with respect to the
disposition of the Paradise Island Business may be subject to the approval of
the Bankruptcy Court.
Mr. Alvarez, a director of RII, also is the Chairman of Alvarez & Marsal, a
financial advisory firm which RII has retained to provide it with advice
regarding RII's financial alternatives, including the Restructuring. If the
Requisite Acceptances are obtained, Alvarez & Marsal will receive a payment in
the amount of $250,000 and 125,000 shares of RII Common Stock prior to any
bankruptcy filing by RII.
SOLICITATION AGENT
Hill and Knowlton, Inc. ("Hill and Knowlton") will act as Solicitation Agent
in connection with the Solicitation. Its telephone number is (212) 210-8850
(call collect). As part of its responsibilities as Solicitation Agent, Hill and
Knowlton will tabulate all votes cast in connection with the Solicitation. All
inquiries relating to the Solicitation should be directed to Hill and Knowlton
at such telephone number. Requests for information or additional copies of this
Information Statement/Prospectus or Ballots should be directed to Hill and
Knowlton. All deliveries to Hill and Knowlton in its capacity as Solicitation
Agent should be directed to one of the addresses set forth on the back cover
page of this Information Statement/Prospectus.
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<PAGE>
Hill and Knowlton will receive reasonable and customary compensation for
services rendered in connection with the Solicitation, will be reimbursed for
reasonable out-of-pocket expenses and will be indemnified against certain
expenses in connection therewith.
OTHER ELEMENTS OF THE RESTRUCTURING
The transactions described below will be effected upon consummation of the
Restructuring. Each such transaction is provided for in the Plan.
RIHF SENIOR FACILITY. The RIHF Senior Facility with one or more funds
managed by Fidelity will be executed and delivered (although conditions
precedent to funding may not have then been satisfied.)
AMENDMENTS TO RII'S CERTIFICATE OF INCORPORATION AND BY-LAWS. Upon the
consummation of the Restructuring and pursuant to the Plan, the Restated
Certificate of Incorporation of RII will be amended (the "Amended RII
Certificate of Incorporation") to provide for: (i) an increase in the authorized
number of shares of RII Common Stock; (ii) the authorization and issuance of the
RII Class B Common Stock; (iii) the authorization of preferred stock; (iv) the
election of two-thirds of the entire RII Board of Directors by the holders of
RII Common Stock (or following the occurrence of the Class B Triggering Event
with respect to the New RIHF Junior Mortgage Notes one less than one-half of the
entire RII Board of Directors); and (v) the election of one-third of the entire
RII Board of Directors by the holders of RII Class B Common Stock (or following
the occurrence of the Class B Triggering Event with respect to the New RIHF
Junior Mortgage Notes, a majority of the entire RII Board of Directors). The
form of the Amended RII Certificate of Incorporation is attached as Appendix C.
Upon consummation of the Restructuring and pursuant to the Plan, the By-laws
of RII will be amended (the "Amended RII By-laws") as necessary in connection
with the Restructuring. The form of the Amended RII By-laws is attached as
Appendix D.
Pursuant to the Delaware General Corporation Law, the Amended RII
Certificate of Incorporation and the Amended RII By-laws may be adopted upon
confirmation of the Plan without further action by RII's directors or the
holders of RII Common Stock.
INTERIM MANAGEMENT AGREEMENT. If the SIHL Sale is not consummated on the
Effective Date, then, at the election of PIRL, RII will enter into the Interim
Management Agreement with PIRL to operate the Paradise Island Business. The
Interim Management Agreement would have an initial term of one year and be
renewable on a yearly basis thereafter. The annual management fee payable to the
Company under the Interim Management Agreement would be 3% of gross revenues of
the Paradise Island Business. PIRL may terminate the Interim Management
Agreement for any reason upon 30 days' prior notice. In the event of such a
termination, RII will be entitled to a termination fee of $1,000,000, in
addition to the unpaid balance of the annual management fee actually earned
through the date of termination.
MANAGEMENT COMPENSATION ARRANGEMENTS. All existing compensation
arrangements with management of the Company, except for the 1990 Stock Option
Plan, will continue. Existing employment contracts with management of the
Company are expected to be renewed in the ordinary course of business. As part
of the Restructuring, the 1990 Stock Option Plan will be terminated and no
further 1990 Stock Options will be issued. Existing holders of 1990 Stock
Options will retain their options under the Plan. The exercise price of the 1990
Stock Options shall remain fixed at the existing exercise price, and shall not
be altered. See "Management of RII".
1994 STOCK OPTION PLAN. In conjunction with the Restructuring, RII will
adopt the 1994 Stock Option Plan for RII and its subsidiaries to attract, retain
and motivate their officers, directors and key employees. To the extent that
shareholder approval of the 1994 Stock Option Plan is required under Rule 16b-3
promulgated under the Exchange Act, if sufficient Acceptances are received from
holders of RII Common Stock and Old Series Notes (including the related GRI
Guaranty), RII intends to use
61
<PAGE>
such Acceptances, along with the Confirmation Order, to constitute approval of
the 1994 Stock Option Plan in compliance with Rule 16b-3. The form of the 1994
Stock Option Plan is attached as Exhibit C to the Plan.
TRANSACTIONS RELATIVE TO SIHL SALE OR PIRL SPIN-OFF. On the Effective Date,
the following will occur (amounts reflected are balances as of September 30,
1993; actual amounts to be effected will be balances as of the Effective Date):
(1) GRI will assume the obligation of RIB to repay the intercompany debt
owed by RIB to RIH ($50,000,000) plus accrued interest thereon and the
intercompany debt owed by RIB to RII ($11,192,000). As a result of such
assumptions, RIB will have no obligations to repay any intercompany debt.
(2) If the SIHL Sale is consummated (or, with the consent of Fidelity
and TCW (so long as the funds and accounts managed by them hold in the
aggregate at least 20% of the outstanding Old Series Notes) if the PIRL
Spin-Off is effected), GRI will distribute to its immediate parent, RII, all
the outstanding capital stock of RIB that is owned by GRI. RIB is the
holding company for the Paradise Island assets located in The Bahamas, which
are held in the following corporations: (a) IHC; (b) PEL; (c) PIB; (d) PIL;
(e) PBI; and (f) PSS. As a result of such distribution, RIB will be a
first-tier subsidiary of RII.
(3) Either: (A) pursuant to the Paradise Island Purchase Agreement, in
exchange for 2,000,000 SIHL Series A Shares, representing 40% of the capital
stock of SIHL to be outstanding after the SIHL Sale, and the SIHL Aggregate
Cash Purchase Price, SIHL will purchase (i) from RII all the capital stock
of RIB and (ii) directly or through subsidiaries the RII Real Estate Assets
and substantially all the assets of the U.S. Paradise Island Subsidiaries
and will assume substantially all the non-intercompany liabilities relating
to such assets; or (B) if the SIHL Sale is not consummated on the Effective
Date, (i) RII will contribute all the capital stock of RIB then directly
owned by RII to the capital of PIRL, which was formed as a first-tier
subsidiary of RII to effect the PIRL Spin-Off, in exchange for PIRL Ordinary
Shares (which, when added to the PIRL Ordinary Shares already owned by RII,
shall equal all the issued and outstanding PIRL Ordinary Shares which are to
be distributed to the holders of the Old Series Notes on the Distribution
Date) and (ii) subsidiaries of PIRL will acquire the RII Real Estate Assets
and substantially all the assets of the U.S. Paradise Island Subsidiaries
and will assume substantially all the non-intercompany liabilities relating
to such assets.
For a chart summarizing the ownership structure of RII, including RIB and
its subsidiaries and the U.S. Paradise Island Subsidiaries, as of the date
hereof and after giving effect to the Restructuring, see "Pre-and
Post-Restructuring Ownership Structures".
ISSUANCE OF PROMISSORY NOTES BY RIH TO RIHF. In order to effect the
issuance of the RIH Promissory Note and the RIH Junior Promissory Note by RIH,
which promissory notes will be held by the Collateral Agent as security for
payment of the New Debt Securities, the following will occur on the Effective
Date (amounts reflected are balances as of September 30, 1993; actual amounts to
be effected will be balances as of the Effective Date):
(1) RIH will distribute the RIH Promissory Note and the RIH Junior
Promissory Note, secured by the RIH Mortgage and the RIH Junior Mortgage,
respectively, to RII in repayment of the intercompany debt owed to RII by
RIH ($51,325,000) and as a distribution to its shareholder.
(2) RII will exchange the RIH Promissory Note and the RIH Junior
Promissory Note, together with the related RIH Mortgage and RIH Junior
Mortgage, for New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes to
be issued by RIHF.
(3) The holders of Old Series Notes will receive the New RIHF Mortgage
Notes and the New RIHF Junior Mortgage Notes and RIHF will assign to the
Collateral Agent the RIH Promissory Note, the RIH Junior Promissory Note,
the RIH Mortgage and the RIH Junior Mortgage.
62
<PAGE>
(4) RII will contribute to GRI the intercompany obligation of GRI to RII
($51,388,000).
(5) Upon termination and release of the RIH Pledge Agreement on the
Effective Date, GRI will exchange with RIH the $325,000,000 of non-interest
bearing RIH Notes for an amount of stock representing on a fully diluted
basis 99.99% of the issued and outstanding common stock of RIH.
SUBSIDIARY TRANSACTIONS. On the Effective Date, after the transactions
described above have occurred, RII will contribute to the capital of GRI the
remaining .01% of the issued and outstanding stock of RIH held by RII on the
date hereof. RIH will become a wholly owned first-tier subsidiary of GRI and an
indirect subsidiary of RII. RIH will then distribute to GRI, as a return of
surplus, the intercompany debt owed by GRI to RIH ($50,000,000) plus accrued
interest thereon.
The other subsidiaries of RII not discussed above, I.E., TGC Holding Corp.
("TGC Holdings"), New Pier Operating Company, Inc. ("NPO"), and Ess Zee
Corporation ("ESS"), will remain in place and will be unaffected by the Plan.
GRIFFIN COMPENSATION ARRANGEMENTS. In September 1990, Merv Griffin entered
into a License and Services Agreement, among Merv Griffin, Griffin Group and RII
(the "Old Griffin Services Agreement"). Pursuant to the Old Griffin Services
Agreement, Griffin Group granted the Company a non-exclusive license to use the
name and likeness of Merv Griffin for purposes of advertising and promoting the
Company's facilities and operations and Merv Griffin agreed to serve as Chairman
of the Board of Directors of RII. In addition, Griffin Group agreed to provide
to the Company the non-exclusive services of Merv Griffin, on a limited basis,
to host or present shows in which he is a featured performer at the Company's
facilities. Under the Old Griffin Services Agreement, the Company was not
required to compensate the Griffin Group and the Company has not paid any
compensation to the Griffin Group, or to Mr. Griffin directly, for Mr. Griffin's
services to the Company under the Old Griffin Services Agreement. The term of
the Old Griffin Services Agreement was for a period of two years, which expired
on September 16, 1992.
Pursuant to the New Griffin Services Agreement, which replaced the Old
Griffin Services Agreement as of its expiration, the Griffin Group granted RII
and RIH a non-exclusive license to use Merv Griffin's name and likeness for the
purpose of advertising and promoting the Resorts Casino Hotel and the Paradise
Island Business. Subject to the performance of their obligations, RII and RIH
also were granted the non-exclusive services of Merv Griffin, as Chairman of the
Board of Directors of RII and in other capacities, including without limitation
spokesperson for RII and RIH. The New Griffin Services Agreement has a basic
term of four years. Under certain circumstances, however, the New Griffin
Services Agreement could remain in force for up to an additional year.
The Griffin Group was entitled to receive from RII or RIH $4,100,000 upon
execution of the New Griffin Services Agreement as compensation for the first
two years of services. The Griffin Group is entitled to compensation in the
amounts of $2,205,000 and $2,310,000 for the third and fourth years of such
services, respectively. Additional prorated compensation also may be paid to the
Griffin Group if the New Griffin Services Agreement continues in force longer
than four years. RIH made the $4,100,000 payment for the first two years under
the New Griffin Services Agreement in April 1993. Simultaneously, Merv Griffin
made a partial prepayment of the Griffin Note in an equal amount to RII thereby
reducing the principal amount of the Griffin Note to $7,523,333. RII then
canceled the Griffin Note in exchange for the Griffin Group Note in the
principal amount of $7,523,333. The Griffin Group Note is payable on demand and
bears interest at the rate of 3% per year. The bank letter of credit securing
the Griffin Note was released by RII. Merv Griffin has personally guaranteed
payment of the Griffin Group Note. Under the New Griffin Services Agreement, RII
and RIH have the right, at their option, to elect to satisfy any compensation
obligation to the Griffin Group by reducing the outstanding amount of the
Griffin Group Note.
On September 17, 1993, RII made the $2,205,000 payment for the third year of
the New Griffin Services Agreement by reducing the principal amount of the
Griffin Group Note in an equal amount.
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<PAGE>
On or prior to the Effective Date, RII will pay $2,310,000 to the Griffin Group
for the fourth year of the New Griffin Services Agreement also by reducing the
principal amount of the Griffin Group Note in an equal amount. If for any reason
the Griffin Group fails to fulfill its obligations under the New Griffin
Services Agreement, it will be obligated to reimburse the Company for all
amounts paid with respect to periods for which such obligations are not
fulfilled.
After payment of the $2,310,000 referenced above, but no later than the
Effective Date, the Griffin Group will pay RII the balance of the Griffin Group
Note (approximately $3,000,000); RII will distribute the proceeds of such
payment to the holders of the Old Series Notes as part of Excess Cash. Payment
in full of outstanding amounts under the Griffin Group Note is a condition to
consummation of the Plan.
The New Griffin Services Agreement also provides that, as additional
consideration thereunder, the Griffin Group will be granted the Griffin
Warrants. Finally, RII and RIH also will provide the Griffin Group and Merv
Griffin with certain indemnification and insurance coverage and reimburse them
for certain expenses incurred in connection with the New Griffin Services
Agreement. Pursuant to the Restructuring, the New Griffin Services Agreement
will remain in place. See "Description of Griffin Warrants".
FRACTIONAL INTERESTS AND ODD-LOT HOLDINGS. Pursuant to the Plan, fractional
shares of the New Equity Securities that would be distributable on the basis of
the provisions of the Plan will not be issued or distributed. The New RIHF
Mortgage Notes and the New RIHF Junior Mortgage Notes will be issued only in
denominations of $1,000 and integral multiples thereof. As soon as practicable
after the Effective Date, the disbursing agent for the holders of Old Series
Notes will aggregate and sell all fractional amounts of the New Equity
Securities, the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes
at then prevailing prices and distribute the net proceeds pro rata to the
security holders entitled thereto. Notwithstanding the foregoing, no
distribution of less than $25 in cash or less than five shares of RII Common
Stock shall be made under the Plan. Such undistributed amount will become the
property of RII. Undistributed RII Common Stock will be held as treasury shares.
RISK FACTORS
In evaluating the Solicitation, impaired creditors and impaired equity
interest holders should consider, among other risks: (i) the continuing high
leverage of the Company; (ii) the Company's recent net losses; (iii) the
possible lack of a market for the New Debt Securities and the New Equity
Securities; (iv) uncertainties relating to financial forecasts; (v) interests of
certain persons in the Restructuring; (vi) the importance of the involvement of
Merv Griffin in the affairs of the Company; (vii) certain Federal income tax
considerations; (viii) certain bankruptcy and insolvency considerations; (ix)
certain considerations related to original issue discount in the event of
bankruptcy; (x) limitations on the Company's ability to incur additional senior
debt; (xi) security holders' possible inability to realize value from the
security for the New RIHF Mortgage Notes or the New RIHF Junior Mortgage Notes;
(xii) the fact that Fidelity and TCW acted on their own behalf, and not as
fiduciaries; (xiii) competition; (xiv) certain regulatory matters; (xv) the
potential disqualification of security holders by the Casino Control Commission;
(xvi) the new ownership of the Paradise Island Business; (xvii) if the PIRL
Spin-Off shall be effected, the enforceability of civil liabilities against
PIRL; (xvii) certain considerations regarding ownership of SIHL Series A Shares;
(xviii) certain defaults by RII under the Old Series Note Indenture; and (xiv)
if the SIHL Sale is not consummated and the PIRL Spin-Off occurs, the recent and
continuing operating losses of the Paradise Island Business. See "Risk Factors".
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The Company intends to take the position that the exchange of the Old Series
Notes for the RII Common Stock and the RII Class B Common Stock will not be
treated as the receipt of stock pursuant to a recapitalization as such term is
defined in Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended
(the "Tax Code"). Accordingly, gain or loss will be recognized by a holder of
Old
64
<PAGE>
Series Notes as a result of the Restructuring to the extent that such holder's
basis for his Old Series Notes exchanged is less than (or greater than) the sum
of the respective fair market values of the New Debt Securities, the RII Common
Stock, the RII Class B Common Stock, the SIHL Series A Shares, the SIHL
Aggregate Cash Purchase Price, Excess Cash, Net Plan Deferred Cash and Net Plan
Consummation Cash. See "Certain Federal Income Tax Considerations -- Exchange of
Old Series Notes."
The New RIHF Mortgage Notes may be, and the New RIHF Junior Mortgage Notes
will be, issued with original issue discount ("OID"). Accordingly, holders may
be required to include amounts in income in advance of the receipt of cash
interest. See "Certain Federal Income Tax Considerations -- OID with Respect to
the New Debt Securities."
The Company expects that, as a result of the Restructuring, it will undergo
an "ownership change" within the meaning of Tax Code Section 382; however, the
Company believes that an exception available to corporations in chapter 11 will
apply. See "Certain Federal Income Tax Considerations -- Tax Consequences to the
Company -- Net Operating Loss Carryovers and Limitations."
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following tables set forth certain historical and pro forma consolidated
financial data for RII and RIH. Certain historical financial data also are
presented for RIB, consolidated with its subsidiaries, and the U.S. Paradise
Island Subsidiaries on a combined basis. This group of companies is sometimes
hereinafter referred to as the "PIRL Group". If the SIHL Sale is not consummated
on the Effective Date and certain other conditions are satisfied or waived, the
PIRL Spin-Off will be effected. The pro forma information presented for the PIRL
Group assumes the PIRL Spin-Off occurs. Because the PIRL Spin-Off will result in
RIB becoming a subsidiary of PIRL and other subsidiaries of PIRL acquiring the
assets and related liabilities of the U.S. Paradise Island Subsidiaries and the
RII Real Estate Assets relating to the Paradise Island Business (and the related
non-intercompany liabilities), the pro forma information presented for this
group is for PIRL consolidated with its subsidiaries.
The historical financial data for the year 1990 is presented separately for
the periods "Through August 31" and "From September 1" due to a change in
control and accounting basis that occurred effective August 31, 1990 as a result
of the confirmation of the Old Plan.
The pro forma statement of operations data give effect to the Restructuring
as if it had occurred on January 1, 1992. The pro forma balance sheet data give
effect to the Restructuring as if it had occurred on September 30, 1993. The
unaudited pro forma financial information is not necessarily indicative of
future results or what the respective entities' financial position or results of
operations would actually have been had the transactions occurred on the dates
indicated. Such information should not be used as a basis to project results for
any future periods. For additional information, see the Consolidated Financial
Statements and the Combined Financial Statements and the notes thereto and "Pro
Forma Financial Data" and the notes thereto.
<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, PRO FORMA
-------------------------------------------- --------------------------------
FOR THE FOR THE
1990 THREE QUARTERS FOR THE THREE QUARTERS
--------------------------- ENDED YEAR ENDED ENDED
THROUGH FROM SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
AUGUST 31 SEPTEMBER 1 1991 1992 1993 1992 1993
----------- ------------- ------ ------ --------------- -------------- ---------------
(IN MILLIONS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
RII STATEMENT OF OPERATIONS
DATA:
Operating revenues............ $ 294.0 $ 129.6 $418.2 $436.9 $ 337.9 $ 270.6 $ 214.8
Depreciation.................. 20.0 6.2 23.8 25.3 20.9 11.5 10.3
Earnings (loss) from
operations................... 13.5 (1.2) 16.0 21.5 20.7 25.6 22.5
Interest income (expense), net
(a).......................... 1.9 (12.3) (58.4) (73.5) (73.2) (23.9) (19.5)
Recapitalization costs (b).... (187.0) (2.8) (4.9)
Earnings (loss) before income
taxes and extraordinary
item......................... (171.6) (13.5) (42.4) (54.8) (57.4) 1.7 3.0
Extraordinary item (b)........ 429.8
Net earnings (loss)........... 258.2 (13.5) (41.6) (53.5) (58.4) 3.0 2.0
Earnings (loss) per share
(c).......................... (.68) (2.07) (2.65) (2.90) .08 .05
Ratio of earnings to fixed
charges (d).................. -- -- -- -- -- 1.1 1.1
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
------------------------
HISTORICAL PRO FORMA
----------- -----------
(IN MILLIONS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
RII BALANCE SHEET DATA:
Cash and cash equivalents (e)............................................................. $ 71.0 $ 20.0
Net property and equipment................................................................ 454.1 277.4
Total assets.............................................................................. 586.6 328.9
Current maturities of long-term debt (f).................................................. 429.5 0.1
Long-term debt, excluding current maturities (f).......................................... 84.5 232.0
Shareholders' equity (deficit)............................................................ (64.6) 4.5
Book value per share...................................................................... (3.21) .12
<FN>
- ------------------------------
(a) Amounts presented include amortization of debt discount. During the period
through August 31, 1990, RII was in bankruptcy and did not accrue interest
or amortize discounts or issuance costs on its public debt.
(b) See Note 2 of Notes to Consolidated Financial Statements of RII for a
discussion of these items in 1990.
(c) For the period through August 31, 1990 there was a sole shareholder of
RII. Accordingly, no per share data is disclosed for that period.
(d) The ratios of earnings to fixed charges were computed by dividing earnings
available for fixed charges (earnings before income taxes and
extraordinary item, adjusted for interest expense, amortization of debt
discount and one-third of rent expense) by fixed charges. Fixed charges
include interest expense, amortization of debt discount and one-third of
rent expense. Earnings were insufficient to cover fixed charges by
$171,594,000 for the period through August 31, 1990; $13,531,000 for the
period from September 1, 1990; $42,402,000 for 1991; $54,802,000 for 1992;
and $57,370,000 for the three quarters ended September 30, 1993.
(e) Excludes restricted cash equivalents.
(f) Amounts are net of unamortized discounts.
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL
------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, PRO FORMA
------------------------------------------- --------------------------------
FOR THE FOR THE
1990 THREE QUARTERS FOR THE THREE QUARTERS
--------------------------- ENDED YEAR ENDED ENDED
THROUGH FROM SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
AUGUST 31 SEPTEMBER 1 1991 1992 1993 1992 1993
------------ ------------ ------ ------ --------------- -------------- ---------------
(IN MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
RIH STATEMENT OF OPERATIONS DATA:
Operating revenues................. $ 158.8 $ 76.2 $247.5 $262.7 $ 208.8 $ 262.7 $ 208.8
Depreciation....................... 10.7 1.9 9.1 11.4 10.3 11.4 10.3
Earnings from operations........... 3.4 2.3 14.8 21.0 15.8 21.0 15.8
Interest income (expense),
net (g)........................... 5.3 2.7 7.0 7.3 5.5 (18.0) (13.5)
Recapitalization costs (h)......... (119.8) (.9) (1.6)
Affiliated bad debt write-off
(h)............................... (99.0)
Earnings (loss) before income taxes
and extraordinary item............ (210.1) 5.0 21.8 27.4 19.7 3.0 2.3
Extraordinary item (h)............. (17.3)
Net earnings (loss)................ (227.4) 5.0 13.1 16.4 19.3 3.0 1.9
Ratio of earnings to fixed charges
(i)............................... -- 14.2 15.5 21.5 23.3 1.2 1.2
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
------------------------
HISTORICAL PRO FORMA
----------- -----------
(IN MILLIONS)
<S> <C> <C>
RIH BALANCE SHEET DATA:
Cash and cash equivalents................................................................. $ 30.8 $ 15.0
Net property and equipment................................................................ 166.4 166.4
Total assets.............................................................................. 275.4 209.0
Current maturities of notes payable to affiliate and other long-term debt................. 325.1 .1
Notes payable to affiliate and other long-term debt....................................... -- 147.6
Shareholder's equity (deficit)............................................................ (145.1) 17.3
<FN>
- ------------------------------
(g) Pro forma amounts include amortization of debt discount.
(h) See Note 2 of Notes to Consolidated Financial Statements of RIH for a
discussion of these items in 1990.
(i) The ratios of earnings to fixed charges were computed by dividing earnings
available for fixed charges (earnings before income taxes and
extraordinary item, adjusted for interest expense and one-third of rent
expense) by fixed charges. Fixed charges include interest expense and
one-third of rent expense. Earnings were insufficient to cover fixed
charges by $210,129,000 for the period through August 31, 1990.
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, PRO FORMA
--------------------------------------------- --------------------------------
FOR THE FOR THE
1990 THREE QUARTERS FOR THE THREE QUARTERS
---------------------------- ENDED YEAR ENDED ENDED
THROUGH FROM SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
AUGUST 31 SEPTEMBER 1 1991 1992 1993 1992 1993
------------ ------------- ------ ------ --------------- -------------- ---------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
PIRL GROUP STATEMENT OF OPERATIONS DATA:
Operating revenues............ $ 129.4 $ 50.9 $163.2 $166.4 $ 123.0 $ 166.4 $ 123.0
Depreciation.................. 9.0 4.3 14.6 13.8 10.6 9.0 6.9
Earnings (loss) from
operations................... 8.0 (6.2) (5.8) (5.7) (3.1) (4.5) (2.0)
Interest income (expense),
net.......................... (3.8) (2.1) (6.6) (6.5) (4.8) .2 .3
Recapitalization costs (j).... (41.3) (1.1) (1.7)
Affiliated bad debt write-off
(j).......................... (2.3)
Net earnings (loss)........... (39.4) (8.3) (12.4) (13.3) (9.6) (4.3) (1.7)
Earnings (loss) per share
(k).......................... (.86) (.34)
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
------------------------
HISTORICAL PRO FORMA
----------- -----------
(IN MILLIONS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
PIRL GROUP BALANCE SHEET DATA:
Cash and cash equivalents (l)............................................................. $ 12.9 $ 12.1
Net property and equipment................................................................ 176.6 112.0
Total assets.............................................................................. 211.5 143.9
Long-term debt............................................................................ .2 .2
Shareholders' equity...................................................................... 104.1 125.0
Book value per share (k).................................................................. 25.00
<FN>
- ------------------------------
(j) See Note 2 of Notes to Combined Financial Statements of the PIRL Group for
a discussion of these items in 1990.
(k) For historical presentation, members of the combined PIRL Group are
directly or indirectly wholly owned subsidiaries of RII. Accordingly, no
per share data is disclosed on a historical basis. Pro forma per share
data was calculated assuming 5,000,000 shares were issued to holders of
the Old Series Notes in accordance with the Plan.
(l) Excludes restricted cash equivalents.
</TABLE>
MARKET PRICES OF OLD SERIES NOTES AND RII COMMON STOCK
The Old Series Notes and the RII Common Stock are listed and traded on the
AMEX. The following table sets forth, for the periods listed, the high and low
trading price on the AMEX for each $100 principal amount of Old Series A Notes,
for each $100 principal amount of Old Series B Notes and for each share of RII
Common Stock.
<TABLE>
<CAPTION>
OLD OLD RII
SERIES A SERIES B COMMON
NOTES NOTES STOCK
------------------ ------------------ ------------------
FISCAL YEARS HIGH LOW HIGH LOW HIGH LOW
------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1991:
First Quarter............ 48 7/8 34 54 35 2 3/8 5/8
Second Quarter........... 55 44 55 51 2 1 3/8
Third Quarter............ 58 52 3/4 62 54 1/8 2 1 1/2
Fourth Quarter........... 62 56 63 3/4 57 1/2 1 5/8 1
1992:
First Quarter............ 76 58 75 58 3/4 2 3/4 1 1/4
Second Quarter........... 70 1/4 63 73 1/2 65 2 3/8 1
Third Quarter............ 68 1/2 60 1/2 69 3/4 60 1/2 1 1/4 3/4
Fourth Quarter........... 62 50 1/2 63 49 1/2 1 1/4 11/16
1993:
First Quarter............ 68 56 1/2 67 3/4 55 1 1/8 13/16
Second Quarter........... 74 60 74 59 1/2 3 7/8 13/16
Third Quarter............ 77 69 76 68 1/4 2 3/4 1 9/16
Fourth Quarter........... 72 66 72 64 1/2 2 1/8 1 3/8
1994:
First Quarter (through
January,1994)...........
</TABLE>
67
<PAGE>
On January 4, 1994, the last trading day prior to the date of this
Information Statement/ Prospectus for which closing prices were available, the
closing prices on the AMEX for each $100 principal amount of Old Series A Notes,
for each $100 principal amount of Old Series B Notes and for each share of RII
Common Stock were $70.00, $69.75 and $1.6875, respectively. No cash dividends on
the RII Common Stock were paid during any of the periods listed above.
MARKET AND TRADING
The Company will apply to have the New RIHF Mortgage Notes, the Units
comprised of the New RIHF Junior Mortgage Notes and the RII Class B Common
Stock, the RII Common Stock and (if issued) the PIRL Ordinary Shares listed on
the AMEX. It is a condition to consummation of the Plan that such securities be
listed on a national securities exchange or approved for quotation on the Nasdaq
National Market (subject to official notice of issuance). However there can be
no assurance that an active trading market for any such securities will develop
on the AMEX, the Nasdaq National Market or otherwise, and no assurance can be
given as to the price at which any such securities might trade. See "Risk
Factors -- Market for New Debt Securities and New Equity Securities". The
Company has been informed that SIHL will apply to have the SIHL Series A Shares
(if issued) listed on the Nasdaq National Market; such listing is a condition to
the SIHL Sale and to consummation of the Plan. For information regarding the
trading market for the SIHL Series A Shares, see the accompanying SIHL
Prospectus.
68
<PAGE>
RISK FACTORS
IN CONSIDERING WHETHER OR NOT TO VOTE TO ACCEPT THE PLAN, EACH IMPAIRED
CREDITOR AND EQUITY INTEREST HOLDER SHOULD CAREFULLY CONSIDER THE FOLLOWING
FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION CONTAINED IN THIS
INFORMATION STATEMENT/PROSPECTUS.
FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND
PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE
ACCOMPANYING SIHL PROSPECTUS RELATING TO THE SIHL SERIES A SHARES. RII HAS
SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS
FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN
INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN
THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT
FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES ACT). RII AND ITS
ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND
FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND
RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND
PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE
ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE
SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT).
CONTINUING HIGH LEVERAGE; FUTURE REFINANCINGS
The Company is highly leveraged. Although completion of the Restructuring
will reduce significantly the Company's debt obligations, the Company will
remain highly leveraged following the Restructuring. The Company had
approximately $482,000,000 principal amount of publicly issued recourse
indebtedness at October 15, 1993 (I.E., not including the Showboat Notes). After
giving effect to the Restructuring, the Company's estimated aggregate publicly
issued recourse indebtedness would total approximately $160,000,000, assuming no
borrowing is made under the RIHF Senior Facility. The Company's high leverage
poses substantial risks to holders of the Company's debt and equity securities.
Debt service on the New Debt Securities is premised solely on cash flows
generated from the continued operation of the Resorts Casino Hotel. The
Company's management believes that, following the completion of the
Restructuring, the Company will have sufficient cash flow from operations to pay
interest on all its outstanding debt as those payments become due.
There can be no assurance that the Company will generate sufficient cash
from operations to repay, when due, the principal amount of the New RIHF
Mortgage Notes maturing in 2003, the principal amount of the New RIHF Junior
Mortgage Notes maturing in 2004 or the principal amount of the Showboat Notes
maturing in 2000. As a result, the Company may be required to refinance such
amounts as they become due and payable. While the Company believes that it will
be able to refinance such amounts, there can be no assurance that any such
refinancing would be consummated or, if consummated, would be in an amount
sufficient to repay such obligations, particularly in light of the Company's
high level of debt. If the Company is unable to effectuate such refinancings or
renewals in the ordinary course of business, it may be required to sell equity
interests in the Company. The sale of additional equity interests in the Company
could result in substantial dilution of the interests of the Company's existing
equity holders. There can be no assurance that such sales would be consummated
or, if consummated, would be in an amount sufficient to repay such obligations
in full. The failure to raise sufficient amounts of capital from such sales
could ultimately result in the Company's inability to meet its debt obligations,
including its obligations under the New Debt Securities.
RECENT NET LOSSES
RII. The Company experienced net losses of $41,571,000 and $53,454,000 in
its fiscal years ended December 31, 1991 and 1992, respectively, and $58,370,000
for the three quarters ended September 30, 1993. In addition, the Company's
earnings before fixed charges were inadequate to
69
<PAGE>
cover fixed charges by $42,402,000, $54,802,000 and $57,370,000 for the fiscal
years ended December 31, 1991 and 1992, and the three quarters ended September
30, 1993, respectively. The Company's recent net losses and its liquidity
problems make it extremely unlikely that the Company will be able, unless it is
able to consummate the Restructuring, to continue as a going concern beyond
April 15, 1994 when the Old Series Notes mature.
PARADISE ISLAND BUSINESS. The PIRL Group experienced net losses of
$12,399,000 and $13,257,000 in its fiscal years ended December 31, 1991 and
1992, respectively, and $9,616,000 for the three quarters ended September 30,
1993.
LACK OF MARKET FOR NEW DEBT SECURITIES AND NEW EQUITY SECURITIES
The New Debt Securities are new issues of securities for which there
currently is no market. If the New Debt Securities are traded after their
initial issuance, their trading price will depend on a number of factors beyond
RII's control, including (i) the number of holders thereof, (ii) prevailing
interest rates and the market for similar securities, (iii) a possible belief
that the New Debt Securities bear interest at a rate insufficient to compensate
investors for the risks inherent in owning the New Debt Securities, (iv) a risk
that an active trading market in the New Debt Securities may not develop and (v)
volatility in the market for "high yield" securities such as the New Debt
Securities.
The Company will apply to have the New RIHF Mortgage Notes, the Units
comprised of the New RIHF Junior Mortgage Notes and the RII Class B Common
Stock, the RII Common Stock and (if issued) the PIRL Ordinary Shares listed on
the AMEX. It is a condition to consummation of the Plan, unless waived, that
such securities be listed on a national securities exchange or approved for
quotation on the Nasdaq National Market (subject to official notice of
issuance). However, there can be no assurance that an active trading market for
any such securities will develop on the AMEX, the Nasdaq National Market or
otherwise, and no assurance can be given as to the price at which any such
securities might trade. Factors such as quarterly fluctuations in the financial
and operating results of the Company, negative announcements by the Company or
others, and developments affecting the Company, its customers or the gaming
industry generally, could cause the market price of such securities to fluctuate
substantially.
The Company has been informed that SIHL will apply to have the SIHL Series A
Shares (if issued) listed on the Nasdaq National Market; such listing is a
condition to the SIHL Sale and to consummation of the Plan. For information
regarding the trading market for the SIHL Series A Shares, see the accompanying
SIHL Prospectus.
RISKS RELATING TO THE FORECASTS
The Company has prepared forecasts of certain financial data for the
five-year period following the Restructuring. The forecasts represent the
Company's best estimate of the most likely results of its operations and
financial position following the Restructuring. Such forecasts are based on
numerous assumptions with respect to industry performance, general business and
economic conditions and other matters, such as interest rates and the regulatory
climate, that are beyond the Company's control. Because the Paradise Island
Business will not be continued by the Company after the Restructuring, no
forecasts for the Paradise Island Business have been prepared by the Company. If
the PIRL Spin-Off occurs, the Paradise Island Business will be owned by the
holders of the Old Series Notes. Any forecasts for the Paradise Island Business
will be prepared by the new management of the Paradise Island Business. The
recent net losses and liquidity problems relative to the PIRL Group, including
the scarcity of cash for necessary capital improvements, create significant
uncertainty regarding the ability of the PIRL Group to continue to operate the
Paradise Island Business as a going concern in its present form beyond April
1994. See "Risk Associated with the Paradise Island Business." Holders of Old
Series Notes and RII Common Stock are cautioned not to place undue reliance on
the forecasts. See "The Restructuring -- Financial Forecasts for the Company".
In connection with the Old Plan, the Company prepared and publicly
disseminated forecasts of certain financial data for fiscal 1990 through fiscal
1994, including net revenues, operating expenses,
70
<PAGE>
operating income and earnings before interest and taxes, describing the
projected financial performance of the Company after consummation of the Old
Plan. The Company's actual results varied significantly from the forecasted
results prepared in connection with the Old Plan due, in large part, to the
Company's inability to sell the Paradise Island Business at a satisfactory
price.
INTERESTS OF CERTAIN PERSONS IN THE RESTRUCTURING
The Company believes that the terms of the Restructuring are the result of
arm's-length negotiations between the Company and representatives of Fidelity
and TCW. In addition, discussions were held with representatives of SIHL
regarding the Paradise Island Purchase Agreement and with the Griffin Group
regarding the New Griffin Services Agreement.
In April 1993, RII, RIH and the Griffin Group executed the New Griffin
Services Agreement to be effective as of September 17, 1992, the termination
date of the Old Griffin Services Agreement. Merv Griffin is a shareholder and
serves as a director and the Chairman of the Board of RII; the Griffin Group is
a company controlled by Merv Griffin. The New Griffin Services Agreement will be
assumed by RII and remain in place after the Effective Date. The New Griffin
Services Agreement has a four-year term. Under certain circumstances, however,
the New Griffin Services Agreement could remain in force up to an additional
year. Pursuant to the New Griffin Services Agreement, Mr. Griffin and the
Griffin Group will promote the operations of the Company in Atlantic City and
The Bahamas. Fees have already been paid to the Griffin Group for the first
three years of the term of the New Griffin Services Agreement. In conjunction
with the negotiations among Fidelity, TCW and the Griffin Group relating to the
Griffin Group's performance under the New Griffin Services Agreement, certain
modifications to the New Griffin Services Agreement were negotiated. As a result
of these modifications, the following will occur: (1) on or prior to the
Effective Date, RII will pay $2,310,000 to the Griffin Group for the fourth year
of the New Griffin Services Agreement by reducing the principal amount of the
Griffin Group Note in an equal amount; (2) subsequent to such payment, but no
later than the Effective Date, the Griffin Group will pay the balance of the
Griffin Group Note (approximately $3.0 million) to RII; and (3) on the
Distribution Date, RII will issue to the Griffin Group the Griffin Warrants to
purchase 4,665,000 shares RII Common Stock, or approximately 10% of the RII
Common Stock on a fully diluted basis. The Griffin Warrants will be exercisable
on the Effective Date at an exercise price of the lesser of $1.875 and the
average closing price of RII Common Stock for the 20 trading days following the
Effective Date. In conjunction with the negotiations among Fidelity, TCW and the
Griffin Group, the Griffin Group negotiated a reduction in the exercise price
for the Griffin Warrants from the original exercise price set forth in the New
Griffin Services Agreement. The exercise prices prior to such amendment were
based upon percentages of the average closing price of the RII Common Stock
during the 20 trading days following the Effective Date (with certain minimum
prices) and ranged from the greater of $1.00 or 125% of such price as to the
first 25% of the Griffin Warrants up to the greater of $1.75 or 200% of such
price as to the final 25% of the Griffin Warrants. The change in the exercise
price was approved by RII, Fidelity and TCW in order to provide additional
incentives to the Griffin Group under the New Griffin Services Agreement for its
efforts to improve the operations and value of RII. Consequently, Mr. Griffin
may have interests which conflict with those of RII and the interests of the
holders of the Old Series Notes, of RII Common Stock (including Mr. Griffin in
his capacity as a shareholder of RII) and of 1990 Stock Options.
Mr. David Hanlon, the President and Chief Executive Officer of RII until
October 31, 1993, owns fully vested 1990 Stock Options to purchase 1,094,800
shares of RII Common Stock (or 5.15% of the outstanding shares of the RII Common
Stock assuming such options were exercised). RII entered into the Hanlon
Termination Agreement in an effort to effectuate an orderly restructuring of its
senior management. Pursuant to the Hanlon Employment Agreement, Mr. Hanlon is
entitled to $850,000 earned under the Hanlon Employment Agreement but not yet
paid as of October 31, 1993. In addition, pursuant to the Hanlon Termination
Agreement, Mr. Hanlon is entitled to receive a total of $2,648,656, consisting
of the present value of future base salary under the Hanlon Employment Agreement
as determined under the Hanlon Termination Agreement in the sum of $1,303,076
and $1,345,580 in respect of the performance bonuses for fiscal years ending
1994 and 1995 payable under
71
<PAGE>
the Hanlon Employment Agreement, half of which was paid on October 31, 1993 and
half of which will be paid upon the earlier of (i) the acceptance of a
reorganization or recapitalization of RII by the requisite number and amount of
RII's creditors voting on such restructuring or reorganization and (ii) April
15, 1995. In addition, Mr. Hanlon will receive a bonus from RII in the amount of
$325,000 in connection with the reorganization or recapitalization of RII,
payable prior to any bankruptcy filing by RII. Finally, Mr. Hanlon will receive
a bonus of $300,000 upon the disposition of the Paradise Island Business.
Accordingly, Mr. Hanlon would receive a total of $625,000 in connection with the
Restructuring. The payment to be made to Mr. Hanlon with respect to the
disposition of the Paradise Island Business may be subject to the approval of
the Bankruptcy Court. Consequently, Mr. Hanlon may have interests which conflict
with those of RII and the interests of the holders of the Old Series Notes, of
RII Common Stock and of 1990 Stock Options.
Mr. Antonio Alvarez is a director of RII. Mr. Alvarez is also the Chairman
of Alvarez & Marsal, a financial advisory firm which RII has retained to provide
it with advice regarding RII's financial alternatives, including the
Restructuring. RII paid Alvarez & Marsal a monthly fee of $50,000 for such
advice amounting to $300,000 as of September 1, 1992, at which time RII's
payment of such fees was suspended. If the Requisite Acceptances are obtained,
Alvarez & Marsal will receive $250,000 and 125,000 shares of RII Common Stock
prior to any bankruptcy filing by RII. Consequently, Mr. Alvarez may have
interests which conflict with the interests of RII and the interests of the
holders of the Old Series Notes, of RII Common Stock and of 1990 Stock Options.
Pursuant to the Restructuring, all existing compensation arrangements with
members of the Company's management will continue after the Effective Date. As
part of the Plan, the 1990 Stock Option Plan will be terminated and the 1994
Stock Option Plan will be adopted. Holders of outstanding 1990 Stock Options
will retain their 1990 Stock Options and the exercise price therefor will remain
fixed at the exercise price at the time of grant. See "Management of RII --
Executive Compensation -- Employment Agreements; Termination of Employment and
Change in Control Arrangements".
INVOLVEMENT OF MERV GRIFFIN
The involvement of Merv Griffin in the affairs of the Company is believed to
be extremely important to its future prospects. The Company believes Merv
Griffin's participation enhances and projects a high positive profile for the
Company's operations, and helps to distinguish the Company from its competitors.
There can be no assurance that Merv Griffin's involvement will continue beyond
September 17, 1996, the termination date of the New Griffin Services Agreement.
No later than the Effective Date, the Griffin Group will have received advance
payment of the full amount due under the New Griffin Services Agreement, but
will be required to reimburse the Company for any advance payment that may not
have been earned if the Griffin Group fails to perform its obligations
thereunder through September 17, 1996. Under certain circumstances, the New
Griffin Services Agreement could remain in force up to an additional year. See
"Summary -- Other Elements of the Restructuring -- Griffin Compensation
Arrangements".
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
TAXATION OF THE EXCHANGE OF OLD SERIES NOTES. The Company intends to take
the position that the exchange (the "Exchange") of Old Series Notes for New Debt
Securities, RII Common Stock, RII Class B Common Stock, SIHL Series A Shares and
the SIHL Aggregate Cash Purchase Price (or if the SIHL Sale is not consummated
on the Effective Date, PIRL Ordinary Shares), Excess Cash and non-transferable
rights to receive payments from Net Reserved Cash, if any, Net Plan Consummation
Cash, if any, and Deferred Cash will be a taxable event for exchanging holders
upon which gain or loss will be recognized, except that a holder of Old Series
Notes will recognize ordinary income on the exchange to the extent a portion of
the consideration is treated as received in respect of accrued interest that the
holder has not included in income. If the Exchange is treated as a
recapitalization, no loss would be recognized by any holder of the Old Series
Notes, and gain, if any, would be recognized
72
<PAGE>
only to the extent a holder receives "boot" (E.G., cash and property other than
stock or securities of the Company) in the Exchange that is not deemed to be in
payment of accrued interest. See "Certain Federal Income Tax Considerations --
Exchange of Old Series Notes".
ORIGINAL ISSUE DISCOUNT. The New RIHF Junior Mortgage Notes will be, and
the New RIHF Mortgage Notes may be, issued with original issue discount. A
holder of such Notes may be required for Federal income tax purposes to report
interest income at a rate that is higher than the stated interest rate and in
advance of the receipt of cash interest. See "Certain Federal Income Tax
Considerations -- OID With Respect to the New Debt Securities".
AVAILABILITY OF NET OPERATING LOSSES. Because the exchange of the Old
Series Notes for the New Debt Securities and New Equity Securities will occur
pursuant to the Plan in the chapter 11 cases, the Company does not expect to be
required to include in its gross income any cancellation of debt ("COD") income
realized by reason of the consummation of the Plan. Moreover, the Company
expects that it will not be required to reduce any of its tax attributes as a
result of such cancellation of debt. If, however, the stock-for-debt exception
were determined not to apply to the exchange of RII Common Stock for a portion
of the Old Series Notes, the Company would be required to reduce certain of its
tax attributes (including net operating loss carryforwards) by the amount of COD
income arising from such exchange that would be excluded from the Company's
gross income under Section 108 of the Tax Code. The stock-for-debt exception
expires on December 31, 1994. Therefore, if the Effective Date does not occur on
or before December 31, 1994, the stock-for-debt exception will not apply to the
exchange of RII Common Stock. See "Certain Federal Income Tax Considerations --
Tax Consequences to the Company -- Cancellation of Indebtedness".
The Company expects that, as a result of the Restructuring, it will undergo
an "ownership change" within the meaning of Section 382 of the Tax Code;
however, the Company believes that an exception available to corporations in
title 11 cases will apply (and the Company does not intend to elect for such
exception not to apply). Assuming such exception applies, the amount of the
Company's net operating loss ("NOL") carryforwards will be reduced to a certain
extent, but such remaining NOLs will not be subject to an annual use limitation
(except for NOLs that arose prior to October 1, 1990, which are already subject
to an annual use limitation). There can be no assurance, however, that the
Internal Revenue Service (the "Service") will not successfully challenge the
applicability of such exception. Moreover, the Federal income tax returns of the
Company for the periods in which the NOLs were generated have not been examined
by the Service. Therefore, if the Service were to determine that (i) no
ownership change occurred in connection with the Restructuring, with the likely
result that an ownership change would occur shortly after the Restructuring when
the exception available to corporations in title 11 cases would not be
available, (ii) an ownership change did occur, but the exception to corporations
in title 11 cases does not apply, or (iii) all or a portion of the NOLs were to
be disallowed for any reason, the ability of the Company to offset future
taxable income with NOLs remaining after the consummation of the Restructuring
could be substantially limited. See "Certain Federal Income Tax Considerations
- -- Tax Consequences to the Company -- Net Operating Loss Carryovers and
Limitations".
CERTAIN BANKRUPTCY AND INSOLVENCY CONSIDERATIONS
Use of a bankruptcy case to implement the Restructuring also entails risks
that should be considered carefully.
GENERAL. If the Requisite Acceptances are received, RII and GRI currently
intend to commence prepackaged bankruptcy cases and to seek to confirm the Plan
using the Requisite Acceptances. See "The Solicitation -- Procedure for Voting
on the Plan" and "The Plan -- Confirmation of the Plan". RII and GRI believe
that obtaining the Requisite Acceptances before commencing bankruptcy cases
would minimize disputes during such cases, would substantially reduce the time
and costs of such cases and would afford the best opportunity to accomplish the
Restructuring. If RII and GRI do not obtain the Requisite Acceptances prior to
the Voting Deadline, RII and GRI will be forced to evaluate options then
available to them.
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<PAGE>
One such option is to conduct another solicitation with respect to the Plan.
Pursuant to the Paradise Island Purchase Agreement, RII and GRI have committed,
notwithstanding the failure to obtain the Requisite Acceptances, to continue to
pursue confirmation of the Plan until the Paradise Island Purchase Agreement is
terminated. This commitment could require RII and GRI to conduct a further
solicitation with respect to the Plan until December 31, 1994. Because the
Paradise Island Purchase Agreement can be terminated by SIHL if RII and GRI
bankruptcy cases are not commenced by February 15, 1994, RII and GRI might
conduct such solicitation after filing a chapter 11 case. RII's and GRI's
failure to abide by the terms of the Paradise Island Purchase Agreement would,
under certain circumstances give rise to a claim by SIHL for breach of such
agreement and entitle SIHL to reimbursement from the SIHL Buyer Expense Escrow.
Moreover, such failure, if not approved by Fidelity and TCW, may relieve
Fidelity and TCW of their obligations under the Bondholders Support Agreement.
Other options available to RII and GRI if the Requisite Acceptances are not
obtained include submission of a revised prepackaged plan of reorganization and
filing for bankruptcy protection under the Bankruptcy Code without a
pre-approved or consensual plan of reorganization. There can be no assurance
that a restructuring other than pursuant to the Plan will result in a
reorganization of RII and GRI rather than a liquidation, or that any
reorganization would be on terms as favorable to the holders of Old Series Notes
(and beneficiaries of the related GRI Guaranty endorsed thereon), the holders of
the RII Common Stock and the holders of 1990 Stock Options as the terms of the
Plan. If a liquidation or non-consensual reorganization were to occur, there is
a substantial risk that (i) there would be no value available for distribution
to holders of the RII Common Stock and holders of 1990 Stock Options, (ii) there
would be much less value available for distribution to holders of Old Series
Notes and (iii) the holders of Old Series Notes might receive a substantially
smaller recovery on their claims than that proposed under the Plan. See "The
Plan -- Alternatives to Consummation of the Plan."
LIQUIDATION ANALYSIS. For purposes of comparison with the distributions
under the Plan, RII and GRI have prepared an analysis of estimated recoveries in
a liquidation under chapter 7 of the Bankruptcy Code (the "Liquidation
Analysis"). The Liquidation Analysis is attached as Appendix B, and includes a
description of procedures followed and the assumptions and qualifications used
in connection with the Liquidation Analysis. A general discussion of the
Liquidation Analysis is included under "The Plan -- Confirmation of the Plan --
Best Interests Test". Confirmation of the Plan requires a finding that each
non-accepting creditor and equity interest holder receive as much under the Plan
as in a chapter 7 liquidation of RII and GRI. RII and GRI believe that the
Liquidation Analysis demonstrates this result. The Bankruptcy Court, however,
may reach a differing conclusion.
The Liquidation Analysis represents the Company's best estimate of the most
likely outcome in the event of a liquidation of the Company under chapter 7 of
the Bankruptcy Code. It is based on numerous assumptions regarding factors which
may be beyond the Company's control. Holders of Old Series Notes and RII Common
Stock are cautioned not to place undue reliance on the Liquidation Analysis.
SECOND BANKRUPTCY FILING. The Plan provides for a restructuring of the Old
Series Notes issued in connection with the Old Plan. No provision of the
Bankruptcy Code expressly limits the ability of a debtor to file a second
chapter 11 case. In addition, the United States Supreme Court, in an analogous
context involving the filing of a second chapter 13 case, refused to impose a
limitation on the ability of the debtor to file a second chapter 13 case absent
an explicit limitation in the Bankruptcy Code. See JOHNSON V. HOME STATE BANK,
111 S. Ct. 2150 (1991); IN RE TARAS, 136 B.R. 941, 954 (Bankr. E.D. Pa. 1992).
The court in IN RE JARTRAN, 886 F.2d 859 (7th Cir. 1989) found that a second
chapter 11 filing was permissible so long as it was filed in good faith. The
court indicated that the second filing could satisfy the good faith requirement
if the second chapter 11 filing was for the purpose of effecting a liquidation
rather than a reorganization involving a restructuring of the debt treated in
the prior chapter 11 filing. A number of other courts also have held that a
second chapter 11 filing is in good faith if the
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filing is the result of unforeseen changed circumstances. See, E.G., ELMWOOD
DEVELOPMENT COMPANY V. GENERAL ELECTRIC PENSION TRUST, 964 F.2d 508 (5th Cir.
1992); IN RE CASA LOMA ASSOCS.,122 B.R. 814 (Bankr. N.D. Ga. 1991).
Several courts have limited the ability of a debtor that has emerged from
chapter 11 to file a second chapter 11 case to modify obligations undertaken in
the reorganization plan confirmed in the first case. See, E.G., IN RE JARTRAN,
886 F.2d 859 (7th Cir. 1989); IN RE NORTHHAMPTON CORP., 59 B.R. 963 (E.D. Pa.
1984); IN RE AT OF MAINE, INC.,56 B.R. 55 (Bankr. D.Me. 1985). The NORTHHAMPTON
and AT OF MAINE courts found that a second chapter 11 filing after substantial
consummation of a plan confirmed in a prior chapter 11 case was PER SE
impermissible. Courts which have held that there are limitations on the ability
of a debtor to make a second chapter 11 filing have relied principally on the
provisions of section 1127 of the Bankruptcy Code, which provide that a
confirmed chapter 11 plan that has been substantially consummated may not be
modified under section 1127.
RII and GRI believe that the filing of new chapter 11 cases in connection
with seeking confirmation of the Plan would satisfy any applicable good faith
requirement and would be permissible under the Bankruptcy Code. As a result,
among other things, of the unforeseen difficulty in selling the Paradise Island
Business, which was a critical component of the Old Plan, the Company believes
that it will be able to satisfy the good faith requirement for filing a second
bankruptcy case. Accordingly, while it is possible that these filings by RII and
GRI could be challenged, RII and GRI believe that they would prevail against any
such challenge.
DISRUPTION OF OPERATIONS. RII believes that it has sufficient cash on hand
to fund its working capital needs during a prepackaged bankruptcy case,
including the continued timely payment of pre-petition employee and trade
obligations to the extent permitted by the Bankruptcy Court. Since the Plan and
the chapter 11 filings will relate only to RII and GRI and not to RII's
operating subsidiaries, the claims of trade creditors and employees of such
operating subsidiaries will not be affected by such filings. Although there is a
risk that the filing of chapter 11 cases by RII and GRI will disrupt their
business operations, RII and GRI believe that such risk is minimal. GRI does not
have any employees and does not believe that it has any trade creditors; it has
no operating business which could be disrupted. As a holding company, RII has
few trade creditors and employees. To the extent necessary, RII, upon
commencement of its chapter 11 case, intends promptly to seek the authorization
of the Bankruptcy Court to maintain flexibility to pay, prior to confirmation of
the Plan, the pre-petition claims of trade creditors. In addition, RII intends
to seek the approval of the Bankruptcy Court to pay all accrued prepetition
salaries and wages, expense reimbursements and severance, to permit affected
employees to utilize their paid vacation time which accrued prior to the date of
the filing of the prepackaged bankruptcy case (so long as they remain employees
of RII) and to continue paying medical benefits under RII's health plan. There
can be no assurance that such authorization will be obtained. In any event, the
Plan provides that claims of employees and trade creditors which are not paid or
honored, as the case may be, prior to consummation of the Plan will be paid or
honored in full at the Distribution Date or as soon thereafter as such payment
or other obligation, consistent with past practice and in the ordinary course of
business, becomes due or performable. See "The Plan -- Treatment of Trade
Creditors and Employees".
The Solicitation of Acceptances for the Plan or any subsequent commencement
of chapter 11 cases, even in connection with the Plan, could adversely affect
the Company's relationships with patrons, suppliers and employees. However, the
Company designed the Plan to minimize such effects. If such relationships were
adversely affected, the Company's financial position could materially
deteriorate. This deterioration could adversely affect the Company's ability to
complete the Solicitation of Acceptances of the Plan, or if the Solicitation is
successfully completed, to obtain confirmation of the Plan. Any disruption in
relationships with the Company's suppliers could reduce the quality and
availability of casino facilities, entertainment and promotional events, as well
as guest and other patron services which could result in a loss of earnings.
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EFFECT ON SUBSIDIARIES. Other than GRI, RII does not currently intend to
seek protection under the Bankruptcy Code for any of its subsidiaries.
CERTAIN RISKS OF NON-COMPLIANCE WITH CONFIRMATION REQUIREMENTS. Even if the
Requisite Acceptances are received, there can be no assurance that the
Bankruptcy Court will confirm the Plan. The Bankruptcy Court might determine
that the disclosure contained herein or the Solicitation hereunder are
inadequate. See -- "Risk of Inadequacy of Solicitation" and "Risk of Improper
Voting Procedures." Moreover, the Bankruptcy Court could still decline to
confirm the Plan if it were to find that any statutory condition to confirmation
had not been met. Section 1129 of the Bankruptcy Code sets forth the
requirements for confirmation and requires, among other things, a finding by the
Bankruptcy Court that the confirmation of the Plan will not be followed by a
further need for financial reorganization, and that the value of distributions
under the Plan to non-accepting creditors and equity interest holders is not
less than the value of distributions such creditors and equity interest holders
would receive if RII and GRI were liquidated under chapter 7 of the Bankruptcy
Code. See "The Plan -- Confirmation of the Plan -- Confirmation Requirements".
There can be no assurance that the Bankruptcy Court will conclude that these
requirements have been met. If the Plan is filed, there can be no assurance that
modifications thereof would not be required for confirmation, or that such
modifications would not require a resolicitation of Acceptances. RII and GRI
believe that the Plan does comply with all of the confirmation requirements,
including the requirements that confirmation of the Plan not be followed by a
need for further financial reorganization and that non-accepting creditors and
equity interest holders receive distributions under the Plan at least as great
as would be received if RII and GRI were liquidated pursuant to chapter 7 of the
Bankruptcy Code. See "The Plan". There can be no assurance, however, that the
Bankruptcy Court would reach the same conclusion.
The confirmation and consummation of the Plan also are subject to certain
conditions imposed by RII and GRI. See "The Plan -- Conditions Precedent to
Confirmation and Consummation of the Plan". There can be no assurance that such
conditions will be satisfied or, if not satisfied, that RII and GRI (with the
consent of Fidelity and TCW if the funds and accounts managed by them hold in
the aggregate at least 20% of the Old Series Notes) would waive such conditions.
The consummation condition requiring entry of a Confirmation Order that has not
been stayed must be satisfied and may not be waived under any circumstances. The
confirmation condition requiring the entry of an order declaring that, as of the
Effective Date, the Old Security Documents shall be deemed released and
terminated is waivable, but the transactions contemplated by the Plan cannot be
consummated if the Old Security Documents are not released and terminated
because RII and GRI will be unable to pledge the requisite collateral to secure
the New Debt Securities.
RISK OF INADEQUACY OF SOLICITATION. Section 1126(b) of the Bankruptcy Code
provides that the holder of a claim against, or interest in, a debtor who
accepts or rejects a plan of reorganization before the commencement of a chapter
11 case is deemed to have accepted or rejected such plan under the Bankruptcy
Code so long as the solicitation of such acceptance was made in accordance with
applicable non-bankruptcy law governing the adequacy of disclosure in connection
with such solicitation, or, if such law does not apply, such acceptance was
solicited after disclosure of "adequate information". Bankruptcy Rule 3018(b)
requires, in the case of a prepackaged plan of reorganization, that: (i) the
plan of reorganization be disseminated for a vote to substantially all impaired
creditors and equity holders entitled to vote; (ii) the time prescribed for
voting on such plan must not be unreasonably short; and (iii) the solicitation
must be conducted in compliance with all applicable non-bankruptcy laws or, in
the absence of such laws, that the disclosure statement for such plan contain
"adequate information". This Information Statement/Prospectus is being
transmitted to all holders of claims against, and all holders of interests in,
RII and GRI to satisfy the requirements of section 1126(b) of the Bankruptcy
Code and Bankruptcy Rule 3018(b). Notwithstanding the foregoing, votes on the
Plan only are being solicited from impaired creditors and equity interest
holders of RII and GRI. RII and GRI believe that the Solicitation complies with
the requirements of Bankruptcy Rule 3018(b) and that the 35-day time period
prescribed for voting on the Plan is not unreasonably short. In addition, RII
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and GRI believe that the Solicitation is being conducted in compliance with
state and Federal securities laws and all other applicable non-bankruptcy laws.
However, failure of the Solicitation to comply with the requirements of section
1126(b) of the Bankruptcy Code or Bankruptcy Rule 3018(b) could result in the
Bankruptcy Court requiring resolicitation of Acceptances. If a resolicitation
were required, there can be no assurance that the SIHL Sale would remain a
viable option to the Company or that Fidelity and TCW would continue to support
the Plan.
RISK OF IMPROPER VOTING PROCEDURES. Even if the Requisite Acceptances are
received, the Bankruptcy Court may find that impaired creditors and equity
interest holders have not validly accepted the Plan if the Bankruptcy Court
determines that the Solicitation did not comply with the requirements of section
1126(b) of the Bankruptcy Code in respect to voting procedures. In an effort to
avoid such a result, RII and GRI are soliciting both Ballots and Master Ballots.
Master Ballots are to be completed by record holders of Old Series Notes and RII
Common Stock who are not the beneficial owners of such securities to reflect the
votes of the beneficial owners of such securities that hold through such record
holder. RII and GRI believe that the use of Ballots and Master Ballots for the
purpose of obtaining Acceptances is in compliance with the Bankruptcy Code. In
addition, RII and GRI will take certain measures in accordance with the
practices of the securities industry and the requirements of applicable
non-bankruptcy law to ensure that this Information Statement/Prospectus and
other Solicitation materials are received by beneficial owners of RII's
securities in sufficient time to enable such parties to instruct their nominees
with respect to voting on the Plan. There can be no assurance, however, that the
Bankruptcy Court will decide that the voting procedures employed by RII and GRI
meet the requirements of section 1126(b) of the Bankruptcy Code. If the
Bankruptcy Court determines that the Solicitation does not comply with the
requirements of section 1126(b) of the Bankruptcy Code, RII and GRI may seek to
resolicit Acceptances.
RISK THAT PLAN MAY BE CONFIRMED OVER REJECTION OF IMPAIRED EQUITY
CLASSES. If certain conditions are met, the Plan may be confirmed even if it is
not accepted by the holders of the RII Common Stock or the holders of 1990 Stock
Options. Section 1129(b) of the Bankruptcy Code sets forth the conditions to a
confirmation (or "cram-down", as it is generally called) of a plan of
reorganization without the acceptance of all impaired classes. So long as at
least one impaired class of claims has accepted the plan (excluding votes cast
by insiders), such plan may be confirmed if it does not "discriminate unfairly"
and is "fair and equitable" with respect to each of the non-accepting classes.
It is generally accepted that a plan does not "discriminate unfairly" if holders
in a non-accepting class receive treatment under a plan that is economically
equivalent to that given to other classes whose holders have the same legal
priorities. In general terms, a plan is "fair and equitable" to a non-accepting
class of secured claims if provision is made under the plan for the holders of
such secured claims to retain the liens securing such claims and to receive
deferred cash payments totalling at least the allowed amount of such claim
having a present value on the effective date of the plan at least equal to the
value of the property securing claims. In general terms, a plan is "fair and
equitable" to a non-accepting class of unsecured claims or interests if the plan
provides that either (i) such holders receive or retain property having a value
as of the effective date of the plan equal to the allowed amount of such
holders' unsecured claims or interests, or (ii) the holders of claims and
interests that are junior to any such non-accepting class do not receive or
retain any property under the plan in respect of such junior claims or
interests. It is possible for a plan to be confirmed by the bankruptcy court
notwithstanding the non-acceptance of a class of claims or interests and the
holders of such claims or interests must accept whatever distribution, if any,
is provided for them under such plan, so long as the requirements set forth
above are satisfied. RII and GRI believe that section 1129(b) of the Bankruptcy
Code would permit confirmation of the Plan over the rejection of the classes of
holders of outstanding RII Common Stock and 1990 Stock Options, but would not
permit confirmation of the Plan over the rejection of the holders of Old Series
Notes. The Company intends to seek to confirm the Plan even if the holders of
outstanding RII Common Stock or 1990 Stock Options vote as a class to reject the
Plan. See "The Plan -- Confirmation of the Plan -- Confirmation Without
Acceptance by All Impaired Classes". Under a cram-down, distributions to all
classes of creditors and equity interest holders would not change.
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RISK OF IMPROPER CLASSIFICATION OF CLAIMS AND INTERESTS. Pursuant to
section 1122 of the Bankruptcy Code, RII and GRI must classify claims and
interests in classes that contain claims and interests that are substantially
similar to the other claims and interests in such class. Although RII and GRI
believe that they have classified all claims and interests in compliance with
section 1122, it is possible that the Bankruptcy Court may find that a different
classification is required for the Plan to be confirmed. In such event, it is
the current intention of RII and GRI to modify the Plan to provide for whatever
reasonable classification might be accepted by the Bankruptcy Court for
confirmation and to use the Acceptances received in the Solicitation to obtain
the approval of the class or classes of which the accepting holder is ultimately
deemed to be a member. Any such reclassification could adversely affect the
class in which such claim or interest was initially classified or any other
class under the Plan by changing the composition of such class and the required
vote of such class for approval of the Plan. Furthermore, a reclassification of
claims or interests after approval of the Plan could necessitate the
resolicitation of Acceptances, which could result in a delay in the consummation
of the Restructuring and could increase the risk that the Restructuring will not
be consummated. To the extent a reclassification of claims or interests after
approval of the Plan materially and adversely changes the treatment of the claim
of any creditor or the interest of any equity interest holder, such creditor or
equity interest holder would no longer be bound by its Acceptance of the Plan
and RII and GRI would be obliged to obtain such creditor's or equity interest
holder's consent in writing to the modification. The need to obtain any
significant number of consents could result in a delay in the consummation of
the Restructuring and could increase the risk that the Restructuring will not be
consummated.
UNANTICIPATED CLAIMS. The Plan provides that general unsecured claims will
be unimpaired. This provision is based on the assumption, which the Company
believes to be correct, that general unsecured claims will not exceed
$__________. If general unsecured claims materially exceed this amount, the
Company may be unable to treat general unsecured claims as unimpaired and may be
forced to modify the treatment of such claims in the Plan. Such modification may
require solicitation of the Plan as modified to holders of general unsecured
claims and to other classes of creditors and equity interest holders. See "The
Plan -- Classification and Treatment of Claims and Interests -- RII Class 5" for
a discussion of potential disputed claims which have been or may be asserted.
The Company believes that any claims based on Federal or state environmental
protection statutes will be discharged in connection with consummation of the
Plan. Under certain circumstances, however, environmental claims may survive
consummation of the Plan and remain assertable against the Company after the
conclusion of the Restructuring. The Company believes that environmental claims,
even if they survive consummation of the Plan, will not have a material impact
on the ability of the Company to effect the Restructuring or meet the Company's
financial forecasts. The feasibility of the Plan may be jeopardized if the
Company is found to have significant unanticipated environmental liability.
AVOIDANCE OF CERTAIN PREPETITION TRANSFERS. The Company has made or,
pursuant to the Restructuring, intends to make certain transfers to third
parties during the year preceding the date of filing of the chapter 11 cases
which may be subject to avoidance and recovery as either preferential transfers
or fraudulent conveyances. These transfers could include payments made under the
Hanlon Termination Agreement and the New Griffin Services Agreement. The Company
does not believe that these or any other transfers made by it or to be made by
it pursuant to the Restructuring constitute voidable transfers. The Company,
however, has conducted no investigation into the existence of potential voidable
transfer. Moreover, there can be no assurance that the Bankruptcy Court would
agree. Even if the Bankruptcy Court were to determine that certain prepetition
transfers were voidable, the Company does not believe such a determination would
materially and adversely affect the Restructuring. Pursuant to section 6.14 of
the Plan, RII and GRI will waive and release any avoidance and recovery actions
(other than such avoidance and recovery actions that have been or are permitted
to be filed in connection with the Old Chapter 11 Cases). A fraudulent
conveyance action styled "__________" is pending in the United States Bankruptcy
Court for the District of New Jersey. This action which seeks recovery of the
merger consideration paid by RII to Mr. Lowenshuss' pension plan will be
continued after the Effective Date.
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RISKS RELATED TO PARADISE ISLAND INTERIM ORDER.__Pursuant to the Paradise
Island Purchase Agreement, RII has committed to request, within five days after
the filing of its chapter 11 case (and if the Paradise Island Purchase Agreement
has not been terminated), and to use its best efforts to obtain the entry of an
order approving certain provisions of the Paradise Island Purchase Agreement
(the "Paradise Island Interim Order"). Such provisions relate primarily to (i)
the establishment of a procedure for the consideration of competing bids for the
Paradise Island Business and (ii) the provision of certain reimbursements to
SIHL if, through no fault of its own, the SIHL Sale is not consummated. For a
detailed description of the provisions of the Paradise Island Purchase Agreement
which RII will seek to have approved by the Bankruptcy Court through the
Paradise Island Interim Order, see "Description of Paradise Island Purchase
Agreement -- General -- Paradise Island Interim Order". If, despite the best
efforts of RII, the Paradise Island Interim Order is not entered by the
Bankruptcy Court, the Paradise Island Purchase Agreement will continue in full
force and effect.
Subject to the requirements of the Paradise Island Interim Order, RII and
GRI may receive other bids for the Paradise Island Business during the pendency
of RII's and GRI's chapter 11 cases. Such bids, if received, may lead to further
proceedings before the Bankruptcy Court, including the conduct of an auction. If
a bidder other than SIHL prevails at such at auction, the Plan may be modified,
as may be necessary, to accommodate the particular requirements of the
prevailing bidder. Any such modification will be subject to compliance with
applicable bankruptcy laws and the approval of Fidelity and TCW (so long as the
funds and accounts managed by either of them hold in the aggregate at least own
20% of the outstanding Old Series Notes). In addition, the Bankruptcy Court may,
but not necessarily will, require a new solicitation.
The Paradise Island Purchase Agreement imposes significant restrictions upon
the Company's ability to consider and ultimately accept acquisition proposals
for the Paradise Island Business other than the SIHL Sale. Pursuant to the
Paradise Island Purchase Agreement, the Company cannot consider any alternative
acquisition proposal unless such proposal constitutes an "Overbid Transaction"
from a financially qualified third party which provides for consideration
attributable to the entire Paradise Island Business having a fair market value
of more than $130 million. The imputed fair market value of the SIHL proposal is
$125 million. Moreover, when considering whether to approve an "Overbid
Transaction" from a competing bidder, the Bankruptcy Court will likely take into
consideration that the Company is required, under the terms of the Paradise
Island Purchase Agreement, to pay SIHL's out-of-pocket costs and expenses
incurred in connection with the proposed SIHL Sale and adjust the value of the
competing bid accordingly.
CERTAIN CONSIDERATIONS RELATED TO ORIGINAL ISSUE DISCOUNT IN THE EVENT OF
SUBSEQUENT BANKRUPTCY
In general, a debt security represents a potential bankruptcy claim equal to
its face amount, plus accrued and unpaid interest through the date of
commencement of the bankruptcy case, less unamortized OID, if any, at that date.
It is unclear as to whether and to what extent the issuance of debt
securities in a bankruptcy should be determined to involve OID for the purpose
of fixing the claim of a holder of such debt securities in a subsequent
bankruptcy. Although the method of calculating unamortized OID in a bankruptcy
is uncertain, the Bankruptcy Court could determine that the claims of the
holders of the Old Series Notes and the GRI Guaranty, which pursuant to the Plan
are to be allowed in full face amount plus accrued interest thereon and
collection costs through the Petition Date, should be reduced by the amount of
unamortized OID related to such instruments. Because the percentage recovery to
such holders would be less the 100% even if this determination were made,
confirmation of the Plan would not be adversely affected by such determination.
However, a bankruptcy court in a bankruptcy proceeding involving RIHF and RIH
subsequent to the Restructuring could determine that the New RIHF Mortgage Notes
and the New RIHF Junior Mortgage Notes were issued at the OID represented by the
difference between the face amount of the New RIHF Mortgage Notes and the New
RIHF Junior Mortgage Notes and the closing sales prices for the Old Series Notes
on the Effective Date. Such OID would be increased to the extent a bankruptcy
court allocated any portion of the fair market value of the Old Series Notes to
the New Equity Securities, Excess Cash and the right to receive payments from
Net Reserved Cash, if any, Net Plan Consummation Cash, if any, and
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Deferred Cash. In such a case, the bankruptcy claim of the holders of Old Series
Notes might be determined to be the stated principal amount of the New RIHF
Mortgage Notes and the New RIHF Junior Mortgage Notes less the amount of
unamortized OID at the time of bankruptcy.
In recent decisions both the Second and Fifth Circuit Courts of Appeals have
held that, for bankruptcy law purposes, no new OID arises by virtue of a face
value debt-for-debt exchange in a consensual out-of-court workout, even if the
fair market value of the old bonds is less than the face amount of the old and
new bonds. See IN RE CHATEAUGAY CORP., 961 F.2d 378 (2nd Cir. 1992) and IN RE
PENGO INDUSTRIES, 962 F.2d 543 (5th Cir. 1992). These cases, while not directly
on point, support the argument that no new OID should arise by virtue of a debt
for debt exchange embodied in a confirmed chapter 11 plan such as the Plan or
the Old Plan. No assurances can be given that this argument would prevail.
ADDITIONAL SENIOR SECURED DEBT; SUBORDINATION
The RIHF Senior Facility will be available to meet working capital needs.
The Company currently does not forecast a need to use such a facility. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Financial Condition -- Liquidity." If borrowings are made under
the RIHF Senior Facility, the Company's post-Restructuring debt burden would
increase. The RIHF Senior Facility Notes will be senior secured obligations
issued by RIHF and guaranteed by RIH pursuant to the RIH Senior Facility
Guaranty. RII also will issue a guaranty of the payment of principal and
interest on the RIHF Senior Facility Notes to the extent the proceeds of the RIH
Senior Facility are loaned to RII.
The RIH Mortgage, the RIH Guaranty Mortgage, the RIH Junior Mortgage and the
RIH Junior Guaranty Mortgage on the Resorts Casino Hotel securing the payment of
the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior
Mortgage Notes and the RIH Junior Mortgage Guaranty, respectively, will be
subordinated to the liens securing the RIHF Senior Facility Notes and the RIH
Senior Facility Guaranty.
SECURITY FOR THE NEW RIHF MORTGAGE NOTES AND THE NEW RIHF JUNIOR MORTGAGE NOTES
If an Event of Default (as defined in either the New RIHF Mortgage Note
Indenture or the New RIHF Junior Mortgage Note Indenture) occurs, there can be
no assurance that a foreclosure on the Resorts Casino Hotel would produce
proceeds in an amount that would be sufficient to pay, FIRST, the principal of,
and accrued interest on, the RIHF Senior Facility Notes (if any), SECOND, the
principal of, and accrued interest on, the New RIHF Mortgage Notes, and THIRD,
the principal of, and accrued interest on, the New RIHF Junior Mortgage Notes.
In any foreclosure sale of the Resorts Casino Hotel, the purchaser would be
required to be licensed to own the Resorts Casino Hotel under the Casino Control
Act and the regulations promulgated thereunder. If the Collateral Agent were
unable to, or chose not to, sell the Resorts Casino Hotel, the Collateral Agent
would be required to be licensed under the Casino Control Act to operate the
Resorts Casino Hotel. Such requirements limit the number of potential bidders
and may delay the sale of, and may adversely affect the sales price for, the
Resorts Casino Hotel. The ability to take possession and dispose of the Resorts
Casino Hotel upon acceleration of the RIHF Senior Facility Notes, the New RIHF
Mortgage Notes and the New RIHF Junior Mortgage Notes is likely to be
significantly impaired or delayed by applicable bankruptcy law if a
reorganization case were to be commenced by or against RII, RIHF or RIH prior to
the foreclosure upon or disposition of the Resorts Casino Hotel by the
Collateral Agent.
FIDELITY AND TCW NOT FIDUCIARIES
RII and GRI have been informed by Fidelity and TCW that, in the opinion of
Fidelity and TCW, they owe no fiduciary, agency or other obligation to any
holder of Old Series Notes (and beneficiary of the related GRI Guaranty endorsed
thereon). If RII and GRI were to commence their chapter 11 cases as other than
prepackaged cases, a creditors' committee comprised of certain creditors of RII
and GRI would be appointed by the office of the United States Trustee and, if it
were so appointed, such committee would owe a fiduciary obligation to the
creditors of RII and GRI, including the holders of Old Series Notes. Because RII
and GRI intend to commence their chapter 11 cases after receipt of the Requisite
Acceptances to the Plan and to seek expedited confirmation of the Plan, they
will request the Office of the United States Trustee to forego the appointment
of an official creditors' committee.
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COMPETITION
GENERAL. The Company competes, and PIRL will compete, directly with other
casino operators in each market in which it operates principally on the basis of
price, quality and customer service. Such competition has intensified in recent
years. See "Business of the Company". The Company faces competition from cruise
lines, riverboat gambling, casinos located in Atlantic City, New Jersey, New
York, Connecticut, Nevada, Puerto Rico, The Bahamas and other locations outside
the United States, from other forms of legalized gaming in New Jersey and in its
surrounding states such as lotteries, horse racing, jai-alai, dog racing and
other legalized gaming activities and from illegal wagering of various types.
The Company also would compete with any facilities in jurisdictions that may
authorize casino gaming or other forms of wager in the future. Legalized
gambling in some form or another is now allowed in 48 states. Since 1989 at
least 65 Indian reservation casinos have opened in 17 states. In addition, 80
more Indian tribes have plans to start gambling ventures in 12 additional
states. The large increase in Indian reservation casinos, along with a rapid
expansion of riverboat gambling and other casino gambling, may adversely affect
the Company's operations, particularly if casino gaming were permitted in
jurisdictions adjacent to, or elsewhere in, New Jersey. Currently, casino gaming
is not allowed in other areas of New Jersey, but is under consideration in
Pennsylvania and the District of Columbia.
Recently, the U.S. Secretary of the Interior approved a plan by the
Mashantucket Pequot Indians to operate a casino facility in Ledyard,
Connecticut, located in the eastern portion of the state. Such facility opened
in early 1991 and was only authorized to conduct table gaming operations. In
January 1993, such casino was authorized to operate slot machines. In July 1993,
the Oneida Indians opened a casino near Syracuse, New York. In October 1993
approval was granted for the construction of a second high-stakes gambling
casino on the St. Regis Mohawk reservation in New York State near the Canadian
border, 50 miles southwest of Montreal. Under New York state law, poker and slot
machines currently are not permitted. The casinos in Connecticut and New York
may have an adverse effect on the Atlantic City casino industry.
ATLANTIC CITY. Competition in the Atlantic City casino/hotel market is
intense. Casino/hotels compete primarily on the basis of promotional allowances,
entertainment, advertising, services provided to patrons, caliber of personnel,
attractiveness of the hotel and casino areas and related amenities and parking
facilities. There are 12 casino/hotels located in Atlantic City, including the
Resorts Casino Hotel, all of which compete for patrons. In the aggregate, those
casino/hotels contain approximately 836,000 square feet of casino space
including simulcast betting and poker rooms and 9,400 hotel rooms. The total
amount of gaming area of these competing properties is expected to increase as
the Showboat casino/hotel (the "Showboat Casino") has recently announced plans,
although preliminary, for a sizable addition to its casino gaming floor. The
Showboat Casino is located on approximately ten acres of "Boardwalk" property
owned by the Company and leased to Atlantic City Showboat, Inc. ("ACS") under a
99-year net lease (the "Showboat Lease"). Also several competitors are expected
to add racetrack simulcasting rooms which are permitted to house authorized
table games. Unlike casino gaming floor area, which is regulated based on the
number of guest rooms at a particular property, the size of simulcasting rooms
is not limited.
The Resorts Casino Hotel is located at the eastern end of the Boardwalk
adjacent to the Taj Mahal Casino-Resort (the "Taj Mahal") and the Showboat
Casino. These three properties have a total of more than 2,400 hotel rooms and
277,000 square feet of gaming space in close proximity to each other. A 28-foot
wide enclosed pedestrian bridge between the Resorts Casino Hotel and the Taj
Mahal allows patrons of both hotels and guests for events being held at the
Resorts Casino Hotel and at the Taj Mahal to move between the facilities without
exposure to the weather. A similar enclosed pedestrian bridge connects the
Showboat Casino to the Taj Mahal, allowing patrons to walk under cover among all
three casino/hotels. The remaining nine Atlantic City casino/hotels are located
approximately one-half mile to one and one-half miles to the west on the
Boardwalk or in the Marina area of Atlantic City.
PARADISE ISLAND. The Company's Paradise Island facilities compete with
other hotels and resorts on Paradise Island, elsewhere in The Bahamas, the
southeastern United States, the Caribbean and Mexico, as well as cruise ships
serving these areas. As new hotels are constructed or new cruise ships are
introduced into service in these areas, competition can be expected to increase.
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The Company's properties principally compete with a casino/hotel and resort
complex on Cable Beach, New Providence Island, comprised of Carnival's Crystal
Palace, with 860 guest rooms, a 33,500 square foot casino, a show theater and
other amenities, and the HCB-owned Radisson with 679 guest rooms. There is a
total of approximately 7,600 rooms for overnight guests on New Providence Island
and Paradise Island combined. Of such rooms, approximately 3,100 are located in
hotels on Paradise Island, including 1,357 in hotels owned and operated by RIB.
In October 1993, Carnival announced that it had signed an agreement in principle
to sell an 81% interest in the Crystal Palace complex to a group of German
investors. This investor group has announced that it plans to increase the
marketing of the Crystal Palace complex in Europe and will invest additional
capital in the complex to establish it as a high-end resort destination.
Although there can be no assurance that such sale will be completed, an upgraded
Crystal Palace complex may adversely affect the Company's operations in The
Bahamas.
In addition to the Crystal Palace casino, the Bahamian government is
obligated to facilitate the grant of a casino license to the operators of the
Ramada Resort situated on the southwestern end of New Providence Island. The
Bahamian government is also obligated to support a proposal for the operation of
a slot casino at the Radisson resort on Cable Beach.
In recent years, the Company's Bahamian hotel and casino operations have
experienced increased competition from the new, larger cruise ships which have
begun serving this area as these cruise ships have effectively provided more
available rooms. Also, the Company's Paradise Island casino competes with two
casinos on Grand Bahama Island, with casinos located on various Caribbean
islands and, to a lesser extent, with Atlantic City and Las Vegas casino/hotels.
NEW JERSEY REGULATORY MATTERS
The ownership and operations of casino/hotel facilities and related
businesses in Atlantic City are the subject of strict state regulation under the
Casino Control Act. The Casino Control Act also imposes substantial restrictions
on the ownership of equity and debt securities of a company holding a casino
license, or an intermediary, holding company or affiliate of a casino licensee.
As a holding company of a casino licensee, RII is required to register with the
Casino Control Commission and obtain qualification approval by meeting
essentially the same requirements as a casino licensee.
A casino license initially is issued for a term of up to one year and must
be renewed annually by action of the Casino Control Commission for the first two
renewal periods succeeding the initial issuance of a casino license. Thereafter,
a casino license is renewed for a period of up to two years, although the Casino
Control Commission may reopen licensing hearings at any time. A license is not
transferable and may be conditioned, revoked or suspended at any time upon
proper action by the Casino Control Commission. The Casino Control Act also
requires an operations certificate which, in effect, has a term coextensive with
that of a casino license. On February 26, 1979, the Casino Control Commission
granted a casino license to RIH for the operation of the Company's Atlantic City
casino. In February 1992, RIH's license was renewed until February 26, 1994.
RIH's renewed license is subject to several conditions, including: (i) the
submission of additional monthly financial reports to the Casino Control
Commission and the Division of Gaming Enforcement; (ii) monthly notification to
such bodies of any significant deviation from certain financial forecasts and
related information provided by the Company in connection with the 1992 renewal
proceedings; (iii) monthly notification of any significant variance in operating
results from the prior year; and (iv) quarterly reporting on its progress in the
development of a financing plan regarding its debt due in April 1994 and, by
June 30, 1993, submission of an outline of terms to satisfy that obligation.
There can be no assurance that the Company will receive or continue to
receive all authorizations needed for the operation of the Company's Atlantic
City casino and thereby be permitted, in the future, to continue to operate the
Resorts Casino Hotel. Failure to maintain a casino license would have a material
adverse effect on the Company's ability to make payments in respect of the RIHF
Senior Facility Notes (if issued), the New RIHF Mortgage Notes and the New RIHF
Junior Mortgage Notes. See "Business of the Company -- Regulation and Gaming
Taxes and Fees -- New Jersey".
It is a condition to the effectiveness of the Plan that the Casino Control
Commission issue various approvals in connection with the Plan and the
transactions described in this Information Statement/
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Prospectus. Among other approvals, the Casino Control Commission must find that
the Company will continue to be financially stable after the consummation of the
Plan and that all substantial (in excess of __%) holders of debt and equity
securities of the Company are qualified unless the qualification requirement is
waived by the Casino Control Commission. The Casino Control Commission considers
various factors in determining whether a company is financially stable,
including without limitation the ability of a company to make necessary capital
and maintenance expenditures, and to pay all debts, including applicable taxes,
as they come due.
POTENTIAL DISQUALIFICATION OF HOLDERS BY THE CASINO CONTROL COMMISSION
Additionally, the Casino Control Commission imposes certain restrictions
upon the ownership of securities issued by a corporation which holds a casino
license or is a holding, intermediary, subsidiary or affiliated company of a
corporate licensee. Among other restrictions, the sale, assignment, transfer,
pledge or other disposition of any security issued by a corporation which holds
a casino license is conditional and shall be ineffective if disapproved by the
Casino Control Commission. If the Casino Control Commission finds that an
individual owner or holder of any securities of a corporate licensee or any
holding or affiliated company must be qualified and is not qualified under the
Casino Control Act, the Casino Control Commission has the right to propose any
necessary remedial action. In the case of corporate holding or affiliated
companies whose securities are publicly traded, the Casino Control Commission
may require divestiture of the security held by any disqualified holder who is
required to be qualified under the Casino Control Act.
If entities or persons required to be qualified refuse or fail to qualify
and fail to divest themselves of such security interest, the Casino Control
Commission has the right to take any necessary action, including the revocation
or suspension of the casino license. If any security holder of the licensee or
any holding or affiliated company who is required to be qualified is found
disqualified, it will be unlawful for the security holder: (i) to receive any
dividends or interest upon any such securities; (ii) to exercise, directly or
through any trustee or nominee, any right conferred by such securities; or (iii)
to receive any remuneration in any form from the corporate licensee for services
rendered or otherwise. The Restated Certificate of Incorporation of RII
provides, and the Amended RII Certificate of Incorporation will provide, that
all securities of RII and any of its subsidiaries are held subject to the
condition that if the holder thereof is found to be disqualified by the Casino
Control Commission pursuant to provisions of the Casino Control Act, then such
holder must dispose of his or her interest in the securities.
CERTAIN DEFAULTS
Based on the monthly internal closing of RII's accounts as of October 31,
1993, RII is not in compliance with its covenant contained in the Old Series
Note Indenture to maintain a Tangible Net Worth (as defined in the Old Series
Note Indenture) of at least $50,000,000. At that date, RII's Tangible Net Worth
was $44,579,000. Such non-compliance constitutes a "Default" under the Old
Series Note Indenture and will become an "Event of Default" under the Old Series
Note Indenture if RII fails to cure the Default within 30 days after receipt of
a formal notice from the Old Series Note Trustee. The Old Series Note Trustee,
on January 3, 1994, furnished a notice of default to the Company, stating that
if such Default were not cured within 30 days of receipt it would become an
Event of Default under the Old Series Note Indenture. The holders of two-thirds
in aggregate principal amount of the Old Series Notes may waive a Default or an
Event of Default under the Old Series Note Indenture. [Fidelity and TCW, which
separately advise and manage various funds and accounts that as of October 21,
1993 held in the aggregate approximately $309,926,000 principal amount of the
Old Series Notes, or approximately 64% of the outstanding Old Series Notes, have
agreed to waive the Default.]
If the Old Series Notes were accelerated, the Old Series Note Trustee would
have the right to realize upon the collateral that secures the Old Series Notes
pursuant to the Old Security Documents. The collateral includes the Resorts
Casino Hotel, the outstanding capital stock of RIH, GRI and all of RII's other
direct and indirect domestic subsidiaries, as well as the RIB Collateral. If the
requisite number of holders of the Old Series Notes demand repayment or if the
Old Series Note Trustee seeks
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to realize upon the collateral securing the Old Series Notes, there is a
substantial likelihood that RII and GRI, as guarantor of the Old Series Notes,
and certain of their Subsidiaries (including RIH and RIB) whose assets are
pledged to secure the Old Series Notes would be forced to seek protection under
applicable bankruptcy law.
RISKS ASSOCIATED WITH THE PARADISE ISLAND BUSINESS
If the SIHL Sale is not consummated ownership of the Paradise Island
Business will be transferred to the holders of the Old Series Notes through the
PIRL Spin-Off. Even if the SIHL Sale is consummated, partial ownership of the
Paradise Island Business is a substantial component of the consideration under
the Plan to holders of Old Series Notes. In considering whether or not to vote
to accept the Plan, holders of Old Series Notes should consider the following
additional risk factors associated with the Paradise Island Business.
Additionally, for a full discussion of the risk factors related specifically to
the SIHL Sale, reference is made to the SIHL Prospectus and the related
Registration Statement.
NEW OWNERSHIP OF PARADISE ISLAND BUSINESS. Pursuant to the Restructuring,
ownership of the Paradise Island Business will be transferred either to SIHL
through the SIHL Sale or to the holders of the Old Series Notes through the PIRL
Spin-Off. Consequently, the Paradise Island Business will come under new
ownership and new management. No assurances can be made as to the ability or
experience of such new ownership or management, or as to the future earnings of
the Paradise Island Business thereunder.
RECENT NET LOSSES. The PIRL Group experienced net losses of $12,399,000 and
$13,257,000 in its fiscal years ended December 31, 1991 and 1992, respectively,
and $9,616,000 for the three quarters ended September 30, 1993. If the PIRL
Spinoff occurs, the recent net losses and liquidity problems relative to the
PIRL Group create significant uncertainty regarding the ability of the PIRL
Group to continue to operate the Paradise Island Business as a going concern in
its present form beyond April 15, 1994 when the Old Series Notes mature.
Moreover, if the SIHL Sale occurs, there can be no assurance that SIHL will be
able to stem such losses or to continue to operate the Paradise Island Business
as a going concern in its present form.
SIHL SERIES A SHARES. For information regarding certain consideration
associated with ownership of the SIHL Series A Shares, see the accompanying SIHL
Prospectus relating to the SIHL Series A Shares.
BAHAMAS REGULATORY MATTERS. The operation of casinos in The Bahamas is
regulated under The Lotteries and Gaming Act, 1969, as amended (the "Gaming
Act"), of the Commonwealth of The Bahamas. The Gaming Act established a Gaming
Board which observes the count of all gaming receipts, prescribes accounting and
control procedures and regulates personnel and security matters. Gaming licenses
are renewable annually. The Gaming Board also is empowered to revoke or suspend
any gaming license if a violation occurs.
PEL currently is licensed under the Gaming Act to operate the Paradise
Island casino. PEL's gaming license is subject to a number of conditions
relating to PEL's activities and operations. Pursuant to amendments of PEL's
casino license, the Company, among other things, is required to: (i) continue
its efforts to achieve a prompt sale of the Paradise Island Business to a
purchaser satisfactory to the government of the Commonwealth of The Bahamas and
HCB; (ii) consult with HCB in advance with respect to material aspects of any
contemplated disposition of the Paradise Island Business; (iii) provide
quarterly reports to HCB describing the progress made by the Company in
implementing plans for separating various functions relating to its Bahamian
operations from the Company's non-Bahamian operations; (iv) provide to HCB
various financial reports; and (v) reimburse the government of the Commonwealth
of The Bahamas and HCB for legal and advisory fees incurred by them relative to
any restructuring of the Company.
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Additionally, approval by the government of the Commonwealth of The Bahamas
is required for foreign ownership of real property in The Bahamas. Moreover, any
foreign investment in The Bahamas requires exchange control approval by the
Central Bank of The Bahamas. No sale of any property located in The Bahamas to
non-Bahamian nationals may be completed until such governmental approvals are
obtained.
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST PIRL.__If the SIHL Sale is not
consummated on the Effective Date, the PIRL Spin-Off will be effected and the
operations of the Paradise Island Business will come under the control of PIRL.
PIRL is a Bahamian holding company, and all or a substantial portion of its
assets are or may be located outside the United States. PIRL has appointed an
agent to receive service of process with respect to any action brought against
it in the United States District Court for the Southern District of New York
under the securities laws of the United States or any State, or any action
brought against it in the Supreme Court of the State of New York in the County
of New York under the securities laws of New York State. However, it may be
difficult for investors to enforce outside the United States judgments against
PIRL obtained in the United States in any such actions, including actions
predicated upon the civil liability provisions of the securities laws of the
United States. In addition, certain of the directors and officers of PIRL are or
may be residents of The Bahamas, and all or a substantial portion of the assets
of such persons are or may be located outside the United States. As a result, it
may be difficult for investors to effect service of process within the United
States upon such persons, or to enforce against them judgments obtained in
United States courts, including judgments predicated upon the civil liability
provisions of the securities laws of the United States. There can be no
assurance as to whether the courts of The Bahamas would enforce (i) judgments of
United States courts obtained against PIRL or such persons predicated upon the
civil liability provisions of the securities laws of the United States or (ii)
in original actions brought in The Bahamas, liabilities against PIRL or such
persons predicated upon the securities laws of the United States.
THE RESTRUCTURING
The following section of this Information Statement/Prospectus sets forth
certain information regarding the events leading to the Restructuring, the terms
of the Restructuring, the effects of the Restructuring on RII and the holders of
its securities and the Company's plan for post-Restructuring operations. The
Restructuring will be effected by means of the Plan.
BACKGROUND
EVENTS LEADING TO THE FILING OF THE OLD PLAN
CONSTRUCTION OF THE TAJ MAHAL. In 1983, the Company commenced construction
of the Taj Mahal project. Although initially scheduled for completion in late
1986, the project experienced cost overruns and construction delays and remained
unfinished at the time it was sold to a partnership controlled by the Trump
Partnership in late 1988. By March 31, 1988, RII's total indebtedness for
borrowed funds exceeded $725,000,000.
By the mid-1980s, the Company's position in the Atlantic City casino/hotel
industry was severely disadvantaged. In an atmosphere of increased competition,
the preoccupation of the Company's management with the Taj Mahal and several
bids for control of the Company caused the Company's then existing management to
neglect the Resorts Casino Hotel and allow its facilities to deteriorate and to
fail to respond to new trends in the industry.
THE ACQUISITION. In late 1988, through a stock purchase and merger,
Griffco, a corporation then wholly owned by Merv Griffin, acquired RII from
Donald Trump, the then Chairman of the RII Board of Directors and its
controlling shareholder, and RII's other shareholders. The aggregate cost of
this acquisition was $296,207,750, in cash, and was principally funded by means
of Merv Griffin's $50,000,000 investment in Griffco and the issuance of two
series of public debt by GRI.
Immediately after Griffco's acquisition of RII, the Company entered into an
agreement pursuant to which it sold certain real and personal assets, including
the Taj Mahal, to the Trump Partnership for $273,000,000 in cash and the
assumption of approximately $19,000,000 of liabilities. In connection
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with the foregoing transactions, RII also terminated the Comprehensive Services
Agreement which RII had entered into with the Trump Hotel Corporation and paid
such corporation an aggregate amount of $63,689,750 for such termination and
fees still owed under such agreement.
DETERIORATION IN FINANCIAL CONDITION. In the period following the
acquisition of RII from Donald Trump, the Company experienced a substantial
deterioration in its results of operations from both the Resorts Casino Hotel
and the Paradise Island Business. The decrease in earnings of the Resorts Casino
Hotel was attributable largely to increased competition and, among other things,
the disruption of operations and patron and employee relationships caused by
ongoing renovations and the Company's financial difficulties. RII and its
affiliates had issued approximately $600,000,000 of subordinated debentures
prior to the acquisition by Griffco, the proceeds of which were principally used
to fund the construction of the Taj Mahal, and GRI issued $325,000,000 of
additional notes to fund the acquisition. As a result, after certain repayments,
the Company had approximately $911,000,000 of long-term debt outstanding in
August 1989. In August 1989, faced with deteriorating results of operations and
substantial debt service, the Company announced a moratorium on the payment of
interest on its outstanding public debt.
NEGOTIATIONS WITH UNOFFICIAL COMMITTEES. In late 1989, the Company embarked
upon recapitalization negotiations with two unofficial committees representing
the holders of the Company's outstanding public debt in respect of which the
Company had declared the interest payment moratorium. For various reasons,
however, RII came to believe that it would not be possible to achieve, on a
solely out-of-court basis, the comprehensive restructuring needed to assure
continued viability. Moreover, the possibility of an out-of-court settlement was
adversely affected when involuntary petitions for relief under chapter 11 of the
Bankruptcy Code were filed against RII and its former subsidiary, RIFI, in
November 1989.
OVERVIEW OF THE OLD PLAN
THE OLD BANKRUPTCY PROCEEDING. On November 12, 1989, certain creditors of
RII and RIFI filed involuntary petitions for relief under chapter 11 of the
Bankruptcy Code. On December 22, 1989, RII and RIFI filed consents to the
involuntary petitions and GRI and GRH, another former subsidiary of RII, filed
the Old Chapter 11 Cases in the New Jersey bankruptcy court. The Old Debtors
subsequently filed the Old Plan, which was confirmed by the New Jersey
bankruptcy court in August 1990. On the effective date of the Old Plan
(September 17, 1990), all conditions to the effectiveness of the Old Plan were
either met or waived and the Old Plan became effective.
FEATURES OF THE OLD PLAN. Set forth below is a brief summary of the
material features of the Old Plan. The summary is qualified in its entirety by
reference to the provisions of the Old Plan which has been filed as an exhibit
to the Registration Statement. See "Available Information". Pursuant to the Old
Plan, the previously outstanding public debt issued by RII, RIFI and GRI was
canceled, the Old Debtors were discharged from all other claims arising prior to
the commencement of the Old Chapter 11 cases and all previously outstanding
shares of stock of RII were canceled.
In consideration for the previously outstanding public debt of $911,000,000
and other unsecured liabilities and claims of approximately $20,000,000, RII
issued (i) debt securities consisting of $187,500,000 principal amount of the
Old Series A Notes, $138,750,000 principal amount of the Old Series B Notes and
$105,333,000 principal amount of the Showboat Notes and (ii) 15,237,234 shares
of RII Common Stock. The distribution with respect to the previously outstanding
public debt was made to the indenture trustees for such debt.
As of October 15, 1993, the Old Series Note Trustee continues to hold
approximately $1,160,000 principal amount of Old Series A Notes, $1,243,000
principal amount of Old Series B Notes, 86,434 shares of RII Common Stock and
approximately $125,000 in cash on behalf of holders of the previously
outstanding public debt of RII, GRI and RIFI that have not yet surrendered such
previously outstanding public debt in accordance with the provisions of the Old
Plan (the "Unsurrendered Public Debt Claims") and other claimants entitled to
participate in such distribution. Under the terms of the Old Plan, holders of
Unsurrendered Public Debt Claims have five years from September 17, 1990, to
surrender such Unsurrendered Public Debt Claims and to receive the distribution
provided by the Old Plan. Any distributions that remain unclaimed on September
17, 1995, will revert to and become the property of RII.
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Certain claims against the Old Debtors are the subject of proceedings
pending in connection with the Old Plan ("Old Plan Disputed Claims") and the
distributions with respect to such Old Plan Disputed Claims are being held by
the Old Series Note Trustee pursuant to the Old Plan. Such Old Plan Disputed
Claims include without limitation claims asserted by Fred Lowenschuss and claims
for approximately $6,600,000 by certain participants in the "Officers
Supplemental Plan." Litigation is pending with respect to these claims in the
United States Bankruptcy Court for the District of New Jersey. The Company has
negotiated a settlement related to the claims under the Officers Supplemental
Plan. Pursuant to this settlement, which has not yet been approved by the United
States Bankruptcy Court for the District of New Jersey, such claim would be
treated as a $6.6 million "Class 3C" claim under the Old Plan and entitled to
the following distribution: 155,623 shares of Old RII Common Stock and
$2,318,003 Old Series B Notes (inlcuding PIK interest). Because the settlement
is not yet evidenced by an executed stipulation approved by the bankruptcy
court, the calculations contained in this Information Statement/Prospectus do
not reflect the issuance of these additional shares or Old Series B Notes. If
the settlement is approved, the recoveries projected herein to equity interest
holders and holders of Old Series Notes will be diluted slightly. Another Old
Plan Disputed Claim is a claim in the amount of $616,000 filed by Dadras
International ("Dadras") related to architectural services rendered to RII.
Dadras has filed a motion with the United States Bankruptcy Court for the
District of New Jersey seeking to allow this claim as an administrative claim in
the Old Chapter 11 Case; such motion has not yet been determined by the Court.
RII has disputed the claim filed by Dadras and intends to oppose the motion
filed by Dadras. Although settlement discussions have been held, no settlement
has yet been reached with Dadras. To the extent that such Old Plan Disputed
Claims are allowed, the holders thereof will be entitled to the distributions
set forth in the Old Plan. For a discussion of the treatment of Unsurrendered
Public Debt Claims and Old Plan Disputed Claims under the Plan, see "The Plan --
Treatment of Unclaimed Consideration from the Old Plan".
Pursuant to the Old Plan, Merv Griffin acquired 4,400,000 shares of RII
Common Stock for which RII received $12,345,000 in cash and the Griffin Note for
$11,000,000 secured by a bank letter of credit. In connection therewith, Merv
Griffin and the Griffin Group entered into the Old Griffin Services Agreement,
pursuant to which RII was granted a non-exclusive license to use his name and
likeness to promote its facilities and operations, and Merv Griffin agreed to
act as Chairman of the Board of RII and to provide certain other services
without compensation for the two-year period ended September 16, 1992.
Merv Griffin also made approximately $2,655,000 available to the indenture
trustee for the outstanding GRI public debt in exchange for voluntary releases
of Merv Griffin, the Company and others (the "GRI Releases") by the holders of
such debt. The trustee paid the $2,655,000 to RII in consideration for the
purchase of an additional 500,000 shares of RII Common Stock (the "GRI Release
Shares"). The GRI Release Shares were distributed, in accordance with the
formula set forth in the Old Plan, to holders of GRI public debt.
Merv Griffin also made $2.5 million in cash (the "RIFI Release Cash")
available to the indenture trustee for the outstanding RIFI public debt in
exchange for voluntary releases of Merv Griffin, the Company and others by the
holders of such debt (the "RIFI Releases"). The RIFI indenture trustee
distributed most of this sum, in accordance with the formula set forth in the
Old Plan, to the RIFI public debt holders which delivered RIFI Releases. At the
present time, the indenture trustee for the old RIFI public debt continues to
hold approximately $227,000 of the RIFI Release Cash which has not yet been
exchanged for RIFI Releases. Under the terms of the Old Plan, electing holders
of old GRI public debt were to have delivered their RIFI Releases to the
indenture trustee for the RIFI public debt prior to the effective date of the
Old Plan to receive a pro rata portion of the RIFI Release Cash. The remaining
RIFI Release Cash currently held by the indenture trustee is subject to disputes
as to whether the respective RIFI public debt holders complied with the terms of
the Old Plan relating the RIFI Releases and the RIFI Release Cash. To the extent
that any portion of the RIFI Release cash is not ultimately exchanged for RIFI
Releases, such remaining RIFI Release Cash will be returned to Merv Griffin. For
a discussion of the treatment under the Plan of the RIFI Release Cash which is
not exchanged for releases of Merv Griffin and others, see "The Plan --
Treatment of Unclaimed Consideration from Old Plan".
The Old Plan further provided for the establishment of the Litigation Trust
pursuant to a litigation trust agreement dated as of September 17, 1990, between
the Old Debtors and the Litigation
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Trustee (the "Litigation Trust Agreement"), to pursue, for the benefit of
certain classes of general unsecured creditors of the Old Debtors, all claims
the Old Debtors and certain of their affiliates may have had against Donald
Trump and certain of his affiliates. In October 1990, RII funded the Litigation
Trust by depositing with the Litigation Trustee the sum of $5,000,000 to cover
reasonable expenses of the Litigation Trust in pursuing such claims, with any
unused balance of such amount to be distributed to the beneficiaries of the
Litigation Trust. Under the Old Plan, the beneficiaries of the Litigation Trust
received the Litigation Trust Units to represent their beneficial interests.
Pursuant to the Old Plan, the holders of 1,785,000 Litigation Trust Units (out
of at least 10,000,000 Litigation Trust Units) had the right to require RII to
purchase their Litigation Trust Units for approximately $3,880,000 in the
aggregate if certain conditions were not met by September 17, 1991. The
$3,880,000 was deposited with the Litigation Trustee in October 1990. Such
conditions were not met and, consequently, approximately 1,760,000 Litigation
Trust Units were purchased by RII in October 1991 for $3,831,000. See
"Description of Litigation Trust Units".
RII accounted for its reorganization pursuant to the Old Plan by use of
"fresh start" accounting. Accordingly, all RII's assets and liabilities were
restated to reflect their estimated fair values and RII's accumulated deficit
was eliminated. RII recorded the effects of the reorganization as of August 31,
1990.
OPERATIONS SUBSEQUENT TO THE OLD PLAN
RII's ability to pay cash interest on the Old Series Notes, and the ultimate
repayment of the Old Series Notes at maturity, was premised in large measure
upon RII's ability to sell the Paradise Island Business (excluding PIA) at its
then-estimated value, and to generate substantial excess cash flow from its
operations and the contemplated sale of the Non-Operating Real Property. The
recession in the United States, and more specifically in the northeast sector,
the acute competition in Atlantic City and The Bahamas, and the impact of the
conflict in the Persian Gulf in early 1991 and its effect on transportation and
tourism, all adversely affected RII's ability to sell the Paradise Island
Business at its then-estimated value and to generate substantial excess cash
flow from operations. The Old Plan projected the Company's excess cash flows
from operations for the initial two years of the Old Plan, net of capital
expenditures and prior to the sale of the Paradise Island Business, to be
$8,300,000. The Company's actual excess cash flow was $2,476,000. The Old Plan
also contemplated additional cash flow in the amount of $15,000,000 from the
sale of the Non-Operating Real Property in the initial two years of the Old
Plan. However, such sales were never accomplished. Due to these and other
factors, RII has never paid interest in cash on the Old Series Notes.
In addition, in late 1991, Carnival announced its plan to dispose of the
Crystal Palace, the Company's principal competition in The Bahamas. Carnival
reported operating losses on the Crystal Palace in excess of $60,000,000 in
fiscal 1990 and 1991 combined, and in fiscal 1991 Carnival's investment in the
Crystal Palace was written down to its estimated net realizable value of
approximately $90,000,000. In early 1992, a portion of the Crystal Palace
complex, which Carnival had been leasing from HCB, was returned to HCB. That
portion is now the HCB-owned Radisson, which has 679 guest rooms. RII believes
that the announcement of the financial problems at Crystal Palace and the
arrangements described above have had a further adverse impact on RII's ability
to sell the Paradise Island Business. Carnival continues to operate the
remainder of the Crystal Palace complex under the Crystal Palace name and, in
October 1993, announced that it had signed an agreement in principle to sell an
81% interest in such complex to a group of German investors. This investor group
has announced that it plans to increase the marketing of the Crystal Palace
complex in Europe and will invest additional capital in the complex to establish
it as a high-end resort destination. Although there can be no assurance that
such sale will be completed, an upgraded Crystal Palace complex may adversely
affect the Company's operations in The Bahamas.
RII's Business Plan and Financial Projections included in RII's Disclosure
Statement relating to the Old Plan stated that RII believed that the net
proceeds from the sale of the Paradise Island Business (excluding PIA) "could
range from $250,000,000 to $300,000,000". Various other parties in interest in
the Old Chapter 11 Cases, such as RII's then financial advisers and certain
creditors' committees, concurred in such belief, and the Old Plan, which
contemplated the sale of the Paradise Island Business, was approved. Based on
the current economic climate, the events described above
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regarding the Crystal Palace, the very limited amount of interest indicated by
prospective purchasers of the Paradise Island Business and, in particular, the
estimated net proceeds of the only offer received prior to the proposed
Restructuring ($150,000,000), RII does not believe that proceeds of the
magnitude originally contemplated in 1990 will be realizable prior to the
maturity date of the Old Series Notes on April 15, 1994. Subsequent discussions
with the prospective purchaser that offered $150,000,000 (net) did not lead to a
definitive agreement.
RII elected to make Old PIK Payments on the interest due on the Old Series
Notes on October 15, 1990 and on April 15 and October 15 of 1991, 1992 and 1993,
in order to continue the Company's capital expenditure program, which management
believed was necessary for the Company's operating properties to remain
competitive, and to conserve cash. For the 33 months ended September 30, 1993,
RII's capital expenditures totaled approximately $69,000,000. The aggregate face
amount of Old Series Notes issued in lieu of cash for the payment of interest on
these seven payment dates was approximately $157,000,000, which increased the
outstanding principal amount of the Old Series Notes to approximately
$482,000,000. If RII were to make Old PIK Payments through the maturity date of
the Old Series Notes and there were no principal retirements, the total
obligation due on the Old Series Notes outstanding at maturity on April 15, 1994
would be approximately $518,000,000.
Although the Company's liquidity is satisfactory until the maturity of the
Old Series Notes in April 1994, the Company must reduce its debt to a level that
can be supported by cash flow reasonably anticipated on a continuing basis. The
effort to achieve that reduction through asset sales in the current economic
environment has been unsuccessful. The Company therefore attempted to develop
financial alternatives which could be coupled with continuing efforts to sell
the Paradise Island Business. Between October 1991 and March 1992, RII retained
Bear Stearns, DLJ and Alvarez & Marsal as financial advisers to assist RII in
the development and analysis of such financial alternatives as well as the
development of a long-term financial plan.
Beginning in October 1991, the Company and its financial and legal advisors
examined and considered a number of alternatives, including continued pursuit of
a cash sale of all or a portion of the Paradise Island Business, a spin-off of
the Paradise Island Business, a transfer of the Paradise Island Business to the
holders of the Old Series Notes in the context of a restructuring of such notes,
and pursuit of an equity investment in the Company or the Paradise Island
Business. The analysis indicated, among other things, that a total debt
restructuring was necessary and that the separation of the Paradise Island
Business from the rest of the Company was advantageous and could be a key
component of a total financial restructuring of RII. In addition, the analysis
indicated that accomplishing the separation through a cash sale or a combination
cash and stock sale of the Paradise Island Business could provide additional
advantages if a satisfactory sales price could be obtained.
Acting on behalf of the Company, Salomon Brothers provided an affiliate of
SIHL, World Leisure Group Limited, with information concerning the Paradise
Island Business in January 1992. From time to time thereafter, representatives
of SIHL's affiliate expressed interest in buying all or a portion of the
Paradise Island Business but made no formal offers. Moreover, the discussions
contemplated prices which could only be considered by the Company in the context
of a restructuring of the Old Series Notes. In June 1993, affiliates of SIHL
began a series of discussions with representatives of Fidelity and TCW which
culminated in the negotiation of the Paradise Island Purchase Agreement.
During the summer of 1992, RII began a series of discussions with Fidelity
and TCW, which represented to RII that various funds and accounts managed
separately by them owned in the aggregate over 60% of the Old Series Notes.
These discussions centered on RII's unsuccessful efforts to sell the Paradise
Island Business and the implications of such failure with respect to the payment
of the Old Series Notes upon their stated maturity in April 1994. These
discussions resulted in a preliminary agreement among RII, Fidelity and TCW on
December 14, 1992, which outlined a framework for the restructuring of RII's
business and obligations with respect to the Old Series Notes.
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<PAGE>
To facilitate further discussions with Fidelity and TCW, RII agreed to pay
the cost of retention of independent counsel. Thereafter, negotiations resumed
in earnest with Fidelity and TCW, culminating in the agreement of Fidelity and
TCW to the Restructuring described in this Information Statement/Prospectus. The
negotiations were frank, complex, comprehensive and protracted and involved not
only RII, Fidelity and TCW, but also SIHL and its various advisers with respect
to the sale of the Paradise Island Business and the Griffin Group with respect
to the New Griffin Services Agreement. The resulting proposed Restructuring
described in this Information Statement/Prospectus has the support and approval
of the Boards of Directors of each of RII and GRI, of Merv Griffin, and of
Fidelity and TCW.
FINANCIAL FORECASTS FOR THE COMPANY
Set forth below are forecasts of certain financial data including net
revenues, EBITDA (defined below under "-- Assumptions -- EBITDA"), net earnings,
cash flow and condensed balance sheets for the Company's remaining operations
after giving effect to the Restructuring. The forecasts assume the Restructuring
is completed on December 31, 1993.
The forecasts are based on a variety of assumptions as set forth below. The
Company believes these assumptions are reasonable; however, they are subject to
significant business, industry, economic, regulatory and competitive
uncertainties, many of which are beyond the control of the Company.
Although these forecasts represent the best estimates of the Company, for
which it believes it has a reasonable basis as of the date of preparation
thereof, September 1993, they are only estimates and actual results may vary
materially from the forecasts. Consequently, the inclusion of the forecasts
herein should not be regarded as a representation by the Company that the
forecast results will be achieved. Because the forecasts are subject to
significant uncertainties and are based upon assumptions that may not prove to
be correct, prospective holders of the New Debt Securities and the New Equity
Securities are cautioned not to place undue reliance on the forecasts. See "Risk
Factors -- Risks Relating to the Forecasts".
Except as required in connection with the hearing on the confirmation of the
Plan, the Company does not intend to update or otherwise revise the forecasts to
reflect the actual date of the completion of the Restructuring, events or
circumstances existing or arising after the date hereof or the occurrence of
unanticipated events. Any updated forecasts will be available at or prior to the
Confirmation Hearing. Any delay in the Effective Date beyond June 30, 1994 could
result in a termination of the Paradise Island Purchase Agreement and could
jeopardize the Company's ability to consummate the Restructuring. See
"Description of Paradise Island Purchase Agreement -- Termination".
The forecasts should be read together with the information contained in RII
information under "Pro Forma Financial Data", "Business of the Company" and the
Consolidated Financial Statements of RII and the related notes included
elsewhere in this Information Statement/Prospectus.
The forecasts were prepared in compliance with the GUIDE FOR PROSPECTIVE
FINANCIAL INFORMATION published by the American Institute of Certified Public
Accountants. The Company's independent auditors have not performed any
procedures with respect to the forecasts and, accordingly, accept no
responsibility for them.
FORECAST FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
----------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net revenues:
Resorts Casino Hotel:
Casino.................... $ 259.1 $ 264.2 $ 269.5 $ 274.9 $ 280.5
Rooms..................... 7.3 7.4 7.5 7.7 7.8
Food and beverage......... 16.6 17.2 17.6 17.8 18.1
Other casino/hotel........ 4.9 5.0 5.1 5.2 5.3
Real estate related......... 8.3 8.5 8.8 9.1 9.3
-------- -------- -------- -------- --------
$ 296.2 $ 302.3 $ 308.5 $ 314.7 $ 321.0
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
90
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
EBITDA:
Resorts Casino Hotel........ $ 42.3 $ 43.4 $ 44.6 $ 45.8 $ 47.0
Real estate related......... (1.6) (1.7) (1.7) (1.8) (1.9)
Corporate expense........... (6.3) (6.5) (6.8) (7.0) (7.3)
-------- -------- -------- -------- --------
Consolidated EBITDA....... $ 34.4 $ 35.2 $ 36.1 $ 37.0 $ 37.8
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net earnings:
Consolidated EBITDA......... $ 34.4 $ 35.2 $ 36.1 $ 37.0 $ 37.8
Depreciation expense........ (13.1) (12.1) (9.9) (8.4) (7.1)
Interest expense............ (17.7) (17.7) (17.7) (17.7) (17.7)
Amortization of debt
discount................... (3.0) (3.3) (3.7) (4.2) (4.7)
Income taxes................ -- -- -- -- (2.0)
-------- -------- -------- -------- --------
$ 0.6 $ 2.1 $ 4.8 $ 6.7 $ 6.3
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net earnings per share........ $ 0.02 $ 0.06 $ 0.13 $ 0.18 $ 0.17
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Cash flow:
Consolidated EBITDA......... $ 34.4 $ 35.2 $ 36.1 $ 37.0 $ 37.8
Capital expenditures........ (12.0) (12.0) (12.0) (12.0) (12.0)
CRDA deposits, net of
provision.................. (1.6) (1.6) (1.6) (1.7) (1.7)
Payments of fees pursuant to
New Griffin Services
Agreement, net of
expense.................... 2.1 (.2) 2.3 1.8 --
Interest payments........... (13.6) (17.7) (17.7) (17.7) (17.7)
Income taxes................ -- -- -- (0.1) (2.1)
-------- -------- -------- -------- --------
$ 9.3 $ 3.7 $ 7.1 $ 7.3 $ 4.3
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
See "-- Assumptions" below.
BECAUSE THE FORECASTS ARE BASED ON A NUMBER OF ASSUMPTIONS AND ARE
INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES THAT ARE
BEYOND THE COMPANY'S CONTROL, THERE CAN BE NO ASSURANCE THAT THE FORECASTS WILL
BE REALIZED, AND ACTUAL RESULTS MAY BE HIGHER OR LOWER THAN THOSE SHOWN,
POSSIBLY BY MATERIAL AMOUNTS.
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<PAGE>
Condensed Balance Sheets:
<TABLE>
<CAPTION>
FORECAST
-----------------------------------------------------------
ACTIVITY DECEMBER 31,
HISTORICAL THROUGH 1993 BEFORE
SEPTEMBER 30, DECEMBER EFFECT OF EFFECT OF DECEMBER 31,
1993 31, 1993 RESTRUCTURING RESTRUCTURING 1993
-------------- ----------- ------------ ------------ ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 71.0 $ (2.6) $ 68.4 $ (48.4) $ 20.0
Restricted cash equivalents........... 8.1 2.0 10.1 (6.7) 3.4
Receivables, net...................... 13.9 3.0 16.9 (10.4) 6.5
Note receivable from related party.... 2.3 -- 2.3 (2.3) --
Inventories........................... 8.5 -- 8.5 (7.0) 1.5
Prepaid expenses...................... 13.5 (0.5) 13.0 (2.3) 10.7
------- ----------- ------------ ------------ -------
Total current assets.............. 117.3 1.9 119.2 (77.1) 42.1
------- ----------- ------------ ------------ -------
Note receivable from related party...... 3.0 -- 3.0 (3.0) --
Property and equipment, net............. 454.1 (5.7) 448.4 (173.6) 274.8
Deferred charges and other assets....... 12.2 0.4 12.6 (1.3) 11.3
------- ----------- ------------ ------------ -------
$ 586.6 $ (3.4) $ 583.2 $ (255.0) $ 328.2
------- ----------- ------------ ------------ -------
------- ----------- ------------ ------------ -------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt,
net.................................. $ 429.5 $ 37.1 $ 466.6 $ (466.5) $ 0.1
Accounts payable and accrued
liabilities.......................... 83.2 (8.7) 74.5 (34.1) 40.4
------- ----------- ------------ ------------ -------
Total current liabilities......... 512.7 28.4 541.1 (500.6) 40.5
------- ----------- ------------ ------------ -------
Long-term debt, net..................... 84.5 0.5 85.0 147.4 232.4
Deferred income taxes................... 54.0 -- 54.0 -- 54.0
Shareholders' equity (deficit).......... (64.6 ) (32.3) (96.9) 98.2 1.3
------- ----------- ------------ ------------ -------
$ 586.6 $ (3.4) $ 583.2 $ (255.0) $ 328.2
------- ----------- ------------ ------------ -------
------- ----------- ------------ ------------ -------
</TABLE>
See "-- Assumptions".
92
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................... $ 29.3 $ 33.0 $ 40.1 $ 47.4 $ 51.7
Restricted cash equivalents................................. 3.4 3.4 3.4 3.4 3.4
Receivables, net............................................ 6.6 6.6 6.6 6.6 6.6
Inventories................................................. 1.5 1.5 1.5 1.5 1.5
Prepaid expenses............................................ 8.6 8.8 6.5 4.7 4.7
--------- --------- --------- --------- ---------
Total current assets.................................... 49.4 53.3 58.1 63.6 67.9
--------- --------- --------- --------- ---------
Property and equipment, net................................... 273.7 273.6 275.7 279.3 284.2
Deferred charges and other assets............................. 12.8 14.4 16.0 17.7 19.4
--------- --------- --------- --------- ---------
$ 335.9 $ 341.3 $ 349.8 $ 360.6 $ 371.5
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities -- accounts payable and accrued
liabilities.................................................. $ 44.6 $ 44.6 $ 44.6 $ 44.6 $ 44.6
Long-term debt, net........................................... 235.5 238.8 242.5 246.7 251.4
Deferred income taxes......................................... 54.0 54.0 54.0 53.9 53.8
Shareholders' equity.......................................... 1.8 3.9 8.7 15.4 21.7
--------- --------- --------- --------- ---------
$ 335.9 $ 341.3 $ 349.8 $ 360.6 $ 371.5
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See "-- Assumptions".
BECAUSE THE FORECASTS ARE BASED ON A NUMBER OF ASSUMPTIONS AND ARE
INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES THAT ARE
BEYOND THE COMPANY'S CONTROL, THERE CAN BE NO ASSURANCE THAT THE FORECASTS WILL
BE REALIZED, AND ACTUAL RESULTS MAY BE HIGHER OR LOWER THAN THOSE SHOWN,
POSSIBLY BY MATERIAL AMOUNTS.
ASSUMPTIONS
At the date of preparation of these forecasts, the Company was unable to
reliably estimate the Effective Date of the Restructuring. In order to provide
five complete years of comparable forecast data, the forecasts assume the
Restructuring is completed as of December 31, 1993. The forecasts do not include
any data related to the Paradise Island Business or any costs incurred or
expenditures made in connection with the Restructuring subsequent to December
31, 1993.
Described below are other assumptions that management believes are material
to the forecasts; however, not all assumptions used in the preparation of the
forecasts are set forth herein.
ACCOUNTING POLICIES. The forecasts were prepared using generally accepted
accounting principles and accounting policies consistent with those currently
being used, and expected to be used during the forecast period, in preparing
historical financial statements of the Company. These include a new income tax
accounting standard (Statement of Financial Accounting Standards No. 109), which
was adopted at the beginning of 1993. Although the individual components of net
earnings and cash flow are not presented on a comparable basis with the
Company's historical financial statements, net earnings and cash flow are
presented on a comparable basis, in all material respects.
93
<PAGE>
NET REVENUES
RESORTS CASINO HOTEL
GENERAL. The following factors are anticipated to increase the
number of visitors to Atlantic City and, therefore, favorably impact the
Atlantic City casino/hotel industry during the forecast period:
-continuing improvements to be made to the Atlantic City International
Airport over the next one to two years making it more attractive for
carriers to provide scheduled air service to Atlantic City;
-the opening of the new Atlantic City Convention Center scheduled for the
fall of 1996;
-proposals by ten casino/hotels to add hotel rooms in Atlantic City in
conjunction with their applications for CRDA financing of such projects
from a special fund set aside to spur construction of new hotel rooms to
support the new convention center; and
-Atlantic City's continuing efforts to position itself as a destination
resort.
CASINO. The Company's casino revenue forecasts are based on
projected industry growth and the Company's projected market share.
The Company projects the Atlantic City casino industry's gaming revenues
(excluding simulcast and poker revenues, as these games were introduced in June
1993) to experience a growth rate of approximately 2% per year from 1993 through
1998. Management believes these projections are reasonable given Atlantic City's
historical gaming revenue growth performance and in light of the factors noted
above under "-- General".
These forecasts consider the potential effects of the opening of a new
casino near Syracuse, New York by the Oneida Indians and the expansion of the
gaming facilities at the Foxwoods Indian Casino in Connecticut; however, they
assume no other jurisdictions on the east coast will approve and commence casino
gaming during the forecast period.
Resorts Casino Hotel contains a 60,000-square-foot casino and an
8,000-square-foot simulcast betting and poker area. In July 1993, Resorts Casino
Hotel operated 1,859 slot machines, 82 table games and 25 poker tables. This
represented 7.6% of the slot machines, 7.4% of the table games and 17.5% of the
poker tables in use in the Atlantic City casino industry at that time.
For the years 1994 through 1998 the Company projects its market share to be
7.5% for both slot and table game revenues. This projected market share is
slightly greater than the average 7.3% market share that the Company has
experienced in the 33 months ended September 30, 1993 for slot revenues.
Management believes that the following factors will enable the Company to
achieve this improved market share:
-completion in 1993 of an extensive five-year capital improvements program
for the entire property, including conversion of the garage to self-parking
(completed in 1992);
-opening of a new VIP slot and table player lounge, and completion of recent
casino renovations including upgrade of high limit slot area and high limit
baccarat and table pit area, purchase of certain new slot machines, and
completion of the simulcast betting and poker room; and
-implementation of new marketing programs aimed at higher margin drive-in
customers coupled with a reduction in marketing efforts aimed at lower
margin bus patrons.
In addition, the forecasts include poker and simulcasting revenues, which
are projected to increase at 2% per year after 1994, the first full year of
offering such wagering.
ROOMS. In recent years the 670-room Resorts Casino Hotel has
experienced occupancy rates of 90% or better; however, consistent with industry
practice, the Company reserves a portion of its hotel rooms and suites as
complimentary accommodations for casino patrons. The Company currently is
shifting its marketing focus to higher margin players, so it is expected that
more rooms will be provided to casino patrons on a complimentary basis during
the forecast period than have been provided in recent history. Thus, fewer rooms
are expected to be available for sale.
94
<PAGE>
In spite of this, the Company is projecting a slight increase in its room
revenues (net of complimentaries) due to projected increases in its average room
rates. The Company believes increased rates will be realizable because (i) the
demand for first class casino/hotel rooms in Atlantic City has historically been
very strong, (ii) the Company's facilities have recently undergone a major
renovation program and (iii) the factors noted above under "General" are
expected to increase the number of visitors to Atlantic City.
FOOD AND BEVERAGE. Resorts Casino Hotel's food and beverage
operations currently include three gourmet restaurants, four volume restaurants,
two cocktail and entertainment lounges, room service and banquet operations, and
the Turf Club, a bar with food service located in the new simulcast and poker
room.
The Company plans a restaurant master plan reconfiguration during 1994 and
1995 which is to include the addition of a mid-priced restaurant and the
consolidation of kitchen operations for the gourmet restaurants. The kitchen
consolidation should allow for faster service in the gourmet restaurants,
thereby increasing the number of patrons served.
Because of these changes planned by the Company and in light of the factors
noted above under "General" that are expected to increase the number of visitors
to Atlantic City, the Company projects an increase in food and beverage revenues
to result from a modest increase in the number of patrons served, other than
complimentaries provided to guests of the casino, and a slight increase in
prices.
OTHER CASINO/HOTEL REVENUES. Revenues in this category are derived
primarily from entertainment and concessions. Resorts Casino Hotel's
entertainment revenues are from ongoing production and headliner shows presented
in the Superstar Theatre and special events (such as boxing matches) held in the
Coconut Ballroom. As the Company's marketing efforts are targeting higher margin
casino customers, the entertainment policy is shifting to more top name
headliners than have been presented in recent years. The Company plans to
continue to capitalize on Merv Griffin's celebrity status in attracting top name
entertainers.
Increased ticket prices are projected with the addition of headliners and
more ticket sales and retail outlet sales are projected with the increase in the
number of visitors to Atlantic City anticipated due to factors described under
"-- General" above. However, because the majority of seating at shows and
special events are typically provided to guests of the casino on a complimentary
basis, the projected increase in other casino/hotel revenues during the forecast
period is slight.
REAL ESTATE RELATED
Although the Company plans to continue its efforts to sell the Non-Operating
Real Property in Atlantic City, no revenues from such sales are included in the
forecasts.
Real estate related revenues forecast herein represent rental revenues
pursuant to the Showboat Lease. Revenues under this lease currently amount to
$8,118,000 per lease year and are adjusted annually based on changes in the
consumer price index. The forecasts assume a 3% increase per year in the
consumer price index.
EBITDA
GENERAL.__"EBITDA" represents earnings before deduction of interest,
taxes, depreciation and amortization. EBITDA should not be construed as an
alternative to operating earnings (as determined in accordance with generally
accepted accounting principles ("GAAP")) as an indicator of operating
performance, or to cash flows from operating activities (as determined in
accordance with GAAP) as a measure of liquidity. Although EBITDA is not an
accepted measure under GAAP, the Company uses EBITDA as an indicator of
performance of the Company's operations. Thus, like GAAP's operating earnings,
EBITDA excludes non-operating income and expense items, income taxes and any
extraordinary items. However EBITDA, unlike operating earnings, is not
"penalized" by depreciation expense, which (i) is beyond the control of the
Company's operating management, (ii) for the Company, has experienced
significant fluctuations, as the Company's assets have been restated to
estimated market value twice in the last several years, and (iii) is a non-cash
expense. Although in
95
<PAGE>
EBITDA, depreciation, routinely the Company's most significant non-cash expense,
is not considered. EBITDA differs from cash flow from operating activities by
the cash flow effect of changes in certain balance sheet accounts.
RESORTS CASINO HOTEL. The operating margin (net revenues divided by
EBITDA) for Resorts Casino Hotel is projected to increase slightly throughout
the forecast period as the projected revenue increases discussed above are
projected to be largely offset by increased operating expenses.
REAL ESTATE RELATED. Rental revenues pursuant to the Showboat Lease,
which make up the forecast real estate related revenues, are not included in
EBITDA for Non-Operating Real Property. Such lease payments are passed through
as interest to holders of RII's Showboat Notes due June 30, 2000, and are not
otherwise available to the Company. No expenses are forecast relative to the
Showboat Lease as it is a net lease.
Real estate related EBITDA is primarily forecasted real estate taxes
associated with the Company's Non-Operating Real Property holdings in Atlantic
City. Although the Company plans to continue its efforts to sell these
properties, no decreases in real estate taxes or other expenses which would
result from the sale of these properties have been forecast. The forecasts
assume that current assessed values for the properties will remain unchanged
during the forecast period, and allow for increased property tax rates of 3.5%
per year, which is the average of the rate increases experienced in 1992 and
1993.
CORPORATE EXPENSE. Corporate expense includes payroll and related taxes
and benefits of RII officers and employees in certain other corporate office
functions, RII's directors' fees and expenses, and insurance and other overhead
expenses. These expenses are forecast to increase by an annual inflation factor
of between 3% and 4%.
NET EARNINGS
DEPRECIATION EXPENSE. Forecast depreciation expense is based on
existing property and equipment as well as capital expenditures projected to be
made throughout the forecast period.
INTEREST EXPENSE. Forecast interest expense comprises interest on the
New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes only. Based on
forecast operating results, it is assumed the Company will not need to make a
borrowing under the RIHF Senior Facility.
Interest expense on the Showboat Notes due June 30, 2000 is not forecast
here, as the rental income under the Showboat Lease which services such interest
obligations is not included in the forecast Consolidated EBITDA.
AMORTIZATION OF DEBT DISCOUNT.__Forecast amortization of debt discount
comprises amortization of estimated discounts on the New Debt Securities and the
discount on the Showboat Notes.
INCOME TAXES. The Company has significant net operating loss
carryforwards for Federal income tax purposes which, based on the forecasts,
will be sufficient to offset all taxable income generated during the forecast
period. Based upon its analysis of the transactions that will occur on the
Effective Date, the Company believes that it will have in excess of $194,700,000
of net operating loss carryovers, which loss carryovers would be available to
offset taxable income without restriction. In addition, the Company believes
that it will have in excess of $388,500,000 of net operating loss carryovers the
use of which is subject to an annual limitation. If all of the Company's net
operating loss carryovers were subject to an annual limitation on use, the
Company believes that it will be able to utilize approximately $2,000,000 of net
operating loss carryovers per year to offset taxable income. Accordingly, to the
extent that the pre-tax income of the Company exceeds $2,000,000 and all of the
Company's net operating loss carryovers were determined to be subject to an
annual limitation on use, the Company's tax liability would be higher than
indicated in the forecast. To the extent taxable income is completely offset
with net operating loss carryforwards, the Company will be subject to the
alternative minimum tax ("AMT") with respect to such income at an effective rate
of 2%. For financial reporting purposes, the current tax provision resulting
from such AMT will be offset by a deferred tax benefit, as the AMT gives rise to
a credit that carries forward indefinitely.
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<PAGE>
For state income tax purposes, RIH has significant net operating loss
carryforwards which will expire in 1997. All forecast taxable income through
1997 for RIH is anticipated to be offset by the utilization of such
carryforwards. The taxable income forecast for RIH in 1998 gives rise to
$2,000,000 of state income taxes included in the forecasts for 1998. RII and its
other subsidiaries are not forecast to have taxable income for state purposes
during the forecast period.
NET EARNINGS PER SHARE
Net earnings per share data were calculated assuming 715,000 shares of RII
Common Stock are issued in payment of financial advisory fees on the
Restructuring prior to the Effective Date and 17,025,000 shares of RII Common
Stock are issued to holders of Old Series Notes pursuant to the Restructuring.
CASH FLOW
CAPITAL EXPENDITURES. Since Resorts Casino Hotel will be completing an
extensive capital improvements program in 1993, the majority of capital
expenditures during the forecast period are for maintenance projects.
CRDA DEPOSITS, NET OF PROVISION. This adjustment reflects the cash
outflow for amounts projected to be deposited with the CRDA and eliminates from
cash flow a non-cash expense associated with the Company's obligation to
purchase CRDA bonds which bear below-market rates.
PAYMENTS OF FEES PURSUANT TO NEW GRIFFIN SERVICES AGREEMENT, NET OF
EXPENSE.__This adjustment reflects the cash outflow for fees payable in 1995
(the fees payable in 1994 are to be offset against the balance of the Griffin
Group Note at the Effective Date, thus requiring no cash outflow) and eliminates
from cash flow the non-cash expense recorded as prepaid fees are written off.
INTEREST PAYMENTS. Forecast interest payments reflect interest on the
New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes only. Such
interest is projected to accrue from January 1, 1994; therefore, based on
proposed interest payment dates, interest payments forecast for 1994 are less
than one full year's interest. Based on forecast operating results, it is
assumed the Company will not need to make a borrowing under the RIHF Senior
Facility.
Interest payments on the Showboat Notes due June 30, 2000 are not forecast
here, as the rental income under the Showboat Lease which services such interest
obligations is not included in the forecast Consolidated EBITDA.
INCOME TAXES. See discussion of income taxes under "-- Assumptions --
Net Earnings".
CONDENSED BALANCE SHEETS
The forecast balance sheets assume the Restructuring is completed as of
December 31, 1993. See RII information under "-- Summary Historical and Pro
Forma Financial Data" for a description of the nature of the adjustments
included in the forecast effect of the Restructuring.
REORGANIZATION VALUES
Over the past two years, RII and GRI have been advised by Bear Stearns with
respect to: the value of post-Restructuring RII; in the case of the SIHL Sale,
SIHL; in the case of the PIRL Spin-Off, the value of PIRL; and the imputed value
of the distributions to the holders of the Old Series Notes. The total fees paid
to date by the Company to Bear Stearns have been $_______. The Company requested
that Bear Stearns provide it with such valuation advice for purposes of a plan
of reorganization under chapter 11 of the Bankruptcy Code and did not impose any
limitations on the scope of Bear Stearns' analysis. Solely for the purposes of
the Plan, the reorganization enterprise value of RII was assumed by the Company,
based on advice from Bear Stearns, to be approximately $225 million as of
October 15, 1993. Under the Plan, based upon such reorganization enterprise
value, the Company believes that the imputed reorganization value of its common
equity is approximately $70 million or approximately $1.80 per share of RII
Common Stock (based upon approximately 38 million shares of RII Common Stock
outstanding as of the Distribution Date).
97
<PAGE>
Solely for purposes of the Plan, the reorganization enterprise value of
SIHL, in the case of SIHL Sale, and of PIRL, in the case of the PIRL Spin-Off,
was assumed by the Company, based on advice from Bear Stearns, to be
approximately $150 million and $125 million, respectively, as of October 15,
1993. Under the Plan, based upon such assumed reorganization enterprise values,
the Company believes that the imputed reorganization value of the common equity
of SIHL, in the case of the SIHL Sale is approximately $150 million or
approximately $30 per share of SIHL Series A Shares and of PIRL, in the case of
the PIRL Spin-Off is approximately $125 million or approximately $25 per share
of PIRL Ordinary Shares (as the case may be) (based upon approximately 5 million
SIHL Series A Shares and approximately 5 million PIRL Ordinary Shares
outstanding as of the Distribution Date.)
Based on consideration of such factors as the Company, based on the advice
of Bear Stearns, believed to be relevant, the Company believes that: (a) the
RIHF Mortgage Notes have an aggregate reorganization value of approximately $117
million or 93% of face; (b) the RIHF Junior Mortgage Notes have an aggregate
reorganization value of approximately $31 million or 89% of face; (c) the SIHL
Series A Shares issued and cash distributed to the holders of the Old Series
Notes if the SIHL Sale is consummated have an aggregate reorganization value of
approximately $161 million (comprised of $101 million cash and $60 million for
the SIHL Series A Shares); and (d) the PIRL Ordinary Shares and cash distributed
to holders of Old Series Notes if the PIRL Spin-Off is effected have an
aggregate reorganization value of approximately $161 million (comprised of $36
million cash and $125 million for the PIRL Ordinary Shares). There can be no
assurance that the amount of Excess Cash at the Distribution Date will be $36
million. The amount of Excess Cash is expected to be at least $30 million. These
reorganization values suggest the following aggregate reorganization values for
the distributions to holders of Old Series Notes as of October 15, 1993:
ESTIMATED REORGANIZATION VALUE OF
AGGREGATE PLAN DISTRIBUTIONS TO HOLDERS OF OLD SERIES NOTES
<TABLE>
<CAPTION>
PLAN SCENARIO
----------------------------
SIHL SALE PIRL SPIN-OFF
----------- ---------------
(IN MILLIONS)
<S> <C> <C>
Cash from SIHL Sale............................................... $ 65 $ --
Other Cash........................................................ 36 36
RIHF Mortgage Notes............................................... 117 117
RIHF Junior Mortgage Notes........................................ 31 31
RII Common Stock.................................................. 28 28
SIHL Series A Shares.............................................. 60 N/A
PIRL Ordinary Shares.............................................. N/A 125
Total....................................................... $ 337 $ 337
</TABLE>
The foregoing aggregate reorganization values suggest the following
reorganization values for the distributions for each $1,000 of principal amount
of Old Series Notes as of October 15, 1993:
ESTIMATED REORGANIZATION VALUE OF PLAN DISTRIBUTIONS
FOR EACH $1,000 PRINCIPAL AMOUNT OF OLD SERIES NOTES
<TABLE>
<CAPTION>
PLAN SCENARIO
--------------------------
SIHL SALE PIRL SPIN-OFF
----------- -------------
<S> <C> <C>
Cash from SIHL Sale............................................... $ 134.9 $ --
Other Cash........................................................ 74.7 74.7
RIHF Mortgage Notes............................................... 242.7 242.7
RIHF Junior Mortgage Notes........................................ 64.3 64.3
RII Common Stock.................................................. 58.1 58.1
SIHL Series A Shares.............................................. 124.4 N/A
PIRL Ordinary Shares.............................................. N/A 259.3
Total....................................................... $ 699.1 $ 699.1
</TABLE>
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<PAGE>
Such reorganization values further suggest that, although the holders of Old RII
Common Stock are diluted under the Plan, such holders retain reorganization
value in Reorganized RII equivalent to approximately $1.80 per share.
The foregoing valuations are based on a number of assumptions, including a
successful reorganization of RII's and GRI's businesses and finances in a timely
manner, the achievement of the financial forecasts reflected herein, the
availability of net operating loss tax carryforwards, the amount of available
cash, current market conditions, and the Plan becoming effective in accordance
with its terms and on a basis consistent with the estimates and other
assumptions discussed herein.
The amount of distributions to be made to the holders of the Old Series
Notes is a result of months of negotiation by RII, Fidelity and TCW (on behalf
of various funds and accounts managed severally by each of them). In addition,
discussions were held with the Griffin Group regarding the Griffin Group's
contractual relationship with the Company and with SIHL regarding the Paradise
Island Purchase Agreement. The Company, Fidelity and TCW were advised throughout
the negotiating process by their respective legal and financial advisers. The
Company's legal and financial advisors are disclosed in this Information
Statement/Prospectus.
In preparing a range of the respective estimated reorganization enterprise
values of RII, SIHL and PIRL and of the reorganization value of the
distributions to holders of Old Series Notes, Bear Stearns: (i) received certain
historical financial information of RII and GRI for recent years and interim
periods; (ii) received certain internal financial and operating data of RII and
GRI, including financial forecasts prepared in September 1993, provided by
management for the Company's remaining operations after giving effect to the
Restructuring; (iii) met with certain members of senior management of RII and
GRI to discuss the Company's remaining operations after giving effect to the
Restructuring and their future prospects; (iv) reviewed publicly available
financial data and considered the market values of public companies which Bear
Stearns deemed generally comparable to the operating businesses of RII and GRI;
(v) considered certain economic and industry information relevant to the
operating businesses; and (vi) reviewed certain analyses prepared by other firms
retained by RII and GRI and conducted such other analyses as Bear Stearns deemed
appropriate. Although Bear Stearns conducted a review and analysis of RII's and
GRI's businesses, operating assets and liabilities and the business plan of the
Company's remaining operations after giving effect to the Restructuring, Bear
Stearns assumed and relied on the accuracy and completeness of all (a) financial
and other information furnished to it by RII and GRI and by other firms retained
by RII and GRI and (b) publicly available information. Neither Bear Stearns nor
any of the other financial advisers to RII and GRI independently verified
management's projections in connection with such valuation, and no independent
evaluations or appraisals of RII and GRI's assets were sought or were obtained
in connection therewith.
Estimates of reorganization enterprise values and of the reorganization
value of the RII Common Stock and the SIHL Series A Shares, the PIRL Ordinary
Shares, the RIHF Mortgage Notes and the RIHF Junior Mortgage Notes do not
purport to be appraisals or necessarily to reflect the values that may be
realized if assets are sold. The estimate of the values of RII, SIHL, and PIRL
prepared by Bear Stearns represents hypothetical going concern reorganization
enterprise values of these entities as the continued owner and operator of their
businesses and assets and assumes consummation of the Plan, and, in the case of
SIHL, the SIHL Sale, and in the case of PIRL, the PIRL Spin-Off, each on terms
as disclosed herein. Such estimate was developed solely for purposes of
formulation and negotiation of a plan of reorganization and analysis of imputed
relative recoveries to creditors thereunder. Such estimate reflects computations
of the estimated reorganization enterprise value of RII, SIHL and PIRL through
the application of various valuation techniques (which techniques Bear Stearns
has concluded are reasonably applicable to these entities) and does not purport
to reflect or constitute appraisals, liquidation values or estimates of the
actual market value that may be realized through the sale of any securities to
be issued pursuant to the Plan, which may be significantly different than the
amount set forth herein. The value of an operating business is subject to
uncertainties and contingencies which are difficult to predict, and will
fluctuate with changes in factors
99
<PAGE>
affecting the financial conditions and prospects of such a business. As a
result, the estimate of the reorganization enterprise values of RII, SIHL and
PIRL and the reorganization value of the RII Common Stock, the SIHL Series A
Shares, the PIRL Ordinary Shares, the RIHF Mortgage Notes, and the RIHF Junior
Mortgage Notes set forth herein are not necessarily indicative of actual
outcomes, which may be significantly more or less favorable than those set forth
therein. Actual market prices of securities at issuance will depend upon, among
other things, prevailing interest rates, conditions in the financial markets,
the anticipated initial securities holdings of prepetition creditors, some of
which may prefer to liquidate their investment rather than hold it on a
long-term basis, and other factors which generally influence the prices of
securities. Actual market prices of such securities also may be affected by
RII's and GRI's history in their chapter 11 cases or by other factors not
possible to predict. See "Risk Factors" for a discussion of various other
factors which could materially affect the value of the securities distributed
pursuant to the Plan. In the course of its evaluation, Bear Stearns considered a
number of valuation indicators in determining the reorganization enterprise
value of the RII, SIHL, and PIRL and the reorganization value of their
respective new securities. These included consideration of the agreement of SIHL
to purchase the operations of the Paradise Island Business, comparable company
analyses based upon publicly traded gaming companies, and comparable securities
analysis. The estimated reorganization enterprise value of SIHL and PIRL is
premised primarily on the implied value associated with the proposed SIHL Sale.
In the event the SIHL Sale is not consummated, and depending on the reasons for
such non-consummation, the estimated reorganization enterprise value of PIRL
could be lower by a material amount. Depending on the results of RII's and GRI's
operations, changes in the financial markets, or failure to consummate the SIHL
Sale, it is possible that Bear Stearns' valuation advice will differ at the
Confirmation Hearing from that disclosed herein. See "Risk Factors".
Based on the foregoing reorganization enterprise value, the anticipated
value of distributions under the Plan equals or exceeds, as to any impaired
class, the liquidation value of distributions to the creditors of such class. To
compare the anticipated value of the distributions under the Plan with the
liquidation value of RII and GRI, see "The Plan -- Confirmation of the Plan --
Best Interests Test" and the Liquidation Analysis attached as Appendix B hereto.
THE BONDHOLDERS SUPPORT AGREEMENT
As a result of the negotiations described above with Fidelity and TCW, RII
and GRI have entered into a letter agreement (the "Bondholders Support
Agreement"), with SIHL, SIIL, Fidelity and TCW, which separately advise and
manage various funds and accounts that held as of October 21, 1993 in the
aggregate approximately $309,926,000 of the outstanding principal amount of the
Old Series Notes, or approximately 64% of the outstanding Old Series Notes
subject to the conditions contained in the Bondholders Support Agreement.
Fidelity and TCW have agreed to continue to hold at least 50.1% of the Old
Series Notes through the Voting Record Date (unless it occurs after January 10,
1994).
Pursuant to the Bondholders Support Agreement and subject to the conditions
set forth therein, Fidelity and TCW have agreed to submit Acceptances of the
Plan with respect to all the outstanding principal amounts of Old Series Notes
(and the related GRI Guaranty endorsed thereon) held by funds or accounts
managed by them on the Voting Record Date. Fidelity and TCW have agreed to
consent to the termination and release of the Old Security Documents in
connection with the Restructuring and the Plan with respect to all the
outstanding principal amounts of Old Series Notes (and the related GRI Guaranty
endorsed thereon) held by the funds and accounts managed by them. Under the
Bondholders Support Agreement, Fidelity and TCW are not obligated to support any
plan other than the Plan.
Fidelity and TCW severally have the right to terminate the Bondholders
Support Agreement if the Plan, the SIHL Purchase Agreement, the RIHF Mortgage
Note Indenture, the RIHF Junior Mortgage Note Indenture and certain other
agreements are breached, waived, amended, modified, altered in any material
respect or terminated without their prior written consent. These consents and
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<PAGE>
approval rights terminate as to Fidelity and TCW if the funds and accounts
managed by either of them hold in the aggregate less than 20% of the Old Series
Notes and terminate as to Fidelity or TCW to the extent either of them owns no
Old Series Notes.
OVERVIEW OF THE RESTRUCTURING
GENERAL
The purpose of the Restructuring is to effect the changes to the Company's
capital structure that the Company believes are necessary to return to
profitability and to consummate the SIHL Sale (or, if the SIHL Sale is not
consummated on the Effective Date, to effect the PIRL Spin-Off). Management of
the Company believes that the Restructuring will improve the Company's financial
position and allow management to create long-term value for the creditors and
the shareholders of the Company and strengthen the Company's position in the
gaming industry. The Restructuring is designed to alleviate the problems caused
by the Company's excessive debt service levels and will help assure the
Company's long-term viability. There can be no assurance, however, that
implementation of the Restructuring will result in the Company's return to
profitability. Likewise, there can be no assurance that, if the SIHL Sale is not
consummated on the Effective Date, PIRL's operations will be profitable once the
PIRL Spin-Off is effected. The Restructuring will be implemented by the Plan.
The terms of the Plan result primarily from an analysis of the Company's
financial condition and operations conducted by RII and its financial advisers
and from negotiations conducted by RII and its financial and legal advisers with
Fidelity and TCW.
RII considered a number of alternatives to the Restructuring, including
liquidation, an out-of-court restructuring of the Old Series Notes, a
refinancing of the Old Series Notes and the sale of RII's resorts and casinos.
RII and its financial advisers concluded that liquidation was not as favorable
to RII's creditors and equity interest holders as the Plan. The Company's
discussions with Fidelity and TCW, representing funds and accounts that hold a
very substantial portion of the outstanding Old Series Notes, led it to conclude
that an out-of-court restructuring of the Old Series Notes was not a viable
option. With respect to refinancing the Old Series Notes, the Company does not
believe that there exists any source of refinancing for the principal amount of
the Old Series Notes on terms acceptable to the Company. Also, the Company's
experience in attempting to sell its Paradise Island Business led it to conclude
that a sale of its resorts and casinos individually was not a viable means to
realize the fair value of the Company's business and assets.
FIDELITY AND TCW SEPARATELY ADVISE AND MANAGE VARIOUS FUNDS AND ACCOUNTS
THAT AS OF OCTOBER 21, 1993 HELD IN THE AGGREGATE APPROXIMATELY $309,926,000
PRINCIPAL AMOUNT OF THE OLD SERIES NOTES, OR APPROXIMATELY 64% OF THE
OUTSTANDING OLD SERIES NOTES. FIDELITY AND TCW HAVE AGREED TO CONTINUE TO HOLD
AN AGGREGATE OF AT LEAST 50.1% OF THE OLD SERIES NOTES THROUGH THE VOTING RECORD
DATE (PROVIDED THAT THE VOTING RECORD DATE IS ON OR BEFORE JANUARY 10, 1994),
HAVE ENGAGED IN EXTENSIVE NEGOTIATIONS WITH RII AND GRI WITH RESPECT TO THE
RESTRUCTURING, AND HAVE AGREED TO VOTE ALL OLD SERIES NOTES OWNED BY FUNDS AND
ACCOUNTS MANAGED BY THEM AS OF THE VOTING RECORD DATE FOR ACCEPTANCE OF THE PLAN
AND TO CONSENT TO THE TERMINATION AND RELEASE OF THE OLD SECURITY DOCUMENTS IN
CONNECTION THEREWITH.
MERV GRIFFIN, WHO HOLDS 4,398,115 SHARES OF RII COMMON STOCK, OR
APPROXIMATELY 21.82% OF THE OUTSTANDING RII COMMON STOCK, HAS AGREED TO VOTE FOR
ACCEPTANCE OF THE PLAN.
THE HOLDERS OF 1,307,300 1990 STOCK OPTIONS ISSUED UNDER THE 1990 STOCK
OPTION PLAN, OR APPROXIMATELY 74% OF THE OUTSTANDING 1990 STOCK OPTIONS, HAVE
AGREED TO VOTE FOR ACCEPTANCE OF THE PLAN.
RII HAS AGREED TO VOTE ITS INTERCOMPANY CLAIM AGAINST GRI AND THE GRI COMMON
STOCK FOR ACCEPTANCE OF THE PLAN.
THE BOARD OF DIRECTORS OF EACH OF RII AND GRI HAS UNANIMOUSLY APPROVED THE
RESTRUCTURING, THE PLAN AND THE SOLICITATION AND RECOMMENDS THAT ALL IMPAIRED
CREDITORS AND EQUITY INTEREST HOLDERS SUBMIT BALLOTS ACCEPTING THE PLAN.
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<PAGE>
THE PLAN. The Plan provides, among other things, that the holders of the
Old Series Notes as of the Distribution Record Date, which will be the close of
business in New York City on the Effective Date, will receive the following
consideration on the relevant Distribution Date for each $1,000 of principal
amount of Old Series Notes outstanding as of such date (and for any accrued
interest thereon) (the aggregate principal amount of Old Series Notes
outstanding as of October 15, 1993 was approximately $482,000,000):
<TABLE>
<S> <C> <C>
-- $259.38 principal amount of the New RIHF Mortgage Notes;
-- one Unit comprised of $72.63 principal amount of the New RIHF Junior
Mortgage Notes and .07263 share of RII Class B Common Stock;
-- 35.33 shares of RII Common Stock;
-- either (A) $134.88 in cash, plus interest on such amount at an annual
rate of 7.5% from January 1, 1994 to the SIHL Closing Date, plus 4.15
SIHL Series A Shares, representing a pro rata share of the
consideration received from the SIHL Sale, or (B) if the SIHL Sale is
not consummated on the Effective Date, 10.375 PIRL Ordinary Shares
pursuant to the PIRL Spin-Off;
-- a pro rata share of Excess Cash, which pro rata share is projected to be
a minimum of $62.25;
-- the non-transferable right to receive a pro rata share of Net Reserved
Cash and Net Plan Consummation Cash; and
-- the non-transferable right to receive a pro rata share of payments from
Deferred Cash, which pro rata share is projected to be a minimum of $5.
See "Description of Litigation Trust Units".
</TABLE>
If the SIHL Sale is consummated, assuming a reorganization enterprise value
of approximately $225 million for RII and a reorganization enterprise value for
SIHL of approximately $150 million, the estimated recovery for holders of Old
Series Notes is projected to be approximately 70% of the principal amount of Old
Series Notes outstanding on October 15, 1993. If the SIHL Sale is not
consummated and the PIRL Spin-Off is effected, the estimated recovery for
holders of Old Series Notes is projected to be approximately 70% of the
principal amount of Old Series Notes outstanding on October 15, 1993, with an
assumed reorganization enterprise value of approximately $225 million for RII
and a reorganization enterprise value for PIRL of approximately $125 million.
There can be no assurance that the projected enterprise values of RII under
either the SIHL sale or of PIRL in the event of the PIRL Spin-Off will be
realized.
The SIHL Aggregate Cash Purchase Price, the New Debt Securities and the New
Equity Securities will be distributed to the disbursing agent for distribution
to the holders of Old Series Notes on the Effective Date. Payments of Net
Reserved Cash will be made as soon as practicable after the Effective Date, but
in no event later than 90 days after the Effective Date. Payments of Net Plan
Consummation Cash will be made as soon as practicable but no later than 90 days
after the Effective Date; provided, however, that if all Plan Expenses have not
been paid by the 90th day after the Effective Date, RII and GRI may continue to
hold back for an additional 60 days the portion of Net Plan Consummation Cash
deemed by the Bankruptcy Court to be necessary to satisfy remaining Plan
Expenses, after which time the remaining Net Plan Consummation Cash will be
distributed, unless otherwise ordered by the Bankruptcy Court. Payments of
Deferred Cash will be made within three business days after receipt by RII of
the Litigation Trust Distributions in immediately available funds. Payments of
Excess Cash will be made on the Effective Date or as soon thereafter as
practicable, but in no event later than 20 days after the Effective Date.
As part of the implementation of the Restructuring, Fidelity, which advises
and manages various funds that hold Old Series Notes, will cause one or more of
the funds it manages to enter into the RIHF Senior Facility which will allow
RIHF to borrow up to $20,000,000 through the issuance of RIHF Senior Facility
Notes. Any amount borrowed by RIHF under the RIHF Senior Facility will be loaned
by RIHF to RIH, and possibly by RIH to RII, through intercompany transactions
and will be
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<PAGE>
used for working capital and general corporate purposes. All principal payments
on the RIHF Senior Facility Notes will be due July 15, 2002. Interest on the
RIHF Senior Facility Notes will accrue at the rate of 11% per year and will be
payable in cash, semi-annually on January 15 and July 15 of each year,
commencing on the January 15 or July 15 next following the date of the initial
borrowing under the RIHF Senior Facility. The RIHF Senior Facility will be
available for a single borrowing during the one-year period from the Efffective
Date, provided that the public resale of the RIHF Senior Facility Notes by the
purchaser thereof upon a resale is registered, if required, under the Securities
Act and the RIHF Senior Facility Note Indenture has been qualified under the
TIA. The RIHF Senior Facility Notes will be secured by a lien on the RIHF Senior
Facility Trust Estate. In addition, RIH will issue the RIH Senior Facility
Guaranty that will guarantee the payment of principal of and interest on the
RIHF Senior Facility Notes. The liens on the Resorts Casino Hotel securing the
payment of the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty
will be senior to the liens securing payment of the New RIHF Mortgage Notes, the
RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior
Mortgage Guaranty. RII also will issue a guaranty of the payment of principal
and interest on the RIHF Senior Facility Notes.
The following transactions will be effected in connection with the
Restructuring: (a) the holders on the Distribution Record Date of the Old Series
Notes will receive the New Debt Securities, the New Equity Securities, Excess
Cash and the right to payments from Net Reserved Cash, Net Plan Consummation
Cash and Deferred Cash in accordance with the terms of the Plan; (b) (i) if the
SIHL Sale is consummated on the Effective Date, the holders on the Distribution
Record Date of the Old Series Notes will receive the SIHL Series A Shares and
the SIHL Aggregate Cash Purchase Price in accordance with the terms of the Plan;
or (ii) if the SIHL Sale is not consummated on or before the Effective Date, the
holders on the Distribution Record Date of the Old Series Notes will receive the
PIRL Ordinary Shares and, at the election of PIRL, the Interim Management
Agreement will be executed; (c) the RIHF Senior Facility will be executed and
delivered; (d) the Amended RII Certificate of Incorporation and the Amended RII
By-Laws will be adopted; (e) the initial post-Restructuring directors will be
appointed to RII's Board of Directors (including two Class B Directors); (f) the
Griffin Warrants will be issued; (g) various intercompany reorganization
transactions described on Schedule 6.3 to the Plan will be effected; (h) the
1990 Stock Option Plan will be terminated and the 1994 Stock Option Plan will be
implemented; and (i) the Old Security Documents will be released and terminated.
If sufficient Acceptances are received from the holders of Old Series Notes
(including the related GRI Guaranty) and from the holders of RII Common Stock,
such Acceptances will constitute approval of the 1994 Stock Option Plan by such
holders for purposes of compliance with Rule 16b-3 promulgated under the
Exchange Act. For information on the election of directors after the Effective
Date, see "-- Post-Restructuring RII Board of Directors".
If the Requisite Acceptances are not received by the Voting Deadline, RII
and GRI will be forced to evaluate options then available to them. Pursuant to
the Paradise Island Purchase Agreement, RII has committed, notwithstanding the
failure to obtain the Requisite Acceptances, to continue to pursue confirmation
of the Plan until the Paradise Island Purchase Agreement is terminated. This
commitment could require RII to conduct a further solicitation with respect to
the Plan until December 31, 1994. Because the Paradise Island Purchase Agreement
can be terminated by SIHL if an RII Chapter 11 case is not commenced by February
15, 1994, RII might conduct such solicitation after filing a chapter 11 case.
RII's failure to abide by the terms of the Paradise Island Purchase Agreement
would, under certain circumstances, give rise to a claim by SIHL for breach of
such agreement and/or entitle SIHL to reimbursement from the SIHL Buyer Expense
Escrow. Moreover, such failure, if not approved by Fidelity and TCW, may relieve
Fidelity and TCW of their obligations under the Bondholders Support Agreement.
Other options available to RII and GRI if the Requisite Acceptances are not
obtained include submission of a revised prepackaged plan of reorganization and
filing for protection under the Bankruptcy Code without a preapproved or
consensual plan of reorganization. If a bankruptcy proceeding were commenced
without a preapproved plan, there is no assurance that a plan would be confirmed
or that any recovery would be realized by the holders of the RII Common Stock
and the
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<PAGE>
existing holders of 1990 Stock Options. In such event, the holders of the Old
Series Notes might receive a substantially smaller recovery on their claims than
under the Plan. See "Risk Factors -- Certain Consequences of Non-acceptance of
the Plan".
Confirmation and consummation of the Plan is subject to certain conditions,
one of which cannot be waived by RII and GRI: the entry of a Confirmation Order
which has not been stayed. There can be no assurance that such condition will be
satisfied. As a practical matter, although the condition requiring the entry of
an order declaring that, as of the Effective Date, the Old Security Documents
shall be deemed released and terminated is waivable, the transactions
contemplated by the Plan cannot be consummated if the Old Security Documents are
not released and terminated. See "The Plan -- Conditions Precedent to
Confirmation and Consummation of the Plan".
POST-RESTRUCTURING RII BOARD OF DIRECTORS
Pursuant to the Restructuring, the number of persons comprising the Board of
Directors of RII will remain at six. Subject to receipt of any necessary
qualification of directors from the Casino Control Commission the initial
post-Restructuring Board of Directors of RII will consist of Merv Griffin,
Thomas Gallagher, Jay Greene and William Fallon, and as Class B Directors,
Vincent Naimoli and Charles Masson. After the Restructuring Date, the holders of
RII's Common Stock, voting as a class, will be entitled to elect four directors
of RII and the holders of RII Class B Common Stock, voting as a class, will be
entitled to elect two Class B Directors of RII. The Board of Directors will be
divided into three classes, and approximately one-third of the total number of
directors will be elected each year. Pursuant to the Plan, on the Effective Date
the initial post-Restructuring board of directors of RII will be composed of
directors designated by RII. If the Class B Triggering Event should occur, the
holders of the RII Class B Common Stock, voting as a class, would elect that
number of additional Class B Directors as will constitute, from time to time, a
majority of the entire RII Board of Directors.
CERTAIN SIGNIFICANT EFFECTS OF THE RESTRUCTURING
Implementation of the Restructuring would have important effects on the
Company and on the current holders of the Old Series Notes, the RII Common Stock
and the 1990 Stock Options and would result in a significant reduction of RII's
financial obligations. Certain of the anticipated effects are described below.
REDUCTION OF DEBT SERVICE OBLIGATIONS
The Restructuring would have the effect of reducing and rescheduling RII's
principal and interest payments. The Restructuring also would result in the
elimination and modification of certain restrictive covenants now applicable to
RII pursuant to the Old Series Indenture. Such modifications give the Company
increased financial flexibility, including the ability to explore additional
revenue generating operations. See "Summary -- Comparison of New RIHF Mortgage
Notes and New RIHF Junior Mortgage Notes to Old Series Notes".
The following table shows, at the dates and for the periods shown, on a pro
forma basis, the impact of the Restructuring as it affects the replacement of
the Old Series Notes with the New Debt Securities. It should be noted that the
table excludes the Showboat Notes and capital leases as it is the Company's
intention that such items will not be affected by the Restructuring. The pro
forma data for the principal amount of the New Debt Securities at September 30,
1993 are based on the assumption that the Restructuring occurred on that date.
The pro forma data regarding the stated interest calculation for the New Debt
Securities for the fiscal year ended December 31, 1992, and the three quarters
ended September 30, 1993, are based on the assumption that the Restructuring
occurred on January 1, 1992.
<TABLE>
<CAPTION>
NEW
OLD DEBT
SERIES NOTES SECURITIES
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Principal amount outstanding at September 30, 1993 (1)............................ $ 448,572 $ 160,000
Stated interest calculation for the fiscal year ended December 31, 1992........... 50,686(2) 17,731
Stated interest calculation for the three quarters ended September 30, 1993....... 47,224(2) 13,298
<FN>
- ------------------------
(1) Represents the principal amount of the Old Series Notes on a historical
basis or the principal amount of the New Debt Securities on a pro forma
basis, exclusive of unamortized discounts. At October 15, 1993, giving
effect to the payment of PIK interest on that date, the principal amount
outstanding was approximately $482,000,000.
</TABLE>
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<PAGE>
(2) The calculation of the interest on the Old Series Notes was based on the
stated interest rates with the principal amount increasing on April 15 and
October 15 due to the issuance of additional Old Series Notes in lieu of
paying cash interest.
SIGNIFICANT DILUTION OF EQUITY INTERESTS
If the Restructuring were implemented, 17,025,000 shares of RII Common Stock
would be issued to holders of the Old Series Notes. Issuance of such number of
shares of RII Common Stock would dilute significantly the equity interests of
the existing holders of the RII Common Stock and the existing holders of the
1990 Stock Options. The following table shows the percentage of beneficial
ownership of the RII Common Stock before and after consummation of the
Restructuring by the holders of the securities listed below, based on the
assumptions set forth in the notes thereto:
<TABLE>
<CAPTION>
POST-RESTRUCTURING
--------------------------------------------
ASSUMING OPTIONS NOT ASSUMING OPTIONS
PRE-RESTRUCTURING EXERCISED EXERCISED
------------------ ----------------------- ------------------
SHARES % SHARES % SHARES %
---------- ------ ---------- ----------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Holders of RII Common Stock (1)......... 20,157,234 92.0% 20,872,234 49.0% 20,872,234 44.7%
Holders of Old Series Notes (2)......... 17,025,000 40.0 17,025,000 36.5
Griffin Warrants (3).................... 4,665,000 11.0 4,665,000 10.0
1990 Stock Options (4).................. 1,758,800 8.0 1,758,800 3.8
1994 Stock Options (5).................. 2,333,000 5.0
---------- ------ ---------- ----- ---------- ------
21,916,034 100.0% 42,562,234 100.0% 46,654,034 100.0%
---------- ------ ---------- ----- ---------- ------
---------- ------ ---------- ----- ---------- ------
<FN>
- ------------------------
(1) Pre-Restructuring amount represents shares of RII Common Stock outstanding
on November 30, 1993. Post-Restructuring amount assumes 715,000 shares are
issued to financial advisers in settlement of certain recapitalization
costs.
(2) Assumes holders of Old Series Notes are issued shares in an amount that
would represent 40% of the shares of RII Common Stock outstanding assuming
the Griffin Warrants are exercised. Such ownership will be subject to
dilution by the exercise of the 1990 Stock Options outstanding as well as
options to be granted under the 1994 Stock Option Plan. Assumes that all
holders of Unsurrendered Public Debt Claims and of Old Series Notes timely
comply with the provisions of the Plan and the Old Plan that govern
entitlement to distributions.
(3) Assumes the Griffin Warrants are granted and exercised.
(4) Represents shares of RII Common Stock which may be issued upon exercise of
the 1990 Stock Options outstanding on November 30, 1993; related
percentages assume all such options are exercised.
(5) The 1994 Stock Option Plan will allow for the granting of options to
purchase up to 5% of the outstanding RII Common Stock; related percentage
assumes all such options are granted and exercised.
</TABLE>
THE PLAN
The following summary of the material provisions of the Plan. A copy of the
Plan is attached hereto as Appendix A.
BRIEF EXPLANATION OF CHAPTER 11
Chapter 11 is the business reorganization chapter of the Bankruptcy Code.
Under chapter 11 of the Bankruptcy Code, a debtor is authorized to reorganize
its business for the benefit of its creditors and equity interest holders. In
addition to permitting rehabilitation of the debtor, another goal of chapter 11
is to promote equality of treatment of creditors and equity interest holders of
equal rank with respect to the distribution of a debtor's assets. In furtherance
of these two goals, upon the filing of a petition for reorganization under
chapter 11, section 362 of the Bankruptcy Code provides for an automatic stay of
substantially all acts and proceedings against the debtor and its property,
including all attempts to collect claims or enforce liens that arose prior to
the commencement of the debtor's case under chapter 11.
The consummation of a plan of reorganization is the principal objective of a
chapter 11 reorganization case. A plan of reorganization sets forth the means
for satisfying claims against, and interests
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in, a debtor. Confirmation of a plan of reorganization by the bankruptcy court
makes the plan binding upon the debtor, any issuer of securities under the plan,
any person acquiring property under the plan and any creditor, equity security
holder or general partner in the debtor. Confirmation of a plan discharges the
debtor from any debt that arose prior to the date of confirmation of the plan
and substitutes therefor the obligations specified under the confirmed plan.
SOLICITATION OF ACCEPTANCES OF THE PLAN
RII and GRI hereby solicit acceptances or rejections of the Plan from
holders of impaired claims and interests under section 1126(b) of the Bankruptcy
Code. Under section 1126(b) of the Bankruptcy Code, a holder of a claim or
interest that has accepted or rejected a plan of reorganization before the
commencement of a chapter 11 case will be deemed to have accepted or rejected
such plan for purposes of confirmation of such plan under chapter 11 of the
Bankruptcy Code if the solicitation is in compliance with any applicable
non-bankruptcy law, rule or regulation governing the adequacy of disclosure in
connection with the solicitation, or if there is not any such law, rule or
regulation, such solicitation was made after disclosure of adequate information
as defined in section 1125(a) of the Bankruptcy Code. RII and GRI believe that
this Information Statement/Prospectus complies with the requirements of section
1126(b) of the Bankruptcy Code for purposes of soliciting acceptances or
rejections of the Plan.
If, by the Voting Deadline, the Requisite Acceptances have been received,
RII and GRI currently intend to commence reorganization cases by filing
petitions for relief under chapter 11 of the Bankruptcy Code and to use the
Acceptances solicited pursuant to this Information Statement/Prospectus to seek
confirmation of the Plan under chapter 11 of the Bankruptcy Code as promptly as
practicable. Neither RII nor GRI intends to commence a case under chapter 11 of
the Bankruptcy Code prior to the Voting Deadline, although it reserves the right
to do so in its sole discretion. RII and GRI would only voluntarily commence a
bankruptcy case prior to the Voting Deadline in the event of a material adverse
change in the finances or operations of the Company or the commencement of
collection or foreclosure actions with respect to the Old Series Notes or the
collateral securing such Notes.
Any party in interest, including any creditor, equity interest holder or
indenture trustee, has standing to appear and be heard on any issue in the
chapter 11 case. At or before the hearing on approval of this Information
Statement/Prospectus, RII and GRI will seek an order of the Bankruptcy Court
finding that (a) the Solicitation was in compliance with the Securities Act and
the Exchange Act and the rules and regulations thereunder and, if applicable,
the provisions of the Bankruptcy Code, and therefore, (b) the holders of claims
and interests that have accepted or rejected the Plan pursuant to the
Solicitation are deemed to have accepted or rejected the Plan for purposes of
confirmation of the Plan under chapter 11 of the Bankruptcy Code.
RII and GRI believe that they will have the best opportunity to confirm the
Plan and accomplish the Restructuring if RII and GRI receive the Requisite
Acceptances prior to the commencement of any bankruptcy cases. See "Confirmation
of the Plan" for a discussion of the Requisite Acceptances. In addition, RII and
GRI believe that the prior acceptance of the Plan would minimize disputes during
a bankruptcy case concerning the reorganization of RII and GRI and would shorten
the time required to complete the reorganization, reduce the expenses of the
proceeding and minimize the disruption of RII's and GRI's business that could
result from protracted and contested bankruptcy cases. IF RII AND GRI WERE
FORCED TO COMMENCE BANKRUPTCY CASES PRIOR TO RECEIPT OF THE REQUISITE
ACCEPTANCES, RII AND GRI BELIEVE THAT SUCH CASES COULD BE PROTRACTED, COSTLY AND
DISRUPTIVE TO RII'S AND GRI'S BUSINESS AND, AS A RESULT, COULD JEOPARDIZE THE
ACCOMPLISHMENT OF THE PLAN.
PROPONENTS OF THE PLAN
The Plan is proposed by RII, GRI, RIH, RIHF and PIRL. This joint proposal of
the Plan has potential ramifications with respect to the securities law
registration exemption contained in section 1145 of the Bankruptcy Code. For
further discussion of these securities law issues, see "Applicability of Federal
and Other Securities Laws to Resales of Securities -- Issuance of Securities
Under the Plan".
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VOTING ON THE PLAN
Pursuant to the Bankruptcy Code, only classes of claims or interests that
are "impaired" are entitled to vote on a plan. Generally speaking, a claim or
interest is impaired under a plan of reorganization if the plan provides that
such claim or interest will not be repaid in full or that the legal, equitable
or contractual rights of the holder of such claim or interest are altered. Only
claims or interests in the following classes are impaired under the Plan:
<TABLE>
<C> <C> <S>
RII Class 2 -- Claims of holders of Old Series Notes
RII Class 7 -- Interests of holders of RII Common Stock
RII Class 8 -- Interests of holders of the 1990 Stock Options
GRI Class 2 -- Claims of holders of the GRI Guaranty
GRI Class 4 -- Claims of RII, as the holder of the RII Intercompany Claim
GRI Class 5 -- Interest of RII, as the holder of all GRI Common Stock
</TABLE>
ALL OTHER CLASSES OF CLAIMS AND INTERESTS ARE UNIMPAIRED UNDER SECTION 1124
OF THE BANKRUPTCY CODE. HOLDERS OF CLAIMS OR INTERESTS IN THESE UNIMPAIRED
CLASSES ARE DEEMED TO HAVE ACCEPTED THE PLAN PURSUANT TO SECTION 1126(F) OF THE
CODE. HOWEVER, HOLDERS OF CLAIMS OR INTERESTS IN ANY CLASS, WHETHER IMPAIRED OR
NOT, MAY OBJECT TO CONFIRMATION OF THE PLAN.
FIDELITY AND TCW SEPARATELY ADVISE AND MANAGE VARIOUS FUNDS AND ACCOUNTS
THAT AS OF OCTOBER 21, 1993 HELD IN THE AGGREGATE CLAIMS IN RII CLASS 2 OF
APPROXIMATELY $309,926,000 PRINCIPAL AMOUNT OF THE OLD SERIES NOTES (AND RELATED
CLAIMS IN GRI CLASS 2), OR APPROXIMATELY 64% OF THE OUTSTANDING OLD SERIES
NOTES. FIDELITY AND TCW HAVE AGREED TO CONTINUE TO HOLD AN AGGREGATE OF AT LEAST
50.1% OF THE OLD SERIES NOTES THROUGH THE VOTING RECORD DATE (PROVIDED THAT THE
VOTING RECORD DATE IS ON OR BEFORE JANUARY 10, 1994), HAVE ENGAGED IN EXTENSIVE
NEGOTIATIONS WITH RII AND GRI IN RESPECT TO THE RESTRUCTURING AND HAVE AGREED TO
VOTE ALL OLD SERIES NOTES OWNED BY FUNDS AND ACCOUNTS MANAGED BY THEM AS OF THE
VOTING RECORD DATE FOR ACCEPTANCE OF THE PLAN AND TO CONSENT TO THE TERMINATION
AND RELEASE OF THE OLD SECURITY DOCUMENTS IN CONNECTION THEREWITH.
MERV GRIFFIN, WHO HOLDS INTERESTS IN RII CLASS 7 OF 4,398,115 SHARES OF RII
COMMON STOCK, REPRESENTING APPROXIMATELY 21.82% OF THE OUTSTANDING RII COMMON
STOCK, HAS AGREED TO VOTE FOR THE PLAN.
THE HOLDERS OF 1,307,300 1990 STOCK OPTIONS (I.E., INTERESTS IN RII CLASS
8), OR APPROXIMATELY 74% OF THE OUTSTANDING 1990 STOCK OPTIONS, HAVE AGREED TO
VOTE FOR THE PLAN.
RII HAS AGREED TO VOTE THE RII INTERCOMPANY CLAIM AND ITS EQUITY INTEREST IN
GRI FOR ACCEPTANCE OF THE PLAN.
The Bankruptcy Code defines acceptance of a plan of reorganization by a
class of claims as acceptance by holders of at least 66 2/3% in dollar amount
and more than one-half in number of the Allowed Claims of that class that have
actually been voted on the plan. The Bankruptcy Code defines acceptance of a
plan of reorganization by a class of interests as acceptance by the holders of
at least 66 2/3% in number of the Allowed Interests of that class that have
actually been voted on the plan. Under the Bankruptcy Code, only those who vote
to accept or to reject the Plan will be counted for purposes of determining
acceptance or rejection of the Plan by any impaired class of claims or
interests. Votes cast by holders of disputed Claims or Interests will not be
counted unless the holders thereof, upon application to the Bankruptcy Court,
obtain an order temporarily allowing such Claims for voting purposes only. See
"-- Confirmation of the Plan".
IF THE PLAN IS CONFIRMED BY THE BANKRUPTCY COURT, EACH HOLDER OF A CLAIM OR
INTEREST IN A CLASS WILL RECEIVE THE SAME CONSIDERATION AS THE OTHER MEMBERS OF
SUCH CLASS, WHETHER OR NOT SUCH HOLDER VOTED TO ACCEPT THE PLAN. MOREOVER, UPON
CONFIRMATION, THE PLAN WOULD BE BINDING ON ALL CREDITORS AND EQUITY INTEREST
HOLDERS OF RII AND GRI REGARDLESS OF WHETHER SUCH CREDITORS OR EQUITY INTEREST
HOLDERS, OR THE CLASS OF WHICH THEY ARE MEMBERS, VOTED TO ACCEPT THE PLAN.
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<PAGE>
TREATMENT OF TRADE CREDITORS AND EMPLOYEES
Since the Plan and the chapter 11 filings will relate only to RII and GRI
and not to RII's operating subsidiaries or the casinos they operate, the claims
of trade creditors and employees of such subsidiaries will not be affected by
such filings. GRI does not have any employees and believes that it does not have
any trade creditors. As a result of its being a holding company, RII has few
trade creditors and employees. To the extent necessary, RII, upon commencement
of its chapter 11 case, intends promptly to seek the authorization of the
Bankruptcy Court to maintain flexibility to pay, prior to confirmation of the
Plan, the prepetition claims of trade creditors. In addition, RII intends to
seek the approval of the Bankruptcy Court to pay all accrued prepetition
salaries and wages, expense reimbursements and severance, to permit affected
employees to utilize their paid vacation time which accrued prior to the date of
the filing of the prepackaged bankruptcy case (so long as they remain employees
of RII) and to continue paying medical benefits under RII's health plan. There
can be no assurance that such authorization will be obtained.
Pursuant to the Plan, RII and GRI have agreed not to pay, and not to cause
their subsidiaries to pay, any claim of a trade creditor or employee except in
the ordinary course of business and consistent with past practice and to
collect, and to cause their subsidiaries to collect, receivables in the ordinary
course of business and consistent with past practice. On the Effective Date, RII
Retained Cash rather than Plan Consummation Cash shall be used to pay any
prepetition Allowed Claims or post-petition Allowed Administrative Claims of
trade creditors and employees which, in the ordinary course of business and
consistent with past practice, would not have been paid by the Effective Date.
USE OF CASH FOR OPERATIONS
To maintain RII's operations during its chapter 11 case, RII will need the
ability to use its cash on hand on the Petition Date as well as funds received
during the pendency of its case. The Bankruptcy Code provides that, to the
extent any person has a security interest in any Cash Collateral (i) RII is
prohibited from making any post-petition use of such Cash Collateral without
obtaining Bankruptcy Court approval or the consent of such person, and (ii) such
person is entitled to "adequate protection" of such security interest as a
condition to the Bankruptcy Court's authorization of such use.
RII does not believe that any person has a security interest in any cash
that could be Cash Collateral. If any person asserts that cash which RII intends
to use is cash collateral, as such term is defined in section 363 of the
Bankruptcy Code (the "Cash Collateral"), RII will seek entry of an order
authorizing RII to use such Cash Collateral subject to provision of appropriate
adequate protection. The Bankruptcy Code generally defines "cash collateral" as
cash, negotiable instruments, documents of title, securities, deposit accounts,
or other cash equivalents in which both the debtor's estate and a third party
have an interest. It includes the proceeds, products, rents, or profits of
property subject to a security interest.
The Cash Collateral Order will provide that RII will be authorized to use
the Cash Collateral in accordance with the terms of the Cash Collateral Order.
The terms of the Cash Collateral Order will be negotiated with any person
objecting to the use of Cash Collateral.
OTHER FIRST DAY ORDERS
In addition to any orders relating to the payment of prepetition claims of
trade creditors and employees, if any, and relating to the use of Cash
Collateral, RII and GRI intend to seek certain first day orders, including the
following (if necessary): (i) an order authorizing the retention of
professionals (including accountants, attorneys and financial advisors) in
connection with the chapter 11 cases; (ii) an order authorizing the retention of
ordinary course professionals without the filing of individual retention
applications and affidavits; (iii) an order authorizing RII and GRI to continue
to provide certain services on behalf of their subsidiaries until confirmation
of the Plan in exchange for certain fees or charges paid by such subsidiaries;
(iv) an order authorizing RII and GRI (a) to continue their current cash
management system, (b) to maintain prepetition bank accounts and (c) to continue
use of existing business forms and existing books and records; (v) an order to
permit RII and GRI to use their current internal financial records and to be
relieved from the filing of certain forms and schedules
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otherwise required by the "United States Trustee Operating Guidelines and
Reporting Requirements" (the "Guidelines") to the extent such Guidelines are
inconsistent with such current internal financial records; (vi) an order
authorizing RII and GRI to continue their current investment guidelines and
invest their available cash in their customary manner; (vii) an order fixing the
dates for the hearings on approval of this Information Statement/Prospectus, the
Solicitation and confirmation of the Plan; (viii) an order authorizing RII to
borrow from its subsidiaries, if required, to pay operating expenses and provide
working capital; (ix) such other orders that are typical in chapter 11 cases or
that may be necessary for the preservation of the assets of RII and GRI or for
confirmation of the Plan.
The first day orders will be sought pursuant to accompanying applications
and, if appropriate, memoranda of law. The foregoing list is subject to change
depending upon the needs of RII and GRI in connection with their operations
during the chapter 11 cases. Failure of the Bankruptcy Court to enter one or
more of these orders, or a delay in doing so, could result in RII's and GRI's
chapter 11 cases becoming protracted and could delay, perhaps materially, the
hearing on, and the ultimate confirmation of, the Plan.
PARADISE ISLAND INTERIM ORDER
Pursuant to the Paradise Island Purchase Agreement, RII has agreed to
request, within five days after the filing of its chapter 11 case (and if the
Paradise Island Purchase Agreement has not been terminated), the entry of the
"Paradise Island Interim Order". The Paradise Island Interim Order would approve
certain provisions of the Paradise Island Purchase Agreement. Such provisions
relate to (1) the establishment of a procedure for the consideration of
competing bids for the Paradise Island Business and (2) the provision of certain
reimbursements to SIHL if, through no fault of its own, SIHL is not the
successful purchaser of the Paradise Island Business. If the Paradise Island
Interim Order is entered, RII would be prohibited from considering an
alternative proposal for the acquisition of the Paradise Island Business unless
it constituted an Overbid Transaction (as defined in the Paradise Island
Purchase Agreement). In general, an Overbid Transaction is an offer from a
financially qualified third party which provides for consideration attributable
to the entire Paradise Island Business having a fair market value of more than
$130 million. The imputed value of the SIHL proposal is $125 million. In
addition, pursuant to the Paradise Island Interim Order, RII would be
responsible for up to $4 million of expense reimbursement to SIHL if it were not
the successful purchaser of the Paradise Island Business. If, despite RII's best
efforts, the Paradise Island Interim Order is not entered, the Paradise Island
Purchase Agreement remains in full force and effect. See "Description of
Paradise Island Purchase Agreement."
To secure its reimbursement obligations described under the Paradise Island
Purchase Agreement, RII deposited $4 million in the SIHL Buyer Expense Escrow
with Citibank, N.A. for the benefit of SIHL. Any amount paid from such escrow
after the Filing Date will be subject to the approval of the Bankruptcy Court as
provided in the Paradise Island Interim Order. At the same time, SIHL deposited
$5 million in the SIHL Escrow with Citibank, N.A. to secure its obligations to
RII under the Paradise Island Purchase Agreement.
Subject to the requirements of the Paradise Island Interim Order, RII and
GRI may receive other bids for the Paradise Island Business during the pendency
of RII's and GRI's chapter 11 cases. Such bids, if received, may lead to further
proceedings before the Bankruptcy Court, including the conduct of an auction. If
a bidder other than SIHL prevails at such an auction, the Plan may be modified,
as may be necessary, to accommodate the particular requirements of the
prevailing bidder. Any such modification will be subject to compliance with
applicable bankruptcy laws and the approval of Fidelity and TCW (if the funds
and accounts managed by either of them hold in the aggregate at least own 20% of
the outstanding Old Series Notes). A new solicitation may be required as well.
As indicated above, however, the Paradise Island Interim Order would impose
significant restrictions upon the Company's ability to consider and ultimately
accept alternative acquisition proposals for the Paradise Island Business other
than the SIHL Sale. The Company cannot consider any
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<PAGE>
alternative acquisition proposal unless such proposal constitutes an "Overbid
Transaction." Moreover, when considering whether to approve an "Overbid
Transaction" from a competing bidder, the Bankruptcy Court will likely take into
consideration that the Company is required, under the terms of the Paradise
Island Purchase Agreement, to pay SIHL's out-of-pocket costs and expenses
incurred in connection with the proposed SIHL Sale and adjust the competing bid
accordingly.
SUBSIDIARIES OF RII
Other than GRI, RII currently does not intend to seek protection under the
Bankruptcy Code for any of its subsidiaries.
The commencement of a chapter 11 case by GRI will prevent any holder of the
Old Series Notes from taking action against GRI under the terms of the GRI
Guaranty.
The Old Series Note Trustee has the right to realize upon the collateral of
various RII subsidiaries pledged pursuant to the Old Security Documents to
secure the Old Series Notes. If necessary, RII will seek an order of the
Bankruptcy Court under section 105 of the Code enjoining any actions against
such subsidiaries for such time as is necessary to consummate the Plan. There
can be no assurance, however, that such an order would be obtained. If RII is
unable to obtain relief from actions taken against such subsidiaries, RII may
seek protection under the Bankruptcy Code for such subsidiaries. In such event,
the business and financial condition of such subsidiary or subsidiaries would be
adversely affected, the consummation of the Plan might be jeopardized and other
bankruptcy filings might be necessary.
In the Solicitation, RII and GRI are soliciting consents to the release of
the Old Security Documents and, if sufficient consents are not obtained, intend
to request the Bankruptcy Court to order the release of the Old Security
Documents. The requisite vote necessary for the voluntary release of the Old
Security Documents is at least 66 2/3 in aggregate principal amount of the
outstanding Old Series Notes and the record holders of at least a majority in
aggregate amount of each of the Old Series A Notes and the Old Series B Notes. A
condition to confirmation of the Plan is the entry of an order of the Bankruptcy
Court declaring that, as of the Effective Date, the Old Security Documents are
deemed released and terminated.
CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS
IN GENERAL
The Plan provides for the classification and treatment of claims and
interests of RII's and GRI's creditors and equity interest holders allowed under
section 502 of the Bankruptcy Code (each, as the case may be, an "Allowed Claim"
or an "Allowed Interest").
An Allowed Claim or Allowed Interest is a claim or interest (i) listed by
RII or GRI in schedules filed with the Bankruptcy Court and not designated as
"contingent", "unliquidated" or "disputed", (ii) as to which a timely proof of
claim or interest has been filed or deemed filed and which is not a disputed
claim or interest, or (iii) which is otherwise allowed under the Plan or by a
final order of the Bankruptcy Court. If an objection is made, the validity and
amount of the claim or interest will be determined by the Bankruptcy Court. A
holder of a claim or interest must file a proof of claim or interest with the
Bankruptcy Court to assert any claim or interest not scheduled by RII or GRI or
with respect to any scheduled claim or interest that is shown as "contingent",
"unliquidated" or "disputed". Such a filing also is required by any person
seeking to assert a claim or interest in an amount larger than the amount
scheduled by RII or GRI or asserting a classification (I.E., secured, priority
or unsecured) different from that which is shown in RII's and GRI's schedules.
RII and GRI are required under section 1122 of the Bankruptcy Code to
classify the claims and interests into classes that contain claims and interests
that are substantially similar to the other claims or interests in such class.
The Plan designates ten classes of claims and three classes of interests. These
classes take into account the differing nature and priority under the Bankruptcy
Code of the various claims and interests.
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Although RII and GRI believe that they have classified all claims and
interests in compliance with the provisions of section 1122 of the Bankruptcy
Code, it is possible that, once chapter 11 proceedings have been commenced, a
creditor or equity interest holder may challenge RII's or GRI's classification
of claims or interests and the Bankruptcy Court may find that a different
classification is required for the Plan to be confirmed. In such event, it is
the current intention of RII and GRI to modify the Plan to provide for whatever
reasonable classification might be required by the Bankruptcy Court for
confirmation and to use the Acceptances received in the Solicitation, to the
extent permitted by the Bankruptcy Court, to obtain the approval of the class or
classes of which the accepting holder is ultimately deemed to be a member. Any
such reclassification could adversely and materially affect the class in which
such claim or interest was initially classified or any other class under the
Plan by changing the composition of such class and the required vote of such
class for approval of the Plan. Furthermore, a reclassification of claims or
interests after approval of the Plan could necessitate the resolicitation of
Acceptances, which would result in a delay in the consummation of the
Restructuring and could increase the risk that the Restructuring will not be
consummated. To the extent a reclassification of claims or interests after
approval of the Plan adversely and materially changes the treatment of the claim
of any creditor or the interest of any equity interest holder, such creditor or
equity interest holder may no longer be bound by its Acceptance of the Plan and
RII and GRI would be obliged to obtain the Acceptance of the class of which the
creditor or equity interest holder is a member by the requisite votes. The need
to obtain such Acceptance could result in a delay in the consummation of the
Restructuring and could increase the risk that the Restructuring will not be
consummated.
SUMMARY OF DISTRIBUTIONS UNDER THE PLAN
The following summarizes the Plan distributions on account of the claims
against and interests in RII and GRI. Such summary does not purport to be
complete and is subject, and is qualified in its entirety by reference, to the
Plan.
ADMINISTRATIVE CLAIMS -- An "Administrative Claim" is a claim for payment of
an administrative expense of a kind specified in section 503(b) of the
Bankruptcy Code and referred to in section 507(a)(1) of the Bankruptcy Code,
including without limitation the actual and necessary costs and expenses
incurred after the commencement of the chapter 11 cases of preserving the estate
and operating the business of RII and GRI, including wages, salaries or
commissions for services, compensation for legal and other services and
reimbursement of expenses awarded under section 330(a) or 331 of the Bankruptcy
Code, and all fees and charges assessed against the estate under chapter 123 of
title 28, United States Code.
If the Bankruptcy Court confirms the Plan within the time frame anticipated
by RII and GRI , RII and GRI expect that the amount of Administrative Claims
will be significantly less than if RII and GRI had commenced chapter 11 cases
without prior receipt of the Requisite Acceptances. Assuming there is no
significant litigation initiated or objections filed with respect to the Plan
and the Plan is confirmed within 90 days after commencement of the chapter 11
cases, RII and GRI estimate that the aggregate allowed amount of unpaid
Administrative Claims, including without limitation the Administrative Claims of
Professional persons, will be approximately $[ ] as of the Effective
Date.
Administrative Claims include the fees and expenses of Fidelity, TCW and
Chemical Bank, as successor indenture trustee for the Old Series Notes. Pursuant
to the Plan, RII will compensate Chemical Bank, as the Old Series Indenture
Trustee, for the reasonable fees and costs incurred by the Old Series Indenture
Trustee (including the reasonable fees and expenses of its professionals) under
the Old Series Indenture. This payment or payments will constitute full
satisfaction of the Old Series Indenture Trustee's claims for compensation and
reimbursement pursuant to the Old Series Indenture, including the claims secured
by the liens granted to the indenture trustee pursuant to the Old Series Note
Indenture (the "Indenture Trustee Charging Liens"). Similarly, under the Plan
RII will consent to the compensation and reimbursement of Fidelity and TCW and
their agents (including
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legal counsel) for their reasonable fees and expenses incurred in connection
with the chapter 11 cases. The fees and expenses of the Old Series Note
Indenture Trustee, Fidelity and TCW and their agents (including legal counsel),
are subject to the approval of the Bankruptcy Court.
Pursuant to the Plan, Allowed Administrative Claims will be paid in cash in
full on the Distribution Date (or, if later, the date on which any such
Administrative Claim is allowed by a Final Order of the Bankruptcy Court),
except to the extent any holder of an Allowed Administration Claim shall have
agreed to different treatment thereof; provided, however, that (a)
Administrative Claims of professional persons, the Indenture Trustee, Fidelity,
TCW and their agents (including legal counsel) shall be paid within ten days
after allowance by Final Order and (b) Administrative Claims representing
liabilities incurred in the ordinary course of business by RII and GRI
(including amounts owed to vendors and suppliers which have sold goods or
furnished services to RII and GRI after the commencement of the chapter 11
cases) will be assumed and paid by RII and GRI in accordance with past practice
and the terms and conditions of the particular transactions and any agreement
relating thereto.
PRIORITY TAX CLAIMS -- A "Priority Tax Claim" is a claim for an amount
entitled to priority under section 507(a)(7) of the Bankruptcy Code. Each holder
of a Priority Tax Claim shall be paid in full in an amount equal to the amount
of such Allowed Claim on the Distribution Date such Priority Tax Claim becomes
due and payable or, at the option of RII or GRI, shall be paid in deferred
annual cash payments over a period not exceeding six years after the earlier of
the Effective Date and the date of assessment of such claim including an
interest component as required by the provisions of section 1129(a)(9)(C) of the
Bankruptcy Code. Interest shall be payable quarterly in arrears at the rate of
[_____]% per year. Any distributions of cash on account of Priority Tax Claims
shall be paid from RII Retained Cash. RII and GRI anticipate that Priority Tax
Claims, if any, will be minimal.
RII CLASS 1 -- RII PRIORITY CLAIMS -- An "RII Priority Claim" is any claim
against RII entitled to priority in accordance with section 507(a) of the
Bankruptcy Code (other than Administrative Claims and Priority Tax Claims)
including: (i) unsecured claims for accrued employee compensation earned within
90 days prior to the filing of the chapter 11 petition, to the extent of $2,000
per employee; and (ii) contributions to employee benefit plans arising from
services rendered within 180 days prior to the filing of the chapter 11
petition, but only for such plans to the extent of (a) the number of employees
covered by such plans multiplied by $2,000 less (b) the aggregate amount paid to
such employees from the estate for wages, salaries or commissions.
As mentioned previously, RII will seek an order approving the pre-Effective
Date payment of RII Priority Claims. To the extent such an order is not entered
or these Claims are not paid prior to the Effective Date, pursuant to the Plan
each holder of an Allowed RII Class 1 Claim, at RII's option, shall receive such
treatment as (i) will not alter the legal, equitable or contractual rights to
which such Allowed RII Class 1 Claim entitles the holder thereof, or (ii)
otherwise will render such Allowed RII Class 1 Claim unimpaired pursuant to
section 1124(2) of the Bankruptcy Code. RII anticipates that RII Priority Claims
will aggregate approximately $[______].
RII CLASS 1 IS UNIMPAIRED AND HOLDERS OF RII CLASS 1 CLAIMS ARE CONCLUSIVELY
PRESUMED PURSUANT TO SECTION 1126(F) OF THE CODE TO HAVE ACCEPTED THE PLAN.
RII CLASS 2 -- CLAIMS OF THE HOLDERS OF OLD SERIES NOTES -- RII Class 2
consists of the Claims of the holders of the Old Series Notes which claims are
allowed for purposes of the Plan only in the aggregate outstanding principal
amount of $482,000,000 at October 15, 1993 plus accrued and unpaid interest and
certain costs and expenses of collection.
Pursuant to the Plan, each holder on the Distribution Record Date of the Old
Series Notes will receive on the relevant Distribution Date and on account of
such holders' Allowed RII Class 2 Claims and Allowed GRI Class 2 Claims, for
each $1,000 principal amount of such claim and all accrued and unpaid interest
thereon:
<TABLE>
<S> <C> <C>
-- $259.38 principal amount of New RIHF Mortgage Notes;
</TABLE>
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<TABLE>
<S> <C> <C>
-- one Unit comprised of $72.63 principal amount of New RIHF Junior
Mortgage Notes and .07263 share of RII Class B Common Stock;
-- 35.33 shares of RII Common Stock;
-- either (A) $134.88 in cash, plus interest on such amount at an annual
rate of 7.5% from January 1, 1994, to the SIHL Closing Date, plus 4.15
SIHL Series A Shares, representing a pro rata share of the
consideration received from the SIHL Sale, or (B) if the SIHL Sale is
not consummated on the Effective Date, 10.375 PIRL Ordinary Shares
pursuant to the PIRL Spin-Off;
-- a pro rata share of Excess Cash, which pro rata share is projected to be
a minimum of $62.25;
-- the non-transferable right to receive a pro rata share of Net Reserved
Cash and Net Plan Consummation Cash; and
-- the non-transferable right to receive a pro rata share of payments from
Deferred Cash, which pro rata share is expected to be a minimum of $5.
See "Description of Litigation Trust Units."
</TABLE>
In addition to the foregoing distribution, RII will make the Caesars Payment
on behalf of the holders of Old Series Notes. For a discussion of this payment,
see "Description of the Caesars Payment."
Any distribution under the Plan on account of such Allowed RII Class 2 Claim
shall be deemed to have been applied first, to original issue price and then, to
accrued and unpaid original issue discount. For a description of the New RIHF
Mortgage Notes and the New RIHF Junior Mortgage Notes, see "Description of New
RIHF Mortgage Notes" and "Description of New RIHF Junior Mortgage Notes". For a
description of the RII Class B Common Stock, the RII Common Stock and the PIRL
Ordinary Shares, see "Description of New Equity Securities". For a description
of the Deferred Cash, see "Description of Deferred Cash" and "Description of
Litigation Trust Units". For a description of Excess Cash, Plan Expenses, Net
Reserved Cash and Net Plan Consummation Cash, see "Description of Net Reserved
Cash", "Description of Excess Cash" and "Description of Net Plan Consummation
Cash and Plan Expenses". THE DISTRIBUTION TO HOLDERS OF ALLOWED RII CLASS 2
CLAIMS IS PROVIDED ALSO IN CONSIDERATION FOR THEIR ALLOWED GRI CLASS 2 CLAIMS.
FRACTIONAL SHARES OF THE NEW EQUITY SECURITIES WILL NOT BE DISTRIBUTED. NEW RIHF
MORTGAGE NOTES AND NEW RIHF JUNIOR MORTGAGE NOTES WILL BE ISSUED ONLY IN
DENOMINATIONS OF $1,000 OR INTEGRAL MULTIPLES THEREOF. PURSUANT TO THE PLAN, THE
DISBURSING AGENT FOR THE HOLDERS OF OLD SERIES NOTES WILL AGGREGATE AND SELL ALL
FRACTIONAL AMOUNTS OF NEW EQUITY SECURITIES AND NEW DEBT SECURITIES AND
DISTRIBUTE THE NET PROCEEDS TO THE HOLDERS OF OLD SERIES NOTES ENTITLED THERETO.
For information with respect to SIHL, the SIHL Sale, the Paradise Island
Purchase Agreement and the SIHL Series A Shares, reference is made to the
accompanying SIHL Prospectus relating to the SIHL Series A Shares. RII HAS
SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS
FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN
INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN
THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT
FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES ACT). RII AND ITS
ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND
FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND
RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND
PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE
ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE
SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT).
RII CLASS 2 IS IMPAIRED AND THE HOLDERS OF RII CLASS 2 CLAIMS ARE ENTITLED
TO VOTE ON THE PLAN.
RII CLASS 3 -- CLAIMS UNDER THE SHOWBOAT NOTES -- RII Class 3 consists of
the Claims of holders of the Showboat Notes. As of the Voting Record Date, the
aggregate outstanding principal amount of the
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Showboat Notes was $105,333,000 and such claim is deemed to be an Allowed Claim
under the Plan. Pursuant to the Plan, each holder of the Showboat Notes will
receive such treatment as (i) will not alter the legal, equitable and
contractual rights to which such Allowed RII Class 3 Claim entitles the holder
thereof or (ii) otherwise will render such Claim unimpaired pursuant to section
1124(2) of the Bankruptcy Code. To the extent not previously paid when due,
interest shall be paid in cash on the Distribution Date (at the applicable,
non-default contractual rate), together with any additional amount required to
be paid to render the Showboat Note Claims unimpaired pursuant to section
1124(2) of the Bankruptcy Code.
RII CLASS 3 IS UNIMPAIRED AND THE HOLDER OF RII CLASS 3 CLAIMS ARE
CONCLUSIVELY PRESUMED PURSUANT TO SECTION 1126(F) OF THE CODE TO HAVE ACCEPTED
THE PLAN.
RII CLASS 4 -- MISCELLANEOUS SECURED CLAIMS -- RII Class 4 consists of each
Claim secured by a security interest in or lien upon property of RII other than
any RII Class 2 or RII Class 3 Claims, including without limitation claims
secured by mortgages or trust deeds of real property, by mechanic's or
materialmen's liens, by artisan's liens, or by miscellaneous personal property
such as office furniture, telephone systems, copiers and mailing equipment. RII
is not presently aware of any RII Class 4 Claims.
Pursuant to the Plan, at the option of RII with respect to each Allowed
Claim in RII Class 4, the Plan either (a) will not alter the legal, equitable or
contractual rights to which such claim entitles the holder thereof, or (b)
otherwise will render such claim unimpaired pursuant to section 1124(2) of the
Bankruptcy Code; provided that in each case the Plan shall not alter the rights
of the holder of such claim in any collateral securing such claim as of the
Petition Date pursuant to the applicable security agreements and the liens
thereunder shall be ratified and affirmed. To the extent not previously paid
when due, interest shall be paid in cash on the Distribution Date (at the
applicable, non-default contractual note), together with any additional amount
required to be paid to render such Allowed RII Class 4 Claim unimpaired pursuant
to section 1124 (2) of the Bankruptcy Code.
RII CLASS 4 IS UNIMPAIRED AND HOLDERS OF RII CLASS 4 CLAIMS ARE CONCLUSIVELY
PRESUMED PURSUANT TO SECTION 1126(F) OF THE CODE TO HAVE ACCEPTED THE PLAN.
RII CLASS 5 -- GENERAL UNSECURED CLAIMS -- RII Class 5 consists of the
Claims of all unsecured creditors not classified in any other RII Class above.
RII Class 5 Claims generally consist of claims of employees (other than RII
Priority Claims) and trade creditors for goods and services provided to RII
prior to the Petition Date, other contract claims and damage claims, and any
other general unsecured claims, such as litigation claims.
RII estimates that after all objections to claims are resolved the ultimate
amount of Allowed Claims included in RII Class 5 (exclusive of claims covered by
insurance) will aggregate approximately $[ ]. THIS IS AN ESTIMATE
REFLECTING THE COSTS AND UNCERTAINTIES OF LITIGATION. RII DOES NOT ADMIT THAT IT
IS LIABLE IN ANY AMOUNT WITH RESPECT TO ANY DISPUTED CLAIMS. IN ADDITION, THERE
CAN BE NO GUARANTY OR ASSURANCE THAT SUCH ESTIMATE WILL BE CORRECT AND,
ACCORDINGLY, THERE IS A RISK THAT THE AMOUNT OF THE ALLOWED CLAIMS INCLUDED IN
RII CLASS 5 WILL BE GREATER THAN THE AMOUNT ESTIMATED BY RII.
RII intends to dispute certain of the claims which would otherwise be
included in the RII Class 5 Claims, and certain of such claims are the subject
of litigation. In this regard, RII believes that state and Federal environmental
agencies may assert claims against RII related to alleged environmental hazards.
RII intends to dispute any such claims, if asserted. Similarly, RII is, or prior
to the Petition Date may become, a defendant in a number of pending or
threatened legal proceedings arising in the ordinary course of business. RII may
request the Bankruptcy Court to determine the allowed amount of any
environmental or other claims. This allowance process may include proceedings
for estimating such claims pursuant to section 502(c) of the Bankruptcy Code.
The Company does not believe that any litigation or environmental claims of
which it is presently aware will have a material adverse impact on the Company,
the Plan or the Restructuring.
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The claims asserted in certain of the pending or threatened legal
proceedings are covered by insurance maintained by RII and to the extent any
claims covered by insurance are upheld, it is anticipated that the major portion
thereof would be paid by RII's insurance carriers. RII intends to (i) consent to
a modification of the automatic stay provisions of section 362(a) of the
Bankruptcy Code so as to permit the prosecution of claims covered by insurance
solely to the extent of such coverage, or (ii) utilize a claims resolution
procedure as may be implemented by the Bankruptcy Court.
RII will seek an order approving the pre-Effective Date payment of RII Class
5 Claims of certain employees and trade creditors. To the extent such an order
is not entered or RII Class 5 Claims are not paid prior to the Effective Date,
at RII's option, each holder of an Allowed RII Class 5 Claim will receive such
treatment as (i) will not alter the legal, equitable or contractual rights to
which such claim entitles the holder thereof, or (ii) otherwise will render such
claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. The
practical effect of this treatment is that any allowed RII Class 5 Claim will be
paid in the Effective Date or as soon thereafter as such RII Class 5 Claim, in
the ordinary course of business and consistent with past practice and the
agreements related thereto, would have been paid in the absence of RII's chapter
11 filing.
RII CLASS 5 IS UNIMPAIRED AND HOLDERS OF RII CLASS 5 CLAIMS ARE CONCLUSIVELY
PRESUMED PURSUANT TO SECTION 1126(F) OF THE BANKRUPTCY CODE TO HAVE ACCEPTED THE
PLAN.
RII CLASS 6 -- PARADISE SUBSIDIARY INTERCOMPANY CLAIMS -- RII Class 6
consists of the claims of certain of the Paradise Subsidiaries, specifically PIV
and ISI, against RII. The aggregate amount of such claims as of September 30,
1993 was approximately $2,342,000. The Paradise Subsidiary Claims are
intercompany debt obligations of RII. PIV and ISI shall retain unaltered the
legal, equitable and contractual rights to which their Allowed RII Class 6
Claims entitle them.
RII CLASS 6 IS UNIMPAIRED AND THE HOLDERS OF RII CLASS 6 CLAIMS ARE NOT
ENTITLED TO VOTE ON THE PLAN.
RII CLASS 7 -- INTERESTS OF THE HOLDERS OF RII COMMON STOCK -- RII Class 7
consists of the Interests of the holders of RII Common Stock. As of the Voting
Record Date, there were [ ] shares of RII Common Stock outstanding.
Pursuant to the Plan, each holder of RII Common Stock will retain its shares
of RII Common Stock. As a result of the issuance under the Plan of (1)
additional shares of RII Common Stock to the holders of RII Class 2 Claims (and
related GRI Class 2 Claims), (2) the Griffin Warrants, (3) options to be issued
under the 1994 Stock Option Plan and (4) shares of RII Class B Common Stock, the
resulting ownership interest in RII represented by the currently outstanding
shares of RII Common Stock will be substantially diluted. RII CLASS 7 IS
IMPAIRED AND HOLDERS OF RII CLASS 7 INTERESTS ARE ENTITLED TO VOTE ON THE PLAN.
RII CLASS 8 -- INTERESTS OF THE HOLDERS OF 1990 STOCK OPTIONS -- RII Class 8
consists of the Interests of the holders of 1990 Stock Options. As of the Voting
Record Date, [ ] 1990 Stock Options were issued.
Pursuant to the Plan, each holder of 1990 Stock Options will retain his or
her options. As part of the Plan, the 1990 Stock Option Plan will be terminated
and the exercise price for the outstanding 1990 Stock Options held by holders of
Allowed RII Class 8 Interests shall thereafter remain fixed at the existing
exercise price which was the exercise price at the time of grant. No further
1990 Stock Options will be issued and the 1994 Stock Option Plan will be
implemented. If sufficient Acceptances are received from the holders of Old
Series Notes and from the holders of RII Common Stock, such Acceptances will
constitute approval of the 1994 Stock Option Plan by such holders for purposes
of compliance with Rule 16b-3 promulgated under the Exchange Act. As a result of
the issuance under the Plan of (1) additional shares of RII Common Stock to the
holders of RII Class 2 Claims (and related GRI Class 2 Claims), (2) the Griffin
Warrants, (3) options to be issued under the 1994 Stock Option Plan and (4)
shares of RII Class B Common Stock, the resulting ownership interest in RII
represented by the currently outstanding 1990 Stock Options will be
substantially diluted.
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<PAGE>
RII CLASS 8 IS IMPAIRED AND HOLDERS OF RII CLASS 8 INTERESTS ARE ENTITLED TO
VOTE ON THE PLAN.
GRI CLASS 1 -- GRI PRIORITY CLAIMS -- A "GRI Priority Claim" is any claim
against GRI entitled to priority in accordance with section 507(a) of the
Bankruptcy Code (other than Administrative Claims and Priority Tax Claims)
including: (i) unsecured claims for accrued employee compensation earned within
90 days prior to the filing of the chapter 11 petition, to the extent of $2,000
per employee; and (ii) contributions to employee benefit plans arising from
services rendered within 180 days prior to the filing of the chapter 11
petition, but only for such plans to the extent of (a) the number of employees
covered by such plans multiplied by $2,000 less (b) the aggregate amount paid to
such employees from the estate for wages, salaries or commission.
GRI will seek an order approving the pre-Effective Date payment of GRI
Priority Claims. To the extent such an order is not entered or these Claims are
not paid prior to the Effective Date, pursuant to the Plan each holder of an
Allowed GRI Class 1 Claim shall, at GRI's option, receive such treatment as (i)
will not alter the legal, equitable or contractual rights to which such Allowed
GRI Class 1 entitled the holder thereof, or (ii) otherwise will render such
Allowed GRI Class 1 Claim unimpaired pursuant to section 1124(2) of the
Bankruptcy Code. GRI anticipates that GRI Priority Claims will aggregate
approximately $[__________].
GRI CLASS 1 IS UNIMPAIRED AND HOLDERS OF GRI CLASS 1 CLAIMS ARE CONCLUSIVELY
PRESUMED PURSUANT TO SECTION 1126(F) OF THE BANKRUPTCY CODE TO HAVE ACCEPTED THE
PLAN.
GRI CLASS 2 -- GRI GUARANTY CLAIMS -- GRI Class 2 consists of the Claims of
the holders of Old Series Notes arising from GRI's guaranty of RII's obligations
under the Old Series Notes pursuant to the GRI Guaranty. For the purposes of the
Plan only, the GRI Guaranty Claims are Allowed in the aggregate principal amount
of $ . The holders of GRI Class 2 Claims also hold RII Class 2 Claims.
The distribution provided to holders of RII Class 2 Claims under the Plan
constitutes the distribution provided under the Plan on account of GRI Class 2
Claims as well.
GRI CLASS 2 IS IMPAIRED AND HOLDERS OF GRI CLASS 2 CLAIMS ARE ENTITLED TO
VOTE ON THE PLAN.
GRI CLASS 3 -- GENERAL UNSECURED CLAIM -- Pursuant to the Plan, at the
option of GRI with respect to each Allowed Claim in GRI Class 3, the Plan either
(i) will not alter the legal, equitable or contractual rights to which such
claim entitles the holder thereof, or (ii) otherwise will render such claim
unimpaired pursuant to section 1124(2) of the Bankruptcy Code. Because it is not
an operating entity, GRI believes that minimal, if any, Class 3 Claims exist.
GRI CLASS 3 IS UNIMPAIRED AND HOLDERS OF GRI CLASS 3 CLAIMS ARE CONCLUSIVELY
PRESUMED PURSUANT TO SECTION 1126(F) OF THE BANKRUPTCY CODE TO HAVE ACCEPTED THE
PLAN.
GRI CLASS 4 -- RII INTERCOMPANY CLAIM -- GRI Class 4 consists of the RII
Intercompany Claim in the amount of $40,196,000 as of September 30, 1993. The
RII Intercompany Claim is the intercompany debt obligation of GRI to RII.
Pursuant to the Plan, RII will contribute the RII Intercompany Claim to the
capital of GRI. The RII Intercompany Claim is an impaired claim.
GRI CLASS 4 IS IMPAIRED AND RII AS THE HOLDER OF THE RII CLASS 4 CLAIM IS
ENTITLED TO VOTE ON THE PLAN. RII, AS THE HOLDER OF SUCH ALLOWED CLAIM, INTENDS
TO VOTE IN FAVOR OF THE PLAN.
GRI CLASS 5 -- INTEREST OF HOLDER OF GRI COMMON STOCK -- The GRI Class 5
Interest consists of the Interest of RII, as the sole holder of GRI Common
Stock. As of the Voting Record Date, there were 1,000 shares of GRI Common Stock
outstanding, all held by RII. Pursuant to the treatment provided under the Plan,
the GRI Class 5 Interest is an impaired interest by virtue of the transfer of a
substantial portion of GRI's assets pursuant to either the Paradise Island
Purchase Agreement or the PIRL Standby Distribution Agreement, as the case may
be.
Pursuant to the Plan, RII as the holder of GRI Common Stock shall retain
such Allowed Interest.
GRI CLASS 5 IS IMPAIRED AND RII AS THE HOLDER OF THE GRI CLASS 5 INTEREST IS
ENTITLED TO VOTE ON THE PLAN. RII INTENDS TO VOTE SUCH ALLOWED INTEREST IN FAVOR
OF THE PLAN.
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PAYMENTS IN THE ORDINARY COURSE. Pursuant to the Plan, RII and GRI have
agreed: (i) not to pay, and not to permit their Subsidiaries to pay, any
prepetition Allowed Claim or postpetition Allowed Administrative Claim,
including claims of trade creditors, on or before the Effective Date, except in
the ordinary course of business and consistent with past practice; and (ii) to
continue to collect, and to cause their Subsidiaries to collect, receivables in
the ordinary course of business and consistent with past practice. On the
Effective Date, RII Retained Cash rather than Plan Consummation Cash shall be
used to pay any prepetition Allowed Claims or post-petition Allowed
Administrative Claims of trade creditors which, in the ordinary course of
business and consistent with past practice, would not have been paid on or
before the Effective Date.
SUMMARY OF OTHER PROVISIONS OF THE PLAN
CREDITORS' COMMITTEES
The Bankruptcy Code sets forth the powers and duties of creditors' and
equity interest holders' committees. After a petition is filed, the United
States trustee (the "United States Trustee") is required to appoint a committee
of holders of unsecured claims, and may appoint additional committees of
creditors or equity interest holders as deemed appropriate to assure the
adequate representation of creditors and equity interest holders in the
proceeding. In the context of a prepackaged plan of reorganization, however,
many of the services generally performed by such a committee already have been
performed prior to the filing of the petition commencing the chapter 11 case.
Because of the prepackaged nature of the Plan and the participation of Fidelity
and TCW in the solicitation process, RII and GRI will request the United States
Trustee not to appoint a separate creditors' committee. If any such committee is
appointed by the United States Trustee pursuant to section 1103 of the
Bankruptcy Code, such committee may hire advisers to such committee, consult
with the debtor concerning administration of the case, conduct such
investigations of the financial condition and operation of the debtor's business
and the desirability of the continuance of such business, and perform such other
services as are relevant to the formulation of the plan of reorganization.
Committee members serve in a fiduciary capacity with respect to holders they
represent.
EXECUTORY CONTRACTS AND LEASES
The Bankruptcy Code gives RII and GRI the power after the commencement of
the chapter 11 cases, subject to the approval of the Bankruptcy Court, to assume
or reject executory contracts and unexpired leases. Although not defined in the
Bankruptcy Code, an "executory contract" is usually described as a contract
under which material performance (other than the payment of money) remains due
at the time of commencement of a bankruptcy case. The Plan provides for the
assumption by RII and GRI of all executory contracts and unexpired leases that
are not expressly rejected or subject to a motion to reject filed by RII and GRI
on or before the Confirmation Date. However, RII and GRI may file motions to
reject certain executory contracts or unexpired leases. Assumed executory
contracts and unexpired leases will be reinstated and rendered unimpaired. In
connection with the assumption of an executory contract or unexpired lease, RII
or GRI, as the case may be, will cure monetary defaults and otherwise satisfy
the requirements of section 365 of the Bankruptcy Code. Disputes regarding
issues related to assumptions of an executory contract or unexpired lease will
be resolved by the Bankruptcy Court on a case by case basis. If an executory
contract or unexpired lease is rejected, the other party to the agreement may
file a proof of claim with respect to a claim for damages by reason of the
rejection. The Plan provides that a proof of claim with respect to any such
claim must be filed within 30 days after the Confirmation Date, or within such
shorter period as may be ordered by the Bankruptcy Court. Each such claim will
constitute an RII Class 5 Claim, to the extent such claim is finally allowed by
the Bankruptcy Court.
DISCHARGE OF INDENTURE TRUSTEE AND RELEASE OF CHARGING LIENS
Subsequent to the performance by the Old Series Indenture Trustee of its
duties and obligations under the provisions of the Plan and the Confirmation
Order, if any, and under the terms of the Old Series Indenture, the Old Series
Indenture Trustee and its agents shall be relieved of all obligations
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associated with the Old Series Indenture. Furthermore, on the Effective Date,
the Old Series Indenture, except for purposes of making distributions under the
Plan, will be deemed canceled, terminated, and of no further force or effect.
Except as otherwise provided in the Plan, such cancellation of the Old Series
Indenture will extinguish the rights and obligations of RII and the holders of
the Old Series Notes under the Old Series Indenture and the rights of the Old
Series Indenture Trustee to assert any Indenture Trustee charging lien against
the distributions to the Holders of Old Series Notes for unpaid fees and
expenses. Notwithstanding the foregoing, RII remains liable, subject to approval
of the Bankruptcy Court, to pay the reasonable unpaid fees and expenses of the
Old Series Indenture Trustee in accordance with other provisions of the Plan. On
the Effective Date, all outstanding Old Series Notes will be canceled on the
books of the RII and GRI and become settled and compromised solely as provided
in the Plan in consideration for the right to participate in distributions under
the Plan. The cancellation of the Old Series Indenture and surrender of the Old
Series Notes will extinguish the right of any holder of Old Series Notes to
commence any cause of action against any entity for unpaid principal and
interest thereon.
EXCULPATION PROVISION
The Plan provides that none of the directors, officers, employees, agents,
representatives, financial advisors, or attorneys of (i) RII and GRI, (ii) any
subsidiary of RII and GRI, (iii) TCW, (iv) Fidelity or (v) the Old Series
Indenture Trustee, and neither RII or GRI, any subsidiary, TCW, Fidelity nor the
Old Series Indenture Trustee, shall have any liability for actions taken or
omitted to be taken in good faith under or in connection with the Plan or in
connection with the chapter 11 cases.
CERTAIN INDEMNIFICATION OBLIGATIONS
The Plan also provides that RII's and GRI's obligations to indemnify their
current and former directors and officers pursuant to their respective
certificates of incorporation, by-laws, applicable state law or agreements will
survive confirmation of the Plan irrespective of whether indemnification is owed
in connection with an event occurring before, on or after the Petition Date.
An officer of the Company has been named as a defendant in an action filed
in the United States Bankruptcy Court in the District of Nevada. Although the
Company is not a defendant in the action, it intends to indemnify the officer.
The complaint in this adversary proceeding alleges that the Company filed
frivolous proofs of claim in the bankruptcy proceedings of Fred Lowenschuss. The
complaint seeks unspecified compensatory damages and punitive damages for
malicious prosecution and prosecution of a frivolous claim. For information
concerning additional indemnity obligations of the Company, see "Management --
Executive Compensation -- Compensation Committee Interlocks and Insider
Participation -- Indemnity Agreement".
In addition, certain warranties and representations related to the Paradise
Island Purchase Agreement or, if applicable, the PIRL Standby Distribution
Agreement may survive consummation of the Plan. RII and GRI do not believe that
any such warranties and representations will give rise to a claim against RII
after the Effective Date.
If the PIRL Spin-Off occurs, PIRL will assume and RII will be released from
RII's obligations to reimburse SIHL for certain costs and expenses incurred in
connection with the Paradise Island Purchase Agreement. PIRL will pledge assets,
reasonably acceptable to SIHL, with a fair market value of $6 million to secure
such obligation.
RESERVES FOR DISPUTED CLAIMS AND DISPUTED INTERESTS
RII will seek a determination from the Bankruptcy Court as a part of the
hearing on the confirmation of the Plan that RII and GRI have the financial
ability to meet their obligations under the Plan with respect to disputed claims
or interests should such claims or interests be allowed, without the need for a
reserve for such disputed claims or interests. The Bankruptcy Court nevertheless
may require such a reserve. Moreover, the disbursing agreement relative to
disbursements to holders of Old Series Notes will contain appropriate reserve
provisions relative to Disputed Claims and unclaimed distributions.
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PAYMENT OF PLAN EXPENSES
Plan Expenses shall be paid from Plan Consummation Cash. Plan Expenses
generally include all costs and expenses or other needs for cash to consummate
and implement the Plan. These expenses would include all administrative and
other claims (other than RII Class 2 and GRI Class 2 Claims) required to be paid
in cash on the Distribution Date and fees and expenses of professionals and
disbursing agents, including reasonable fees and expenses of professionals
associated with litigating Disputed Claims (as defined in the Plan) or Disputed
Interests and implementing and consummating the Plan. The expenses also would
include any and all payments and costs attributable to either the SIHL Sale or
the PIRL Spin-Off. Such costs and expenses could be substantial and could
include any actual payments required to be made by RII or its subsidiaries for
transfer taxes or federal alternative minimum taxes incurred as a result of the
consummation of the transactions contemplated by the Paradise Island Purchase
Agreement or, alternatively, the PIRL Standby Distribution Agreement and any
costs and liabilities arising under applicable bulk transfer laws, reasonable
fees and reasonable expenses of Professional Persons associated with litigating
Disputed Claims or Disputed Interests and implementing and consummating the
Plan.
On the Effective Date, RII will estimate the amount of cash it reasonably
believes will be necessary to pay Plan Expenses and will retain such amount as
Plan Consummation Cash. RII will take reasonable efforts to pay all Plan
Expenses as soon as practicable. Once all Plan Expenses have been paid, RII will
distribute any Net Plan Consummation Cash, together with interest on Net Plan
Consummation Cash at the average rate of return received by RII and its
subsidiaries on invested cash from the Effective Date to but excluding the date
of payment, to the disbursing agent for the holders of the Old Series Notes. If
all Plan Expenses have not been paid within 90 days after the Effective Date,
RII may retain for an additional 60 days such amount of Plan Consummation Cash
as the Bankruptcy Court determines to be necessary to pay any remaining Plan
Expenses, with an excess to be distributed to the disbursing agent for the
holders of the Old Series Notes as Net Plan Consummation Cash. After such 60-day
period, RII shall pay the remaining Plan Consummation Cash (together with
interest thereon), if any, to the disbursing agent for the holders of the Old
Series Notes, unless otherwise ordered by the Bankruptcy Court.
UNCLAIMED DISTRIBUTIONS
If any person entitled to receive cash or securities directly from RII under
the Plan cannot be located within two years of the Effective Date, any such cash
or securities and accrued interest or dividends thereon will become the property
of and will be released to RII. Notwithstanding the foregoing, any SIHL Series A
Shares, PIRL Ordinary Shares or cash, as the case may be, allocable to a holder
of Old Series Notes that cannot be located will be redistributed to the holders
who do claim their distributions in a timely manner.
TREATMENT OF UNCLAIMED CONSIDERATION FROM OLD PLAN. As of the date hereof,
the indenture trustee for the RIFI public debt continues to hold RIFI Release
Cash which has not yet been exchanged for the RIFI Releases. Pursuant to the Old
Plan, any undistributed RIFI Release Cash on September 17, 1995 is to be
returned to Merv Griffin. Accordingly, the undistributed RIFI Release Cash is
not treated under the Plan.
As of the date hereof, Chemical Bank, on behalf of the holders of RII, RIFI
and GRI public debt outstanding when the Old Chapter 11 Cases were filed,
continues to hold the consideration, including Old Series A Notes, Old Series B
Notes and Old RII Common Stock, payable under the Old Plan with respect to
Unsurrendered Public Debt Claims. Any holder of an Unsurrendered Public Debt
Claim who fails to comply, within the five-year time period to claim
distributions under the Old Plan, with the provisions for the receipt of
distributions under the Old Plan will not receive such distributions and,
accordingly, will not be entitled to participate in the distributions under the
Plan. On the other hand, compliance with the provisions for the receipt of
distributions under the Old Plan will entitle a holder to participate in the
distributions under the Plan if such holder complies, within the two-year time
period to claim distributions under the Plan, with the provisions for the
receipt of distributions
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under the Plan. The distributions under the Plan that would have been paid to
holders of Unsurrendered Public Debt Claims will be returned to and become the
property of RII. Notwithstanding the foregoing, the Plan provides that SIHL
Series A Shares or PIRL Ordinary Shares which are unclaimed will be
redistributed to holders of Old Series Notes who do claim their distributions.
To the extent that Old Plan Disputed Claims are allowed, the holders thereof
will be entitled to the distributions set forth in the Old Plan. Subject to
compliance with the provisions of the Plan and the Bankruptcy Code relative to
allowance, such holders will then be entitled to participate in the
distributions set forth in the Plan. The Old Plan Disputed Claims include
without limitation claims asserted by Fred Lowenschuss and claims for
approximately $6,600,000 by certain participants in the Officers Supplemental
Plan. Litigation is sending with respect to these claims in the United States
Bankruptcy Court for the District of New Jersey. The Company has negotiated a
settlement related to the claims under the Officers Supplemental Plan. Pursuant
to this settlement, which has not yet been approved by the United States
Bankruptcy Court for the District of New Jersey, such claim would be treated as
a $6.6 million "Class 3C" claim under the Old Plan and entitled to the following
distribution: 155,623 shares of Old RII Common Stock and $2,318,003 Old Series B
Notes (including Payment-In-Kind interest). Because the settlement is not yet
evidenced by an executed stipulation approved by the bankruptcy court, the
calculations contained in this Information Statement/Prospectus do not reflect
the issuance of these additional shares or Old Series B Notes. If the settlement
is approved, the recoveries projected herein to equity interest holders and
holders of Old Series Notes will be diluted slightly. Similarly, if the claim of
Dadras is allowed as an administrative claim in the Old Chapter 11 Case, it
would be treated as an RII Class 5 Claim hereunder; if the claim of Dadras is
allowed as a prepetition general unsecured Class 3C claim in the Old Chapter 11
Case, it would be entitled to receive the consideration applicable to such class
of claims under the Old Plan. Because RII has disputed the claim of Dadras, the
calculations contained in this Information Statement/Prospectus do not reflect
allowance of the claim of Dadras. If such claim is allowed as a Class 3C claim
under the Old Plan, the recoveries referenced herein to equity interest holders
and holders of Old Series Notes would be diluted.
PAYMENT OF POST-CONFIRMATION FEES AND EXPENSES
After the Confirmation Date RII and GRI, in the ordinary course of business
and without the necessity for any approval by the Bankruptcy Court, will pay as
Plan Expenses the reasonable fees and expenses of professionals related to
implementation and consummation of the Plan; provided, however, that no such
fees and expenses will be paid except upon receipt by RII and GRI of a detailed
written invoice, which invoice shall also be served upon the United States
Trustee, Fidelity and TCW, from the professionals seeking fee and expense
reimbursement; and provided further that any such party may, within ten days
after receipt of an invoice for fees and expenses, request that the Bankruptcy
Court determine any such request.
PREFERENCE AND FRAUDULENT CONVEYANCE CLAIMS
RII and GRI do not believe that there are material transactions that will
give rise to preference claims or fraudulent conveyance claims by RII or GRI
upon commencement of the chapter 11 cases. Material payments have been made only
to secured creditors and to trade creditors in the ordinary course of business
or financial affairs, none of which should give rise to preference claims or
fraudulent conveyance claims. RII and GRI, however, have conducted no
investigation into whether viable preference or fraudulent conveyance claims may
exist. RII and GRI have no current intention to bring any such actions, and the
Plan, in fact, provides that no such actions (other than such avoidance and
recovery actions that have been or are permitted to be filed in connection with
the Old Chapter 11 Cases) shall survive consummation of the Plan.
In this regard, a fraudulent conveyance action against Fred Lowenschuss and
related parties styled "Resorts International, Inc. v. Fred Lowenschuss,
individually and as Trustee of Fred Lowenschuss, IRA, and Laurance Lowenschuss,
IRA," is presently pending as Adv. No. 90-1005 in the
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United States Bankruptcy Court for the District of New Jersey. This action,
which seeks among other things the recovery of the merger consideration paid to
Mr. Lowenschuss' pension plan, will survive consummation of the Plan and any
proceeds received with respect thereto will become assets of RII.
SUCCESSORS AND ASSIGNS
The rights, benefits and obligations of any person named or referred to in
the Plan will be binding upon, and will inure to the benefit of, the heir,
executor, administrator, successor or assign of such person.
CONFIRMATION OF THE PLAN
CONFIRMATION REQUIREMENTS
If the Requisite Acceptances are received, RII and GRI will seek to
implement the Plan by commencing cases under chapter 11 of the Bankruptcy Code
and will request that the Bankruptcy Court as promptly as practicable hold a
confirmation hearing and a hearing to approve the Information
Statement/Prospectus under section 1126(b) of the Bankruptcy Code. Parties in
interest, including all holders of claims and interests, will receive notice of
the date and time fixed by the Bankruptcy Court for the these hearings. Section
1128(b) of the Bankruptcy Code provides that any party in interest may object
to confirmation of the Plan and approval of the Information
Statement/Prospectus. The Bankruptcy Court also will establish procedures for
the filing and service of objections to the adequacy of the Information
Statement/Prospectus and to confirmation of the Plan.
In order for the Plan to be confirmed, and regardless of whether all
impaired classes of claims and interests vote to accept the Plan, the Code
requires that the Bankruptcy Court determine that the Plan complies with the
requirements of section 1129 of the Bankruptcy Code. Section 1129 of the
Bankruptcy Code requires, among other things, that: (i) the Plan be accepted by
the requisite votes of holders of impaired claims and interests, except to the
extent that confirmation, despite lack of acceptance by an impaired class, is
available under section 1129(b) of the Bankruptcy Code (see "Confirmation
Without Acceptance by All Impaired Classes"); (ii) the Plan be feasible under
section 1129(a)(ii) of the Bankruptcy Code (that is, there is a reasonable
probability that RII and GRI will be able to perform their obligations under the
Plan and continue to operate their businesses without further financial
reorganization) (see "Feasibility of the Plan"); and (iii) the Plan meet the
requirements of section 1129(a)(7) of the Bankruptcy Code, which requires that,
with respect to each impaired class, each holder of a claim or interest either
accepts the Plan or receives at least as much pursuant to the Plan as such
holder would receive in liquidations of RII and GRI under chapter 7 of the
Bankruptcy Code (see "Best Interests Test" and "Alternatives to Consummation of
the Plan -- Liquidation Under Chapter 7").
Although RII and GRI believe that the Plan will meet such tests, as well as
the other requirements of section 1129 of the Bankruptcy Code, there can be no
assurance that the Bankruptcy Court will reach the same conclusion. Even if the
Requisite Acceptances have been received prior to the commencement of the
chapter 11 cases, the Bankruptcy Court may find that the holders of claims and
interests have not accepted the Plan if the Bankruptcy Court finds that the
Solicitation did not comply with all the applicable provisions of the Bankruptcy
Code and the Bankruptcy Rules (including the requirement under section 1126(b)
that the Solicitation comply with any applicable non-bankruptcy law, rule or
regulation governing the adequacy of disclosure or that the Solicitation be made
after disclosure of adequate information). In such an event, the Bankruptcy
Court might order RII and GRI to resolicit Acceptances, and therefore,
confirmation of the Plan would be delayed and possibly jeopardized. Although RII
and GRI believe that the Solicitation complies with the applicable provisions of
the Bankruptcy Code and the Bankruptcy Rules and that the Acceptances received
will be accepted as votes for the Plan in chapter 11 cases by the Bankruptcy
Court, there can be no assurance that the Bankruptcy Court would reach the same
conclusion.
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ACCEPTANCE OF THE PLAN
Except as described under "Confirmation Without Acceptance by All Impaired
Classes", the Bankruptcy Code generally requires that each impaired class of
claims or interests accept a plan of reorganization as a condition to
confirmation. Classes of claims or interests that are not "impaired" under a
plan are deemed to have accepted the plan and are not entitled to vote. The
Bankruptcy Code defines acceptance of a plan of reorganization by a class of
claims as acceptance by holders of at least 66 2/3% in dollar amount and more
than one-half in number of the Allowed Claims in that class, but for this
purpose counts only those claims that have voted on the plan. The Bankruptcy
Code defines acceptance of the plan of reorganization by a class of interests as
acceptance by the holders of at least 66 2/3% in amount of the Allowed Interests
in that class, but for this purpose counts only those interests that have been
voted on the plan. Holders of claims or interests who fail to vote and holders
of disputed claims or interests (which have not been temporarily allowed for
voting purposes) who vote will not be counted to determine the acceptance or
rejection of the Plan by any impaired class of claims or interests.
FEASIBILITY OF THE PLAN
Section 1129(a) of the Bankruptcy Code requires that, to confirm the Plan,
the Bankruptcy Court must find that confirmation of the Plan will not likely be
followed by the liquidation or the need for further financial reorganization of
RII and GRI that is not provided for in the Plan (the "Feasibility Test"). For
the Plan to meet the Feasibility Test, the Bankruptcy Court must find that RII
and GRI will possess the resources and working capital necessary to meet their
obligations under the Plan.
RII and GRI have analyzed their ability to meet their obligations under the
Plan. As part of this analysis, the Company has prepared forecasts of its
financial performance for the five-year period ending December 31, 1998. These
forecasts, and the significant assumptions on which they are based, are included
in this Information Statement/Prospectus. See "The Restructuring -- Financial
Forecasts for the Company". The forecasts indicate that the Company has
sufficient cash to make all distributions required to be made on the applicable
Distribution Date. Although the forecasts do not extend through the final
maturity of the New Debt Securities, the Company believes it will have
sufficient cash to meet, or the financial strength to refinance, its deferred
obligations under the Plan, including payments with respect to the New Debt
Securities. The Company believes, based on this analysis, that the Plan provides
a feasible means of reorganization and operation from which there is a
reasonable expectation that, subject to the risks disclosed in this Information
Statement/Prospectus, the Company will be able to make all payments required to
be made pursuant to the Plan.
However, there can be no assurance that the Company will generate sufficient
cash from operations to repay, when due, the principal amount of the New RIHF
Mortgage Notes maturing in 2003 and the principal amount of the New RIHF Junior
Mortgage Notes maturing in 2004. As a result, the Company may be required to
refinance such amounts as they become due and payable. There can be no assurance
that any such refinancing would be consummated or, if consummated, would be in
an amount sufficient to repay such obligations, particularly in light of the
Company's high level of debt. If the Company is unable to effectuate such
refinancings or renewals in the ordinary course of business, it may be required
to sell equity interests in the Company. The sale of additional equity interests
in the Company could result in substantial dilution of the interests of the
Company's existing equity holders. There can be no assurance that such sales
would be consummated or, if consummated, would be in an amount sufficient to
repay such obligations in full. The failure to raise sufficient amounts of
capital from such sales ultimately could result in the Company's inability to
meet its debt obligations, including its obligations under the New Debt
Securities. Holders of the Old Series Notes are cautioned not to place undue
reliance on the forecasts. See "Risk Factors -- Risks Relating to the
Forecasts".
Consummation of the transactions contemplated by the Plan requires the
release and termination of the Old Security Documents. Absent such release, the
Company will be unable to pledge the requisite collateral as security for the
New Debt Securities.
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BEST INTERESTS TEST
With respect to each impaired class, confirmation of the Plan requires that
each holder of a claim or interest either (a) accept the Plan or (b) receive or
retain under the Plan property of a value as of the Effective Date that is not
less than the value such holder would receive or retain if RII and GRI were
liquidated under chapter 7 of the Bankruptcy Code (the "Best Interests Test").
To determine the value that holders of each impaired class of claims and
interests would receive if RII and GRI were liquidated, the Bankruptcy Court
must determine the dollar amount that would be generated from the liquidation of
RII's and GRI's assets and properties in the context of chapter 7 liquidation
cases. Secured claims and the costs and expenses of the liquidation case would
be paid in full from the liquidation proceeds before the balance of those
proceeds would be made available to pay prepetition unsecured claims and
interests.
In applying the Best Interests Test, it is possible that claims and
interests in the chapter 7 cases may not be classified according to the
classification provided in the Plan. In the absence of a contrary determination
by the Bankruptcy Court, all general unsecured claims arising prior to the
Petition Date would be treated as one class for purposes of determining the
potential distribution of the liquidation proceeds resulting from RII's and
GRI's chapter 7 cases. The distributions from the liquidation proceeds would be
calculated ratably according to the amount of the claim held by each creditor
holding a claim. Section 510(b) of the Bankruptcy Code also requires, among
other things, that any claim for damages arising from the purchase or sale of a
security of the debtor shall be subordinated to all claims or interests that are
senior to or equal the claim or interest represented by such security (except
that claims in respect of common stock have the same priority as common stock).
After consideration of the effect that chapter 7 liquidations would have on
the ultimate proceeds available for distribution to RII's and GRI's creditors
and equity interest holders, including (i) increased costs and expenses of
liquidation under chapter 7 arising from fees payable to a trustee in bankruptcy
and professional advisers to such trustee, (ii) the erosion in value of assets
in the context of the expeditious liquidation required under chapter 7 and the
"forced sale" atmosphere that would prevail, (iii) the adverse effects on the
salability of business segments that could result from the probable departure of
key employees and the loss of guests, (iv) the costs attributable to the time
value of money resulting from what is likely to be a more protracted proceeding
than if the Plan is confirmed (because of the time required to liquidate the
assets of RII and GRI, resolve claims and related litigation and prepare for
distributions), and (v) the application of the rule of absolute priority to
distributions under a chapter 7 liquidation, RII and GRI have determined that
the Plan will provide each creditor and equity interest holder holding a claim
or interest in an impaired class with a greater recovery than such creditor or
equity interest holder would receive pursuant to liquidations of RII and GRI
under chapter 7 of the Bankruptcy Code. This determination is evidenced by the
Liquidation Analysis attached hereto as Appendix B.
The Liquidation Analysis provides a summary of the liquidation values of the
assets of RII and GRI aggregated in accordance with the Plan, all assuming a
chapter 7 liquidation in which a trustee appointed by the Bankruptcy Court would
liquidate the assets of RII's and GRI's estates within a six-month period
beginning on October 15, 1993. The Company believes the Liquidation Analysis to
be reasonably accurate.
Reference should be made to Appendix B for a complete discussion and
presentation of the Liquidation Analysis which was prepared by the management of
the Company, together with the Company's financial advisor, Bear Stearns. In
summary, however, the Liquidation Analysis indicates that, in a liquidation, the
creditors and equity interest holders would likely receive the following
distributions:
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<TABLE>
<CAPTION>
ESTIMATED NET PRESENT LIQUIDATION VALUE
OF DISTRIBUTIONS TO CLASSES OF
CREDITORS AND EQUITY SECURITY HOLDERS
(AS OF OCTOBER 15, 1993)
- ----------------------------------------------------------------------------------------------------------------
CLASS UNDER PLAN TYPE OF CHAPTER 7 CLAIM DISTRIBUTION
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
RII and GRI Class 1 Priority Claims 100%
RII Class 2 Old Series Notes $485 per $1,000 claim (1)
RII Class 3 Showboat Note Claim 100%
RII Class 4 Miscellaneous Secured Claims 100%
RII Class 5 General Unsecured Less than 100% (2)
RII Class 6 Paradise Subsidiary Claims None (3)
RII Class 7 and 8 Equity--Old RII Common None
Stock and 1990 Stock Options
GRI Class 2 GRI Guaranty Recovery implied in recovery of RII
Class 2
GRI Class 3 General Unsecured Less than 100%
GRI Class 4 RII Intercompany Claims Less than 100% (4)
GRI Class 5 Equity None
</TABLE>
(1)_ Recovery by RII Class 2 claimants may be reduced below that estimated here
to the extent that RII Class 5 Claims share distributions with any RII
Class 2 deficiency claims arising from any assets of RII which are not
subject to the security interests benefitting the RII Class 2 Claims.
(2)_ RII Class 5 will not be paid in full in a chapter 7 context, but will rank
pari passu with any RII Class 2 deficiency claims and will obtain
recoveries based upon the level of assets at RII which are not subject to
the security interests benefitting the RII Class 2 Claims.
(3)_ Because it is assumed that Paradise Island Resorts will be sold as a going
concern free and clear of any intercompany claims, the Paradise Subsidiary
Claims are not expected to receive any recovery.
(4)_ GRI Class 4 Claims consist of a single claim which will be voted in favor
of the Plan.
These likely liquidation distributions compare unfavorably to the
distributions that it is estimated would be received by such Classes of
Creditors and Equity Security Holders under the Plan. See chart below and "The
Restructuring -- Reorganization Values".
Underlying the Liquidation Analysis are a number of estimates and
assumptions (the most important of which are set forth in Appendix B) that,
although considered reasonable by management, are inherently subject to
significant economic and competitive uncertainties and contingencies beyond the
control of the Company and management. The Liquidation Analysis also is based
upon assumptions (the most important of which are set forth in Appendix B) with
regard to liquidation decisions that are subject to change. Accordingly, there
can be no assurance that the values reflected would be realized if RII and GRI
were, in fact, to undergo such liquidation.
The Liquidation Analysis assumes that the Resorts Casino Hotel and the
Paradise Island Resorts would continue to operate during the pendency of a
chapter 7 liquidation by RII and GRI. This assumption may be incorrect. For
example, in the case of the Resorts Casino Hotel, there is a risk that a chapter
7 liquidation by RII and GRI would provide the Casino Control Commission with
sufficient grounds to revoke or refuse to renew RIH's casino license. If this
occurred, the Resorts Casino Hotel would cease to operate. The value of the
Resorts Casino Hotel if sold in a non-operating mode would be substantially less
than the value ascribed to such asset in the Liquidation Analysis and
distributions to creditors would be reduced accordingly.
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Moreover, it is possible, in the context of a chapter 7 liquidation of RII
and GRI, that litigation with respect to various claims of RII and GRI against
various affiliates of RII and GRI could make it difficult to continue to operate
the Resorts Casino Hotel and the Paradise Island Business as going concerns. In
such event, recoveries in a chapter 7 context could be significantly below those
estimated above.
A summary comparison of the estimated net present liquidation value of
distributions to creditors in a chapter 7 liquidation of RII and GRI (assuming
that the chapter 7 liquidation of RII and GRI does not cause the termination of
operations of the Resorts Casino Hotel) or of the Paradise Island Resorts to the
value of anticipated distributions to such creditors under the Plan is set forth
in the following table:
<TABLE>
<CAPTION>
COMPARISON OF ESTIMATED NET PRESENT LIQUIDATION VALUE
TO VALUE OF ANTICIPATED DISTRIBUTIONS UNDER PLAN
(AS OF OCTOBER 15, 1993)
- ----------------------------------------------------------------------------------------------------------------
CLASS UNDER PLAN PROJECTED PLAN DISTRIBUTION CHAPTER 7 DISTRIBUTION
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
RII and GRI Class 1 100% 100%
RII Class 2 and GRI Class 2 Combined $699 per $1,000 claim $485 per $1,000 claim
RII Class 3 100% 100%
RII Class 4 100% 100%
RII Class 5 per claim dollar per claim dollar
RII Class 6 per claim dollar per claim dollar
RII Class 7 44.7% of equity in RII (fully None
diluted basis)
RII Class 8 3.8% of equity in RII (fully diluted None
basis)
GRI Class 2 Recovery implied in recovery of RII Recovery implied in recovery of RII
Class 2 Class 2
GRI Class 3 100% Less than 100%
GRI Class 4 None Not applicable
GRI Class 5 100% of equity of None
GRI
</TABLE>
The procedures followed and the assumptions and qualifications made by Bear
Stearns in connection with its analyses are described in the Liquidation
Analysis set forth in Appendix B. There can be no assurance that such
assumptions would be accepted by the Bankruptcy Court.
CONFIRMATION WITHOUT ACCEPTANCE BY ALL IMPAIRED CLASSES
If any impaired class or classes reject the Plan, section 1129 of the
Bankruptcy Code provides that, so long as at least one impaired class has
accepted the Plan (excluding the vote of insiders), the Bankruptcy Court may
still confirm the Plan under section 1129(b). To obtain confirmation on such
basis, RII and GRI must demonstrate to the Bankruptcy Court that the Plan "does
not discriminate unfairly" and is "fair and equitable" with respect to any
dissenting class. The "unfair discrimination" test generally requires that
holders of a non-accepting class receive treatment under a plan that is
economically equivalent to that given to other classes whose holders have the
same legal priorities and that no class receives more than it is legally
entitled to receive for its claims or equity interests.
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The Bankruptcy Code establishes different "fair and equitable" tests for
secured creditors, unsecured creditors and equity interest holders. The
respective tests are as follows:
(a) SECURED CREDITORS. Each impaired creditor in the rejecting class
either (i) (A) retains its liens in the collateral securing such
creditor's claim or in the proceeds thereof to the extent of the Allowed
Amount of its secured claim and (B) receives deferred cash payments in at
least the Allowed Amount of such secured claim with a present value at the
Effective Date at least equal to such creditor's interest in its collateral
or in the proceeds thereof, or (ii) realizes the indubitable equivalent of
its allowed secured claim.
(b) UNSECURED CREDITORS. Either (i) each impaired unsecured creditor of
the rejecting class receives or retains under the plan property of a
value equal to the amount of its Allowed Claim, or (ii) the holders of
claims and interests that are junior to the claims of the dissenting class
do not receive or retain any property under the plan.
(c) EQUITY INTEREST HOLDERS. Either (i) each equity interest holder of
the rejecting class receives or retains under the plan property of a
value equal to the greater of (A) the fixed liquidation preference or
redemption price, if any, of the equity interest it holds and (B) the value
of such equity interest, or (ii) the holders of interests that are junior to
such equity interest do not receive or retain any property under the plan.
RII and GRI intend to seek to apply section 1129(b) of the Bankruptcy Code
if the Plan is not accepted by the holders of RII Class 7 and 8 Interests, and
believe that the Bankruptcy Court would confirm the Plan over the rejection of
such holders. The Company believes the Plan does not unfairly discriminate
against the holders of RII Class 7 and Class 8 Interests because no class of
creditors will receive under the Plan more than it is legally entitled to
receive. The Company believes the Plan is fair and equitable because there are
no junior interest holders which receive or retain property under the Plan. RII
and GRI will not seek to confirm the Plan over the rejection of the holders of
RII Class 2 Claims and GRI Class 2 Claims.
PARADISE ISLAND APPROVAL ORDER
In connection with confirmation of the Plan, and assuming that the Paradise
Island Purchase Agreement has not been terminated, RII will request the
Bankruptcy Court to enter an order, which may be included as part of the
Confirmation Order, approving the sale of the Paradise Island Business to SIHL
pursuant to the terms of the Paradise Island Purchase Agreement (the "Paradise
Approval Order"). Subject to the approval of the Bankruptcy Court, the Paradise
Approval Order will contain detailed findings and conclusions relative to the
SIHL Sale.
CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN
CONDITIONS TO CONFIRMATION
Confirmation of the Plan is subject to the following conditions: (i) the
Confirmation Date shall occur no later than December 31, 1994; (ii) the
Confirmation Order shall approve in all respects all of the provisions, terms
and conditions of the Plan; (iii) the Confirmation Order shall provide for the
confirmation of the Plan as to both RII and GRI; (iv) the Confirmation Order
shall be acceptable in form and substance to RII, GRI, TCW, Fidelity and, to the
extent provided in the Paradise Island Purchase Agreement, SIHL; (v) the
Confirmation Order shall contain a finding that, except as expressly provided in
the Plan, all of the property distributed under the Plan shall vest in the
recipients thereof free and clear of all liens, claims, encumbrances and
interests of any nature whatsoever and that consummation of the Plan shall not
result in a voidable transfer with respect to either RII or GRI or any of their
affiliates; and (vi) the entry of an order declaring that, as of the Effective
Date, the Old Security Documents, under which the liens on the property securing
the Old Series Notes were granted or created, shall be deemed released and
terminated. Subject to the approval of Fidelity and TCW, so long as the funds
and accounts managed by either of them hold in the aggregate at least 20% of the
outstanding Old Series Notes, RII and GRI reserve the right to waive at any
time, without notice, without leave of or order of the Bankruptcy Court, any
condition to
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confirmation of the Plan. As a practical matter, although the condition
requiring the entry of an order declaring that, as of the Effective Date, the
Old Security Documents shall be deemed released and terminated is waivable, the
transactions contemplated by the Plan cannot be consummated if the Old Security
Documents are not released and terminated. To effect such release, RII is
soliciting the consents of the record holders of Old Series Notes pursuant to
the terms of the Old Series Note Indenture to terminate and release the Old
Security Documents (as defined in the Old Series Note Indenture) under which the
liens on the property securing the Old Series Notes were granted or created.
Such consents must be evidenced by such record holders separately from their
vote on the Plan. The ballots for the holders of Old Series Notes permit holders
to give or withhold such consent. Any executed ballot with respect to the Plan
returned without an indication to withhold such consent will be deemed to give
such consent. If sufficient consents are received from holders of Old Series
Notes, RII and GRI will request the Bankruptcy Court to confirm release of the
Old Security Documents, effective as of the Effective Date, by entry of an
appropriate order. If insufficient consents are received from holders of Old
Series Notes to effectuate a consensual termination and release of the Old
Security Documents by the holders of Old Series Notes, RII and GRI intend to
request the Bankruptcy Court to order the release of the Old Security Documents;
however, there can be no assurance that such an order will be entered.
CONDITIONS TO EFFECTIVE DATE
The occurrence of the Effective Date of the Plan is subject to the following
conditions: (i) the entry of the Confirmation Order which has not been stayed;
(ii) the New RIHF Mortgage Indenture and the New RIHF Junior Mortgage Indenture
shall have been qualified under the TIA; (iii) the securities to be issued under
the New RIHF Mortgage Indenture and the New RIHF Junior Mortgage Indenture, as
well as the RII Class B Common Stock and the RII Common Stock, and SIHL Series A
Shares or PIRL Ordinary Shares, as the case may be, shall be registered under
the Securities Act and accepted or admitted on a national securities exchange or
the Nasdaq National Market; (iv) the Effective Date shall occur no later than
January 31, 1995; (v) all required regulatory approvals shall have been obtained
(including without limitation any regulatory approvals from the Casino Control
Commission, the Bahamian Government and the U.S. Department of Transportation;
(vi) all indentures, mortgages, security agreements and other agreements and
instruments to be delivered under or necessary to effectuate the Plan, including
without limitation the RIHF Senior Facility Note Purchase Agreement (as defined
in the Plan), shall have been executed and delivered; (vii) either (a) the
closing of the SIHL Sale shall have occurred or (b) the closing of the
transactions necessary to effectuate the PIRL Spin-Off shall have occurred; and
(viii) all outstanding amounts under the Griffin Group Note shall have been paid
in full.
Subject to the approval of Fidelity and TCW, so long as the funds and
accounts managed by either of them hold in the aggregate at least 20% of the
outstanding Old Series Notes, RII and GRI at any time, without notice, without
leave of or order of the Bankruptcy Court, and without any formal action other
than consummation of the Plan, may waive any condition precedent to consummation
of the Plan, other than the condition that the Confirmation Order has been
entered and not stayed.
MODIFICATIONS OF THE PLAN
Subject to the approval of Fidelity and TCW, so long as the funds and
accounts managed by either of them hold in the aggregate at least 20% of the
outstanding Old Series Notes, RII and GRI expressly reserve the right to modify,
at any time and from time to time, the terms of the Plan in accordance with the
provisions of section 1127 of the Bankruptcy Code, if, and to the extent that,
RII and GRI determine that such modifications are necessary or desirable in
order to complete the Restructuring. Under the Bankruptcy Rules, such
modifications may be approved by the Bankruptcy Court at confirmation without
resolicitation of the votes of the members of any class whose treatment is not
adversely affected by such modification. RII and GRI will give holders of the
claims and interests such notice of such modifications as may be required by
applicable law. RII and GRI reserve the right to use Acceptances to confirm any
modifications of the Plan to the extent permitted by law. In addition, RII and
GRI reserve the right to use Acceptances received in the Solicitation to seek
confirmation of the
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<PAGE>
Plan under any other circumstances, including a case commenced by the filing of
involuntary petitions against RII and GRI under section 303 of the Bankruptcy
Code. An "involuntary petition" involves the filing of a bankruptcy case against
a debtor by creditors of the debtor without the debtor's consent.
After the date on which the Plan has been confirmed by the Bankruptcy Court
and the Confirmation Order has been entered by the clerk of the Bankruptcy Court
(the "Confirmation Date"), RII and GRI may institute proceedings in the
Bankruptcy Court to remedy any defects or omissions or reconcile any
inconsistencies in the Plan or the Confirmation Order as may be necessary to
carry out the purposes and intent of the Plan so long as the holders of claims
and interests are not adversely affected and prior notice of such proceeding is
served in accordance with Bankruptcy Rules 2002 and 9014.
CONSENT RIGHTS OF FIDELITY AND TCW
If, and only if, at any time prior to the Effective Date, the funds and
accounts managed by Fidelity and TCW cease to beneficially own an aggregate of
at least 20% of the aggregate principal amount of outstanding Old Series Notes,
all the rights of consent, approval, acceptance or directions granted to
Fidelity and TCW under the Plan, the Paradise Island Purchase Agreement, the
PIRL Standby Distribution Agreement or any document relating to any of the
foregoing, shall automatically cease to exist. Notwithstanding the foregoing,
the failure of Fidelity and TCW beneficially to own an aggregate of at least 20%
of the aggregate principal amount of outstanding Old Series Notes shall not
limit or otherwise prejudice in any manner any rights which Fidelity and TCW may
have under the Bankruptcy Code and the Bankruptcy Rules. In addition, if either
the Fidelity-managed funds and accounts or the TCW-managed funds and accounts
cease to beneficially own any Old Series Notes whatsoever (but the other retains
an aggregate of at least 20% of the aggregate principal amount of outstanding
Old Series Notes), then the obligations of RII and GRI to obtain consent will be
extinguished solely as to Fidelity or TCW, as the case may be, without prejudice
to the rights of the other.
ALTERNATIVES TO CONSUMMATION OF THE PLAN
The theoretical alternatives to consummation of the Plan include (i)
withdrawal of the Plan, (ii) liquidation of RII and GRI under chapter 7 of the
Bankruptcy Code and (iii) an alternative plan of reorganization or liquidation.
WITHDRAWAL OF THE PLAN
Subject to the approval of Fidelity and TCW, so long as the funds and
accounts managed by either of them hold in the aggregate at least 20% of the
outstanding principal amount of the Old Series Notes, RII and GRI reserve the
right not to file the Plan, or, if they file the Plan, to withdraw the Plan at
any time prior to confirmation, in which case the Plan will be deemed to be null
and void. In such event, nothing contained in the Plan will be deemed to
constitute a waiver or release of any claims by or against RII, GRI or any other
person or to prejudice in any manner the rights of RII, GRI or any other person.
Given the maturity of the Old Series Notes on April 15,1994, the Company does
not believe that withdrawal of the Plan, in the absence of an alternative Plan
of Reorganization, is a practical alternative. See "The Restructuring --
Background -- Operations Subsequent to the Old Plan."
LIQUIDATION UNDER CHAPTER 7
If the Plan is not confirmed or consummated, the chapter 11 cases filed by
RII and GRI may, but not necessarily will, be converted to cases under chapter 7
of the Bankruptcy Code in which a trustee or trustees would be appointed to
liquidate the assets of RII and GRI for distribution to the creditors in
accordance with priorities established by the Bankruptcy Code. Discussion of the
effect that chapter 7 liquidations would have on the recovery of holders of
impaired claims and interests is set forth above under the caption "The Plan--
Confirmation of the Plan -- Best Interests Test". RII and GRI believe that
liquidation under chapter 7 would result in smaller distributions being made to
creditors than those provided for in the Plan because of: (i) additional
administrative expenses involved in the appointment of a trustee and attorneys
and other professionals to assist such trustee; (ii) additional expenses and
claims,
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some of which would be entitled to priority, which would be generated during the
liquidation and from the rejection of leases and other executory contracts in
connection with the cessation of RII's operations; and (iii) the likelihood that
the assets of RII and GRI would have to be sold or otherwise disposed of
expeditiously and at lower prices than otherwise might be the case. For these
same reasons and as a result of the distributional priorities applicable to
Chapter 7 liquidation, RII and GRI believe that equity interest holders would
receive no distribution under a chapter 7 liquidation.
ALTERNATIVE PLAN OF REORGANIZATION
If RII and GRI commence their chapter 11 cases, but the Plan is not
confirmed, RII, GRI or any other party in interest could attempt to formulate a
different plan. Such a plan might involve either reorganization and continuation
of RII's and GRI's business or an orderly liquidation of their assets.
In connection with the formulation and development of the Plan, RII and GRI
and their financial advisors have explored various alternative plan structures.
RII and GRI believe the Plan enables creditors and equity interest holders,
including both the holders of Old Series Notes and of Old RII Common Stock, to
realize greater value than would be realized under the alternatives which RII
and GRI believe could be consensually implemented. On the other hand, an
alternative reorganization plan could be formulated which would attempt to
eliminate entirely the interests of equity interest holders. RII and GRI believe
that this form of alternative plan would be vigorously contested by equity
interest holders. The expense and delay associated with this dispute, coupled
with its potential adverse impact on the operations of the Company and the
morale of its employees, could substantially impair reorganization value. If
such an alternative plan were confirmed, however, recoveries to holders of Old
Series Notes might, but not necessarily would, be greater than those projected
under the Plan and no recovery would be available to holders of Old RII Common
Stock.
In a liquidation under chapter 11, RII's and GRI's assets would be sold in
an orderly fashion over a more extended period of time than in a liquidation
under chapter 7, probably resulting in somewhat greater recoveries and
distributions. Further, if a trustee were not appointed (which generally is the
case under chapter 11), the expenses for professional fees most likely would be
lower than in a chapter 7 case. Although preferable to a chapter 7 liquidation,
RII and GRI believe that a liquidation under chapter 11 would not realize the
full going-concern value of RII's and GRI's assets and, as it is likely to be a
more protracted proceeding than the chapter 11 case in which confirmation of the
Plan would be sought as described herein, would involve greater administrative
expenses. Consequently, RII and GRI believe that a liquidation under chapter 11
is a much less attractive alternative to creditors and equity interest holders
than the Plan because the Plan provides for a greater return to creditors and
equity interest holders than would likely be realized in a chapter 11
liquidation.
MEANS FOR IMPLEMENTATION OF THE PLAN
ISSUANCE OF NEW DEBT SECURITIES AND THE NEW EQUITY SECURITIES
The Company will have authorized and, on the Effective Date, will issue the
New Debt Securities and the New Equity Securities as provided in the Plan. The
New Debt Securities and the New Equity Securities to be issued pursuant to the
Plan have been registered with the Commission pursuant to the Registration
Statement of which this Information Statement/Prospectus is a part, filed by the
Company under the Securities Act. See "Description of New RIHF Mortgage Notes",
"Description of New RIHF Junior Mortgage Notes" and "Description of New Equity
Securities".
CASH DISTRIBUTIONS
Pursuant to the Plan, RII proposes to make certain distributions to
creditors in cash. Distributions of cash are computed by reference to certain
defined terms related to cash. See the definitions of these terms (Available
Cash, Excess Cash, RII Retained Cash, SIHL Target Adjusted Cash, Standby Target
Adjusted Cash, Reserved Cash, Plan Consummation Cash) and the formulas embodied
therein to evaluate the cash distributions under the Plan. For a description of
Available Cash, Excess Cash and RII Retained Cash, see "Description of Excess
Cash." For a description of SIHL Target Adjusted Cash, see "Description of
Paradise Island Purchase Agreement". For a description of PIRL Target Adjusted
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Cash, see "Description of PIRL Standby Distribution Agreement". For a
description of Reserved Cash, see "Description of Net Reserved Cash". For a
description of Plan Consummation Cash, see "Description of Net Plan Consummation
Cash and Plan Expenses".
DISTRIBUTIONS
Distributions of securities and cash under the Plan may be made by RII or
GRI, as the case may be. Alternatively, at the option of RII and GRI, one or
more disbursing agents ("Disbursing Agent") may be designated and employed by
RII and GRI to make such distributions. With respect to distributions to holders
of Old Series Notes (and the related GRI Guaranty), a Disbursing Agent, which
may be the Old Series Note Trustee, may be designated for such distributions. It
is not expected that distributions to holders of Old Series Notes will be made
by RII or GRI. All distributions to be made by a Disbursing Agent other than RII
and GRI shall be made pursuant to a disbursing agreement approved by the
Bankruptcy Court. Any such disbursing agreement relative to any distribution to
a class of claims will be approved by the Bankruptcy Court and will provide for
an appropriate reserve to be maintained by the Disbursing Agent relative to
Disputed Claims as of the Distribution Date. No reserve will be required when
RII or GRI act as the Disbursing Agent.
DISTRIBUTION DATE
The Distribution Date for any Claim that is an Allowed Claim on the
Effective Date, will be the Effective Date or as soon thereafter as practicable,
but in no event later than 20 days after the Effective Date. For any Claim that
is a Disputed Claim on the Effective Date, the Distribution Date will be the
date as soon as practicable, but in no event later than 30 days, after the date
upon which such Claim becomes an Allowed Claim. Notwithstanding the foregoing,
the Distribution Date with respect to distribution to the Disbursing Agent for
holders of Old Series Notes is as follows: (a) for distribution of the SIHL
Aggregate Cash Purchase Price, the New Debt Securities and the New Equity
Securities, the Effective Date; (b) for payments of Net Reserved Cash, as soon
as practicable after the Effective Date, but in no event later than 90 days
after the Effective Date; (c) for payments of Net Plan Consummation Cash, as
soon as practicable but no later than 90 days after the Effective Date;
provided, however, that if all Plan Expenses have not been paid by the 90th day
after the Effective Date, RII and GRI may continue to hold back for an
additional 60 days the portion of Net Plan Consummation Cash deemed by the
Bankruptcy Court to be necessary to satisfy remaining Plan Expenses, after which
time, the remaining Net Plan Consummation Cash shall be distributed, unless
otherwise ordered by the Bankruptcy Court; (d) for payments of Deferred Cash,
within three business days after receipt by RII of the Litigation Trust
Distributions in immediately available funds; and (e) for payments of Excess
Cash, the Effective Date or as soon thereafter as practicable, but in no event
later than 20 days after the Effective Date.
ADDITIONAL DISTRIBUTION PROVISIONS
DISTRIBUTIONS TO BE MADE TO HOLDERS AS OF THE DISTRIBUTION RECORD DATE. Only
holders of record as of the Distribution Record Date will be entitled to receive
the distributions provided under the Plan. As of the close of business on the
Distribution Record Date, the respective transfer ledgers in respect of the Old
Series Notes will be closed. RII, GRI and the Disbursing Agent, if any, will
have no obligation to recognize any transfer of Old Series Notes occurring after
the Distribution Record Date. RII, GRI and any such Disbursing Agent shall be
entitled instead to recognize and, for purposes of making distributions under
the Plan, deal only with those holders of record stated on the transfer ledgers
maintained by the Registrar for the Old Series Notes as of the close of business
on the Distribution Record Date.
DISTRIBUTION TO HOLDERS OF OLD SERIES NOTES. On the Effective Date, all Old
Series Notes will be settled and compromised in full by the treatment accorded
to such claims in this Plan. Distributions to holders of Old Series Notes shall
be delivered on the Distribution Date to the Disbursing Agent, if any, for the
holders of Old Series Notes, which in turn will deliver the distributions to the
holders of record of the Old Series Notes on the Distribution Record Date in
accordance with the provisions of the Plan,
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the Old Series Note Indenture and the applicable disbursing agreement, if any.
For purposes of any distributions by RII and GRI to holders of Old Series Notes,
the Disbursing Agent, if any, will be deemed to be the sole holder of all such
Old Series Notes.
PROCEDURES FOR DISTRIBUTION TO HOLDERS OF OLD SERIES PUBLIC DEBT CLAIMS. On
the Distribution Date, the Disbursing Agent, if any, for the holders of Old
Series Notes will receive from RII (or, in the case of SIHL Series A Shares and
the SIHL Aggregate Cash Purchase Price, SIHL) as applicable (i) certificates
representing New RIHF Mortgage Notes, New RIHF Junior Mortgage Notes, SIHL
Series A Shares or PIRL Ordinary Shares, as the case may be, RII Common Stock,
RII Class B Common Stock and (ii) cash. As soon as practicable, the Disbursing
Agent, in accordance with the applicable disbursing agreement and the Plan,
shall deliver such cash and certificates to the holders of Old Series Notes that
have validly surrendered the Old Series Notes held by such holders.
As a condition to receiving distributions provided for by the Plan in
respect of the Old Series Notes, any holder of Old Series Notes shall be
required to surrender such securities, accompanied by duly executed and
completed letters of transmittal, to RII or the Disbursing Agent, as
appropriate. All instruments so surrendered shall be canceled, marked
"Compromised and Settled Only as Provided in the Plan of Reorganization for
Resorts International, Inc. and GGRI, Inc." and delivered to RII. RII or the
Disbursing Agent shall make distributions only to holders of Old Series Notes
that have surrendered such instruments as herein provided. Except as otherwise
provided in the Plan, no distribution shall be made to any holder of Old Series
Notes that has not so surrendered such instruments held by it.
Unless waived by the RII or the Disbursing Agent, any holder of a claim
based upon an Old Series Note which has been lost, stolen, mutilated or
destroyed shall, in lieu of surrendering such Old Series Note as provided in
this section, deliver to RII or the Disbursing Agent, as appropriate, (i)
satisfactory evidence of the loss, theft, mutilation or destruction of such
instrument and (ii) such security or indemnity as may be reasonably required by
RII and the Disbursing Agent, if any, to hold Reorganized RII and the Disbursing
Agent harmless from any damages, liabilities, or costs incurred in treating such
entity as a holder of such Old Series Notes. Thereafter, such entity shall be
treated as the holder of Old Series Notes for all purposes of the Plan and
shall, for all purposes under this Plan, be deemed to have surrendered the
instrument representing such Old Series Notes.
ANY HOLDER OF OLD SERIES NOTES WHO HAS NOT SURRENDERED THE CERTIFICATES
REPRESENTING ITS OLD SERIES NOTES WITHIN TWO YEARS AFTER THE EFFECTIVE DATE
SHALL HAVE ITS CLAIM BASED ON SUCH OLD SERIES NOTES DISALLOWED, SHALL RECEIVE NO
DISTRIBUTIONS ON SUCH CLAIM UNDER THIS PLAN AND SHALL BE FOREVER BARRED FROM
ASSERTING ANY CLAIM THEREON. In such case, the Disbursing Agent, if any, shall
return to and be retained by RII (or, in the case of New RIHF Mortgage Notes and
New RIHF Junior Mortgage Notes, RIHF) all certificates representing New RIHF
Mortgage Notes, New RIHF Junior Mortgage Notes, SIHL Series A Shares or PIRL
Ordinary Shares, as the case may be, RII Class B Common Stock, RII Common Stock
and all cash allocable to such non-surrendering holders. All such certificates
representing New RIHF Mortgage Notes, New RIHF Junior Mortgage Notes, RII Class
B Common Stock, and RII Common Stock which are so returned to RII or, as
applicable, RIHF shall be canceled. All cash and certificates representing SIHL
Series A Shares or PIRL Ordinary Shares which are so returned to RII shall be
redistributed as soon as practicable after the end of the 24-month after the
Effective Date to the other holders of Old Series Notes as of the Distribution
Record Date who previously surrendered their Old Series Notes.
DELIVERY OF DISTRIBUTIONS. Subject to Bankruptcy Rule 9010, distributions to
holders of Allowed Claims shall be made at the address of each such holder as
set forth on the Schedules filed with the Bankruptcy Court unless superseded by
the address as set forth on the proofs of claim filed by such holders (or at the
last known addresses of such a holder if no proof of claim is filed or if RII
and GRI have been notified in writing of a change of address), or in the case of
holders of Old Series Notes, may be made at the addresses contained in the
records of the Registrar, except as provided below. If any holder's distribution
is returned as undeliverable, no further distributions to such holder shall be
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made unless and until RII or the Disbursing Agent, if any, is notified of such
holder's then current address, at which time all missed distributions shall be
made to such holder without interest. Amounts in respect of undeliverable
distributions made through a disbursing agent shall be returned to such
Disbursing Agent making such distribution until such distributions are claimed.
All claims for undeliverable distributions shall be made on or before the later
of the second anniversary of the Effective Date and the date 90 days after such
claim is allowed. After such date, all unclaimed property shall be returned to
RII and GRI or their successors in accordance with the Plan and the claim of any
holder with respect to such property shall be discharged and forever barred.
FEES AND EXPENSES OF DISBURSING AGENTS
Except as otherwise ordered by the Bankruptcy Court, the amount of any
reasonable fees and expenses incurred by a disbursing agent, including but not
limited to the Old Series Indenture Trustee, as the case may be, on or after the
Confirmation Date (including without limitation tax related expenses) and any
compensation and expense reimbursement claims (including reasonable fees and
expenses of its agents) made by such Disbursing agent shall be paid as a Plan
Expense by RII in accordance with the applicable disbursing agreement without
further order of the Bankruptcy Court; provided, however, that the Bankruptcy
Court will hear and determine any disputes in respect of such fees and expenses.
AMENDMENTS TO RII'S CERTIFICATE OF INCORPORATION AND BY-LAWS
Upon the consummation of the Restructuring and pursuant to the Plan, the
Restated Certificate of Incorporation of RII will be amended to provide for: (i)
an increase in the authorized number of shares of RII Common Stock; (ii) the
authorization and issuance of the RII Class B Common Stock; (iii) the
authorization of preferred stock; (iv) the election of two-thirds of the entire
RII Board of Directors by the holders of RII Common Stock (or, following the
occurrence of the Class B Triggering Event, one-half minus one of the entire RII
Board of Directors); and (vi) the election of one-third of the entire RII Board
of Directors by the holders of RII Class B Common Stock (or, following the
occurrence of the Class B Triggering Event, a majority of the entire RII Board
of Directors). The form of the Amended RII Certificate of Incorporation is
attached as Appendix C.
Upon consummation of the Restructuring and pursuant to the Plan, the By-laws
of RII will be amended as necessary in connection with the Restructuring. The
form of the Amended RII By-laws is attached as Appendix D.
Pursuant to the Delaware General Corporation Law, the Amended RII
Certificate of Incorporation and the Amended RII By-laws may be adopted upon
confirmation of the Plan without further action by RII's directors or the
holders of RII Common Stock.
INTERIM MANAGEMENT AGREEMENT
If the SIHL Sale is not consummated on the Effective Date, RII, at the
election of PIRL, will enter into the Interim Management Agreement with PIRL to
operate the Paradise Island Business. The Interim Management Agreement would
have an initial term of one year and be renewable on a yearly basis thereafter.
The annual management fee payable to the Company under the Interim Management
Agreement would be 3% of gross revenues of the Paradise Island Business. PIRL
may terminate the Interim Management Agreement for any reason upon 30 days'
prior notice. In the event of such a termination, RII would be entitled to a
termination fee of $1,000,000, in addition to a prorated portion of the unpaid
balance of the annual management fee through the date of termination.
MANAGEMENT AND MANAGEMENT COMPENSATION ARRANGEMENTS
The Plan provides for the executive officers of RII and GRI immediately
before confirmation of the Plan to continue to serve immediately after
confirmation of the Plan in their respective capacities. Upon the Effective
Date, the composition of the Board of Directors of RII and GRI will change. For
a description of the method of selection of the Board of Directors of RII and
other related matters, see "The Restructuring -- Overview of the Restructuring
- -- Post-Restructuring RII Board of Directors". Subject to receipt of any
necessary qualification of directors from the Casino Control Commission, the
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initial post-Restructuring Board of Directors of RII and GRI will consist of
Merv Griffin, Thomas Gallagher, Jay Greene and William Fallon and, as Class B
Directors, Vincent Naimdi and Charles Masson. Prior to confirmation of the Plan,
RII and GRI will disclose, in accordance with section 1129(a)(5) of the
Bankruptcy Code, any additional information regarding (i) the identity of and
affiliations of any individual proposed to serve, after confirmation of the
Plan, as a director, officer or voting trustee of RII, GRI and the other
proponents of the Plan, and (ii) the identity of any insider (as such term is
defined in section 101 of the Bankruptcy Code) that will be employed and
retained by RII, GRI and the other proponents of the Plan, and the nature of any
compensation for such insider. All existing compensation arrangements with
members of the Company's management will continue. Existing employment contracts
with members of the Company's management are expected to be renewed in the
ordinary course of business. For certain information regarding the current
directors and executive officers of RII and a description of the employment
agreements of certain insiders and their compensation, see "Management of RII".
1994 STOCK OPTION PLAN: DESCRIPTION AND FEDERAL TAX CONSEQUENCES
DESCRIPTION
GENERAL. In connection with the Plan, RII is proposing to adopt the 1994
Stock Option Plan to enable RII and its subsidiaries to attract, retain and
motivate their directors, officers and key employees by providing for
proprietary interests of such individuals in RII.
If sufficient Acceptances are received from the holders of Claims entitled
to receive RII Common Stock pursuant to the Plan (holders of Allowed RII Class 2
and GRI Class 2 Claims) and from the holders of RII Class 7 Interests, such
Acceptances will constitute approval of the 1994 Stock Option Plan by such
holders for purposes of compliance with Rule 16b-3 promulgated under the
Exchange Act. The following description of the 1994 Stock Option Plan is
qualified in its entirety by reference to the full text of the 1994 Stock Option
Plan, which is contemplated to be in substantially the form thereof filed
attached as Exhibit C to the Plan. The 1994 Stock Option Plan will be unfunded.
The 1994 Stock Option Plan will be administered by a committee appointed by
the Board of Directors of RII (the "Option Committee".) The Option Committee
will consist solely of "disinterested" directors, as that term is defined for
purposes of satisfying Rule 16b-3. Subject to the provisions of the 1994 Stock
Option Plan, the Option Committee will have full and final authority to select
the participants to whom awards will be granted thereunder, to grant such
awards, and to determine the terms and conditions of such awards (including,
subject to certain limitations, exercise price) and the number of shares to be
issued pursuant thereto.
Key employees, officers and directors of RII or any of its subsidiaries
("Eligible Participants") are eligible to be considered for the grant of awards
under the 1994 Stock Option Plan. The maximum number of shares of RII Common
Stock that may be issued pursuant to awards granted under the 1994 Stock Option
Plan will be no more than 5% of the fully diluted shares of RII Common Stock
outstanding on the Effective Date. For the market price of RII Common Stock, see
"Market Prices of RII Common Stock".
AWARDS. The proposed terms of the 1994 Stock Option Plan authorize the
Option Committee to grant to Eligible Participants options to purchase RII
Common Stock at not less than 100% of the fair market value of the stock at the
date of the grant of the options. The fair market value of the stock as of a
date shall be deemed to be the closing price of RII Common Stock on the date of
grant of such option. The fair market value of RII Common Stock as of the
Effective Date is at this point indeterminable.
Any stock option granted to Eligible Participants under the 1994 Stock
Option Plan may be a tax benefited incentive stock option (an "Incentive
Option") (in which case it may be granted only to
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employees and certain other restrictions will apply), or it may be a
nonqualified stock option that is not tax benefited (in which case it may be
issued to both employees, officers and directors, and few, if any, legal
restrictions will apply).
The proposed terms of the 1994 Stock Option Plan provide that all options
immediately become fully exercisable upon a "change in control," as defined in
the 1994 Stock Option Plan. In the event of a "change in control" or a merger in
which RII is not the surviving entity, any unexercised options shall be replaced
by the surviving corporation. The 1994 Stock Option Plan deems a "change in
control" to have occurred if any corporation, person or group acquires a
majority of RII's Common Stock or a majority of RII's outstanding voting
securities, or if within a two-year period a majority of the RII Board of
Directors is replaced by persons who were not directors at the beginning of such
period and who were not nominated or ratified by at least two-thirds of the
directors who were directors at the beginning of such two-year period. For
purposes of the 1994 Stock Option Plan, the occurrence of the Class B Triggering
Event will not constitute such a "change of control".
No awards will be granted under the 1994 Stock Option Plan prior to the
Effective Date. Subject to the express requirements under the 1994 Stock Option
Plan, the terms of any and all awards granted to Eligible Participants will be
determined by, and subject to the conditions imposed by the Option Committee,
including provisions as to the exercisability, expiration, termination or
forfeiture of options.
Options granted under the 1994 Stock Option Plan to employees or officers of
RII or its subsidiaries expire one year after an optionee's death, one year
after the optionee's termination of employment because of disability,
immediately upon termination of the optionee's employment for "good cause," as
defined in the 1994 Stock Option Plan, and three months after an optionee's
employment terminates for any other reason. Notwithstanding the foregoing, in
all cases options expire ten years after the date of grant, or at such earlier
time as the Option Committee may provide.
Under the 1994 Stock Option Plan, ___________________ options may be granted
to outside directors of RII or its subsidiaries. Options granted under the 1994
Stock Option Plan to outside directors expire one year after an optionee's
death. Notwithstanding the foregoing, in all cases options granted to outside
directors expire ten years after the date of grant, or at such earlier time as
the Option Committee may provide. The exercise price of such option shall not be
less than 100% of the fair market value of the underlying shares of RII Common
Stock as of the date such options are granted.
An award under the 1994 Stock Option Plan may permit the recipient to pay
all or part of the purchase price of the shares issuable pursuant thereto, or to
pay all or part of such recipient's tax withholding obligation with respect to
such issuance, by delivering a sufficient amount of shares of stock of RII owned
for at least six months (the fair market value thereof being calculated as of
the date next preceding the date of issuance) or otherwise as the Option
Committee may determine according to the terms and conditions of the 1994 Stock
Option Plan.
The 1994 Stock Option Plan authorizes the Option Committee to provide for
arrangements under which brokers that are compensated by RII provide temporary
financing to assist an optionee in paying the exercise price of an option, such
financing to be paid off by the sale of shares issuable upon exercise of the
option.
No option right granted under the 1994 Stock Option Plan may be transferred
other than by will or the laws of descent and distribution or, except as to
Incentive Options, pursuant to a qualified domestic relations order (as defined
in the Tax Code) and the award may be exercised during the recipient's lifetime
only by the recipient or by his or her guardian or legal representative.
The exercise price for such awards will be equal to (i) the fair market
value per share (as determined according to the 1994 Stock Option Plan) of RII
Common Stock at the time the options are awarded, or (ii) in the event that such
award is an Incentive Option granted to a person who, at the time such option is
granted, owns shares of RII, or any subsidiary corporation thereof, which
possess
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more than 10% of the total combined voting power of all classes of shares of
capital stock of RII or of any subsidiary corporation of RII, 110% of the fair
market value per share (as determined according to the 1994 Stock Option Plan)
of RII Common Stock at the time such Incentive Option is awarded. Consequently,
the value of any such awards is not yet determinable. Also, as noted below,
given the vesting requirements of awards under the 1994 Stock Option Plan and
the restrictions on transfer of any awards, the value of awards under the 1994
Stock Option Plan is not presently determinable, and would be speculative at
best. For a description of awards under RII's 1990 Stock Option Plan, see
"Management of RII -- Executive Compensation".
AMENDMENT AND TERMINATION. Under the proposed terms of the 1994 Stock
Option Plan, the Board of Directors of RII will be able to alter, amend, suspend
or terminate the 1994 Stock Option Plan, provided that no such action shall
alter or impair any option granted to the optionee pursuant to the 1994 Stock
Option Plan without the optionee's consent. Except as provided in the 1994 Stock
Option Plan, no amendment by the Board of Directors of RII, unless taken with
the approval of the shareholders of RII, may:
(1) materially increase the benefits accruing to participants under
the 1994 Stock Option Plan;
(2) materially increase the number of securities which may be issued
under the 1994 Stock Option Plan (except for permitted adjustments
pursuant to a "change of control" and certain dilutive events);
(3) materially modify the requirements as to eligibility for
participation in the 1994 Stock Option Plan; or
(4) decrease the minimum exercise price of an Incentive Option.
VESTING OF OPTIONS. Pursuant to the 1994 Stock Option Plan options shall
vest, and the restrictions imposed thereon shall lapse, on the dates and in the
amounts set forth in the particular stock option agreement between RII and the
optionee.
In the event of the death or termination due to disability or retirement of
any employee holder of option awards, all options held by such employee on the
date of such death or termination shall vest in full and become immediately
exercisable.
FEDERAL INCOME TAX TREATMENT
The following is a brief description of the Federal income tax treatment
which generally will apply to benefits or awards ("Awards") made under the 1994
Stock Option Plan, based on Federal income tax laws in effect on the date
hereof. The exact Federal income tax treatment of Awards will depend on the
specific nature of any such Award. BECAUSE THE FOLLOWING PROVIDES ONLY A BRIEF
SUMMARY OF THE GENERAL FEDERAL INCOME TAX RULES, INDIVIDUALS SHOULD NOT RELY
THEREON FOR INDIVIDUAL TAX ADVICE, AS EACH TAXPAYER SITUATION AND THE
CONSEQUENCES OF ANY PARTICULAR TRANSACTION WILL VARY DEPENDING UPON THE SPECIFIC
FACTS AND CIRCUMSTANCES INVOLVED. RATHER, EACH TAXPAYER IS ADVISED TO CONSULT
WITH HIS OR HER OWN TAX ADVISOR FOR PARTICULAR FEDERAL, AS WELL AS STATE AND
LOCAL INCOME AND ANY OTHER TAX ADVICE.
INCENTIVE STOCK OPTIONS. Pursuant to the 1994 Stock Option Plan,
participants may be granted options which are intended to qualify as Incentive
Options under the provisions of section 422 of the Tax Code. Generally, the
optionee is not taxed and RII is not entitled to a deduction on the grant or the
exercise of an Incentive Option. However, if the optionee disposes of the shares
acquired upon the exercise of an Incentive Option at any time within (i) one
year after the date the shares are transferred to the optionee pursuant to the
exercise of such Incentive Option or (ii) two years after the date of grant of
such Incentive Option (a "disqualifying disposition"), the optionee will
recognize ordinary income in an amount equal to the excess, if any, of the
lesser of the amount realized on the date of such disposition or the fair market
value of RII's stock on the date of exercise, over the exercise price of such
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Incentive Option (with any remaining gain being taxed as a capital gain). In
such an event, RII generally will be entitled to a deduction in an amount equal
to the amount of ordinary income recognized by such optionee. If the optionee
does not dispose of the option shares within the above described time limits,
there will be no ordinary income recognized upon any subsequent sale or other
disposition of the shares, but rather capital gain or loss will be recognized in
an amount equal to the difference between the amount realized on the sale or
disposition and the exercise price. RII will not be entitled to any deduction in
this event. Finally, exercise of an Incentive Option may result in alternative
minimum tax liability for the optionee. Any excess of the fair market value of
the stock on the date the Incentive Option is exercised over the option exercise
price will be included in the calculation of the optionee's alternative minimum
taxable income, which may subject the optionee to the alternative minimum tax at
a rate of up to 28%. The portion of any such alternative minimum tax
attributable to the exercise of an incentive stock option can be credited
against the optionee's regular tax liability in later years to the extent that
in any such year the optionee's regular tax liability exceeds the alternative
minimum tax.
NONQUALIFIED STOCK OPTIONS. The grant of an option which does not qualify
for treatment as an Incentive Option generally is not a taxable event for the
optionee. However, upon exercise, the optionee generally will recognize ordinary
income in an amount equal to the excess of the fair market value of the stock
acquired upon exercise (determined as of the date of exercise) over the exercise
price of such option, and RII will generally be entitled to a deduction equal to
such amount. Upon the later disposition of the option shares acquired upon
exercise, appreciation (or depreciation) after the date of exercise will be
treated as capital gain (or loss) to the optionee and will have no tax effect as
to RII.
SPECIAL RULES FOR SECTION 16 INSIDERS. If a nonqualified option has been
held for less than six months at the time of exercise, and the exercise price of
the option is equal to or less than the fair market value of the acquired shares
at the time of exercise, an officer or more than 10% shareholder of RII subject
to the provisions of Section 16 of the Exchange Act (an "Insider") will not be
taxed until the earlier of (i) the expiration of the six-month holding period
beginning on the date of grant of the nonqualified option, or (ii) the sale of
the acquired shares, at which time the Insider will recognize ordinary income in
an amount equal to the excess, if any, of the then-fair market value of the
acquired shares over the exercise price of the nonqualified option.
Alternatively, pursuant to Section 83(b) of the Tax Code, the Insider may elect
within 30 days after exercise of the nonqualified option to recognize ordinary
income equal to the excess, if any, of the fair market value of the RII Common
Stock on the date of exercise over the exercise price. The capital gains holding
period for the acquired shares shall commence immediately following the date on
which the optionee is required to recognize ordinary income, and any
appreciation (or depreciation) realized following such date, will be taxed as a
capital gain (or loss).
MISCELLANEOUS. Special rules will apply in cases where the participant pays
the exercise or purchase price of awards or applicable withholding tax
obligations under the 1994 Stock Option Plan by delivering previously owned RII
Common Stock or in the case of satisfying withholding obligations, by reducing
the amount of shares or other property otherwise issuable pursuant to the award.
The surrender (in the circumstances below) or withholding of such stock will be
a taxable event, resulting in the recognition of gain or loss. Such gain will be
taxable as ordinary income if the stock surrendered or withheld either (i) was
acquired upon exercise of an Incentive Option and the surrender takes place
within one year after the exercise or two years after the date of grant of the
Incentive Option, or (ii) is both subject to a substantial risk of forfeiture
and is not freely transferable for purpose of Tax Code Section 83, the market
value of such stock is in excess of the amount paid for the stock and no
election has been made under Tax Code Section 83(b). In addition, shares
withheld on the exercise of a nonqualified option in order to pay tax
withholding should result in tax on the withheld shares equal to the difference
between the fair market value of the shares (on the date of exercise) and the
exercise price.
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Generally, RII will receive a deduction equal to, and will be required to
withhold applicable taxes with respect to, any ordinary income recognized by a
participant in connection with awards made under the 1994 Stock Option Plan.
The 1994 Stock Option Plan is not a "qualified plan" within the meaning of
Section 401(a) of the Tax Code and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Upon the accelerated exercisability of an option in connection with a change
in ownership or control of RII, depending upon the individual circumstances of
the recipient participant, certain amounts with respect to such awards may
constitute "excess parachute payments" under the golden parachute provisions of
the Tax Code. Pursuant to these provisions a participant will be subject to a
20% excise tax on any "excess parachute payment" and RII will be denied any
deduction with respect to such excess parachute payment.
GRIFFIN COMPENSATION ARRANGEMENTS
In September 1990, Merv Griffin, Griffin Group and RII entered into the Old
Griffin Services Agreement. Pursuant to the Old Griffin Services Agreement,
Griffin Group granted the Company a non-exclusive license to use the name and
likeness of Merv Griffin for purposes of advertising and promoting the Company's
facilities and operations and Merv Griffin agreed to serve as Chairman of the
Board of Directors of RII. In addition, Griffin Group agreed to provide to the
Company the non-exclusive services of Merv Griffin, on a limited basis, to host
or present shows in which he is a featured performer at the Company's
facilities. Under the Old Griffin Services Agreement, the Company was not
required to compensate the Griffin Group and the Company has not paid any
compensation to the Griffin Group, or to Mr. Griffin directly, for Mr. Griffin's
services to the Company under the Old Griffin Services Agreement. The term of
the Old Griffin Services Agreement was for a period of two years, which expired
on September 16, 1992.
Pursuant to the New Griffin Services Agreement, which replaced the Old
Griffin Services Agreement as of its expiration, RII and RIH were granted a
non-exclusive license to use Merv Griffin's name and likeness for the purpose of
advertising and promoting the Resorts Casino Hotel and the Paradise Island
Business. Subject to the performance of their obligations, RII and RIH also were
granted the non-exclusive services of Merv Griffin, as Chairman of the Board of
Directors of RII and in other capacities, including without limitation
spokesperson for RII and RIH. The New Griffin Services Agreement has a basic
term of four years. Under certain circumstances however, the New Griffin
Services Agreement could remain in force for up to an additional year.
The Griffin Group was entitled to receive from RII or RIH $4,100,000 upon
execution of the New Griffin Services Agreement as compensation for the first
two years of services under the New Griffin Services Agreement. The Griffin
Group was entitled to compensation in the amounts of $2,205,000 and $2,310,000
for the third and fourth years of such services, respectively. Additional
prorated compensation also may be paid to the Griffin Group if the New Griffin
Services Agreement continues in force longer than four years. RIH made the
$4,100,000 payment for the first two years under the New Griffin Services
Agreement in April 1993. Simultaneously, Merv Griffin made a partial prepayment
of the Griffin Note in an equal amount to RII thereby reducing the principal
amount of the Griffin Note to $7,523,333. RII then canceled the Griffin Note in
exchange for the Griffin Group Note in the principal amount of $7,523,333. The
Griffin Group Note is payable on demand and bears interest at the rate of 3% per
year. The bank letter of credit securing the Griffin Note was released by RII.
Merv Griffin has personally guaranteed payment of the Griffin Group Note. Under
the New Griffin Services Agreement, RII and RIH have the right, at their option,
to elect to satisfy any compensation obligation to the Griffin Group by reducing
the outstanding amount of the Griffin Group Note.
On September 17, 1993, RII made the $2,205,000 payment for the third year of
the New Griffin Services Agreement by reducing the principal amount of the
Griffin Group Note in an equal amount.
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On or prior to the Effective Date, RII will pay $2,310,000 to the Griffin Group
for the fourth year of the New Griffin Services Agreement also by reducing the
principal amount of the Griffin Group Note in an equal amount. If for any reason
the Griffin Group fails to fulfill its obligations under the New Griffin
Services Agreement, it will be obligated to reimburse the Company for all
amounts paid with respect to periods for which such obligations are not
fulfilled.
After payment of the $2,310,000 referenced above, but no later than the
Effective Date, the Griffin Group will pay RII the balance of the Griffin Group
Note (approximately $3,000,000). RII will distribute the proceeds of such
payment to the holders of the Old Series Notes as part of Excess Cash. Payment
in full of outstanding amounts under the Griffin Group Note is a condition to
consummation of the Plan.
The New Griffin Services Agreement also provides that, on the Effective
Date, the Griffin Group will be granted the Griffin Warrants. Upon issuance, the
Griffin Warrants will entitle the Griffin Group to purchase approximately 10% of
the RII Common Stock on a fully diluted basis at a purchase price per share
equal to the lesser of $1.875 and the average closing trading price for the 20
trading days following the Effective Date. Once issued, the Griffin Group may
exercise the Griffin Warrants, subject to applicable securities laws, at any
time prior to the fourth anniversary of the Effective Date. Finally, RII and RIH
also will provide the Griffin Group and Merv Griffin with certain
indemnification and insurance coverage and reimburse them for certain expenses
incurred in connection with the performance under the New Griffin Services
Agreement. Pursuant to the Restructuring, the New Griffin Services Agreement
will remain in place. See "Description of Griffin Warrants".
TRANSACTIONS RELATIVE TO SIHL SALE OR PIRL SPIN-OFF. On the Effective Date,
the following will occur (amounts reflected are balances as of September 30,
1993; actual amounts to be effected will be balances as of the Effective Date):
(1) GRI will assume the obligation of RIB to repay the intercompany debt
owed by RIB to RIH ($50,000,000) plus accrued interest thereon and the
intercompany debt owed by RIB to RII ($11,192,000). As a result of such
assumptions, RIB will have no obligations to repay any inter-company debt.
(2) If the SIHL Sale is consummated (or, with the consent of Fidelity
and TCW (so long as the funds and accounts managed by them hold in the
aggregate at least 20% of the outstanding Old Series Notes) if the PIRL
Spin-Off is effected), GRI will distribute to its immediate parent, RII, all
the outstanding capital stock of RIB that is owned by GRI. RIB is the
holding company for the Paradise Island assets located in The Bahamas, which
are held in the following corporations: IHC, PEL, PIB, PIL, PBI and PSS. As
a result of such distribution, RIB will be a first-tier subsidiary of RII.
(3) Either: (A) pursuant to the Paradise Island Purchase Agreement, in
exchange for 2,000,000 SIHL Series A Shares, representing 40% of the capital
stock of SIHL to be outstanding after the SIHL sale, and the SIHL Aggregate
Cash Purchase Price, SIHL will purchase (i) from RII all the capital stock
of RIB and (ii) directly or through its subsidiaries the RII Real Estate
Assets and substantially all the assets of the U.S. Paradise Island
Subsidiaries and will assume substantially all the non-intercompany
liabilities relating to such assets; or (B) if the SIHL Sale is not
consummated on the Effective Date, (i) RII will contribute all the capital
stock of RIB to the capital of PIRL, which was formed as a first-tier
subsidiary of RII to effect the PIRL Spin-Off, in exchange for PIRL Ordinary
Shares (which, when added to the shares of PIRL Ordinary Shares owned by
RII, shall equal all the issued and outstanding PIRL Ordinary Shares which
are to be distributed to the holders of the Old Series Notes on the
Distribution Date) and (ii) subsidiaries of PIRL will acquire the RII Real
Estate Assets and substantially all the assets of the U.S. Paradise Island
Subsidiaries and will assume substantially all the non-intercompany
liabilities relating to such assets.
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For a chart summarizing the ownership structure of RII, including RIB and
its subsidiaries and the U.S. Paradise Island Subsidiaries, as of the date
hereof and after giving effect to the Restructuring, see "Summary -- Pre-and
Post-Restructuring Ownership Structures".
ISSUANCE OF PROMISSORY NOTES BY RIH TO RIHF. In order to effect the
issuance by RIH of the RIH Promissory Note and the RIH Junior Promissory Note,
which promissory notes will be held by the Collateral Agent as security for
payment of the New Debt Securities, the following will occur on the Effective
Date (amounts reflected are balances as of September 30, 1993; actual amounts to
be effected will be balances as of the Effective Date):
(1) RIH will distribute the RIH Promissory Note and the RIH Junior
Promissory Note, secured by the RIH Mortgage and the RIH Junior Mortgage,
respectively, to RII in repayment of the intercompany debt owed to RII by
RIH ($51,325,000) and as a distribution to its shareholder.
(2) RII will exchange the RIH Promissory Note and the RIH Junior
Promissory Note, together with the related RIH Mortgage and the RIH Junior
Mortgage, for New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes
to be issued by RIHF.
(3) The holders of Old Series Notes will receive the New RIHF Mortgage
Notes and the New RIHF Junior Mortgage Notes and RIHF will assign to the
Collateral Agent the RIH Promissory Note, the RIH Junior Promissory Note,
the RIH Mortgage and the RIH Junior Mortgage.
(4) RII will contribute to GRI the intercompany obligation of GRI to RII
($51,388,000).
(5) Upon termination and release of the RIH Pledge Agreement on the
Effective Date, GRI will exchange with RIH the $325,000,000 of non-interest
bearing RIH Notes for an amount of stock representing on a fully diluted
basis 99.99% of the issued and outstanding common stock of RIH.
SUBSIDIARY TRANSACTIONS. On the Effective Date, after the transactions
described above have occurred, RII will contribute to the capital of GRI the
remaining .01% of the issued and outstanding stock of RIH held by RII on the
date hereof. RIH will then distribute to GRI, as a return of surplus, the
intercompany debt owed by GRI to RIH ($50,000,000) plus accrued interest
thereon. RIH will become a wholly owned first-tier subsidiary of GRI and an
indirect subsidiary of RII.
TGC Holdings, NPO and ESS will remain in place and will be unaffected by the
Plan.
NON-OPERATING REAL PROPERTY. The Company will continue its attempts to sell
all the Non-Operating Real Property. However, there can be no assurance that any
such sale will occur or, if such a sale does occur, as to the amount of proceeds
therefrom. The Company does not expect to sell any portion of the Non-Operating
Real Property prior to the consummation of the Plan. If any such sale were to
occur prior to the consummation of the Plan, the proceeds would be distributed
to holders of the Old Series Notes as a component of Excess Cash. The
Non-Operating Real Property will not constitute collateral securing any of the
New Debt Securities.
DISPUTED CLAIMS OR INTERESTS
RII and GRI, as well as any other party in interest, may object to the
allowance of claims or interests filed with the Bankruptcy Court. Objections
will be litigated to a final order in which all rights of appeal have been
exhausted (a "Final Order"). However, RII and GRI may compromise and settle any
objections to claims or interests, subject to the approval of the Bankruptcy
Court, and may seek Bankruptcy Court estimation of disputed claims or interests
pursuant to section 502(c) of the Bankruptcy Code.
SURRENDER AND CANCELLATION OF INSTRUMENTS
As a condition to receiving any distribution pursuant to the Plan, each
holder of an Old Series Note (and the related GRI Guaranty) evidencing an RII
Class 2 Claim and a GRI Class 2 Claim must surrender such Old Series Note (and
the related GRI Guaranty) to RII or the Disbursing Agent, if any (or establish
the unavailability thereof and provide an indemnity arrangement to the
satisfaction of
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RII or the Disbursing Agent, as the case may be), in all cases, in proper form
for transfer. Any holder of such an RII Class 2 Claim and a GRI Class 2 Claim
that fails to surrender such Old Series Note (and the related GRI Guaranty)
within two years from the Effective Date will be deemed to have forfeited all
rights, claims and interests and will not participate in any distributions under
the Plan.
On the Effective Date (a) all such Old Series Notes (and the related GRI
Guaranty endorsed thereon) will be canceled, and (b) RII's and GRI's obligations
under the Old Series Note Indenture, the Old Security Documents and related
instruments and agreements will be terminated, canceled and discharged.
FRACTIONAL INTERESTS AND ODD-LOT HOLDINGS
Pursuant to the Plan, fractional shares of the New Equity Securities that
would be distributable on the basis of the provisions of the Plan will not be
issued or distributed. The New RIHF Mortgage Notes and the New RIHF Junior
Mortgage Notes will be issued only in denominations of $1,000 and integral
multiples thereof. As soon as practicable after the Effective Date, the
disbursing agent for the holders of the Old Series Notes will aggregate and sell
all fractional amounts of the New Equity Securities, the New RIHF Mortgage Notes
and the New RIHF Junior Mortgage Notes at then prevailing prices and distribute
the net proceeds to the security holders entitled thereto. No distribution of
less than $25 in cash or less than five shares of RII Common Stock shall be made
to any Holder of an Allowed Claim. Such undistributed amount will be retained by
RII or GRI, as the case may be, and in the case of undistributed RII Common
Stock, held as treasury shares.
MANNER OF PAYMENTS UNDER THE PLAN
At the option of RII, any cash payment to be made by RII pursuant to the
Plan may be made by a check or wire transfer or as otherwise required or
provided in applicable agreements, except that payments made to foreign trade
creditors holding unsecured claims or to foreign governmental units holding
Priority Tax Claims will be in such funds and by such means as are customary or
as may be necessary in a particular foreign jurisdiction. Checks issued by RII
in respect of Allowed Claims shall be null and void if not negotiated within six
months after the date of issuance thereof. Any amounts paid to a Disbursing
Agent in respect of such a check shall be promptly returned to RII by a
Disbursing Agent. Requests for reissuance of any check shall be made directly to
RII by the holder of the Allowed Claim with respect to which such check
originally was issued. Any claim in respect of such a voided check shall be made
on or before the later of the second anniversary of the Effective Date and 90
days after the six month period following the date of issuance of such check.
After such date, all claims in respect of void checks shall be discharged and
forever barred.
EFFECTS OF PLAN CONFIRMATION
VESTING OF ASSETS
Except as provided in the Plan, on the Effective Date, all assets of RII's
bankruptcy estate and GRI's bankruptcy estate shall vest in RII and GRI,
respectively, as reorganized pursuant to the Plan, free and clear of all liens,
claims, encumbrances and interests, except as provided by the Plan. The Plan
contemplates that the rights in collateral of RII Class 3 and RII Class 4 claims
existing at the time RII's and GRI's chapter 11 cases are commenced (as modified
or supplemented by the order regarding the use of Cash Collateral will be
preserved.
DISCHARGE OF RII AND GRI
Upon confirmation of the Plan, the Plan's provisions shall (i) bind all
holders of claims and interests, whether or not they accept the Plan and (ii)
except as otherwise provided in the Plan, discharge RII and GRI from any claim
and any "debt" (as such term is defined in section 101(12) of the Bankruptcy
Code) incurred before the Confirmation Date, and RII's and GRI's liability in
respect thereof shall be extinguished completely, including without limitation
any liability of a kind specified in section 502(g) of the Bankruptcy Code. In
addition, except as otherwise provided in the Plan, confirmation of the Plan
pursuant to the Confirmation Order acts as a discharge, effective as of the
Confirmation Date, as to each creditor or equity interest holder in respect of
any direct or indirect
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right or claim or interest such creditor or equity interest holder had or may
have had against or in respect of RII and GRI that arose at any time prior to
the Confirmation Date, including without limitation all principal and interest,
whether accrued before, on, or after the filing of the petitions commencing
RII's and GRI's chapter 11 cases.
RETENTION OF JURISDICTION
Notwithstanding entry of the Confirmation Order or the occurrence of the
Effective Date, the Plan provides for the retention of jurisdiction by the
Bankruptcy Court over RII's and GRI's chapter 11 cases: (a) to determine the
Allowed Amount of disputed claims; (b) to determine requests for payment of
claims entitled to priority under section 507(a)(1) of the Bankruptcy Code,
including compensation of and reimbursement of expenses of parties entitled
thereto; (c) to resolve controversies and disputes regarding interpretation and
implementation of the Plan; (d) to enter orders in aid of the Plan, including
without limitation appropriate orders (which may include contempt or other
sanctions) to protect RII or GRI; (e) to modify the Plan or remedy any apparent
defect or omission in the Plan; (f) to determine any and all applications,
claims, adversary proceedings and contested or litigated matters pending on the
Confirmation Date or as timely filed pursuant to the Bankruptcy Code or an order
of the Bankruptcy Court; (g) to allow, disallow, estimate, liquidate or
determine any claim and to enter or enforce any order requiring the filing of
any such claim before a particular date; (h) to determine any and all pending
applications for the rejection or disaffirmance of executory contracts or
leases, or for the assignment of assumed executory contracts and leases, and to
hear, determine, and, if appropriate, liquidate, any and all claims arising
therefrom; (i) to hear and determine any avoidance or recovery action not waived
or released pursuant to the Plan and any action for determination of RII's and
GRI's tax liability pursuant to section 505 of the Bankruptcy Code; (j) to enter
a final decree closing the chapter 11 cases; and (k) to determine such other
matters that may arise in connection with the chapter 11 cases, the Plan or the
Confirmation Order.
TERM OF INJUNCTIONS OR STAYS
Unless otherwise provided in the Plan, all injunctions or stays provided for
in RII's and GRI's chapter 11 cases pursuant to section 105 or 362 of the
Bankruptcy Code or otherwise and in effect on the Confirmation Date shall remain
in full force and effect until the Effective Date. The Confirmation Order shall
provide that the distributions and transfers of property pursuant to the terms
of the Plan are made free and clear of all claims (except as otherwise expressly
provided in the Plan), and that upon the confirmation of the Plan, except as
otherwise expressly provided in the Plan, all holders of claims will be
permanently enjoined from and restrained against commencing or continuing any
suit, action or proceeding or asserting against RII, GRI or their assets any
claim, interest or cause of action based upon any claim or interest, which is
based upon any act or omission, transaction or other activity of any kind or
nature that occurred before the Confirmation Date.
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THE SOLICITATION
GENERAL
RII and GRI, upon the terms and subject to the conditions set forth herein
and in the voting instructions set forth in the Ballots and Master Ballots, are
soliciting an Acceptance of the Plan from each entity that was a beneficial
owner on the Voting Record Date of (a) any Old Series Notes (and the beneficiary
of the related GRI Guaranty endorsed therein), (b) any RII Common Stock, (c) the
GRI Common Stock, (d) the RII Intercompany Claim and (e) 1990 Stock Options. The
term "beneficial owner" includes any person who has or shares, directly or
indirectly, through any contract, arrangement, understanding, relationship, or
otherwise, the power to vote or direct the voting of a security, and/or dispose
or direct the disposition of a security. A form of Ballot and, where
appropriate, a form of Master Ballot, to be used for voting to accept or reject
the Plan and, in the case of holders of Old Series Notes, for indicating
consents to the termination and release of the Old Security Documents), together
with a pre-addressed postage-paid envelope, has been provided with this
Information Statement/Prospectus.
The terms of the Solicitation are for the sole benefit of RII and GRI and
may be asserted by RII and GRI regardless of the circumstances or may be waived
by RII and GRI, in whole or in part, at any time and from time to time, in their
sole discretion (subject to the approval of Fidelity and TCW, so long as the
funds and accounts managed by them hold in the aggregate at least 20% of the
outstanding Old Series Notes). Any determination by RII and GRI concerning the
terms of the Solicitation will be final and binding upon all parties, subject
only to approval of the Bankruptcy Court when required.
PERSONS ENTITLED TO VOTE; VOTING RECORD DATE
The following classes of claims and interests are impaired under the Plan
and all holders of Allowed Claims or Interests in such classes as of the Voting
Record Date are entitled to vote to accept or reject the Plan:
<TABLE>
<C> <S> <C>
RII Class 2 -- Claims of holders of Old Series Notes (use the gray Ballot)
RII Class 7 -- Interests of holders of RII Common Stock (use the blue Ballot)
RII Class 8 -- Interests of holders of 1990 Stock Options (use the green Ballot)
GRI Class 2 -- Claims of holders of GRI Guaranty (use the gray Ballot)
GRI Class 4 -- Claims of RII, as the holder of the RII Intercompany Claims
GRI Class 5 -- Interest of RII, as the holder of all GRI Common Stock
</TABLE>
Any holder of claims or interests in more than one class is required to vote
separately with respect to each class in which such holder has claims or
interests. Please use a separate Ballot of the appropriate form to vote each
such class or interest. Although RII Class 2 Claims and GRI Class 2 Claims are
to be voted on the same Ballot, holders of such Claims must use a separate
Ballot for each series of Old Series Notes which they hold and for each account
in which Old Series Notes are held. In addition, banks and brokerage firms must
submit separate Master Ballots for each series of Old Series Notes for which
they have beneficial owners.
The Voting Record Date for voting on the Plan is the close of business in
the City of New York, State of New York on January 10, 1994. To be entitled to
vote to accept or reject the Plan, a holder of a RII Class 2 Claim, RII Class 7
Interest, RII Class 8 Interest, GRI Class 2 Claim, GRI Class 4 Claim or GRI
Class 5 Interest must have been the beneficial owner of such claim or interest
at the close of business on the Voting Record Date. It is important that all
beneficial owners vote to accept or reject the Plan. Under the Bankruptcy Code,
for purposes of determining whether the Requisite Acceptances have been
received, only beneficial owners who vote will be counted. Each beneficial owner
electing to vote on the Plan should (i) carefully read the voting instructions
set forth in the applicable Ballot, (ii) complete the applicable Ballot, (iii)
mark the Ballot to indicate his or her vote on the Plan, (iv) in the case of
holders of Old Series Notes, indicate in the appropriate place on the Ballot
whether he or she consents to the release of the Old Security Documents and (v)
sign and return the Ballot in accordance with the instructions set forth
thereon. ANY BALLOT THAT IS EXECUTED BY A BENEFICIAL OWNER AND DOES NOT INDICATE
A REJECTION OF THE PLAN WILL BE DEEMED AN ACCEPTANCE OF THE PLAN.
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VOTING DEADLINE; EXTENSIONS; MODIFICATIONS
The Solicitation will expire at 5:00 p.m., New York City time, on the Voting
Deadline. Except to the extent RII and GRI so determine or as permitted by the
Bankruptcy Court, Ballots or Master Ballots that are received after the Voting
Deadline will not be accepted or used by RII and GRI in connection with RII's or
GRI's request for confirmation of the Plan (or any permitted modification
thereof).
RII and GRI expressly reserve the right, at any time or from time to time,
to extend the Voting Deadline by giving oral or written notice to the
Solicitation Agent of such extension. Any extension or expiration of the Voting
Deadline will be followed as promptly as practicable by a public announcement
made through the Dow Jones News Service. There can be no assurance that RII and
GRI will exercise their right to extend the Voting Deadline. During any
extension of the Voting Deadline, all Ballots and Master Ballots previously
given will remain subject to all the terms and conditions of the Solicitation,
including the withdrawal and revocation rights specified herein.
RII and GRI expressly reserve the right to modify, at any time and from time
to time, the terms of the Solicitation or the Plan (subject to compliance with
the requirements of section 1127 of the Bankruptcy Code and to the approval of
Fidelity and TCW, so long as the funds and accounts managed by them hold in the
aggregate at least 20% of the outstanding Old Series Notes). If RII or GRI makes
a material change in the terms of the Solicitation or the Plan or if it waives a
material condition, RII and GRI will disseminate additional solicitation
materials and will extend the Solicitation, in each case to the extent required
by law. See "The Plan -- Conditions Precedent to Confirmation and Consummation
of the Plan".
AGREEMENTS UPON FURNISHING BALLOTS
The delivery of a Ballot or Master Ballot by a holder in accordance with the
procedures set forth below will constitute an agreement between such holder and
RII and GRI to accept all the terms of, and conditions to, this Solicitation.
PROCEDURE FOR VOTING ON THE PLAN
GENERAL
Under the Bankruptcy Code, for purposes of determining whether the
sufficient Acceptances have been received with respect to the Old Series Notes
(and the related GRI Guaranty), the RII Intercompany Claim, the RII Common
Stock, the GRI Common Stock or 1990 Stock Options, only those beneficial owners
of the Old Series Notes, the RII Common Stock or 1990 Stock Options as of the
Voting Record Date who vote will be counted. It is therefore important that all
such holders of the Old Series Notes, the RII Common Stock or 1990 Stock Options
vote to accept or reject the Plan. Each beneficial owner electing to vote on the
Plan should (i) carefully read the voting instructions set forth herein and in
the applicable Ballot, (ii) complete the applicable Ballot, in accordance with
the instructions set forth below, (iii) mark the Ballot to indicate his or her
vote on the Plan, (iv) in the case of holders of Old Series Notes, indicate in
the appropriate place on the Ballot whether he or she consents to the release of
the Old Security Documents and (v) sign and return the Ballot in accordance with
the instructions set forth thereon. ANY BALLOT THAT IS EXECUTED BY A HOLDER AND
DOES NOT INDICATE A REJECTION OF THE PLAN WILL BE DEEMED AN ACCEPTANCE OF THE
PLAN. RII and GRI intend to urge the Bankruptcy Court to count unmarked, but
executed Ballots as deemed acceptances of the Plan and, in the case of Ballots
from holders of Old Series Notes, consents to release and terminate the Old
Security Documents. There can be no assurance, however, that the Bankruptcy
Court will permit unmarked Ballots to be counted. Accordingly, RII and GRI urge
all persons entitled to vote to both execute their Ballots and mark whether they
accept or reject the Plan.
ANY BALLOT THAT IS EXECUTED BY A HOLDER OF OLD SERIES NOTES BUT FAILS TO
INDICATE WHETHER CONSENT TO RELEASE OF THE OLD SECURITY DOCUMENTS IS GIVEN OR
WITHHELD SHALL BE DEEMED TO BE A CONSENT TO THE TERMINATION AND RELEASE OF THE
OLD SECURITY DOCUMENTS. Failure by a beneficial owner to send a duly signed
Ballot will be deemed not to be a vote regarding the Plan.
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RII and GRI are providing copies of this Information Statement/Prospectus,
Ballots and, where appropriate, Master Ballots, to all holders of record of the
Old Series Notes (and the related GRI Guaranty endorsed thereon), the RII Common
Stock and 1990 Stock Options on the Voting Record Date. Such holders may include
brokerage firms, commercial banks, trust companies, or other nominees. If such
entities do not hold for their own account, they should provide copies of this
Information Statement/Prospectus and the appropriate Ballots to their customers
and beneficial owners and follow the procedures described below.
SOLICITATION AGENT
Hill and Knowlton, Inc. will act as Solicitation Agent in connection with
the Solicitation. Its telephone number is (212) 210-8850 (call collect). As part
of its responsibilities as Solicitation Agent, Hill and Knowlton will tabulate
all votes cast in connection with the Solicitation. All inquiries relating to
the Solicitation should be directed to Hill and Knowlton. Requests for
information or additional copies of this Information Statement/Prospectus or
Ballots also should be directed to Hill and Knowlton. All deliveries to Hill and
Knowlton in its capacity as Solicitation Agent should be directed to the address
set forth on the back cover page of this Information Statement/Prospectus.
BROKERAGE FIRMS, BANKS AND OTHER NOMINEES
Each brokerage firm that is the registered holder of Old Series Notes (and
the related GRI Guaranty) or RII Common Stock for a beneficial owner, or is a
participant in a securities clearing agency and is authorized to vote in the
name of such securities clearing agency pursuant to an omnibus proxy (as
described below) and is acting for a beneficial owner, should vote on behalf of
such beneficial owner by (i) distributing a copy of this Information
Statement/Prospectus and all appropriate Ballot(s) and a self addressed, postage
prepaid envelope to such beneficial owner, (ii) collecting a signed Ballot from
each such beneficial owner, (iii) completing a Master Ballot by compiling the
votes and other information from the Ballots collected, and (iv) transmitting
such Master Ballot to the Solicitation Agent on or before the Voting Deadline. A
proxy intermediary acting on behalf of a brokerage firm or bank may perform the
procedures outlined in the preceding sentence on behalf of such brokerage firm.
Each commercial bank or trust company that is the registered holder of Old
Series Notes (and related GRI Guarantees) or RII Common Stock for a beneficial
owner may arrange for such beneficial owner to vote by (i) executing all
appropriate Ballot(s), and (ii) sending to such beneficial owner a copy of this
Information Statement/Prospectus, such executed Ballot(s) and a stamped envelope
addressed to the Solicitation Agent to be completed by such beneficial owner and
returned to the Solicitation Agent or follow the procedures outlined in the
previous paragraph.
A beneficial owner of Old Series Notes (and beneficiary of the related GRI
Guaranty) or RII Common Stock may receive multiple mailings containing
Ballot(s), especially if such beneficial owner owns Old Series Notes or RII
Common Stock through more than one broker or bank. Each beneficial owner should
complete and return all Ballots received by it in the return envelope provided
with each such Ballot. Each beneficial owner should indicate on each Ballot the
names of all broker-dealers or other intermediaries or persons who are
registered holders of Old Series Notes (and the related GRI Guaranty) or RII
Common Stock on his behalf. Registered holders or nominees compiling Master
Ballots should include all such account information on the Master Ballot. Any
beneficial owner who has not received a Ballot should contact his brokerage firm
or nominee, or the Solicitation Agent.
BENEFICIAL OWNERS HOLDING THROUGH NOMINEES
Any beneficial owner holding Old Series Notes (and the related GRI Guaranty)
or RII Common Stock in "street name" through a brokerage firm, bank, trust
company or other nominee must vote on the Plan by following the instructions set
forth below:
1. complete and sign the Ballot (unless the Ballot has already been
signed by the bank, trust company or other nominee); and
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2. return the Ballot as promptly as possible to the addressee on the
pre-addressed, stamped envelope enclosed with the Ballot. If no
pre-addressed, postage paid envelope was enclosed, contact the Solicitation
Agent for instructions.
Any Ballot returned by a beneficial owner to a brokerage firm or proxy
intermediary will not be counted until such brokerage firm or proxy intermediary
properly completes and delivers to the Solicitation Agent a Master Ballot that
reflects such vote. Therefore, you must return your Ballot to the brokerage firm
or financial intermediary in sufficient time prior to the Voting Deadline to
permit the nominee to complete and return a Master Ballot to the Solicitation
Agent prior to the Voting Deadline.
BENEFICIAL AND RECORD OWNERS
Any beneficial owner of Old Series Notes (and the related GRI Guaranty) or
RII Common Stock who also is the record owner of such Old Series Notes or RII
Common Stock must vote on the Plan by following the instructions set forth
below:
1. complete and sign the Ballot; and
2. mail the Ballot to the Solicitation Agent as promptly as possible
using the pre-addressed, stamped envelope enclosed with the Ballot. If no
pre-addressed, postage paid envelope was enclosed, contact the Solicitation
Agent for instructions.
SECURITIES CLEARING AGENCIES
RII and GRI expect that each of the Depository Trust Company, The Midwest
Securities Trust Company and The Philadelphia Depository Trust Company, as a
nominee holder of Old Series Notes or RII Common Stock, will execute an omnibus
proxy in favor of its respective participants. As a result of such omnibus
proxies, each such participant will be authorized to vote the securities owned
by it and held in the name of such securities clearing agencies.
OTHER
If a Ballot is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person should indicate such capacity when
signing and, if requested by RII or GRI, must submit proper evidence
satisfactory to RII or GRI of authority to so act. Authorized signatories (E.G.,
custodians, trustees, etc.) should submit separate Ballots for each beneficial
owner for whom they are voting.
RII and GRI, in their sole discretion, may reject any Ballot or Master
Ballot as invalid and, therefore, decline to utilize it in connection with
seeking confirmation of the Plan by the Bankruptcy Court unless such Ballot or
Master Ballot is properly completed and timely submitted to the Solicitation
Agent on or prior to the Voting Deadline together with any other documents
required by such Ballot or Master Ballot. IN NO CASE SHOULD A BALLOT OR MASTER
BALLOT BE DELIVERED TO RII, GRI, OR THE TRUSTEE UNDER THE OLD SERIES NOTE
INDENTURE.
RII AND GRI ARE NOT AT THIS TIME REQUESTING THE DELIVERY OF, AND WILL NOT
ACCEPT, CERTIFICATES REPRESENTING OLD SERIES NOTES. PROMPTLY AFTER THE EFFECTIVE
DATE, RII WILL FURNISH ALL HOLDERS OF OLD SERIES NOTES WITH AN APPROPRIATE
LETTER OF TRANSMITTAL TO BE USED TO REMIT OLD SERIES NOTES IN EXCHANGE FOR
APPROPRIATE NEW DEBT SECURITIES, NEW EQUITY SECURITIES, EXCESS CASH, NET
RESERVED CASH, IF ANY, NET PLAN CONSUMMATION CASH, IF ANY, AND DEFERRED CASH.
THE EXISTING HOLDERS OF EQUITY INTERESTS WILL RETAIN THE CERTIFICATES
REPRESENTING RII COMMON STOCK AND THE 1990 STOCK OPTIONS, AS THE CASE MAY BE.
WAIVERS OF DEFECTS, IRREGULARITIES, ETC.
Unless otherwise directed by the Bankruptcy Court, all questions as to the
validity, form, eligibility (including time of receipt), acceptance, and
revocation or withdrawal of Ballots or Master Ballots or Acceptances will be
determined by RII and GRI, in their sole discretion, which determination will be
final and binding. RII and GRI reserve the absolute right to contest the
validity of any revocation or withdrawal. RII and GRI also reserve the right to
reject any and all Ballots or Master Ballots not in proper form, the acceptance
of which would, in the opinion of RII, GRI or their counsel, be unlawful.
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RII and GRI further reserve the right to waive any defects or irregularities or
conditions of delivery as to any particular Ballot or Master Ballot. The
interpretation (including of the Ballot or Master Ballot and the respective
instructions thereto) by RII and GRI, unless otherwise directed the Bankruptcy
Court, will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with deliveries of Ballots or Master Ballots must
be cured within such time as RII and GRI (or the Bankruptcy Court) determine.
Neither RII nor GRI nor any other person will be under any duty to provide
notification of defects or irregularities with respect to deliveries of, or
notices of revocation or withdrawal of, Ballots or Master Ballots, nor will any
of them incur any liability for failure to provide such notification. Unless
otherwise directed by the Bankruptcy Court, delivery of such Ballots or Master
Ballots will not be deemed to have been made until such irregularities have been
cured or waived. Ballots or Master Ballots previously furnished (and as to which
any irregularities have not theretofore been cured or waived) will be
invalidated.
CONSENTS TO TERMINATION AND RELEASE OF OLD SECURITY DOCUMENTS
RII is also soliciting the consents of the record holders of Old Series
Notes pursuant to the terms of the Old Series Note Indenture in order to
terminate and release the Old Security Documents under which the liens on the
property securing the Old Series Notes were granted or created. Such consents
must be evidenced by such record holder separately from their vote on the Plan.
The ballots for the holders of the Old Series Notes permit holders to give or
withhold such consent. ANY EXECUTED BALLOT WITH RESPECT TO THE PLAN RETURNED
WITHOUT AN INDICATION TO WITHHOLD SUCH CONSENT WILL BE DEEMED TO GIVE SUCH
CONSENT.
RII is soliciting these consents for the purposes of: (i) releasing the
Resorts Casino Hotel from the lien of the Old Security Documents so that it may
be encumbered to secure the RIHF Senior Facility Notes, the RIH Senior Facility
Guaranty, the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF
Junior Mortgage Notes and the RIH Junior Mortgage Guaranty; (ii) effecting
either the SIHL Sale or the PIRL Spin-Off; and (iii) releasing the Non-Operating
Real Property from the liens of the Old Security Documents. Absent a release of
the Old Security Documents through either consent or (if feasible) an
appropriate Bankruptcy Court order, the transactions contemplated by the Plan
cannot be consummated. In no event will the consents to release the Old Security
Documents be used to effectuate the termination and release of the Old Security
Documents in the absence of the confirmation and consummation of the Plan. If
RII and GRI fail to receive the Requisite Acceptances, notwithstanding receipt
of sufficient consents to release and terminate the Old Security Documents
pursuant to the Old Series Note Indenture, such consents will only be used in
the event that RII and GRI continue to pursue confirmation and consummation of
the Plan. In the event that RII and GRI elect or are required to resolicit
Acceptances of the Plan, however, they reserve the right not to resolicit with
respect to the consents to release the Old Security Documents and to use
consents received from the initial Solicitation.
WITHDRAWAL; REVOCATION RIGHTS
Ballots or Master Ballots previously delivered may be withdrawn or revoked
at any time prior to the Voting Deadline by the beneficial owner on the Voting
Record Date who completed the original Ballot or by the nominee who completed
the Master Ballot on such beneficial owner's behalf, as the case may be. Only
the person or nominee who submits a Ballot can withdraw or revoke that Ballot. A
Ballot may be revoked or withdrawn either by submitting a superseding Ballot or
by providing written notice to the Solicitation Agent. Neither RII nor GRI
intends to commence a case under chapter 11 of the Bankruptcy Code prior to the
Voting Deadline, although it reserves the right to do so in its sole discretion.
After commencement of the chapter 11 cases, withdrawal or revocation may be
effected only with the approval of the Bankruptcy Court.
Acceptances or rejections may be withdrawn or revoked prior to commencement
of the chapter 11 cases by complying with the following procedures: (a) a
beneficial owner holding Old Series Notes or RII Common Stock in "street name"
who returned his Ballot to a brokerage firm proxy intermediary or other nominee
should deliver a written notice of withdrawal or revocation to such brokerage
firm
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<PAGE>
proxy intermediary or other nominee, as the case may be; and (b) all other
beneficial owners should deliver a written notice of withdrawal or revocation to
the Solicitation Agent. To be effective, notice of revocation or withdrawal
must: (i) be received on or before the Voting Deadline by the Solicitation Agent
at its address specified on the back cover of this Information
Statement/Prospectus; (ii) specify the name of the holder of the Old Series
Notes or RII Common Stock whose vote on the Plan is being withdrawn or revoked;
(iii) contain the description of the Old Series Notes (and related GRI
Guarantees) or RII Common Stock or 1990 Stock Options as to which a vote on the
Plan is withdrawn or revoked; and (iv) be signed by the holder of the Old Series
Notes (and related GRI Guarantees) or RII Common Stock or 1990 Stock Options who
executed the Ballot reflecting the vote being withdrawn or revoked, or by the
nominee who executed the Master Ballot reflecting the vote being withdrawn or
revoked, as applicable, in each case in the same manner as the original
signature on the Ballot or Master Ballot, as the case may be. In addition to the
foregoing information, in the case of a nominee that withdraws or revokes votes
reflected on a Master Ballot, such nominee also must specify the customer
account or sequence number(s) of the beneficial owner whose vote is being
withdrawn or revoked. The foregoing procedures should also be followed with
respect to a person entitled to vote on the Plan who wishes to change (rather
than revoke or withdraw) its vote.
TERMINATION
Notwithstanding any provisions of the Solicitation, RII and GRI will not be
required to accept any Ballot or Master Ballot and may terminate or amend the
Solicitation at its option at any time on or after the date of the commencement
of the Solicitation.
FEES AND EXPENSES
The expenses of soliciting Acceptances will be borne by RII (including the
costs and expenses incurred by nominees in mailing this Information
Statement/Prospectus, Master Ballots and Ballots to impaired creditors and
equity interest holders). The principal solicitation is being made by mail;
however, additional solicitations may be made by facsimile, telephone or in
person by officers and regular employees of RII and its affiliates, who will not
receive additional compensation therefor, and by Hill and Knowlton. Arrangements
also may be made with brokerage houses and other custodians, nominees and
fiduciaries to forward the material regarding the Solicitation to the beneficial
owners of each of the Old Series Notes and the RII Common Stock. RII will
reimburse such forwarding agents for reasonable out-of-pocket expenses incurred
by them, but no compensation will be paid for their services.
SOLICITATION AGENT
Hill and Knowlton will act as Solicitation Agent in connection with the
Solicitation. Its telephone number is (212) 210-8850 (call collect). All
inquiries relating to the Solicitation should be directed to Hill and Knowlton
at such telephone number. Requests for information or additional copies of this
Information Statement/Prospectus or Ballots should be directed to Hill and
Knowlton. All deliveries to Hill and Knowlton in its capacity as Solicitation
Agent should be directed to the address set forth on the back cover page of this
Information Statement/Prospectus.
Hill and Knowlton will receive reasonable and customary compensation for
services rendered in connection with the Solicitation, will be reimbursed for
reasonable out-of-pocket expenses and will be indemnified against certain
expenses in connection therewith.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of November 30, 1993, Merv Griffin, the Chairman of the Board, owned of
record or beneficially 4,398,115 shares of RII Common Stock (approximately
21.82% of such class). Merv Griffin has informed RII that he will vote his RII
Common Stock in favor of the Plan.
As of November 30, 1993, there were 37 holders of 1990 Stock Options to
purchase 1,758,800 shares of RII Common Stock. The holders of 1990 Stock Options
to purchase 1,307,300 shares of RII
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<PAGE>
Common Stock (approximately 74% of such class), consisting of the Company's
current management and David P. Hanlon, the former Chief Executive Officer of
RII, have informed RII that they intend to vote their 1990 Stock Options in
favor of the Plan.
INTERESTS OF CERTAIN PERSONS IN THE RESTRUCTURING
The following directors and officers of RII may have, to the extent
indicated, an interest in the Restructuring.
In April 1993, RII, RIH and the Griffin Group executed the New Griffin
Services Agreement to be effective as of September 17, 1992, the termination
date of the Old Griffin Services Agreement. Merv Griffin serves as a director
and the Chairman of the Board of RII; the Griffin Group is a company controlled
by Merv Griffin. The New Griffin Services Agreement will be assumed by RII and
remain in place after the Effective Date. The New Griffin Services Agreement has
a four-year term. Under certain circumstances, however, the New Griffin Services
Agreement could remain in force up to an additional year. Pursuant to the New
Griffin Services Agreement, Mr. Griffin and the Griffin Group will promote the
operations of the Company in Atlantic City and The Bahamas. Fees have already
been paid to the Griffin Group for the first three years of the term of the New
Griffin Services Agreement. In conjunction with the negotiations among Fidelity,
TCW and the Griffin Group relating to the Griffin Group's performance under the
New Griffin Services Agreement, certain modifications to the New Griffin
Services Agreement were negotiated. As a result of these modifications, the
following will occur: (1) on or prior to the Effective Date, RII will pay
$2,310,000 to the Griffin Group for the fourth year of the New Griffin Services
Agreement by reducing the principal amount of the Griffin Group Note in an equal
amount; (2) subsequent to such payment, but no later than the Effective Date,
the Griffin Group will pay the balance of the Griffin Group Note (approximately
$3.0 million) to RII; and (3) on the Distribution Date, RII will issue to the
Griffin Group the Griffin Warrants to purchase 4,665,000 shares RII Common
Stock, or approximately 10% of the RII Common Stock on a fully diluted basis.
The Griffin Warrants will be exercisable on the Effective Date at an exercise
price of the lesser of $1.875 and the average closing price of RII Common Stock
for the 20 trading days following the Effective Date. In conjunction with the
negotiations among Fidelity, TCW and the Griffin Group, the Griffin Group
negotiated a reduction in the exercise price for the Griffin Warrants from the
original exercise price set forth in the New Griffin Services Agreement.
Mr. David Hanlon, the President and Chief Executive Officer of RII until
October 31, 1993, owns fully vested 1990 Stock Options to purchase 1,094,800
shares of RII Common Stock (or 5.15% of the outstanding shares of the RII Common
Stock assuming such options were exercised). Pursuant to the Hanlon Employment
Agreement, Mr. Hanlon is entitled to $850,000 earned under the Hanlon Employment
Agreement but not yet paid as of October 31, 1993. In addition, pursuant to the
Hanlon Termination Agreement, Mr. Hanlon is entitled to receive a total of
$2,648,656, consisting of the present value of future base salary under the
Hanlon Employment Agreement as determined under the Hanlon Termination Agreement
in the sum of $1,303,076 and $1,345,580 in respect of the performance bonuses
for fiscal years ending 1994 and 1995 payable under the Hanlon Employment
Agreement, half of which was paid on October 31, 1993 and half of which will be
paid upon the earlier of (i) the acceptance of a reorganization or
recapitalization of RII by the requisite number and amount of RII's creditors
voting on such restructuring or reorganization and (ii) April 15, 1995. In
addition, Mr. Hanlon will receive a bonus from RII in the amount of $325,000 in
connection with the reorganization or recapitalization of RII, payable prior to
any bankruptcy filing by RII. Finally, Mr. Hanlon will receive a bonus of
$300,000 upon the disposition of the Paradise Island Business. Accordingly, Mr.
Hanlon would receive a total of $625,000 in connection with the Restructuring.
The payment to be made to Mr. Hanlon with respect to the disposition of the
Paradise Island Business may be subject to the approval of the Bankruptcy Court.
Mr. Alvarez, a director of RII, is also the Chairman of Alvarez & Marsal, a
financial advisory firm which RII has retained to provide it with advice
regarding the Restructuring. For a discussion of the interests of Alvarez &
Marsal in the Restructuring, see "Agreement with Financial Advisors".
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AGREEMENTS WITH FINANCIAL ADVISORS
In October 1991, RII retained Bear Stearns as its financial advisor to
assist it in the development and analysis of financial alternatives and the
development of a long-term financial plan. In February 1992, RII's Board of
Directors also authorized the retention of two other financial advisors, DLJ and
Alvarez & Marsal, to provide additional advice.
RII retained Bear Stearns pursuant to a letter agreement, amended as of July
1, 1993. Under the Bear Stearns letter agreement, RII paid Bear Stearns an
initial cash fee of $150,000 and is obligated to pay Bear Stearns a monthly fee
of $75,000. As of June 30, 1993, RII had paid Bear Stearns fees in an aggregate
amount of $1,650,000. Pursuant to the terms of the Bear Stearns letter
agreement, RII also has agreed to pay Bear Stearns a transaction fee, which will
be payable upon the completion of the Restructuring. RII estimates that the
transaction fee payable to Bear Stearns will be approximately $1,633,000. All
monthly fees payable to Bear Stearns subsequent to July 1, 1993 are creditable
against such transaction fee. RII also has agreed to reimburse Bear Stearns for
certain out-of-pocket expenses, and to indemnify it against certain liabilities
that might arise in connection with the Restructuring.
RII's agreement with DLJ provided for RII to pay to DLJ an initial fee of
$65,000 and 100,000 shares of RII Common Stock, and monthly fees of $50,000 and
35,000 shares of RII Common Stock commencing March 1, 1992. RII paid the initial
cash fee and the cash portion of monthly fees through April 1993, at which time
the agreement was terminated. No shares of RII Common Stock have yet been issued
to DLJ pursuant to the agreement. RII also reimbursed DLJ for certain
out-of-pocket expenses, and indemnified it against certain liabilities that
might arise in connection with the Restructuring.
RII engaged Alvarez & Marsal pursuant to a letter agreement, dated March 1,
1992, as amended on September 14, 1992. Under the Alvarez & Marsal letter
agreement, RII paid Alvarez & Marsal monthly fees of $50,000 amounting to
$300,000 as of September 1, 1992, at which time RII's payment of such fees was
suspended. Pursuant to the terms of the Alvarez & Marsal letter agreement, RII
also has agreed to pay Alvarez & Marsal a transaction fee of $250,000 and
125,000 shares of RII Common Stock upon receipt of Requisite Acceptances for the
Restructuring. It is anticipated that this fee will be paid prior to the filing
of RII's and GRI's bankruptcy cases. RII also has agreed to reimburse Alvarez &
Marsal for its out-of-pocket expenses, and to indemnify it against certain
liabilities that might arise in connection with the Restructuring. The total
amount that has been paid to DLJ was $765,000, and DLJ is entitled to receive
590,000 shares of RII Common Stock.
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CAPITALIZATION OF RII
The following table sets forth the historical consolidated capitalization of
RII and its subsidiaries at September 30, 1993, and RII's pro forma
capitalization at such date after giving effect to the Restructuring.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
--------------------------
HISTORICAL PRO FORMA
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Current maturities of long-term debt:
Old Series A Notes (a)........................................................... $ 233,953
Old Series B Notes (a)........................................................... 195,336
Other............................................................................ 211 $ 81
------------ ------------
Total current maturities....................................................... 429,500 81
------------ ------------
Long-term debt:
New RIHF Mortgage Notes (b)...................................................... 116,625
New RIHF Junior Mortgage Notes (c)............................................... 30,975
RIHF Senior Facility Notes (d)...................................................
Showboat Notes (e)............................................................... 84,357 84,357
Other............................................................................ 184 15
------------ ------------
Total long-term debt........................................................... 84,541 231,972
------------ ------------
Shareholders' equity (deficit):
RII Common Stock................................................................. 202 379
RII Class B Common Stock (f).....................................................
Capital in excess of par......................................................... 102,092 133,965
Accumulated deficit.............................................................. (166,926) (129,797)
------------ ------------
Total shareholders' equity (deficit)........................................... (64,632) 4,547
------------ ------------
Total capitalization......................................................... $ 449,409 $ 236,600
------------ ------------
------------ ------------
<FN>
- ------------------------
(a) See "Description of Old Series Notes". Historical amounts are net of
unamortized discounts of $10,273,000 and $9,010,000 for the Old Series A
Notes and the Old Series B Notes, respectively.
(b) See "Description of New RIHF Mortgage Notes". Pro Forma balance is net of
unamortized discount of $8,375,000.
(c) See "Description of New RIHF Junior Mortgage Notes". Pro forma balance is
net of unamortized discount of $4,025,000.
(d) See "Description of RIHF Senior Facility Notes". Assumes no borrowings
under the RIHF Senior Facility.
(e) See "Description of Showboat Notes". Amounts are net of unamortized
discount of $20,976,000.
(f) See "Description of New Equity Securities -- Description of RII Class B
Common Stock".
</TABLE>
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CAPITALIZATION OF PIRL
The following table sets forth the historical combined capitalization at
September 30, 1993, for RIB, consolidated with its subsidiaries, and the U.S.
Paradise Island Subsidiaries. If the SIHL Sale is not consummated on the
Effective Date, the PIRL Spin-Off will be effected. The pro forma capitalization
of PIRL assumes the PIRL Spin-Off occurs. Because the PIRL Spin-Off will result
in RIB becoming a subsidiary of PIRL and other subsidiaries of PIRL acquiring
the assets and related liabilities of the U.S. Paradise Island Subsidiaries, the
pro forma capitalization presented is for PIRL consolidated with its
subsidiaries.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
------------------------
HISTORICAL PRO FORMA
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Current maturities of long-term debt.................................................. $ 130 $ 130
Note payable to affiliate (a)......................................................... 50,000 --
----------- -----------
50,130 130
----------- -----------
Long-term debt -- capitalized lease obligations......................................... 169 169
----------- -----------
Shareholders' equity:
Capital stock......................................................................... 33 50
Capital in excess of par.............................................................. 147,546 124,950
Retained earnings (accumulated deficit)............................................... (43,527) --
----------- -----------
Total shareholders' equity.......................................................... 104,052 125,000
----------- -----------
Total capitalization.............................................................. $ 154,351 $ 125,299
----------- -----------
----------- -----------
<FN>
- ------------------------
(a) Note payable to RIH to be assumed by GRI as part of the Restructuring.
</TABLE>
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ACCOUNTING TREATMENT
RII proposes to account for the Restructuring as required by Statement of
Position 90-7 "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP 90-7"). Pursuant to SOP 90-7, the New Debt Securities
will be stated at the present values of amounts to be paid, determined at
appropriate current interest rates. The difference between the carrying value of
the Old Series Notes and the sum of the fair values of the items exchanged
therefor (I.E., (i) Excess Cash, (ii) New RIHF Mortgage Notes, (iii) New RIHF
Junior Mortgage Notes and RII Class B Common Stock Units, (iv) SIHL Series A
Shares, the SIHL Aggregate Cash Purchase Price and non-transferable rights to
receive payments from Net Reserved Cash (or if the SIHL Sale is not consummated
on the Effective Date, PIRL Ordinary Shares), (v) RII Common Stock and (vi)
non-transferable rights to receive payments from Net Plan Consummation Cash and
Deferred Cash) will be recognized as an extraordinary item, along with the tax
effects of the exchange. In addition, the difference between the carrying values
and the fair values of the equity and/or assets transferred in clause (iv) above
will be recognized in earnings from operations.
152
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial information presented below for RII, RIH
and the PIRL Group was derived from the consolidated financial statements of RII
and RIH and the combined financial statements of the PIRL Group and should be
read in conjunction with such consolidated or combined financial statements, the
notes thereto and the other financial information included herein. Information
presented at September 30, 1993 and for the three quarters ended September 30,
1992 and 1993 is derived from unaudited consolidated or combined financial
statements of the respective entities. In the opinion of management, such
unaudited financial statements include all adjustments (consisting solely of
normal recurring adjustments) necessary for a fair presentation. The results for
the three quarters ended September 30, 1993 are not necessarily indicative of
the results to be expected for the year ending December 31, 1993.
RESORTS INTERNATIONAL, INC.
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
FOR THE THREE
1988 1990 QUARTERS ENDED
-------------------------- ---------------------- SEPTEMBER 30,
OPERATING INFORMATION THROUGH FROM THROUGH FROM --------------------
(NOTE A) NOVEMBER 14 NOVEMBER 15 1989 AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
- ----------------------- ------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues
(Note B).............. $ 407,145 $ 48,826 $ 451,254 $ 293,972 $ 129,591 $ 418,243 $ 436,934 $ 330,254 $ 337,858
------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
Earnings (loss) from
operations (Note B)... $ 30,907 $ (2,490) $ (7,850) $ 13,540 $ (1,214) $ 16,036 $ 21,502 $ 20,107 $ 20,680
Recapitalization costs
(Note C).............. (7,291) (187,018) (2,848) (2,337) (4,879)
Write-off of
goodwill.............. (181,311)
Net gain from purchases
of subordinated
debentures (Note D)... 4,149
Loss on sale of assets
and termination fee
(Note E).............. (335,690)
Other income
(deductions), net
(Note F).............. (65,895) (15,262) (114,286) 1,884 (12,317) (58,438) (73,456) (54,993) (73,171)
------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
Loss before income
taxes and
extraordinary item.... (370,678) (17,752) (306,589) (171,594) (13,531) (42,402) (54,802) (37,223) (57,370)
Income tax benefit
(expense) (Note G).... 7,000 3,700 831 1,348 (1,000)
------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
Loss before
extraordinary item.... (363,678) (17,752) (302,889) (171,594) (13,531) (41,571) (53,454) (37,223) (58,370)
Extraordinary item
(Note C).............. 429,809
------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
Net earnings (loss).... $ (363,678) $ (17,752) $(302,889) $ 258,215 $ (13,531) $ (41,571) $ (53,454) $ (37,223) $ (58,370)
------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
Net loss per share
(Note H).............. $ (.68) $ (2.07) $ (2.65) $ (1.85) $ (2.90)
----------- --------- --------- --------- ---------
----------- --------- --------- --------- ---------
Ratio of earnings to
fixed charges
(Note I).............. -- -- -- -- -- -- -- -- --
------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------------ AT SEPTEMBER 30,
BALANCE SHEET INFORMATION (NOTE A) 1988 1989 1990 1991 1992 1993
- -------------------------------------- ---------- --------- --------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Total assets.......................... $1,034,578 $ 745,976 $ 568,746 $ 567,890 $ 568,950 $ 586,632
Current maturities of long-term debt
(Note J)............................. 14,516 1,269 1,528 1,571 828 429,500
Long-term debt, excluding current
maturities (Note J).................. 785,461 858,931 341,069 392,667 460,712 84,541
Shareholders' equity (deficit)........ 32,248 (260,641) 77,041 36,099 (17,262) (64,632)
</TABLE>
153
<PAGE>
NOTES TO RII SELECTED HISTORICAL FINANCIAL DATA
NOTE A: Effective November 15, 1988 Griffco acquired RII through a series
of transactions. These transactions were accounted for as a purchase, and
according to an accounting practice known as "push-down" accounting, RII
adjusted its net assets to reflect the amount of Griffco's investment in RII. In
doing so, RII's consolidated assets and liabilities were adjusted to their
estimated fair values.
During 1989, the Old Debtors filed consents to involuntary petitions or
filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code.
The effects of the bankruptcy proceedings reflected in the selected financial
data for periods during which the Company operated subject to the jurisdiction
of the New Jersey bankruptcy court are (i) the Company stopped accruing interest
on its previously outstanding public debt issues in November and December 1989,
(ii) the Company stopped amortizing debt issuance costs on the dates the
respective interest accruals ceased and (iii) the Company included in long-term
debt at December 31, 1989 sinking funds due in 1990 and accrued interest on
public debt stayed in bankruptcy proceedings.
Note 2 of Notes to Consolidated Financial Statements of RII describes
another change in entity and related presentation resulting from the application
of "fresh start" accounting in connection with the Company's emergence from
bankruptcy proceedings in 1990.
Changes in operations during the past five years include the following:
operations of Trump Air ceased in November 1988. Amphibious airline operation
was sold in December 1990; Security consulting service operations were sold in
1990 and 1991.
NOTE B: Operating revenues for 1988 include the sales of various
residential lots in The Bahamas for net proceeds of $1,520,000. Earnings from
operations for 1988 include a net gain of $1,192,000 on those sales.
Operating revenues for 1989 include the sales of various parcels of vacant
land in Atlantic City and The Bahamas for net proceeds of $5,053,000. Earnings
from operations for 1989 include a net loss of $317,000 on those sales.
Operating revenues for 1990 include the sales of various parcels of vacant
land in The Bahamas for net proceeds of $3,933,000. Earnings from operations for
1990 include gains of $247,000 on those sales.
Operating revenues for 1992 include the sale of a residential lot in The
Bahamas for net proceeds of $213,000. Earnings from operations for 1992 include
a net loss of $17,000 on that sale.
NOTE C: See Note 2 of Notes to Consolidated Financial Statements of RII for
a discussion of these items in 1990.
NOTE D: The 1989 net gain from purchases of subordinated debentures
resulted from RII's purchases of $13,528,000 of its subordinated debentures to
satisfy sinking fund requirements.
NOTE E: Includes a provision for the loss of $275,000,000 on the sale to
affiliates of Donald Trump of the Taj Mahal, the Steel Pier, certain helicopters
and associated assets, certain real property adjacent to the Taj Mahal site and
certain other assets. Also includes a provision of $60,690,000 for a fee to
terminate the ten-year Comprehensive Services Agreement with the Trump Hotel
Corporation.
NOTE F: Includes interest income, interest expense net of capitalized
interest, and amortization of debt discount and issuance costs. For the periods
through November 14 and from November 15, 1988, $12,867,000 and $79,000,
respectively, of interest was capitalized. In 1989 $99,000 of interest was
capitalized.
NOTE G: For the period through November 14, 1988 the Company had Federal
and state net operating losses for financial reporting purposes. The tax benefit
relating to these net operating losses for this period was recognized for
financial reporting purposes by reducing the deferred tax liability. The Company
adopted Statement of Financial Accounting Standards No. 96, "Accounting For
Income
154
<PAGE>
Taxes", ("SFAS 96") effective November 15, 1988. For the period from November
15, 1988 the Company also generated Federal and state net operating losses;
however, pursuant to the accounting method prescribed in SFAS 96, no tax benefit
was recorded for that period.
For the year 1989 the Company had net operating losses for purposes of
Federal and state income taxes. To the extent the carryforward of these net
operating losses reduced the existing deferred tax liability, it resulted in a
tax benefit for the year. The write-off of $181,311,000 of goodwill in 1989 was
a non-deductible item for income tax purposes.
See Note 13 of Notes to Consolidated Financial Statements of RII for
discussion of income taxes for 1990, 1991 and 1992, and Note 17 for discussion
of income taxes for the three quarters ended September 30, 1993.
NOTE H: See Note 1 of Notes to Consolidated Financial Statements of RII for
discussion of net loss per share of RII Common Stock.
NOTE I: The ratios of earnings to fixed charges were computed by dividing
earnings available for fixed charges (earnings before income taxes and
extraordinary item, adjusted for interest expense, amortization of debt discount
and expense and one-third of rent expense) by fixed charges. Fixed charges
include interest expense, amortization of debt discount and expense, capitalized
interest and one-third of rent expense. Earnings were insufficient to cover
fixed charges by $383,545,000 for the period through November 14, 1988;
$17,831,000 for the period from November 15, 1988; $306,688,000 for 1989;
$171,594,000 for the period through August 31, 1990; $13,531,000 for the period
from September 1, 1990; $42,402,000 for 1991; $54,802,000 for 1992; $37,223,000
for the three quarters ended September 30, 1992; and $57,370,000 for the three
quarters ended September 30, 1993.
NOTE J: Net of unamortized discounts.
NOTE K: RII has not paid any dividends on its capital stock during the
periods presented.
155
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
(IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------
FOR THE THREE
1988 1990 QUARTERS ENDED
--------------------------- ---------------------- SEPTEMBER 30,
OPERATING INFORMATION THROUGH FROM NOVEMBER THROUGH FROM --------------------
(NOTE A) NOVEMBER 14 15 1989 AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
- ----------------------- ------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues..... $ 246,716 $ 27,464 $ 255,054 $ 158,805 $ 76,216 $ 247,474 $ 262,740 $ 203,080 $ 208,814
------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
Earnings (loss) from
operations............ $ 20,985 $ 189 $ (7,286) $ 3,449 $ 2,304 $ 14,819 $ 21,049 $ 19,421 $ 15,805
Recapitalization costs
(Note B).............. (2,430) (119,804) (874) (704) (1,580)
Write-off of
goodwill.............. (105,161)
Termination fee (Note
C).................... (35,690)
Affiliated bad debt
write-off (Note B).... (98,983)
Other income
(deductions), net
(Note D).............. (30,080) (4,142) (37,565) 5,209 2,696 6,942 7,181 5,331 5,441
------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
Earnings (loss) before
income taxes and
extraordinary item.... (44,785) (3,953) (152,442) (210,129) 5,000 21,761 27,356 24,048 19,666
Income tax benefit
(expense) (Note E).... 1,600 3,400 (8,704) (10,942) (9,620) (400)
------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
Earnings (loss) before
extraordinary item.... (44,785) (2,353) (149,042) (210,129) 5,000 13,057 16,414 14,428 19,266
Extraordinary item
(Note B).............. (17,335)
------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
Net earnings (loss).... $ (44,785) $ (2,353) $(149,042) $(227,464) $ 5,000 $ 13,057 $ 16,414 $ 14,428 $ 19,266
------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
Ratio of earnings to
fixed charges
(Note F).............. -- -- -- -- 14.2 15.5 21.5 24.3 23.3
------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------------------------------------- AT SEPTEMBER 30,
BALANCE SHEET INFORMATION (NOTE A) 1988 1989 1990 1991 1992 1993
- -------------------------------------- --------- --------- --------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Total assets.......................... $ 545,463 $ 414,608 $ 221,193 $ 235,235 $ 250,636 $ 275,351
Current maturities of notes payable to
affiliate and other long-term debt... 770 482 1,044 958 643 325,081
Notes payable to affiliate and
other long-term debt, excluding
current maturities................... 325,000 356,953 326,787 326,539 325,904 15
Shareholder's equity (deficit)........ 142,677 (6,365) (193,829) (180,772) (164,358) (145,092)
</TABLE>
156
<PAGE>
NOTES TO RIH SELECTED HISTORICAL FINANCIAL DATA
NOTE A: Effective with Griffco's purchase of RII on November 15, 1988, and
according to an accounting practice known as "push-down" accounting, RIH
adjusted its net assets to reflect its portion of the cost of Griffco's
investment in RII. In doing so, RIH's assets and liabilities were adjusted to
their estimated fair values.
At the end of 1989, when the Old Debtors entered bankruptcy and stopped
accruing interest on their public debt, RIH stopped accruing interest on its
affiliated notes payable, the terms of which mirrored the terms of certain of
the public debt. Also at that time RIH stopped amortizing related debt issuance
costs. At December 31, 1989, accrued interest on RIH's affiliated notes payable
is included in long-term, rather than current, liabilities.
Note 2 of Notes to Consolidated Financial Statements of RIH describes
another change in entity and related presentation resulting from the application
of "fresh start" accounting in connection with RII's emergence from bankruptcy
proceedings in 1990.
NOTE B: See Note 2 of Notes to Consolidated Financial Statements of RIH for
discussion of these items in 1990.
NOTE C: Represents RIH's allocated portion of the fee paid to terminate the
Comprehensive Services Agreement between RII and the Trump Hotel Corporation.
NOTE D: Includes interest income, interest expense and amortization of debt
discount and issuance costs.
NOTE E: For the period through November 14, 1988, RIH had an agreement with
RII whereby RIH provided for Federal and state income taxes using a combined
rate of 40% except for material transactions which, under then existing tax
laws, would be subject to a significantly different combined tax rate. Such
transactions were separately tax effected using appropriate tax rates. Pursuant
to this agreement, no tax benefits were allocated to RIH.
For the period from November 15, 1988 and the year ended December 31, 1989,
RIH accounted for income taxes under the liability method prescribed by SFAS 96.
Also, effective November 15, 1988 RIH entered into a Tax Sharing Agreement among
Griffco, RII and another subsidiary of RII, pursuant to which RIH was liable to
Griffco for the amount of Federal income taxes calculated on a separate return
basis, and the tax benefit for that period was calculated on that basis.
See Note 11 of Notes to Consolidated Financial Statements of RIH herein for
discussion of income taxes for 1990, 1991 and 1992, and Note 14 for discussion
of income taxes for the three quarters ended September 30, 1993.
NOTE F: The ratios of earnings to fixed charges were computed by dividing
earnings available for fixed charges (earnings before income taxes and
extraordinary item, adjusted for interest expense, amortization of debt discount
and expense and one-third of rent expense) by fixed charges. Fixed charges
include interest expense, amortization of debt discount and expense and
one-third of rent expense. Earnings were insufficient to cover fixed charges by
$44,785,000 for the period through November 14, 1988; $3,953,000 for the period
from November 15, 1988; $152,442,000 for 1989; and $210,129,000 for the period
through August 31, 1990.
157
<PAGE>
PIRL GROUP
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1988 1990
--------------------------- -------------------------
OPERATING INFORMATION THROUGH FROM THROUGH FROM
(NOTE A) NOVEMBER 14 NOVEMBER 15 1989 AUGUST 31 SEPTEMBER 1 1991 1992
- ------------------------------ ------------ ------------ -------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues (Note B)... $ 152,126 $ 20,117 $184,045 $ 129,413 $ 50,937 $163,216 $166,381
------------ ------------ -------- ---------- ------------ -------- --------
------------ ------------ -------- ---------- ------------ -------- --------
Earnings (loss) from
operations (Note B).......... $ 15,286 $ (1,636) $ (1,828) $ 8,005 $ (6,163) $ (5,787) $ (5,667)
Recapitalization costs (Note
C)........................... (2,430) (41,270) (1,099)
Affiliated bad debt write-off
(Note C)..................... (2,251)
Write-off of goodwill......... (76,151)
Loss on sale of assets and
termination fee (Note D)..... (25,537)
Other income (deductions), net
(Note E)..................... 618 (459) (4,142) (3,848) (2,092) (6,612) (6,491)
------------ ------------ -------- ---------- ------------ -------- --------
Net loss...................... $ (9,633) $ (2,095) $(84,551) $ (39,364) $ (8,255) $(12,399) $(13,257)
------------ ------------ -------- ---------- ------------ -------- --------
------------ ------------ -------- ---------- ------------ -------- --------
<CAPTION>
FOR THE THREE
QUARTERS ENDED
SEPTEMBER 30,
OPERATING INFORMATION ------------------
(NOTE A) 1992 1993
- ------------------------------ -------- --------
<S> <C> <C>
Operating revenues (Note B)... $121,329 $123,016
-------- --------
-------- --------
Earnings (loss) from
operations (Note B).......... $ (5,944) $ (3,091)
Recapitalization costs (Note
C)........................... (929) (1,719)
Affiliated bad debt write-off
(Note C).....................
Write-off of goodwill.........
Loss on sale of assets and
termination fee (Note D).....
Other income (deductions), net
(Note E)..................... (4,835) (4,806)
-------- --------
Net loss...................... $(11,708) $ (9,616)
-------- --------
-------- --------
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------------------------------------- AT SEPTEMBER 30,
BALANCE SHEET INFORMATION (NOTE A) 1988 1989 1990 1991 1992 1993
- ---------------------------------------- --------- --------- --------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Total assets............................ $ 382,710 $ 303,818 $ 252,066 $ 237,498 $ 227,676 $ 211,528
Long-term debt.......................... 319 671 1,153 457 269 169
Shareholders' equity.................... 271,494 186,943 139,324 126,925 113,668 104,052
</TABLE>
NOTES TO PIRL GROUP SELECTED HISTORICAL FINANCIAL DATA
NOTE A: Effective with Griffco's purchase of RII on November 15, 1988, and
according to an accounting practice known as "push-down" accounting, the PIRL
Group adjusted its net assets to reflect its portion of the cost of Griffco's
investment in RII. In doing so, the PIRL Group's assets and liabilities were
adjusted to their estimated fair values.
Note 2 of Notes to Combined Financial Statements of PIRL Group describes
another change in entity and related presentation resulting from the application
of "fresh start" accounting in connection with RII's emergence from bankruptcy
proceedings in 1990.
Changes in operations during the past five years include the following:
PIA's Dash 7 service commenced in March 1989 and PIA's amphibious airline
operation was sold in December 1990.
NOTE B: Operating revenues for 1988 include the sale of various residential
lots in The Bahamas for net proceeds of $1,520,000. Earnings from operations for
1988 include a net gain of $1,192,000 on those sales.
Operating revenues for 1989 include the sales of various parcels of vacant
land in The Bahamas for net proceeds of $733,000. Earnings from operations for
1989 include a net gain of $668,000 on those sales.
Operating revenues for 1990 include the sales of various parcels of vacant
land in The Bahamas for net proceeds of $3,933,000. Earnings from operations for
1990 include gains of $247,000 on those sales.
Operating revenues for 1992 include the sale of a residential lot in The
Bahamas for net proceeds of $213,000. Earnings from operations for 1992 include
a net loss of $17,000 on that sale.
NOTE C: See Note 2 of Notes to Combined Financial Statements of PIRL Group
for a discussion of these items in 1990.
NOTE D: This includes $25,000,000 which represents PIRL Group's allocated
portion of the fee paid to terminate the Comprehensive Services Agreement
between RII and the Trump Hotel Corporation.
NOTE E: Includes interest income and interest expense, net of capitalized
interest. For the period from November 15, 1988, $79,000 of interest was
capitalized. In 1989 $99,000 of interest was capitalized.
158
<PAGE>
PRO FORMA FINANCIAL DATA
Set forth below is certain unaudited pro forma financial information for
RII, RIH and PIRL. The pro forma balance sheet information as of September 30,
1993 gives effect to the Restructuring as if it occurred on that date. The pro
forma statements of operations information for the year ended December 31, 1992
and the three quarters ended September 30, 1993 gives effect to the
Restructuring as if it occurred on January 1, 1992. However, the pro forma
statements of operations information excludes the gains (losses) resulting from
the Restructuring and the costs associated therewith. The unaudited pro forma
information is not necessarily indicative of future results or what the
respective entities' financial position or results of operations would actually
have been had the transactions occurred on the dates indicated. Such information
should not be used as a basis to project results for any future period.
RIHF
Pro forma financial statements are not presented for RIHF due to its recent
incorporation and lack of activity to date. Pursuant to the Restructuring, RIHF
is to have notes receivable from RIH (the RIH Promissory Note and the RIH Junior
Promissory Note) in amounts equal to its notes payable balance for the New RIHF
Mortgage Notes and the New RIHF Junior Mortgage Notes. Also, RIHF is to have
interest income from the notes receivable from RIH in an amount equal to the
interest expense on its notes payable. RIHF is not expected to have any other
assets or liabilities or engage in any transactions subsequent to the
Restructuring except to the extent that RIHF draws upon the RIHF Senior
Facility. If RIHF does draw upon the RIHF Senior Facility, RIHF will have as
assets notes receivable from RIH (the RIH Senior Facility Note) in amounts equal
to its notes payable balance pursuant to the RIHF Senior Facility (the RIHF
Senior Facility Notes), and have interest income from such notes receivable in
an amount equal to the interest expense on its notes payable.
159
<PAGE>
RESORTS INTERNATIONAL, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
-----------------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------------- -----------
<S> <C> <C> <C>
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents........................................... $ 71,026 $ 1,211(a) $ 20,000
3,008(b)
(45,245)(c)
(10,000)(e)
Restricted cash equivalents......................................... 8,076 (1,211)(a) 1,372
(1,099)(c)
(4,394)(d)
Receivables, net.................................................... 13,961 (7,380)(c) 6,581
Note receivable from related party.................................. 2,310 (2,310)(b) 0
Inventories......................................................... 8,484 (7,020)(c) 1,464
Prepaid expenses.................................................... 13,492 2,310(b) 11,190
(3,406)(c)
(1,206)(e)
----------- ----------------- -----------
Total current assets.............................................. 117,349 (76,742) 40,607
Note receivable from related party.................................... 3,008 (3,008)(b) 0
Property and equipment, net........................................... 454,055 (176,606)(c) 277,449
Deferred charges and other assets..................................... 12,220 (1,332)(c) 10,888
----------- ----------------- -----------
$ 586,632 $ (257,688) $ 328,944
----------- ----------------- -----------
----------- ----------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt, net........................... $ 429,500 $ (429,419)(c) $ 81
Accounts payable and accrued liabilities............................ 83,223 (40,471)(c) 38,344
(3,520)(d)
(888)(e)
----------- ----------------- -----------
Total current liabilities......................................... 512,723 (474,298) 38,425
----------- ----------------- -----------
Long-term debt, net................................................... 84,541 147,431(c) 231,972
----------- ----------------- -----------
Deferred income taxes................................................. 54,000 54,000
----------- -----------
Shareholders' equity (deficit):
Common stock........................................................ 202 170(c) 379
7(e)
Capital in excess of par............................................ 102,092 30,815(c) 133,965
1,058(e)
Accumulated deficit................................................. (166,926) 49,386(c) (129,797)
(874)(d)
(11,383)(e)
----------- ----------------- -----------
Total shareholders' equity (deficit).............................. (64,632) 69,179 4,547
----------- ----------------- -----------
$ 586,632 $ (257,688) $ 328,944
----------- ----------------- -----------
----------- ----------------- -----------
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet of RII.
160
<PAGE>
RESORTS INTERNATIONAL, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE THREE QUARTERS ENDED
DECEMBER 31, 1992 SEPTEMBER 30, 1993
------------------------------------------ ---------------------------------------------
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
Revenues:
Casino............................ $ 299,900 $ (66,120)(f) $ 233,780 $ 236,488 $(48,685)(f) $187,803
Rooms............................. 39,001 (30,235)(f) 8,766 27,992 (22,622)(f) 5,370
Food and beverage................. 48,907 (32,851)(f) 16,056 35,933 (23,593)(f) 12,340
Other casino/hotel revenues....... 22,028 (17,890)(f) 4,138 17,713 (14,412)(f) 3,301
Other operating revenues.......... 19,072 (19,072)(f) 0 13,704 (13,704)(f) 0
Real estate related............... 8,026 (213)(f) 7,813 6,028 6,028
---------- ------------- ---------- ---------- ----------- ------------
436,934 (166,381) 270,553 337,858 (123,016) 214,842
---------- ------------- ---------- ---------- ----------- ------------
Expenses:
Casino............................ 176,119 (48,272)(f) 127,847 141,600 (36,587)(f) 105,013
Rooms............................. 11,799 (8,217)(f) 3,582 8,064 (5,562)(f) 2,502
Food and beverage................. 42,819 (25,161)(f) 17,658 31,332 (17,902)(f) 13,430
Other casino/hotel operating
expenses......................... 64,654 (31,373)(f) 33,281 49,995 (24,247)(f) 25,748
Other operating expenses.......... 15,549 (15,549)(f) 0 11,122 (11,122)(f) 0
Selling, general and
administrative................... 73,262 (26,806)(f) 46,456 53,835 (18,319)(f) 35,516
Provision for doubtful
receivables...................... 4,047 (2,633)(f) 1,414 2,284 (1,748)(f) 536
Depreciation...................... 25,322 (13,792)(f) 11,530 20,942 (10,612)(f) 10,330
Real estate related............... 1,599 (230)(f) 1,369 1,114 1,114
Unallocated corporate expense..... 262 (15)(f) 1,806 (3,110) (8)(f) (1,822)
5,284(g) 3,596(g)
(3,725)(h) (2,300)(h)
---------- ------------- ---------- ---------- ----------- ------------
415,432 (170,489) 244,943 317,178 (124,811) 192,367
---------- ------------- ---------- ---------- ----------- ------------
Earnings from operations............ 21,502 4,108 25,610 20,680 1,795 22,475
Other income (deductions):
Interest income................... 4,969 6,391(f) 4,610 2,485 4,772(f) 2,194
(6,750)(i) (5,063)(i)
Interest expense.................. (40,856) 100(f) (25,999) (38,336) 34(f) (19,550)
32,488(j) 32,050(j)
(17,731)(k) (13,298)(k)
Amortization of debt discount..... (37,569) 35,745(j) (2,553) (37,320) 35,811(j) (2,113)
(729)(k) (604)(k)
Recapitalization costs............ (2,848) 1,099(f) 0 (4,879) 1,719(f) 0
1,749(l) 3,160(l)
---------- ------------- ---------- ---------- ----------- ------------
Earnings (loss) before income
taxes.............................. (54,802) 56,470 1,668 (57,370) 60,376 3,006
Income tax benefit (expense)........ 1,348 1,348 (1,000) (1,000)
---------- ------------- ---------- ---------- ----------- ------------
Net earnings (loss)................. $ (53,454) $ 56,470(m) $ 3,016 $ (58,370) $60,376(m) $ 2,006
---------- ------------- ---------- ---------- ----------- ------------
---------- ------------- ---------- ---------- ----------- ------------
Net earnings (loss) per share....... $ (2.65) $ .08 $ (2.90) $ .05
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
Weighted average number of shares
outstanding........................ 20,146 37,886(n) 20,157 37,897(n)
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
Ratio of earnings to fixed
charges............................ -- 1.1 -- 1.1
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
</TABLE>
See Notes to Pro Forma Consolidated Statements of Operations of RII.
161
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(a) Reflects the reclassification of the balance of the collateral account for
the Old Series Notes from restricted cash equivalents to non-restricted cash
and cash equivalents.
(b) Reflects (i) prepayment of fees due Griffin Group through September 17, 1994
pursuant to the New Griffin Services Agreement by application of such amount
as a reduction of the Griffin Group Note balance and (ii) collection of the
remaining balance of the Griffin Group Note.
(c) Reflects the exchange, net of related tax effects, of the Old Series Notes
for the following:
(i) $125,000,000 principal amount of New RIHF Mortgage Notes;
(ii) $35,000,000 principal amount of New RIHF Junior Mortgage Notes, and
35,000 shares of RII Class B Common Stock to be issued therewith;
(iii) Excess Cash;
(iv) 17,025,000 shares of RII Common Stock, which will approximate 40% of
the outstanding RII Common Stock after giving effect to the
Restructuring, assuming the Griffin Warrants are exercised; and
(v) either the SIHL Aggregate Cash Purchase Price and the SIHL Series A
Shares or, if the SIHL Sale is not consummated on the Effective Date,
the PIRL Ordinary Shares. As none of these items are reflected in the
historical consolidated balance sheet of RII at September 30, 1993, the
pro forma adjustments recording this component of the exchange reflect
the elimination of balances of the PIRL Group, after adjustment of its
working capital to $12,000,000, of which cash is a minimum of
$5,000,000. The equity and/or assets of members of the PIRL Group are to
be purchased by SIHL in the SIHL Sale, or transferred to PIRL through
the PIRL Spin-Off.
(d) Reflects payment of expenses of the Litigation Trust and distribution of its
remaining restricted cash balance to holders of Old Series Notes. Also
reflects elimination of liability for Litigation Trust obligations.
(e) Reflects the write-off of prepaid recapitalization costs and settlement of
other recapitalization costs through cash payments and the issuance of
715,000 shares of RII Common Stock, 590,000 of which were accrued for at
September 30, 1993.
162
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(f) Reflects the elimination of operating results of PIRL Group.
(g) Reflects the elimination of the management fee charged to PIRL Group by RII.
Such fee is based on 3% of certain PIRL Group gross revenues. Assumes no
fees earned by RII pursuant to the Interim Management Agreement.
(h) Reflects the elimination of costs incurred by RII for services provided to
the PIRL Group including accounting, data processing and other support
services.
(i) Reflects the elimination of interest income on RIH's $50,000,000 note
receivable from RIB which is to be canceled pursuant to the terms of the
Restructuring.
(j) Reflects the elimination of interest expense and amortization of debt
discount on the Old Series Notes.
(k) Reflects interest expense and amortization of debt discount on the New RIHF
Mortgage Notes and the New RIHF Junior Mortgage Notes.
(l) Reflects the elimination of recapitalization costs incurred in connection
with the Restructuring.
(m) The pro forma adjustments (f) through (l) affecting RII's consolidated
earnings do not include the gains (losses) resulting from the Restructuring
and the costs associated therewith. Assuming the Restructuring was effective
September 30, 1993, the operating loss on the Restructuring, which results
from the difference between the carrying value of the PIRL Group and its
fair value, would amount to approximately $65,000,000. For purposes of this
computation, fair value was estimated based on the proposed terms of the
SIHL Sale. Also assuming the Restructuring was effective on that date, the
extraordinary gain on the Restructuring would amount to approximately
$123,000,000.
(n) Reflects (i) the issuance of 715,000 shares of RII Common Stock to financial
advisers in settlement of certain recapitalization costs and (ii) the
issuance of 17,025,000 shares of RII Common Stock to holders of the Old
Series Notes, which will approximate 40% of the outstanding RII Common Stock
after giving effect to the Restructuring, assuming the Griffin Warrants are
exercised.
163
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
---------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ---------------- -----------
<S> <C> <C> <C>
(IN THOUSANDS OF DOLLARS)
ASSETS
Current assets:
Cash and cash equivalents........................................... $ 30,820 $ (15,820)(a) $ 15,000
Receivables, net.................................................... 5,682 5,682
Interest receivable from affiliate.................................. 2,813 (2,813)(b) --
Note receivable from affiliate...................................... 50,000 (50,000)(b) --
Inventories......................................................... 1,464 1,464
Prepaid expenses.................................................... 7,260 2,310(c) 9,570
----------- ---------------- -----------
Total current assets.............................................. 98,039 (66,323) 31,716
Property and equipment, net........................................... 166,424 166,424
Deferred charges and other assets..................................... 10,888 10,888
----------- ---------------- -----------
$ 275,351 $ (66,323) $ 209,028
----------- ---------------- -----------
----------- ---------------- -----------
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt................................ $ 81 $ 81
Accounts payable and accrued liabilities............................ 24,622 24,622
Notes payable to affiliate -- RIH Notes............................. 325,000 $ (325,000)(d) --
Due to parent company............................................... 51,325 2,310(c) --
(53,635)(e)
----------- ---------------- -----------
Total current liabilities......................................... 401,028 (376,325) 24,703
----------- ---------------- -----------
Notes payable to affiliate -- RIH Promissory Note and RIH Junior
Promissory Note, net................................................. 147,600(e) 147,600
---------------- -----------
Other long-term debt.................................................. 15 15
----------- -----------
Deferred income taxes................................................. 19,400 19,400
----------- -----------
Shareholder's equity (deficit):
Common stock........................................................ 1,000(d) 1,000
Excess of liabilities over assets at August 31, 1990
reorganization..................................................... (198,829) (198,829)
Capital in excess of par............................................ (15,820)(a) 215,139
(52,813)(b)
324,000(d)
(40,228)(e)
Retained earnings................................................... 53,737 (53,737)(e) --
----------- ---------------- -----------
Total shareholder's equity (deficit).............................. (145,092) 162,402 17,310
----------- ---------------- -----------
$ 275,351 $ (66,323) $ 209,028
----------- ---------------- -----------
----------- ---------------- -----------
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet of RIH.
164
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE THREE QUARTERS ENDED
DECEMBER 31, 1992 SEPTEMBER 30, 1993
----------------------------------------- -----------------------------------------
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
----------- --------------- ----------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT RATIOS)
Revenues:
Casino.................. $ 233,780 $ 233,780 $ 187,803 $ 187,803
Rooms................... 8,766 8,766 5,370 5,370
Food and beverage....... 16,056 16,056 12,340 12,340
Other casino/hotel
revenues............... 4,138 4,138 3,301 3,301
----------- --------------- ----------- ----------- --------------- -----------
262,740 262,740 208,814 208,814
----------- --------------- ----------- ----------- --------------- -----------
Expenses:
Casino.................. 127,847 127,847 105,013 105,013
Rooms................... 3,582 3,582 2,502 2,502
Food and beverage....... 17,658 17,658 13,430 13,430
Other casino/hotel
operating expenses..... 33,281 33,281 25,748 25,748
Selling, general and
administrative......... 46,507 46,507 35,516 35,516
Provision for doubtful
receivables............ 1,414 1,414 536 536
Depreciation............ 11,402 11,402 10,264 10,264
----------- --------------- ----------- ----------- --------------- -----------
241,691 241,691 193,009 193,009
----------- --------------- ----------- ----------- --------------- -----------
Earnings from
operations............... 21,049 21,049 15,805 15,805
Other income (deductions):
Interest income......... 7,576 $ (6,750)(f) 826 5,631 $ (5,063)(f) 568
Interest expense........ (395) (17,731)(g) (18,126) (190) (13,298)(g) (13,488)
Amortization of debt
discount............... (729)(g) (729) (604)(g) (604)
Recapitalization
costs.................. (874) 874(h) -- (1,580) 1,580(h) --
----------- --------------- ----------- ----------- --------------- -----------
Earnings (loss) before
income taxes............. 27,356 (24,336) 3,020 19,666 (17,385) 2,281
Income tax expense........ (10,942) 10,942(i) -- (400) (400)
----------- --------------- ----------- ----------- --------------- -----------
Net earnings (loss)....... $ 16,414 $ (13,394) $ 3,020 $ 19,266 $ (17,385) $ 1,881
----------- --------------- ----------- ----------- --------------- -----------
----------- --------------- ----------- ----------- --------------- -----------
Ratio of earnings to fixed
charges.................. 21.5 1.2 23.3 1.2
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See Notes to Pro Forma Consolidated Statements of Operations of RIH.
165
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(a) Reflects the distribution to GRI of cash not needed for current operations.
GRI, in turn, is to distribute these funds to RII for its distribution of
Excess Cash to holders of Old Series Notes.
(b) Reflects (i) the assumption by GRI of RIB's note payable to RIH and accrued
interest thereon and (ii) RIH's distribution to GRI of such note and accrued
interest as a return of surplus.
(c) Reflects prepayment of fees due Griffin Group through September 17, 1994
pursuant to the New Griffin Services Agreement by application of such amount
as a reduction of the Griffin Group Note balance receivable by RII.
(d) Reflects GRI's exchange of the RIH Notes for RIH's issuance to GRI of
999,900 shares of RIH common stock, which is to represent 99.99% of the
issued and outstanding common stock of RIH.
(e) Reflects the distribution to RII of the RIH Promissory Note and the RIH
Junior Promissory Note in repayment of the intercompany debt owed to RII by
RIH, with the balance being a return of surplus.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(f) Reflects the elimination of interest income on the note receivable from RIB,
which note is to be distributed to GRI as a return of surplus.
(g) Reflects interest expense and amortization of debt discount on the RIH
Promissory Note and the RIH Junior Promissory Note.
(h) Reflects the elimination of recapitalization costs incurred in connection
with the Restructuring.
(i) For the year ended December 31, 1992, reflects a change in method of
accounting for income taxes, as RIH adopted Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes" ("SFAS 109") in
the first quarter of 1993. See the "Income Tax Accounting" section of Note
14 of Notes to Consolidated Financial Statements of RIH.
166
<PAGE>
(PIRL SPIN-OFF SCENARIO)
P. I. RESORTS LIMITED
PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
---------------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ---------------- -----------
<S> <C> <C> <C>
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents........................................... $ 12,870 $ (757)(a) $ 12,063
(50)(b)
Restricted cash equivalents......................................... 1,099 1,099
Receivables, net.................................................... 7,380 7,380
Inventories......................................................... 7,020 7,020
Prepaid expenses.................................................... 5,221 (1,815)(a) 3,206
(200)(b)
----------- -------- -----------
Total current assets............................................ 33,590 (2,822) 30,768
Property and equipment, net........................................... 176,606 (64,590)(c) 112,016
Deferred charges and investment in joint venture...................... 1,332 (179)(c) 1,153
----------- -------- -----------
$ 211,528 $ (67,591) $ 143,937
----------- -------- -----------
----------- -------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt................................ $ 130 $ 130
Accounts payable and accrued liabilities............................ 18,688 $ (50)(b) 18,638
Due to parent company............................................... 35,676 (2,572)(a) --
(10,435)(d)
(22,669)(e)
Interest payable to affiliate....................................... 2,813 (2,813)(d) --
Note payable to affiliate........................................... 50,000 (50,000)(d) --
----------- -------- -----------
Total current liabilities....................................... 107,307 (88,539) 18,768
----------- -------- -----------
Long-term debt........................................................ 169 169
----------- -------- -----------
Shareholders' equity:
Capital stock:
RIB and U.S. Paradise Island Subsidiaries combined................ 33 (33)(f) --
P. I. Resorts Limited............................................. 50(f) 50
----------- -------- -----------
33 17 50
Capital in excess of par............................................ 147,546 (64,769)(c) 124,950
22,669(e)
(17)(f)
19,521(g)
Retained earnings (accumulated deficit)............................. (43,527) (200)(b) --
63,248(d)
(19,521)(g)
----------- -------- -----------
Total shareholders' equity...................................... 104,052 20,948 125,000
----------- -------- -----------
$ 211,528 $ (67,591) $ 143,937
----------- -------- -----------
----------- -------- -----------
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet of PIRL.
167
<PAGE>
P. I. RESORTS LIMITED
(PIRL SPIN-OFF SCENARIO)
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE THREE QUARTERS ENDED
DECEMBER 31, 1992 SEPTEMBER 30, 1993
------------------------------------------------ --------------------------------------------
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------- ------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenues:
Casino........................... $ 66,120 $ 66,120 $ 48,685 $ 48,685
Rooms............................ 30,235 30,235 22,622 22,622
Food and beverage................ 32,851 32,851 23,593 23,593
Other casino/hotel revenues...... 17,890 17,890 14,412 14,412
Other operating revenues......... 19,072 19,072 13,704 13,704
Real estate related.............. 213 213
---------- ------------- ------------- ---------- ----------- ------------
166,381 166,381 123,016 123,016
---------- ------------- ------------- ---------- ----------- ------------
Expenses:
Casino........................... 48,272 48,272 36,587 36,587
Rooms............................ 8,217 8,217 5,562 5,562
Food and beverage................ 25,161 25,161 17,902 17,902
Other casino/hotel operating
expenses........................ 31,373 31,373 24,247 24,247
Other operating expenses......... 15,549 15,549 11,122 11,122
Selling, general and
administrative.................. 21,537 $ 3,725(h) 25,262 14,731 $ 2,300(h) 17,031
Provision for doubtful
receivables..................... 2,633 2,633 1,748 1,748
Depreciation..................... 13,792 (4,800)(i) 8,992 10,612 (3,700)(i) 6,912
Real estate related.............. 230 230
Management fee................... 5,284 (5,284)(j) 5,239 3,596 (3,596)(j) 3,886
5,239(k) 3,886(k)
---------- ------------- ------------- ---------- ----------- ------------
172,048 (1,120) 170,928 126,107 (1,110) 124,997
---------- ------------- ------------- ---------- ----------- ------------
Earnings (loss) from operations.... (5,667) 1,120 (4,547) (3,091) 1,110 (1,981)
Other income (deductions):
Interest income.................. 359 359 291 291
Interest expense................. (6,850) 6,750(l) (100) (5,097) 5,063(l) (34)
Recapitalization costs........... (1,099) 1,099(m) -0- (1,719) 1,719(m) -0-
---------- ------------- ------------- ---------- ----------- ------------
Net loss........................... $ (13,257) $ 8,969 $ (4,288) $ (9,616) $ 7,892 $ (1,724)
---------- ------------- ------------- ---------- ----------- ------------
---------- ------------- ------------- ---------- ----------- ------------
Net loss per share................. $ (.86)(n) $ (.34)(n)
------------- ------------
------------- ------------
Weighted average number of shares
outstanding....................... 5,000(n) 5,000(n)
------------- ------------
------------- ------------
</TABLE>
See Notes to Pro Forma Consolidated Statements of Operations of PIRL.
168
<PAGE>
P. I. RESORTS LIMITED
GENERAL NOTE TO PIRL PRO FORMA FINANCIAL STATEMENTS
The historical financial information presented for PIRL is combined
financial information of the PIRL Group as, for the historical periods
presented, PIRL did not exist. The pro forma financial information presented for
PIRL assumes the PIRL Spin-Off, rather than the SIHL Sale, occurs. Such
information is presented on a consolidated basis as, pursuant to the PIRL
Spin-Off, PIRL is to become the parent of RIB and other subsidiaries of PIRL are
to acquire the assets and related liabilities of the U.S. Paradise Island
Subsidiaries.
The accounting principles, policies and estimates to be used in the
preparation of PIRL consolidated financial statements will be the responsibility
of PIRL's new management, which may or may not be the management of RII, who has
prepared these pro forma consolidated financial statements. Thus, PIRL
consolidated financial statements may be prepared on different bases utilizing
different accounting treatments and estimates from those used in the preparation
of these pro forma consolidated financial statements.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(a) Reflects the transfer to RII of prepaid insurance not related to PIRL Group.
Also reflects the transfer of cash to RII in order to establish a working
capital balance of $12,000,000, of which cash is a minimum of $5,000,000, at
the time of the PIRL Spin-Off.
(b) Reflects the payment of PIRL Group's accrued recapitalization costs and the
write-off of PIRL Group's prepaid recapitalization costs.
(c) For purposes of this presentation the equity of PIRL was valued at
$125,000,000 based on the proposed terms of the SIHL Sale.
(d) Reflects the assumption by GRI of (i) RIB's note payable to RIH and accrued
interest thereon and (ii) RIB's remaining intercompany payables to RII.
(e) Reflects the elimination of intercompany balances between RII and the U.S.
Paradise Island Subsidiaries which are not to be purchased or assumed by
PIRL's subsidiaries.
(f) Reflects (i) the issuance of PIRL Ordinary Shares to RII in exchange for the
capital stock of members of the PIRL Group and (ii) the consolidation of
PIRL Group with PIRL.
(g) Reflects adjustment of beginning retained earnings to zero.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(h) Reflects the costs incurred by RII for services provided to PIRL Group
including accounting, data processing and other support services. These
costs do not include any costs of RII executives or costs of corporate
office functions such as treasury, financial reporting and tax services.
(i) Reflects decrease in depreciation expense due to the basis adjustment of
property and equipment. For purposes of this presentation it was assumed
that depreciation expense would decrease by 35%, which approximates the
percentage decrease in valuation of property and equipment. The depreciable
lives of different categories of property and equipment may vary greatly.
The actual decrease in depreciation expense may differ significantly from
that presented here as it will depend on estimated fair values attributed to
the individual components of property and equipment and the remaining
depreciable lives assigned to those components by the new management of
PIRL.
(j) Reflects the elimination of the management fee charged to PIRL Group from
RII. Such fee is based on 3% of certain gross revenues.
169
<PAGE>
(k) Reflects management fees to RII pursuant to the Interim Management
Agreement. For tax provision computations it was assumed that PIRL allocates
a portion of such fees to its subsidiaries which operate in the U.S.
(l) Reflects the elimination of interest expense on RIB's note payable to RIH
which is to be assumed by GRI.
(m) Reflects the elimination of recapitalization costs incurred in connection
with the Restructuring.
(n) Reflects the issuance of 5,000,000 PIRL Ordinary Shares to holders of the
Old Series Notes. Net earnings (loss) per share data could differ
significantly from those presented herein as appraisals, valuation
procedures and estimates used as of the Effective Date may result in
significantly different valuations and estimated remaining depreciable lines
from those used in preparing this pro forma information. Also, this pro
forma information assumes the PIRL Spin-Off, rather than the SIHL Sale,
occurs.
170
<PAGE>
MARKET PRICES OF OLD SERIES NOTES
The Old Series Notes are listed and traded on the AMEX. The following table
sets forth, for the periods indicated, the high and low trading price for each
$100 principal amount of Old Series Notes on the AMEX.
<TABLE>
<CAPTION>
OLD SERIES A NOTES OLD SERIES B NOTES
------------------ ------------------
<S> <C> <C> <C> <C>
FISCAL YEARS HIGH LOW HIGH LOW
------------------------- ------- ------- ------- -------
1991:
First Quarter.......... 48 7/8 34 54 35
Second Quarter......... 55 44 55 51
Third Quarter.......... 58 52 3/4 62 54 1/8
Fourth Quarter......... 62 56 63 3/4 57 1/2
1992:
First Quarter.......... 76 58 75 58 3/4
Second Quarter......... 70 1/4 63 73 1/2 65
Third Quarter.......... 68 1/2 60 1/2 69 3/4 60 1/2
Fourth Quarter......... 62 50 1/2 63 49 1/2
1993:
First Quarter.......... 68 56 1/2 67 3/4 55
Second Quarter......... 74 60 74 59 1/2
Third Quarter.......... 77 69 76 68 1/4
Fourth Quarter......... 72 66 72 64 1/2
1994:
First Quarter (through
January , 1994).......
</TABLE>
On January 4, 1994, the last trading day prior to the date of this
Information Statement/ Prospectus for which closing prices were available, the
closing prices of the Old Series A Notes and the Old Series B Notes were 70.00
and 69.75, respectively.
MARKET PRICES OF RII COMMON STOCK
RII Common Stock is listed and traded on the AMEX. As of November 30, 1993,
there were 20,157,234 shares of RII Common Stock outstanding and held of record
by 2,003 holders. The following table sets forth, for the periods listed, the
high and low trading prices per share of RII Common Stock on the AMEX.
<TABLE>
<CAPTION>
FISCAL YEARS HIGH LOW
------------------------- ------- -------
<S> <C> <C>
1991:
First Quarter.......... 2 3/8 5/8
Second Quarter......... 2 1 3/8
Third Quarter.......... 2 1 1/2
Fourth Quarter......... 1 5/8 1
1992:
First Quarter.......... 2 3/4 1 1/4
Second Quarter......... 2 3/8 1
Third Quarter.......... 1 1/4 3/4
Fourth Quarter......... 1 1/4 11/16
1993:
First Quarter.......... 1 1/8 13/16
Second Quarter......... 3 7/8 13/16
Third Quarter.......... 2 3/4 1 9/16
Fourth Quarter......... 2 1/8 1 3/8
1994:
First Quarter (through
January , 1994).......
</TABLE>
On January 4, 1994, the last trading day prior to the date of this
Information Statement/ Prospectus, the closing price for RII Common Stock on the
AMEX was $1.6875. No cash dividends on the RII Common Stock were paid during any
of the periods listed above.
171
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Following is management's discussion and analysis of financial condition and
results of operations ("M D & A") of the Company (comprised of RII and its
subsidiaries), RIH, the Paradise Island Business (which, pursuant to the
Restructuring, will become the operations of PIRL) and RIHF. The Company's
Atlantic City casino/hotel segment and Resorts Casino Hotel are the operations
and property of RIH. The Company's Paradise Island properties, the Paradise
Island casino/hotel segment, the Paradise Island real estate related segment,
and the Company's airline operations or airline segment all are components of
the Paradise Island Business. For M D & A of RIH and the Paradise Island
Business, the relevant portions of the Company's M D & A should be read in
conjunction with the sections specifically designated as "RIH" or "Paradise
Island Business", as appropriate. M D & A of RIHF, which entity did not exist in
the historical periods discussed below, is limited to a prospective discussion
specifically identified in "Financial Condition -- Liquidity".
FINANCIAL CONDITION
LIQUIDITY
THE COMPANY. At September 30, 1993, the Company's current liabilities
exceeded its current assets by $395,374,000 because the Old Series Notes, which
are due April 15, 1994, are classified as current liabilities (due within one
year). The Company's working capital at September 30, 1993 included unrestricted
cash and equivalents of $71,026,000. A substantial amount of the unrestricted
cash and equivalents currently is required for day-to-day operations, including
approximately $15,000,000 of currency and coin on hand, which amount varies by
days of the week, holidays and seasons, as well as approximately $15,000,000 of
additional cash balances necessary to meet current working capital needs.
The principal amount of the Old Series Notes is approximately $482,000,000.
Assuming there are no principal retirements resulting from any asset sales, the
interest obligation due on April 15, 1994 will approximate $36,000,000. This
will result in a total obligation of approximately $518,000,000 at the maturity
date.
The Company's ability to pay the principal balance due on the Old Series
Notes at maturity was premised on certain assumptions included in the Old Plan,
the most significant of which were the Company's ability to sell the Paradise
Island assets by December 31, 1991 at a price ranging from $250,000,000 to
$300,000,000. Other assumptions included the Company's ability to generate
substantial excess cash flow from its operations and the Company's ability to
sell its non-operating real estate holdings in Atlantic City at acceptable
prices. The recession in the United States, and more specifically in the
northeast sector, the acute competition in Atlantic City and The Bahamas, the
unexpected increase in competition in other jurisdictions, the unforeseen
difficulty is selling the Paradise Island Business at the projected price, and
the impact of the conflict in the Persian Gulf in early 1991 and its effect on
transportation and tourism, all adversely affected the Company's ability to
achieve the assumptions in the Old Plan.
In addition, in late 1991 Carnival announced its plan to dispose of its
Crystal Palace, the Company's principal competition in The Bahamas. In early
1992, a portion of the Crystal Palace complex, which Carnival had been leasing
from HCB, was returned to HCB. Since that time as Carnival continued to operate
the remainder of the Crystal Palace complex under the Crystal Palace name, it
continued to seek a buyer for that property. In October 1993, Carnival announced
that it had signed an agreement in principle to sell an 81% interest in such
complex to a group of German investors.
Although the Company did not discontinue its efforts to sell the Paradise
Island assets, as the economy entered the recent recession, the events described
above related to the Crystal Palace unfolded, and the Company experienced a very
limited amount of interest by prospective purchasers of the Paradise Island
assets, it became apparent that proceeds of the magnitude originally
contemplated in 1990 would not be realizable prior to the maturity date of the
Old Series Notes. The only
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offer received by the Company prior to the proposed Restructuring for its
Paradise Island assets was made in August 1991. That offer would have netted the
Company approximately $150,000,000 if the transaction had been consummated. This
amount was inadequate to retire sufficient Old Series Notes at par so as to
permit the Company's then remaining Atlantic City operations to service the debt
that would have remained outstanding. Subsequent discussions with the
prospective purchaser did not lead to a definitive agreement, and the
discussions terminated in early 1992. A sale of the Paradise Island assets in
October 1991 for $250,000,000 and application of the proceeds to retire
outstanding Old Series Notes would have reduced the amount of Old Series Notes
outstanding at maturity by approximately $348,000,000. Additional reductions in
principal amount of Old Series Notes outstanding at maturity could have been
achieved if the Company had sold all or a portion of its non-operating real
estate holdings in Atlantic City or if the Company's operations had generated
substantial excess cash flow. The Old Plan assumed that $50,000,000 of such real
estate assets would be sold and, for the first two years of the Old Plan,
operations would generate approximately $5,800,000 more cash flow, net of
capital expenditures, than was actually generated. For the years 1992 and 1993,
the Old Plan assumed the cash flow generated by the Resorts Casino Hotel, net of
capital expenditures, would be approximately $9 million more than currently
projected.
As the possibilities of a sale of the Paradise Island assets at other than a
depressed price diminished, and the Company was unable to generate substantial
excess cash flow from its operations, the principal amount of the Old Series
Notes (originally $325,000,000) increased due to Old PIK Payments. Thus, it
became evident that in order for the Company to reduce its debt to a level that
could be supported by the cash flow reasonably anticipated on a continuing
basis, it had to develop financial alternatives other than, or in conjunction
with, a sale of its Paradise Island assets. The Company has been working with
its financial advisers on developing and analyzing financial alternatives, as
well as developing a long-term financial plan, since late 1991. The Paradise
Island Purchase Agreement restricts the Company's ability to solicit or consider
other offers for sale of the Paradise Island Business.
Since obligations of approximately $518,000,000 under Old Series Notes will
be due on April 15, 1994 and the Company currently does not have the means to
repay them, management is unable to predict the future liquidity of the Company
if the Restructuring is not accomplished by that date. If the Restructuring is
accomplished, management believes that, although the Restructuring includes the
disposition of the Paradise Island Business, the Restructuring will improve the
Company's long-term liquidity and enhance its ability to meet its financial
obligations as they become due since it will retain, after the Restructuring,
$20,000,000 of cash, coin and currency. Although the Restructuring will result
in a significant reduction in the Company's unrestricted cash and equivalents
due to the distribution of Excess Cash to holders of Old Series Notes, the
Company will have the $20,000,000 RIHF Senior Facility available for one year
from the Effective Date, should the Company have unforeseen cash needs. The
Company believes that the RIHF Senior Facility will serve as a safeguard if an
emergency arises from current operations, or serve as a source of funds for a
profitable investment opportunity.
However, there can be no assurance that the Company will generate sufficient
cash from operations to repay, when due, the principal amount of the New RIHF
Mortgage Notes maturing in 2004 or the principal amount of the Showboat Notes
maturing in 2000. As a result, the Company may be required to refinance such
amounts as they become due and payable. There can be no assurance that any such
refinancing would be consummated or, if consummated, would be in an amount
sufficient to repay such obligations, particularly in light of the Company's
high level of debt. If the Company is unable to effectuate such refinancings or
renewals in the ordinary course of business, it may be required to sell equity
interests in the Company. The sale of additional equity interests in the Company
could result in substantial dilution of the interests of the Company's existing
equity holders. There can be no assurance that such sales would be consummated
or, if consummated, would be in an amount sufficient to repay such obligations
in full. The failure to raise sufficient amounts of capital
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<PAGE>
from such sales could ultimately result in the Company's inability to meet its
debt obligations, including its obligations under the New Debt Securities.
Holders of the Old Series Notes are cautioned not to place undue reliance on the
forecasts. See "Risk Factors -- Risks Relating to the Forecasts".
RIH. At September 30, 1993 RIH's current liabilities exceeded its current
assets by $302,989,000 because its notes payable to GRI in the amount of
$325,000,000, which are due upon demand after April 15, 1994, are classified as
current liabilities. RIH's working capital at September 30, 1993 included
$30,820,000 of cash and equivalents. The day-to-day operations of RIH require
approximately $10,000,000 of currency and coin on hand which amount varies by
days of the week, holidays and seasons. Additional cash balances are necessary
to meet current working capital needs.
Pursuant to the Restructuring, the notes payable to GRI will be canceled.
Also, RIH, through its affiliated notes payable to RIHF, will be the principal
source of funds for servicing the New RIHF Mortgage Notes and the New RIHF
Junior Mortgage Notes, as well as the RIHF Senior Facility Notes to the extent
issued. Based on projected operating results, management believes that RIH's
liquidity will continue to be satisfactory after the Restructuring; however,
management can give no assurances as to RIH's future liquidity due to the
possibility of unanticipated events and circumstances inherent in any
projections.
PARADISE ISLAND BUSINESS. At September 30, 1993 the current liabilities of
the companies whose operations and properties compose the Paradise Island
Business, on a combined basis, exceeded their combined current assets by
$73,717,000. However, their combined current liabilities include a $50,000,000
demand note payable by RIB to RIH and $35,676,000 of advances from RII.
At September 30, 1993 these companies, on a combined basis, had $12,870,000
of unrestricted cash and equivalents. The day-to-day operations of the Paradise
Island Business require approximately $5,000,000 of currency and coin on hand
which amount varies by days of the week, holidays and seasons.
Thus, these companies' liquidity was satisfactory as long as RII advanced
funds if and when needed, RII made no attempt to collect on its advances, and
RIH did not demand payment of the note.
As part of the Restructuring: (i) RIB's $50,000,000 demand note payable to
RIH, the interest accrued thereon and advances from RII are to be assumed by
GRI; (ii) the net intercompany liability from the U.S. Paradise Island
Subsidiaries to RII will not be assumed by subsidiaries of SIHL, should the SIHL
Sale occur, nor assumed by subsidiaries of PIRL, should the PIRL Spin-Off occur;
and (iii) at the time the equity and assets and liabilities of members of the
PIRL Group are transferred from the Company (through either the SIHL Sale or the
PIRL Spin-Off), the group's collective working capital will amount to
$12,000,000, of which at least $5,000,000 will be cash. Management of RII can
make no representations concerning the liquidity of PIRL and the companies to
become its subsidiaries on a prospective basis as they will no longer be
affiliated with RII.
RIHF. RIHF was formed for the purpose of issuing the New RIHF Mortgage
Notes and the New RIHF Junior Mortgage Notes as part of the Restructuring, as
well as the RIHF Senior Facility Notes to the extent issued. Also as part of the
Restructuring, RIHF is to obtain notes receivable from RIH with terms that
mirror the terms of the New Debt Securities and, to the extent issued, the RIHF
Senior Facility Notes with the intent that RIH pay interest to RIHF on RIHF's
interest payment dates so that RIHF will have cash available to make its
interest payments on those dates. It is not anticipated that RIHF will have any
other operations.
CAPITAL EXPENDITURES AND OTHER USES OF FUNDS
THE COMPANY. In recent years, capital expenditures have consistently been a
significant use of financial resources. See capital additions by geographic and
business segment in the table entitled "Identifiable Assets, Depreciation and
Capital Additions" below. Pursuant to a capital expenditure
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<PAGE>
program developed by the Company in 1989, virtually all guest rooms and public
areas at Resorts Casino Hotel have been refurbished. Also pursuant to this
program, virtually all guest rooms in the Company's Paradise Island facilities
were refurbished.
Capital additions in 1990 for Resorts Casino Hotel amounted to $24,582,000
and included the completion of casino renovations which were started in 1989,
certain infrastructure improvements and the refurbishment of approximately 150
guest rooms in the East Tower. In 1991, capital additions amounted to
$22,734,000 as approximately 200 more guest rooms in the East Tower were
refurbished and certain information systems were upgraded. In 1992, capital
additions amounted to $15,548,000 and included the conversion of the parking
garage from valet to self-parking, the construction of a covered walkway from
the garage to the Resorts Casino Hotel, the continued renovation of guest rooms,
the purchase of additional slot machines and improvements to the building's
infrastructure.
Capital additions in 1990 for the Paradise Island properties amounted to
$9,324,000 and included refurbishment of guest rooms and the purchase and
installation of 265 new slot machines as replacements for older models. In 1991,
new carpeting was installed in the casino, a new casino management system was
implemented and certain kitchen areas and additional guest rooms were renovated
at a cost of $3,726,000. Capital additions for 1992 totalled $4,317,000, and
included the installation of 37 new slot machines, expansion of the Paradise
Island airport parking lot, upgrading existing computer equipment and restaurant
renovations. The expenditures for both 1991 and 1992 were somewhat curtailed
from those originally planned, in response to the operating performance of the
Company's facilities on Paradise Island.
During the first three quarters of 1993, the Company expended approximately
$20,000,000 for capital improvements at Resorts Casino Hotel. The Company
converted certain back-of-the-house space into an 8,000-square-foot simulcast
facility, which houses eight betting windows and approximately 80 seats for
simulcast betting operations, as well as 25 poker tables, various other table
games and a full service bar. Also, certain casino renovations were completed,
280 slot machines were purchased, most of which will replace older models, and
the new VIP slot and table player lounge, "Club Griffin", opened. In addition,
guest room refurbishments continued and a new centralized mobile communications
system was installed. In subsequent years recurring capital expenditures to keep
existing facilities competitive can be expected to approximate $12,000,000 per
year for the Resorts Casino Hotel.
During the first three quarters of 1993, the Company expended approximately
$3,000,000 on capital improvements at its facilities in The Bahamas. This
included the purchase of 110 slot machines as replacements for older models as
well as various maintenance projects.
The Company continually monitors its capital expenditure plan and considers
both the timing and the scope of certain projects to be flexible. Thus, economic
developments and other factors may cause the Company to deviate from its present
capital expenditure plans.
Another significant use of funds in recent years has been recapitalization
costs. Payments of legal, financial and other advisory fees and costs amounted
to $5,585,000 in the first three quarters of 1993 and $2,460,000 in 1992 in
contemplation of a possible restructuring of the Old Series Notes, and payments
of $163,000, $2,954,000, $5,883,000 and $12,528,000 in the first three quarters
of 1993 and the years 1992, 1991 and 1990, respectively, for costs associated
with the Old Plan.
RIH. Expenditures for capital improvements described above have been, by
far, the largest use of funds for RIH for the periods discussed here.
Recapitalization costs in 1990 and 1992 were another significant use of funds,
as RIH pays RII its allocable portion (approximately one-third) of such costs as
they are incurred. Other uses of RIH's funds are for CRDA deposits and bond
purchases, as required by the New Jersey Casino Control Act, and repayments of
advances from RII.
PARADISE ISLAND BUSINESS. Expenditures for capital improvements noted above
have consistently been a large use of funds for the Paradise Island Business
during the periods discussed here. Recapitalization costs in 1990 and 1992 were
another significant use of funds, as RIB pays RII its
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<PAGE>
allocable portion (approximately one-third) of such costs as they are incurred.
In the period of 1990 through August 31, when these companies had more available
cash, $14,878,000 was used to repay advances to RII and other affiliates.
CAPITAL RESOURCES AND OTHER SOURCES OF FUNDS
THE COMPANY. Since 1990, operations have been the most significant source
of funds to the Company.
In accordance with the Old Plan, in September 1990, RII received $12,345,000
cash from Merv Griffin as partial payment for the issuance of 4,400,000 shares
of RII Common Stock. An additional $2,655,000 was received in October 1990 on
behalf of certain holders of the Company's previously outstanding public debt in
consideration for the issuance to them of an aggregate of 500,000 shares of RII
Common Stock.
The Griffin Group owes the Company $5,318,333 under the Griffin Group Note.
The next payment required under the New Griffin Services Agreement ($2,310,000)
is to be applied to reduce the balance due under the Griffin Group Note. The
then remaining balance of the Griffin Group Note is to be collected by RII and
distributed to holders of Old Series Notes as part of Excess Cash.
As part of the Restructuring, the Company will have the $20,000,000 RIHF
Senior Facility available for one year from the Effective Date for the Company's
working capital and general corporate purposes.
RIH. Since 1990 operations have been the most consistent significant source
of funds for RIH. Advances from RII and affiliates have also been a source of
funds in certain periods.
PARADISE ISLAND BUSINESS. Since 1990 cash flows from operations have been
adversely affected by a number of factors which are discussed below under
"Results of Operations". During 1990 and 1991 sales of assets were a significant
source of funds. These included assets previously used in PIA's amphibious
airline operation ($6,652,000), parcels of land on Paradise Island ($3,979,000),
and helicopters and other aircraft owned by ANTL which had been primarily used
in the Company's Atlantic City casino/hotel operations ($2,736,000).
RESULTS OF OPERATIONS
GENERAL
Included in the discussion below are comments on the Paradise Island
Business which, pursuant to the Restructuring, is to be disposed of. The
Paradise Island Business includes the casino/hotel on Paradise Island, The
Bahamas, the real estate located on Paradise Island, The Bahamas and the
Company's airline operations.
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REVENUES
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------------------------------------
1990 FOR THE THREE QUARTERS
------------------------ ENDED SEPTEMBER 30,
THROUGH FROM ------------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey:
Casino....................................... $ 139,466 $ 66,259 $ 218,881 $ 233,780 $ 180,510 $ 187,803
Rooms........................................ 5,093 2,599 8,074 8,766 6,688 5,370
Food and beverage............................ 10,492 5,320 16,406 16,056 12,801 12,340
Other casino/hotel........................... 3,948 2,041 4,113 4,138 3,081 3,301
----------- ----------- ----------- ----------- ----------- -----------
158,999 76,219 247,474 262,740 203,080 208,814
----------- ----------- ----------- ----------- ----------- -----------
Paradise Island, The Bahamas:
Casino....................................... 43,321 19,940 61,003 66,120 44,171 48,685
Rooms........................................ 31,840 9,435 33,173 30,235 23,984 22,622
Food and beverage............................ 29,317 11,207 36,053 32,851 25,157 23,593
Other casino/hotel........................... 11,584 4,895 17,563 17,890 13,457 14,412
----------- ----------- ----------- ----------- ----------- -----------
116,062 45,477 147,792 147,096 106,769 109,312
----------- ----------- ----------- ----------- ----------- -----------
Total casino/hotel......................... 275,061 121,696 395,266 409,836 309,849 318,126
----------- ----------- ----------- ----------- ----------- -----------
Real estate related:
Atlantic City, New Jersey...................... 4,759 2,426 7,542 7,813 5,845 6,028
Paradise Island, The Bahamas................... 3,721 212 213 213
----------- ----------- ----------- ----------- ----------- -----------
8,480 2,638 7,542 8,026 6,058 6,028
----------- ----------- ----------- ----------- ----------- -----------
Airline.......................................... 11,071 6,083 18,234 22,483 16,841 16,618
Other segments................................... 1,183 27 97 162 124 109
Intersegment eliminations........................ (1,823) (853) (2,896) (3,573) (2,618) (3,023)
----------- ----------- ----------- ----------- ----------- -----------
Revenues from operations......................... $ 293,972 $ 129,591 $ 418,243 $ 436,934 $ 330,254 $ 337,858
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RII describes a
change in entity and related presentation for periods presented.
FIRST THREE QUARTERS 1993 COMPARED TO FIRST THREE QUARTERS 1992
CASINO/HOTEL -- ATLANTIC CITY, NEW JERSEY
Casino revenues were up $7,293,000 for the first three quarters of 1993.
This increase was due to slot win, poker revenue and simulcast commissions. Slot
win increased as the effect of an increase in amounts wagered by patrons offset
a decrease in the hold percentage (ratio of casino win to total amount wagered
for slots or total amount of chips purchased for table games). The Company began
offering poker and simulcast betting on June 28, 1993.
Although total occupancy was relatively flat for the first three quarters of
1993 as compared to the same period of 1992, the number of complimentary rooms
provided to casino patrons increased. The reduced occupancy from rooms sold
resulted in lower room revenues and contributed to the decrease in food and
beverage revenues.
CASINO/HOTEL -- PARADISE ISLAND, THE BAHAMAS
Casino revenues increased by $4,514,000 for the first three quarters of
1993. This improvement was due to increases in both slot win and table game win.
The increased table game win resulted primarily from the effect of increased
amounts wagered by patrons and, to a lesser extent, from an improved hold
percentage.
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Room revenues and food and beverage revenues were lower in the first three
quarters of 1993 due to a reduction in occupancy.
The Restructuring contemplates the disposition of the Company's Paradise
Island assets and operations.
REAL ESTATE RELATED
The Paradise Island real estate related revenues in 1992 resulted from the
sale of a residential lot on Paradise Island.
AIRLINE
Airline revenues decreased $223,000 for the first three quarters of 1993.
This resulted as decreased revenues from contracted training, flight and
maintenance work for non-affiliated parties more than offset a slight increase
in passenger revenues. Though passenger revenues were up slightly for the first
three quarters of 1993, competition for passenger revenues increased with the
addition of a new air shuttle service between Miami and Nassau in March 1993.
The Restructuring contemplates the disposition of the Company's airline
operations.
COMPARISON OF THE YEARS 1992, 1991 AND 1990
CASINO/HOTEL -- ATLANTIC CITY, NEW JERSEY
Casino revenues from the Resorts Casino Hotel increased by $14,899,000 in
1992 and $13,156,000 in 1991. For both 1992 and 1991, the increase resulted
primarily from increased slot revenues. The improvement in slot revenues
resulted from increases in amounts wagered by patrons, while the slot hold
percentage declined. This reflects management's decision to decrease the slot
hold percentage in order to attract more slot players and encourage increased
slot play per player as well as marketing programs which targeted slot players.
In 1991 the Company's table game revenues were up slightly. In 1992 the
Company's table game revenues declined as did the entire Atlantic City casino
industry's. The Company's decline of 6.5% was greater than the industry's
decline of 3.3% and can be attributed to a decrease in amounts wagered and, to a
lesser extent, a decrease in the table game hold percentage. The Company is
adjusting its marketing focus in an effort to recapture some of its lost market
share in table revenues by increasing the use of star headliners and changing
the revue show more frequently.
Also affecting the comparison of gaming revenues between 1991 and 1990 is
the fact that portions of the casino were closed for renovations during the
first half of 1990.
CASINO/HOTEL -- PARADISE ISLAND, THE BAHAMAS
Revenues from the Company's Paradise Island casino/hotel operations
decreased by $696,000 in 1992 and by $13,747,000 in 1991.
In 1992, increased casino revenue was more than offset by decreased room
revenue and food and beverage revenue. Casino revenue was up due to increases in
both slot win and table game win. The increase in table game revenues reflected
an increase in drop (amount of chips purchased), the favorable effect of which
more than offset the impact of a decline in the table game hold percentage. The
decrease in room revenue was due to reduced room rates and occupancy, net of
complimentary rooms. The reduction in occupancy also had an adverse effect on
food and beverage revenue. Total air arrivals to the Paradise -- New Providence
Island area were down in 1992 by 10%, which management of the Company attributes
to the continuing economic recession and reduced air service available. Air
arrivals to this area were already down in 1991 as compared to the prior year
due to factors noted below. In addition, the Company's competitors reduced room
rates in 1992 and the Company, in an effort to maintain occupancy, did the same.
In 1991, all facets of the Company's Paradise Island operations suffered due
to the economic recession experienced during that year. Also, the tour and
travel industry in general was significantly affected by the Persian Gulf
conflict in early 1991. The impact of this on the Company's Bahamian operations
was severe, as this occurred during the first quarter, which is typically the
period when the Company realizes its highest revenues and earnings in The
Bahamas, due to seasonal factors.
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REAL ESTATE RELATED
Atlantic City real estate related revenues in 1992, 1991 and 1990 represent
rent from ACS pursuant to the Showboat Lease. Commencing July 1, 1990, such rent
receipts were restricted for the payment of interest on the Showboat Notes. See
Note 7 of Notes to Consolidated Financial Statements of RII.
The Paradise Island real estate related revenues in 1992 resulted from the
sale of a residential lot on Paradise Island. Substantially all the Paradise
Island real estate related revenues for 1990 resulted from the sale of
approximately seven acres of beach front property near the Company's Ocean Club
Golf & Tennis Resort on Paradise Island.
AIRLINE
Airline revenues increased $4,249,000 in 1992 and $1,080,000 in 1991. The
increase in 1992 was due primarily to an increase in number of passengers flown
as other airlines ceased their flights or reduced the frequency of their flights
to The Bahamas and the Company expanded its flight schedule. Also, 1992 includes
revenues from contracted training, flight and maintenance work for
non-affiliated parties.
The increase in 1991 resulted from an increase in passengers flown due to
reasons noted above as well as an increase in average fare.
CONTRIBUTION TO CONSOLIDATED LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------------------------------------
1990 FOR THE THREE QUARTERS
-------------------------- ENDED SEPTEMBER 30,
THROUGH FROM ----------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
------------ ------------ ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey.................. $ 4,179 $ 2,412 $ 14,817 $ 21,051 $ 19,421 $ 15,804
Paradise Island, The Bahamas*.............. 7,351 (6,166) (5,707) (5,592) (6,132) (2,974)
------------ ------------ ---------- ---------- ---------- ----------
11,530 (3,754) 9,110 15,459 13,289 12,830
------------ ------------ ---------- ---------- ---------- ----------
Real estate related:
Atlantic City, New Jersey.................. 2,803 1,947 5,911 6,425 4,741 4,900
Paradise Island, The Bahamas............... 188 59 (17) (17)
------------ ------------ ---------- ---------- ---------- ----------
2,991 2,006 5,911 6,408 4,724 4,900
------------ ------------ ---------- ---------- ---------- ----------
Airline*..................................... 5 (4) 83 77 314 (14)
Other segments............................... (68) (156) (148) (70) (53) (94)
Unallocated corporate expense................ (918) 694 1,080 (372) 1,833 3,058
------------ ------------ ---------- ---------- ---------- ----------
Earnings (loss) from
operations.................................. 13,540 (1,214) 16,036 21,502 20,107 20,680
Other income (deductions):
Interest income............................ 2,318 1,740 4,824 4,969 2,311 2,485
Interest expense........................... (434) (5,476) (31,157) (40,856) (30,795) (38,336)
Amortization of debt discount.............. (8,581) (32,105) (37,569) (26,509) (37,320)
Recapitalization costs..................... (187,018) (2,848) (2,337) (4,879)
------------ ------------ ---------- ---------- ---------- ----------
Loss before income taxes and extraordinary
item........................................ $ (171,594) $ (13,531) $ (42,402) $ (54,802) $ (37,223) $ (57,370)
------------ ------------ ---------- ---------- ---------- ----------
------------ ------------ ---------- ---------- ---------- ----------
</TABLE>
* The Paradise Island casino/hotel segment subsidized the operation of PIA in
the following amounts for the periods indicated: through August 31, 1990 --
$1,320,000; from September 1, 1990 -- $571,000; 1991 -- $760,000; and first
three quarters of 1993 -- $813,000.
- ------------------------
Note 2 of Notes to Consolidated Financial Statements of RII describes a
change in entity and related presentation for periods presented.
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<PAGE>
FIRST THREE QUARTERS 1993 COMPARED TO FIRST THREE QUARTERS 1992
CASINO/HOTEL -- ATLANTIC CITY, NEW JERSEY
Casino, hotel and related operating results decreased by $3,617,000 in the
first three quarters of 1993 as increased revenues were offset by a net increase
in operating expenses. For the first three quarters of 1993 the most significant
increases in operating expenses were casino promotional costs ($4,800,000),
payroll and related costs ($3,600,000), casino operating costs ($1,700,000),
fees to the Griffin Group ($1,700,000) and depreciation ($1,600,000). The
increase in casino promotional costs was due primarily to a new program which
rewards slot players by giving cash back to patrons based on their level of
play. Since the introduction of the "cash-back" program, the Company has reduced
cash giveaways to bus patrons and through other promotional mailings. Payroll
and related costs and casino operating costs increased due primarily to the
increased staffing levels and other operating costs associated with the new
simulcast and poker facility. The fees paid to the Griffin Group are for
services rendered under the New Griffin Services Agreement described in Note 17
of Notes to Consolidated Financial Statements of RII. The most significant cost
reductions were in the performance incentive bonus accrual ($2,900,000) and food
and beverage costs ($1,200,000).
For a discussion of competition in the Atlantic City casino/hotel industry
see "Business of the Company -- Atlantic City -- Competition".
CASINO/HOTEL -- PARADISE ISLAND, THE BAHAMAS
Casino, hotel and related operating results improved by $3,158,000 for the
first three quarters of 1993. This resulted from increased revenues and a net
decrease in operating expenses. The most significant decrease in operating
expenses was in payroll and related costs ($1,800,000) as staffing levels were
reduced in response to lower occupancy. The most significant increases in costs
were in gaming taxes and fees ($900,000) and in the subsidy of PIA ($813,000).
Gaming taxes and fees increased relative to the increase in casino revenues. The
subsidy of PIA, RII's subsidiary which provides air service between south
Florida and the Company's Paradise Island Airport, increased as PIA's operating
results declined. See "Airline" below.
For a discussion of competition in The Bahamas see "Business of the Company
- -- The Bahamas -- Competition".
AIRLINE
Airline operating results before the subsidy from the Paradise Island
casino/hotel segment decreased by $1,141,000 for the first three quarters of
1993 as results of both the scheduled and charter flights and the contract work
for non-affiliated parties were down ($600,000 and $500,000, respectively). A
slight increase in flight revenues was more than offset by a net increase in
operating, particularly maintenance, costs. The decrease in contract work
largely resulted from a decline in revenues from such activity.
OTHER INCOME (DEDUCTIONS)
THE COMPANY. The increase in interest expense for the first three quarters
of 1993 was due to the net effect of (i) increased principal amounts of debt
outstanding, as the Company has issued additional Old Series Notes to satisfy
its interest obligations on the Old Series Notes, (ii) an increase in the stated
interest rate on the Old Series A Notes and (iii) changes in the market value of
the Old Series Notes, as the Company records interest at the estimated market
value of additional Old Series Notes to be issued in satisfaction of its
interest obligations. Interest expense is expected to increase significantly in
the next several months as, subsequent to October 15, 1993, the Company will be
recording interest expense on the Old Series Notes at the stated rate in lieu of
a discounted rate to reflect market value, as the Company's option to
payment-in-kind ("PIK") interest is no longer available.
Amortization of debt discounts increased primarily due to the additional
discounts associated with Old Series Notes issued in satisfaction of interest
obligations.
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The Company's interest expense and amortization of debt discounts are
expected to be significantly less after the Restructuring.
RIH. RIH's interest income has been largely attributable to the $50,000,000
note receivable from RIB, which bears interest at 13.5% per year. This note is
to be cancelled as part of the Restructuring.
RIH's interest expense, in recent years, has been limited to minor amounts
incurred on capitalized lease obligations. After the Restructuring RIH is to
bear, indirectly, the interest on the New RIHF Mortgage Notes and the New RIHF
Junior Mortgage Notes and, to the extent issued, the RIHF Senior Facility Notes,
through notes payable to RIHF, the terms of which will mirror the terms of such
debt of RIHF.
COMPARISON OF THE YEARS 1992, 1991 AND 1990
CASINO/HOTEL -- ATLANTIC CITY, NEW JERSEY
Casino, hotel and related operating results improved by $6,234,000 for 1992
and by $8,226,000 for 1991.
For 1992 increased revenues discussed above were partially offset by a net
increase in operating expenses. The most significant increases in operating
expenses were payroll and related costs ($3,500,000), depreciation ($2,300,000),
casino win tax ($1,400,000) and performance incentive bonuses ($1,200,000). The
increase in payroll and related costs was due to increases in wages, payroll
taxes and union benefits. For 1992 the most significant decrease in net
operating expenses was the provision for doubtful receivables ($2,100,000).
For 1991 increased revenues discussed above were partially offset by a net
increase in operating expenses. The most significant increases in operating
expenses were management fees ($2,500,000), performance incentive bonuses
($2,000,000), advertising ($1,400,000), provision for doubtful receivables
($1,400,000) and food and beverage ($1,300,000). The increase in management fees
resulted from a change in the Company's method of allocating overhead expenses
from corporate to the operating properties, which was effective September 1,
1990. The increase in advertising cost was primarily attributable to a new
television campaign. The increase in food and beverage costs resulted primarily
from increased patronage of the Beverly Hills Buffet. The Beverly Hills Buffet
offers all you can eat for a price which is on average below the cost to the
Company. This reflected the Company's change in marketing emphasis, whereby the
Company targeted slot and mid-level players by featuring programs that provide
attractive values in food, beverage and entertainment.
For 1991 the most significant decreases in operating expenses were
depreciation ($3,800,000) and entertainment ($2,700,000). The reduction in
depreciation was due to the revaluation of the Company's assets in conjunction
with the reorganization in 1990. The reduction in entertainment costs resulted
from a shift in emphasis from headliner shows to a revue format in conjunction
with the change in the targeted markets discussed above.
CASINO/HOTEL -- PARADISE ISLAND, THE BAHAMAS
Casino, hotel and related operating results improved by $115,000 for 1992
and decreased by $6,892,000 for 1991. For 1992 decreased revenues discussed
above were more than offset by net decreased operating expenses. The most
significant reductions in operating expenses were food, beverage and other
direct costs ($1,000,000), depreciation ($800,000), payroll and related costs
($800,000) and the subsidy of PIA ($760,000). The reduced occupancy level and
the reduction in number of visitors to the area contributed to an overall
reduction in operating costs throughout the facility. The subsidy of PIA
decreased as PIA's operating results improved. See "Airline."
For 1992 the most significant increases in operating expenses were marketing
and promotional costs ($1,400,000) and gaming taxes and fees ($1,000,000). The
Company increased its marketing and promotional efforts over the prior year to
attract a greater number of patrons to its facilities.
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For 1991 decreased revenues discussed above were partially offset by a net
decrease in operating expenses. The most significant reductions in operating
expenses were payroll and related costs ($4,000,000), food, beverage and other
direct costs ($1,900,000), casino promotional costs ($1,800,000) and a reduction
in the subsidy of PIA ($1,131,000). Due to the factors discussed above, in early
1991 occupancy levels at the Company's Paradise Island properties were such that
the Company implemented a cost containment program which included a reduction in
room availability, reduced operating schedules of the casino and food and
beverage outlets, and payroll reductions. By the summer of 1991, the Company's
facilities returned to their normal operating schedules. The reduction in casino
promotional costs is due primarily to increased efforts to monitor
complimentaries given to casino customers. The subsidy of PIA decreased as PIA's
operating results improved due to its previously noted increased revenues. The
most significant increase in costs for 1991 was depreciation ($1,800,000).
REAL ESTATE RELATED
The comparison of earnings from Atlantic City real estate related activities
is affected by increases in rental income under the Showboat Lease. The
favorable results in 1991 also reflect the elimination of property tax expense
on a tract of land which the Company had under option. Such option was
terminated in 1990.
The Paradise Island real estate related earnings represent the net loss in
1992 and the net gain in 1990 on the sales of Paradise Island properties
mentioned above.
AIRLINE
Airline operating results before the subsidy from the Paradise Island
casino/hotel segment increased by $754,000 in 1992 and by $1,213,000 in 1991.
For 1992 the increase resulted primarily from the contract work for
non-affiliated parties noted above. For 1991 the increase was primarily due to
the increase in passenger revenues described above.
UNALLOCATED CORPORATE EXPENSE
Unallocated corporate expense increased by $1,452,000 in 1992 and decreased
by $1,304,000 in 1991.
Effective September 1, 1990, the Company changed its method of allocating
certain overhead costs from corporate to certain operations. This new allocation
method, based on a percentage of certain gross revenues, accounted for a
favorable variance in unallocated corporate expense of $2,300,000 in 1991. This
was partially offset by an increase in 1991 in the cost of directors and
officers liability insurance ($900,000).
In 1992, the Company recorded charges of approximately $2,900,000 in
connection with the start-up, management and subsequent termination of an
agreement to manage a casino located in Black Hawk, Colorado. The impact of this
charge was partially offset by a reduction in certain corporate insurance costs
($600,000) and an increase in the amount of overhead expense allocated from
corporate to certain operations ($600,000).
OTHER INCOME (DEDUCTIONS)
THE COMPANY. The Company did not accrue interest or amortize discounts on
its previously outstanding public debt during 1990 while it was involved in
bankruptcy proceedings. RII began accruing interest and amortizing discounts on
its Old Series Notes and the Showboat Notes effective October 1, 1990, the
initial distribution date of those securities.
The increase in interest expense in 1992 was due to a combination of: (i) an
increase in the stated interest rates of the Old Series Notes; (ii) increased
principal amounts of debt outstanding, as RII has issued additional Old Series
Notes to satisfy its interest obligations on the Old Series Notes; and (iii)
changes in the market value of the Old Series Notes, as RII records interest at
the estimated
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market value of additional Old Series Notes to be issued in satisfaction of its
interest obligations. Amortization of debt discounts increased primarily due to
the additional discounts associated with Old Series Notes issued in satisfaction
of interest obligations.
Recapitalization costs in 1992 resulted from the Company's retention of
financial advisers to assist in the development and analysis of financial
alternatives which would enable the Company to reduce its future debt service
requirements. For a description of recapitalization costs in 1990 see Note 2 of
Notes to Consolidated Financial Statements of RII.
RIH. For a description of recapitalization costs and the affiliated bad
debt write-off in 1990, see Note 2 of Notes to Consolidated Financial Statements
of RIH.
PARADISE ISLAND BUSINESS. For a description of recapitalization costs and
the affiliated bad debt write-off in 1990, see Note 2 of Notes to Combined
Financial Statements of PIRL Group.
INCOME TAXES
THE COMPANY. See Note 13 of Notes to Consolidated Financial Statements of
RII for an explanation of changes in the Company's effective income tax rate
during the years 1990 through 1992 and the section on "Income Taxes" in Note 1
of Notes to Consolidated Financial Statements of RII for a discussion of the
anticipated effects of the 1993 adoption of a new standard of accounting for
income taxes.
RIH. See Note 11 of Notes to Consolidated Financial Statements of RIH for a
discussion of RIH's income tax expense for the years 1990 through 1992 and Note
14 for a discussion of the effects of the 1993 adoption of a new standard of
accounting for income taxes.
PARADISE ISLAND BUSINESS. See Note 10 of Notes to Combined Financial
Statements of PIRL Group for a discussion of income tax accounting for the
combined group and the section on "Income Taxes" in Note 1 of Notes to Combined
Financial Statements of PIRL Group for a discussion of the anticipated effects
of the 1993 adoption of a new standard of accounting for income taxes.
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IDENTIFIABLE ASSETS, DEPRECIATION AND CAPITAL ADDITIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS
------------------------------------------
LESS ACCUMULATED
DEPRECIATION AND
GROSS VALUATION
ASSETS ALLOWANCES NET ASSETS DEPRECIATION
----------- ---------------- ----------- -------------
CAPITAL
ADDITIONS
-----------
FOR THE YEAR ENDED
DECEMBER 31, 1992 DECEMBER 31, 1992
------------------------------------------ --------------------------
<S> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey..... $ 212,668 $ (26,644) $ 186,024 $ 11,392 $ 15,548
Paradise Island, The Bahamas.. 208,899 (33,899) 175,000 12,973 4,317
----------- -------- ----------- ------------- -----------
421,567 (60,543) 361,024 24,365 19,865
----------- -------- ----------- ------------- -----------
Real estate related:
Atlantic City, New Jersey..... 110,824 (68) 110,756 29
Paradise Island, The Bahamas.. 33,414 33,414
----------- -------- ----------- ------------- -----------
144,238 (68) 144,170 29
----------- -------- ----------- ------------- -----------
Airline......................... 12,923 (1,995) 10,928 805 4
Other segments.................. 1,542 (34) 1,508 13
Corporate (A)................... 51,605 (285) 51,320 110 16
----------- -------- ----------- ------------- -----------
$ 631,875 $ (62,925) $ 568,950 $ 25,322 $ 19,885
----------- -------- ----------- ------------- -----------
----------- -------- ----------- ------------- -----------
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1991 DECEMBER 31, 1991
------------------------------------------ --------------------------
<S> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey..... $ 196,022 $ (16,680) $ 179,342 $ 9,084 $ 22,734
Paradise Island, The Bahamas.. 207,924 (21,684) 186,240 13,782 3,726
----------- -------- ----------- ------------- -----------
403,946 (38,364) 365,582 22,866 26,460
----------- -------- ----------- ------------- -----------
Real estate related:
Atlantic City, New Jersey..... 112,900 (26) 112,874 19
Paradise Island, The Bahamas.. 33,400 33,400
----------- -------- ----------- ------------- -----------
146,300 (26) 146,274 19
----------- -------- ----------- ------------- -----------
Airline......................... 12,934 (1,163) 11,771 809 280
Other segments.................. 1,549 (20) 1,529 14
Corporate (A)................... 42,909 (175) 42,734 106 10
----------- -------- ----------- ------------- -----------
$ 607,638 $ (39,748) $ 567,890 $ 23,814 $ 26,750
----------- -------- ----------- ------------- -----------
----------- -------- ----------- ------------- -----------
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1990
------------------------------------------------------
FROM THROUGH FROM THROUGH
DECEMBER 31, 1990 SEPTEMBER 1 AUGUST 31 SEPTEMBER 1 AUGUST 31
------------------------------------------ ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Casino/hotel:
Atlantic City, New Jersey..... $ 173,527 $ (7,671) $ 165,856 $ 1,902 $ 10,772 $ 5,307 $ 19,275
Paradise Island, The Bahamas.. 198,825 (8,256) 190,569 3,878 8,153 4,320 5,004
----------- -------- ----------- ------------- ----------- ------------- -----------
372,352 (15,927) 356,425 5,780 18,925 9,627 24,279
----------- -------- ----------- ------------- ----------- ------------- -----------
Real estate related:
Atlantic City, New Jersey..... 113,376 (6) 113,370 6 151
Paradise Island, The Bahamas.. 34,075 34,075
----------- -------- ----------- ------------- ----------- ------------- -----------
147,451 (6) 147,445 6 151
----------- -------- ----------- ------------- ----------- ------------- -----------
Airline......................... 11,568 (319) 11,249 370 746 35 56
Other segments.................. 2,067 (116) 1,951 8 91
Corporate (A)................... 51,744 (68) 51,676 68 134 1 86
----------- -------- ----------- ------------- ----------- ------------- -----------
$ 585,182 $ (16,436) $ 568,746 $ 6,232 $ 20,047 $ 9,663 $ 24,421
----------- -------- ----------- ------------- ----------- ------------- -----------
----------- -------- ----------- ------------- ----------- ------------- -----------
<FN>
- ------------------------------
(A) Includes cash equivalents, restricted cash equivalents not pledged for
operations, and other corporate assets.
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RII describes a
change in entity and related presentation for periods presented.
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BUSINESS OF THE COMPANY
ATLANTIC CITY
GAMING FACILITIES
The Resorts Casino Hotel has a casino of approximately 60,000 square feet
and a racetrack simulcast betting and poker area of approximately 8,000 square
feet. In July 1993 these gaming areas contained 51 blackjack tables, 25 poker
tables, 13 dice tables, 10 roulette tables, 4 baccarat tables, 2 pai gow poker
tables, 1 big six wheel, 1 sic bo table, 1,859 slot machines and 8 betting
windows for race book. As described below under "Capital Improvements", the
casino and hotel facilities at the Resorts Casino Hotel have undergone extensive
renovation and remodeling pursuant to a major capital improvements program. The
Resorts Casino Hotel is owned and operated by RII's subsidiary, RIH.
During 1992, the Company had a total gross win (the amount won before all
costs and expenses, including taxes) from its Atlantic City casino of
$233,780,000. This compares to total gross wins of $218,881,000 for 1991 and
$205,725,000 for 1990.
Casino gaming in Atlantic City is highly competitive and is strictly
regulated under the Casino Control Act, which affects virtually all aspects of
the Company's Atlantic City casino operations. See "Competition" and "Regulation
and Gaming Taxes and Fees -- New Jersey" below.
RESORT AND HOTEL FACILITIES
The Resorts Casino Hotel commenced operations in May 1978 and was the first
casino/hotel opened in Atlantic City. This was accomplished by the conversion of
the former Haddon Hall Hotel, a classic hotel structure originally built in the
early 1900's, into a casino/hotel. It is situated on approximately seven acres
of land with approximately 310 feet of Boardwalk frontage overlooking the
Atlantic Ocean. The Resorts Casino Hotel consists of two hotel towers, the
15-story East Tower and the nine-story North Tower. In addition to the casino
facilities described above, the casino/hotel complex includes approximately 670
guest rooms and suites, the 1,400-seat Superstar Theatre, eight restaurants,
three cocktail and entertainment lounges, an indoor swimming pool and health
club, and retail stores. The complex also has approximately 50,000 square feet
of convention facilities, including ten large meeting rooms and a
16,000-square-foot ballroom.
During 1992, the Company added two floors to its multi-storied parking
garage and converted it from a valet-parking facility into a self-parking
facility which accommodates approximately 700 vehicles. This parking facility is
connected to the Resorts Casino Hotel by a covered walkway. The Company believes
that the conversion to self-parking and the remodeling of its garage encourages
increased patronage and enhances the Company's competitive position. The Company
continues to offer valet parking at nearby, uncovered leased lots that provide
space for approximately 700 automobiles and has an additional leased lot which
provides self-parking for approximately 100 cars.
Consistent with industry practice, the Company reserves a portion of its
hotel rooms and suites as complimentary accommodations for high-level casino
wagerers. For 1992, 1991 and 1990 the average occupancy rates, including
complimentary rooms which were primarily provided to casino patrons, were 93%,
90% and 84%, respectively. The average occupancy rate and weighted average daily
room rental, excluding complimentary rooms, were 57% and $61, respectively, for
1992. This compares with 51% and $67, respectively, for 1991, and 55% and $66,
respectively, for 1990.
CAPITAL IMPROVEMENTS
The Company has pursued a major capital improvements program since 1989 in
order to compete more effectively in the Atlantic City market. During the first
three quarters of 1993 the Company expended approximately $20,000,000 for
capital improvements at the Resorts Casino Hotel. The Company converted certain
back-of-the-house space into a simulcast facility, which houses eight betting
windows and approximately 80 seats for simulcast betting operations, as well as
25 poker tables, various other table games and a full service bar. Also, certain
casino renovations were completed, 280 slot machines were purchased, most of
which will replace older models, and the new VIP
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slot and table player lounge, "Club Griffin", opened. In addition, guest room
refurbishments continued and a new centralized mobile communications system was
installed. From 1989 through 1992 capital additions at Resorts Casino Hotel
totalled approximately $80,000,000. Improvements included refurbishment of rooms
in both the East Tower and the North Tower, casino renovations, purchase of new
slot machines and gaming equipment, conversion of the parking garage to
self-parking, restaurant remodeling and upgrading, renovation of public areas,
installation of new computer equipment and management information systems, as
well as improvements to the infrastructure such as elevators, air conditioning,
and exterior renovations and painting. With the anticipated completion of the
capital improvements program in 1993, management expects capital expenditures in
1994 to decline to approximately $12,000,000 which will be primarily for
maintenance of existing facilities.
EMPLOYEES
During 1992, the Company had a maximum of approximately 3,700 employees
located in Atlantic City. The Company believes that its employee relations are
satisfactory.
In Atlantic City, approximately 1,400 of the Company's employees are
represented by unions. Of these employees, approximately 1,200 are represented
by the Hotel Employees and Restaurant Employees International Union Local 54,
whose contract expires in September 1994. There are several other union
contracts covering Atlantic City union employees.
In Atlantic City, all the Company's casino employees must be licensed under
the Casino Control Act. Casino employees are subject to more stringent
requirements than non-casino employees, including hotel employees who must be
registered with the Casino Control Commission. Each casino employee must meet
applicable standards pertaining to such matters as financial responsibility,
good character, ability, casino training and experience, and New Jersey
residency.
MARKETING
The Company continues to take advantage of the celebrity status of Merv
Griffin, who is actively engaged in the marketing of the Resorts Casino Hotel.
Mr. Griffin, who is Chairman of the Board of RII, is featured in television
commercials and in print advertisements. Merv Griffin also produced live at
Resorts Casino Hotel "Merv Griffin's New Year's Eve Special 1992" which was
broadcast nationwide through approximately 240 stations. Mr. Griffin's continued
participation in the operations and marketing of the Company is ensured by the
New Griffin Services Agreement until at least September 1996.
The Company's marketing strategy is designed to increase the attractiveness
of the Resorts Casino Hotel to the mid and premium-level slot and table game
players. For slot players, the Company has: (i) introduced a new "cash-back"
program which rewards players with cash refunds or complimentaries based on
their volume of play; (ii) expanded and upgraded "Hollywood Hills", its
high-limit slot area; and (iii) opened a VIP slot and table player lounge, "Club
Griffin". Also, in an effort to attract mid and premium table game players, the
Company has established customer development teams to increase opportunities in
this market area.
The entertainment program has also been retargeted to attract the mid and
premium players by increasing the use of star headliners and changing the revue
show more frequently in 1993 than had been done in recent years. The revue that
had been offered since January 1993 was replaced with a new revue that opened in
September 1993.
TRANSPORTATION FACILITIES
The lack of an adequate transportation infrastructure in the Atlantic City
area continues to negatively affect the industry's ability to attract patrons
from outside a core geographic area. In 1989 the terminal at the Atlantic City
International Airport (located approximately 12 miles from Atlantic City) was
expanded to handle additional air carriers and large passenger jets, but
scheduled service to that airport from major cities by national air carriers
remains extremely limited. Also, in 1989 Amtrak express rail service to Atlantic
City commenced from Philadelphia, New York, Washington and other major cities in
the northeast. This was expected to improve access to Atlantic City and expand
the
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geographic size of the Atlantic City casino industry's marketing base. However,
there has been no significant change in the industry's marketing base or in the
principal means of transportation to Atlantic City, which continues to be
automobile and bus. The resulting geographic limitations and traffic congestion
have restricted Atlantic City's growth as a major destination resort. However,
the Company understands that the South Jersey Transportation Authority has begun
work on a comprehensive master plan for the future development of the airport
which it expects to complete in 1994. The State of New Jersey acquired the
airport terminal and surrounding property from Atlantic City in 1991.
The Company continues to utilize day-trip bus programs. A non-exclusive
easement enables the Resorts Casino Hotel to utilize a bus tunnel under the Taj
Mahal, which connects Pennsylvania and Virginia Avenues, and a service road exit
from the bus tunnel. This reduces congestion around the Pennsylvania Avenue bus
entrance to the Resorts Casino Hotel. To comfortably accommodate its bus
patrons, the Company has a waiting facility which is located indoors, adjacent
to the casino, and offers various amenities.
PROPOSED NEW CONVENTION CENTER
In January 1992, the State of New Jersey enacted legislation that authorizes
a financing plan for the construction of a new convention center to be located
on a 30-acre site next to the Atlantic City train station at the base of the
Atlantic City Expressway. The Company understands that the proposed convention
center will have 500,000 square feet of exhibit space and an additional 104,200
square feet of meeting rooms. Construction of the new convention center began in
early 1993 and it is anticipated that it will be completed within three years.
The convention center has been reported to be part of a broader plan that
includes additional expansion of the Atlantic City International Airport and
other improvements in Atlantic City. Officials have commented upon the need for
improved commercial air service into Atlantic City as a factor in the success of
the new convention center. Although these developments are viewed as positive
and favorable to the future prospects of the Atlantic City gaming industry, the
Company, at this point, can make no representations as to whether, or to what
extent, its operations may be improved by the completion of the proposed
convention center and airport expansion projects.
COMPETITION
Competition in the Atlantic City casino/hotel industry is intense.
Casino/hotels compete primarily on the basis of promotional allowances,
entertainment, advertising, services provided to patrons, caliber of personnel,
attractiveness of the hotel and casino areas and related amenities, and parking
facilities. The Resorts Casino Hotel competes directly with 11 casino/hotels in
Atlantic City which, in the aggregate, contain approximately 768,000 square feet
of casino space, including simulcast betting and poker rooms, and 8,700 hotel
rooms. The total amount of gaming area of these competing properties is expected
to increase as the Showboat Casino has recently announced plans, although
preliminary, for a sizable addition to its casino gaming floor. Also, several
competitors are expected to add simulcasting rooms which are permitted to house
poker and other authorized table games. Unlike casino gaming floor area, which
is regulated based on the number of guest rooms at a particular property, the
size of simulcasting rooms is not limited.
The Resorts Casino Hotel is located at the eastern end of the Boardwalk
adjacent to the Taj Mahal, which is next to the Showboat Casino. These three
properties have a total of more than 2,400 hotel rooms and 277,000 square feet
of gaming space in close proximity to each other. A 28-foot wide enclosed
pedestrian bridge between the Resorts Casino Hotel and the Taj Mahal allows
patrons of both hotels and guests for events being held at the Resorts Casino
Hotel and at the Taj Mahal to move between the facilities without exposure to
the weather. A similar enclosed pedestrian bridge connects the Showboat Casino
to the Taj Mahal, allowing patrons to walk under cover among all three casino/
hotels. The remaining nine Atlantic City casino/hotels are located approximately
one-half mile to one and one-half miles to the west on the Boardwalk or in the
Marina area of Atlantic City.
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All Atlantic City casino/hotels compete for customers with casino/hotels
located in Nevada, and in certain foreign resort areas, including The Bahamas,
particularly with respect to destination-oriented business, including
conventions. The Las Vegas casino/hotel industry benefits from a favorable
climate and nearby airport facilities that serve most major domestic carriers.
Atlantic City casino/hotels also would compete with casinos located in other
U.S. jurisdictions, particularly those close to New Jersey, which may adopt
legislation approving casino gaming. Colorado, Illinois, Iowa, Louisiana,
Mississippi, Missouri and South Dakota have legalized, and several other states
and the District of Columbia are currently considering legalizing limited
land-based and riverboat casino gaming. Additionally, certain gaming operations
are conducted or have been proposed on federal Indian reservations in a number
of states. In January 1993, a gaming casino on an Indian reservation located in
Connecticut was authorized to operate slot machines. Previously, the casino,
which opened in early 1991, was only authorized to conduct table gaming
operations. In July 1993, the Oneida Indians opened a casino near Syracuse, New
York. In October 1993 approval was granted for the construction of a high-stakes
gambling casino in New York State on the St. Regis Mohawk reservation near the
Canadian border, 50 miles southwest of Montreal. Under New York state law, poker
and slot machines currently are not permitted. Due to the proximity to Atlantic
City, the casinos in Connecticut and New York may have, to an indeterminate
extent, an adverse effect on the Atlantic City casino industry.
SEASONAL FACTORS
The Company's business activities are strongly affected by seasonal factors
that influence the New Jersey beach trade. Higher revenues and earnings are
typically realized from the Company's Atlantic City operations during the middle
third of the year.
GAMING CREDIT POLICY
Credit is extended to selected gaming customers primarily in order to
compete with other casino/ hotels in Atlantic City which also extend credit to
customers. Credit play represented 23% of table game volume at the Resorts
Casino Hotel in 1992, 24% in 1991 and 26% in 1990. Gaming receivables, net of
allowance for uncollectible amounts, were $4,503,000, $5,586,000 and $6,949,000
as of December 31, 1992, 1991 and 1990, respectively. The collectibility of
gaming receivables has an effect on results of operations, and management
believes that overall collections have been satisfactory. Atlantic City gaming
debts are enforceable under the laws of New Jersey and certain other states,
although it is not clear whether other states will honor this policy or enforce
judgments rendered by the courts of New Jersey with respect to such debts.
SHOWBOAT LEASE
The Showboat Casino has approximately 515 guest rooms, a 60-lane bowling
center, a 64,000-square-foot casino and a 15,000-square-foot simulcast betting
and poker room. The Showboat Casino is situated on approximately ten acres which
are owned by the Company and leased to ACS pursuant to the Showboat Lease, dated
October 26, 1983, as amended, which is a 99-year net lease. The Showboat Lease
provided for an initial annual rental, which commenced in March 1987, of
$6,340,000, subject to future annual adjustment based upon changes in the
consumer price index. The rental for the 1993 lease year is $8,118,000.
The Showboat Notes issued by RII are First Mortgage Non-Recourse
Pass-Through Notes due June 30, 2000, and are secured and serviced by the
Showboat Lease. All lease payments thereunder are made to the indenture trustee
for the Showboat Notes to meet the Company's interest obligations under those
notes. See Note 11 of Notes to Consolidated Financial Statements of RII.
The Showboat Lease provides that if, under New Jersey law, the Company is
prohibited from acting as lessor, including any finding by the Casino Control
Commission that the Company is unsuitable, the Company must appoint a trustee,
acceptable to the Casino Control Commission, to act for the Company and collect
all lease payments on the Company's behalf. In that event, the trustee also must
proceed to sell all the Company's interest in the Showboat Lease and the leased
property to a buyer qualified to act as lessor. The net proceeds of any such
sale, together with any unremitted rentals, would be paid to the Company. Also,
if the Company is no longer able to act as a lessor, as
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aforesaid, ACS would have an option to acquire ownership of the ten acres leased
from the Company. The option would be exercisable during a period of not more
than three months. The purchase price would be an amount equal to the greater of
$66,000,000 or the fair market value of the leased acreage, as defined, but in
no event may the purchase price be more than 11 times the rent being paid by ACS
in the year in which the option may become effective. If the fair market value
is not ascertained within the time required by the Casino Control Commission,
then the purchase price would be the lesser of $66,000,000 or 11 times the rent
being paid by ACS in the year the option may become effective. In the event of
any sale of the leased property under the circumstances described above, the
disposition of the proceeds of such sale would be governed by the indenture for
the Showboat Notes.
Under New Jersey's Casino Control Act, both the Company and ACS, because of
their lessor-lessee relationship, are jointly and severally liable for the acts
of the other with respect to any violations of the Casino Control Act by the
other. In order to limit the potential liability that could result from this
provision, ACS, its parent, Ocean Showboat, Inc., and the Company have entered
into an indemnity agreement pursuant to which they agree to indemnify each other
from all liabilities and losses which may arise as a result of acts of the other
party that violate the Casino Control Act. The Casino Control Commission could
determine, however, that the party seeking indemnification is not entitled to,
or is barred from, such indemnification.
SECURITY CONTROLS
Gaming at the Resorts Casino Hotel is conducted by personnel trained and
supervised by the Company. Prior to employment in Atlantic City, all casino
personnel must be licensed under the Casino Control Act. Security checks are
made to determine, among other matters, that job applicants for key positions
have had no criminal ties or associations. The Company employs extensive
security and internal controls. Security at the Resorts Casino Hotel utilizes
closed circuit video cameras to monitor the casino floor and money counting
areas. The count of money from gaming is observed daily by state government
representatives.
OTHER PROPERTIES
The Company owns the Non-Operating Real Property, including approximately 90
acres of land in Atlantic City at various sites which could be developed and are
available for sale. This acreage primarily consists of vacant land in Great
Island, Rum Point, the Marina Area and waterfront parcels in the inlet sections.
See also "-- The Company's Properties -- Atlantic City -- Other Properties".
THE BAHAMAS
GENERAL
The Company, through Bahamian subsidiaries, owns and operates a major
destination resort on Paradise Island, The Bahamas. The Company's Paradise
Island Resorts consist of three hotel complexes: (i) the Paradise Island Resort
& Casino; (ii) the Ocean Club Golf & Tennis Resort; and (iii) the Paradise
Paradise Beach Resort. The Paradise Island Resort & Casino includes two hotel
towers totaling 1,186 guest rooms, the 30,000-square-foot Paradise Island casino
and related facilities. The Ocean Club Golf & Tennis Resort is an exclusive
71-room hotel with premium room rates. The Paradise Paradise Beach Resort is a
100-room hotel complex that offers more moderately priced accommodations. The
Company also owns and operates convention facilities, shops, restaurants, bars
and lounges, tennis courts, swimming pools and an 18-hole golf course. It owns
approximately six miles of beach and water frontage and other resort facilities
on Paradise Island. Its holdings on Paradise Island, including undeveloped real
estate, represent 564 acres, or almost 70%, of the acreage of the entire island.
In addition, certain of the U.S. Paradise Island Subsidiaries provide
support services for the Paradise Island Business. RRII provides reservation
services to RIB's hotels and to PIA. PIVI is a wholesale tour company whose
primary objective is the production of incremental tour revenues to
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the Paradise Island Resorts. PIVI provides air inclusive packages primarily to
Paradise Island for individual tourists, groups, conventions and casino patrons.
ISI is a centralized purchasing company which obtains supplies for the Paradise
Island Resorts.
Since 1990, given the Company's intention to sell its Paradise Island assets
and in light of the operating performance of those properties (see "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Results of Operations -- Casino/hotel -- Paradise Island, The Bahamas"), capital
expenditures there were essentially limited to maintenance of existing
facilities. Approximately $3,000,000 was expended for maintenance projects in
1993. No significant improvements to facilities are planned.
Paradise Island is part of the Commonwealth of The Bahamas. It is situated
immediately across Nassau Harbour, north of the capital city of Nassau, New
Providence Island, and is connected to Nassau by a two-lane toll bridge and
ferry boat service. The entire island is 5.5 miles in length, two-thirds of a
mile wide at its widest point, and totals 826 acres.
PARADISE ISLAND CASINO
The Paradise Island casino is the center of the Paradise Island Resort &
Casino complex. It is connected by arcades with shops to the 682-room Britannia
Towers and the 504-room Paradise Towers. The one-story and part-mezzanine casino
building situated between the two hotel towers contains nearly 165,000 square
feet, including the 30,000-square-foot casino gaming area. It also houses
several restaurants and bars; the Le Cabaret Theatre, which also serves meals, a
central commissary, employee cafeteria, shops and casino offices.
At July 31, 1993, the Paradise Island casino gaming area contained 58
blackjack tables, 10 dice tables, 10 roulette tables, 2 big six wheels, 2
baccarat tables and 799 slot machines. During 1992, the Company's Paradise
Island casino had a total gross gaming win of $66,120,000, compared to
$61,003,000 and $63,261,000 in 1991 and 1990, respectively.
PARADISE ISLAND RESORT AND HOTEL FACILITIES
The Company's resort and hotel facilities on Paradise Island include the
Paradise Island Resort & Casino, the Ocean Club Golf & Tennis Resort and the
Paradise Paradise Beach Resort, with a total of 1,357 guest rooms, suites and
villas, 15 restaurants, 13 bars and lounges, 21 tennis courts, 4 swimming pools,
an 18-hole golf course, approximately six miles of beach and water frontage, and
other resort facilities and land holdings.
The Paradise Island Resort & Casino is the largest hotel complex in The
Bahamas. It includes a 1,186-room hotel and casino complex with two swimming
pools, restaurants, lounges, tennis courts, convention facilities, ocean beach,
shops and other resort facilities. This complex includes the 682-room Britannia
Towers and the 504-room Paradise Towers. The total floor area of the two hotel
towers, villas, casino and restaurants exceeds 1,000,000 square feet.
The Ocean Club Golf & Tennis Resort is an exclusive, luxury resort facility
geared toward the affluent visitor. The complex comprises 71 guest rooms
including villas and cabanas, an 18-hole golf course, tennis courts, a swimming
pool, ocean beach and dining and cocktail facilities.
The Paradise Paradise Beach Resort includes 100 guest rooms, a restaurant,
lounge, swimming pool and ocean beach. The complex attracts value-conscious
tourists.
Consistent with industry practice, the Company reserves a portion of its
hotel rooms and suites as complimentary accommodations for high-level wagerers.
During 1992, 1991 and 1990 the average occupancy rates, including complimentary
rooms which were primarily provided to casino patrons, were 68%, 71% and 77%,
respectively. The average occupancy rate and weighted average daily room rental,
excluding complimentary rooms, were 54% and $108, respectively, for 1992. This
compares with 58% and $111, respectively, for 1991, and 66% and $123,
respectively, for 1990.
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EMPLOYEES
During 1992, the Company had a maximum of approximately 3,100 employees
located in The Bahamas. The Company believes that its employee relations are
satisfactory.
In The Bahamas, approximately 1,900 of the Company's employees are
represented by The Bahamas Catering and Allied Workers Union, whose contract
expires in January 1995. In light of the downturn in business being experienced
by hotels in the Paradise-New Providence Island area, the Company, along with
other affected operators in that area, did not pay wage and pension increases
scheduled for January 1993 as they were negotiating with the union for certain
concessions under the contract. Since then the union filed claims against the
employers and, after attempting to mediate the dispute, the Minister of Labour
referred it to arbitrators. The dispute remains unsettled, negotiations among
the parties continue and no work interruptions have been experienced.
In The Bahamas, all casino employees also must be licensed and all
non-Bahamian employees must apply for and receive work permits issued by the
Government of The Bahamas. From time to time this requirement has created
difficulties in hiring certain skilled non-Bahamian employees. These work
permits are generally subject to renewal annually.
MARKETING
The Company's marketing strategy for the Paradise Island properties has
recently increased its focus on the casino rather than primarily promoting the
hotels and related amenities. Through direct mailings to those known to be
casino players, both in the United States and abroad, and increased casino
promotional activities, the Company hopes to attract more casino customers to
Paradise Island. In addition, the Paradise Island complex has well-established
ties with numerous tour and travel wholesalers, as well as many repeat patrons.
Merv Griffin is involved in the development of marketing campaigns promoting
the Paradise Island facilities. During December 1993, Merv Griffin hosted his
fifth annual "Star Sports Spectacular" which featured celebrities from the
entertainment and sports fields who participated with the Company's casino
guests in golf and tennis tournaments. It is not expected that Merv Griffin will
be associated with the Paradise Island Business subsequent to the Restructuring.
See "-- Competition" for information regarding the Company's competitive
position in The Bahamas.
TRANSPORTATION FACILITIES
AIRLINE TRANSPORTATION. Several major airlines provide regularly scheduled
service to Nassau International Airport. In March 1993 Jet Shuttle began a new
air shuttle service between Miami and Nassau, and in 1992 American Eagle
initiated service to Nassau; however, in recent years overall air transportation
to Nassau has been reduced significantly. This has resulted from the failure of
certain major United States air carriers, financial difficulties experienced by
Bahamasair, the national air carrier of The Bahamas, as well as the current
state of the economy, particularly in the northeastern United States. The
reduction in airline service to Nassau has adversely affected the Company's
Paradise Island operations.
Most patrons arriving by air use the Nassau International Airport. However,
the Company also owns and operates a "STOL" airport facility, including a
3,000-foot runway, airport terminal and customs building, situated on 63 acres
of land located at the southeast corner of Paradise Island. PIA, a subsidiary of
RII, is currently the second largest passenger carrier to The Bahamas. PIA
provides scheduled service between Paradise Island and Miami, Ft. Lauderdale and
West Palm Beach, Florida, and offers a program of casino night flights to and
from Ft. Lauderdale, Florida. PIA operates one Company-owned and four leased
Dash 7 STOL aircraft. See "Airline Operations".
CRUISE SHIPS. The Company believes that a significant portion of the cruise
ship tourists currently docking at New Providence Island visit the Company's
facilities on Paradise Island. The Bahamian government operates 11 cruise ship
berths in Nassau Harbour.
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COMPETITION
The Company's Paradise Island facilities compete with other hotels and
resorts on Paradise Island, elsewhere in The Bahamas, the southeastern United
States, the Caribbean and Mexico, as well as with cruise ships serving these
areas. As new hotels are constructed or new cruise ships are introduced into
service in these areas, competition can be expected to increase.
The Company's properties principally compete with a casino/hotel and resort
complex on Cable Beach, New Providence Island, comprised of Carnival's Crystal
Palace, with 860 guest rooms, a 33,500-square-foot casino, a show theater and
other amenities, and the HCB-owned Radisson with 679 guest rooms. Carnival had
operated the entire complex prior to February 1992, as until that time Carnival
leased the property now known as the Radisson from HCB. In October 1993,
Carnival announced that it had signed an agreement in principle to sell an 81%
interest in the Crystal Palace complex to a group of German investors. This
investor group has announced that it plans to increase the marketing of the
Crystal Palace complex in Europe and will invest additional capital in the
complex to establish it as a high-end resort destination. Although there can be
no assurance that such sale will be completed, an upgraded Crystal Palace
complex may adversely affect the Company's operations in The Bahamas. Carnival
Air Lines, affiliated with Carnival, provides charter air service from the
continental United States to Nassau International Airport.
In addition to the Crystal Palace casino, the Bahamian government is
obligated to facilitate the grant of a casino license to the operators of the
Ramada Resort situated on the southwestern end of New Providence Island. The
Bahamian government is also obligated to support a proposal for the operation of
a slot casino at the Radisson resort on Cable Beach.
There are a total of approximately 7,600 rooms for overnight guests on New
Providence Island and Paradise Island combined. Of such rooms, approximately
3,100 are located in hotels on Paradise Island, including 1,357 in hotels owned
and operated by the Company. In recent years the Company's Bahamian hotel and
casino operations have experienced increased competition from the new, larger
cruise ships which have begun serving this area as these cruise ships have
effectively provided more available rooms. Also, the Company's Paradise Island
casino competes with two casinos on Grand Bahama Island, with casinos located on
Caribbean islands and, to a lesser extent, with Atlantic City and Las Vegas
casino/hotels.
Competition among hotels and resort properties is, in general, based upon:
the attractiveness of the facilities and the relative convenience of available
transportation to destinations; the presence of a casino; service; quality and
price of rooms, food and beverages; convention facilities; and entertainment.
The Company believes that its Paradise Island resort facilities, because of
location, variety of hotels and restaurants, beaches, available sports
activities and overall quality, compete strongly with other resort facilities.
SEASONAL FACTORS
The Company's business activities are strongly affected by seasonal factors
that affect the Caribbean tourist trade. Higher revenues and earnings are
typically realized from the Company's operations in The Bahamas during the first
quarter of the year.
CERTAIN ARRANGEMENTS WITH THE BAHAMIAN GOVERNMENT
The Company, through certain of its Bahamian subsidiaries, and HCB have
entered into various agreements, effective in 1978, pursuant to which the
Paradise Island casino facility is leased to HCB, and PEL, an indirect
subsidiary of RII, is retained by HCB to manage and operate the casino. These
agreements, as subsequently amended, are referred to herein as the "Paradise
Island Agreements".
Under the Paradise Island Agreements, the casino facility is leased to HCB
at an annual rental of $500,000 and PEL has an exclusive right to manage and
operate the casino through December 31, 1997, subject to an annual finding of
fitness. The lease of the casino facility was extended to December 31, 1997, by
a 1988 letter agreement between RIB, an indirect Bahamian subsidiary of RII
which,
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with its subsidiaries, owns and operates the Company's Bahamian properties, and
HCB. In consideration of the right to manage and operate the casino and to use
the gaming facilities, PEL pays HCB an annual operating fee of $5,000,000 plus
15% of gross revenues from casino gaming in excess of $25,000,000. PEL also pays
all gaming taxes.
Pursuant to amendments of PEL's casino license, the Company, among other
things, is required to: (i) continue its efforts to achieve a prompt sale of the
Paradise Island Business to a purchaser satisfactory to the Government of The
Bahamas and HCB; (ii) consult with HCB in advance with respect to material
aspects of any contemplated disposition of the Paradise Island Business; (iii)
provide quarterly reports to HCB describing the progress made by the Company in
implementing plans for separating various functions relating to its Bahamian
operations from the Company's non-Bahamian operations; (iv) provide to HCB
various financial reports; and (v) reimburse the Government of The Bahamas and
HCB for legal and advisory fees incurred by them relative to any restructuring
of the Company. To date, the Company has complied with each of these
requirements; it will continue to do so in the future.
SECURITY CONTROLS
Gaming at the Paradise Island casino is conducted by personnel trained and
supervised by the Company. In The Bahamas all casino personnel must be cleared
by the Bahamian Government. Security checks are made to determine, among other
matters, that job applicants for key positions have had no criminal ties or
associations. The Company employs extensive security and internal controls.
Security at the Paradise Island casino utilizes closed circuit video cameras to
monitor the casino floor and money counting areas. The count of money from
gaming is closely observed daily by Bahamian government representatives.
LAND AND OTHER ASSETS
The Company, through Bahamian subsidiaries, owns 564 acres on Paradise
Island. Approximately 219 acres of such land is not used in the Company's
operations and is available for sale or joint venture. The Company has prepared
a master plan for the island, which includes properties available for hotel,
commercial, condominium and time-share land use. The Company also owns roads and
other land improvements on Paradise Island and a water and sewage system which
serves, at stated charges, substantially all facilities on Paradise Island. The
water and sewage system presently is operating near full capacity and
significant additional development on the island will require expansion of the
system. A subsidiary of RIB also owns approximately 1,555 acres of undeveloped
and 120 acres of partially developed land located on Little Hawksbill Creek,
several miles from Freeport, Grand Bahama Island. See "-- The Company's
Properties -- The Bahamas -- Other Properties".
Approval by the Government of The Bahamas is required for foreign ownership
of real property in The Bahamas. In addition, any foreign investment in The
Bahamas requires exchange control approval by the Central Bank of The Bahamas.
No sale of any property located in The Bahamas to non-Bahamian nationals may be
completed until such governmental approvals are obtained.
AIRLINE OPERATIONS
The Company's airline operations are entirely conducted by PIA and are
described under "-- The Bahamas -- Transportation Facilities".
FOREIGN OPERATIONS
A significant portion of the Company's operating assets are located in The
Bahamas. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Revenues,
- -- Contribution to Consolidated Loss Before Income Taxes and Extraordinary
Item", and the table titled "Identifiable Assets, Depreciation and Capital
Additions". The Company believes that its business experience in The Bahamas has
been satisfactory. Changes in applicable taxes, duties, immigration policies,
exchange control regulations, policies concerning investments, ownership and
transfer of real estate, or legislation could adversely affect the Company. In
August 1992 a new Prime
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Minister was elected in The Bahamas. The former Prime Minister had been in
office for 25 years. Management believes that the change in government will
favorably impact the tourism industry in The Bahamas over the long term.
From time to time, Bahamian subsidiaries of the Company have made, and in
the future may make, legal political contributions in The Bahamas solely for
general goodwill purposes without any understandings or agreements as to the
receipt by the Company of any favors, privileges or other special treatment in
its dealings with the Government of The Bahamas.
REGULATION AND GAMING TAXES AND FEES
NEW JERSEY
GENERAL. The Company's operations in Atlantic City are subject to
regulation under the Casino Control Act, which authorizes the establishment of
casinos in Atlantic City, provides for licensing, regulation and taxation of
casinos and created the Casino Control Commission and the Division of Gaming
Enforcement. These bodies administer the Casino Control Act. In general, the
provisions of the Casino Control Act concern: the ability, character and
financial stability and integrity of casino operators, their officers, directors
and employees and others financially interested in a casino; the nature and
suitability of hotel and casino facilities, operating methods and conditions;
and financial and accounting practices. Gaming operations are subject to a
number of restrictions relating to the rules of games, number of games, credit
play, size and facilities of hotel and casino operations, hours of operation,
persons who may be employed, companies which may do business with casinos, the
maintenance of accounting and cash control procedures, security and other
aspects of the business.
Significant regulatory changes in 1992 and 1993 included the approval by the
Casino Control Commission of simulcast betting, poker and 24-hour gaming, as
well as the adoption of guidelines to evaluate the financial stability of casino
licensees. To establish evidence of financial stability, casino licensees must,
among other things, demonstrate the ability to make necessary capital and
maintenance expenditures and to adequately manage debts as they come due.
CASINO LICENSE. A casino license initially is issued for a term of up to
one year and must be renewed annually by action of the Casino Control Commission
for the first two renewal periods succeeding the initial issuance of a casino
license. Thereafter, a casino license is renewed for a period of up to two
years, although the Casino Control Commission may reopen licensing hearings at
any time. A license is not transferable and may be conditioned, revoked or
suspended at any time upon proper action by the Casino Control Commission. The
Casino Control Act also requires an operations certificate which, in effect, has
a term coextensive with that of a casino license.
On February 26, 1979, the Casino Control Commission granted a casino license
to RIH for the operation of the Company's Atlantic City casino. In February
1992, RIH's license was renewed until February 26, 1994. RIH's renewed license
is subject to several conditions, including: (i) the submission of additional
monthly financial reports to the Casino Control Commission and the Division of
Gaming Enforcement; (ii) monthly notification to such bodies of any significant
deviation from certain financial forecasts and related information provided by
the Company in connection with the 1992 renewal proceedings; (iii) monthly
notification of any significant variance in operating results from the prior
year; and (iv) quarterly reporting on its progress in the development of a
financing plan regarding the Old Series Notes due in April 1994 and by June 30,
1993 submission of an outline of terms to satisfy that obligation.
RESTRICTIONS ON OWNERSHIP OF EQUITY AND DEBT SECURITIES. The Casino Control
Act imposes certain restrictions upon the ownership of securities issued by a
corporation which holds a casino license or is a holding, intermediary or
subsidiary company of a corporate licensee (collectively, "holding company").
Among other restrictions, the sale, assignment, transfer, pledge or other
disposition of any security issued by a corporation which holds a casino license
is conditional and shall be ineffective if disapproved by the Casino Control
Commission.
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Each holder of securities issued by RII or RIHF must be qualified by the
Casino Control Commission, unless the qualification requirement is waived. The
Casino Control Commission has the authority to waive the qualification
requirement for any security holder who does not have the ability to control the
issuer or elect one or more directors thereof. The Casino Control Act provides
that anyone who holds 5% or more of the securities of a publicly traded holding
company or affiliate, such as RII and RIHF, is presumed to have to qualify. In
addition, the Casino Control Commission has the authority to waive the
qualification requirement for an "institutional investor" (as defined in the
Casino Control Act) who holds less than 10% of the equity securities of a
publicly traded holding company of a casino licensee, such as RII, or holds less
than 20% of the outstanding debt securities and less than 50% of any issue of
debt securities issued by a publicly traded affiliate, such as RIHF, if the
institutional investor holds the securities for investment purposes only and has
no intention of influencing or affecting the affairs of the issuer and there is
no reason to believe that the institutional investor may be found unqualified.
If a security holder is required to qualify, the security holder must submit an
application for qualification or dispose of its securities within certain time
periods. An application for qualification must include a trust agreement whereby
the security holder places its securities in trust with a trustee qualified by
the Casino Control Commission. If the security holder is found qualified, the
trust agreement will be terminated. If the security holder is not found
qualified, the trust will become operative and the trustee will be empowered
with all rights of ownership pertaining to such security holder's securities,
including the right to sell the securities. In the event of such a sale, the
former security holder will not be entitled to receive an amount in excess of
the lesser of the actual costs at which the securities were acquired or the
value of the securities at the time the trust became operative. The Company will
apply for waiver of the qualification requirement for all security holders who
appear to be eligible for same.
If the Casino Control Commission finds that an individual owner or holder of
any securities of a corporate licensee, its holding company or affiliate must be
qualified and is not qualified under the Casino Control Act, the Casino Control
Commission has the right to propose any necessary remedial action. In the case
of corporate holding companies and affiliates whose securities are publicly
traded, the Casino Control Commission may require divestiture of the security
held by any disqualified holder who is required to be qualified under the Casino
Control Act.
In the event that entities or persons required to be qualified refuse or
fail to qualify and fail to divest themselves of such security interest, the
Casino Control Commission has the right to take any necessary action, including
the revocation or suspension of the casino license. If any security holder of
the licensee, its holding company or affiliate who is required to be qualified
is found disqualified, it will be unlawful for the security holder to: (i)
receive any dividends or interest upon any such securities; (ii) exercise,
directly or through any trustee or nominee, any right conferred by such
securities; or (iii) receive any remuneration in any form from the corporate
licensee for services rendered or otherwise. The Restated Certificate of
Incorporation of RII provides, and the Amended RII Certificate of Incorporation
will provide, that all securities of RII and any of its subsidiaries are held
subject to the condition that if the holder thereof is found to be disqualified
by the Casino Control Commission pursuant to provisions of the Casino Control
Act, then that holder must dispose of his or her interest in the securities.
REMEDIES. In the event that it is determined that a licensee has violated
the Casino Control Act, or if a security holder of the licensee required to be
qualified is found disqualified but does not dispose of his securities in the
licensee or holding company, under certain circumstances the licensee could be
subject to fines or have its license suspended or revoked.
The Casino Control Act permits the Casino Control Commission to appoint a
conservator to operate the casino and hotel facility if a license is revoked,
not renewed or suspended for a period in excess of 120 days. If a conservator is
appointed, the suspended or former licensee is entitled to a "fair rate of
return out of net earnings, if any, during the period of the conservatorship,"
taking into consideration what amounts to a fair rate of return in the casino or
hotel industry.
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Under certain circumstances, upon the revocation of a license or failure to
renew, the conservator, after approval by the Casino Control Commission and
consultation with the former licensee, may sell, assign, convey or otherwise
dispose of all of the property of the casino/hotel. In such cases, the former
licensee is entitled to a summary review of such proposed sale by the Casino
Control Commission and creditors of the former licensee and other parties in
interest are entitled to prior written notice of sale.
LICENSE FEES, TAXES AND INVESTMENT OBLIGATIONS. The Casino Control Act
provides for casino license renewal fees and other fees based upon the cost of
maintaining control and regulatory activities, and various license fees for the
various classes of employees. In addition, a licensee is subject annually to a
tax of 8% of "gross revenue" (defined under the Casino Control Act as casino
win, less provision for uncollectible accounts up to 4% of casino win) and
license fees of $500 on each slot machine.
The following table summarizes, for the periods shown, the fees and taxes
assessed upon the Company by the Casino Control Commission.
<TABLE>
<CAPTION>
FOR THE YEAR
----------------------------------------------
1990 1991 1992
-------------- -------------- --------------
<S> <C> <C> <C>
Gaming tax....................................................... $ 16,351,000 $ 17,384,000 $ 18,788,000
License, investigation, inspection and other fees................ 5,014,000 4,730,000 4,417,000
-------------- -------------- --------------
$ 21,365,000 $ 22,114,000 $ 23,205,000
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
The Casino Control Act, as originally adopted, required a licensee to make
investments equal to 2% of the licensee's gross revenue (as defined under the
Casino Control Act) (the "investment obligation") for each calendar year,
commencing in 1979, in which such gross revenue exceeded its "cumulative
investments" (as defined in the Casino Control Act). A licensee had five years
from the end of each calendar year to satisfy this investment obligation or
become liable for an "alternative tax" in the same amount. In 1984, the New
Jersey legislature amended the Casino Control Act so that these provisions now
apply only to investment obligations for the years 1979 through 1983. Certain
issues have been raised concerning the satisfaction of the Company's investment
obligations for the years 1979 through 1983. See Note 15 of Notes to
Consolidated Financial Statements of RII for a discussion of these issues.
Effective for 1984 and subsequent years, the amended Casino Control Act
requires a licensee to satisfy its investment obligation by purchasing bonds to
be issued by the Casino Reinvestment Development Authority (the "CRDA"), a
public authority created under the Casino Control Act, or by making other
investments authorized by the CRDA, in an amount equal to 1.25% of a licensee's
gross revenue. If the investment obligation is not satisfied, then the licensee
will be subject to an investment alternative tax of 2.5% of gross revenue.
Licensees are required to make quarterly deposits with the CRDA against their
current year investment obligations. The Company's investment obligations for
the years 1992, 1991 and 1990 amounted to $2,930,000, $2,706,000 and $2,542,000,
respectively, and have been satisfied by deposits made with the CRDA. At
December 31, 1992, the Company held $4,873,000 face amount of bonds issued by
the CRDA and had $9,921,000 on deposit with the CRDA. The CRDA bonds issued
through 1992 have interest rates ranging from 5.8% to 7% and have repayment
terms of between 41 and 50 years.
THE BAHAMAS
LICENSING. PEL is currently licensed to operate the Paradise Island casino
under the Gaming Act of the Commonwealth of The Bahamas, which regulates the
operation of casinos in The Bahamas. The Gaming Act established a "Gaming Board"
which observes the count of all gaming receipts, prescribes accounting and
control procedures and regulates personnel and security matters. Gaming licenses
are renewable annually. The Gaming Board also is empowered to revoke or suspend
any gaming license if a violation occurs.
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PEL's gaming license is subject to a number of conditions relating to PEL's
activities and operations. Under the casino license, PEL and its parent entities
are required to observe certain operating requirements and to provide certain
financial and other information to the Government of The Bahamas on a continuing
basis. See "The Bahamas -- Certain Arrangements with The Bahamian Government".
LICENSE FEES AND TAXES. Currently, the Gaming Act provides for an annual
basic license fee of $200,000 plus a tax of 25% on all gaming win up to
$10,000,000, 20% on the next $6,000,000 of win, 10% on the next $4,000,000 of
win, and 5% on all win over $20,000,000, with a minimum tax of $2,000,000
payable each year on gaming win.
The following table summarizes, for the periods shown, the taxes and fees
paid or accrued by the Company under the Gaming Act and the Paradise Island
Agreements.
<TABLE>
<CAPTION>
FOR THE YEAR
----------------------------------------------
1990 1991 1992
-------------- -------------- --------------
<S> <C> <C> <C>
Gaming tax....................................................... $ 6,269,000 $ 6,153,000 $ 6,411,000
Basic license and operating fees................................. 10,957,000 10,610,000 11,382,000
-------------- -------------- --------------
$ 17,226,000 $ 16,763,000 $ 17,793,000
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
THE COMPANY'S PROPERTIES
The Company's casino, resort hotel and related properties in Atlantic City
and The Bahamas, together with certain other properties, described above are
owned in fee, except for approximately 1.2 acres of the Resorts Casino Hotel
site which are leased pursuant to ground leases expiring from 2056 through 2067.
RII's office in North Miami, Florida, is located in a three-story building owned
by RII.
The Company's principal properties, including the Resorts Casino Hotel, the
Paradise Island Resort & Casino, the Ocean Club Golf & Tennis Resort and the
Paradise Paradise Beach Resort (but not the land underlying the Showboat Casino
or the Showboat Lease), and, in each case, any additions or improvements to
those properties, together with all related furniture, fixtures, machinery and
equipment, directly or indirectly comprise the collateral securing the Old
Series Notes. The Showboat Lease, including the land subject to the lease,
secures the payment of the Showboat Notes.
ATLANTIC CITY -- OTHER PROPERTIES
The Company owns the Non-Operating Real Property in Atlantic City including
various sites that could be developed and are available for sale. The
Non-Operating Real Property consists primarily of vacant land in Great Island,
Brigantine Island and the Marina Area, and waterfront parcels in the inlet
section. In view of the generally depressed state of the commercial real estate
market in Atlantic City and the condition of the economy generally, the Company
does not anticipate any significant real estate activity in the foreseeable
future.
RII is the owner of real property located at Brigantine Boulevard on
Brigantine Island that consists of approximately 40 acres ("Rum Point"), of
which only approximately 17 acres can be developed because the remaining
portions constitute wetlands areas and consequently are not available for
development. Additional environmental and coastal restrictions apply to the
development of Rum Point, though the Company currently is attempting to have the
restrictions modified to permit development.
RII owns in fee an approximately 552-acre parcel located in Atlantic City on
Blackhorse Pike (the "Great Island Property"), of which approximately 500 acres
are considered to be wetlands. In 1987, the Atlantic City Board of Education
(the "Board of Education") acquired a 48-acre parcel of non-wetland property
which was part of the Great Island Property owned by RII that originally
comprised 600 acres. The acquisition was pursuant to eminent domain proceedings
brought by the Board of Education. In 1987 RII received $5,382,500 of the total
estimated compensation of $5,720,000 for the 48-acre parcel taken by the Board
of Education. The difference of $337,500 was set aside for estimated
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tidelands claims by the State of New Jersey. In December 1990, a jury decided
that the value of the property was approximately $7,537,000. In 1992, RII
received $1,817,000 of additional compensation plus interest thereon. RII is
contesting the amount of compensation paid to it.
ESS owns in fee an eight-acre parcel located in the marina area of Atlantic
City immediately adjacent to the Harrah's Casino Hotel. The Company also owns in
fee various individual parcels of property located in the area of Atlantic City
known as the South Inlet which in the aggregate constitute approximately ten
acres and a parcel of land in Atlantic City consisting of approximately seven
acres and a warehouse thereon.
The Company is the owner of various additional properties at scattered sites
in Atlantic City. Principal among these is the so-called "Trans Expo" site, a
2.3-acre parcel located near the proposed convention center.
THE BAHAMAS -- OTHER PROPERTIES
The Company, through RIB, owns 564 acres on Paradise Island. RIB has
prepared a land use master plan for the island. See "-- The Bahamas -- Land and
Other Assets" for a description of the acreage available for development and/or
sale and the preparation of a master plan for Paradise Island. The Company
recently sold a .63 acre tract of land on Paradise Island. The Company does not
anticipate any significant real estate sales on Paradise Island while it is
seeking to implement the Restructuring.
The Company, through a subsidiary of RIB, also owns approximately 1,555
acres of undeveloped and 120 acres of partially developed land located on Little
Hawksbill Creek, several miles from Freeport, Grand Bahama Island.
As previously indicated, approval by the Bahamian Government is required for
foreign ownership of real property in The Bahamas. In addition, any foreign
investment in The Bahamas requires exchange control approval by the Central Bank
of The Bahamas. No sale of any property located in The Bahamas to non-Bahamian
nationals may be completed until such governmental approvals are obtained.
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MANAGEMENT OF RII
DIRECTORS AND EXECUTIVE OFFICERS
The directors of RII are:
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
- ---------------------------------------- --- --------------
<S> <C> <C>
Merv Griffin 68 1988
Chairman of the Board of Directors
Antonio C. Alvarez II 45 1990
Warren Cowan 72 1990
Thomas E. Gallagher 48 1993
Joseph G. Kordsmeier 54 1991
Paul C. Sheeline 72 1990
</TABLE>
Pursuant to RII's Restated Certificate of Incorporation, the total number of
directors is fixed at six. The Board of Directors is classified into three equal
classes, Class I, Class II, and Class III, which have staggered terms ending at
the annual shareholders' meetings scheduled to be held in 1994, 1995 and 1996,
respectively, and thereafter at the third annual shareholders' meeting following
each such meeting. Notwithstanding the foregoing, each director shall serve
until his successor is elected and qualified or until his earlier death,
resignation or removal. Messrs. Kordsmeier and Sheeline comprise Class I,
Messrs. Alvarez and Gallagher comprise Class II, and Messrs. Griffin and Cowan
comprise Class III.
Upon completion of the Reorganization, the Board of Directors will consist
of Messrs. Griffin, Gallagher, Greene and Fallon, and, as Class B directors,
Masson and Namol:
RIH's casino license from the Casino Control Commission requires that (i) at
least two members of the Board of Directors of RII be independent, outside
directors, and (ii) the audit committee of the Board of Directors consist
entirely of independent, outside members of the Board of Directors. The audit
committee of the Board of Directors of RII consists of two independent
directors, Messrs. Kordsmeier and Sheeline. Messrs. Griffin, Sheeline and
Gallagher are members of the Executive Committee of the Board of Directors of
RII. The Executive Committee was formed in November 1993 and was authorized by
the full Board of Directors to approve any action to be taken by RII other than
those involving the Restructuring, affiliate transactions and other transactions
out of the ordinary course of business of RII.
The executive officers of RII are:
<TABLE>
<CAPTION>
EXECUTIVE
NAME AGE OFFICER SINCE
- ---------------------------------------- --- --------------
<S> <C> <C>
Merv Griffin 68 1988
Chairman of the Board of Directors
Christopher D. Whitney 49 1988
Office of the President, Executive Vice
President, Chief of Staff, General
Counsel and Secretary
Matthew B. Kearney 53 1982
Office of the President, Executive Vice
President -- Finance, Chief Financial
Officer and Treasurer
David G. Bowden 52 1979
Vice President -- Controller, Chief
Accounting Officer, Assistant Secretary
and Assistant Treasurer
</TABLE>
The officers of RII serve at the pleasure of the Board of Directors of RII.
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Pursuant to the Hanlon Termination Agreement, David P. Hanlon resigned as of
October 31, 1993, from his positions as President, Chief Executive Officer and a
director of RII. Pending completion of the Restructuring, RII will be managed by
an Office of the President comprised of Mr. Whitney and Mr. Kearney. It is
anticipated that RII's post-Restructuring board of directors will commence a
search for a new Chief Executive Officer upon completion of the Restructuring.
BUSINESS EXPERIENCE
The principal occupations and business experience for the last five years or
more of the directors and executive officers of RII are as follows:
MERV GRIFFIN -- Chairman of the Board of RII since November 1988; Chairman
of Griffco from its incorporation in May 1986 to September 1990; President of
Griffco from September 1988 to September 1990; Chairman of Griffin Group since
its incorporation in September 1988; Chairman of January Enterprises, Inc.
("January Enterprises") a television production and holding company doing
business as Merv Griffin Enterprises, from 1964 to May 1986, and Chief Executive
Officer since 1964; director of Hollywood Park Operating Company from 1987 to
June 1991; television and radio producer since 1945. Merv Griffin created and
produced the nationally syndicated television game shows, "Wheel of Fortune" and
"Jeopardy". For 21 years, through 1986, Merv Griffin hosted "The Merv Griffin
Show", a nationally syndicated talk show. In 1986, Merv Griffin sold January
Enterprises to The Coca Cola Company, but he continues to act as Chief Executive
Officer of January Enterprises, presently a wholly owned indirect subsidiary of
Sony Pictures Entertainment, Inc.
ANTONIO C. ALVAREZ II -- Chief Executive Officer of Phar-Mor Inc., a
discount drugstore chain, since February 1993; President and Chief Operating
Officer of Phar-Mor Inc. from September 1992 to February 1993; Chairman of
Alvarez & Marsal, a financial advisory firm, since September 1983; Vice
President and Controller of Norton Simon Inc. from December 1981 to September
1983; prior thereto, Partner, Coopers & Lybrand.
WARREN COWAN -- Public relations consultant since July 1992; Chairman of
Rogers & Cowan, Inc., a public relations firm, from 1986 until July 1992;
President of Rogers & Cowan, Inc., from 1964 until 1986.
THOMAS E. GALLAGHER -- President and Chief Executive Officer of the Griffin
Group since April 1, 1992 and a director of Players International, Inc., a
riverboat gaming company, since December 10, 1992. For the preceeding 15 years,
Mr. Gallagher was a partner of the law firm of Gibson, Dunn & Crutcher.
JOSEPH G. KORDSMEIER -- President and sole owner of Kordsmeier Company,
consultants to the lodging industry, since 1982; Senior Vice President of Sales
and Marketing Worldwide and other positions with Hyatt Hotels from 1972 to 1982;
Mr. Kordsmeier also serves on the Advisory Board to Language Line, a division of
AT&T.
PAUL C. SHEELINE -- Chairman of Vale Petroleum Corporation from 1989 to
1991; Consultant to Intercontinental Hotels Corporation ("Intercontinental")
from 1986 to June 1990; Chief Executive Officer of Intercontinental from 1971 to
1985. In addition, Mr. Sheeline through 1992 was Of Counsel to the Washington,
D.C. law firm of Verner, Liipfert, Bernhard, McPherson and Hand.
CHARLES MASSON -- President of McCloud Partners, a private advisory firm,
since June 1, 1993; Director of Salomon Brothers Inc from 1991 through May 31,
1993; Vice President of Salomon Brothers Inc from 1983 through 1990.
WILLIAM FALLON -- Senior Vice President of R.M. Bradley & Co. Inc., a real
estate brokerage and management company, since 1988; Director of Massachusetts
Certified Development Corporation, a small business development company, since
1987 to present.
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VINCENT J. NAIMOLI -- Managing General Partner of the Tampa Bay Baseball
Ownership Group, since [____]; Chairman, President and Chief Executive Officer
of Anchor Industries International, Inc., an operating and holding company,
since [____]; Chairman and Chief Executive Officer of Doehler-Jarvis Corporation
since [____]; Chairman, President, Chief Executive Officer of Harvard
Industries, Inc.; Chairman, President and Chief Executive Officer of Ladish
Company, Inc. since [____]; director of Lincoln Foodservice Products, Inc. since
[____]; director of Simplicity Pattern Company since [____]; prior thereto
Chairman, President and Chief Executive Officer of Anchor Glass Container
Corporation from 1983 through 1989.
JAY M. GREEN -- Executive Vice President Finance and Administration and
Treasurer of Culbro Corporation, a diversified consumer and industrial products
company since 1988; Chairman of the Board of The Eli Witt Company, a Culbro
subsidiary, since February 1993; prior to 1988, Vice President and Controller of
Columbia Pictures Entertainment, Inc.
CHRISTOPHER D. WHITNEY -- Office of the President of RII since November
1993; Executive Vice President of RII since December 1989; General Counsel to
and Secretary of RII since February 1989; Chief of Staff of RII since December
1988; Senior Vice President of RII from December 1988 to December 1989; Senior
Vice President, Law & Government and General Counsel of Harrah's East from
November 1984 to December 1988; Vice President, General Counsel and Secretary of
Harrah's, the western branch of Holiday's casino subsidiary located in Reno,
Nevada, from June 1983 to November 1984; Vice President, General Counsel and
Secretary of Perkins Restaurants, Inc., Holiday's restaurant group subsidiary
then located in Minneapolis, Minnesota from November 1981 to June 1983; Vice
President & Associate General Counsel (Litigation) of Holiday in Memphis,
Tennessee from January 1979 to November 1981.
MATTHEW B. KEARNEY -- Office of the President of RII since November 1993;
Executive Vice President -- Finance of RII since September 1993; Chief Financial
Officer of RII since 1982; Vice President -- Finance of RII from 1982 through
September 1993.
DAVID G. BOWDEN -- Vice President -- Controller and Chief Accounting Officer
of RII since 1979.
EXECUTIVE COMPENSATION
The following table (hereinafter referred to as the "RII Summary
Compensation Table") sets forth information concerning compensation earned by,
paid to or awarded to RII's Chief Executive Officer and to each of the other
executive officers of RII who were serving as executive officers at December 31,
1992, for services rendered in all capacities to RII and its subsidiaries.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- NUMBER OF ALL
OTHER ANNUAL STOCK OPTIONS OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION GRANTED COMPENSATION (6)
- ------------------------------------------- --------- --------- ------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
David P. Hanlon 1992 $ 764,231 $1,206,435(1) $177,776(4) $ 36,738
President and Chief Executive Officer 1991 750,000 1,325,000(1) 1,097,433(5)
1990 750,000 1,287,857(1) 1,097,433(5)
Christopher D. Whitney 1992 300,000 125,000(2) 14,592
Executive Vice President and Chief of 1991 283,269 150,000(2) 100,000
Staff 1990 250,000 275,000(3)
Matthew B. Kearney 1992 275,000 125,000(2) 16,074
Vice President -- Finance and Chief 1991 266,635 125,000(2) 87,500
Financial Officer 1990 250,000 120,000(3)
David G. Bowden 1992 135,000 40,000(2) 8,126
Vice President -- Controller and Chief 1991 131,654 35,000(2) 25,000
Accounting Officer 1990 125,000 45,000(3)
<FN>
- ------------------------------
(1) Includes special incentive bonus payments in satisfaction of a guaranteed
bonus of $1,500,000 in connection with Mr. Hanlon's agreement to enter
into employment with the Company. Such payments for 1992, 1991 and 1990
were $375,000, $375,000 and $750,000, respectively. Also includes
performance bonuses for 1992, 1991 and 1990 of $831,435, $950,000 and
$537,857, respectively.
</TABLE>
201
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<TABLE>
<S> <C>
(2) Performance bonus for year in which presented.
(3) In addition to performance bonuses for 1990, amounts include special
bonuses paid in connection with services related to the Company's
reorganization of $175,000 for Mr. Whitney, $50,000 for Mr. Kearney and
$25,000 for Mr. Bowden.
(4) Includes $157,776 for legal fees and expenses incurred in connection with
the preparation and negotiation of the Hanlon Employment Agreement.
(5) The 1990 Stock Option Plan provides for the grant to Mr. Hanlon of options
to purchase 5% of the shares of Common Stock Outstanding, which amount by
its definition is subject to adjustment. The amount reflected here is
based on Common Stock Outstanding at December 31, 1992. In 1990 the
Company granted an option to Mr. Hanlon to purchase these shares at an
exercise price of $4.00 per share. In 1991, with the approval of RII's
shareholders, a new option was granted to Mr. Hanlon for the same number
of shares at an exercise price of $1.875 per share and the option granted
in 1990 was cancelled.
(6) Includes the cost of group life and health insurance: Mr. Hanlon --
$18,074, Mr. Whitney -- $8,612, Mr. Kearney -- $10,441 and Mr. Bowden --
$5,329; the Company's contribution to a defined contribution group
retirement plan: Mr. Hanlon -- $5,433, Mr. Whitney -- $5,980, Mr. Kearney
-- $5,633 and Mr. Bowden -- $2,797; and the cost of additional disability
insurance coverage: Mr. Hanlon -- $13,231.
</TABLE>
See also "Employment Agreements; Termination of Employment and Change in Control
Arrangements."
No options were granted in 1992 to the executive officers named in the RII
Summary Compensation Table. Accordingly, no "Option Grant Table" is presented
herein. The following table sets forth information as of December 31, 1992,
concerning the unexercised options held by those executive officers, none of
whom exercised options in 1992. No options held by those executive officers were
in-the-money at December 31, 1992. Options are "in-the-money" when the fair
market value of underlying common stock exceeds the exercise price of the
option. All options held by the named executives have an exercise price of
$1.875 per share. The closing price of RII Common Stock on December 31, 1992,
was $.875 per share.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
OPTIONS
AT DECEMBER 31, 1992
--------------------------
NAME EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------- ----------- -------------
<S> <C> <C>
David P. Hanlon............................................ 1,097,433 0
Christopher D. Whitney..................................... 66,666 33,334
Matthew B. Kearney......................................... 58,333 29,167
David G. Bowden............................................ 16,666 8,334
</TABLE>
COMPENSATION OF DIRECTORS
RII's non-employee directors are each entitled to receive $35,000 annually
as compensation for serving as a director, $500 for each Board meeting attended
and $500 for each committee meeting attended when such committee meeting is not
held on the same day as a Board meeting or another committee meeting. No
compensation was paid to Mr. Griffin or Mr. Hanlon for their services as
directors of RII in 1992.
Messrs. Alvarez, Cowan, Kordsmeier and Sheeline received $41,500, $41,500,
$44,000 and $45,000, respectively, for their services as directors during 1992.
Mr. Sheeline's compensation includes $1,000 for participation in a Board meeting
of a subsidiary of RII.
EMPLOYMENT AGREEMENTS; TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
DAVID P. HANLON. Pursuant to the Hanlon Termination Agreement, RII and Mr.
Hanlon mutually agreed to the termination, as of October 31, 1993, of the Hanlon
Employment Agreement.
Pursuant to the Hanlon Employment Agreement, Mr. Hanlon is entitled to
$850,000 earned pursuant to the Hanlon Employment Agreement but not yet paid as
of October 31, 1993. In addition, pursuant to the Hanlon Termination Agreement,
Mr. Hanlon is entitled to receive the present value of future base salary
pursuant to the Hanlon Employment Agreement as determined under the Hanlon
Termination Agreement in the sum of $1,303,076 and $1,345,580 in respect of the
performance bonuses for fiscal years ending 1994 and 1995 payable under the
Hanlon Employment Agreement,
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<PAGE>
half of which was paid on October 31, 1993 and half of which will be paid upon
the earlier of (i) the acceptance of a reorganization or recapitalization of RII
by the requisite number and amount of RII's creditors voting on such
restructuring or reorganization and (ii) April 15, 1995. In addition, Mr. Hanlon
will receive a bonus from RII in the amount of $325,000 in connection with the
reorganization or recapitalization of RII, payable prior to any bankruptcy
filing by RII. Finally, Mr. Hanlon will receive a bonus of $300,000 upon the
disposition of the Paradise Island Business. Accordingly, Mr. Hanlon would
receive a total of $625,000 in connection with the Restructuring. The payment to
be made to Mr. Hanlon with respect to the disposition of the Paradise Island
Business may be subject to the approval of the Bankruptcy Court. Mr. Hanlon is
also entitled to participate in all of RII's benefit plans through and including
September 16, 1995, unless Mr. Hanlon receives a comparable benefit in
connection with subsequent employment. Mr. Hanlon will retain all previously
granted 1990 Stock Options.
CHRISTOPHER D. WHITNEY AND MATTHEW B. KEARNEY. The Company has employment
agreements with Messrs. Whitney and Kearney, both dated as of May 3, 1991, which
were extended to May 1995. The respective terms of employment will each renew
automatically for another year unless either party to the agreement notifies the
other that the term is not to be renewed. Mr. Whitney's agreement provides for
an annual salary of $300,000 and Mr. Kearney's agreement was recently amended to
provide for an annual salary of $300,000. If the Company terminates the
executive's employment without cause, as defined, the executive will be entitled
to receive base salary payments through the end of his term of employment. If
such a termination of his employment follows a change in control, as defined,
the executive will receive a lump-sum payment equal to the present value of such
base salary payments.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
COMPENSATION COMMITTEE MEMBERS. Messrs. Alvarez, Griffin and Sheeline serve
as members of the Compensation Committee of the Board of Directors of RII. Mr.
Griffin also serves as an officer of RII.
GRIFFIN SERVICES AGREEMENT. The Griffin Group, Merv Griffin and RII entered
into the Old Griffin Services Agreement in September 1990. Pursuant to the Old
Griffin Services Agreement, the Griffin Group granted the Company a
non-exclusive license to use the name and likeness of Merv Griffin for purposes
of advertising and promoting the Company's facilities and operations, and Merv
Griffin agreed to serve as Chairman of the Board of Directors of RII. In
addition, the Griffin Group agreed to provide to the Company the non-exclusive
services of Merv Griffin, on a limited basis, to host or present shows in which
he is a featured performer at the Company's facilities. Under the Old Griffin
Services Agreement, the Company was not required to compensate the Griffin Group
and the Company has not paid any compensation to the Griffin Group, or to Mr.
Griffin directly, for Mr. Griffin's services to the Company under the Old
Griffin Services Agreement. The term of the Old Griffin Services Agreement was
for a period of two years, which expired on September 16, 1992.
Pursuant to the New Griffin Services Agreement entered into in April 1993,
but dated and effective as of September 17, 1992 to replace the Old Griffin
Services Agreement as of its expiration, the Griffin Group granted RII and RIH a
non-exclusive license to use the name and likeness of Merv Griffin, in certain
advertising media and limited merchandising, for the sole purpose of advertising
and promoting the Resorts Casino Hotel and the Paradise Island Business. In
connection with such license, the Griffin Group will not grant any similar
license to any casino/hotel located in either Atlantic City or The Bahamas
during the term of the New Griffin Services Agreement, so long as RII and RIH
own and/or operate casino and hotel facilities in such locations. It is not
expected that Merv Griffin will be associated with the Paradise Island Business
subsequent to the Restructuring.
Pursuant to the New Griffin Services Agreement, the Griffin Group also
agreed to provide to RII and RIH, for the term of the New Griffin Services
Agreement, the non-exclusive services of Merv Griffin, subject to the
performance by RII and RIH of its obligations under the New Griffin Services
Agreement, as (i) Chairman of the Board of Directors of RII, (ii) host,
producer, presenter and featured
203
<PAGE>
performer relative to certain shows to be presented at the Resorts Casino Hotel,
(iii) as consultant and marketing adviser, (iv) in certain capacities, as
spokesperson for RII and RIH and (v) as participant in certain radio, television
and print advertisements.
The New Griffin Services Agreement will continue in force (unless earlier
terminated under certain circumstances, including but not limited to a change in
control of RII, the removal of Merv Griffin as Chairman of the Board of
Directors of RII or a sale of the Resorts Casino Hotel) until the later of
September 17, 1996, or the fourth anniversary of the effective date of any
restructuring of RII's outstanding debt or any reorganization of RII under the
Bankruptcy Code. If no such restructuring or reorganization has been consummated
as of September 17, 1996, the New Griffin Services Agreement shall terminate as
of that date. Additionally, in no event shall the New Griffin Services Agreement
extend beyond September 17, 1997.
Under the New Griffin Services Agreement, the Griffin Group was entitled to
receive from RII and RIH $4,100,000 upon execution of such agreement, as
compensation for the first two years of services. The New Griffin Services
Agreement also provides for additional compensation to Griffin Group in the
amounts of $2,205,000 and $2,310,000 for services during the third and fourth
years, respectively, of the term of the New Griffin Services Agreement.
Thereafter, should the New Griffin Services Agreement remain in force for
another full year, RII and RIH will pay Griffin Group additional compensation in
the amount of $2,425,000, or if the New Griffin Services Agreement remains in
force for less than a full year, a prorated portion of such amount. RIH made the
$4,100,000 payment for the first two years under the New Griffin Services
Agreement in April 1993. Simultaneously, Merv Griffin made a partial payment of
the Griffin Note in an equal amount to RII thereby reducing the principal amount
of the Griffin Note to $7,523,333. RII then cancelled the Griffin Note. The
Griffin Group Note in the principal amount of $7,523,333 was substituted
therefor. On September 17, 1993, RII satisfied its obligation to make the
$2,205,000 payment for the year ending September 16, 1995 by reducing the
Griffin Group Note by that amount. The Griffin Group Note is payable on demand
and bears interest at the rate of 3% per year. The bank letter of credit
securing the Griffin Note was released by RII. Merv Griffin has personally
guaranteed payment of the Griffin Group Note. On or before the Effective Date,
RII will pay $2,310,000 to the Griffin Group for the fourth year of the New
Griffin Services Agreement also by reducing the principal amount of the Griffin
Group Note in an equal amount. Subsequent thereto, RII will receive payment of
the balance of the Griffin Group Note (approximately $3,000,000) from the
Griffin Group and will distribute the proceeds of such payment to the holders of
the Old Series Notes as part of Excess Cash. Payment in full of the outstanding
amounts under the Griffin Group Note is a condition to consummation of the Plan.
Additionally, pursuant to the New Griffin Services Agreement, the Griffin
Group will also receive, on the Effective Date, the Griffin Warrants.
RII and RIH also have agreed to indemnify Merv Griffin and the Griffin Group
for certain costs and liabilities arising in connection with the New Griffin
Services Agreement or Merv Griffin's services, or the service of any employee of
the Griffin Group, as a director or officer of RII or any subsidiary thereof.
Pursuant to the New Griffin Services Agreement, RII and RIH have agreed to
maintain for at least four years comprehensive public liability, personal injury
and umbrella insurance coverage in specified amounts for both the Griffin Group
and Merv Griffin, individually.
RII and RIH also have agreed to reimburse the Griffin Group for certain
expenses incurred by the Griffin Group and Merv Griffin in connection with the
license and services agreed to under the New Griffin Services Agreement. If the
Griffin Group fails to perform its obligations pursuant to the New Griffin
Services Agreement, all unearned advance payments to the Griffin Group will be
repaid to the Company.
INDEMNITY AGREEMENT. RII agreed to indemnify Merv Griffin pursuant to an
Indemnity Agreement (the "Indemnity Agreement"), executed on September 19, 1990,
against any and all losses by reason of, arising from, in connection with, or
relating to the Acquisition Claims (as defined in the Indemnity Agreement). The
Acquisition Claims relate to all claims asserted against Mr. Griffin in
204
<PAGE>
connection with the acquisition of RII by Griffco in November 1988, and all
transactions consummated in connection therewith, including the sale of the Taj
Mahal to certain affiliates of Donald J. Trump and the issuance of certain debt
securities by GRI. RII also agreed to reimburse Mr. Griffin for any
out-of-pocket expenses (including counsel fees) incurred by him in connection
with the enforcement of, or preservation of any rights under, the Indemnity
Agreement.
INDEBTEDNESS OF MANAGEMENT. In September 1990, Merv Griffin, Chairman of
the Board of RII, purchased 4,400,000 shares of RII Common Stock for which RII
received $12,345,000 in cash and the $11,000,000 Griffin Note. The Griffin Note
was secured by a letter of credit issued by a bank, bore interest at 8% per year
and was due upon demand. As described above in "Griffin Services Agreements", in
April 1993 Mr. Griffin made a partial payment on the Griffin Note, resulting in
a remaining balance of $7,523,333. The Griffin Note was then canceled and the
$7,523,333 Griffin Group Note, payable by the Griffin Group, a company
controlled by Merv Griffin, was substituted therefor. The Griffin Group Note is
payable on demand and bears interest at the rate of 3% per year. Merv Griffin
has personally guaranteed payment of the Griffin Group Note. Further payments on
the Griffin Group Note have been and will be made as described above in "Griffin
Services Agreement".
CANCELLATION OF RECEIVABLES. As part of the Old Plan, $50,000,000 of the
Company's notes receivable from Griffco (formerly owned by Merv Griffin) were
cancelled. In addition, $386,000 of receivables from Griffco were eliminated as
a result of the merger of Griffco into a subsidiary of RII.
OTHER SERVICES. The Company reimbursed the Griffin Group $400,000,
$358,000, $396,000 and $181,000 for charter air services rendered in 1990, 1991,
1992 and to date in 1993, respectively, to Mr. Griffin as well as other
directors and officers of RII for travel related to Company business.
In 1991 and 1992 the Company did business with various subsidiaries of
January Enterprises, of which Merv Griffin is Chief Executive Officer. In 1991
the Company paid $235,000 and provided certain facilities and personnel for the
production of the "Ruckus Game Show" at Resorts Casino Hotel. Also in 1991, the
Company provided facilities, labor and accommodations relative to the production
of "Merv Griffin's 1991 New Year's Eve Special" which was broadcast live from
Resorts Casino Hotel. In 1992 the Company agreed to pay $100,000 and provided
certain facilities, labor and accommodations in connection with the production
of the live television broadcast of "Merv Griffin's New Year's Eve Special 1992"
from Resorts Casino Hotel. In 1993 the Company agreed to the same terms as in
1992 for the production of the live television broadcast of "Merv Griffin's New
Year's Eve Special 1993". The Company received certain promotional
considerations in connection with the television broadcast of these shows.
The Company paid Alvarez & Marsal $2,145,000 and $241,000 in 1990 and 1991,
respectively, for financial advisory services performed in connection with the
Old Plan. Also, the Company paid Alvarez & Marsal $300,000 for financial
advisory services rendered in 1992. In early 1992, RII entered into an agreement
with Alvarez & Marsal pursuant to which it was to provide financial advisory
services in connection with the development and analysis of financial
alternatives available to the Company, and the development of a long-term
financial plan. The agreement provided for monthly fees of $50,000 commencing on
March 1, 1992, reimbursement of expenses, and, upon a financial restructuring, a
fee of $250,000 and 125,000 shares of RII Common Stock. The agreement was
amended to suspend monthly fees as of September 1, 1992, in connection with Mr.
Alvarez's new position as an executive officer of Phar-Mor Inc. If the Requisite
Acceptances are received prior to the filing of the Prepackaged Chapter 11 Cases
(as defined in the Plan), the Company intends to pay Alvarez & Marsal its
restructuring fee of $250,000 and 125,000 shares of RII Common Stock prior to
such filing. If the Requisite Acceptances are not received prior to such filing,
the Company anticipates that Alvarez & Marsal will file a claim against the
Company for its restructuring fee contingent on consummation of the
Restructuring. Mr. Alvarez, a shareholder of Alvarez & Marsal, has been a member
of the Board of Directors of RII since September 1990.
The Company retained Verner, Liipfert, Bernhard, McPherson and Hand during
1992 for certain legal services. Mr. Sheeline, who was "Of Counsel" at that time
to such law firm, has been a director of RII since 1990.
205
<PAGE>
MANAGEMENT OF RIHF
DIRECTORS AND EXECUTIVE OFFICERS
The directors of RIHF are:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
- ---------------------------------------- --- ------------
<S> <C> <C>
Christopher D. Whitney 49 1993
Matthew B. Kearney 53 1993
</TABLE>
The executive officers of RIHF are:
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME AGE SINCE
- ---------------------------------------- --- ------------
<S> <C> <C>
Christopher D. Whitney 49 1993
President
Matthew B. Kearney 53 1993
Executive Vice President -- Finance and
Chief Financial Officer
</TABLE>
RIHF was recently incorporated and therefore had no compensation or other
activity in 1992. See "Management of RII" for a description of the business
experience and the compensation arrangements for Messrs. Whitney and Kearney.
MANAGEMENT OF RIH
DIRECTORS AND EXECUTIVE OFFICERS
The directors of RIH are:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
- ---------------------------------------- ---- ------------
<S> <C> <C>
Christopher D. Whitney 49 1991
Matthew B. Kearney 53 1993
</TABLE>
The executive officers of RIH are:
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME AGE SINCE
- ---------------------------------------- ---- ------------
<S> <C> <C>
John P. Belisle 39 1991
Executive Vice President and Chief
Operating Officer
Christopher D. Whitney 49 1989
Executive Vice President, Chief of
Staff and Secretary
Matthew B. Kearney 53 1982
Vice President and Chief Financial
Officer
Kimberly A. Corrigan 36 1991
Vice President -- Hotel Operations
Paul E. Patay 62 1989
Vice President -- Food and Beverage
Michelle Perna 40 1988
Vice President -- Human Resources
Anthony P. Rodio 35 1993
Vice President -- Finance
</TABLE>
206
<PAGE>
BUSINESS EXPERIENCE
See "Management of RII -- Directors and Executive Officers -- Business
Experience" above for information regarding Messrs. Whitney and Kearney. The
principal occupations and business experience for the last five years or more of
the directors and executive officers of RIH who do not also serve as directors
or executive officers of RII are as follows:
JOHN P. BELISLE -- Executive Vice President and Chief Operating Officer of
RIH since November 1993; Senior Vice President -- Casino Operations of RIH
from May 1993 to November 1993; Vice President -- Marketing of RIH from June
1991 to May 1993; Vice President -- Marketing of Trump Castle from January
1990 to June 1990; Vice President -- Marketing of RIH from September 1989 to
January 1990; various other positions with RIH from December 1981 to
September 1989.
KIMBERLY A. CORRIGAN -- Vice President -- Hotel Operations of RIH since
September 1991; Executive Director -- Hotel Operations of Taj Mahal from
September 1990 to September 1991; Executive Director of Operations of
Bally's Grand casino/hotel in Atlantic City, New Jersey from June 1986 to
August 1989.
PAUL E. PATAY -- Vice President -- Food and Beverage of RIH since April
1989; manager of food and beverage operations of RIH from December 1988 to
April 1989; Vice President -- Food and Beverage of Trump Castle casino/hotel
in Atlantic City from September 1985 to May 1988.
MICHELLE PERNA -- Vice President -- Human Resources of RIH since November
1988; Manager -- Employee Relations and various other positions with
Harrah's Marina from May 1980 to November 1988.
ANTHONY P. RODIO -- Vice President -- Finance of RIH since September 1993;
Director of Operational Accounting of RIH from October 1990 to September
1993; Casino Controller of Trump Plaza Hotel and Casino from August 1987 to
October 1990.
EXECUTIVE COMPENSATION
The following table (hereinafter referred to as the "RIH Summary
Compensation Table") sets forth information concerning compensation earned by,
paid to or awarded to RIH's Chief Executive Officer and to each of the other
four most highly compensated executive officers of RIH who were serving as
executive officers at December 31, 1992 for services rendered in all capacities
to RIH, RII and RII's other subsidiaries for the year ended December 31, 1992.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION COMPENSATION (2)
- ------------------------------------------------- ----------- --------- ------------- ----------------
<S> <C> <C> <C> <C>
David P. Hanlon (1) (1) (1)
President and Chief Executive Officer(3)
Christopher D. Whitney (1) (1)
Executive Vice President
Matthew B. Kearney (1) (1)
Vice President and Chief
Financial Officer
John R. Spina $ 198,077 $ 97,568 $ 8,562
Executive Vice President and Chief Operating
Officer(3)
Earl Yanase $ 220,000 $ 53,068 $ 8,342
Vice President -- Casino Operations (3)
<FN>
- ------------------------
(1) Messrs. Hanlon, Whitney and Kearney were executive officers of RII at
December 31, 1992. See "RII Summary Compensation Table" for information
regarding their compensation.
</TABLE>
207
<PAGE>
<TABLE>
<S> <C>
(2) Includes the cost of group life and health insurance: Mr. Spina -- $5,299
and Mr. Yanase -- $5,634; employer's contribution to a defined
contribution group retirement plan: Mr. Spina -- $3,263 and Mr. Yanase --
$2,708.
(3) Messrs. Hanlon, Spina and Yanase served in these capacities through
October 1993, November 1993 and July 1993, respectively.
</TABLE>
Certain executives of RIH participate in RII's 1990 Stock Option Plan. Their
options are to purchase shares of RII Common Stock. No options were granted in
1992 to the executive officers named in the RIH Summary Compensation Table.
Accordingly, no Option Grant Table is presented herein. The following table sets
forth information as of December 31, 1992, concerning the unexercised options
held by those executive officers, none of whom exercised options in 1992. No
options held by those executive officers were in-the-money at December 31, 1992.
Options are "in-the-money" when the fair market value of underlying common stock
exceeds the exercise price of the option. All options held by the named
executives have an exercise price of $1.875 per share. The closing price of RII
Common Stock on December 31, 1992 was $.875 per share.
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED OPTIONS AT
DECEMBER 31, 1992
-------------------------
NAME EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------- ---------- -------------
<S> <C> <C>
David P. Hanlon................................................ (1) (1)
Christopher D. Whitney......................................... (1) (1)
Matthew B. Kearney............................................. (1) (1)
John R. Spina.................................................. 23,333 11,667
Earl Yanase.................................................... 11,666 23,334
<FN>
- ------------------------
(1) For information regarding fiscal year end option values for Messrs.
Hanlon, Whitney and Kearney, see the table of unexercised options at
December 31, 1992 under "Management of RII -- Executive Compensation".
</TABLE>
COMPENSATION OF DIRECTORS
The directors of RIH presently receive no compensation specifically for
their services as directors. However, both directors of RIH serve as officers of
RII and are compensated for such services. Also, Mr. Hanlon who served as a
director during 1992, received no compensation specifically for his service as
an RIH director. During 1992 he served as an officer of RII and was compensated
for such service.
EMPLOYMENT AGREEMENTS; TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
In connection with Mr. Spina's termination in November 1993, RIH paid Mr.
Spina a lump sum cash settlement of $176,250. Messrs. Whitney and Kearney have
employment agreements with RII. See "Management of RII -- Executive Compensation
- -- Employment Agreements; Termination of Employment and Change in Control
Arrangements".
208
<PAGE>
MANAGEMENT OF PIRL
DIRECTORS AND EXECUTIVE OFFICERS
The directors of PIRL are:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
- ---------------------------------------- --- ------------
<S> <C> <C>
Christopher D. Whitney 49 1993
Matthew B. Kearney 53 1993
</TABLE>
The executive officers of PIRL are:
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME AGE SINCE
- ---------------------------------------- --- ------------
<S> <C> <C>
Christopher D. Whitney 49 1993
President
Matthew B. Kearney 53 1993
Vice President -- Finance and Chief
Financial Officer and Secretary
</TABLE>
PIRL was recently incorporated and therefore had no compensation or other
activity in 1992. See "Management of RII" for a description of the business
experience and the compensation arrangements for Messrs. Whitney and Kearney.
If the PIRL Spin-Off occurs, Messrs. Whitney and Kearney will resign as
directors and officers of PIRL. Pursuant to the Plan, Fidelity and TCW will
designate the initial directors and officers of PIRL for the period commencing
on the Effective Date.
209
<PAGE>
SECURITY OWNERSHIP
As of November 30, 1993, there were 2,003 record holders of RII Common
Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to the beneficial
ownership of RII Common Stock as of October 21, 1993, by persons known by RII to
be holders of 5% or more of RII Common Stock, or expected to become holders of
5% or more of RII Common Stock when the Restructuring is effected. Information
as to the number of shares beneficially owned has been furnished by the persons
named in the table.
<TABLE>
<CAPTION>
PRE-RESTRUCTURING POST-RESTRUCTURING
------------------------- -------------------------
SHARES SHARES PERCENT
NAME AND ADDRESS OF BENEFICIALLY PERCENT BENEFICIALLY OF
BENEFICIAL OWNER OWNED OF CLASS OWNED CLASS(3)
----------------------- ------------ --------- ------------ ---------
<S> <C> <C> <C> <C>
Merv Griffin............................ 4,398,115 21.82% 9,063,115(2) 21.29%
c/o The Griffin Group, Inc.
780 Third Avenue, Suite 1801
New York, NY 10017
David P. Hanlon......................... 1,094,800(1) 5.15% 1,094,800 2.81%
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, NJ 08401
Certain funds and accounts managed by -- -- 6,714,941 17.72%
Fidelity................................
Certain funds and accounts managed by -- -- 4,234,733 11.17%
TCW.....................................
<FN>
- ------------------------
(1) Ownership represents shares issuable upon exercise of fully vested 1990
Stock Options issued pursuant to the 1990 Stock Option Plan. Related
percentages shown give effect to the exercise of options for such shares.
See Note (5) to RII Summary Compensation Table under "Management of RII --
Executive Compensation".
(2) Assumes Griffin Warrants for 4,665,000 shares are issued. Related
percentage gives effect to their exercise.
(3) The percentages shown give effect to the issuance of 17,025,000 shares to
the holders of the Old Series Notes and 715,000 shares to financial
advisers in settlement of certain recapitalization costs.
</TABLE>
210
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as to the beneficial
ownership of RII Common Stock as of November 30, 1993, by each director, each
executive officer named in the RII Summary Compensation Table and by all
directors and executive officers as a group.
<TABLE>
<CAPTION>
PRE-RESTRUCTURING POST-RESTRUCTURING
------------------------- -------------------------
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
SHARES SHARES PERCENT
BENEFICIALLY PERCENT BENEFICIALLY OF
NAME OF BENEFICIAL OWNER OWNED OF CLASS OWNED CLASS(5)
- ---------------------------------------- ------------ --------- ------------ ---------
<S> <C> <C> <C> <C>
Merv Griffin............................ 4,398,115 21.82% 9,063,115(3) 21.29%
Antonio C. Alvarez II................... 5,000 .02% 5,000 .01%
Warren Cowan............................ 5,000 .02% 5,000 .01%
Thomas E. Gallagher..................... None None None None
Joseph G. Kordsmeier.................... None None None None
Paul C. Sheeline........................ 5,000 .02% 5,000 .01%
Christopher D. Whitney.................. 100,000(1) .49% 100,000 .26%
Matthew B. Kearney...................... 87,500(1) .43% 87,500 .23%
David G. Bowden......................... 25,000(1) .12% 25,000 .07%
Directors and officers as a group (nine
persons)............................... 4,625,615(2) 22.71% 9,290,615(4) 21.72%
<FN>
- ------------------------
(1) Ownership represents shares issuable upon exercise of 1990 Stock Options.
Related percentages shown give effect to the exercise of options for such
shares.
(2) Includes 212,500 shares which are issuable upon exercise of 1990 Stock
Options. Related percentage shown gives effect to the exercise of options
for such shares.
(3) Includes 4,665,000 shares issuable upon exercise of the Griffin Warrants
assuming that the Griffin Warrants are issued. Related percentage gives
effect to their exercise.
(4) Includes 212,500 shares which are issuable upon exercise of 1990 Stock
Options and 4,665,000 shares issuable upon exercise of the Griffin
Warrants. Related percentage shown gives effect to the exercise of all
such stock options and the Griffin Warrants.
(5) The percentages shown give effect to the issuance of 17,025,000 shares to
the holders of the Old Series Notes and 715,000 shares to financial
advisers in settlement of certain recapitalization costs.
</TABLE>
CERTAIN TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Messrs. Alvarez, Griffin and Sheeline serve as members of the Compensation
Committee of the Board of Directors of RII. Mr. Griffin also serves as an
officer of RII. See "Management of RII -- Executive Compensation -- Compensation
Committee Interlocks and Insider Participation" for more information relating to
these directors.
The Company paid Rogers & Cowan, Inc. $179,000, $147,000 and $128,000 for
public relations services rendered in 1990, 1991 and 1992, respectively, on a
non-exclusive basis for the Company's Atlantic City and Paradise Island
properties. Mr. Cowan, who was the Chairman of the Board and a shareholder of
Rogers & Cowan, Inc. until July 1992, has been a director of RII since September
1990.
211
<PAGE>
DESCRIPTION OF NEW RIHF MORTGAGE NOTES
The following is a summary of certain provisions of the New RIHF Mortgage
Notes and the New RIHF Mortgage Note Indenture. Wherever particular provisions
of the New RIHF Mortgage Note Indenture or New RIHF Mortgage Notes are referred
to, such provisions are incorporated by reference herein. References to Sections
or Articles refer to Sections or Articles of the New RIHF Mortgage Note
Indenture. The definitions of certain terms used below are set forth in "Certain
Definitions" below in this section. All other capitalized terms used in this
section but not defined in this Information Statement/Prospectus have the
meanings ascribed thereto in the New RIHF Mortgage Note Indenture and are
incorporated by reference herein.
GENERAL
The New RIHF Mortgage Notes will be issued pursuant to the New RIHF Mortgage
Note Indenture among RIHF, RIH and State Street Bank and Trust Company of
Connecticut, National Association, as trustee (the "New RIHF Mortgage Note
Trustee"). A copy of the New RIHF Mortgage Note Indenture is filed as an exhibit
to the Registration Statement of which this Information Statement/Prospectus is
a part. The terms of the New RIHF Mortgage Note Indenture also are governed by
certain provisions of the TIA. The New RIHF Mortgage Notes will be secured
senior subordinated obligations of RIHF in the aggregate principal amount of
$125,000,000. The New RIHF Mortgage Notes will mature on September 15, 2003.
INTEREST
Interest on the New RIHF Mortgage Notes will accrue from the Effective Date
at a rate of 11% per year. Interest is payable semi-annually on March 15 and
September 15 in each year to holders of record at the close of business on the
first day of the month in which the interest payment date occurs. RIHF is
required to pay interest on overdue principal and, to the extent permitted by
law, overdue interest at the rate of 14% per year.
SINKING FUND REQUIREMENTS
None.
MANDATORY REDEMPTION
In the event of an RIH Sale, all the New RIHF Mortgage Notes shall be
redeemed by RIHF whether such RIH Sale occurs before, on or after the fifth
anniversary of the Effective Date, at par together with interest, if any,
accrued and unpaid thereon to the Redemption Date; provided, however, that such
obligation of RIHF to redeem the New RIHF Mortgage Notes in the event of a
proposed RIH Sale shall cease to exist if the Holders of not less than 66 2/3%
in Outstanding Amount of the Outstanding New RIHF Mortgage Notes have consented
to such proposed RIH Sale. (SECTION 3.12).
OPTIONAL REDEMPTION
The New RIHF Mortgage Notes are redeemable at any time in whole, or from
time to time in part, on or after the fifth anniversary of the Effective Date at
the election of RIHF, at a redemption price of 100% of their principal amount
plus accrued interest to the Redemption Date. (SECTION 3.12).
From and after any Redemption Date, if funds for the redemption of any New
RIHF Mortgage Notes called for redemption shall have been made available, such
New RIHF Mortgage Notes will cease to bear interest and the only right of the
holders will be to receive payment of the Redemption Price and all interest
accrued to such Redemption Date. (SECTION 13.06).
The New RIHF Mortgage Note Indenture requires that notice of any redemption
of any New RIHF Mortgage Notes be given to holders at their addresses, as shown
in the register, not less than 30 nor more than 30 days prior to the Redemption
Date. The notice of redemption must specify, among other things, the Redemption
Date, the Redemption Price, the principal amount of New RIHF Mortgage Notes to
be redeemed, and, if less than all outstanding New RIHF Mortgage Notes are to be
redeemed, the identification (and, in the case of partial redemption, the
respective principal amounts)
212
<PAGE>
of the New RIHF Mortgage Notes to be redeemed and the place or places where the
New RIHF Mortgage Notes to be redeemed are to be surrendered for payment of the
Redemption Price. (SECTION 13.04).
The New RIHF Mortgage Note Indenture provides that in the event of
redemption of less than all the outstanding New RIHF Mortgage Notes, the
particular New RIHF Mortgage Notes to be redeemed will be selected by the New
RIHF Mortgage Note Trustee by a random, automated selection process or pro rata,
as deemed appropriate by the New RIHF Mortgage Note Trustee. (SECTION 13.03).
LIMITATION ON OPEN-MARKET PURCHASES
See "-- Covenants -- Limitation on Certain Transactions".
CASINO CONTROL ACT REGULATION
The New RIHF Mortgage Notes are subject to the qualification, divestiture
and redemption provisions under the Casino Control Act that are described in
"Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey".
(SECTION 13.08).
INTERCREDITOR AGREEMENT
The RIHF Senior Facility Notes, the RIH Senior Facility Guaranty, the New
RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage
Notes and the RIH Junior Mortgage Guaranty are all secured, in whole or in part,
by the Resorts Casino Hotel. See "-- Collateral", "-- Guaranty", "Description of
RIHF Senior Facility Notes -- Collateral", "Description of RIHF Senior Facility
Notes -- Guaranty", "Description of New RIHF Junior Mortgage Notes --
Collateral" and "Description of New RIHF Junior Mortgage Notes -- Guaranty".
RII, RIH, RIHF, the RIHF Senior Facility Trustee, the New RIHF Mortgage Note
Trustee, the New RIHF Junior Mortgage Note Trustee and any other lender or
lenders (or any trustee or agent acting on behalf of such lender or lenders)
under the Junior Mortgage Facility or the Working Capital Facility will enter
into an intercreditor agreement (the "Intercreditor Agreement"), relating to the
administration, preservation and disposition of the Resorts Casino Hotel.
The Intercreditor Agreement will provide that: (i) the liens securing
payment of the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty
will be PARI PASSU with each other and senior to liens securing payment of the
New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage
Notes and the RIH Junior Mortgage Guaranty with respect to payment from proceeds
realized upon any sale or other disposition of the Resorts Casino Hotel; and
(ii) the liens securing payment of the New RIHF Mortgage Notes and the RIH
Mortgage Guaranty will be PARI PASSU with each other, and senior to the liens
securing payment of the New RIHF Junior Mortgage Notes and the RIH Junior
Mortgage Guaranty, and junior to the liens securing payment of the RIHF Senior
Facility Notes and the RIH Senior Facility Guaranty with respect to payment from
proceeds realized upon any sale or other disposition of the Resorts Casino
Hotel.
COLLATERAL
GENERAL
The New RIHF Mortgage Notes are secured by the New RIHF Mortgage Trust
Estate pursuant to the Mortgage Documents described below. (ARTICLE SIX).
The "New RIHF Mortgage Trust Estate" consists of an assignment by RIHF to
the New RIHF Mortgage Note Trustee for the benefit of the holders of the New
RIHF Mortgage Notes, of (i) the RIH Promissory Note in the original aggregate
principal amount of $125,000,000, payable in amounts and at times necessary to
pay the principal of and interest on the New RIHF Mortgage Notes, and (ii) a
lien on the RIH Property, consisting of RIH's fee and leasehold interests
comprising the Resorts Casino Hotel, the contiguous parking garage and property,
all additions or improvements constructed thereon, encumbered pursuant to the
RIH Senior Mortgage between RIH, as mortgagor, and RIHF, as mortgagee, securing
the payment of the RIH Promissory Note.
213
<PAGE>
THE RIH SENIOR MORTGAGE
The RIH Mortgage creates a mortgage lien and security interest (subject to
the liens securing the RIHF Senior Facility Notes, the RIH Senior Facility
Guaranty and any other secured Working Capital Facility) in the Resorts Casino
Hotel. RIH is prohibited from obtaining the release of the Resorts Casino Hotel
without the consent of each holder of the outstanding New RIHF Mortgage Notes,
except as permitted by the provisions described under "-- Release and
Substitution of Collateral".
RELEASE AND SUBSTITUTION OF COLLATERAL
No portion of the New RIHF Mortgage Trust Estate may be released without the
consent of the Holders of not less than 66 2/3% in Outstanding Amount of the New
RIHF Mortgage Notes then Outstanding. (SECTION 11.02). Section 2.02 of the RIH
Mortgage provides that, unless an Event of Default shall have occurred and be
continuing, RIH may sell or dispose of certain elements of the Resorts Casino
Hotel which may have become obsolete or unfit for use or which are no longer
necessary in the conduct of its businesses. The New RIHF Mortgage Trust Estate
will be released upon satisfaction and discharge of RIHF's obligations under the
New RIHF Mortgage Note Indenture. (SECTION 5.01).
LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL
GENERAL
If there is an Event of Default under the New RIHF Mortgage Note Indenture
or the RIH Mortgage, the RIHF Mortgage Note Trustee, subject to the requirements
of the Casino Control Act, may enforce the rights and remedies arising under the
RIH Mortgage. The net amount realized in any foreclosure sale for the benefit of
holders of the New RIHF Mortgage Notes will be only that amount that exceeds all
amounts then due and owing to creditors, if any, having senior security
interests (including the holders of the RIHF Senior Facility Notes or the
parties to any other secured Working Capital Facility) and certain costs, taxes
and other items.
CERTAIN REGULATORY CONSIDERATIONS
In any foreclosure sale with respect to the Resorts Casino Hotel, the RIHF
Mortgage Note Trustee could bid the amount of the outstanding New RIHF Mortgage
Notes. The RIHF Mortgage Note Trustee would be required to comply with the
applicable requirements of the Casino Control Act in any foreclosure sale,
including obtaining a casino license.
CERTAIN BANKRUPTCY CONSIDERATIONS
In the event of the filing of a petition under the Bankruptcy Code for RIHF
or RIH, applicable provisions of the Bankruptcy Code, including the automatic
stay provisions of section 362 of the Bankruptcy Code, may operate to prevent
the RIHF Mortgage Note Trustee, from taking action to realize on the New RIHF
Mortgage Trust Estate if there is an Event of Default.
GROUND LEASES
A substantial portion of the North Tower of the Resorts Casino Hotel, a
portion of the adjacent parking garage and a small portion of the casino/hotel
are located on land that is owned by unrelated third parties and held by RIH
under long-term ground leases. The ground leases do not provide certain
mortgagee protections and, in the event of a default thereunder, the RIHF
Mortgage Note Trustee may not have the right to cure any such default. However,
the RIHF Mortgage Note Trustee has the right under the New RIHF Mortgage Note
Indenture to tender defaulted ground lease payments to RIH and require RIH to
transmit such funds to the respective ground lessor. If such default is not
cured, the lessor under any ground lease may have the right to terminate the
ground lease. The termination of any or all of such ground leases could result
in the loss of portions of, or rights with respect to, the property subject to
the terminated ground lease.
214
<PAGE>
GUARANTY
RIH will guarantee payment of principal of and interest on the New RIHF
Mortgage Notes pursuant to the RIH Mortgage Guaranty. In addition, the RIH
Mortgage Guaranty will be secured by the RIH Guaranty Mortgage. The RIH Guaranty
Mortgage will encumber the Resorts Casino Hotel on a basis PARI PASSU with the
RIH Mortgage. (ARTICLE FOUR)
RANKING
The RIH Mortgage will be PARI PASSU with the lien of the RIH Guaranty
Mortgage and subordinated to the liens on the Resorts Casino Hotel securing
payment of the RIHF Senior Facility Notes, the RIHF Senior Facility Guaranty and
any other secured Working Capital Facility. (SECTION 4.03).
The aggregate principal amount that may be outstanding under the RIHF Senior
Facility and any other Working Capital Facility on and after the Effective Date
is limited to $20,000,000.
PAYMENTS OF NET PROCEEDS OF ASSET SALES
None.
CHANGE OF CONTROL
See "-- Covenants -- Limitation on Consolidation, Merger, Conveyance,
Transfer or Lease of Property and Assets."
COVENANTS
CORPORATE EXISTENCE
Subject to the provisions described under "-- Limitations on Merger,
Consolidation, Transfer or Lease of Property and Assets", the New RIHF Mortgage
Note Indenture will provide that each of RIHF and RIH 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 existence of each of its Subsidiaries in
accordance with the respective organizational documents of RIHF, RIH and each
such Subsidiary and the rights (charter and statutory), licenses, permits,
approvals and governmental franchises of it and each of its Subsidiaries
necessary to the conduct of its and their respective businesses, including,
without limitation, all licenses, permits, approvals and franchises necessary to
assure the continued operation of RIH's gaming operations at the Resorts Casino
Hotel; PROVIDED, HOWEVER, that any direct or indirect wholly owned subsidiary of
RIH may consolidate with, merge into or transfer or distribute all or part of
its properties and assets to RIH or RIHF or as otherwise provided in Section
10.01 of the New RIHF Mortgage Note Indenture. (SECTION 12.04).
LIMITATION ON DIVIDENDS AND RESTRICTED PAYMENTS
The New RIHF Mortgage Note Indenture will provide that RIHF will not,
directly or indirectly, make, or permit any Subsidiary of RIHF to make, any
Restricted Payment.
The New RIHF Mortgage Note Indenture also will provide that RIH will not,
directly or indirectly make, or permit any Subsidiary of RIH to make, any
Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's Consolidated Interest
Coverage Ratio, as certified to the New RIHF Mortgage Note Trustee by an
Officers' Certificate, calculated at the time of the declaration of the dividend
or distribution is equal to or exceeds two, then RIH may declare and pay cash
dividends or make cash distributions in respect of any class of capital stock of
RIH in an amount not to exceed in the aggregate with any other such cash
dividends or distributions declared or made from and after the date of the New
RIHF Mortgage Note Indenture, 50% of RIH's Consolidated Net Income from and
after the Effective Date; and (ii) if (1) RIH's Consolidated Interest Coverage
Ratio, as certified to the New RIHF Mortgage Note Trustee by an Officer's
Certificate, calculated at the time of the declaration of the dividend or
distribution is equal to or exceeds two, and (2) RIH has cash in excess of the
amount required to pay interest on the New RIHF Mortgage Notes and the New RIHF
Junior Mortgage Notes on the next Interest Payment Date plus $20,000,000, then
RIH may declare and pay cash dividends or make cash distributions in respect of
any class of capital stock of RIH in an amount not to exceed such excess cash
amount.
215
<PAGE>
The New RIHF Mortgage Note Indenture further will provide that RIHF and RIH
will not, and will not permit any of their respective Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction of any kind on the ability of any Subsidiary of RIH or RIHF: (i) to
pay dividends or make any other distribution on the capital stock of such
Subsidiary that is owned by RIH, RIHF or a wholly owned Subsidiary of RIHF or
RIH, as applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH,
RIHF or any wholly owned Subsidiary of RIHF or RIH, as applicable; (iii) to make
loans or advances to RIH, RIHF or any wholly owned Subsidiary of RIHF or RIH, as
applicable; or (iv) to transfer any of its property or assets to RIHF, RIH or
any wholly owned Subsidiary of RIHF or RII, as applicable, except (A) any
restrictions existing on or prior to the date of the New RIHF Mortgage Note
Indenture, or in connection with agreements in effect, or entered into, on the
date of the New RIHF Mortgage Note Indenture, or any permitted amendments,
renewals, refundings, refinancings or extensions thereof; PROVIDED, HOWEVER,
that the terms and conditions of any such amendments, renewals, refundings,
refinancings or extensions are no more restrictive with respect to the matters
set forth in clauses (i) through (iv) of this paragraph than the agreements
being amended, refunded, renewed, refinanced or extended; (B) any restrictions
or encumbrances existing or arising pursuant to the terms of Indebtedness of a
Person outstanding at the time such Person becomes a Subsidiary of RIHF or RIH
and not incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary of RIHF or RIH or any permitted amendments, renewals,
refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and
conditions of any such amendments, renewals, refundings, refinancings or
extensions are no more restrictive with respect to the matters set forth in
clauses (i) through (iv) of this paragraph than the agreements being amended,
renewed, refunded, refinanced or extended; (C) encumbrances or restrictions
existing under or by reason of applicable law or regulation (including, without
limitation, the Casino Control Act) or the New RIHF Mortgage Note Indenture; (D)
customary provisions restricting assignment of contracts or subletting or
assignment of any lease governing a leasehold interest of any Subsidiary of RIHF
or RIH; or (E) net worth maintenance requirements imposed by any governmental
authority. (SECTION 12.07).
LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF NOTES
The New RIHF Mortgage Note Indenture will provide that RIHF and RIH will
not, and will not permit any of their respective Subsidiaries to, directly or
indirectly, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to, including without limitation through any
merger or consolidation to which RIHF, RIH or any of their respective
Subsidiaries is a party or through any other acquisition of any such Subsidiary
(collectively, "incur"), or have outstanding, any Indebtedness other than,
without duplication, the following:
(i) the New RIHF Mortgage Notes;
(ii) Indebtedness represented by the Junior Mortgage Facility;
(iii) Indebtedness represented by the Working Capital Facility;
(iv) Indebtedness represented by Capitalized Lease Obligations in an amount
not in excess of $5,000,000 in the aggregate at any time outstanding;
(v) Indebtedness represented by F, F&E Financing Agreements in an amount not
in excess of $10,000,000 in the aggregate at any time outstanding;
(vi) unsecured Indebtedness in an amount not in excess of $5,000,000 in the
aggregate at any time outstanding that is subordinated and junior to the
New RIHF Junior Mortgage Notes at least to the extent set forth in the
Subordination Provisions attached to the New RIHF Mortgage Note
Indenture as Exhibit C and which Indebtedness does not have any
requirements for amortization payments, mandatory redemption or sinking
fund payments prior to the stated maturity of the New RIHF Junior
Mortgage Notes and does not provide for the payment of interest in cash
at any time when the most recent installment of interest on the New RIHF
Junior Mortgage Notes was not paid in cash;
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(vii) Non-Recourse Indebtedness in an amount not in excess of $25,000,000 in
the aggregate at any time outstanding;
(viii) After-Acquired Fee Mortgage Debt in an amount not in excess of
$3,000,000 in the aggregate at any time outstanding; and
(ix) Intercompany advances between RIH, RIHF or any of their direct or
indirect Subsidiaries on the one hand, and RII, on the other hand, not
in excess of $1,000,000 in the aggregate at any time outstanding.
The New RIHF Mortgage Note Indenture also will provide that RIHF and RIH
will not permit any of their respective Subsidiaries to issue (other than to
RIHF, RIH or a direct or indirect wholly owned Subsidiary of RIHF or RIH) any
capital stock which has voting rights or has a preference as to any distribution
over its common stock. (SECTION 12.08).
LIMITATION ON REPAYMENT OF SUBORDINATED INDEBTEDNESS
The New RIHF Mortgage Note Indenture will provide that neither RIHF nor RIH
will, and neither RIHF nor RIH will permit any Subsidiary to, directly or
indirectly, purchase, redeem, defease (including, but not limited to, in
substance or legal defeasance) or otherwise acquire or retire for value prior to
the stated maturity of, or prior to any scheduled mandatory redemption or
sinking fund payment with respect to (collectively, to "repay" or a
"repayment"), the principal of any Indebtedness of RIHF, RIH or any Subsidiary
of RIHF or RIH which is subordinated (whether pursuant to its terms or by
operation of law) in right of payment to the New RIHF Mortgage Notes; PROVIDED,
HOWEVER, that the provisions of this paragraph shall not apply with respect to
the Indebtedness incurred pursuant to the Junior Mortgage Facility (it being
agreed by RIH and RIHF that no modification, waiver, consent or amendment to the
New RIHF Junior Mortgage Notes or the New RIHF Junior Mortgage Note Indenture
shall permit the redemption of the New RIHF Junior Mortgage Notes prior to the
fifth anniversary of the Effective Date unless the same shall have been approved
by the holders of 66 2/3% in Outstanding Amount of the New RIHF Mortgage Notes
then Outstanding). (SECTION 12.09).
LIMITATION ON CERTAIN TRANSACTIONS
The New RIHF Mortgage Note Indenture also will provide that each of RIHF and
RIH will not, and will not permit any Subsidiary to, repurchase any New RIHF
Mortgage Notes in the open market if an Event of Default shall have occurred and
shall be continuing under the New RIHF Mortgage Note Indenture, under the New
RIHF Junior Mortgage Note Indenture or under the RIHF Senior Facility Indenture.
(SECTION 12.10).
RESTRICTION OF ACTIVITIES
The New RIHF Mortgage Note Indenture will provide that RIH will not, until
the date that is 91 days after the payment in full by RIHF of the principal of
(and interest, if any, on) all Outstanding New RIHF Mortgage Notes, engage in
any business or investment activities other than those necessary for, incident
to, connected with or arising out of acquiring, financing, owning and operating
the Resorts Casino Hotel or additional hotels or casinos or related or ancillary
businesses.
The New RIHF Mortgage Note Indenture also will provide that neither RIHF nor
RIH shall make any loans to any Affiliate or any other Person other than (i)
Indebtedness of the type described in clause (ix) of the covenant described in
"-- Limitation on Additional Indebtedness and Issuance of Notes", and (ii) loans
to RII from the proceeds of the Indebtedness represented by the Working Capital
Facility; PROVIDED, HOWEVER, that RIH shall have the right to make loans to
employees of RIH actively involved in the operation of the Resorts Casino Hotel
or to engage in credit transactions in the operation of the Resorts Casino
Hotel, if such loans or credit transactions are in the ordinary course of
business of operating a casino/hotel.
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The New RIHF Mortgage Note Indenture further will provide that RIHF will not
engage in any business (and shall not have any Subsidiaries) other than (i) to
collect principal, interest (and any interest on overdue principal and interest)
and other amounts under any intercompany notes or guaranties made to the order
of or otherwise in favor of RIHF, (ii) to preserve its rights under the New RIHF
Mortgage Note Indenture and the Mortgage Documents and otherwise to comply with
its obligations thereunder and under the New RIHF Mortgage Notes, (iii) to do or
cause to be done all things necessary or appropriate to protect the New RIHF
Mortgage Trust Estate, (iv) to preserve its rights under the New RIHF Junior
Mortgage Note Indenture and the Junior Mortgage Documents and otherwise to
comply with its obligations thereunder and under the New RIHF Junior Mortgage
Notes, (v) to issue the Indebtedness represented by any other Junior Mortgage
Facility Notes, (vi) to issue Indebtedness represented by the Working Capital
Facility; (vii) to preserve its rights under the Working Capital Facility and
otherwise comply with its obligations under the Working Capital Facility, (viii)
to incur any other Indebtedness permitted under this Indenture, (ix) to do all
such acts and deeds necessary in connection with the Junior Mortgage Facility
and the documents and instruments relating thereto and in connection with the
Working Capital Facility and the documents and instruments relating thereto, (x)
to declare, issue and pay dividends on, or make any redemptions or repurchases
of, RIHF's capital stock as contemplated by its Certificate of Incorporation (to
the extent permitted hereby) and otherwise to comply with and perform the
provisions of its Certificate of Incorporation and By-laws, and (xi) to do such
further acts and deeds to effectuate any of the matters listed in the foregoing
clauses of this paragraph. (SECTION 12.11).
LIMITATION ON SUBSIDIARIES CONSOLIDATED GROUP
The New RIHF Mortgage Note Indenture will provide that RIHF and RIH will not
have any Subsidiaries except the Subsidiaries existing on the date of the New
RIHF Mortgage Note Indenture and Subsidiaries acquired by RIHF or RIH in
transactions not prohibited by the other provisions of the New RIHF Mortgage
Note Indenture which are and shall at all times be wholly owned (directly or
indirectly) by RIHF or RIH. (SECTION 12.12).
LIMITATIONS ON LIENS
The New RIHF Mortgage Note Indenture will provide that neither RIHF nor RIH
will create, incur, suffer to exist or permit to be created or incurred any
mortgage, lien, charge or encumbrance on or pledge of the Mortgage Documents or
any of the New RIHF Mortgage Trust Estate, other than (a) the lien of the
Mortgage Documents and the Assignment Agreement, (b) liens on the New RIHF
Mortgage Trust Estate in connection with Indebtedness permitted by clauses (i),
(ii), (iii), (iv) or (v) of the first paragraph of the covenant described in "--
Limitation on Additional Indebtedness and Issuance of Notes", (c) other
Permitted Encumbrances on the New RIHF Mortgage Trust Estate, and (d) a notice
of intention or building contract filed by a mechanic, materialman or laborer
under the New Jersey lien law. Without limiting the generality of the previous
sentence, but notwithstanding the provisions of such sentence, RIH will not be
deemed to have breached such provisions by virtue of the existence of liens for
Impositions (as defined in the RIH Mortgage) or mechanics' liens so long as RIH
is in good faith contesting the validity of such liens in accordance with the
provisions of Section 5.09 of the RIH Senior Mortgage. (SECTION 12.13).
COMPLIANCE WITH LAWS
The New RIHF Mortgage Note Indenture will provide that each of RIHF and RIH
will comply, and will cause each of its Subsidiaries to comply, with the Casino
Control Act and all other applicable statutes (including, without limitation,
ERISA), rules, regulations, orders and restrictions of the United States of
America, states and municipalities, and of any governmental department,
commission, board, regulatory authority, bureau, agency and instrumentality of
the foregoing in respect of the conduct of its business and the ownership of its
properties and assets, including without limitation the New RIHF Mortgage Trust
Estate, except such as are being contested in good faith by appropriate
proceedings in accordance with the Mortgage Documents (to the extent applicable)
and except for
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such noncompliances as will not in the aggregate have a material adverse effect
on the business, properties, operations or financial condition of RIHF, RIH or
their respective Subsidiaries. (SECTION 12.14).
PAYMENT OF TAXES AND OTHER CLAIMS
The New RIHF Mortgage Indenture will provide that RIHF or RIH will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon RIHF, RIH or any of their respective Subsidiaries or upon the New
RIHF Mortgage Trust Estate or any portion thereof or upon the income, profits or
property of RIHF, RIH or any of their respective Subsidiaries, and (b) all
lawful claims for labor, materials and supplies which, if unpaid, will by law
become a Lien upon the New RIHF Mortgage Trust Estate or upon any other property
of RIHF, RIH or any of their respective Subsidiaries; PROVIDED, HOWEVER, that
RIHF and RIH shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessments, charge or claim the amount, applicability
or validity of which is being contested in good faith by appropriate proceedings
in accordance with the Mortgage Documents (to the extent applicable) if adequate
reserves therefor have been established in accordance with GAAP. (SECTION
12.15).
MAINTENANCE OF PROPERTIES
The New RIHF Mortgage Note Indenture further will provide that each of RIHF
and RIH will cause the New RIHF Mortgage Trust Estate and all other properties
(other than obsolete equipment) owned by or leased to it or any of its
Subsidiaries, and used or useful in the conduct of its business or the business
of RIHF, RIH or such Subsidiary to be maintained and kept in good condition,
repair and working order, except for reasonable wear and use, and will cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as required by the Mortgage Documents or, to the
extent not governed by the Mortgage Documents, as in the reasonable judgment of
the Board of Directors of RIH may be necessary so that the business carried on
in connection therewith may be properly and advantageously conducted at all
times. (SECTION 12.16).
INSURANCE
The New RIHF Mortgage Note Indenture will provide that each of RIHF and RIH
will maintain, and will cause each of its Subsidiaries to maintain, with
financially sound and reputable insurers, appropriate insurance on each of their
respective properties and businesses against liabilities, casualties, risks and
contingencies of the type and in amounts required by the Mortgage Documents or,
to the extent not governed by the Mortgage Documents, as customarily maintained
by corporations and other entities engaged in the same or similar businesses and
similarly situated; PROVIDED, HOWEVER, that any such insurer shall be qualified
to do business in the jurisdiction where the insured property is located.
(SECTION 12.17).
WAIVER OR STAY, EXTENSION OR USURY LAWS
The New RIHF Mortgage Note Indenture will provide that each of RIHF and RIH
(to the extent that it may lawfully do so) will not, and will not cause or
permit any of its Subsidiaries to, at any time insist upon, or plead, or in any
manner whatsoever claim, and will resist any and all efforts to be compelled to
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive RIHF or RIH from paying all or any
portion of the principal of, or premium, if any, and interest on the New RIHF
Mortgage Notes or the RIH Promissory Note or the Guaranty as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of the new RIHF Mortgage Note Indenture
or the RIH Promissory Note or the Guaranty; and (to the extent that it may
lawfully do so) RIHF and RIH hereby expressly waive all benefit of advantage or
any such law, and covenant that they will not hinder, delay or impede the
execution of any power granted to the New RIHF Mortgage Note Trustee in the New
RIHF Mortgage Note Indenture and in the Mortgage Documents, but will suffer and
permit the execution of every such power as though no such law had been enacted.
(SECTION 12.18).
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TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
The New RIHF Mortgage Note Indenture also will provide that each of RIHF and
RIH will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of RIHF or RIH or with any
Affiliate of any such Holder, unless (a) such transaction is upon fair and
reasonable terms which are no less favorable to RIHF or such Subsidiary, as the
case may be, than would be available in an arm's-length transaction with an
unrelated person and (b) if over $250,000, such transaction is determined in the
good faith judgment of a majority of the members of the Board of Directors of
either (i) RII, so long as RII owns, directly or indirectly, a majority of the
outstanding capital stock of RIH, directly or indirectly, or (ii) RIH, to be in
the best interests of RIHF, RIH or such Subsidiary as applicable; PROVIDED,
HOWEVER, that this provision shall not apply to (A) any agreements, documents,
instruments or transactions entered into in connection with the RIHF Senior
Facility Notes, (B) the New Griffin Services Agreement, (C) the RII Management
Contract, or (D) the RII Tax Sharing Agreement. (SECTION 12.21).
EVENTS OF DEFAULT
The following events constitute "Events of Default" under the New RIHF
Mortgage Note Indenture:
(a) default in the payment of any interest upon any New RIHF Mortgage Note
when such interest becomes due and payable and continuance of such
default (the deposit with the New RIHF Mortgage Note Trustee of funds
sufficient to make such interest payment in full being deemed to cure
any such default) for a period of ten days;
(b) default in the payment of all or any portion of the principal of any New
RIHF Mortgage Note at its Maturity;
(c) default in the performance or breach of any covenant of RIHF or RIH in
the New RIHF Mortgage Note Indenture (other than a covenant a default in
the performance or breach of which is elsewhere in this paragraph
specifically dealt with), the Assignment Agreement or any of the
Mortgage Documents and continuance of such default or breach for a
period of 30 days (or such shorter or longer cure period, if any, as may
be specified in respect of such default or breach in the Assignment
Agreement or the applicable Mortgage Document, as the case may be), and
(other than with respect to the covenants described in "Covenants --
Limitation on Dividends and Restricted Payments", "Covenants --
Limitation on Additional Indebtedness and Issuance of Notes", "Covenants
-- Limitation on Repayment of Subordinated Indebtedness", "Covenants --
Limitation on Certain Transactions", "Covenants -- Restriction of
Activities", "Covenants -- Limitation on Liens" and "Covenants --
Transactions with Stockholders and Affiliates") after there has been
given (i) to RIHF by the New RIHF Mortgage Note Trustee, or (ii) to RIHF
and the New RIHF Mortgage Note Trustee by the Holders of at least 25% in
Outstanding Amount of the Outstanding New RIHF Mortgage Notes, a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default"; PROVIDED,
HOWEVER, that, if such default or breach is of a covenant set forth in
certain specified provisions of the New RIHF Mortgage Note Indenture,
and if such default or breach is of such a nature that is curable but is
not susceptible of being cured with due diligence within such 30-day
period (or such shorter or longer cure period) (for reasons other than
lack of funds), then, under certain circumstances, such period shall be
extended for such further period of time (up to a maximum of 60 days) as
may reasonably be required to cure such default or breach;
(d) a proceeding or case shall be commenced, without the application or
consent of RIHF or RIH, in any court of competent jurisdiction, seeking
(i) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment or it debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of RIHF or RIH or
of all or any substantial part of its assets, or (iii) similar relief in
respect of RIHF or RIH under any law relating to
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bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of 60 consecutive days;
(e) other than the Case, the commencement by RIHF or RIH of a voluntary case
under the Federal bankruptcy laws or any other applicable Federal or
state law, or the consent or acquiescence by any of them to the filing
of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or
other similar official) of RIHF or RIH or any substantial part of any of
their property, or the making by any of them of an assignment for the
benefit of creditors, or the taking of action by RIHF or RIH in
furtherance of any such action;
(f) the revocation, suspension or involuntary loss of any Permit which
results in the cessation of a substantial portion of the operations of
the Resorts Casino Hotel for a period of more than 90 consecutive days;
(g) (i) a default by RIHF, RIH or any of their Subsidiaries under any
Indebtedness (other than the Working Capital Facility and the Junior
Mortgage Facility), in an aggregate principal amount in excess of
$5,000,000, which default results in the acceleration of the maturity of
any such Indebtedness under the evidence of indebtedness, indenture or
other instrument governing such Indebtedness; PROVIDED, HOWEVER, that,
if such default under such evidence of indebtedness, indenture or other
instrument shall be cured by the obligor, or be waived by the Holders of
such Indebtedness, in each case as may be permitted by such evidence of
indebtedness, indenture or other instrument and in each case resulting
in rescission of such acceleration thereunder, then the Event of Default
by reason of such default shall be deemed likewise to have been
thereupon cured or waived; or (ii) a default by RIHF, RIH or any of the
Subsidiaries under any Indebtedness represented by the Working Capital
Facility, or the Junior Mortgage Facility, the effect of which default
(after the expiration of any applicable notice or grace periods) is to
permit the Holder or Holders of any such Indebtedness represented by the
Working Capital Facility or the Junior Mortgage Note Indenture in an
aggregate principal amount in excess of $5,000,000 (or a trustee or
agent on behalf of such Holder or Holders) to cause the acceleration of
the maturity of such Indebtedness represented by the Working Capital
Facility or the Junior Mortgage Facility under the evidence of
indebtedness, indenture or other instrument governing such Indebtedness;
PROVIDED, HOWEVER, that if such default under such evidence of
indebtedness, indenture or other instrument of shall be cured by the
obligor, or be waived by the Holders of such evidence of indebtedness,
indenture or other instrument (and, if such default resulted in the
acceleration of the maturity of such indebtedness, such acceleration
shall have been rescinded thereunder), then the Event of Default under
the New RIHF Mortgage Note Indenture by reason of such default shall be
deemed likewise to have been thereupon cured or waived; or (iii) the
existence of a final judgment of a court of competent jurisdiction in an
amount in excess of $3,000,000 against RIHF, RIH or the New RIHF
Mortgage Trust Estate, which judgment has not been satisfied or
otherwise provided for, for a period of 30 days (during which execution
shall not be effectively stayed) following the date on which such
judgment becomes a lien against the New RIHF Mortgage Trust Estate or
any part thereof (unless the lawsuit in question was commenced without
effective service of process upon either RIHF or RIH in which case such
30-day period shall not commence until RIHF or RIH receives notice of
such final judgment); or (iv) the existence of a final judgment of a
court of competent jurisdiction in an amount in excess of $15,000,000
against RIHF, RIH or the New RIHF Mortgage Trust Estate, which judgment
has not been satisfied or otherwise provided for, for a period of 60
days (during which execution shall not be effectively stayed) following
the date of such final judgment; or (v) the existence of a final
judgment of a court of competent jurisdiction, regardless of amount,
against RIHF, RIH or the New RIHF Mortgage Trust Estate, which judgment
has
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not been satisfied or otherwise provided for, for a period of 60 days
(during which execution shall not be effectively stayed) following the
date of such final judgment, if such judgment, by itself or upon
recordation or other action of the judgment creditor, imposes or would
impose a lien on the New RIHF Mortgage Trust Estate or any part thereof
senior to the lien of the RIH Senior Mortgage;
(h) default in the performance, or breach, of any covenant of RIHF or RIH in
connection with the restrictions described under "--Limitation on
Consolidation, Merger, Conveyance, Transfer or Lease of Property and
Assets";
(i) the existence of a judgment of a court of competent jurisdiction in an
amount in excess of $3,000,000 against RIH regarding the CRDA Dispute,
which judgment has not been stayed, satisfied or otherwise provided for,
for a period of 30 days (during which execution shall not be effectively
stayed) (unless the lawsuit in question was commenced without effective
service of process upon RIH in which case such 30-day period shall not
commence until RIH receives notice of such final judgment); or
(j) if RII fails to pay or discharge or cause to be paid or discharged,
within 30 days before the same shall become delinquent, all taxes
levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of Default
or Default shall be deemed to exist under the New RIHF Mortgage Note
Indenture with respect to any tax liability not paid or discharged by
RII if and to the extent that the amount, applicability or validity of
such tax liability is being contested in good faith by appropriate
proceedings if adequate reserves therefor have been established in
accordance with GAAP; PROVIDED FURTHER, HOWEVER, that this paragraph
shall not apply to amount due with respect to any period during which
neither RIHF, RIH nor any of their Subsidiaries is included in RII's
consolidated group for Federal income tax purposes. (SECTION 7.01).
If an Event of Default (other than one referred to in clause (d) or (e)
above) occurs and is continuing, then and in every such case the New RIHF
Mortgage Note Trustee or the Holders of not less than 25% in Outstanding Amount
of the New RIHF Mortgage Notes Outstanding may declare the Outstanding Amount of
all the New RIHF Mortgage Notes to be due and payable immediately, by a notice
in writing to RIHF (and to the New RIHF Mortgage Note Trustee, if given by any
Noteholders), and upon any such declaration such Outstanding Amount shall become
immediately due and payable. If an Event of Default referred to in clause (d) or
(e) above occurs, then the Outstanding Amount of all the New RIHF Mortgage Notes
shall automatically become immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are expressly
waived by RIHF. (SECTION 7.02).
At any time after such a declaration of acceleration has been made, but
before any judgment or decree for payment of money due on any New RIHF Mortgage
Notes has been obtained by the New RIHF Mortgage Note Trustee, the Holders of a
majority in Outstanding Amount of the New RIHF Mortgage Notes may, by written
notice to RIHF and the New RIHF Mortgage Note Trustee, rescind and annul such
declaration and its consequences if: (a) RIHF has deposited with the New RIHF
Mortgage Note Trustee a sum sufficient to pay (1) all overdue installments of
interest on all New RIHF Mortgage Notes, (2) the principal of any New RIHF
Mortgage Notes which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed therefor in
the New RIHF Mortgage Notes, and (3) all sums paid or advanced by the New RIHF
Mortgage Note Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the New RIHF Mortgage Note Trustee, its agents and
counsel; and (b) all Events of Default, other than the non-payment of the
Outstanding Amount of the New RIHF Mortgage Notes which have become due solely
by such declaration of acceleration, have been cured or have been waived as
provided in the New RIHF Mortgage Note Indenture. No such rescission and
annulment shall affect any subsequent default or impair any right to consequent
thereon. (SECTION 7.02).
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LIMITATION ON CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE OF PROPERTY
AND ASSETS
Neither RIHF nor RIH shall consolidate, combine or merge with or into any
other Person or permit any other Person to consolidate, combine or merge with or
into RIHF or RIH, as the case may be; and neither RIHF with respect to its
assets nor RIH with respect to the New RIHF Mortgage Trust Estate shall sell,
assign, convey or transfer its interest in such assets or the New RIHF Mortgage
Trust Estate, as the case may be, substantially as an entirety (and
notwithstanding anything to the contrary contained in the New RIHF Mortgage Note
Indenture (including the proviso at the end of this sentence), but subject to
the provisions of the RIH Senior Mortgage regarding dispositions of the New RIHF
Mortgage Trust Estate, neither RIHF with respect to its assets nor RIH with
respect to the New RIHF Mortgage Trust Estate may sell, assign, convey or
transfer such assets or the New RIHF Mortgage Trust Estate, as the case may be,
other than substantially as an entirety) to any other Person or group of Persons
in one transaction or a series of related transactions, or permit any other
Person or group of Persons to convey or transfer all or substantially all of its
assets, subject to liabilities other than DE MINIMIS liabilities, to RIHF or
RIH; and RIHF and RIH shall not transfer, convey, sell or otherwise dispose of
to any other Person, or issue to any Person, any equity interest in RIHF or RIH,
as the case may be (each such transaction referred to as a "Combination
Transaction"); PROVIDED, HOWEVER, that (i) RIHF may engage in a Combination
Transaction in which the only other party or parties is RIH or a direct or
indirect wholly owned Subsidiary of RIHF or RIH, and (ii) RIHF or RIH may engage
in any other Combination Transaction (either independently or at the same time
as other Combination Transactions), subject to the following with respect to
each such Combination Transaction: (a) immediately following such Combination
Transaction, (1) RIH (or any successor entity) shall be eligible for and shall
meet all relevant Legal Requirements, including holding all permits, required
for the normal operation of the business of owning and operating the Resorts
Casino Hotel, and (2) RIH (or any successor entity) shall be controlled by a
Person that is, or shall retain to manage the Resorts Casino Hotel one or more
Persons that are, experienced in the operation and management of casino/hotels;
(b) in the event RIHF or RIH shall consolidate, combine or merge with or into
another Person or sell, assign, convey or transfer its interest in its assets or
in the New RIHF Mortgage Trust Estate, as the case may be, substantially as an
entirety (but not less than substantially as an entirety) to another Person in
one transaction or a series of related transactions, the entity which is formed
by or survives such consolidation, combination or merger or the Person to which
such assets or the New RIHF Mortgage Trust Estate are conveyed or transferred,
(1) shall be organized and existing under the laws of the United States of
America, any state thereof, or the District of Columbia; (2) shall expressly
assume, by an indenture supplemental to the New RIHF Mortgage Note Indenture,
executed and delivered to the New RIHF Mortgage Note Trustee, the performance
and observance of every covenant, obligation and condition of the New RIHF
Mortgage Note Indenture to be performed or observed by RIHF or RIH, whichever
the case may be; (3) shall expressly assume, by an instrument executed and
delivered to the New RIHF Mortgage Note Trustee, the performance of every
covenant, obligation and condition of the Mortgage Documents and the Assignment
Agreement to be performed by RIHF or RIH, whichever the case may be; (4)
immediately after and giving effect to such transaction could incur at least
$1.00 of additional Indebtedness under the covenant described in "Covenants --
Limitation on Additional Indebtedness and Issuance of Notes"; (c) immediately
after giving effect to such transaction, no Event of Default, or Default under
the New RIHF Mortgage Note Indenture or under the RIH Senior Mortgage, shall
have occurred and be continuing; (d) such Combination Transaction shall be on
such terms as shall not impair the lien and security and priority of the New
RIHF Mortgage Note Indenture or of the Mortgage Documents or of the Assignment
Agreement and the rights and powers of the New RIHF Mortgage Note Trustee and
the Holders of the New RIHF Mortgage Notes thereunder; and (e) RIHF or RIH, as
the case may be, shall have delivered to the New RIHF Mortgage Note Trustee an
Officers' Certificate and an Opinion of Counsel, each of which shall state that
such Combination Transaction and such supplemental indenture comply with the
provisions of Article Ten of the New RIHF Mortgage Note Indenture and that all
conditions precedent provided for in the New RIHF Mortgage Note Indenture
relating to such transaction have been complied with. (SECTION 10.01).
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Except as otherwise expressly permitted by the RIH Senior Mortgage and the
New RIHF Mortgage Note Indenture, neither RIHF nor RIH shall sell, assign,
lease, hypothecate, pledge, mortgage or otherwise transfer all or any part of
the assets of RIHF or the New RIH Senior Mortgage Trust Estate or any interest
therein (including, without limitation, any interest in the Ground Leases).
Without limiting the generality of the foregoing, RIH shall not separate, or
attempt to separate, its ownership of its interest in the Ground Leases from the
ownership of the buildings constituting the Resorts Casino Hotel or any part
thereof. (SECTION 10.04).
The foregoing limitations on consolidation, merger, conveyance, transfer or
lease of property and assets shall not apply in connection with an RIH Sale.
(SECTION 10.5).
DISCHARGE OF NEW RIHF MORTGAGE NOTE INDENTURE; DEFEASANCE
RIHF may terminate substantially all obligations under the New RIHF Mortgage
Note Indenture at any time by delivering all outstanding New RIHF Mortgage Notes
to the New RIHF Mortgage Note Trustee for cancellation and paying any other sums
payable under the New RIHF Mortgage Note Indenture. (ARTICLE FIVE).
The New RIHF Mortgage Note Indenture also provides that the Company will be
deemed to have paid and discharged the entire Indebtedness on the New RIHF
Mortgage Notes and the provisions of the New RIHF Mortgage Note Indenture
(except as to any surviving rights of transfer or exchange of New RIHF Mortgage
Notes provided for in the New RIHF Mortgage Note Indenture or the New RIHF
Mortgage Notes and any right to receive payments of principal and interest as
provided in this paragraph), if: (1) RIHF irrevocably deposits in trust with the
New RIHF Mortgage Note Trustee, pursuant to an irrevocable trust and security
agreement in form and substance reasonably satisfactory to the New RIH Mortgage
Note Trustee, U.S. Legal Tender or direct non-callable obligations of, or
non-callable obligations guaranteed as to timely payment by, the United States
of America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged ("U.S. Government
Obligations") maturing as to principal and interest in such amounts and at such
times as are sufficient, without consideration of the reinvestment of such
interest and after payment of all Federal, state and local taxes or other
charges or assessments in respect thereof payable by the New RIHF Mortgage Note
Trustee, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof (in form and substance
reasonably satisfactory to the New RIHF Mortgage Note Trustee) delivered to the
New RIHF Mortgage Note Trustee, to pay reasonable compensation to the New RIHF
Mortgage Note Trustee under Section 8.07 of the New RIHF Mortgage Note Indenture
and the principal of and interest on the outstanding New RIHF Mortgage Notes on
the dates on which any such payments are due and payable in accordance with the
terms of the New RIHF Mortgage Note Indenture and of the New RIHF Mortgage
Notes; (2) such deposits will not cause the New RIHF Mortgage Note Trustee to
have a conflicting interest as defined in and for purposes of the TIA; (3) such
deposit will not result in a Default under the New RIHF Mortgage Note Indenture;
(4) RIHF will deliver to the New RIHF Mortgage Note Trustee an Opinion of
Counsel, or a private ruling of the Internal Revenue Service, in form and
substance satisfactory to the New RIHF Mortgage Note Trustee, to the effect that
Holders of the New RIHF Mortgage Notes will not recognize income, gain or loss
for Federal income tax purposes as a result of such deposit and the defeasance
contemplated hereby and will be subject to Federal income tax in the same
amounts and in the same manner and at the same times as would have been the case
if such deposit and defeasance had not occurred; (5) the deposit will not result
in RIHF, the New RIHF Mortgage Note Trustee or the trust becoming or being
deemed to be an "investment company" under the Investment Company Act of 1940,
as amended; (6) the Holders shall have a perfected security interest under
applicable law in the U.S. Legal Tender or U.S. Government Obligations deposited
pursuant to clause (1) above; and (7) RIHF has delivered to the New RIHF
Mortgage Note Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent specified herein relating to the
defeasance contemplated by this paragraph have been complied with.
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If all or any portion of the New RIHF Mortgage Notes are to be redeemed
through such irrevocable trust, RIHF must make arrangements satisfactory to the
New RIHF Mortgage Note Trustee, at the time of such deposit, for the giving of
the notice of such redemption or redemptions by the New RIHF Mortgage Note
Trustee in the name and at the expense of RIHF.
The New RIHF Mortgage Note Trustee and each co-trustee and separate trustee,
if any, then acting as such hereunder shall, at the expense of RIHF, execute and
deliver a termination statement and such instruments of satisfaction and
discharge as may be necessary and pay, assign, transfer and deliver to RIHF or
upon Company Order all cash, securities and other personal property then held by
it hereunder, other than pursuant to Section 14.01 of the New RIHF Mortgage Note
Indenture. (SECTION 14.01).
MODIFICATION OF INDENTURE
From time to time, the parties to the New RIHF Mortgage Note Indenture,
without the consent of the Holders of the New RIHF Mortgage Notes, may enter
into one or more supplemental indentures for certain specified purposes,
including curing ambiguities, defects or inconsistencies, provided such action
does not adversely affect the rights of any Holder. (SECTION 11.01).
Modifications, changes and amendments to the New RIHF Mortgage Note Indenture
also may be made by the parties thereto with the consent of the Holders of not
less than 66 2/3% in Outstanding Amount of the New RIHF Mortgage Notes then
Outstanding, except that without the consent of the Holder of each New RIHF
Mortgage Note affected, no such modification or alteration may (i) change the
stated maturity of the principal of, or any installment of interest on, any New
RIHF Mortgage Note, or reduce the principal amount thereof or the premium
payable upon the redemption thereof, or change any Place of Payment where, or
the coin or currency in which, any New RIHF Mortgage Note, or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), (ii) reduce the percentage in
Outstanding Amount of the New RIHF Mortgage Notes, the consent of whose Holders
is required for any amendment, supplement or waiver, (iii) modify or alter the
provisions of the proviso of the definition of the term "Outstanding", (iv)
modify any of the provisions described in this paragraph or, with certain
exceptions, the provisions of the New RIHF Mortgage Note Indenture regarding
waiver of default, or (v) permit the creation of any lien ranking prior to the
lien of the RIH Senior Mortgage (except for such liens expressly permitted
pursuant to the covenant described under "-- Covenants -- Limitations on
Liens"). (SECTION 11.02).
TRUSTEE
The New RIHF Mortgage Note Trustee may require reasonable indemnity before
exercising any of its rights or powers under the New RIHF Mortgage Note
Indenture. (SECTION 8.03).
REPORTS TO HOLDERS
RIH will furnish or cause to be furnished to the New RIHF Mortgage Note
Trustee, within 105 days after each fiscal year of RIH: (i) a copy of annual
audited financial statements of RIH prepared in conformity with GAAP,
accompanied by a report of Ernst & Young or of another firm of independent
certified public accountants of recognized national standing selected by RIH
(the "National Accountants"), together with a certificate from such National
Accountants stating that their audit examination has included a review of the
terms of the New RIHF Mortgage Note Indenture and that the National Accountants
have not become aware of any Event of Default or that a Default has occurred and
is continuing, and if they have become aware of any such Event of Default or
Default, describing it; provided, however, that the National Accountants will
not be liable to any Person for any failure to discover any Event of Default or
Default in connection with such review; and (ii) a copy of annual unaudited
financial statements of RIH, including notes to such financial statements and
corresponding management's discussion and analysis, in form and substance and
comparable to that which would be required to be filed with the Commission in an
Annual Report on Form 10-K under the Exchange Act, prepared in the same manner
as the audited financial statements referred to in clause (i) above, signed by a
proper accounting officer of RIH. RIH contemporaneously with the
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furnishing of such audited financial statements to the New RIHF Mortgage Note
Trustee under clause (i) of this paragraph, RIH will mail copies of such audited
financial statements to the Holders (which need not include the certificate
referred to in clause (i) above).
RIH also will furnish or cause to be furnished to the New RIHF Mortgage Note
Trustee, within 60 days after each quarter of each fiscal year of RIH, except
the final quarter of such fiscal year, a copy of unaudited financial statements
of RIH prepared on a consistent basis with the audited financial statements
referred to in clause (i) of the paragraph above, signed by a proper accounting
officer of RIH and consisting of at least a balance sheet as at the close of
such quarter and statements of operations and cash flow for such quarter and for
the period from the beginning of such fiscal year to the close of such quarter,
including notes to such financial statements and corresponding management's
discussion and analysis, in form and substance comparable to that which would be
required to be filed with the Commission in a Quarterly Report on Form 10-Q
under the Exchange Act. RIH contemporaneously with the furnishing of such
unaudited financial statements to the New RIHF Mortgage Note Trustee, RIH shall
mail copies of such unaudited financial statements to the Holders (which need
not be signed by a proper accounting officer of RIH).
RIH will furnish or cause to be furnished to the New RIH Senior Mortgage
Note Trustee, contemporaneously with the furnishing of a copy of the annual
financial statements and of the quarterly financial statements referred to
above, an Officers' Certificate dated the date of such annual financial
statement or such quarterly financial statements to the effect that no Default
or Event of Default has occurred and is continuing, or, if there is any such
Default or Event of Default, describing it and the steps, if any, being taken to
cure it.
RIH will furnish or cause to be furnished to the New RIHF Mortgage Note
Trustee, copies of each filing and report made by RIH or RIHF with the
Commission pursuant to the reporting and filing requirements of Section 13 or
15(d) of the Exchange Act, within 15 days after RIH or RIHF, as applicable, is
required to file the same.
Pursuant to the New RIHF Mortgage Note Indenture, if RIH becomes exempt from
the Commission reporting and filing requirements of Section 13 or 15(d) of the
Exchange Act, RIH will prepare such periodic reports as it would otherwise have
been required to file with the Commission and (i) at its own expense, cause all
such periodic reports to be filed with the Commission, the New RIHF Mortgage
Note Trustee and any exchange upon which the New RIHF Mortgage Notes then are
listed, in each case on the date when such periodic report would have been
required to be filed with the Commission under Section 13 or 15(d) of the
Exchange Act, if either of such provisions were applicable, and (ii) keep copies
of such periodic reports available at its office and promptly provide any Person
who so requests with a copy of any such periodic report, at RIHF's expense.
Each of RIHF and RIH shall comply with the provisions of Section 314(a) of
the Trust Indenture Act.
RIHF will deliver to the New RIHF Mortgage Note Trustee, promptly upon
becoming aware of any Default or Event of Default (but in no event later than
five business days thereafter) in the performance of any covenant or agreement
of the Company contained in the New RIHF Mortgage Note Indenture or any of the
Mortgage Documents, an Officers' Certificate specifying with particularity such
event. (SECTION 12.06).
CERTAIN DEFINITIONS
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, and, with respect to any specified natural
Person, any other Person having a relationship by blood, marriage or adoption
not more remote than first cousin with such specified Person. For purposes of
this definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the
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foregoing; PROVIDED, HOWEVER, that, except as may be required under the TIA, the
term "Affiliate" shall not include, with respect to RIHF or RIH, any of Fidelity
Management & Research Company, TCW Special Credits or funds or accounts managed
or advised by either of them.
"AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured by an
After-Acquired Fee Mortgage.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section 2.07 of the
RIH Mortgage.
"ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of the
date of the New RIHF Mortgage Note Indenture, providing for the assignment of
the RIH Promissory Note and other Mortgage Documents to the New RIHF Mortgage
Note Trustee by RIHF, and acknowledgment thereof by RIH, a copy of which is
attached to the New RIHF Mortgage Note Indenture as Exhibit B.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee
which, in conformity with GAAP consistently applied, is accounted for as a
capitalized lease on the balance sheet of such Person.
"CASE" means, collectively, the bankruptcy cases involving RII and GRI in
the United States Bankruptcy Court for the District of Delaware.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any period,
an amount equal to the sum of (i) the consolidated net income (or loss) of such
Person for such period determined in accordance with GAAP consistently applied,
excluding interest income, interest expense and gains or losses from
extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing
such consolidated net income (or loss) in respect of depreciation and
amortization, plus (iii) non-cash charges arising from the reduction of CRDA
Deposits to market value, minus (iv) taxes based upon or measured by income
which are payable in cash, minus (v) CRDA Deposits.
"CONSOLIDATED INTEREST CHARGES" means, with respect to any Person for any
period, the consolidated interest expense (not including the non-cash
amortization of discount on the original issuance of (a) the RIH Promissory
Note, (b) any intercompany indebtedness of RIH issued in connection with
Indebtedness represented by the Junior Mortgage Facility and (c) any
intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Working Capital Facility), whether payable in cash or in-kind
(and with respect to RIH, including, without limitation, the interest paid or
accrued (without duplication) on (i) the RIH Promissory Note, (ii) any
intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Junior Mortgage Facility and (iii) any intercompany
indebtedness of RIH issued in connection with Indebtedness represented by the
Working Capital Facility), without deduction for interest income (other than
cash interest income received from RII in payment of its interest cost on any
Working Capital Facility), in each case for such Person and its consolidated
Subsidiaries for such period determined in accordance with GAAP consistently
applied.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its
consolidated Subsidiaries for the immediately preceding four consecutive fiscal
quarters to (b) Consolidated Interest Charges of RIH and its consolidated
Subsidiaries for such period.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
an amount equal to consolidated net income (or loss) of such Person for such
period determined in accordance with GAAP consistently applied, minus (a)
Federal and state taxes based upon or measured by income which are payable in
cash, plus (b) non-cash charges arising from Federal and state taxes based upon
or measured by income.
"CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the Casino
Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross
revenue in order to satisfy its investment obligation pursuant to the Casino
Control Act, and (b) the amounts invested in qualified investments in lieu of
any of the quarterly deposits (or portion thereof) referred to in clause (a)
above.
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"CRDA DISPUTE" means the dispute existing on the date hereof between RIH and
the New Jersey Casino Reinvestment Development Authority regarding CRDA Deposits
and New Jersey Casino Reinvestment Authority Notes, which dispute involves an
amount of approximately $30,000,000.
"F, F&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible
Personal Property (as defined in the RIH Mortgage) and other items constituting
Operating Assets (as defined in the RIH Mortgage), such as computer software,
which are financed, purchased or leased by RIH, provided that, with certain
exceptions, the principal amount of the indebtedness secured by such lien shall
not exceed 85% of the cost to RIH of such property at the time of acquisition.
"GUARANTY" means the guaranty contained in Article Four of the New RIHF
Mortgage Note Indenture.
"HOLDER" means a Person in whose name a New RIHF Mortgage Note is
registered.
"INDEBTEDNESS" means, as applied to any Person, without duplication, any
indebtedness, exclusive of deferred taxes: (a) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof); (b) evidenced by bonds, notes, debentures
or similar instruments or letters of credit; (c) representing the balance
deferred and unpaid of the purchase price of any property, if and to the extent
such indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP (but excluding trade accounts payable
arising in the ordinary course of business that are not overdue by more than 90
days or are being contested by such Person in good faith); (d) any Capitalized
Lease Obligations (other than, with respect to RIH or RIHF, the Ground Leases)
of such Person; and (e) Indebtedness of others guaranteed by such Person,
including without limitation every obligation of such Person (i) to purchase or
pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (ii) to purchase property,
securities or services for the purpose of assuring the holder of such
Indebtedness of the payment of such Indebtedness, or (iii) to maintain working
capital, equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness; PROVIDED, HOWEVER, that the guaranty by any Person shall not
include endorsements by such Person for collection or deposit, in either case in
the ordinary course of business. The term "INDEBTEDNESS" does not include: (1)
any of the types of indebtedness described in clauses (a) through (e) above
(inclusive) owed by RIHF to RIH or any of their Subsidiaries, by RIH to RIHF or
any of their Subsidiaries or by any such Subsidiary to RIH, RIHF or any other
such Subsidiary (including without limitation the RIH Promissory Note and the
RIH Junior Promissory Note); (2) the RIH Guaranty, the RIH Junior Mortgage
Guaranty and any guaranty of a Working Capital Facility Guaranty; (3) matters
relating to the CRDA Dispute, New Jersey Casino Reinvestment Development
Authority Notes or the CRDA Deposits; and (4) any payments made by RIHF or RIH
under the RII Management Agreement, the RII Tax Sharing Agreement or the
Services Agreement.
"JUNIOR MORTGAGE DOCUMENTS" means (a) the Junior Mortgage, the Junior
Guaranty Mortgage, the RIH Junior Promissory Note, the Junior Assignment of
Leases and Rents and any other security document to which either RIH or RIHF is
a party relating to the New RIHF Junior Mortgage Notes, which is executed and
delivered pursuant to or in connection with the Junior Mortgage, the Junior
Guaranty Mortgage or the Junior Assignment Agreement, and (b) any mortgage, deed
of trust, guaranty, promissory note, collateral assignment agreement, assignment
of leases and rents, assignment of operating assets and any other security
document to which either RIH or RIHF is a party relating to the Junior Mortgage
Facility.
"JUNIOR MORTGAGE FACILITY" means the New RIHF Junior Mortgage Notes and any
secured or unsecured facility or facilities entered into by RIH or RIHF
providing for the making of loans to RIH or RIHF on a revolving or term basis,
or the issuance of notes, debentures or bonds by RIH or RIHF, as such agreement,
indenture or instrument may be amended, supplemented or modified from time to
time, or any refinancing thereof, in an aggregate principal amount up to
$35,000,000 plus additional
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notes, debentures or bonds issued in payment of interest accrued on outstanding
notes, debentures or bonds; PROVIDED, HOWEVER, that the lender or lenders
thereunder (or any trustee or agent acting on behalf of such lender or lenders)
shall have executed an interecreditor agreement covering the matters set forth
on Exhibit G to the New RIHF Mortgage Note Indenture. The liens, if any,
securing the Junior Mortgage Facility shall be PARI PASSU with the lien of the
RIH Junior Mortgage and the RIH Junior Guaranty Mortgage. The term "JUNIOR
MORTGAGE FACILITY" does not include the RIH Junior Mortgage Guaranty.
"MORTGAGE DOCUMENTS" means the RIH Mortgage, the RIH Guaranty Mortgage, the
RIH Promissory Note, the Assignment of Leases and Rents and any other security
document to which either RIH or RIHF is a party relating to the New RIHF
Mortgage Notes, which is executed and delivered pursuant to or in connection
with the RIH Mortgage, the RIH Guaranty Mortgage or the Assignment Agreement.
"NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in connection with
the acquisition, purchase, improvement or development of property or assets
(other than the New RIHF Mortgage Trust Estate) used by RIHF, RIH or any
Subsidiary of RIH or RIHF to engage in the casino business, the hotel business
or related or ancillary business or purpose and which is secured only by such
assets and without recourse to RIH, RIHF or any Subsidiary of RIH or RIHF or the
New RIHF Mortgage Trust Estate for such indebtedness.
"OUTSTANDING" when used with respect to New RIHF Mortgage Notes means, as of
the date of determination, all New RIHF Mortgage Notes theretofore authenticated
and delivered under the New RIHF Mortgage Note Indenture, except:
(a) New RIHF Mortgage Notes theretofore canceled by the New RIHF Mortgage
Note Trustee or delivered to the Trustee for cancellation;
(b) New RIHF Mortgage Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the New RIHF
Mortgage Note Trustee or any Paying Agent in trust for the Holders of
such New RIHF Mortgage Notes;
(c) New RIHF Mortgage Notes in exchange for or in lieu of which other New
RIHF Mortgage Notes have been authenticated and delivered under the New
RIHF Mortgage Note Indenture; and
(d) New RIHF Mortgage Notes alleged to have been destroyed, lost or stolen
which have been paid as provided in Section 3.06 of the New RIHF
Mortgage Note Indenture;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of New RIHF Mortgage Notes Outstanding have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, New RIHF
Mortgage Notes owned by RIHF or any other obligor upon the New RIHF Mortgage
Notes or any Affiliate of RIHF or of such other obligor shall be disregarded and
deemed not to be Outstanding. In determining whether the New RIHF Mortgage Note
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only New RIHF Mortgage
Notes which the New RIHF Mortgage Note Trustee actually knows to be so owned
shall be so disregarded.
"OUTSTANDING AMOUNT" of any Indebtedness at any time means the principal
amount outstanding of such Indebtedness at such time.
"RESTRICTED PAYMENT" means (a) any declaration or payment of any dividend or
the making of any distribution to holders of capital stock of RIH or RIHF or any
Subsidiary of RIH or RIHF in respect of such capital stock (other than to RIH or
RIHF or a direct or indirect wholly owned Subsidiary of RIH or RIHF), (b) any
purchase, redemption or other acquisition or retirement for value of any capital
stock (or warrants, rights or options to acquire any capital stock or
Indebtedness convertible into or exchangeable for any capital stock) of RIH or
RIHF or any Subsidiary of RIH or RIHF (other than purchases, redemptions,
acquisitions or retirement solely from RIH or RIHF or a direct or indirect
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wholly owned Subsidiary of RIH or RIHF); PROVIDED, HOWEVER, that any such
purchase, redemption or other acquisition or retirement that is required by the
Casino Control Commission or under the Casino Control Act shall not constitute a
Restricted Payment. The term "Restricted Payment" also shall not include any
loan or advance to RII of all or any portion of the proceeds of the Indebtedness
represented by the Working Capital Facility.
"RIH SALE" means (a) a consolidation, combination or merger involving RIH
and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's
interest in the New RIHF Mortgage Note Trust Estate, substantially as an
entirety, to any other Person or group of Persons in one transaction or a series
of related transactions, or (c) any transaction as a result of which RIH ceases
to be a direct or indirect wholly owned Subsidiary of RII; PROVIDED, HOWEVER,
that any of the transactions described in clauses (a), (b) and (c) above shall
not constitute an RIH Sale if the other party or parties to the transaction
consists of only one or more of the following Persons: RIHF or any wholly owned
direct or indirect subsidiary of RIH or RIHF; PROVIDED FURTHER, HOWEVER, that
notwithstanding any other provision of this definition, if the primary effect of
any of the aforesaid transactions is the redemption of the New RIHF Mortgage
Notes, then such transaction shall not be considered to be a RIH Sale.
"RII MANAGEMENT CONTRACT" means the Interim Management Agreement.
"RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement between RII and
RIH pursuant to which (i) RIH will not make any payments to RII or any other
Affiliate in respect of taxes, other than to reimburse RII for any cash payments
actually made by RII in respect of any Federal, state or local income or
alternative minimum taxes arising from the earnings or operations of RIH;
PROVIDED, HOWEVER, that RIH shall not be required to reimburse RII for cash
payments in respect of Federal, state or local income or alternative minimum
taxes that would not have been owed but for the reduction, if any, of the amount
of the consolidated net operating loss carryforwards or consolidated current
losses of the affiliated group of which RII is a common parent which resulted
from the inclusion in the consolidated return filed for such group for any
taxable year ending after the Effective Date of the income of any entity other
than RIH, other than income directly attributable to the consummation of the
Plan, including but not limited to the transfer of the stock of RIB and the
assets of the U.S. Paradise Island Subsidiaries, and (ii) RIH will be entitled
to any refund (plus the interest thereon) of any taxes for which RIH is required
to reimburse RII.
"SUBSIDIARY" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
Person or one or more Subsidiaries of such Person.
"WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the RIHF
Senior Facility Notes issued thereunder) and any other secured or unsecured
facility or facilities entered into by RIH and/or RIHF providing for the making
of working capital loans to RIH or RIHF (with RII as a guarantor thereunder) on
a revolving or term basis, or the issuance of notes, debentures or bonds by RIH,
RIHF or RII, as such agreement may be amended, supplemented or modified from
time to time, or any refinancing thereof, in an aggregate principal amount up to
$20,000,000; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any
trustee or agent acting on behalf of such lender or lenders) shall have executed
an interecreditor agreement covering the matters set forth on Exhibit G to the
New RIHF Mortgage Note Indenture. The liens, if any, securing the Working
Capital Facility may be senior to the lien of the RIH Mortgage, the RIH Guaranty
Mortgage, the RIH Junior Mortgage and the RIH Junior Guaranty Mortgage. The term
"WORKING CAPITAL FACILITY" does not include the Working Capital Facility
Guaranty.
DESCRIPTION OF NEW RIHF JUNIOR MORTGAGE NOTES
The following is a summary of certain provisions of the New RIHF Junior
Mortgage Notes and the New RIHF Junior Mortgage Note Indenture. Wherever
particular provisions of the New RIHF Junior Mortgage Note Indenture or New RIHF
Junior Mortgage Notes are referred to, such provisions are incorporated by
reference herein. References to Sections or Articles refer to Sections or
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Articles of the New RIHF Junior Mortgage Note Indenture. The definition of
certain terms used below are set forth in "Certain Definitions" below in this
section. All other capitalized terms used in this section but not defined in
this Information Statement/Prospectus have the meanings ascribed thereto in the
New RIHF Junior Mortgage Note Indenture and are incorporated by reference
herein.
GENERAL
The New RIHF Junior Mortgage Notes will be issued pursuant to the New RIHF
Junior Mortgage Note Indenture among RIHF, RIH and U.S. Trust Company of
California, N.A. (the "New RIHF Junior Mortgage Note Trustee"). A copy of the
New RIHF Junior Mortgage Note Indenture is filed as an exhibit to the
Registration Statement of which this Information Statement/Prospectus is a part.
The terms of the New RIHF Junior Mortgage Note Indenture also are governed by
certain provisions of the TIA. The New RIHF Junior Mortgage Notes will be
secured obligations of RIHF in the aggregate principal amount of $35,000,000
plus the principal amount of New RIHF Junior Mortgage Notes that may be issued
in payment of interest as described below. The New RIHF Junior Mortgage Notes
will mature on December 15, 2004.
INTEREST
Interest on the New RIHF Junior Mortgage Notes will accrue from the
Effective Date at a rate of 11.375% per year. Interest is payable semi-annually
on June 15 and December 15 in each year to Holders of record at the close of
business on the first day of the month in which the interest payment date
occurs. RIHF is required to pay interest on overdue principal and, to the extent
permitted by law, overdue interest at the rate of 14.375% per year. (SECTION
3.10).
RIHF may pay all or any portion of interest accruing on the New RIHF Junior
Mortgage Notes by issuing additional Units comprised of New RIHF Junior Mortgage
Notes (valued, for purposes only of determining the principal amount of
additional New RIHF Junior Mortgage Notes to be issued in respect of interest so
paid, at 100% of their principal amount) and RII Class B Common Stock in lieu of
cash in satisfaction of interest payments due, provided that on the interest
payment date in question, Consolidated Cash Flow of RIH and its consolidated
Subsidiaries for the most recently completed four fiscal quarters is less than
$35,000,000. (SECTION 3.11).
SINKING FUND REQUIREMENTS
None.
MANDATORY REDEMPTION
In the event of an RIH Sale, all the New RIHF Junior Mortgage Notes shall be
redeemed by RIHF whether such RIH Sale occurs before, on or after the fifth
anniversary of the Effective Date, at par together with interest, if any,
accrued and unpaid thereon to the Redemption Date; provided, however, that such
obligation of RIHF to redeem the New RIHF Junior Mortgage Notes in the event of
a proposed RIH Sale shall cease to exist if the Holders of not less than 66 2/3%
in Outstanding Amount of the Outstanding New RIHF Junior Mortgage Notes have
consented to such proposed RIH Sale. (SECTION 3.13).
OPTIONAL REDEMPTION
The New RIHF Junior Mortgage Notes are redeemable at any time in whole, or
from time to time in part, on or after the fifth anniversary of the Effective
Date at the election of RIHF, at a redemption price of 100% of their principal
amount plus accrued interest to the Redemption Date. (SECTION 3.13).
From and after any Redemption Date, if funds for the redemption of any New
RIHF Junior Mortgage Notes called for redemption shall have been made available,
such New RIHF Junior Mortgage Notes will cease to bear interest and the only
right of the Holders will be to receive payment of the Redemption Price and all
interest accrued to such Redemption Date. (SECTION 13.06).
The New RIHF Junior Mortgage Note Indenture requires that notice of any
redemption of any New RIHF Junior Mortgage Notes be given to Holders at their
addresses, as shown in the register, not less than 30 nor more than 60 days
prior to the Redemption Date. The notice of redemption must
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specify, among other things, the Redemption Date, the Redemption Price, the
principal amount of New RIHF Junior Mortgage Notes to be redeemed, and, if less
than all outstanding New RIHF Junior Mortgage Notes are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal
amounts) of the New RIHF Junior Mortgage Notes to be redeemed and the place or
places where the New RIHF Junior Mortgage Notes to be redeemed are to be
surrendered for payment of the Redemption Price. (SECTION 13.04).
The New RIHF Junior Mortgage Note Indenture provides that in the event of
redemption of less than all the outstanding New RIHF Junior Mortgage Notes, the
particular New RIHF Junior Mortgage Notes to be redeemed will be selected by the
New RIHF Junior Mortgage Note Trustee by a random, automated selection process
or pro rata, as deemed appropriate by the Trustee. (SECTION 13.03).
LIMITATION ON OPEN-MARKET PURCHASES
The New RIHF Junior Mortgage Note Indenture provides that RIHF and RIH will
not, and will not permit any of their respective Subsidiaries to, purchase or
otherwise acquire (other than pursuant to a redemption described in Article
Thirteen of the New RIHF Junior Mortgage Note Indenture) any New RIHF Junior
Mortgage Notes unless all interest accrued on the New RIHF Junior Mortgage Notes
and payable on the Interest Payment Date immediately preceding the date of such
repurchase was paid solely in cash and not in Additional Notes. (SECTION 12.22).
In addition, the New RIHF Junior Mortgage Note Indenture provides that RIHF and
RIH will not, and will not permit any of their respective subsidiaries to,
repurchase any New RIHF Junior Mortgage Notes in the open market if an Event of
Default has occurred and is continuing under the New RIHF Junior Mortgage Note
Indenture, the New RIHF Mortgage Note Indenture or the Senior Facility Note
Indenture. (SECTION 12.09).
CASINO CONTROL ACT REGULATION
The New RIHF Junior Mortgage Notes are subject to the qualification,
divestiture and redemption provisions under the Casino Control Act that are
described in "Business of the Company -- Regulation and Gaming Taxes and Fees --
New Jersey". (SECTION 13.08).
INTERCREDITOR AGREEMENT
See "Description of New Senior Mortgage Notes -- Intercreditor Agreement".
COLLATERAL
GENERAL
The New RIHF Junior Mortgage Notes are secured by the New RIHF Junior
Mortgage Trust Estate pursuant to the Mortgage Documents described below.
(ARTICLE SIX).
The "New RIHF Junior Mortgage Trust Estate" consists of an assignment by
RIHF to the Collateral Agent, on behalf of the New RIHF Junior Mortgage Note
Trustee for the benefit of the Holders of the New RIHF Junior Mortgage Notes, of
(i) the RIH Junior Promissory Note in the original aggregate principal amount of
$35,000,000, payable in amounts and at times necessary to pay the principal of
and interest on the New RIHF Junior Mortgage Notes, and (ii) a lien on Resorts
Casino Hotel, consisting of RIH's fee and leasehold interests comprising the
Resorts Casino Hotel, the contiguous parking garage and property, all additions
or improvements constructed thereon, encumbered pursuant to the RIH Junior
Mortgage between RIH, as mortgagor, and RIHF, as mortgagee, securing the payment
of the RIH Junior Promissory Note.
THE RIH JUNIOR MORTGAGE
The RIH Junior Mortgage creates a mortgage lien and security interest
(subject to the liens securing the RIHF Senior Facility Notes, the RIH Senior
Facility Guaranty, any other secured Working Capital Facility, the RIH Mortgage
and the RIH Senior Guaranty Mortgage securing the New RIHF Mortgage Notes) in
the Resorts Casino Hotel. RIH is prohibited from obtaining the release of, or
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granting any additional liens on, the Resorts Casino Hotel without the consent
of each Holder of the outstanding New RIHF Junior Mortgage Notes, except as
permitted by the provisions described under "-- Release and Substitution of
Collateral".
RELEASE AND SUBSTITUTION OF COLLATERAL
No portion of the New RIHF Junior Mortgage Trust Estate may be released
without the consent of the Holders of not less than 66 2/3% in Outstanding
Amount of the New RIHF Junior Mortgage Notes then Outstanding. (SECTION 11.02).
Section 2.02 of the RIH Junior Mortgage provides that RIH may, unless an Event
of Default shall have occurred and be continuing, sell or dispose of certain
elements of the Resorts Casino Hotel which may have become obsolete or unfit for
use or which are no longer necessary in the conduct of its businesses. The New
RIHF Junior Mortgage Trust Estate will be released upon satisfaction and
discharge of RIHF's obligations under the New RIHF Junior Mortgage Note
Indenture. (SECTION 5.01).
LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL
GENERAL
If there is an Event of Default under the New RIHF Junior Mortgage Note
Indenture or the RIH Junior Mortgage, the New RIHF Junior Mortgage Note Trustee,
subject to the requirements of the Casino Control Act, may enforce the rights
and remedies arising under the RIH Junior Mortgage. The net amount realized in
any foreclosure sale for the benefit of Holders of the New RIHF Junior Mortgage
Notes will be only that amount that exceeds all amounts then due and owing to
creditors, if any, having senior security interests (including the Holders of
the RIHF Senior Facility Notes, the parties to any other secured Working Capital
Facility and the holders of the RIHF Mortgage Notes and the related New RIH
Mortgage Guaranty) and certain costs, taxes and other items.
CERTAIN REGULATORY CONSIDERATIONS
In any foreclosure sale with respect to the Resorts Casino Hotel, the New
RIHF Junior Mortgage Note Trustee could bid the amount of the outstanding New
RIHF Junior Mortgage Notes. The New RIHF Junior Mortgage Note Trustee would be
required to comply with the applicable requirements of the Casino Control Act in
any foreclosure sale, including obtaining a casino license.
CERTAIN BANKRUPTCY CONSIDERATIONS
In the event of the filing of a petition under the Bankruptcy Code for RIHF
or RIH, applicable provisions of the Bankruptcy Code, including the automatic
stay provisions of section 362 of the Bankruptcy Code, may operate to prevent
the New RIHF Junior Mortgage Note Trustee from taking action to realize on the
New RIHF Junior Mortgage Trust Estate if there is an Event of Default.
GROUND LEASES
A substantial portion of the North Tower of the Resorts Casino Hotel, a
portion of the adjacent parking garage and a small portion of the casino/hotel
are located on land that is owned by unrelated third parties and held by RIH
under long-term ground leases. The ground leases do not provide certain
mortgagee protections and, in the event of a default thereunder, the New RIHF
Junior Mortgage Note Trustee may not have the right to cure any such default.
However, the New RIHF Junior Mortgage Note Trustee has the right under the New
RIHF Junior Mortgage Note Indenture to tender defaulted ground lease payments to
RIH and require RIH to transmit such funds to the respective ground lessor. If
such default is not cured, the lessor under any ground lease may have the right
to terminate the ground lease. The termination of any or all of such ground
leases could result in the loss of portions of, or rights with respect to, the
property subject to the terminated ground lease.
GUARANTY
RIH will guarantee payment of principal of and interest on the New RIHF
Junior Mortgage Notes pursuant to the RIH Junior Mortgage Guaranty. In addition,
the RIH Junior Mortgage Guaranty will be secured by the RIH Junior Guaranty
Mortgage. The RIH Junior Guaranty Mortgage will encumber the Resorts Casino
Hotel on a basis PARI PASSU with the RIH Junior Mortgage. (ARTICLE FOUR)
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RANKING
The RIH Junior Mortgage will be PARI PASSU with the lien of the RIH Junior
Guaranty Mortgage and subordinated to the liens on the Resorts Casino Hotel
securing payment of the RIHF Senior Facility Notes, the RIHF Senior Facility
Guaranty, any other secured Working Capital Facility, the New RIHF Mortgage
Notes and the RIH Mortgage Guaranty. (SECTION 4.03).
The aggregate principal amount of senior debt that may be outstanding on and
after the Effective Date is limited to $145,000,000.
PAYMENTS OF NET PROCEEDS OF ASSET SALES
None.
CHANGE OF CONTROL
See "-- Covenants -- Limitation on Consolidation, Merger, Conveyance,
Transfer or Lease of Property and Assets."
COVENANTS
CORPORATE EXISTENCE
Subject to the provisions described under "-- Limitations on Merger,
Consolidation, Transfer or Lease of Property and Assets", the New RIHF Junior
Mortgage Note Indenture will provide that each of RIHF and RIH 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 existence of each of its Subsidiaries
in accordance with the respective organizational documents of RIHF, RIH and each
such Subsidiary and the rights (charter and statutory), licenses, permits,
approvals and governmental franchises of it and each of its Subsidiaries
necessary to the conduct of its and their respective businesses, including
without limitation all licenses, permits, approvals and franchises necessary to
assure the continued operation of RIH's gaming operations at the Resorts Casino
Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned subsidiary of RIH
may consolidate with, merge into or transfer or distribute all or part of its
properties and assets to RIH or RIHF or as otherwise provided in Section 10.01
of the New RIHF Junior Mortgage Note Indenture. (SECTION 12.04).
LIMITATION ON DIVIDENDS AND RESTRICTED PAYMENTS
The New RIHF Junior Mortgage Note Indenture will provide that RIHF will not,
directly or indirectly, make, or permit any Subsidiary of RIHF to make, any
Restricted Payment.
The New RIHF Junior Mortgage Note Indenture also will provide that RIH will
not, directly or indirectly make, or permit any Subsidiary of RIH to make, any
Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's Consolidated Interest
Coverage Ratio, as certified to the New RIHF Junior Mortgage Note Trustee by an
Officers' Certificate, calculated at the time of the declaration of the dividend
or distribution is equal to or exceeds two, then RIH may declare and pay cash
dividends or make cash distributions in respect of any class of capital stock of
RIH in an amount not to exceed in the aggregate with any other such cash
dividends or distributions declared or made from and after the date hereof, 50%
of RIH's Consolidated Net Income from and after the Effective Date; and (ii) if
(1) RIH's Consolidated Interest Coverage Ratio, as certified to the New RIHF
Junior Mortgage Note Trustee by an Officer's Certificate, calculated at the time
of the declaration of the dividend or distribution is equal to or exceeds two;
and (2) RIH has cash in excess of the amount required to pay interest on the New
RIHF Junior Mortgage Notes and the New RIHF Mortgage Notes on the next Interest
Payment Date plus $20,000,000, then RIH may declare and pay cash dividends or
make cash distributions in respect of any class of capital stock of RIH in an
amount not to exceed such excess cash amount.
The New RIHF Junior Mortgage Note Indenture further will provide that RIHF
and RIH will not, and will not permit any of their respective Subsidiaries to,
create or otherwise cause or suffer to exist or become effective any encumbrance
or restriction of any kind on the ability of any Subsidiary of RIH or RIHF: (i)
to pay dividends or make any other distribution on the capital stock of such
Subsidiary
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that is owned by RIH, RIHF or a wholly owned Subsidiary of RIHF or RIH, as
applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH, RIHF or
any wholly owned Subsidiary of RIHF or RIH, as applicable; (iii) to make loans
or advances to RIH, RIHF or any wholly owned Subsidiary of RIHF or RIH, as
applicable; or (iv) to transfer any of its property or assets to RIHF, RIH or
any wholly owned Subsidiary of RIHF or RII, as applicable, except (A) any
restrictions existing on or prior to the date of the New RIHF Junior Morgage
Note Indenture, or in connection with agreements in effect, or entered into, on
the date of the New RIHF Junior Mortgage Note Indenture, or any permitted
amendments, renewals, refundings, refinancings or extensions thereof; PROVIDED,
HOWEVER, that the terms and conditions of any such amendments, renewals,
refundings, refinancings or extensions are no more restrictive with respect to
the matters set forth in clauses (i) through (iv) of this paragraph than the
agreements being amended, refunded, renewed, refinanced or extended; (B) any
restrictions or encumbrances existing or arising pursuant to the terms of
Indebtedness of a Person outstanding at the time such Person becomes a
Subsidiary of RIHF or RIH and not incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary of RIHF or RIH or any
permitted amendments, renewals, refinancings or extensions thereof; PROVIDED,
HOWEVER, that the terms and conditions of any such amendments, renewals,
refundings, refinancings or extensions are no more restrictive with respect to
the matters set forth in clauses (i) through (iv) of this paragraph than the
agreements being amended, renewed, refunded, refinanced or extended; (c)
encumbrances or restrictions existing under or by reason of applicable law or
regulation (including, without limitation, the Casino Control Act) or the New
RIHF Junior Mortgage Note Indenture; (d) customary provisions restricting
assignment of contracts or subletting or assignment of any lease governing a
leasehold interest of any Subsidiary of RIHF or RIH; or (e) net worth
maintenance requirements imposed by any governmental authority. (SECTION 12.07).
LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF NOTES
The New RIHF Junior Mortgage Indenture will provide that RIHF and RIH will
not, and will not permit any of their respective Subsidiaries to, directly or
indirectly, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to, including, without limitation, through any
merger or consolidation to which RIHF, RIH or any of their respective
Subsidiaries is a party or through any other acquisition of any such Subsidiary
(collectively, "incur"), or have outstanding, any Indebtedness other than,
without duplication, the following:
(i) the New RIHF Junior Mortgage Notes and the New RIHF Mortgage Notes;
(ii) Indebtedness represented by the Junior Mortgage Facility;
(iii) Indebtedness represented by the Working Capital Facility;
(iv) Indebtedness represented by Capitalized Lease Obligations in an amount
not in excess of $5,000,000 in the aggregate at any time outstanding;
(v) Indebtedness represented by F,F&E Financing Agreements in an amount not
in excess of $10,000,000 in the aggregate at any time outstanding;
(vi) unsecured Indebtedness in an amount not in excess of $5,000,000 in the
aggregate at any time outstanding that is subordinated and junior to the
New RIHF Junior Mortgage Notes at least to the extent set forth in the
Subordination Provisions attached to the New RIHF Junior Mortgage Note
Indenture as Exhibit C and which Indebtedness does not have any
requirements for amortization payments, mandatory redemption or sinking
fund payments prior to the stated maturity of the New RIHF Junior
Mortgage Notes and does not provide for the payment of interest in cash
at any time when the most recent installment of interest on the New RIHF
Junior Mortgage Notes was not paid in cash;
(vii) Non-Recourse Indebtedness in an amount not in excess of $25,000,000 in
the aggregate at any time outstanding; and
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(viii) After-Acquired Fee Mortgage Debt in an amount not in excess of
$3,000,000 in the aggregate at any time outstanding; and
(ix) Intercompany advances between RIH, RIHF or any of their direct or
indirect Subsidiaries on the one hand, and RII, on the other hand, not
in excess of $1,000,000 in the aggregate at any time outstanding.
The New RIHF Junior Mortgage Note Indenture also will provide that RIHF and
RIH will not permit any of their respective Subsidiaries to issue (other than to
RIHF, RIH or a direct or indirect wholly owned Subsidiary of RIHF or RIH) any
capital stock which has voting rights or has a preference as to any distribution
over its common stock. (SECTION 12.08).
LIMITATION ON REPAYMENT OF SUBORDINATED INDEBTEDNESS
The New RIHF Junior Mortgage Note Indenture will provide that neither RIHF
nor RIH will, and neither RIHF nor RIH will permit any Subsidiary to, directly
or indirectly, purchase, redeem, defease (including, but not limited to, in
substance or legal defeasance) or otherwise acquire or retire for value prior to
the stated maturity of, or prior to any scheduled mandatory redemption or
sinking fund payment with respect to (collectively, to "repay" or a
"repayment"), the principal of any Indebtedness of RIHF, RIH or any Subsidiary
of RIHF or RIH which is subordinated (whether pursuant to its terms or by
operation of law) in right of payment to the New RIHF Junior Mortgage Notes.
(SECTION 12.09).
LIMITATION ON CERTAIN TRANSACTIONS
The New RIHF Junior Mortgage Note Indenture also will provide that each of
RIHF and RIH will not, and will not permit any Subsidiary to, repurchase any New
RIHF Mortgage Notes in the open market if an Event of Default shall have
occurred and shall be continuing under the New RIHF Mortgage Note Indenture, the
New RIHF Junior Mortgage Note Indenture or under the RIHF Senior Facility
Indenture. (SECTION 12.10).
RESTRICTION OF ACTIVITIES
The New RIHF Junior Mortgage Note Indenture will provide that RIH will not,
until the date that is 91 days after the payment in full by RIHF of the
principal of (and interest, if any, on) all Outstanding New RIHF Junior Mortgage
Notes, engage in any business or investment activities other than those
necessary for, incident to, connected with or arising out of acquiring,
financing, owning and operating the Resorts Casino Hotel or additional hotels or
casinos or related or ancillary businesses.
The New RIHF Junior Mortgage Note Indenture also will provide that neither
RIHF nor RIH will make any loans to any Affiliate or any other Person other than
(i) Indebtedness of the type described in clause (ix) of the covenant described
in "--Limitation on Additional Indebtedness and Issuance of Notes", and (ii)
loans to RII from the proceeds of the Indebtedness represented by the Working
Capital Facility; PROVIDED, HOWEVER, that RIH shall have the right to make loans
to employees of RIH actively involved in the operation of the Resorts Casino
Hotel or to engage in credit transactions in the operation of the Resorts Casino
Hotel, if such loans or credit transactions are in the ordinary course of
business of operating a casino/hotel.
The New RIHF Junior Mortgage Note Indenture further will provide that RIHF
will not engage in any business (and will not have any Subsidiaries) other than
(i) to collect principal, interest (and any interest on overdue principal and
interest) and other amounts under any intercompany notes or guaranties made to
the order of or otherwise in favor of RIHF, (ii) to preserve its rights under
the New RIHF Junior Mortgage Note Indenture and the Mortgage Documents and
otherwise to comply with its obligations thereunder and under the New RIHF
Junior Mortgage Notes, (iii) to do or cause to be done all things necessary or
appropriate to protect the New RIHF Junior Mortgage Trust Estate, (iv) to
preserve its rights under the New RIHF Mortgage Indenture and the Senior
Mortgage Documents and otherwise to comply with its obligations thereunder and
under the New RIHF Mortgage Notes, (v) to issue Indebtedness represented by the
Working Capital Facility, (vi) to preserve its rights under the Working Capital
Facility and otherwise comply with its obligations under the Working
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Capital Facility, (vii) to incur any other Indebtedness permitted under the New
RIHF Junior Mortgage Note Indenture, (viii) to do all such acts and deeds
necessary in connection with the Junior Mortgage Facility and the documents and
instruments relating thereto and the Working Capital Facility and the documents
and instruments relating thereto, (ix) to declare, issue and pay dividends on,
or make any redemptions or repurchases of, RIHF's capital stock as contemplated
by its Certificate of Incorporation (to the extent permitted hereby) and
otherwise to comply with and perform the provisions of its Certificate of
Incorporation and By-laws, and (x) to do such further acts and deeds to
effectuate any of the matters listed in the foregoing clauses of this paragraph.
(SECTION 12.11).
LIMITATION ON SUBSIDIARIES; CONSOLIDATED GROUP
The New RIHF Junior Mortgage Note Indenture will provide that RIHF and RIH
will not have any Subsidiaries except the Subsidiaries existing on the date of
the New RIHF Junior Mortgage Note Indenture and Subsidiaries acquired by RIHF or
RIH in transactions not prohibited by the other provisions of the New RIHF
Junior Mortgage Note Indenture which are and shall at all times be wholly owned
(directly or indirectly) by RIHF or RIH. (SECTION 12.12).
LIMITATIONS ON LIENS
The New RIHF Junior Mortgage Note Indenture will provide that neither RIHF
nor RIH will create, incur, suffer to exist or permit to be created or incurred
any mortgage, lien, charge or encumbrance on or pledge of the Mortgage Documents
or any of the New RIHF Junior Mortgage Trust Estate, other than (a) the lien of
the Mortgage Documents and the Assignment Agreement, (b) liens on the New RIHF
Junior Mortgage Trust Estate in connection with Indebtedness permitted by
clauses (i), (ii), (iii), (iv) or (v) of the first paragraph of the covenant
described in "Limitation on Additional Indebtedness and Issuance of Notes", (c)
other Permitted Encumbrances on the New RIHF Junior Mortgage Trust Estate, and
(d) a notice of intention or building contract filed by a mechanic, materialman
or laborer under the New Jersey lien law. Without limiting the generality of the
previous sentence, but notwithstanding the provisions of such sentence, RIH
shall not be deemed to have breached such provisions by virtue of the existence
of liens for Impositions (as defined in the RIH Junior Mortgage) or mechanics'
liens so long as RIH is in good faith contesting the validity of such liens in
accordance with the provisions of Section 5.09 of the RIH Junior Mortgage.
(SECTION 12.12).
COMPLIANCE WITH LAWS
The New RIHF Junior Mortgage Note Indenture will provide that each of RIHF
and RIH will comply, and will cause each of its Subsidiaries to comply, with the
Casino Control Act and all other applicable statutes (including, without
limitation, ERISA), rules, regulations, orders and restrictions of the United
States of America, states and municipalities, and of any governmental
department, commission, board, regulatory authority, bureau, agency and
instrumentality of the foregoing in respect of the conduct of its business and
the ownership of its properties and assets, including, without limitation, the
New RIHF Junior Mortgage Trust Estate, except such as are being contested in
good faith by appropriate proceedings in accordance with the Mortgage Documents
(to the extent applicable) and except for such noncompliances as will not in the
aggregate have a material adverse effect on the business, properties, operations
or financial condition of RIHF, RIH or their respective Subsidiaries. (SECTION
12.14).
PAYMENT OF TAXES AND OTHER CLAIMS
The New RIHF Junior Mortgage Note Indenture will provide that RIHF or RIH
will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon RIHF, RIH or any of their respective Subsidiaries or upon the New
RIHF Junior Mortgage Trust Estate or any portion thereof or upon the income,
profits or property of RIHF, RIH or any of their respective Subsidiaries, and
(b) all lawful claims for labor, materials and supplies which, if unpaid, will
by law become a Lien upon the New RIHF Junior Mortgage Trust Estate or upon any
other property of RIHF, RIH or any of their respective Subsidiaries; PROVIDED,
HOWEVER, that RIHF and RIH shall not be required to pay or
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discharge or cause to be paid or discharged any such tax, assessments, charge or
claim the amount, applicability or validity of which is being contested in good
faith by appropriate proceedings in accordance with the Mortgage Documents (to
the extent applicable) if adequate reserves therefor have been established in
accordance with GAAP. (SECTION 12.15).
MAINTENANCE OF PROPERTIES
The New RIHF Junior Mortgage Note Indenture further will provide that each
of RIHF and RIH will cause the Trust Estate and all other properties (other than
obsolete equipment) owned by or leased to it or any of its Subsidiaries, and
used or useful in the conduct of its business or the business of RIHF, RIH or
such Subsidiary to be maintained and kept in good condition, repair and working
order, except for reasonable wear and use, and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as required by the Mortgage Documents or, to the extent not governed by the
Mortgage Documents, as in the reasonable judgment of the Board of Directors of
RII may be necessary so that the business carried on in connection therewith may
be properly and advantageously conducted at all times. (SECTION 12.16).
INSURANCE
The New RIHF Junior Mortgage Note Indenture will provide that each of RIHF
and RIH will maintain, and will cause each of its Subsidiaries to maintain, with
financially sound and reputable insurers, appropriate insurance on each of their
respective properties and businesses against liabilities, casualties, risks and
contingencies of the type and in amounts required by the Mortgage Documents or,
to the extent not governed by the Mortgage Documents, as customarily maintained
by corporations and other entities engaged in the same or similar businesses and
similarly situated; PROVIDED, HOWEVER, that any such insurer shall be qualified
to do business in the jurisdiction where the insured property is located.
(SECTION 12.17).
WAIVER OF STAY, EXTENSION OR USURY LAWS
The New RIHF Junior Mortgage Note Indenture will provide that each of RIHF
and RIH (to the extent that it may lawfully do so) will not, and will not cause
or permit any of its Subsidiaries to, at any time insist upon, or plead, or in
any manner whatsoever claim, and will resist any and all efforts to be compelled
to take the benefit or advantage of, any stay or extension law or any usury law
or other law that would prohibit or forgive RIHF or RIH from paying all or any
portion of the principal of, or premium, if any, and interest on the New RIHF
Junior Mortgage Notes or the RIH Junior Promissory Note or the Guaranty as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of the New RIHF Junior
Mortgage Note Indenture or the RIH Junior Promissory Note or the Guaranty; and
(to the extent that it may lawfully do so) RIHF and RIH hereby expressly waive
all benefit or advantage of any such law, and covenant that they will not
hinder, delay or impede the execution of any power granted to the New RIHF
Junior Mortgage Note Trustee herein and in the Mortgage Documents, but will
suffer and permit the execution of every such power as though no such law had
been enacted. (SECTION 12.18).
TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
The New RIHF Junior Mortgage Note Indenture also will provide that each of
RIHF and RIH will not, and will not permit any of its Subsidiaries to, directly
or indirectly, enter into or permit to exist any transaction (including without
limitation the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of RIHF or RIH or with any
Affiliate of any such holder, unless (a) such transaction is upon fair and
reasonable terms which are no less favorable to RIHF or such Subsidiary, as the
case may be, than would be available in an arm's-length transaction with an
unrelated person and (b) if over $250,000, such transaction is determined in the
good faith judgment of a majority of the members of the Board of Directors of
either (i) RII, so long as RII owns directly or indirectly a majority of the
outstanding capital stock of RIH, directly or indirectly, or (ii) RIH, to be in
the best interests of RIHF, RIH or such Subsidiary as applicable; PROVIDED,
HOWEVER, that this provision
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shall not apply to (A) any agreements, documents, instruments or transactions
entered into in connection with the RIHF Senior Facility Notes, (B) the Services
Agreement, (C) the RII Management Contract, or (D) the RII Tax Sharing
Agreement. (SECTION 12.21).
EVENTS OF DEFAULT
The following events constitute "Events of Default" under the New RIHF
Junior Mortgage Note Indenture:
(a) default in the payment of any interest upon any New RIHF Junior Mortgage
Note when such interest becomes due and payable and continuance of such
default (the deposit with the New RIHF Junior Mortgage Note Trustee of
funds sufficient to make such interest payment in full being deemed to
cure any such default) for a period of ten days;
(b) default in the payment of all or any portion of the principal of any New
RIHF Junior Mortgage Note at its Maturity;
(c) default in the performance or breach, of any covenant of RIHF or RIH in
the New RIHF Junior Mortgage Note Indenture (other than a covenant a
default in the performance or breach of which is elsewhere in this
paragraph specifically dealt with), the Assignment Agreement or any of
the Mortgage Documents and continuance of such default or breach for a
period of 30 days (or such shorter or longer cure period, if any, as may
be specified in respect of such default or breach in the Assignment
Agreement or the applicable Mortgage Document, as the case may be), and
(other than with respect to the covenants described in "Covenants --
Limitation on Dividends and Restricted Payments", "Covenants --
Limitation on Additional Indebtedness and Issuance of Notes", "Covenants
-- Limitation on Repayment of Subordinated Indebtedness", "Covenants --
Limitation on Certain Transactions", "Covenants -- Restriction of
Activities", "Covenants -- Limitation on Liens" and "Covenants --
Transactions with Stockholders and Affiliates") after there has been
given (i) to RIHF by the New RIHF Junior Mortgage Note Trustee, or (ii)
to RIHF and the New RIHF Junior Mortgage Note Trustee by the Holders of
at least 25% in Outstanding Amount of the Outstanding New RIHF Junior
Mortgage Notes, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default"; PROVIDED, HOWEVER, that, if such default or breach is of a
covenant set forth in certain specified provisions of the New RIHF
Junior Mortgage Note Indenture, and if such default or breach is of such
a nature that is curable but is not susceptible of being cured with due
diligence within such 30-day period (or such shorter or longer cure
period) (for reasons other than lack of funds), then, under certain
circumstances, such period shall be extended for such further period of
time (up to a maximum of 60 days) as may reasonably be required to cure
such default or breach;
(d) a proceeding or case shall be commenced, without the application or
consent of RIHF or RIH, in any court of competent jurisdiction, seeking
(i) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of RIHF or RIH or
of all or any substantial part of its assets, or (iii) similar relief in
respect of RIHF or RIH under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60
consecutive days;
(e) other than the Case, the commencement by RIHF or RIH of a voluntary case
under the federal bankruptcy laws or any other applicable federal or
state law, or the consent or acquiescence by any of them to the filing
of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or
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other similar official) of RIHF or RIH or any substantial part of any of
their property, or the making by any of them of an assignment for the
benefit of creditors, or the taking of action by RIHF or RIH in
furtherance of any such action;
(f) the revocation, suspension or involuntary loss of any Permit which
results in the cessation of a substantial portion of the operations of
the Resorts Casino Hotel for a period of more than 90 consecutive days;
(g) (i) a default by RIHF, RIH or any of their Subsidiaries under any
Indebtedness (other than the Indebtedness represented by the Working
Capital Facility and the Junior Mortgage Facility in an aggregate
principal amount in excess of $5,000,000), which default results in the
acceleration of the maturity of any such Indebtedness under the evidence
of indebtedness, indenture or other instrument governing such
Indebtedness; PROVIDED, HOWEVER, that, if such default under such
evidence of indebtedness, indenture or other instrument shall be cured
by the obligor, or be waived by the Holders of such Indebtedness, in
each case as may be permitted by such evidence of indebtedness,
indenture or other instrument and in each case resulting in rescission
of such acceleration thereunder, then the Event of Default under the New
RIHF Junior Note Indenture by reason of such default shall be deemed
likewise to have been thereupon cured or waived; or (ii) a default by
RIHF, RIH or any of the Subsidiaries under any Indebtedness represented
by the Working Capital Facility or the Junior Mortgage Facility, the
effect of which default (after the expiration of any applicable notice
or grace periods) is to permit the Holder or Holders of any such
Indebtedness represented by the Working Capital Facility or the Junior
Mortgage Note Indenture in an aggregate principal amount in excess of
$5,000,000 (or a trustee or agent on behalf of such Holder or Holders)
to cause the acceleration of the maturity of such Indebtedness
represented by the Working Capital Facility or the Junior Mortgage
Facility under the evidence of indebtedness, indenture or other
instrument governing such Indebtedness; provided, however, that if such
default under such evidence of indebtedness, indenture or other
instrument shall be cured by the obligor, or be waived by the Holders of
such evidence of indebtedness, indenture or other instrument (and, if
such default resulted in the acceleration of the maturity of such
Indebtedness, such acceleration shall have been rescinded thereunder),
then the Event of Default under the New RIHF Junior Mortgage Note
Indenture by reason of such default shall be deemed likewise to have
been thereupon cured or waived; or (iii) the existence of a final
judgment of a court of competent jurisdiction in an amount in excess of
$3,000,000 against RIHF, RIH or the New RIHF Junior Mortgage Trust
Estate, which judgment has not been satisfied or otherwise provided for,
for a period of 30 days (during which execution shall not be effectively
stayed) following the date on which such judgment becomes a lien against
the New RIHF Junior Mortgage Trust Estate or any part thereof (unless
the lawsuit in question was commenced without effective service of
process upon either RIHF or RIH in which case such 30-day period shall
not commence until RIHF or RIH receives notice of such final judgment);
or (iv) the existence of a final judgment of a court of competent
jurisdiction in an amount in excess of $15,000,000 against RIHF, RIH or
the New RIHF Junior Mortgage Trust Estate, which judgment has not been
satisfied or otherwise provided for, for a period of 60 days (during
which execution shall not be effectively stayed) following the date of
such final judgment; or (v) the existence of a final judgment of a court
of competent jurisdiction, regardless of amount, against RIHF, RIH or
the New RIHF Junior Mortgage Trust Estate, which judgment has not been
satisfied or otherwise provided for, for a period of 60 days (during
which execution shall not be effectively stayed) following the date of
such final judgment, if such judgment, by itself or upon recordation or
other action of the judgment creditor, imposes or would impose a lien on
the New RIHF Junior Mortgage Trust Estate or any part thereof senior to
the lien of the RIH Junior Mortgage;
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(h) default in the performance, or breach, of any covenant of RIHF or RIH in
connection with the provisions described in "-- Limitation on
Consolidation, Merger, Conveyance, Transfer or Lease of Property and
Assets. (SECTION 7.01);
(i) the existence of a judgment of a court of competent jurisdiction in an
amount in excess of $3,000,000 against RIH regarding the CRDA Dispute,
which judgment has not been stayed, satisfied or otherwise provided for,
for a period of 30 days (during which execution shall not be effectively
stayed) (unless the lawsuit in question was commenced without effective
service of process upon RIH in which case such 30-day period shall not
commence until RIH receives notice of such final judgement); or
(j) if RII fails to pay or discharge or cause to be paid or discharged,
within 30 days before the same shall become delinquent, all taxes
levied or imposed upon RII; provided, however, that no Event of Default
or Default will be deemed to exist under the New RIHF Junior Mortgage
Note Indenture with respect to any tax liability not paid or discharged
by RII if and to the extent that the amount, applicability or validity
of such tax liability is being contested in good faith by appropriate
proceedings if adequate reserves therefor have been established in
accordance with GAAP; provided, further, however, that this paragraph
shall not apply to amounts due with respect to any period during which
neither RIHF, RIH nor any of their Subsidiaries is included in RII's
consolidated group for Federal income tax purposes.
If an Event of Default (other than one referred to in clause (d) or (e)
above) occurs and is continuing, then and in every such case the New RIHF Junior
Mortgage Note Trustee or the Holders of not less than 25% in Outstanding Amount
of the New RIHF Junior Mortgage Notes Outstanding may declare the Outstanding
Amount of all the New RIHF Junior Mortgage Notes to be due and payable
immediately, by a notice in writing to RIHF (and to the New RIHF Junior Mortgage
Note Trustee, if given by any Noteholders), and upon any such declaration such
Outstanding Amount shall become immediately due and payable. If an Event of
Default referred to in clause (d) or (e) above occurs, then the Outstanding
Amount of all the New RIHF Junior Mortgage Notes shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are expressly waived by RIHF. (SECTION
7.02).
At any time after such a declaration of acceleration has been made, but
before any judgment or decree for payment of money due on any New RIHF Junior
Mortgage Notes has been obtained by the New RIHF Junior Mortgage Note Trustee,
the Holders of a majority in Outstanding Amount of the New RIHF Junior Mortgage
Notes may, by written notice to RIHF and the New RIHF Junior Mortgage Note
Trustee, rescind and annul such declaration and its consequences if: (a) RIHF
has deposited with the New RIHF Junior Mortgage Note Trustee a sum sufficient to
pay (1) all overdue installments of interest on all New RIHF Junior Mortgage
Notes, (2) the principal of any New RIHF Junior Mortgage Notes which have become
due otherwise than by such declaration of acceleration and interest thereon at
the rate or rates prescribed therefor in the New RIHF Junior Mortgage Notes, and
(3) all sums paid or advanced by the New RIHF Junior Mortgage Note Trustee
hereunder and the reasonable compensation, expenses, disbursements and advances
of the New RIHF Junior Mortgage Note Trustee, its agents and counsel; and (b)
all Events of Default, other than the non-payment of the Outstanding Amount of
the New RIHF Junior Mortgage Notes which have become due solely by such
declaration of acceleration, have been cured or have been waived as provided in
the New RIHF Junior Mortgage Note Indenture. No such rescission and annulment
shall affect any subsequent default or impair any right consequent thereon.
(SECTION 7.02).
LIMITATION ON CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE OF PROPERTY
AND ASSETS
Neither RIHF nor RIH shall consolidate, combine or merge with or into any
other Person or permit any other Person to consolidate, combine or merge with or
into RIHF or RIH, as the case may be; and neither RIHF with respect to its
assets nor RIH with respect to the New RIHF Junior Mortgage Trust Estate shall
sell, assign, convey or transfer its interest in such assets or the New RIHF
Junior Mortgage Trust Estate, as the case may be, substantially as an entirety
(and notwithstanding
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anything to the contrary contained in the New RIHF Junior Mortgage Note
Indenture (including the proviso at the end of this sentence), but subject to
the provisions of the RIH Junior Mortgage regarding dispositions of the New RIHF
Junior Mortgage Trust Estate, neither RIHF with respect to its assets nor RIH
with respect to the New RIHF Junior Mortgage Trust Estate may sell, assign,
convey or transfer such assets or the new RIHF Junior Mortgage Trust Estate, as
the case may be, other than substantially as an entirety) to any other Person or
group of persons in one transaction or a series of related transactions, or
permit any other Person or group of persons to convey or transfer all or
substantially all of its assets, subject to liabilities other than DE MINIMIS
liabilities, to RIHF or RIH; and RIHF and RIH shall not transfer, convey, sell
or otherwise dispose of to any other Person, or issue to any Person, any equity
interest in RIHF or RIH, as the case may be (each such transaction referred to
as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) RIHF may engage in
a Combination Transaction in which the only other party or parties is RIH or a
direct or indirect wholly owned Subsidiary of RIHF or RIH, and (ii) RIHF or RIH
may engage in any other Combination Transaction (either independently or at the
same time as other Combination Transactions), subject to the following with
respect to each such Combination Transaction: (a) immediately following such
Combination Transaction, (1) RIH (or any successor entity) shall be eligible for
and shall meet all relevant Legal Requirements, including holding all permits,
required for the normal operation of the business of owning and operating the
Resorts Casino Hotel, and (2) RIH (or any successor entity) shall be controlled
by a Person that is, or shall retain to manage the Resorts Casino Hotel one or
more Persons that are, experienced in the operation and management of casino
hotels; (b) in the event RIHF or RIH shall consolidate, combine or merge with or
into another Person or sell, assign, convey or transfer its interest in its
assets or in the New RIHF Junior Mortgage Trust Estate, as the case may be,
substantially as an entirety (but not less than substantially as an entirety) to
another Person in one transaction or a series of related transactions, the
entity which is formed by or survives such consolidation, combination or merger
or the Person to which such assets or the New RIHF Junior Mortgage Trust Estate
are conveyed or transferred, (1) shall be organized and existing under the laws
of the United States of America, any state thereof, or the District of Columbia;
(2) shall expressly assume, by an indenture supplemental to the New RIHF Junior
Mortgage Note Indenture, executed and delivered to the New RIHF Junior Mortgage
Note Trustee, the performance and observance of every covenant, obligation and
condition of the New RIHF Junior Mortgage Note Indenture to be performed or
observed by RIHF or RIH, whichever the case may be; (3) shall expressly assume,
by an instrument executed and delivered to the New RIHF Junior Mortgage Note
Trustee, the performance of every covenant, obligation and condition of the
Mortgage Documents and the Assignment Agreement to be performed by RIHF or RIH,
whichever the case may be; (4) immediately after giving effect to such
transaction could incur at least $1.00 of additional Indebtedness under the
covenant described in "Covenants -- Limitation on Additional Indebtedness and
Issuance of Notes"; (c) immediately after giving effect to such transaction, no
Event of Default, or Default under the New RIHF Junior Mortgage Note Indenture
or under the RIH Junior Mortgage, shall have occurred and be continuing; (d)
such Combination Transaction shall be on such terms as shall not impair the lien
and security and priority of the New RIHF Junior Mortgage Note Indenture or of
the Mortgage Documents or of the Assignment Agreement and the rights and powers
of the New RIHF Junior Mortgage Note Trustee and the Holders of the New RIHF
Junior Mortgage Notes thereunder; and (e) RIHF or RIH, as the case may be, shall
have delivered to the New RIHF Junior Mortgage Note Trustee an Officers'
Certificate and an Opinion of Counsel, each of which shall state that such
Combination Transaction and such supplemental indenture comply with the
provisions of Article Ten of the New RIHF Junior Mortgage Note Indenture and
that all conditions precedent provided for in the New RIHF Junior Mortgage Note
Indenture relating to such transaction have been complied with. (SECTION 10.01).
Except as otherwise expressly permitted by the RIH Junior Mortgage and the
New RIHF Junior Mortgage Note Indenture, neither RIHF nor RIH shall sell,
assign, lease, hypothecate, pledge, mortgage or otherwise transfer all or any
part of the assets of RIHF or the New RIHF Junior Mortgage Trust Estate or any
interest therein (including without limitation any interest in the Ground
Leases).
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Without limiting the generality of the foregoing, RIH shall not separate, or
attempt to separate, its ownership of its interest in the Ground Leases from the
ownership of the buildings constituting the Resorts Casino Hotel or any part
thereof. (SECTION 10.04).
The foregoing limitations on consolidation, merger, conveyance, transfer or
lease of property and assets shall not apply in connection with an RIH Sale.
(SECTION 10.05).
DISCHARGE OF NEW RIHF JUNIOR MORTGAGE NOTE INDENTURE
RIHF may terminate substantially all obligations under the New RIHF Junior
Mortgage Note Indenture at any time by delivering all outstanding New RIHF
Junior Mortgage Notes to the New RIHF Junior Mortgage Note Trustee for
cancellation and paying any other sums payable under the New RIHF Junior
Mortgage Note Indenture. (ARTICLE FIVE).
MODIFICATION OF INDENTURE
From time to time, the parties to the New RIHF Junior Mortgage Note
Indenture, without the consent of the Holders of the New RIHF Junior Mortgage
Notes, may enter into one or more supplemental indentures for certain specified
purposes, including curing ambiguities, defects or inconsistencies, provided
such action does not adversely affect the rights of any Holder. (SECTION 11.01).
Modifications, changes and amendments to the New RIHF Junior Mortgage Note
Indenture also may be made by the parties thereto with the consent of the
Holders of not less than 66 2/3% in Outstanding Amount of the New RIHF Junior
Mortgage Notes then Outstanding, except that without the consent of the Holder
of each New RIHF Junior Mortgage Note affected, no such modification or
alteration may (i) change the stated maturity of the principal of, or any
installment of interest on, any New RIHF Junior Mortgage Note, or reduce the
principal amount thereof or the premium payable upon the redemption thereof, or
change any Place of Payment where, or the coin or currency in which, any New
RIHF Junior Mortgage Note, or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), (ii) reduce the percentage in Outstanding amount of the New
RIHF Junior Mortgage Notes, the consent of whose Holders is required for any
amendment, supplement or waiver, (iii) modify or alter the provisions of the
proviso of the definition of the term "Outstanding", (iv) modify any of the
provisions described in this paragraph or, with certain exceptions, the
provisions of the New RIH Junior Mortgage Note Indenture regarding waiver of
default, or (v) permit the creation of any lien ranking prior to the lien of the
Mortgage (except for such liens expressly permitted pursuant to the covenant
described under "-- Covenants -- Limitations on Liens"). In addition, the
Holders of 66 2/3% in aggregate principal amount of the New RIHF Mortgage Notes
must consent to any amendment of the New RIHF Junior Mortgage Note Indenture
allowing for the redemption of the New RIHF Junior Mortgage Notes prior to the
fifth anniversary of the Effective Date unless such redemption is in connection
with an RIH Sale. (SECTION 11.02).
TRUSTEE
The New RIHF Junior Mortgage Note Trustee may require reasonable indemnity
before exercising any of its rights or powers under the New RIHF Junior Mortgage
Note Indenture. (SECTION 8.05).
REPORTS TO HOLDERS
RIH will furnish or cause to be furnished to the New RIHF Junior Mortgage
Note Trustee, within 105 days after each fiscal year of RIH: (i) a copy of
annual audited financial statements of RIH prepared in conformity with GAAP,
accompanied by a report of Ernst & Young or of another firm of independent
certified public accountants of recognized national standing selected by RIH
(the "National Accountants"), together with a certificate from such National
Accountants stating that their audit examination has included a review of the
terms of the New RIHF Junior Mortgage Note Indenture and that the National
Accountants have not become aware of any Event of Default or that a Default has
occurred and is continuing, and if they have become aware of any such Event of
Default or Default, describing it; provided, however, that the National
Accountants will not be liable to any Person for any failure to discover any
Event of Default in connection with such review; and (ii) a copy
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of annual unaudited financial statements of RIH, including notes to such
financial statements and corresponding management's discussion and analysis, in
form and substance comparable to that which would be required to be filed with
the Commission in an Annual Report on Form 10-K under the Exchange Act, prepared
in the same manner as the audited financial statements referred to in clause (i)
above, signed by a proper accounting officer of RIH. RIH contemporaneously with
the furnishing of such audited financial statements to the New RIHF Junior
Mortgage Note Trustee under clause (i) of this paragraph, RIH will mail copies
of such audited financial statements to the Holders (which need not include the
certificate referred to in clause (i) above).
RIH also will furnish or cause to be furnished to the New RIHF Junior
Mortgage Note Trustee, within 60 days after each quarter of each fiscal year of
RIH, except the final quarter of such fiscal year, a copy of unaudited financial
statements of RIH prepared on a consistent basis with the audited financial
statements referred to in clause (i) of the paragraph above, signed by a proper
accounting officer of RIH and consisting of at least a balance sheet as at the
close of such quarter and statements of operations and cash flow for such
quarter and for the period from the beginning of such fiscal year to the close
of such quarter, including notes to such financial statements and corresponding
management's discussion and analysis, in form and substance comparable to that
which would be required to be filed with the Commission in a Quarterly Report on
Form 10-Q under the Exchange Act. RIH contemporaneously with the furnishing of
such unaudited financial statements to the New RIHF Mortgage Note Trustee, RIH
shall mail copies of such unaudited financial statements to the Holders (which
need not be signed by a proper accounting officer of RIH).
RIH will furnish or cause to be furnished to the New RIH Junior Mortgage
Note Trustee, contemporaneously with the furnishing of a copy of the annual
financial statements and of the quarterly financial statements referred to
above, an Officers' Certificate dated the date of such annual financial
statement or such quarterly financial statements to the effect that no Default
or Event of Default has occurred and is continuing, or, if there is any such
Default or Event of Default, describing it and the steps, if any, being taken to
cure it.
RIH will furnish or cause to be furnished to the New RIHF Junior Mortgage
Note Trustee, copies of each filing and report made by RIH or RIHF with the
Commission pursuant to the reporting and filing requirements of Section 13 or
15(d) or the Exchange Act, within 15 days after RIH or RIHF, as applicable, is
required to file the same.
Pursuant to the New RIHF Junior Mortgage Note Indenture, if RIH becomes
exempt from the Commission reporting and filing requirements of Section 13 or
15(d) of the Exchange Act, RIH will prepare such periodic reports as it would
otherwise have been required to file with the Commission and (i) at its own
expense, cause all such periodic reports to be filed with the Commission, the
New RIHF Junior Mortgage Note Trustee and any exchange upon which the New RIHF
Junior Mortgage Notes then are listed, in each case on the date when such
periodic report would have been required to be filed with the Commission under
Section 13 or 15(d) of the Exchange Act, if either or such provisions were
applicable, and (ii) keep copies of such periodic reports available at its
office and promptly provide any Person who so requests with a copy of any such
periodic report, at RIHF's expense.
Each of RIHF and RIH shall comply with the provisions of Section 314(a) of
the Trust Indenture Act.
RIHF will deliver to the Trustee, promptly upon becoming aware of any
Default or Event of Default (but in no event later than five business days
thereafter) in the performance of any covenant or agreement of RIHF contained in
the New RIHF Junior Mortgage Note Indenture or any of the Mortgage Documents, an
Officers' Certificate specifying with particularity such event. (SECTION 12.06).
CERTAIN DEFINITIONS
"ADDITIONAL NEW RIHF JUNIOR MORTGAGE NOTES" means additional New RIHF Junior
Mortgage Notes issued in payment of interest accrued on outstanding New RIHF
Junior Mortgage Notes pursuant to Section 3.11 of the New RIHF Junior Mortgage
Note Indenture.
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"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, and, with respect to any specified natural
Person, any other Person having a relationship by blood, marriage or adoption
not more remote than first cousin with such specified Person. For purposes of
this definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be required
under the TIA, the term "Affiliate" shall not include, with respect to RIHF or
RIH, any of Fidelity Management & Research Company, TCW Special Credits or funds
or accounts managed or advised by either of them.
"AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured by an
After-Acquired Fee Mortgage.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section 2.07 of the
RIH Junior Mortgage.
"ASSIGNMENT AGREEMENT" means the Assignment of Agreements providing for the
assignment of the RIH Junior Promissory Note and other Mortgage Documents to the
New RIHF Junior Mortgage Note Trustee by RIHF, and acknowledgment thereof by
RIH, a copy of which is attached to the New RIHF Junior Mortgage Note Indenture
as Exhibit B.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee
which, in conformity with GAAP consistently applied, is accounted for as a
capitalized lease on the balance sheet of such Person.
"CASE" means, collectively, the bankruptcy cases involving RII and GRI in
the United States Bankruptcy Court for the District of Delaware.
"CONSOLIDATED CASH FLOW' means, with respect to any Person for any period,
an amount equal to the sum of (i) the consolidated net income (or loss) of such
Person for such period determined in accordance with GAAP consistently applied,
excluding interest income, interest expense and gains or losses from
extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing
such consolidated net income (or loss) in respect of depreciation and
amortization, plus (iii) non-cash charges arising from the reduction of CRDA
Deposits to market value, minus (iv) taxes based upon or measured by income
which are payable in cash, minus (v) CRDA Deposits.
"CONSOLIDATED INTEREST CHARGES" means, with respect to any Person for any
period, the consolidated interest expense (not including the non-cash
amortization of discount on the original issuance of (a) the RIH Senior
Promissory Note, (b) any intercompany indebtedness of RIH issued in connection
with Indebtedness represented by the Junior Mortgage Facility and (c) any
intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Working Capital Facility), whether payable in cash or in-kind
(and with respect to RIH, including, without limitation, the interest paid or
accrued (without duplication) on (i) the RIH Promissory Note, (ii) any
intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Junior Mortgage Facility and (iii) any intercompany
indebtedness of RIH issued in connection with Indebtedness represented by the
Working Capital Facility), without deduction for interest income (other than
cash interest income received from RII in payment of its interest cost on any
Working Capital Facility), in each case for such Person and its consolidated
Subsidiaries for such period determined in accordance with GAAP consistently
applied.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its
consolidated Subsidiaries for the immediately preceding four consecutive fiscal
quarters to (b) Consolidated Interest Charges of RIH and its consolidated
Subsidiaries for such period.
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"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
an amount equal to consolidated net income (or loss) of such Person for such
period determined in accordance with GAAP consistently applied, minus (a)
federal and state taxes based upon or measured by income which are payable in
cash, plus (b) non-cash charges arising from federal and state taxes based upon
or measured by income.
"CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the Casino
Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross
revenue in order to satisfy its investment obligation pursuant to the Casino
Control Act, and (b) the amounts invested in qualified investments in lieu of
any of the quarterly deposits (or portion thereof) referred to in clause (a)
above.
"CRDA DISPUTE" means the dispute existing on the date hereof between RIH and
the New Jersey Casino Reinvestment Development Authority regarding CRDA Deposits
and New Jersey Casino Reinvestment Authority Notes, which dispute involves an
amount of approximately $30,000,000.
"DEFAULT" means the occurrence and continuance of an Event of Default or an
event which, after notice or lapse of time or both, would become an Event of
Default.
"F, F&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible
Personal Property (as defined in the RIH Junior Mortgage) and other items
constituting Operating Assets (as defined in the RIH Junior Mortgage), such as
computer software, which are financed, purchased or leased by RIH, provided
that, with certain exceptions, the principal amount of the indebtedness secured
by such lien shall not exceed 85% of the cost to RIH of such property at the
time of acquisition.
"GUARANTY" means the guaranty contained in Article Four of the New RIHF
Junior Mortgage Note Indenture.
"HOLDER" means a Person in whose name a New RIHF Junior Mortgage Note is
registered.
"INDEBTEDNESS" means, as applied to any Person, without duplication, any
indebtedness, exclusive of deferred taxes: (a) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof); (b) evidenced by bonds, notes, debentures
or similar instruments or letters of credit; (c) representing the balance
deferred and unpaid of the purchase price of any property, if and to the extent
such indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP (but excluding trade accounts payable
arising in the ordinary course of business that are not overdue by more than 90
days or are being contested by such Person in good faith); (d) any Capitalized
Lease Obligations (other than, with respect to RIH or RIHF, the Ground Leases)
of such Person; and (e) Indebtedness of others guaranteed by such Person,
including without limitation every obligation of such Person (i) to purchase or
pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (ii) to purchase property,
securities or services for the purpose of assuring the Holder of such
Indebtedness of the payment of such Indebtedness, or (iii) to maintain working
capital, equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness; PROVIDED, HOWEVER, that the guaranty by any Person shall not
include endorsements by such Person for collection or deposit, in either case in
the ordinary course of business. The term "INDEBTEDNESS" does not include: (1)
any of the types of indebtedness described in clauses (a) through (e) above
(inclusive) owed by RIHF to RIH or any of their Subsidiaries, by RIH to RIHF or
any of their Subsidiaries or by any such Subsidiary to RIH, RIHF or any other
such Subsidiary (including without limitation the RIH Promissory Note and the
RIH Junior Promissory Note); (2) the RIH Mortgage Guaranty, the RIH Junior
Mortgage Guaranty, and any guaranty of a Working Capital Facility Guaranty; (3)
matters relating to the CRDA Dispute, New Jersey Casino Reinvestment Development
Authority Notes or the CRDA Deposits; and (4) any payments made by RIHF or RIH
under the RII Management Agreement, the RII Tax Sharing Agreement or the
Services Agreement.
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"JUNIOR MORTGAGE FACILITY" means the New RIHF Junior Mortgage Notes and any
secured or unsecured facility or facilities entered into by RIH or RIHF
providing for the making of loans to RIH or RIHF on a revolving or term basis,
or the issuance of notes, debentures or bonds by RIH or RIHF, as such agreement,
indenture or instrument may be amended, supplemented or modified from time to
time, or any refinancing thereof, in an aggregate principal amount up to
$35,000,000 plus additional notes, debentures or bonds issued in payment of
interest accrued on outstanding notes, debentures or bonds; PROVIDED, HOWEVER,
that the lender or lenders thereunder (or any trustee or agent acting on behalf
of such lender or lenders) shall have executed an interecreditor agreement
covering the matters set forth on Exhibit G to the New RIHF Junior Mortgage Note
Indenture. The liens, if any, securing the Junior Mortgage Facility shall be
PARI PASSU with the lien of the RIH Junior Mortgage and the RIH Junior Guaranty
Mortgage. The term "Junior Mortgage Facility" does not include the RIH Junior
Mortgage Guaranty.
"MORTGAGE DOCUMENTS" means (a) the RIH Junior Mortgage, the RIH Junior
Guaranty Mortgage, the RIH Junior Promissory Note, the Assignment of Leases and
Rents and any other security document to which either RIH or RIHF is a party
relating to the New RIHF Junior Mortgage Notes, which is executed and delivered
pursuant to or in connection with the RIH Junior Mortgage, the RIH Junior
Guaranty Mortgage or the Assignment Agreement, and (b) any mortgage, deed of
trust, guaranty, promissory note, collateral assignment agreement, assignment of
leases and rents, assignment of operating assets and any other security document
to which either RIH or RIHF is a party relating to the Junior Mortgage Facility.
"NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in connection with
the acquisition, purchase, improvement or development of property or assets
(other than the New RIHF Junior Mortgage Trust Estate) used by RIHF, RIH or any
Subsidiary of RIH or RIHF to engage in the casino business, the hotel business
or related or ancillary business or purpose and which is secured only by such
assets and without recourse to RIH, RIHF or any Subsidiary of RIH or RIHF or the
New RIHF Junior Mortgage Trust Estate for such indebtedness.
"OUTSTANDING" when used with respect to New RIHF Junior Mortgage Notes
means, as of the date of determination, all New RIHF Junior Mortgage Notes
theretofore authenticated and delivered under this Indenture, except:
(a) New RIHF Junior Mortgage Notes theretofore canceled by the New RIHF
Junior Mortgage Note Trustee or delivered to the New RIHF Junior Mortgage
Note Trustee for cancellation;
(b) New RIHF Junior Mortgage Notes for whose payment or redemption money
in the necessary amount has been theretofore deposited with the New RIHF
Junior Mortgage Note Trustee or any Paying Agent in trust for the Holders of
such New RIHF Junior Mortgage Notes;
(c) New RIHF Junior Mortgage Notes in exchange for or in lieu of which
other New RIHF Junior Mortgage Notes have been authenticated and delivered
under the New RIHF Junior Mortgage Note Indenture; and
(d) New RIHF Junior Mortgage Notes alleged to have been destroyed, lost
or stolen which have been paid as provided in Section 3.06 of the New RIHF
Junior Mortgage Note Indenture;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of New RIHF Junior Mortgage Notes Outstanding have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
New RIHF Junior Mortgage Notes owned by RIHF or any other obligor upon the New
RIHF Junior Mortgage Notes or any Affiliate of RIHF or of such other obligor
shall be disregarded and deemed not to be Outstanding. In determining whether
the New RIHF Junior Mortgage Note Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
New RIHF Junior Mortgage Notes which the New RIHF Junior Mortgage Note Trustee
actually knows to be so owned shall be so disregarded.
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"OUTSTANDING AMOUNT" of any Indebtedness at any time means the principal
amount outstanding of such Indebtedness at such time.
"RESTRICTED PAYMENT" means (a) any declaration or payment of any dividend or
the making of any distribution to Holders of capital stock of RIH or RIHF or any
Subsidiary of RIH or RIHF in respect of such capital stock (other than to RIH or
RIHF or a direct or indirect wholly owned Subsidiary of RIH or RIHF), (b) any
purchase, redemption or other acquisition or retirement for value of any capital
stock (or warrants, rights or options to acquire any capital stock or
Indebtedness convertible into or exchangeable for any capital stock) of RIH or
RIHF or any Subsidiary of RIH or RIHF (other than purchases, redemptions,
acquisitions or retirement solely from RIH or RIHF or a direct or indirect
wholly owned Subsidiary of RIH or RIHF); PROVIDED, HOWEVER, that any such
purchase, redemption or other acquisition or retirement that is required by the
Casino Control Commission or under the Casino Control Act shall not constitute a
Restricted Payment. The term "Restricted Payment" also shall not include any
loan or advance to RII of all or any portion of the proceeds of the Indebtedness
represented by the Working Capital Facility.
"RIH SALE" means (a) a consolidation, combination or merger involving RIH
and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's
interest in the New RIHF Junior Mortgage Note Trust Estate, substantially as an
entirety, to any other Person or group of Persons in one transaction or a series
of related transactions, or (c) any transaction as a result of which RIH ceases
to be a direct or indirect wholly owned Subsidiary of RII; PROVIDED, HOWEVER,
that any of the transactions described in clauses (a), (b) and (c) above shall
not constitute an RIH Sale if the other party or parties to the transaction
consists of only one or more of the following Persons: RIHF or any wholly owned
direct or indirect subsidiary of RIH or RIHF; and PROVIDED, FURTHER, HOWEVER,
that notwithstanding any other provision of this definition, if the primary
effect of any of the aforesaid transactions is the redemption of the New RIHF
Junior Mortgage Notes, then such transaction shall not be considered to be a RIH
Sale.
"RII MANAGEMENT CONTRACT means the Interim Management Agreement.
"RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement between RII and
RIH pursuant to which (i) RIH will not make any payments to RII or any other
Affiliate in respect of taxes, other than to reimburse RII for any cash payments
actually made by RII in respect of any Federal, state or local income or
alternative minimum taxes arising from the earnings or operations of RIH;
PROVIDED, HOWEVER, that RIH shall not be required to reimburse RII for cash
payments in respect of Federal, state or local income or alternative minimum
taxes that would not have been owed but for the reduction, if any, of the amount
of the consolidated net operating loss carryforwards or consolidated current
losses of the affiliated group of which RII is a common parent which resulted
from the inclusion in the consolidated return filed for such group for any
taxable year ending after the Effective Date of the income of any entity other
than RIH, other than income directly attributable to the consummation of the
Plan, including but not limited to the transfer of the stock of RIB and the
assets of the U.S. Paradise Island Subsidiaries, and (ii) RIH will be entitled
to any refund (plus the interest thereon) of any taxes for which RIH is required
to reimburse RII.
"SENIOR MORTGAGE DOCUMENTS" means the Senior Mortgage, the Senior Guaranty
Mortgage, the RIH Promissory Note, the Senior Assignment of Leases and Rents and
any other security document to which either RIH or RIHF is a party relating to
the New RIHF Mortgage Notes, which is executed and delivered pursuant to or in
connection with the Senior Mortgage, the Senior Guaranty Mortgage or the Senior
Assignment Agreement.
"SUBSIDIARY" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
Person or one or more Subsidiaries of such Person.
"WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the RIHF
Senior Facility Notes issued thereunder) and any other secured or unsecured
facility or facilities entered into by RIH and/or RIHF providing for the making
of working capital loans to RIH or RIHF (with RII as a guarantor
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thereunder) on a revolving or term basis, or the issuance of notes, debentures
or bonds by RIH, RIHF or RII, as such agreement may be amended, supplemented or
modified from time to time, or any refinancing thereof, in an aggregate
principal amount up to $20,000,000; PROVIDED, HOWEVER, that the lender or
lenders thereunder (or any trustee or agent acting on behalf of such lender or
lenders) shall have executed an interecreditor agreement covering the matters
set forth on Exhibit G to the New RIHF Junior Mortgage Note Indenture. The
liens, if any, securing the Working Capital Facility may be senior to the lien
of the RIH Junior Mortgage, the RIH Junior Guaranty Mortgage, the RIH Senior
Mortgage and the RIH Senior Guaranty Mortgage. The term "Working Capital
Facility" does not include the Working Capital Facility Guaranty.
DESCRIPTION OF RIHF SENIOR FACILITY NOTES
GENERAL
The RIHF Senior Facility Notes, if issued, will be issued pursuant to the
RIHF Senior Facility and the RIHF Senior Facility Note Indenture among RIHF,
RIH, one or more funds managed by Fidelity and a trustee to be named prior to
the Effective Date, (the "RIHF Senior Facility Trustee"). The RIHF Senior
Facility Notes will be secured senior obligations of RIHF in the aggregate
principal amount of $20,000,000. The RIHF Senior Facility Notes will mature on
July 15, 2002.
As part of the implementation of the Restructuring, Fidelity, which advises
and manages various funds that hold Old Series Notes, will cause one or more of
the funds it manages to enter into the RIHF Senior Facility which will allow
RIHF to borrow up to $20,000,000 through the issuance of RIHF Senior Facility
Notes. Any amount borrowed by RIHF under the RIHF Senior Facility will be loaned
by RIHF to RIH, and possibly by RIH to RII, through intercompany transactions
for working capital and general corporate purposes. Acceptances of the Plan by
the holders of Old Series Notes and the entry of the Confirmation Order will
constitute the approval of and consent by the holders of the Old Series Notes to
the transfer to and use by RIH and RII of the proceeds from the RIHF Senior
Facility Notes. The RIHF Senior Facility will be available for a single
borrowing for a period of one year from the Effective Date, provided that the
public resale of the RIHF Senior Facility Notes by purchasers upon a resale is
registered, if required, under the Securities Act, and the RIHF Senior Facility
Note Indenture has been qualified under the TIA, among other conditions. The
RIHF Senior Facility Notes and the RIH Senior Facility Guaranty are not included
among the securities registered under the Registration Statement, nor has the
RIHF Senior Facility Note Indenture yet been qualified under the TIA. Any public
offering of the RIHF Senior Facility Notes and RIH Senior Facility Guaranty will
be made only by means of a prospectus pursuant to a separate registration
statement to be filed by RIHF and RIH under the Securities Act. Information
concerning the RIHF Senior Facility is included in this Information
Statement/Prospectus because the RIHF Senior Facility is an integral part of the
Restructuring and because execution of the RIHF Senior Facility Indenture and
related documents and instruments is a condition precedent to the consummation
of the Plan.
INTEREST
Interest on the RIHF Senior Facility Notes will accrue from and after their
date of original issuance at a rate of 11% per year. Interest is payable
semi-annually on January 15 and July 15 in each year to holders of record at the
close of business on the first day of the month in which the interest payment
date occurs.
SINKING FUND REQUIREMENTS
None.
MANDATORY REDEMPTION
Subject to negotiations among RIHF, RIH, RII and Fidelity.
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OPTIONAL REDEMPTION
The RIHF Senior Facility Notes will be redeemable at any time in whole, or
from time to time in part, at the election of RIHF, at a redemption price of
103% of their principal amount plus accrued interest to the Redemption Date
during the first three years after the issuance and at a redemption price of
100% of their principal amount plus accrued interest to the Redemption Date
thereafter.
LIMITATION ON OPEN-MARKET PURCHASES
Subject to negotiations among RIHF, RIH, RII and Fidelity.
CASINO CONTROL ACT REGULATION
The RIHF Senior Facility Notes will be subject to the qualification,
divestiture and redemption provisions under the Casino Control Act that are
described in "Business of the Company -- Regulation and Gaming Taxes and Fees --
New Jersey".
INTERCREDITOR AGREEMENT
See "Description of New RIHF Mortgage Notes -- Intercreditor Agreement".
COLLATERAL
GENERAL
The RIHF Senior Facility Notes will be secured by the RIHF Senior Facility
Trust Estate pursuant to the Mortgage Documents described below.
The "RIHF Senior Facility Trust Estate" will consist of an assignment by
RIHF to the RIHF Senior Facility Trustee for the benefit of the holders of the
RIHF Senior Facility Notes, of (i) one or more promissory notes (collectively,
the "RIH Senior Facility Note") issued from time to time by RIH to RIHF not
exceeding an aggregate principal amount of $20,000,000, payable in amounts and
at times necessary to pay the principal of and interest on the RIHF Senior
Facility Notes, and (ii) a lien on the Resorts Casino Hotel, consisting of RIH's
fee and leasehold interests comprising the Resorts Casino Hotel, the contiguous
parking garage and property, all additions or improvements constructed thereon,
encumbered pursuant to an indenture of mortgage, an assignment of leases and
rents and a security agreement (collectively, the "RIH Senior Facility
Mortgage") between RIH, as mortgagor, and RIHF, as mortgagee, securing payment
of the RIH Senior Facility Note.
Additional collateral subject to negotiations among RIHF, RIH and Fidelity.
THE RIH SENIOR FACILITY MORTGAGE
The RIH Senior Facility Mortgage will create a senior mortgage lien and
security interest in the Resorts Casino Hotel.
RELEASE AND SUBSTITUTION OF COLLATERAL
Subject to negotiations among RIHF, RIH, RII and Fidelity.
LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL
GENERAL
If there is an Event of Default under the RIHF Senior Facility, the RIHF
Senior Facility Note Indenture or the RIH Senior Facility Mortgage, the RIHF
Senior Facility Trustee, subject to the requirements of the Casino Control Act,
may enforce the rights and remedies arising under the RIH Senior Facility
Mortgage. The net amount realized in any foreclosure sale for the benefit of
holders of the RIHF Senior Facility Notes will be only that amount that exceeds
all amounts then due and owing to creditors, if any, having senior security
interests and certain costs, taxes and other items.
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CERTAIN REGULATORY CONSIDERATIONS
In any foreclosure sale with respect to the Resorts Casino Hotel, the RIHF
Senior Facility Trustee could bid the amount of the outstanding RIHF Senior
Facility Notes. The RIHF Senior Facility Trustee would be required to comply
with the applicable requirements of the Casino Control Act in any foreclosure
sale, including obtaining a casino license.
CERTAIN BANKRUPTCY CONSIDERATIONS
In the event of the filing of a petition under the Bankruptcy Code for RIHF
or RIH, applicable provisions of the Bankruptcy Code, including the automatic
stay provisions of section 362 of the Bankruptcy Code, may operate to prevent
the RIHF Senior Facility Trustee from taking action to realize on the RIHF
Senior Facility Trust Estate if there is an Event of Default.
GROUND LEASES
A substantial portion of the North Tower of the Resorts Casino Hotel, a
portion of the adjacent parking garage and a small portion of the casino hotel
are located on land that is owned by unrelated third parties and held by RIH
under long-term ground leases. The ground leases do not provide certain
mortgagee protections and, in the event of a default thereunder, the RIHF Senior
Facility Trustee may not have the right to cure any such default. If such
default is not cured, the lessor under any ground lease may have the right to
terminate the ground lease. The termination of any or all of such ground leases
could result in the loss of portions of, or rights with respect to, the property
subject to the terminated ground lease.
GUARANTY
RIH and RII each will guaranty payment of principal of and interest on the
RIHF Senior Facility Notes pursuant to the RIH Senior Facility Guaranty.
Additional guarantors are subject to further negotiation.
RANKING
The RIHF Senior Facility Notes will be secured senior obligations of RIHF.
The RIH Senior Facility Mortgage will be senior to the liens on the Resorts
Casino Hotel securing payment of the New RIHF Mortgage Notes, the RIH Mortgage
Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage
Guaranty.
PAYMENT OF NET PROCEEDS FROM ASSET SALES
None.
CHANGE OF CONTROL
Subject to negotiations among RIHF, RIH, RII and Fidelity.
COVENANTS
Subject to negotiations among RIHF, RIH, RII and Fidelity.
EVENTS OF DEFAULT
Subject to negotiations among RIHF, RIH, RII and Fidelity.
LIMITATION ON MERGERS
Subject to negotiations among RIHF, RIH, RII and Fidelity.
DISCHARGE OF RIHF SENIOR FACILITY; DEFEASANCE
Subject to negotiations among RIHF, RIH, RII and Fidelity.
MODIFICATION OF RIHF SENIOR FACILITY
Subject to negotiations among RIHF, RIH, RII and Fidelity.
TRUSTEE
The RIHF Senior Facility Note Trustee may require reasonable indemnity
before exercising any of its rights or powers under the RIHF Senior Facility.
REPORTS TO HOLDERS
Subject to negotiations among RIHF, RIH, RII and Fidelity.
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DESCRIPTION OF NEW EQUITY SECURITIES
GENERAL
RII is a Delaware corporation that, following the Restructuring, will have
two classes of authorized and outstanding common stock. The RII Common Stock
will be issued to the holders of the Old Series Notes as of the Effective Date
pursuant to the Plan. The existing holders of RII Common Stock will continue to
hold their existing shares of RII Common Stock. The RII Class B Common Stock
will be issued as part of the Units to the holders of the Old Series Notes as of
the Effective Date pursuant to the Plan and is essentially a non-participating
stock that entitles its holders to elect the Class B Directors to the RII Board
of Directors. THE RII CLASS B COMMON STOCK MAY NOT BE TRANSFERRED SEPARATELY
FROM THE RELATED NEW RIHF JUNIOR MORTGAGE NOTES. All the outstanding shares of
RII Common Stock are, and any shares of RII Common Stock and RII Class B Common
Stock issued to the holders of Old Series Notes pursuant to the Plan will be,
validly issued, fully paid and non-assessable.
CASINO CONTROL ACT REGULATION
The New Equity Securities are subject to the qualification, divestiture and
redemption provisions under the Casino Control Act that are described in
"Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey".
DESCRIPTION OF RII COMMON STOCK
NUMBER OF SHARES. Up to 100,000,000 shares of RII Common Stock are
authorized; 20,157,234 shares of RII Common Stock are outstanding as of November
30, 1993, and 17,025,000 shares of RII Common Stock will be issued as of the
Distribution Date pursuant to the Plan (assuming all distributions to be made
under the Plan are made on the Distribution Date and no options and warrants to
purchase RII Common Stock have been exercised).
DIVIDENDS. Holders of RII Common Stock are entitled to share ratably in
such dividends as may be declared by RII's Board of Directors and paid by RII
out of funds legally available therefor.
REDEMPTION. The RII Common Stock is subject to redemption if a holder
required to qualify under the Casino Control Act refuses or fails to so qualify
and subsequently fails to divest itself of such RII Common Stock.
LIQUIDATION RIGHTS. In the event of a dissolution, liquidation or winding
up of RII, the holders of RII Common Stock are entitled to share ratably with
the holders of RII Class B Common Stock in all assets remaining after payment of
liabilities and liquidation preferences, if any, to the extent of the $.01 par
value per share of each such class, with the balance of such proceeds payable
pro rata to the holders of the RII Common Stock.
ELECTION OF DIRECTORS. Holders of the RII Common Stock are entitled to
elect two-thirds of the entire RII Board of Directors (or following the Class B
Triggering Event in connection with the New RIHF Junior Mortgage Notes, one less
than half of the entire RII Board of Directors). The directors are to be divided
into three classes of directors serving staggered three-year terms. Upon
redemption or cancellation of all the outstanding RII Class B Common Stock,
holders of the RII Common Stock are entitled to elect the entire RII Board of
Directors. The classified board provision could have the effect of making the
removal of incumbent directors more difficult, and therefore of discouraging a
third party from attempting to obtain control of RII, even though such attempt
might be beneficial to RII and its stockholders.
VOTING RIGHTS. The holders of RII Common Stock are entitled to one vote per
share on all matters on which stockholders are entitled to vote, other than the
election of directors by the holders of the RII Class B Common Stock.
PREEMPTIVE RIGHTS. None.
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DESCRIPTION OF RII CLASS B COMMON STOCK
NUMBER OF SHARES. Up to 80,000 shares of RII Class B Common Stock are
authorized; 35,000 shares of RII Class B Common Stock will be issued as of the
Distribution Date pursuant to the Plan (assuming all distributions to be made
under the Plan are made on the Distribution Date). Authorized and unissued
shares of RII Class B Common Stock will be issued only as part of Units that are
issuable if PIK payments are made with respect to the New RIHF Junior Mortgage
Notes.
DIVIDENDS. The holders of RII Class B Common Stock are not entitled to
participate in any dividends which may be declared by RII's Board of Directors.
REDEMPTION. Upon the redemption, or cancellation following the purchase
thereof, of each $1,000 principal amount of New RIHF Junior Mortgage Notes, RII
will redeem, at a price of $.01 per share, the share of RII Class B Common Stock
issued as a Unit with each $1,000 principal amount of New RIHF Junior Mortgage
Notes. The RII Class B Common Stock also is subject to redemption if a holder
required to qualify under the Casino Control Act refuses or fails to so qualify
and subsequently fails to divest itself of such RII Class B Common Stock.
LIQUIDATION RIGHTS. In the event of a dissolution, liquidation or winding
up of RII, the holders of RII Class B Common Stock are entitled to share ratably
with the holders of the RII Common Stock in all assets remaining after payment
of liabilities and liquidation preferences, if any, to the extent of the $.01
par value per share of each such class.
RESTRICTIONS OF TRANSFER. Each share of RII Class B Common Stock will be
issued as part of a Unit with each $1,000 principal amount of New RIHF Junior
Mortgage Notes and may not be transferred separately from such New RIHF Junior
Mortgage Note.
ELECTION OF DIRECTORS. Holders of the RII Class B Common Stock are entitled
to elect one-third of the entire RII Board of Directors (or following the Class
B Triggering Event in connection with the New RIHF Junior Mortgage Notes, a
majority of the entire RII Board of Directors).
VOTING RIGHTS. The holders of RII Class B Common Stock are not entitled to
any voting rights, except (i) in the election directors by the holders of the
RII Class B Common Stock as described above, (ii) to the extent required under
the Delaware General Corporation Law, and (iii) with respect to certain
amendments to the Amended RII Certificate of Incorporation or the Amended RII
By-laws that would affect the RII Class B Common Stock.
PREEMPTIVE RIGHTS. None.
DESCRIPTION OF PIRL ORDINARY SHARES
The authorized capital stock of PIRL consists of 25,000,000 PIRL Ordinary
Shares, par value $.01 per share, of which 5,000,000 shares will be issued as of
the Distribution Date to the holders of Old Series Notes pursuant to the Plan,
if the SIHL Sale is not consummated on or before the Effective Date (assuming
all distributions to be made under the Plan are made on the Distribution Date).
The holders of PIRL Ordinary Shares are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders, including
the election of directors. Holders of PIRL Ordinary Shares are entitled to share
ratably such dividends as may be declared by the Board of Directors of PIRL and
paid by PIRL out of funds legally available therefor. In the event of a
dissolution, liquidation, or winding up of PIRL, the holders of the PIRL
Ordinary Shares are entitled to share ratably in all assets remaining after
payment of liabilities and liquidation preferences, if any. Holders of PIRL
Ordinary Shares have no preemptive, subscription, redemption or conversion
rights. All the outstanding shares of PIRL Ordinary Shares are, and any shares
issued to the holders of Old Series Notes pursuant to the Plan will be, validly
issued, fully paid and non-assessable. See "Description of PIRL Standby
Distribution".
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DESCRIPTION OF PARADISE ISLAND PURCHASE AGREEMENT
GENERAL
The following is a summary of material portions of the Paradise Island
Purchase Agreement, a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. Capitalized terms
used and not otherwise defined herein will have meanings assigned to them in the
Paradise Island Purchase Agreement.
For the purposes of the Paradise Island Purchase Agreement, the following
terms have the following meanings:
"Adjusted Cash" means cash and cage cash.
"Adjusted Current Assets" means Current Assets minus Adjusted Cash.
"Adjusted Working Capital" means Adjusted Current Assets minus Current
Liabilities.
"Current Assets" means cash, cage cash, net receivables, prepaid expenses
and inventory.
"Current Liabilities" means accounts payable.
"EBITDA Adjustment" means the earnings from operations appearing as a line
item on the Closing Date Operations Statement PLUS depreciation PLUS the amount,
if any, paid or accrued with respect to RII management fees to the extent such
fees were deducted in computing earnings from operations (as hereinafter
defined), PLUS any expenses in excess of $25,000 appearing on the Closing Date
Operations Statement that are attributable to events occurring prior to January
1, 1994, LESS $275,000 per month for overhead relating to RII and the U.S.
Paradise Island Subsidiaries (to be prorated for any portion of a month) LESS
capital expenditures; provided that any item of capital expenditure in excess of
$25,000 shall not be deducted if not approved in writing by SIHL.
"Paradise Island Interim Order" means an order in form and substance
reasonably satisfactory to SIHL and its counsel (i) approving the provisions of
and authorizing the performance by RII of its obligations under the Paradise
Island Purchase Agreement described below under "Additional Agreements -- No
Solicitations of Transaction", "Additional Agreements -- SIHL Expense
Reimbursement" and "Termination", (ii) providing that the Bankruptcy Court shall
not permit consideration of or approve, so long as the Paradise Island Purchase
Agreement has not been terminated, an Acquisition Proposal (as hereinafter
defined) unless such Acquisition Proposal constitutes an Overbid Transaction,
(iii) subject to applicable bankruptcy law and rules, approving an amount of
SIHL Expense Reimbursement (as hereinafter defined) reasonably incurred by SIHL
up to the date of the Paradise Island Interim Order, (iv) approving an escrow
agreement among RII, SIHL and an escrow agent substantially in the form of
Exhibit G to the Paradise Island Purchase Agreement (the "Escrow Agreement"),
and (v) providing that the Paradise Island Interim Order cannot be amended or
modified without the consent of Fidelity and TCW. Within five days after the
filing of their chapter 11 cases, RII and GRI have agreed to request, and use
their best efforts to obtain, the entry by the Bankruptcy Court of the Paradise
Island Interim Order.
"Material Adverse Effect" means any change in, or effect on, the Paradise
Island Business that is materially adverse to the business, assets, results of
operations or financial condition of the Paradise Island Business, excluding
changes resulting from general economic conditions or economic conditions
relating specifically to the gaming or hotel industry.
"Overbid Transaction" means an Acquisition Proposal or a Post Termination
Sale (as hereinafter defined) which provides for consideration attributable to,
or in the case of transaction involving less than all of the Paradise Island
Business, consideration that would result in, the entire Paradise Island
Business having a fair market value, as determined by an investment banking firm
of international standing selected by RII and reasonably acceptable to SIHL, in
an amount in excess of $130,000,000.
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"Paradise Island Assets" means all the assets, properties, goodwill,
business and other rights of every kind and nature whatsoever, tangible or
intangible, real, personal or mixed, and wherever located, used primarily in
connection with or relating primarily to the Paradise Island Business, including
without limitation any company name, receivables, rights under Contracts,
Intellectual Property, property and assets used primarily in connection with or
relating primarily to the Paradise Island Business acquired by RII or any
affiliate or RII between October 11, 1993 and the SIHL Closing Date and has not
sold, transferred or otherwise disposed of prior to the SIHL Closing Date in the
ordinary course of business and in accordance with the terms hereof.
"Paradise Island Business" means all the operations and properties conducted
and owned by RII and its affiliates primarily in connection with or relating
primarily to Paradise Island, The Bahamas, including without limitation the
Paradise Island Properties, approximately 1,675 acres on Grand Bahamas Island,
approximately 561 acres on Andros Island and other similarly related assets not
currently used actively in the Paradise Island operations.
"Purchase Price" means the SIHL Aggregate Cash Purchase Price plus 2,000,000
SIHL Series A Shares.
"Target Adjusted Cash" means Adjusted Cash of $5 million.
PURCHASE AND SALE OF THE SHARES AND THE U.S. PARADISE ISLAND ASSETS
The Paradise Island Purchase Agreement provides that, upon terms and subject
to the conditions set forth therein, SIHL will purchase, and RII will sell, 100%
of the outstanding capital stock of RIB. In addition, certain U.S. and Bahamian
subsidiaries of SIHL will purchase from the U.S. Paradise Island Subsidiaries
and RII the U.S. Paradise Island Assets. As consideration for the transfer of
the Shares and the U.S. Paradise Island Assets, SIHL shall cause on the Closing
Date the Purchase Price to be delivered, on behalf of RII and the U.S. Paradise
Island Subsidiaries, to the disbursing agent designated pursuant to the Plan for
purposes of making distributions to holders of Old Series Notes.
REPRESENTATIONS AND WARRANTIES
RII REPRESENTATIONS AND WARRANTIES. The Paradise Island Purchase Agreement
contains various customary representations and warranties by RII, including
without limitation representations and warranties as to RII's organization and
authority relative to the Paradise Island Purchase Agreement and the
transactions contemplated thereby, compliance with certain laws and agreements,
consents and required filings, organization and standing of RIB, its
subsidiaries and the U.S. Paradise Island Subsidiaries, ownership of and title
to the Shares, assets and real property, intellectual property rights, existing
contracts, litigation, insurance, employee benefits, absence of undisclosed
liabilities, accounts receivable, inventory, the absence since January 1, 1992,
of certain events, the accuracy of financial statements relating to the Paradise
Island Business, the equity interests in the subsidiaries of RIB, the accuracy
of drafts of this Information Statement/Prospectus, the Plan and information
supplied by RII for inclusion in the SIHL Prospectus and the Registration
Statement related hereto, environmental and labor matters, transactions with
affiliates and certain unlawful payments.
WAIVER OF CERTAIN REPRESENTATIONS AND WARRANTIES. The Paradise Island
Purchase Agreement provides that, except as set forth in the following
paragraph, as of 11:59 p.m. on November 30, 1993, SIHL shall be deemed to have
waived and released any and all of SIHL's claims, rights and remedies of any
nature whatsoever (including without limitation SIHL's ability, if any, to seek
damages or to terminate the Paradise Island Purchase Agreement) with respect to
any inaccuracies in or breaches of representations or warranties of RII
contained in the Paradise Island Purchase Agreement on account of any matter
arising or occurring on or before November 30, 1993.
Notwithstanding the foregoing paragraph, under the terms of the Paradise
Island Purchase Agreement, SIHL does not waive (i) any claim, right, or remedy
whatsoever (including without limitation SIHL's ability, if any, to seek damages
or to terminate the Paradise Island Purchase Agreement) with respect to any
breaches of representations and warranties relating to RII's organization,
authorization to execute and perform the Paradise Island Purchase Agreement or
ownership of
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the Shares, (ii) any claim for damages relating to any breach of the
representations and warranties related to information supplied by RII for use in
this Prospectus or (iii) any claim, right, or remedy whatsoever (including
without limitation SIHL's ability, if any, to seek damages or to terminate the
Paradise Island Purchase Agreement) with respect to any inaccuracies in or
breaches of the representations or warranties of RII contained in the Paradise
Island Purchase Agreement on account of any matter arising or occurring on or
before November 30, 1993 (x) which was known by RII or any of its Affiliates or
which would have been known by RII or any of its Affiliates had they not been
grossly negligent or (y) which was fraudulently or knowingly concealed from SIHL
by RII or any of its Affiliates.
SIHL REPRESENTATIONS AND WARRANTIES. The Paradise Island Purchase Agreement
contains various customary representations and warranties by SIHL, including,
without limitation, representations and warranties as to SIHL's organization and
authority relative to the Paradise Island Purchase Agreement and the
transactions contemplated thereby, compliance with certain laws and agreements,
the accuracy of this Prospectus and the Registration Statement related thereto
and information supplied by SIHL for inclusion in the Resorts Information
Statement/Prospectus, authority to issue the Shares, the operations of SIHL
since its incorporation, the capital structure of SIHL, the enforceability of a
subscription agreement among SIIL and certain shareholders of SIIL (the "SIIL
Subscription Agreement") and a subscription agreement between SIIL and SIHL (the
"SIHL Subscription Agreement").
HANDLING OF CASH AND WORKING CAPITAL
Within 45 days of the Closing Date, RII will deliver to SIHL an audited
balance sheet for the Paradise Island Business as of the close of business on
Closing Date (the "Closing Date Balance Sheet") and an audited statement of
operations for the Paradise Island Business for the period beginning 12:01 a.m.
on January 1, 1994, and ending at the end of business on the Closing Date (the
"Closing Date Operations Statement"), accompanied by an opinion of Ernst & Young
thereon to the effect such balance sheet and statement of operations present
fairly in all material respects the financial position and results of operations
of the Paradise Island Business at such date and for such period. The Paradise
Island Purchase Agreement provides a mechanism pursuant to which SIHL could
disagree with the Closing Date Balance Sheet or Closing Date Operation
Statements. Any such disagreements would be settled through negotiations between
SIHL and RII or by an independent Big Six accounting firm. SIHL and RII have
agreed in the Paradise Island Purchase Agreement that if prior to 35 days after
the Closing Date there has not been a resolution of the dispute (the "Union
Contract Dispute") between RIB and The Bahamas Hotel Catering and Allied Workers
Union (the "Union") with respect to amounts claimed by the Union to be owed by
RIB through December 31, 1993, under the collective bargaining agreement dated
as of January 7, 1990, between The Bahamas Hotel Employers Association and the
Union, then RII and SIHL shall agree as to the amount they believe it would
reasonably take to settle the Union Contract Dispute or, in absence of any
agreement between RII and SIHL, such amount will be determined by Bahamian
counsel selected jointly by RII and SIHL (the "Union Contract Dispute Amount").
The Union Contract Dispute Amount shall appear on the Closing Date Balance Sheet
as a Current Liability and is currently estimated to be approximately
$1,000,000. Any amounts owed by RIB pursuant to a resolution of the Union
Contract Dispute after the Closing shall remain an obligation of RIB not RII.
See "Business -- Employees".
The Paradise Island Purchase Agreement provides that within three Business
Days after the Closing Date, SIHL and RII shall jointly prepare a cash statement
setting forth the amount of Adjusted Cash of the Paradise Island Business as of
the Closing Date. If the Adjusted Cash of the Paradise Island Business shown on
such cash statement is less than the Target Adjusted Cash, on the fourth
Business Day after the Closing Date, RII shall pay to SIHL the difference in
immediately available funds.
If the Adjusted Working Capital of the Paradise Island Business plus the
Adjusted Cash shown on the Closing Date Balance Sheet plus any amount paid to
SIHL pursuant to the cash adjustment
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described in the immediately preceding paragraph shall be greater than $12
million plus the EBITDA Adjustment, then SIHL shall pay to RII the difference in
immediately available funds, together with interest on such amount at a rate of
7.5% per year from and including the Closing Date to but excluding the date of
payment. If the Adjusted Working Capital of the Paradise Island Business plus
the Adjusted Cash shown on the Closing Date Balance Sheet plus any amount paid
to SIHL pursuant to the cash adjustment described in the immediately preceding
paragraph shall be less than $12 million plus the EBITDA Adjustment, then RII
shall pay to SIHL the difference in immediately available funds, together with
interest on such amount at a rate of 7.5% per year from and including the
Closing Date to but excluding the date of payment.
RII COVENANTS
RII has made various covenants in the Paradise Island Purchase Agreement.
RII has agreed, until the Closing Date, to cause the Paradise Island Business to
be conducted in the ordinary course consistent with past practice and make all
reasonable efforts to preserve relationships with parties with whom the Paradise
Island Business deals has agreed that, except as otherwise expressly permitted
or contemplated by the Paradise Island Purchase Agreement, it shall not allow
the Company or any U.S. Paradise Island Subsidiary to: (a) amend its
organizational documents; (b) issue, sell, pledge, dispose of or encumber any
shares of capital stock or any assets relating to the Paradise Island Business;
(c) declare or pay any dividends or distributions, except certain dividends and
distributions that in the good faith opinion of management would not cause the
Paradise Island Business, as of the Closing Date, to have Adjusted Cash plus
Adjusted Working Capital to be less than $12 million plus an estimate of the
EBITDA Adjustment; (d) reclassify, redeem, purchase or otherwise acquire any of
its capital stock; (e) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (f) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse the obligations of any person,
or make loans or advances, except in the ordinary course of business and in a
manner consistent with past practice; (g) enter into any Material Contract other
than in the ordinary course of business and in a manner consistent with past
practice; (h) increase compensation payable to any of its officers or employees,
except increases in compensation of any officers or employees of the Paradise
Island Business whose annual cash compensation does not exceed $100,000 in the
ordinary course of business consistent with past practice; (i) establish, adopt,
enter into or amend any Benefit Plan; (j) take any action other than in a manner
consistent with past practice with respect to accounting policies or procedures;
(k) make any material tax election, other than in the ordinary course of
business and in a manner consistent with past practice, or (l) pay, discharge or
satisfy any material claims, liabilities or obligations, other than in the
ordinary course of business in a manner consistent with past practice and
certain additional obligations.
ADDITIONAL AGREEMENTS
NO SOLICITATION OF TRANSACTIONS
RII has agreed that neither it nor any of its Affiliates nor any officer,
director, employee, agent (including without limitation any investment banker,
financial advisor, attorney or accountant) or other representative of RII or any
of its Affiliates shall, directly or indirectly, initiate any contact with,
solicit, or encourage, negotiate or enter into any agreement with, any Third
Party, or enter into or continue any discussions or negotiations with, or
disclose directly or indirectly any information concerning the Paradise Island
Business to any Third Party (other than SIHL) in connection with any possible
proposal regarding the acquisition of any part of the Paradise Island Business
(whether by merger, purchase of capital stock, purchase of assets, tender offer
or otherwise) (each an "Acquisition Proposal"); PROVIDED, HOWEVER, (i) prior to
the entry of the Paradise Island Interim Order by the Bankruptcy Court, RII may,
to the extent required by the fiduciary obligations of the Board of Directors of
RII, as determined in good faith by the Board of Directors based upon advice of
outside counsel, (a) in response to an unsolicited request therefor, furnish
information with respect to the Paradise Island Business (but specifically
excluding SIHL or SIHL's plans with respect to the Paradise Island Business) to
any person pursuant to a customary confidentiality agreement (as determined by
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RII's independent counsel) and discuss such information (but not the terms of
any Acquisition Proposal) with such person and (b) upon receipt by RII of an
Acquisition Proposal, following delivery to SIHL of notice thereof, participate
in negotiations regarding such Acquisition Proposal and (ii) after entry of the
Paradise Island Interim Order by the Bankruptcy Court, RII may furnish
information to, and cooperate with, a Third Party that RII reasonably believes
is financially able to and interested in consummating an Overbid Transaction (a
"Qualified Third Party").
The Paradise Island Purchase Agreement further provides that no Acquisition
Proposal shall be considered, approved, adopted or recommended by the Board of
Directors of RII, or presented by RII or its respective Board of Directors or
management, to the stockholders of RII for vote or approval by written consent,
and no meeting of stockholders shall be called or noticed for purposes of taking
stockholder action with respect to any Acquisition Proposal. Notwithstanding the
foregoing, the Paradise Island Purchase Agreement provides that in the exercise
of its fiduciary duties the Board of Directors may consider, approve, adopt or
recommend an Overbid Transaction with a Qualified Third Party or enter into an
agreement with a Qualified Third Person with respect to such Overbid
Transaction, in each case at any time after the third Business Day following
SIHL's receipt of a written notice advising SIHL that RII has received an offer
for an Overbid Transaction, specifying the material terms and conditions thereof
and the Qualified Third Party making such offer.
Notwithstanding anything to the contrary set forth above, (i) RII is not
prohibited from supplying TCW and Fidelity with any information regarding the
Paradise Island Business or engaging in discussions related to the PIRL
Spin-Off, or in the event the SIHL Sale does not occur for any reason
whatsoever, from effecting the PIRL Spin-Off, and (ii) RII is not prohibited
from supplying the party identified prior to the date hereof by RII with respect
to any Acquisition Proposal that by its terms shall not be effective until the
Paradise Island Purchase Agreement is terminated in accordance with its terms;
PROVIDED, HOWEVER, that while the Paradise Island Purchase Agreement is still in
effect, RII shall not supply such party with any information regarding the
Paradise Island Business that is not generally available to the public (unless
required to do so by its fiduciary duties), and that before engaging in any
discussions with such party, RII and RIB shall enter into a customary
confidentiality agreement with such party, pursuant to which, among other
things, such party agrees (x) not to have, directly or indirectly, any contact
with the Government of The Bahamas or any employees or suppliers of the Paradise
Island Business and (y) that it shall not make any public announcements of its
discussion with RII, TCW or Fidelity, unless otherwise required by law.
SUBSCRIPTION AGREEMENT. The Paradise Island Purchase Agreement provides
that immediately prior to Closing, SIIL shall acquire from SIHL the Series B
Ordinary Shares for $90 million plus interest at the rate of 7.5% per year on
$65,000,000 from January 1, 1994 pursuant to the terms of the SIHL Subscription
Agreement.
PUT RIGHT.__Pursuant to the documents related to the Paradise Island
Purchase Agreement, holders of Series A Shares will be entitled to sell, and
require SIHL to purchase on the fifth anniversary of the SIHL Sale, each such
Series A Share at a price equal to $35 (USD) per share (the "Put Right"). SIHL's
parent, Sun International Investments Limited, will pledge its sixty percent
(60%) equity interest in SIHL to secure SIHL's obligation to make such purchase.
SIHL EXPENSE REIMBURSEMENT. To the extent and in the circumstances set
forth below and provided that SIHL shall not have materially breached any of its
obligations under the Paradise Island Purchase Agreement, RII shall reimburse
SIHL for all of SIHL's reasonable out-of-pocket costs and expenses incurred
since June 1, 1993, in connection with the preparation of SIHL's plans for the
Paradise Island Business and the negotiation, execution, delivery and
performance of SIHL's obligations under the Paradise Island Purchase Agreement
and the other agreements related thereto, including without limitation
reasonable out-of-pocket costs and expenses of investors of SIHL and its
Affiliates relating to the transactions contemplated by the Paradise Island
Purchase Agreement (the "SIHL Expense Reimbursement"):
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(i) in the event that the Paradise Island Purchase Agreement is
terminated as a result of the approval by the Bankruptcy Court of an
Acquisition Proposal, then RII promptly upon such termination shall pay to
SIHL the SIHL Expense Reimbursement up to $4 million;
(ii) in the event that the Paradise Island Purchase Agreement is
terminated by RII after November 30, 1993, as a result of a Force Majeure
Event (as hereinafter defined) causing a loss in excess of $20 million, then
RII promptly upon such termination shall pay to SIHL the SIHL Expense
Reimbursement up to $4 million;
(iii) in the event that the Paradise Island Purchase Agreement is
terminated by SIHL after November 30, 1993, as a result of a Force Majeure
Event causing a loss in excess of $20 million, then RII promptly upon such
termination shall pay to SIHL the SIHL Expense Reimbursement up to $2
million;
(iv) in the event that the Paradise Island Purchase Agreement is
terminated as a result of RII's inability to deliver title to a material
portion of the Paradise Island Assets, then RII promptly upon such
termination shall pay to SIHL the SIHL Expense Reimbursement up to $3
million;
(v) in the event that the Paradise Island Purchase Agreement is
terminated after November 30, 1993, as a result of a breach of RII's
covenant to operate the Paradise Island Business in the ordinary course, or
after November 30, 1993, as a result of a Force Majeure Event causing a loss
of less than $20 million, then RII promptly upon such termination shall pay
to SIHL the SIHL Expense Reimbursement up to $2 million;
(vi) in the event the Paradise Island Purchase Agreement is terminated by
RII pursuant to any of the provisions of the Paradise Island Purchase
Agreement or by SIHL as a result of the failure of the Closing to occur on
or before June 30, 1994, and a sale of the Paradise Island Business or any
portion thereof that would reasonably be expected to generate 50% or more of
the revenues of the Paradise Island Business (whether by merger, purchase of
capital stock, purchase of assets, tender offer or otherwise) is consummated
within one year of such termination (a "Post Termination Sale"), then upon
the consummation of such Post Termination Sale, RII, or if the PIRL Spin-Off
shall have already occurred, PIRL shall pay to SIHL the SIHL Expense
Reimbursement up to $4 million in the event such Post Termination Sale shall
constitute an Overbid Transaction or up to $2 million in the event such Post
Termination Sale is not an Overbid Transaction, in each case less any
amounts previously paid to SIHL pursuant to subparagraphs (i), (ii), (iii),
(iv) and (v) above; and
(vii) in the event that the Paradise Island Purchase Agreement is
terminated by SIHL pursuant to any of the provisions the Paradise Island
Purchase Agreement and a Post Termination Sale which constitutes an Overbid
Transaction occurs within one year of such termination, then upon the
consummation of such Post Termination Sale, RII, or if the Spin-Off shall
have already occurred, PIRL, shall pay to SIHL the SIHL Expense
Reimbursement up to $4 million less any amounts previously paid to SIHL
pursuant to subparagraphs (i), (ii), (iii), (iv) and (v) above.
The Plan provides that if the PIRL Spin-Off occurs (i) the obligation to pay
the SIHL Expense Reimbursement pursuant to paragraphs (vi) and (vii) above shall
be an obligation of PIRL and not RII and (ii) prior to the consummation of the
PIRL Spin-Off, PIRL shall enter into a security and pledge agreement with SIHL,
pursuant to which PIRL shall pledge assets reasonably acceptable to SIHL and
having a fair market value of $6 million to secure PIRL's obligation to pay the
SIHL Expense Reimbursement, such security and pledge agreement to be in a form
modeled after, and to have terms generally consistent with the tenor of those
terms contained in, the Non-Recourse Guarantee and Pledge Agreement (as
hereinafter defined).
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ESCROW AGREEMENT. Pursuant to the Paradise Island Purchase Agreement, as of
December 1, 1993, SIHL and RII executed and delivered an Escrow Agreement
pursuant to which SIHL deposited with an independent third party escrow agent
(the "Escrow Agent") $5 million ("SIHL's Escrowed Property") and RII deposited
with the Escrow Agent $4 million ("RII's Escrowed Property"). SIHL's Escrowed
Property secures the full and prompt payment and performance, when due, of its
obligation under the Paradise Island Purchase Agreement up to and including the
Closing. RII's Escrowed Property secures the full and prompt payment, when due,
of RII's obligation to pay any SIHL Expense Reimbursement. The Escrow Agent is
not authorized to release any property held by it unless it receives written
instructions signed by both SIHL and RII or a court order directing the release
of such property. The Escrow Agreement contains customary terms relating to the
indemnification of the Escrow Agent.
PREPACKAGED PLAN SOLICITATION. RII agreed to seek confirmation of the Plan
by the Bankruptcy Court using the acceptances of the Reorganization Plan
received by RII as a result of the solicitation being made pursuant to this
Information Statement/Prospectus and further agreed not to consent to any
amendment or supplement to, or modification of, the Plan that purports to change
the terms or conditions of the transactions contemplated by the Paradise Island
Purchase Agreement without the prior written consent of SIHL.
REASONABLE BEST EFFORTS. Each party to the Paradise Island Purchase
Agreement agreed to use its reasonable best efforts to satisfy its obligations
under the Paradise Island Purchase Agreement and cause the Closing to occur.
EMPLOYEE MATTERS. As of the Closing Date, SIHL shall (directly or through
Bahamian subsidiaries) offer employment to each person employed by the U.S.
Paradise Island Subsidiaries whose primary functions relate to the operation of
the Paradise Island Business and certain other employees of RII (a "Paradise
Employee"), except that SIHL may designate within 60 days from the date of the
Paradise Island Purchase Agreement up to 40 Paradise Employees to whom it does
not wish to offer employment (the "Excluded Employees"). SIHL shall not be
required to offer employment to any Excluded Employee and RII has agreed that
all obligations, including obligations under any Benefit Plan or similar
employee benefits, to such Excluded Employees shall remain the responsibility
solely of RII and not of SIHL after the Closing.
Pursuant to the terms of the Paradise Island Purchase Agreement SIHL shall
have no obligation to maintain, continue or assume obligations under any Benefit
Plan of RII. The Paradise Island Purchase Agreement further provides that within
90 days from the date of the Paradise Island Purchase Agreement, SIHL shall
determine whether it shall offer Paradise Employees who accept employment with
SIHL a 401(k) plan. If SIHL determines to offer such a 401(k) plan, then as
promptly as practical after the Closing Date, RII shall take all actions
necessary to transfer to such new 401(k) plan the account balances in the
Resorts Retirement Savings Plan of all Paradise Employees.
CONDITIONS TO CLOSING
The obligation of SIHL to purchase and pay for the RIB Capital Stock and the
U.S. Paradise Island Assets and of RII to sell and deliver the RIB Capital Stock
and the U.S. Paradise Island Assets, and the obligation of each of SIHL and RII
to effect other the transactions to be effected by it under the Paradise Island
Purchase Agreement will be subject to satisfaction or waiver, at or prior to the
Closing Date, of the following conditions.
SIHL CONDITIONS TO CLOSING. (a) (i) The representations and warranties of
RII relating to its organization and authority to execute and perform its
obligations under the Paradise Island Purchase Agreement and as to the good
title to the RIB Capital Stock shall be true and correct in all respects, in
each case when made and as of the Closing Date, (ii) RII shall not have failed
to comply with certain covenants contained in the Paradise Island Purchase
Agreement where such failures in the aggregate would have a Material Adverse
Effect, (iii) RII shall have complied in all respects with its obligation to
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extinguish or otherwise discharge all Indebtedness of RIB, (iv) each of the
other agreements and covenants contained in the Paradise Island Purchase
Agreement and in any certificate or agreement by RII delivered pursuant thereto
to be performed or complied with by RII, at or before closing, shall have been
duly performed or complied with in all material respects and (v) SIHL shall have
received a certificate of RII, signed by a Vice President thereof, as to the
fulfillment of the conditions set forth in the foregoing clauses (i), (ii),
(iii) and (iv); (b) any waiting period (and any extension thereof) applicable to
the consummation of the transactions contemplated thereby under the HSR Act
shall have expired or been terminated; (c) the Confirmation Order shall have
been entered by the Bankruptcy Court and the Effective Date shall have occurred,
or there shall be no unsatisfied conditions to the occurrence of the Effective
Date other than the closing, under the Paradise Island Purchase Agreement and
such Confirmation Order shall be in full force and effect and shall not then be
stayed, or the consummation of the transactions contemplated by the Paradise
Island Purchase Agreement shall have been approved by another order of the
Bankruptcy Court and such other order shall be in full force and effect and
shall not then be stayed; (d) all Governmental Consents shall have been
received; (e) there shall not be in effect any injunction or restraining order
issued by a court of competent jurisdiction against the consummation of the sale
and purchase of the RIB Capital Stock and the U.S. Paradise Island Assets
pursuant to the Paradise Island Purchase Agreement; (f) no proceeding shall have
been instituted or consented to by or against RIB or any U.S. Paradise Island
Subsidiary seeking to adjudicate any of them a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of any of their debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of any order for relief or the appointment of a receiver, trustee,
custodian or other similar official for any of them or any substantial part of
any of their property, and such proceeding shall not have been dismissed or
terminated within 60 days of the commencement thereof; (g) SIHL shall have
received an opinion of counsel to RII, reasonably acceptable to SIHL and its
counsel; (h) the Registration Rights Agreement shall have been executed and
delivered by the parties thereto and shall be in full force and effect; (i) SIHL
shall have received resignations and releases of all officers and directors of
RIB who are not directly involved in the business and operations of RIB; and (j)
certain agreements relating to the Old Series Notes shall not be in force and
effect.
RII CONDITIONS TO CLOSING. (a) The representations and warranties of SIHL
contained in the Paradise Island Purchase Agreement and in any certificate or
agreement of SIHL delivered pursuant thereto shall be true and correct in all
respects and those not so in all material respects, (ii) each of the agreements
and covenants contained in the Paradise Island Purchase Agreement and in any
certificate or agreement of SIHL delivered pursuant thereto to be performed or
complied with by SIHL, at or before the Closing, shall have been duly performed
or complied with in all material respects and (iii) RII shall have received a
certificate of SIHL, signed by a Vice President thereof as to the fulfillment of
the conditions set forth in the foregoing clauses (i) and (ii); (b) any waiting
period (and any extension thereof) applicable to the consummation of the
transactions contemplated thereby under the HSR Act shall have expired or been
terminated; (c) the Confirmation Order shall have been entered by the Bankruptcy
Court and the Effective Date shall have occurred, or there shall be no
unsatisfied conditions to the occurrence of the Effective Date other than the
closing under the Paradise Island Purchase Agreement, and such Confirmation
Order shall be in full force and effect and shall not then be stayed, or the
consummation of the transactions contemplated by the Paradise Island Purchase
Agreement shall have been approved by another order of the Bankruptcy Court and
such other order shall be in full force and effect and shall not then be stayed;
(d) all Governmental Consents shall have been received; (e) there shall not be
in effect any injunction or restraining order issued by a court of competent
jurisdiction against the consummation of the sale and purchase of the RIB
Capital Stock and the U.S. Paradise Island Assets pursuant to the Paradise
Island Purchase Agreement; (f) RII shall have received an opinion of counsel to
SIHL, reasonably satisfactory to RII and its counsel; (g) no proceeding shall
have been instituted or consented to by or against any of SIHL, SIIL or SIHL
International Management (U.K.) Limited seeking to adjudicate any of them a
bankrupt
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or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of any of their debts under any
law relating to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of any order for relief or the appointment of a receiver,
trustee, custodian or other similar official for any of them or any substantial
part of any of their property; (h) shares of each of SIIL, SIHL International
Management (U.K.) Limited and SIHL carrying a controlling interest exercisable
at general meetings of SIIL, SIHL International Management (U.K.) Limited and
SIHL shall be directly or indirectly beneficially owned by its current
beneficial owners or any persons affiliated with such entities; (i) all
conditions under the Management Agreement shall have been satisfied or waived;
and (j) certain agreements relating to the Old Series Notes shall not be in
force and effect.
TERMINATION
The Paradise Island Purchase Agreement may be terminated at any time prior
to the Closing Date: (a) by mutual written consent of RII and SIHL at any time
prior to entry of the Confirmation Order; (b) by SIHL or RII, if the closing
thereunder shall not have occurred on or before June 30, 1994; (c) in the event
an Acquisition Proposal is approved by the Bankruptcy Court the Paradise Island
Purchase Agreement will automatically be deemed terminated; (d) by SIHL, if any
event or development first occurring or arising after November 30, 1993, either
alone or taken in the aggregate with other matters arising or occurring after
November 30, 1993, shall have caused inaccuracies or breaches in the
representations and warranties of RII contained in the Paradise Island Purchase
Agreement to occur; (e) by SIHL, if it has become aware that RII will be unable
to comply with the closing condition described in paragraph (a) of the section
entitled "SIHL Conditions to Closing" and such inability to so comply is not
reasonably capable of being cured by June 30, 1994, or by RII, if it has become
aware that SIHL will be unable to comply with the closing condition described in
paragraph (a) of the section entitled "-- RII Conditions to Closing" and such
inability to so comply is not reasonably capable of being cured by June 30,
1994; (f) [by SIHL, on or prior to November 30, 1993, if SIHL reasonably shall
determine, on or prior to such date and so notify RII, that (i) any of the
representations and warranties of RII contained in the Paradise Island Purchase
Agreement and qualified as to materiality shall not be true and correct in all
respects or that those not so qualified shall not be true and correct in all
material respects, in each case when made or on November 30, 1993 (except
representations and warranties that are made as of a specific date, which need
be true and correct only as of such date) or (ii) there is a reasonable
likelihood that the Company's economic costs with respect to the Union Contract
would be an amount which is materially different from the amount SIHL reasonably
expects; PROVIDED, HOWEVER, RII shall have 10 Business Days from the date of
notice from SIHL to cure such problems and if such problems are cured no
termination shall occur; (g) by SIHL or RII, on or prior to November 30, 1993,
if on or prior to such date SIHL has not entered into financing commitment
letters with customary terms and conditions with a bank or group of banks for an
amount of at least $67.5 million; (h) ] by SIHL within five Business Days (i) of
becoming aware that RII has materially breached certain covenants contained in
the Paradise Island Purchase Agreement or (ii) after February 15, 1994, if the
Bankruptcy Cases shall not have been filed on or before such date; (i) by SIHL
within five Business Days after notifying RII that it is in material breach of
its covenant to provide SIHL access to the Paradise Island Properties and RII
has not cured such breach; (j) by RII, if the reorganization of SIIL described
in the Parent Subscription Agreement has not occurred prior to November 30,
1993; (k) by SIHL, if a Material Adverse Effect occurs as a result of any fire,
flood, hurricane, accident, explosion or other calamity or casualty or any
strike, labor disturbance, riot, act of God or public enemy, or the institution
of condemnation proceedings affecting any material portion of the Real Property
or Improvements (a "Force Majeure Event"); provided, however, that SIHL shall
not have the right to terminate the Paradise Island Purchase Agreement in the
event that the loss caused by a Force Majeure Event (including the present value
of lost profits) is less than $20 million and there is adequate insurance to
cover such loss, and provided further, however, that a strike or labor
disturbance of the employees of the Paradise Island Business after November 30,
1993, shall not constitute a Force Majeure Event; (1) by SIHL or RII in the
event a Force Majeure Event occurs and the loss related thereto (including the
present value of lost profits) exceeds $20 million, regardless of
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whether or not such loss is covered by adequate insurance; (m) by SIHL, if SIHL
reasonably determines that RII will not be able to deliver good title free and
clear of encumbrances, other than Permitted Encumbrances and those encumbrances
arising from acts of SIHL or its Affiliates and other than applicable Transfer
Taxes, to a material portion of the Paradise Island Business or the Shares by
June 30, 1994; (n) by SIHL, on or prior to November 30, 1993, if SIHL reasonably
determines that it will be unable to obtain consents to certain Material
Contracts; (o) by SIHL, if as a result of a breach by RII of its covenant to
operate the Paradise Island Business in the ordinary course, a Material Adverse
Effect has occurred; and (p) by SIHL or RII, if on or before the close of
business on December 1, 1993, the other party has not executed, delivered and
performed its obligations under the Escrow Agreement. Failure to obtain the
Paradise Island Interim Order, despite the best efforts of RII and GRI, is not a
ground for termination of the Paradise Island Purchase Agreement.
TRANSFER TAXES
The Paradise Island Purchase Agreement provides that any sales and transfer
taxes applicable to the conveyance and transfer of the Shares and the U.S.
Paradise Island Assets shall be borne and paid 50% by SIHL and 50% by RII. The
Bahamian Government has notified SIHL and RII that a transfer tax of $1.08
million is payable as a result of the transfer of the shares, and in accordance
with provisions of the Paradise Island Purchase Agreement, such transfer tax
will be paid 50% by RII and 50% by SIHL.
AMENDMENT AND WAIVERS
No amendment to the Paradise Island Purchase Agreement will be effective
unless it is in writing signed by RII and SIHL and consented to by Fidelity and
TCW. Any party may waive any provision of the Paradise Island Purchase Agreement
or consent to any departure by any party therefrom; PROVIDED, HOWEVER, that no
such waiver or consent by RII shall be valid unless consented to by Fidelity and
TCW.
INDEMNIFICATION
INDEMNIFICATION BY RII. Pursuant to the term of the Paradise Island
Purchase Agreement, until March 31, 1995, RII has agreed to indemnify and hold
SIHL and its Affiliates harmless from all claims, damages, liabilities, liens,
losses or other obligations ("Losses") arising out of or based upon or caused by
the inaccuracy of the representations of RII contained in the Paradise Island
Purchase Agreement relating to its organization and authority to execute and
perform the Paradise Island Purchase Agreement, title to the RIB Capital Stock,
and the accuracy of the information supplied by RII for inclusion in the SIHL
Prospectus. In addition, RII has agreed to indemnify SIHL and its Affiliates for
any Losses resulting from breaches of certain covenants of RII contained in the
Paradise Island Purchase Agreement.
INDEMNIFICATION BY SIHL. Pursuant to the terms of the Paradise Island
Purchase Agreement, until March 31, 1995, SIHL has agreed to indemnify RII and
its Affiliates for any Losses arising out of or based upon or caused by the
inaccuracy of the representations of SIHL contained in the Paradise Island
Purchase Agreement relating to its organization, capital structure and authority
to execute and perform the Paradise Island Purchase Agreement and to issue the
Shares, the accuracy of the information supplied by SIHL for inclusion in this
Prospectus and the operation of SIHL since its organization. In addition, SIHL
has agreed to indemnify RII and its Affiliates for any Losses resulting from
breaches of certain covenants of SIHL contained in the Paradise Island Purchase
Agreement.
DESCRIPTION OF PIRL STANDBY DISTRIBUTION AGREEMENT
GENERAL
The following is a summary of material portions of the PIRL Standby
Distribution Agreement, a copy of which has been filed as an exhibit to the
Registration Statement of which this Information Statement/Prospectus is a part.
Capitalized terms used and not otherwise defined herein will have meanings
assigned to them in the PIRL Standby Distribution Agreement.
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For the purposes of the PIRL Standby Distribution Agreement, the following
terms have the following meanings:
"Adjusted Cash" means cash and cage cash.
"Adjusted Current Assets" means Current Assets minus Adjusted Cash.
"Adjusted Working Capital" means Adjusted Current Assets minus Current
Liabilities.
"Current Assets" means cash, cage cash, net receivables, prepaid expenses
and inventory.
"Current Liabilities" means accounts payable.
"EBITDA Adjustment" means the Earnings from Operations appearing as a line
item on the Closing Date Operations Statements PLUS depreciation PLUS the
amount, if any, paid or accrued with respect to RII management fees to the
extent such fees were deducted in computing Earnings from Operations, PLUS any
expenses in excess of $25,000 appearing on the Closing Date Operations Statement
that are attributable to events occurring prior to January 1, 1994, LESS
$275,000 per month for overhead relating to RII and the U.S. Paradise Island
Subsidiaries (to be prorated for any portion of a month) LESS capital
expenditures; provided that any item of capital expenditure in excess of $25,000
shall not be deducted if not approved in writing by SIHL.
"Overbid Transaction" means an Acquisition Proposal or a Post Termination
Sale (as hereinafter defined) which provides for consideration attributable to,
or in the case of transaction involving less than all of the Paradise Island
Business, consideration that would result in, the entire Paradise Island
Business having a fair market value, as determined by an investment banking firm
of international standing selected by RII and reasonably acceptable to SIHL in
an amount in excess of $130,000,000.
"Target Adjusted Cash" means Adjusted Cash of $5 million.
PURCHASE AND SALE OF THE SHARES AND THE U.S. PARADISE ISLAND ASSETS
The PIRL Standby Distribution Agreement provides that, upon terms and
subject to the conditions set forth therein, PIRL will purchase, and RII or GRI
will sell, 100% of the outstanding RIB Capital Stock. In addition, certain
Bahamian subsidiaries of PIRL will purchase from the U.S. Paradise Island
Subsidiaries and RII the U.S. Paradise Island Assets. As consideration for the
transfer of the Paradise Island Shares, and the U.S. Paradise Island Assets,
PIRL on the Closing Date shall cause the PIRL Ordinary Shares to be delivered,
on behalf of RII and the U.S. Paradise Island Subsidiaries, to the Disbursing
Agent designated pursuant to the Plan for purposes of making distributions to
holders of Old Series Notes.
RII REPRESENTATIONS AND WARRANTIES
The PIRL Standby Distribution Agreement contains various customary
representations and warranties by RII, including without limitation
representations and warranties as to RII's organization and authority relative
to the PIRL Standby Distribution Agreement and the transactions contemplated
thereby, compliance with certain laws and agreements, consents and required
filings, organization and standing of RIB, its subsidiaries and the U.S.
Paradise Island Subsidiaries, ownership of and title to the Paradise Island
Shares, assets and real property, employee benefits, absence of undisclosed
liabilities, the absence since January 1, 1992, of certain events, the accuracy
of financial statements relating to the Paradise Island Business and the equity
interests in the subsidiaries of RIB.
The PIRL Standby Distribution Agreement also contains various customary
representations and warranties by RII regarding PIRL, including representations
and warranties as to PIRL's organization and authority relative to the PIRL
Standby Distribution Agreement and the transactions contemplated thereby,
compliance with certain laws and agreements, authority to issue the PIRL
Ordinary Shares, the operations of PIRL since its incorporation and the capital
structure of PIRL.
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HANDLING OF CASH AND WORKING CAPITAL
Within 45 days of the Closing Date, RII will deliver to PIRL an audited
balance sheet for the Paradise Island Business as of the close of business on
the Closing Date (the "Closing Date Balance Sheet") and an audited statement of
operations for the Paradise Island Business for the period beginning 12:01 a.m.
on January 1, 1994, and ending at the end of business on the Closing Date (the
"Closing Date Operations Statement"), accompanied by an opinion of Ernst & Young
thereon to the effect that such balance sheet and statement of operations
present fairly in all material respects the financial position and results of
operations of the Paradise Island Business at such date and for such period. The
PIRL Standby Distribution Agreement provides a mechanism pursuant to which PIRL
could disagree with the Closing Date Balance Sheet or Closing Date Operation
Statements. Any such disagreements would be settled through negotiations between
PIRL and RII or by an independent "Big Six" accounting firm. PIRL and RII have
agreed in the PIRL Standby Distribution Agreement that if prior to 35 days after
the Closing Date there has not been a resolution of the dispute (the "Union
Contract Dispute") between RIB and The Bahamas Hotel Catering and Allied Workers
Union (the "Union") with respect to amounts claimed by the Union to be owed by
RIB through December 31, 1993, under the collective bargaining agreement dated
as of January 7, 1990, between The Bahamas Hotel Employers Association and the
Union, then RII and PIRL shall agree as to the amount they believe it would
reasonably take to settle the Union Contract Dispute or, in absence of any
agreement between RII and PIRL, such amount will be determined by Bahamian
counsel selected jointly by RII and PIRL (the "Union Contract Dispute Amount").
The Union Contract Dispute Amount shall appear on the Closing Date Balance Sheet
as a Current Liability.
The PIRL Standby Distribution Agreement provides that within three Business
Days after the Closing Date, PIRL and RII shall jointly prepare a cash statement
setting forth the amount of Adjusted Cash of the Paradise Island Business as of
the Closing Date. If the Adjusted Cash of the Paradise Island Business shown on
such cash statement is less than the Target Adjusted Cash, on the fourth
Business Day after the Closing Date, RII shall pay to PIRL the difference in
immediately available funds.
If the Adjusted Working Capital of the Paradise Island Business plus any
Adjusted Cash in excess of $5 million shown on the Closing Date Balance Sheet
shall be greater than the Target Adjusted Working Capital plus the EBITDA
Adjustment, then PIRL shall pay to RII the difference in immediately available
funds, together with interest on such amount at an annual rate of 7.5% per year
from and including the Closing Date to but excluding the date of payment. If the
Adjusted Working Capital of the Paradise Island Business plus any Adjusted Cash
in excess of $5 million shown on the Closing Date Balance Sheet shall be less
than the Target Adjusted Working Capital plus the EBITDA Adjustment, then RII
shall pay to PIRL the difference in immediately available funds, together with
interest on such amount at a rate of 7.5% per year from and including the
Closing Date to but excluding the date of payment.
RII COVENANTS
RII has made various covenants in the PIRL Standby Distribution Agreement.
RII agreed, until the Closing Date, to cause the Paradise Island Business to be
conducted in the ordinary course consistent with past practice and make all
reasonable efforts to preserve relationships with parties with whom the Paradise
Island Business deals, and has agreed that, except as otherwise expressly
permitted or contemplated by the PIRL Standby Distribution Agreement it shall
not allow RIB or any U.S. Paradise Island Subsidiary to: (a) amend its
organizational documents; (b) issue, sell, pledge, dispose of or encumber any
shares of capital stock or any assets relating to the Paradise Island Business;
(c) declare or pay any dividends or distributions, except certain dividends and
distributions that in the good faith opinion of management would not cause the
Paradise Island Business, as of the Closing Date, to have Adjusted Cash plus
Adjusted Working Capital to be less than $10 million plus an estimate of the
EBITDA Adjustment; (d) reclassify, redeem, purchase or otherwise acquire any of
its capital stock; (e) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation,
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partnership or other business organization or division thereof; (f) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse the obligations of any person, or make loans or advances,
except in the ordinary course of business and in a manner consistent with past
practice; (g) enter into any Material Contract other than in the ordinary course
of business and in a manner consistent with past practice; (h) increase
compensation payable to any of its officers or employees, except increases in
compensation of any officers or employees of the Paradise Island Business whose
annual cash compensation does not exceed $100,000 in the ordinary course of
business consistent with past practice; (i) establish, adopt, enter into or
amend any Benefit Plan; (j) take any action other than in a manner consistent
with past practice with respect to accounting policies or procedures; (k) make
any material tax election, other than in the ordinary course of business and in
a manner consistent with past practice, or (l) pay, discharge or satisfy any
material claims, liabilities or obligations, other than in the ordinary course
of business in a manner consistent with past practice and certain additional
obligations.
ADDITIONAL AGREEMENTS
SIHL EXPENSE REIMBURSEMENT. To the extent and in the circumstances set
forth in the Paradise Island Purchase Agreement and provided that SIHL shall not
have materially breached any of its obligations under the Paradise Island
Purchase Agreement, RII may be required to reimburse SIHL for certain of SIHL's
reasonable out-of-pocket costs and expenses incurred since June 1, 1993, in
connection with the preparation of SIHL's plans for the Paradise Island Business
and the negotiation, execution, delivery and performance of SIHL's obligations
under the Paradise Island Purchase Agreement. See "Description of Paradise
Island Purchase Agreement -- Additional Agreements -- SIHL Expense
Reimbursement".
The Plan and the PIRL Standby Distribution Agreement provide that if the
PIRL Spin-Off occurs, the obligation to pay the SIHL Expense Reimbursement shall
be an obligation of PIRL (and not RII) pursuant to either of the circumstances
described below:
(1) In the event that the Paradise Island Purchase Agreement is
terminated by RII pursuant to any of the provisions of the Paradise Island
Purchase Agreement or by SIHL as a result of the failure of the closing
thereunder to occur on or before June 30, 1994, and a sale of the Paradise
Island Business or any portion thereof that would reasonably be expected to
generate 50% or more of the revenues of the Paradise Island Business
(whether by merger, purchase of capital stock, purchase of assets, tender
offer or otherwise) is consummated within one year of such termination (a
"Post Termination Sale"), then upon the consummation of such Post
Termination Sale, RII or, if the PIRL Spin-Off shall have already occurred
PIRL, shall pay to SIHL the SIHL Expense Reimbursement up to $4 million in
the event such Post Termination Sale shall constitute an Overbid Transaction
or up to $2 million in the event such Post Termination Sale is not an
Overbid Transaction, in each case less any amounts previously paid to SIHL
pursuant to subparagraphs (i), (ii), (iii), (iv) and (v) of Section 7.02 of
the Paradise Island Purchase Agreement.
(2) In the event that the Paradise Island Purchase Agreement is
terminated by SIHL pursuant to any of the provisions the Paradise Island
Purchase Agreement and a Post Termination Sale which constitutes an Overbid
Transaction occurs within one year of such termination, then upon the
consummation of such Post Termination Sale, RII, or if the PIRL Spin-Off
shall have already occurred, PIRL, shall pay to SIHL the SIHL Expense
Reimbursement up to $4 million less any amounts previously paid to SIHL
pursuant to subparagraphs (i), (ii), (iii), (iv) and (v) of Section 7.02 of
the Paradise Island Purchase Agreement.
Prior to the consummation of the PIRL Spin-Off, PIRL shall enter into a
security and pledge agreement with SIHL, pursuant to which PIRL shall pledge
assets reasonably acceptable to SIHL and having a fair market value of $6
million to secure PIRL's obligation to pay the SIHL Expense Reimbursement.
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SOLICITATION. RII has agreed to seek confirmation of the Plan by the
Bankruptcy Court using the Acceptances of the Plan received by RII as a result
of the Solicitation being made pursuant to this Information Statement/Prospectus
and has further agreed not to consent to any amendment or supplement to, or
modification of, the Plan that purports to change the terms or conditions of the
transactions contemplated by the PIRL Standby Distribution Agreement without the
prior written consent of Fidelity and TCW, so long as the funds and accounts
managed by them hold in the aggregate at least 20% of the outstanding Old Series
Notes.
REASONABLE BEST EFFORTS. Each party to the PIRL Standby Distribution
Agreement has agreed to use its reasonable best efforts to satisfy its
obligations under the PIRL Standby Distribution Agreement and cause the Closing
to occur.
EMPLOYEE MATTERS. As of the Closing Date, PIRL shall (directly or though
Bahamian subsidiaries) offer employment to each person employed by the U.S.
Paradise Island Subsidiaries whose primary functions relate to the operation of
the Paradise Island Business and certain other employees of RII (a "Paradise
Employee"), except that PIRL may designate within 60 days from the date of the
PIRL Standby Distribution Agreement up to 40 Paradise Employees to whom it does
not wish to offer employment (the "Excluded Employees"). PIRL shall not be
required to offer employment to any Excluded Employee and RII has agreed that
all obligations, including obligations under any Benefit Plan or similar
employee benefits, to such Excluded Employees shall remain the responsibility
solely of RII and not of PIRL after the Closing.
Pursuant to the terms of the PIRL Standby Distribution Agreement PIRL shall
have no obligation to maintain, continue or assume obligations under any Benefit
Plan of RII. The PIRL Standby Distribution Agreement further provides that
within 90 days from the date of the PIRL Standby Distribution Agreement, PIRL
shall determine whether it shall offer Paradise Employees who accept employment
with PIRL a 401(k) plan. If PIRL determines to offer such a 401(k) plan, then as
promptly as practical after the Closing Date, RII shall take all actions
necessary to transfer to such new 401(k) plan the account balances in the
Resorts Retirement Savings Plan of all Paradise Employees.
CONDITIONS TO CLOSING
The obligation of PIRL to purchase and pay for the Paradise Island Shares
and the U.S. Paradise Island Assets and of RII to sell and deliver the Paradise
Island Shares and the U.S. Paradise Island Assets, and the obligation of each of
PIRL and RII to effect other transactions to be effected by it under the PIRL
Standby Distribution Agreement will be subject to satisfaction or waiver, at or
prior to the Closing Date, of the following conditions.
PIRL CONDITIONS. (a) (i) The representations and warranties of RII relating
to its organization and authority to execute and perform its obligations under
the PIRL Standby Distribution Agreement and as to the good title to the Paradise
Island Shares shall be true and correct in all respects, in each case when made
and as of the Closing Date, (ii) RII shall not have failed to comply with
certain covenants contained in the PIRL Standby Distribution Agreement where
such failures in the aggregate would have a Material Adverse Effect, (iii) RII
shall have complied in all respects with its obligation to extinguish or
otherwise discharge all Indebtedness of RIB, (iv) each of the other agreements
and covenants contained in the PIRL Standby Distribution Agreement and in any
certificate or agreement by RII delivered pursuant thereto to be performed or
complied with by RII, at or before closing, shall have been duly performed or
complied with in all material respects and (v) PIRL shall have received a
certificate of RII, signed by a Vice President thereof as to the fulfillment of
the conditions set forth in the foregoing clauses (i), (ii), (iii) and (iv); (b)
the Paradise Island Purchase Agreement shall have terminated; (c) any waiting
period (and any extension thereof) applicable to the consummation of the
transactions contemplated thereby under the HSR Act shall have expired or been
terminated; (d) the Confirmation Order shall have been entered by the Bankruptcy
Court and the Effective Date shall have occurred, or there shall be no
unsatisfied conditions to the occurrence of the Effective Date other than the
closing thereunder, and such Confirmation Order shall be in full
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force and effect and shall not then be stayed; (e) all Governmental Consents
shall have been received; (f) there shall not be in effect any injunction or
restraining order issued by a court of competent jurisdiction against the
consummation of the sale and purchase of the Paradise Island Shares and the
assets of the U.S. Paradise Island Subsidiaries pursuant to the PIRL Standby
Distribution Agreement; (g) no proceeding shall have been instituted or
consented to by or against RIB or any U.S. Paradise Island Subsidiary seeking to
adjudicate any of them a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief or composition
of any of their debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of any order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for any of them or any substantial part of any of their property, and
such proceeding shall not have been dismissed or terminated within 60 days of
the commencement thereof; (h) PIRL shall have received opinions of counsel to
RII reasonably acceptable to PIRL and its counsel; (i) the Registration Rights
Agreement shall have been executed and delivered by the parties thereto and
shall be in full force and effect; (j) PIRL shall have received resignations and
releases of all officers and directors of RIB who are not directly involved in
the business and operations of RIB; and (k) certain agreements relating to the
Old Series Notes shall not be in force and effect.
RII CONDITIONS. (a) Any waiting period (and any extension thereof)
applicable to the consummation of the transactions contemplated thereby under
the HSR Act shall have expired or been terminated; (b) the Confirmation Order
shall have been entered by the Bankruptcy Court and the Effective Date (as
defined in the Plan) shall have occurred, or there shall be no unsatisfied
conditions to the occurrence of the Effective Date other than the closing
thereunder, and such Confirmation Order shall be in full force and effect and
shall not then be stayed, or the consummation of the transactions contemplated
by the PIRL Standby Distribution Agreement shall have been approved by another
order of the Bankruptcy Court and such other order shall be in full force and
effect and shall not then be stayed; (c) all Governmental Consents shall have
been received; (d) there shall not be in effect any injunction or restraining
order issued by a court of competent jurisdiction against the consummation of
the sale and purchase of the Paradise Island Shares and the assets of the U.S.
Paradise Island Subsidiaries pursuant to the PIRL Standby Distribution
Agreement; and (f) the Paradise Island Purchase Agreement shall have been
terminated.
TERMINATION
The PIRL Standby Distribution Agreement may be terminated at any time prior
to the Closing Date: (a) by mutual written consent of RII and PIRL at any time
prior to entry of the Confirmation Order; (b) in the event that a proposal for
the sale of the Paradise Island Business by RII or GRI, other than pursuant to
the PIRL Standby Distribution Agreement or the Paradise Island Purchase
Agreement, is approved by the Bankruptcy Court (such termination to occur
automatically); (c) by PIRL, if a Material Adverse Effect (as defined in the
PIRL Standby Distribution Agreement) occurs as a result of any Force Majeure
Event (as defined in the PIRL Standby Distribution Agreement), provided,
however, that PIRL may not terminate the PIRL Standby Distribution Agreement if
the loss caused by the Force Majeure Event (including the present value of lost
profits) is less than $20,000,000 and there is adequate insurance to cover such
loss; (d) by PIRL, if PIRL reasonably determines that RII will not be able to
deliver good title free and clear of encumbrances, other than certain permitted
encumbrances, to a material portion of the Paradise Island Business or 100% of
the outstanding RIB Capital Stock by September 30, 1994; (e) by PIRL, if as a
result of a breach of RII of its covenant to operate the Paradise Island
Business in the ordinary course, a Material Adverse Effect has occurred; (f) by
PIRL, if the Paradise Island Purchase Agreement is terminated by SIHL after
November 30, 1993 on account of any matter arising or occurring on or before
November 30, 1993 (i) which was known by RII or any of its Affiliates (as
defined in the PIRL Standby Distribution Agreement) or which would have been
known by RII or any of its Affiliates had they not been grossly negligent or
(ii) which was fraudulently or knowingly concealed from SIHL by RII or any of
its Affiliates; (g) by PIRL, if in Fidelity's and TCW's reasonable judgment
(based on advice of legal counsel), the consummation of the transactions
contemplated by the PIRL Standby Distribution Agreement could be
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expected to result in the incurrence of any personal liabilities by the holders
of PIRL's capital stock by virtue of their status as shareholders (excluding any
losses resulting solely from a decline in the economic value of such capital
stock); provided, however, that in the event of a good faith dispute concerning
whether PIRL is entitled to terminate the PIRL Standby Distribution Agreement
pursuant to the provisions described in this clause (g), the matter will be
submitted to a court of competent jurisdiction for a final and binding
determination; (h) by PIRL, if RII or any of its Affiliates propose or support
before the Bankruptcy Court any proposal for the sale or disposition of the
Paradise Island Business other than pursuant to the PIRL Standby Distribution
Agreement or the Paradise Island Purchase Agreement; or (i) in the event that
the sale of the Paradise Island Business by RII and the U.S. Paradise Island
Subsidiaries to SIHL is consummated pursuant to the Paradise Island Purchase
Agreement (such termination to occur automatically).
TRANSFER TAXES
The PIRL Standby Distribution Agreement provides that any sales and transfer
taxes applicable to the conveyance and transfer of the Paradise Island Shares
and the U.S. Paradise Island Assets shall be borne and paid 100% by RII. The
Bahamian Government has notified PIRL and RII that a transfer tax of $1.08
million is payable as a result of the transfer of the Shares, and in accordance
with provisions of the PIRL Standby Distribution Agreement, such transfer tax
will be paid 100% by RII.
AMENDMENT AND WAIVERS
No amendment to the PIRL Standby Distribution Agreement will be effective
unless it is in writing signed by RII and PIRL and consented to by Fidelity and
TCW. Any party may waive any provision of the PIRL Standby Distribution
Agreement or consent to any departure by any party therefrom; PROVIDED, HOWEVER,
that no such waiver or consent by RII shall be valid unless consented to by
Fidelity and TCW.
INDEMNIFICATION
INDEMNIFICATION BY RII. Pursuant to the term of the PIRL Standby
Distribution Agreement, until March 31, 1995, RII has agreed to indemnify and
hold PIRL and its Affiliates harmless from the claims, damages, liabilities,
liens, losses or other obligations ("Losses") arising out of or based upon or
caused by the inaccuracy of the representations of RII contained in the PIRL
Standby Distribution Agreement relating to its organization and authority to
execute and perform the PIRL Standby Distribution Agreement and title to the
Paradise Island Shares. In addition, RII has agreed to indemnify SIHL and its
Affiliates for any Losses resulting from breaches of certain covenants of RII
contained in the PIRL Standby Distribution Agreement.
INDEMNIFICATION BY PIRL. Pursuant to the terms of the Standby Distribution
Agreement, until March 31, 1995, SIHL has agreed to indemnify RII and its
Affiliates for any Losses arising out of or based upon or caused by the
inaccuracy of the representations of PIRL contained in the Standby Distribution
Agreement relating to its organization, capital structure and authority to
execute and perform the Standby Distribution Agreement and to issue the Paradise
Island Shares. In addition, SIHL has agreed to indemnify RII and its Affiliates
for any Losses resulting from breaches of certain covenants of SIHL contained in
the Standby Distribution Agreement.
DESCRIPTION OF THE CAESARS PAYMENT
On the Distribution Date, pursuant to the Plan, RII will distribute to
Caesars World, Inc. the Caesars Payment, which is a cash payment in the amount
of $400,000.00. This payment arises from a letter agreement, dated August 18,
1993, by and among Caesars World, Inc., Fidelity and TCW. In conjunction with
efforts by Fidelity and TCW to identify potential permanent management for the
Paradise Island Business in the event of the PIRL Spin-Off, TCW and Fidelity
entered into the letter agreement with Caesars World, Inc. pursuant to which
Caesars World, Inc. agreed to grant an option to the holders of Old Series
Notes, exercisable until December 31, 1994 to cause Caesars World, Inc. to
undertake good faith negotiations with PIRL of agreements under which a
subsidiary of Caesars
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World, Inc. would provide management services with respect to the Paradise
Island Business, in the event the SIHL Sale is not consummated. In consideration
for this option, Fidelity and TCW agreed to support the inclusion in the Plan of
a provision for the payment by RII to Caesars World, Inc. of the sum of
$400,000. In conjunction with their discussions and negotiations with Fidelity
and TCW concerning the Restructuring and the Plan, and in light of Fidelity's
and TCW's agreement to support the Plan, RII and GRI agreed to make the Caesars
Payment on the Distribution Date if the Plan was consummated.
DESCRIPTION OF DEFERRED CASH
The rights to receive payments from Deferred Cash will be non-transferable,
will be evidenced by the Plan and represent the right to receive payments
resulting from distributions by the Litigation Trust from time to time after the
Effective Date in respect of Litigation Trust Units owned by RII. No separate
evidence will be issued in respect of the rights to receive payments from
Deferred Cash. Each such right is an uncertificated, unsecured and unguaranteed
obligation of RII to pay an amount to a holder of such right to the extent that
RII receives such amount from the Litigation Trust. Such right does not have a
definite term and is non-interest bearing. Distributions to RII in respect of
the Litigation Trust Units received prior to the Effective Date will be treated
as Available Cash and included in the calculation of Excess Cash.
DESCRIPTION OF EXCESS CASH
On the Effective Date, or as soon thereafter as practicable, but in no event
later than 20 days after the Effective Date, pursuant to the Plan, RII will
distribute Excess Cash to the disbursing agent for the holders of Old Series
Notes. Excess Cash equals the Available Cash on the Effective Date minus the sum
of (a) RII Retained Cash of $20 million, (b) the Target Adjusted Cash, (c) the
Reserved Cash, (d) the Plan Consummation Cash, and (e) the Caesars Payment.
Under the Plan, Available Cash is defined as all cash of RII and its
subsidiaries on the Effective Date, including but not limited to cash deposited
in depository accounts, cash on hand and cage cash, before giving effect to the
SIHL Sale or PIRL Spin-Off, as the case may be, and the distributions under the
Plan, but specifically excluding (a) any cash actually received by RII on or
prior to the Effective Date, from Atlantic City Showboat, Inc., as tenant under
the Showboat Lease, which has been escrowed by RII to pay its current
obligations with respect to the Showboat Notes, (b) any restricted cash relating
to the Litigation Trust and (c) any portion of the SIHL Aggregate Cash Purchase
Price. Available Cash includes pre-Effective Date distributions to RII in
respect of the Litigation Trust Units.
Pursuant to the Plan, RII and GRI have agreed not to pay, and not to cause
their subsidiaries to pay, any claim except in the ordinary course of business
and consistent with past practice and to collect, and to cause their
subsidiaries to collect, receivables in the ordinary course of business and
consistent with past practice. On the Effective Date, RII Retained Cash rather
than Plan Consummation Cash shall be used to pay any prepetition Allowed Claims
or post-petition Allowed Administrative Claims which, in the ordinary course of
business and consistent with past practice, would not have been paid by the
Effective Date.
DESCRIPTION OF LITIGATION TRUST UNITS
Under the Old Plan, the Litigation Trust was created pursuant to the
Litigation Trust Agreement dated September 17, 1990. Pursuant to the Litigation
Trust Agreement, various assets of the Old Debtors were assigned to the
Litigation Trust to be liquidated, and the proceeds thereof, less certain
expenses provided for under the Old Plan, distributed by the Litigation Trustee
for the benefit of certain creditors of the Old Debtors, the holders under the
Old Plan of Allowed Class 3B Claims, Allowed RII Debenture Claims and Allowed
Other Class 3C Claims (collectively, the "Trust Beneficiaries"). The Old Plan
provided that the aggregate beneficial interests in the Litigation Trust were to
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be divided into at least 10,000,000 Litigation Trust Units which were to be
allocated by the Litigation Trustee to the Trust Beneficiaries as prescribed by
the Old Plan. Each Litigation Trust Unit entitles its holder to a pro rata share
of any distribution from the Litigation Trust.
The assets assigned to the Litigation Trust were in the form of various
claims and causes of action (the "Litigation Claims") held by the Old Debtors
and certain of their affiliates against Donald J. Trump and affiliated entities
(collectively, the "Trump Parties"). The Litigation Trustee assessed the
viability of proposed litigation against the Trump Parties and explored
settlement options on behalf of the Trust Beneficiaries. On May 28, 1991, the
Litigation Trustee entered into an agreement with the Trump Parties, Merv
Griffin and affiliated entities, and the Old Debtors and affiliated entities
(the "Settlement Agreement") settling the Litigation Claims on behalf of the
Trust Beneficiaries, subject to their approval. Such approval was solicited and
received by July 15, 1991. Pursuant to the Settlement Agreement, the Trump
Parties settled all Litigation Claims for $12,000,000.
Furthermore, as required by the Old Plan, RII also was required to make
available $5,000,000 to the Litigation Trust to be used to prosecute or
otherwise liquidate the Litigation Claims which the Old Debtors had assigned to
the Litigation Trust. In October 1990, this money was placed in a separate
expense account held on behalf of RII in order to secure RII's obligation to
fund the Litigation Trust's expenses. Under this funding arrangement, interest
earned on the $5,000,000 belongs to RII. The balance of the funds remaining in
the expense account, after the interest earned on the account is returned to RII
and the reasonable expenses incurred by the Litigation Trust are paid in full,
is available for distribution to the Trust Beneficiaries.
Finally, pursuant to the Old Plan, the holders of 1,785,000 Litigation Trust
Units had the right to require RII to purchase their Litigation Trust Units for
approximately $3,880,000 in the aggregate if certain conditions were not met by
September 17, 1991. The $3,880,000 was deposited with the Litigation Trustee in
October 1990. Approximately 1,760,000 Litigation Trust Units were purchased in
October 1991 for $3,831,000. Interest earned on such $3,880,000 was for the
account of the Old Debtors.
As of September 30, 1992, there were net trust funds in the Litigation Trust
in the amount of $12,690,188. Additionally, expenses in the amount of $561,390
incurred by the Litigation Trustee had been paid from the $5,000,000 that RII
had made available to liquidate the Litigation Claims. Having settled or
otherwise definitively resolved the Litigation Claims and reduced same to cash
proceeds being held in the Litigation Trust, the Litigation Trustee is now in a
position to make the distributions of the Litigation Trust funds to the Trust
Beneficiaries as required in the Old Plan. However, the Litigation Trustee has
declined to make distributions until certain aspects of the tax treatment and
allocation of such distribution are clarified.
Prior to making any distributions to the Trust Beneficiaries, the Trustee
has sought orders from the New Jersey bankruptcy court concerning the tax status
of the Litigation Trust and the proper method of distributing the assets of the
Litigation Trust. The tax status of the Litigation Trust is the subject of a
stipulation which has been executed by all parties to this adversary proceeding,
although an order in approving this stipulation has not yet been entered by the
New Jersey bankruptcy court.
Assuming the order with respect to the resolution of the tax proceeding is
entered in January, 1994 as currently anticipated, the second order sought by
the Trustee, concerning the method of distributing the assets of the Litigation
Trust, has been resolved by a stipulation and order entered on July 13, 1993.
Accordingly, the Trustee currently intends to distribute the full amount of the
Trust assets in early 1994.
DESCRIPTION OF NET RESERVED CASH
On the Effective Date, pursuant to the Plan, RII will estimate Reserved
Cash, I.E., the amount of cash RII reasonably estimates will be necessary to
fund any adjustments required under either the Paradise Island Purchase
Agreement or the PIRL Standby Distribution Agreement, as appropriate.
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As soon as practicable after the Effective Date, but no later than 90 days after
the Effective Date, RII will distribute Net Reserved Cash. To the extent that
Reserved Cash exceeds the amount of cash actually required for such purposes,
there will exist Net Reserved Cash to be distributed to the former holders of
Old Series Notes.
The rights to receive payments, if any, from Net Reserved Cash will be
non-transferable and will be evidenced by the Plan. No separate evidence will be
issued in respect of the rights to receive payments from Net Reserved Cash. Each
right is an unsecured and unguaranteed obligation of RII to pay an amount to a
holder of such right to the extent that there exists Net Reserved Cash. There
can be no assurance of Net Reserved Cash and, as a result, no assurance of any
payments from Net Reserved Cash. The right to receive Net Reserved Cash will
bear interest thereon at the average rate of return received by RII and its
subsidiaries on invested cash from the Effective Date to but excluding the
Distribution Date.
DESCRIPTION OF NET PLAN CONSUMMATION CASH AND PLAN EXPENSES
On the Effective Date, pursuant to the Plan, RII will estimate Plan
Consummation Cash, I.E., the amount of cash RII reasonably estimates will be
necessary to pay Plan Expenses. Plan Expenses include administrative claims, the
claims of RII Classes 1, 4, and 5 and GRI Classes 1 and 3 (whether or not such
Claims are Disputed Claims) which by their terms are overdue on the Effective
Date and the payment of which is incapable of being reinstated or deferred under
the Bankruptcy Code, plus (i) any actual payments required to be made by RII or
the RII Paradise Subsidiaries for transfer taxes or federal alternative minimum
taxes incurred solely as a result of the consummation of the transactions
contemplated by the Paradise Island Purchase Agreement or, alternatively, the
PIRL Standby Distribution Agreement (after giving effect to all available
deductions or credits allowed to the affiliated group of which RII is the common
parent for the taxable year in which such transaction occurs), and for costs and
liabilities pursuant to section 6.10 of the Paradise Island Purchase Agreement
or, alternatively, section 5.09 of the PIRL Standby Distribution Agreement, (ii)
costs or expenses incurred in connection with the implementation and
consummation of the Plan for (a) amounts payable to the Disbursing Agent under
the Plan as provided in section 6.11.9 hereof, (b) the reasonable fees and
reasonable expenses of professionals associated with litigating Disputed Claims
or Disputed Interests and implementing and consummating the Plan. As soon as
practicable after the Effective Date, but no later than 90 days after the
Effective Date, RII will determine the amount of cash actually required for such
purposes. To the extent that Plan Consummation Cash exceeds the amount of cash
actually required for such purposes, there will exist Net Plan Consummation Cash
to be distributed to the former holders of Old Series Notes.
Pursuant to the Plan, RII and GRI have agreed not to pay, and not to cause
their subsidiaries to pay, any claim except in the ordinary course of business
and consistent with past practice and to collect, and to cause their
subsidiaries to collect, receivables in the ordinary course of business and
consistent with past practice. On the Effective Date, RII Retained Cash rather
than Plan Consummation Cash shall be used to pay any prepetition Allowed Claims
or post-petition Allowed Administrative Claims which, in the ordinary course of
business and consistent with past practice, would not have been paid by the
Effective Date.
The rights to receive payments, if any, from Net Plan Consummation Cash will
be non-transferable and will be evidenced by the Plan. No separate evidence will
be issued in respect of the rights to receive payments from Net Plan
Consummation Cash. Each right is an unsecured and unguaranteed obligation of RII
to pay an amount to a holder of such right to the extent that there exists Net
Plan Consummation Cash. There can be no assurance of Net Plan Consummation Cash
and, as a result, no assurance of any payments from Net Plan Consummation Cash.
The right to receive Net Plan Consummation Cash will bear interest thereon at
the average rate of return received by RII and its subsidiaries on invested cash
from the Effective Date to but excluding the Distribution Date.
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DESCRIPTION OF GRIFFIN WARRANTS
GENERAL
The form of the Griffin Warrants has been filed as an exhibit to the
Registration Statement. See "Available Information".
EXERCISE OF GRIFFIN WARRANTS
Upon issuance, the Griffin Warrants will entitle the holder thereof to
purchase approximately 10% of the RII Common Stock on a fully diluted basis at a
purchase price per share equal to the Griffin Warrant Exercise Price (as defined
below). Once issued, the holder may exercise the Griffin Warrants, subject to
applicable securities laws, at any time prior to the fourth anniversary of the
Effective Date.
The "Griffin Warrant Exercise Price" shall be the lesser of (i) the average
market price of RII Common Stock for the 20 trading days following the Effective
Date and (ii) $1.875.
If the holder exercises the Griffin Warrants for less than all the shares of
RII Common Stock purchasable thereunder, RII will issue to such holder a RII
warrant certificate evidencing the remaining amount of shares of RII Common
Stock purchasable upon further exercise of the Griffin Warrants. Payment of the
purchase price upon the exercise of the Griffin Warrants may be made in cash or
by certified or official bank or bank cashier's check.
ADJUSTMENTS
Capitalized terms used under this caption and not otherwise defined in this
Information Statement/Prospectus have the meanings ascribed thereto under "--
Certain Definitions" below.
The number of shares of RII Common Stock covered by the Griffin Warrants are
subject to adjustment under certain events, including: (i) the distribution of
additional shares of RII Common Stock to all holders of RII Common Stock, the
subdivision of shares of RII Common Stock and the combination of shares of RII
Common Stock into a smaller number of shares of RII Common Stock (ii) the
distribution to holders of Common Stock of any Indebtedness (other than
Convertible Securities), shares of capital stock (other than Convertible
Securities or Additional Shares of Common Stock) or any other securities or
property (other than cash) or any warrant or other right to subscribe for or
purchase any Indebtedness (other than Convertible Securities); (iii) the
issuance or sale of any Additional Shares of Common Stock for a consideration
per share less than the Current Warrant Price per share of Common Stock; (iv)
the distribution or issuance or sale of warrants or other rights to subscribe
for or purchase any Additional Shares of Common Stock or any Convertible
Securities, whether or not the rights to exercise, exchange or convert
thereunder are immediately exercisable, if the consideration per share for which
Additional Shares of Common Stock at any time thereafter may be issuable
pursuant to the terms of such warrants or other rights or such Convertible
Securities is less than the Current Warrant Price per share of Common Stock; and
(v) the distribution or issuance or sale of any Convertible Securities, whether
or not the rights to exchange or convert thereunder are immediately exercisable,
if the consideration per share for which Additional Shares of Common Stock at
any time thereafter may be issuable pursuant to the terms of such Convertible
Securities is less than the Current Warrant Price per share of Common Stock. RII
is not required to issue fractional shares of RII Common Stock.
If RII consolidates with or merges with and into another entity or sells or
transfers substantially all its assets, the holders of Griffin Warrants will be
entitled to receive, upon the exercise of the Griffin Warrants, the securities
or property to which the holder of the shares of RII Common Stock or other
securities then deliverable upon the exercise of the Griffin Warrants would have
been entitled upon such consolidation, merger or sale.
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LIMITATION ON RIGHT TO VOTE OR RECEIVE DIVIDENDS
No holder of the Griffin Warrants, as such, will be entitled to any rights
as a shareholder of the RII, including the right to vote or to receive dividends
or other distributions with respect to the shares of RII Common Stock, until
such holder has properly exercised the Griffin Warrants in accordance with their
terms.
CERTAIN DEFINITIONS
"Additional Shares of Common Stock" means all shares of Common Stock issued
subsequent to the Effective Date other than (A) shares issued upon exercise of
the Griffin Warrants and (B) any shares of Common Stock issued upon exercise of
any 1990 Stock Option or any option issued under the 1994 Stock Option Plan.
"Capitalized Lease" means, with respect to any Person, any lease or any
other agreement with respect to the use of property that, in accordance with
GAAP, should be capitalized on the lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person means, as of any date as of
which the amount thereof is to be determined, the amount of the liability
capitalized in respect of a Capitalized Lease of such Person.
"Common Stock" means RII Common Stock, par value $.01 per share, as
constituted on the Distribution Date and any capital stock into which such
common stock thereafter may be changed on one or more occasions as a result of a
stock split, stock dividend or combination or reclassification of shares, or
through a merger, consolidation, reorganization or recapitalization, or by any
other means, and in addition to such RII Common Stock also includes capital
stock of RII of any other class that is not preferred as to dividends or assets
over any other class of capital stock of RII and that is not subject to
redemption; provided that the shares of Common Stock receivable upon exercise of
the Warrants shall include only shares designated as RII Common Stock on the
Effective Date.
"Convertible Securities" means Indebtedness, shares of stock or other
securities that, with or without payment of additional consideration in cash or
property, are convertible into or exchangeable for Additional Shares of Common
Stock, either immediately or upon the arrival of a specified date or the
happening of a specified event.
"Current Warrant Price" per share of Common Stock, as of any date, means the
amount equal to the quotient resulting from dividing the Exercise Price per
Stock Unit in effect on such date by the number of shares (including any
fractional share) of Common Stock comprising a Stock Unit on such date.
"Current Market Value" of a share of Common Stock means, for each trading
day: (A) the daily average of the high and low sale prices for Common Stock as
reported on the American Stock Exchange, or if no such sale takes place on any
such trading day the daily average of the high and low bid quotations for the
Common Stock on the American Stock Exchange; (B) if the Common Stock is not
listed on the American Stock Exchange, the daily average of the high and low
sale prices for the Common Stock as reported on the principal national
securities exchange on which the Common Stock is listed, or if no such sale
takes place on any such trading day the daily average of the high and low bid
quotations on such exchange; (C) if the Common Stock is not listed on any
national securities exchange, the daily average of the high and low sale prices
in the over-the-counter market as reported on the NASDAQ/National Market System,
or if no such sale takes place on any such trading day the daily average of the
high and low bid quotations as so reported; or (D) if no such quotations are
available, the fair market value as determined in good faith by the Board of
Directors of RII.
"GAAP" means United States generally accepted accounting principles.
"Indebtedness" of any Person means, as of any date as of which the amount
thereof is to be determined, (i) all obligations of such Person that, in
accordance with GAAP, would be classified on a balance sheet of such Person as
debt or indebtedness, including all obligations of such Person in
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respect of borrowed money or evidenced by bonds, debentures, notes or other
evidence of indebtedness, and (ii) in addition (A) all obligations that are
secured by any Lien existing on property owned by such Person whether or not the
obligations secured thereby shall have been assumed by such Person, (B) all
Capitalized Lease Obligations of such Person, (C) all obligations of such Person
to purchase any materials, supplies or other property, or to obtain the services
of any Person, if the relevant contract or other related document requires that
payment for such materials, supplies or other property, or for such services,
shall be made regardless of whether or not delivery of such materials, supplies
or other property is ever made or tendered or such services are ever performed
or tendered, (D) all obligations of such Person to advance or supply funds to,
or to purchase property or services from, any other Person in order to maintain
the working capital, net worth or any other balance sheet condition of such
other Person or to pay debts, dividends or expenses of such other Person or to
assure such other Person or any third party against any liability or loss and
(E) guarantees, endorsements and other contingent obligations, direct or
indirect, on the part of such Person (other than endorsement of negotiable
instruments for collection in the ordinary course of business) for the payment,
discharge or satisfaction of Indebtedness of others to pay the same or to the
owners of such Indebtedness of others of the character described above,
including any agreement, contingent or otherwise, to (x) purchase such
Indebtedness of others, (y) purchase or sell property or services primarily to
permit the debtor in respect of such Indebtedness of others to pay the same or
the owner of such Indebtedness of others to avoid loss or (z) supply funds to or
invest in any such debtor.
"Lien" means: (i) any interest in property (whether real, personal or mixed
and whether tangible or intangible) that secures an obligation owed to, or a
claim by, a Person other than the owner of such property, whether such interest
is based on the common law, statute or contract, including without limitation
any such interest arising from a Capitalized Lease, arising from a mortgage,
charge, pledge, security agreement, conditional sale or trust receipt, arising
by way of the right of set-off, or deposit in trust, or arising from a lease,
consignment or bailment given for security purposes; (ii) any encumbrances upon
such property that does not secure such an obligation; and (iii) any exception
to or defect in the title to or ownership interest in such property, including
without limitation reservations, rights of entry, possibilities of reverter,
encroachments, easements, right of way, restrictive covenants, leases, licenses
and profits a prendre.
"Person" includes an individual, a corporation, an association, a
partnership, a trust or estate, a government and any agency or political
subdivision thereof or any other entity.
"Stock Unit" means one share of Common Stock until the occurrence of any
adjustment specified in the antidilution section of the Griffin Warrants and
thereafter means such other number of shares of Common Stock as may result from
any one or more of such adjustments.
DESCRIPTION OF OLD SERIES NOTES
The Old Series Notes were issued pursuant to the Old Series Note Indenture
dated as of September 14, 1990, between RII and Chemical Bank (successor to
Manufacturers Hanover Trust Company), the Old Series Note Trustee. A copy of the
Old Series Note Indenture is filed as an exhibit to the Registration Statement
of which this Information Statement/Prospectus is a part. The terms of the Old
Series Note Indenture also are governed by certain provisions contained in the
Trust Indenture Act of 1939, as amended.
Wherever particular provisions of the Old Series Note Indenture or Old
Series Notes are referred to, such provisions are incorporated by reference
herein. Capitalized terms used in this section but not defined in this
Information Statement/Prospectus or in the Plan have the meanings ascribed
thereto in the Old Series Note Indenture and are incorporated by reference
herein. References to Sections or Articles refer to Sections or Articles of the
Old Series Note Indenture and references to Paragraphs refer to Paragraphs of
the respective Old Series Notes.
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CERTAIN TERMS OF THE OLD SERIES A NOTES
GENERAL
The Old Series A Notes are secured obligations of RII, guaranteed as to
payment of principal and interest by GRI pursuant to the GRI Guaranty and
limited to $187,500,000 in aggregate principal amount plus the principal amount
of Old Series A Notes that may be issued in payment of interest as described
below. As of November 30, 1993, approximately [ ____________] in aggregate
principal amount of Old Series A Notes were outstanding. The Old Series A Notes
mature on April 15, 1994.
SINKING FUND REQUIREMENTS
None.
INTEREST
The Old Series A Notes paid interest at a rate of 6% per year from April 11,
1990 until April 15, 1991. The interest rate on the Old Series A Notes increased
to 9% on April 15, 1991, to 12% on April 15, 1992, and to 15% on April 15, 1993.
Interest is payable semi-annually on April 15 and October 15 in each year to
holders of record at the close of business on the first day of the month in
which the interest payment date occurs. RII is required to pay interest on
overdue principal and, to the extent permitted by law, overdue interest at the
then current rate applicable to the Old Series A Notes plus 2% per year. RII may
pay all or any portion of interest accruing on the Old Series A Notes by issuing
additional Old Series A Notes (valued, for purposes only of determining the
principal amount of additional Old Series A Notes to issue in respect of
interest so paid, at 100% of their principal amount) in lieu of cash in
satisfaction of interest payments due. Interest on the Old Series A Notes may be
paid in cash only if interest on the Old Series B Notes is concurrently paid in
cash in the same proportion of the total interest due. To date, RII has made all
interest payments on the Old Series A Notes by issuing additional Old Series A
Notes.
CERTAIN TERMS OF THE OLD SERIES B NOTES
GENERAL
The Old Series B Notes are secured obligations of RII, limited in aggregate
principal amount to the sum of (a) $137,500,000, plus (b) the principal amount
of Old Series B Notes that were issued in respect of certain general unsecured
claims under the Old Plan, approximately [$4,300,000], plus (c) the principal
amount of Old Series B Notes that are issued in payment of interest as described
below. As of November 30, 1993, approximately [____________] in aggregate
principal amount of Old Series B Notes were outstanding. The Old Series B Notes
mature on April 15, 1994.
SINKING FUND REQUIREMENTS
None.
INTEREST
The Old Series B Notes paid interest at a rate of 11% per annum from May 8,
1990 until April 15, 1991. Thereafter the interest rate on the Old Series B
Notes is 15% per year until maturity. Interest is payable semi-annually on April
15 and October 15 in each year to holders of record at the close of business on
the first day of the month in which the interest payment date occurs. RII is
required to pay interest on overdue principal and, to the extent permitted by
law, overdue interest at the then current rate applicable to the Old Series B
Notes plus 2% per year. RII may pay all or any portion of interest accruing on
the Old Series B Notes by issuing additional Old Series B Notes (valued, for
purposes only of determining the principal amount of additional Old Series B
Notes to issue in respect of interest so paid, at 100% of their principal
amount) in lieu of cash in satisfaction of interest payments due. Interest on
the Old Series B Notes may be paid in cash only if interest on the Old Series A
Notes is concurrently paid in cash in the same proportion of the total interest
due. To date, RII has made all interest payments on the Old Series B Notes by
issuing additional Old Series B Notes.
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MANDATORY REDEMPTION
If RII or any of its subsidiaries sells any of their assets listed in a
schedule to the Old Series Note Indenture, any other real property or the
capital stock of any such subsidiary, the Cash Proceeds from such sale are
required to be deposited into the Collateral Account, a custodial account
maintained by the Old Series Note Trustee for the benefit of the holders of the
Old Series Notes, immediately upon receipt thereof (except Cash Proceeds from
the disposition of assets in the ordinary course or in connection with any sale
of all or substantially all the assets of RII). If, as a result of any such
deposit, the balance in the Collateral Account exceeds $15,000,000, RII is
required to redeem the Old Series Notes with the entire balance in the
Collateral Account at 100% of the principal amount thereof plus accrued and
unpaid interest to the date of redemption. The Old Series Note Indenture
requires that any such redemption be made of both the Old Series A Notes and the
Old Series B Notes, pro rata according to the respective principal amounts of
the Old Series Notes of each series then outstanding. (ARTICLE THREE AND
PARAGRAPH 5).
OPTIONAL REDEMPTION
The Old Series Notes are not entitled to any sinking fund.
The Old Series Notes are redeemable at any time in whole, or from time to
time in part, at the election of RII, at a redemption price of 100% of their
principal amount plus accrued interest to the Redemption Date. The Old Series
Note Indenture requires that any such redemption be made of both the Old Series
A Notes and the Old Series B Notes, pro rata according to the respective
principal amounts of the Old series Notes of each series then outstanding.
(SECTION 3.02).
From and after any Redemption Date, if funds for the redemption of any Old
Series Notes called for redemption shall have been made available on such
Redemption Date, such Old Series Notes will cease to bear interest and the only
right of the holders will be to receive payment of the Redemption Price and all
interest accrued to such Redemption Date. (SECTION 3.05 AND PARAGRAPH 5).
The Old Series Note Indenture requires that notice of any optional
redemption of any Old Series Notes be given to holders at their addresses, as
shown in the register, not more than 60 nor less than 30 days prior to the
Redemption Date. The notice of redemption must specify, among other things, the
Redemption Date, the Paying Agent and, in the case of a partial redemption, the
aggregate principal amount of the Old Series A Notes and the Old Series B Notes
to be redeemed and the aggregate principal amount of the Old Series A Notes and
the Old Series B Notes that will be outstanding after such partial redemption.
(SECTION 3.03).
LIMITATION ON OPEN-MARKET PURCHASES
See "-- Restrictive Covenants".
CASINO CONTROL ACT REGULATION
The Old Series Notes are subject to the qualification, divestiture and
redemption provisions under the Casino Control Act that are described in
"Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey".
(SECTION 3.07; PARAGRAPH 6).
PUT OPTION UPON CHANGE OF CONTROL
Each holder of Old Series Notes has the right (the "Change of Control Put
Option") to require RII to purchase such holder's Old Series Notes upon the
occurrence of one or more of the following (unless, in the case of clauses (i)
and (ii) below, RII calls all the Old Series Notes for redemption in connection
therewith pursuant to the terms of the Old Series Note Indenture): (i) the
consolidation or merger of RII with or into another entity in which RII is not
the surviving corporation; (ii) the sale of all or substantially all the assets
of RII, provided that a sale of the stock or substantially all the assets of
either RIB or RIH (but not both) will not constitute such a sale; (iii) the
percentage of the total issued and outstanding voting stock held by Merv Griffin
and his affiliates falls below 15%, other than as a result of issuance by RII of
additional shares of voting stock; or (iv) any person or "group" (as
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defined in Rule 13d-5 promulgated under the Exchange Act), other than Merv
Griffin, any of his affiliates or any group of which he or any such affiliate is
a member, acquires 50% or more of the total issued and outstanding voting stock.
(SECTION 5.16).
Within 30 business days after any such event, RII is required to give notice
thereof to the holders of the Old Series Notes at their addresses shown in the
register. The notice must specify the nature of the event giving rise to the
right to have the Old Series Notes repurchased, a repurchase date not more than
40 nor less than 30 days after the date of the notice and the instructions a
holder of the Old Series Notes must follow in order to have its Old Series Notes
repurchased. The repurchase price is 100% of the principal amount of the Old
Series Notes repurchased plus accrued and unpaid interest to the date of
repurchase. (SECTION 5.16).
To the extent applicable, RII will be required to comply with Rule 13e-4
under the Exchange Act and any other applicable provisions of federal and state
securities laws in connection with any repurchase of the Old Series Notes
pursuant to the Change of Control Put Option.
The Change of Control Put Option may in certain circumstances make more
difficult or discourage a takeover of RII, and, thus, the removal of incumbent
management.
COLLATERAL
GENERAL
The Old Series Notes are secured by the Collateral pursuant to the Old
Security Documents described below. The Old Series A Notes and the Old Series B
Notes rank PARI PASSU with respect to amounts realized upon the sale or other
disposition of the Collateral. (ARTICLE FOUR).
The Collateral consists of:
(i) The RII Property, consisting of RII's fee and leasehold interests in
substantially all of its real properties, additions or all improvements
constructed thereon (other than the Showboat Lease and the real property
that is subject to the Showboat Lease), pursuant to the RII Mortgage between
RII and the Old Series Note Trustee;
(ii) The Resorts Casino Hotel,consisting of RIH's fee and leasehold
interests comprising the Resorts Casino Hotel, the contiguous parking garage
and property, all additions or improvements constructed thereon (other than
certain new facilities such as the proposed new parking garage) and all
furniture, fixtures, machinery, equipment, inventory and accounts of RIH
related thereto, encumbered pursuant to the RIH Mortgage between RIH and the
Old Series Note Trustee;
(iii) all of the outstanding capital stock of RIH and GRI and all of
RII's other direct and indirect domestic subsidiaries pledged by RII to the
Old Series Note Trustee pursuant to the Resorts Pledge Agreement between RII
and the Old Series Note Trustee;
(iv) the RIH Notes in the aggregate principal amount of $325,000,000,
pledged by GRI to the Old Series Note Trustee pursuant to the RIH Pledge
Agreement between GRI and the Old Series Note Trustee;
(v) 66% of the outstanding RIB Stock, pledged by GRI to the Old Series
Note Trustee pursuant to the GRI Pledge Agreement between GRI and the Old
Series Note Trustee; and
(vi) the RIB Note, the RIB Subsidiary Guaranty Agreements and the RIB
Mortgage (each as defined hereafter) pledged by RIH to the Old Series Note
Trustee pursuant to the RIB Collateral Assignment Agreement between RIH and
the Old Series Note Trustee.
THE RII MORTGAGE AND THE RIH MORTGAGE
The RII Mortgage and the RIH Mortgage create a first priority mortgage lien
and security interest (subject to certain permitted liens) in the RII Property
and the Resorts Casino Hotel, respectively. RII and RIH are prohibited from
obtaining the release of, or granting any additional liens on, the RII Property
and the Resorts Casino Hotel, respectively, without the consent of the holders
of at least two-
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thirds in principal amount of the Old Series A Notes and the Old Series B Notes,
voting together as a single class, and a majority of each class voting
separately, except as permitted by the provisions described under the captions
"-- Negative Pledge Covenant" and "-- Release and Substitution of Collateral"
below.
RII, RIH AND GRI PLEDGE AGREEMENTS
The RII, RIH and GRI Pledge Agreements collectively create a security
interest in all of the outstanding capital stock of RIH, GRI and all of RII's
other direct and indirect domestic subsidiaries and in 66% of the outstanding
voting stock of RIB. Unless an Event of Default under the Old Series Note
Indenture has occurred and is continuing, RII, RIH and GRI will be entitled to
exercise full voting rights of, and may receive any dividends declared on, the
pledged shares.
In addition, the RIH Pledge Agreement creates a security interest in the RIH
Notes, which, as amended, evidence the borrowing by RIH from GRI of the proceeds
from the issuance by GRI of the Old GRI Notes.
THE RIB COLLATERAL
The RIB Collateral includes a promissory note (the "RIB Note") issued by RIB
to RIH to evidence the borrowing by RIB from RIH of $50,000,000 of the proceeds
of the loan to RIH made by GRI out of the proceeds of sale of the Reset Notes.
The RIB Note was assigned by RIH to the Old Series Note Trustee as collateral.
The RIB Note is guaranteed by three subsidiaries of RIB (collectively, the "RIB
Subsidiary Guarantors") and such guarantees (the "RIB Subsidiary Guaranty
Agreements") are secured by first priority mortgages and liens evidenced by
indentures of mortgage (collectively, the "RIB Mortgage"). The RIB Subsidiary
Guaranty Agreements and the RIB Mortgage also were assigned by RIH to the Old
Series Note Trustee as collateral. The RIB Mortgage encumbers the interests of
RIB and the RIB Subsidiary Guarantors in the Paradise Island Resort & Casino,
the Ocean Club, the Paradise Paradise Beach Resort, all additions or
improvements constructed thereon and all furniture, furnishings, fixtures,
machinery and equipment and other personal property forming a part thereof or
used in connection therewith (the "RIB Property"). The RIB Mortgage does not
encumber the golf course, certain undeveloped land owned by such subsidiaries
and certain other properties not used in connection with the hotel operations on
Paradise Island. See "Business of the Company -- The Bahamas" for a description
of the RIB Property.
NEGATIVE PLEDGE COVENANT
RII and its subsidiaries, including RIH, GRI, RIB and the RIB Subsidiary
Guarantors, are prohibited from granting any additional liens, other than
certain permitted liens, on any of their respective assets without the consent
of the holders of at least two-thirds in principal amount of the Old Series A
Notes and the Old Series B Notes, voting together as a single class (which must
include the holders of at least a majority in aggregate principal outstanding of
each such series). (SECTION 5.12).
RELEASE AND SUBSTITUTION OF COLLATERAL
Subject to certain provisions of the Old Series Note Indenture, real
property Collateral (other than real property constituting all or a portion of
the Resorts Casino Hotel or the RIB Casino Hotel) may be released upon
substitution of other real property Collateral or cash collateral with a fair
value, or in an amount, equal to the fair value of the real property Collateral
released. Cash Collateral may be released for redemptions of Old Series Notes.
Collateral may be released in connection with sales of assets by RII or its
subsidiaries, provided that the cash proceeds from sales of certain specified
assets are deposited into a separate account which proceeds shall, when the
balance in such account equals $15,000,000, be used to redeem Old Series Notes.
See "-- Mandatory Redemption" above. Collateral may be released upon request of
RIH, GRI or RIB, as the case may be, if the holders of at least two-thirds in
aggregate principal amount of the Old Series A Notes and the Old Series B Notes,
voting together as a single class (which must include the holders of at least a
majority in aggregate outstanding principal amount of each such series), consent
to such release in writing. In addition, Collateral sold, assigned, transferred,
licensed or otherwise disposed of in the ordinary course of the business or
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abandoned because it is no longer necessary or desirable in, and is not material
to, the conduct of the business will be released, subject, in certain cases, to
receipt by the Old Series Note Trustee of certain reports and to limitations on
the fair value of property so released. All Collateral will be released upon
satisfaction and discharge of RII's obligations under the Old Series Note
Indenture. (ARTICLE FOUR).
LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL
GENERAL
If there is an Event of Default under the Old Series Note Indenture or the
Old Security Documents, the Old Series Note Trustee, subject to the requirements
of the Casino Control Act and the Gaming Act, may enforce the rights and
remedies arising under the Old Security Documents. The net amount realized in
any foreclosure sale for the benefit of holders of the Old Series Notes will be
only that amount that exceeds all amounts then due and owing to creditors, if
any, having senior security interests and certain costs, taxes and other items.
CERTAIN REGULATORY CONSIDERATIONS
In any foreclosure sale with respect to the Resorts Casino Hotel, the Old
Series Note Trustee could bid the amount of the outstanding Old Series Notes. In
the case of a foreclosure under the RIB Mortgage, the Old Series Note Trustee
could not bid on the RIB Property unless the foreclosure sale is being conducted
by leave or order of a Bahamas court and the court has granted leave to bid, in
which event the Old Series Note Trustee could bid the amount outstanding under
the RIB Note. The Old Series Note Trustee would be required to comply with the
applicable requirements of the Casino Control Act (including obtaining a casino
license) and Gaming Act in any foreclosure sale.
CERTAIN BANKRUPTCY CONSIDERATIONS
In the event of the filing of a petition under the Bankruptcy Code for RIH,
applicable provisions of the Bankruptcy Code, including the automatic stay
provisions of section 362 of the Bankruptcy Code, may operate to prevent the Old
Series Note Trustee from taking action to realize on the Collateral if there is
an Event of Default.
GROUND LEASES
A substantial portion of the North Tower of the Resorts Casino Hotel, a
portion of the adjacent parking garage and a small portion of the casino hotel
are located on land that is owned by unrelated third parties and held by RIH
under long-term ground leases. The ground leases do not provide certain
mortgagee protections and, in the event of a default thereunder, the Old Series
Note Trustee may not have the right to cure any such default. However, the Old
Series Note Trustee has the right under the Old Series Note Indenture to tender
defaulted ground lease payments to RIH and require RIH to transmit such funds to
the respective ground lessor. If such default is not cured, the lessor under any
ground lease may have the right to terminate the ground lease. The termination
of any or all of such ground leases could result in the loss of portions of, or
rights with respect to, the property subject to the terminated ground lease.
ENFORCEABILITY OF JUDGMENTS WITH RESPECT TO BAHAMAS ASSETS
Since substantially all the assets of RIB and its subsidiaries are outside
the United States, any judgment obtained in the United States, including
judgments with respect to the payment of principal on the Old Series Notes or
with respect to the RIB Note or the RIB Mortgage, might not be collectible
within the United States with respect to such foreign assets. In connection with
the Acquisition and the issuance and sale of the GRI Notes, RII was informed by
Bahamas counsel, Dupuch & Turnquest, that (i) foreign (including United States)
judgments for liquidated amounts in civil matters, obtained against RII, GRI or
RIB after due trial before a court of competent jurisdiction and which are final
and
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conclusive as to the issues in contention are actionable in Bahamian courts and
are impeachable only upon the grounds of fraud, public policy and natural
justice, and (ii) there are no other factors under Bahamian law which would
defeat an action brought on the basis of such a judgment of a United States
court under the Old Series Note Indenture, the Old Series Notes or the RIB
Mortgage.
GUARANTY
GRI guarantees payment of principal and interest of the Old Series Notes
pursuant to the GRI Guaranty. GRI's assets consist principally of the RIH Notes
and the capital stock of RIB. RIB and its subsidiaries own the Paradise Island
properties, including the Paradise Island Resort & Casino, the Ocean Club Golf &
Tennis Resort and the Paradise Paradise Beach Resort, and all related furniture,
fixtures, machinery and equipment. The RIH Notes and such Paradise Island
properties, including all additions or improvements to such properties, directly
or indirectly, comprise part of the Collateral securing the Old Series Notes.
The Collateral also includes the lien on the Resorts Casino Hotel, owned by RIH,
together with all additions or improvements thereto.
RANKING
The Old Series Notes are senior secured obligations of RII.
PAYMENT OF NET PROCEEDS OF ASSET SALES
See "-- Mandatory Redemption".
RESTRICTIVE COVENANTS
The Old Series Note Indenture contains certain restrictive covenants on the
part of RII, including without limitation restrictions (subject to certain
exceptions) on: (i) the payment of cash dividends or redemptions of capital
stock by RII (other than as required by the Casino Control Act); (ii) the
repurchase (other than as required by the Casino Control Act) of any Old Series
Notes other than at par unless all interest due on the Old Series Notes on the
immediately preceding interest payment date was paid in cash and the funds used
for the repurchase are not the proceeds of asset sales that are required to be
deposited in the Collateral Account and that have not been so deposited; (iii)
the incurrence of additional indebtedness for borrowed money, with exceptions
for (A) certain purchase money financing not to exceed $15,000,000 in aggregate
principal amount at any time outstanding, (B) financing to develop certain
property in The Bahamas to fulfill RIB's obligation to the Bahamian Government
to construct at least 150 first-class hotel rooms or (after satisfaction of such
obligation) otherwise, not to exceed $20,000,000 in aggregate principal amount
at any time outstanding, and (C) after the sale of the Paradise Island Business
and application of such sale proceeds to prepay the Old Series Notes such that
the aggregate principal amount of the Old Series Notes remaining outstanding
does not exceed $75,000,000, financing for the construction of new hotel
facilities, including a parking garage to serve the Resorts Casino Hotel in
Atlantic City, not to exceed $75,000,000 in aggregate principal amount at any
time outstanding; (iv) transactions with affiliates, with exceptions for
transactions that RII's Board of Directors determines to be on terms as
favorable as could be obtained from a non-affiliated party, certain transactions
in regard to acquisition of and financing for new hotel facilities, and
contribution by RII or any of its subsidiaries of undeveloped land to joint
ventures, provided that neither RII nor any of its subsidiaries may enter into
any of the foregoing transactions in excess of $10,000,000 without a fairness
opinion of an independent financial adviser; (vi) mergers and consolidations
with entities other than affiliates of RII; and (vii) the ability of RII and its
subsidiaries to sell their respective assets. The Old Series Note Indenture also
requires RII, at all times after December 31, 1990, to maintain a Tangible Net
Worth equal to at least $50,000,000. (ARTICLE FIVE).
EVENTS OF DEFAULT
The following events constitute "Events of Default" under the Old Series
Note Indenture: (i) failure to pay principal of the Old Series A Notes or the
Old Series B Notes when due, whether at maturity, upon redemption, by
declaration, or otherwise; (ii) failure to make any interest payment on the Old
Series A Notes or the Old Series B Notes when due and continuation of such
default for a
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period of 30 days; (iii) failure on the part of RII to observe or perform any
other covenant or agreement contained in the Old Series Note Indenture if such
failure continues unremedied for 30 days after written notice given by the Old
Series Note Trustee or the holders of at least 25% in aggregate principal amount
of the Old Series Notes then outstanding (except in the case of default with
respect to the maintenance of corporate existence, restrictions on asset sales
and mergers and consolidations, which shall constitute Events of Default without
notice or passage of time); (iv) failure on the part of RII or any of its
subsidiaries to perform any of its obligations under any Old Security Document
to which it is a party (in certain cases where such failure continues unremedied
for a period of time after written notice given by the Old Series Note Trustee
or holders of 25% in aggregate principal amount of the Old Series Notes then
outstanding); (v) certain events involving the subsequent bankruptcy,
insolvency, receivership or reorganization of RII, RIH, GRI or RIB; (vi) any
default under any other Indebtedness of RII, RIH or RIB (other than certain
intercompany indebtedness and the Showboat Notes) in excess (together with other
Indebtedness the maturity of which is so accelerated) of $10,000,000 in
principal amount if such default permits the holders thereof to cause such
Indebtedness to become due prior to its stated maturity and such holders have
caused such Indebtedness to become due prior thereto and have not rescinded or
annulled such action; (vii) the entry of one or more final judgments, no longer
subject to appeal and not covered by insurance, against RII, RIH, GRI or RIB
involving aggregate uninsured liability exceeding $10,000,000, if such judgment
remains undischarged or unstayed for a period of 45 days; and (viii) any
revocation, suspension or loss of any gaming license which results in the
cessation of business at the Resorts Casino Hotel or the Paradise Island Casino
for a period of more than 45 consecutive days. (SECTION 7.01).
If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency, receivership or reorganization) shall have occurred and
be continuing, the Old Series Note Trustee or the holders of not less than 40%
in aggregate principal amount of the Old Series Notes then outstanding may
declare immediately due and payable all unpaid principal and interest accrued
and unpaid on the Old Series Notes. In case an Event of Default resulting from
certain events of bankruptcy, insolvency, receivership or reorganization shall
occur, all unpaid principal and interest accrued and unpaid shall be due and
payable immediately, without any declaration or other act on the part of the Old
Series Note Trustee or the holders of the Old Series Notes. Subject to certain
conditions, the holders of a majority in aggregate principal amount of the Old
Series Notes then outstanding may rescind a declaration if all Events of Default
are remedied. In certain cases the holders of two-thirds in aggregate principal
amount of the Old Series Notes then outstanding (which must include holders of
at least a majority in aggregate principal amount outstanding of each series)
may waive any past Default and its consequences, except a default in the payment
of principal of or interest on any Old Series Notes. (SECTION 7.02).
LIMITATION ON MERGERS
RII, without the consent of the holders of the Old Series Notes, may
consolidate with or merge into any other entity or convey, transfer or lease all
or substantially all its properties and assets to any person, provided that: (1)
the entity formed by such consolidation or into which RII is merged or the
person which acquires by conveyance or transfer, or which leases, the properties
and assets of RII is a corporation, partnership or trust, organized and existing
under the laws of the United States of America, any State thereof or the
District of Columbia; (2) the successor entity shall expressly assume, by a
supplemental indenture executed and delivered to the Old Series Note Trustee, in
form satisfactory to the Old Series Note Trustee, the performance of every
covenant of the Old Series Notes, the Old Series Note Indenture and the Old
Security Documents on the part of RII to be performed or observed; (3)
immediately before and immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and (4) RII
or the successor entity shall have a Tangible Net Worth (immediately after
giving effect to such transaction and the assumption contemplated by clause (2)
above) equal to or greater than RII's Tangible Net Worth immediately preceding
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such transaction. (SECTION 6.01). Upon compliance with these provisions by a
successor entity, RII would be relieved of its obligations under the Old Series
Notes and the Old Series Note Indenture. (SECTION 6.02).
DISCHARGE OF OLD SERIES NOTE INDENTURE; DEFEASANCE
RII may terminate substantially all obligations under the Old Series Note
Indenture at any time by delivering all outstanding Old Series Notes to the Old
Series Note Trustee for cancellation and paying any other sums payable under the
Old Series Note Indenture. (SECTION 9.02).
The Indenture also provides that RII may elect to defease and be discharged
from any and all obligations with respect to the Old Series Notes and that the
provisions of the Old Series Note Indenture will no longer be in effect with
respect to the Old Series Notes (except for certain obligations, including the
obligations to register the transfer or exchange of the Old Series Notes, to
replace temporary or mutilated, destroyed, lost or stolen Old Series Notes, to
maintain an office or agency in respect of Old Series Notes and to hold funds
for payment in trust).
Such defeasance will take effect only upon the deposit with the Old Series
Note Trustee, in trust for such purpose, of money and/or U.S. Government
Obligations that, through the payment of principal and interest in accordance
with their terms, will provide money, in an amount sufficient to pay the
principal of and interest on the Old Series Notes on the date such payments are
due in accordance with the terms of the Old Series Notes. Such a trust may be
established with respect to the Old Series Notes only upon satisfaction of
certain conditions specified in the Old Series Note Indenture. (ARTICLE NINE).
MODIFICATION OF INDENTURE
The Old Series Note Indenture and any Old Security Document may be amended
or supplemented by RII or the party to such Old Security Document, the Old
Series Note Trustee and the holders of not less than two-thirds in aggregate
principal amount of the Old Series Notes then outstanding (which must include
holders of at least a majority in aggregate principal amount outstanding of each
of the Old Series A Notes and the Old Series B Notes), except that without the
consent of the holder of each Old Series A Note and Old Series B Note affected,
no such modification or alteration may (i) change the stated maturity of such
Note, reduce the principal amount of such Note, reduce the rate or extend the
time of payment of interest on such Note, (ii) modify any redemption provision
of such Note in a manner that would adversely affect the holder of such Note,
(iii) waive a default in the payment of principal of, or interest on, such Note,
or (iv) reduce the aggregate principal amount of the Old Series Notes with
respect to which the consent of the holders is required for an amendment or
supplement to, or a waiver of any provision of, the Old Series Note Indenture.
(ARTICLE TEN).
TRUSTEE
Chemical Bank (successor to Manufacturers Hanover Trust Company) is the Old
Series Note Trustee. Upon the occurrence of an Event of Default (other than
resulting from bankruptcy, insolvency, receivership or reorganization) the Old
Series Note Trustee or the holders of not less than 40% in aggregate principal
amount of the Old Series Notes then outstanding may accelerate their Notes. The
Old Series Note Trustee may require reasonable indemnity before exercising any
of its rights or powers under the Old Series Note Indenture.
REPORTS TO HOLDERS
RII will furnish the holders of Old Series Notes and the Old Series Note
Trustee with annual reports containing audited financial statements and
quarterly reports containing unaudited financial statements. (SECTION 8.06).
DESCRIPTION OF SHOWBOAT NOTES
The Showboat Notes were issued by RII pursuant to the Showboat Indenture
dated as of September 14, 1990, between RII and Bank of New York, as trustee
(the "Showboat Note Trustee"). A copy of
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the Showboat Indenture is filed as an exhibit to the Registration Statement of
which this Information Statement/Prospectus is a part. The terms of the Showboat
Indenture also are governed by certain provisions contained in the TIA.
Wherever particular provisions of the Showboat Notes and Showboat Indenture
are referred to, such provisions are incorporated by reference herein.
Capitalized terms used in this section but not defined in this Information
Statement/Prospectus or in the Plan have the meanings ascribed thereto in the
Showboat Indenture and are incorporated by reference herein. References to
Sections and Articles refer to Sections and Articles of the Showboat Indenture
and references to Paragraphs refer to Paragraphs of the Showboat Notes.
GENERAL
The Showboat Notes are secured, nonrecourse notes, limited in aggregate
principal amount to the sum of $105,333,000. As of November 30, 1993,
$105,333,000 in aggregate principal amount of Showboat Notes were outstanding.
The Showboat Notes will mature on June 30, 2000.
The principal of and interest on the Showboat Notes are payable at the
office of the Showboat Note Trustee in New York, New York or at other offices or
agencies maintained for that purpose. Payment of interest may be made by check
mailed to the address of the person entitled thereto as shown on the register.
Registration of the Showboat Notes is transferable at an office or agency of
the registrar, upon surrender of such Showboat Notes duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to RII duly
executed by the holder thereof or his attorney duly authorized in writing. No
service charge will be made for any such registration of transfer or exchange,
but RII may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. The registrar will not be
required to register the transfer of or exchange Showboat Notes or portions
thereof called for redemption.
RII initially appointed the Showboat Note Trustee as Paying Agent and
Registrar. RII at any time may terminate the appointment of any Paying Agent or
Registrar and appoint additional or other Paying Agents and Registrars. RII
initially will designate the corporate trust office of the Showboat Note Trustee
in New York, New York as the office at which Showboat Notes may be presented and
surrendered. Notice of such termination or appointment and of any change in the
office through which any Paying Agent or Registrar will act will be given to the
Showboat Note Trustee. Until all the Showboat Notes have been delivered to the
Showboat Note Trustee for cancellation, however, RII is required to maintain
offices or agencies where Showboat Notes may be presented for payment and
transfer.
INTEREST
Interest on the Showboat Notes consists of a pass-through (subject to
certain adjustments) of the lease payments actually received by RII or the
Showboat Note Trustee under the Showboat Lease. For a description of certain
terms of the Showboat Lease, see "-- Collateral" below. Interest is payable
based upon lease payments received under the Showboat Lease with respect to
periods commencing on or after July 1, 1990. Interest is payable semi-annually
on January 15 and July 15 in each year to holders of record of the Showboat
Notes at the close of business on the first day of the month in which the
interest payment date occurs. RII's obligation with respect to interest on the
Showboat Notes is only to pay to the holders of the Showboat Notes those lease
payments which are actually received by RII or the Showboat Note Trustee under
the Showboat Lease. In the event of a default in the payment of such lease
payments by the lessee under the Showboat Lease, the Showboat Note Trustee and
the holders of Showboat Notes will have no recourse against RII but will have
recourse, after a 30-day grace period following such default, against the
collateral described below if such default is not cured by the lessee under the
Showboat Lease or RII.
OPTIONAL REDEMPTION
The Showboat Notes are not entitled to any sinking fund.
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The Showboat Notes are redeemable at any time in whole, or from time to time
in part, at the election of RII, at a redemption price of 100% of the principal
amount redeemed plus interest to the date of such redemption (based on lease
payments actually received to the redemption date and, if the redemption date is
not during the first five business days of a calendar month, the amount of rent
accrued under the Showboat Lease but not yet paid in respect of the calendar
month in which the redemption date occurs).
From and after any redemption date, if funds for the redemption of any
Showboat Notes called for redemption shall have been made available for
redemption on such redemption date, such Showboat Notes will cease to bear
interest and the only right of the holders will be to receive payment of the
redemption price and all interest to such redemption date. (SECTION 3.05 AND
PARAGRAPH 5).
The Showboat Note Indenture requires that notice of any option redemption of
any Showboat Notes be given to holders at their addresses, as shown in the
register, not more than 60 nor less than 30 days prior to the redemption date.
The notice of redemption must specify, among other things, the redemption date,
the Paying Agent and, in the case of a partial redemption, the aggregate
principal amount of Showboat Notes to be redeemed and the aggregate principal
amount of Showboat Notes that will be outstanding after such partial redemption.
CASINO CONTROL ACT REGULATION
The Showboat Notes are subject to the qualification, divestiture and
redemption provisions under the Casino Control Act that are described in
"Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey".
COLLATERAL
The Showboat Notes are secured by a mortgage encumbering the 10.44 acre site
which has been leased to ACS (the "Showboat Property"), by a collateral
assignment of the Showboat Lease (together, such site and the Showboat Lease are
referred to as the "Showboat Mortgage") and by a pledge of any proceeds of the
sale of the Showboat Mortgage. The Showboat Indenture and the Showboat Mortgage
provide that, so long as any of the Showboat Notes are outstanding, lease
payments will be made by the lessee under the Showboat Lease directly to the
Showboat Note Trustee. The Showboat Notes are issued without recourse to RII.
Accordingly, in the event of a default by RII under the terms of the Showboat
Indenture, the sole recourse available to the Showboat Note Trustee and holders
of Showboat Notes will be to proceed against the Showboat Collateral.
The Showboat Lease expires on December 15, 2082. Lease payments are paid in
equal monthly installments on the first day of each month. The annual rental for
the lease year ending March 31, 1994 is $8,118,000. The lease payment is
increased annually as of April 1, based on the changes in the consumer price
index from the previous year. Under the terms of the Showboat Lease, ACS is
required to pay all real estate taxes and other expenses related to its use of
the Showboat Property. The permitted use of the Showboat Property is that of a
first-class hotel casino and related facilities. If such use becomes illegal,
however, the Showboat Property may be used for any lawful purpose consistent
with the urban renewal plan for Atlantic City then in existence. ACS is required
to maintain comprehensive general liability insurance (not less than $1,000,000
combined single limit) and umbrella excess liability insurance (not less than
$200,000,000 combined single limit), all with RII named as an additional
insured. ACS has agreed to indemnify RII to the full limit of any claims in
excess of the insurance coverage provided.
ACS may transfer its interest in the Showboat Property or sublet the
Showboat Property with RII's written consent so long as any transferee agrees to
assume and be bound by all the obligations of the Showboat Lease. No consent by
RII is required if ACS transfers its interest to a leasehold mortgagee or to an
affiliate of ACS or if a sublease involves less than five percent of the gross
square footage of the Showboat Property.
Under the terms of the Showboat Lease, RII is required, prior to making an
offer to any other parties, to offer to ACS the opportunity to acquire the
Showboat Property.
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The Showboat Lease provides that an assignment of the Showboat Property and
the Showboat Lease as collateral (such as contemplated by the Showboat
Indenture) does not trigger any right of first offer in favor of ACS. Moreover,
Resorts does not believe that a foreclosure on the Showboat Collateral by the
Showboat Note Trustee in the event of a default under the Showboat Indenture
would trigger such right of first offer. Any subsequent sale by the Showboat
Note Trustee might be subject to a right of first offer in favor of ACS. Any
sale of the Showboat Property (as well as the ability of the Showboat Note
Trustee to take title thereto) also would require the approval of the Casino
Control Commission, and the necessity of such approval may affect both the
timing of such sale as well as the ultimate price to be obtained.
If RII were for any reason prohibited under New Jersey law from acting as
lessor under the Showboat Lease, including prohibition due to a finding by the
Casino Control Commission that RII is unsuitable to own a casino property, the
Showboat Lease would require RII to appoint a trustee acceptable to Casino
Control Commission to act for RII and collect all lease payments on RII's
behalf. The trustee would be required to sell RII's interest in the Showboat
Lease and the leased property to a buyer qualified to act as lessor. The net
proceeds of any such sale, together with any unremitted lease payments to the
date of sale, would be paid to RII, which would in turn remit such proceeds to
the Showboat Note Trustee. If RII were no longer able to act as a lessor, ACS
would have the right to purchase the underlying land leased from RII. The
purchase price would be an amount equal to the greater of $66,000,000 and the
fair market value of the leased acreage, but no more than 11 times the rent then
being paid by ACS. If the fair market value is not ascertained within the time
required by the Casino Control Commission, then the purchase price would be the
lesser of $66,000,000 and 11 times the rent being paid by ACS in the year the
option would become effective. If the Showboat Note Trustee takes title to the
Showboat Collateral and becomes the lessor under the Showboat Lease, it
similarly will be subject to the foregoing regulatory provisions.
In the event of the filing of a petition under the Bankruptcy Code for RII,
applicable provisions of the Bankruptcy Code, including the automatic stay
provisions of section 362 of the Bankruptcy Code, may operate to prevent the
Showboat Note Trustee from taking action to realize on the Showboat Collateral
if there is an Event of Default.
CERTAIN COVENANTS
Set forth below is a description of certain covenants by RII in favor of the
holders of the Showboat Notes.
TRANSFER OF SHOWBOAT COLLATERAL; LIENS
The Showboat Indenture provides that RII may sell, assign, transfer or
otherwise dispose of, or create, suffer or permit to be created or exist any
Lien (other than certain permitted liens) on, the Showboat Collateral or any
part thereof only if concurrently therewith or prior thereto all outstanding
Showboat Notes are redeemed. (SECTIONS 5.10 AND 5.11).
PERFORMANCE OF COVENANTS UNDER THE SHOWBOAT LEASE
RII promptly will perform and observe all the terms, covenants and
conditions required to be performed and observed by RII as landlord under the
Showboat Lease. RII promptly will notify the Showboat Note Trustee, in writing,
of the receipt by RII of a notice from ACS asserting or claiming a default by
RII under the Showboat Lease. (SECTION 5.09).
NOTIFICATION OF DEFAULTS BY ACS UNDER THE SHOWBOAT LEASE AND EXERCISE OF
REMEDIES BY RII
RII will notify the Showboat Note Trustee, in writing, promptly following
the expiration of any applicable grace period for which provision is made in the
Showboat Lease, of any default by ACS in the performance or observance of any of
the terms, covenants or conditions on the part of ACS to be performed or
observed under the Showboat Lease. Similarly, the Showboat Note Trustee will
notify
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RII, in writing, promptly if the Showboat Note Trustee fails to receive from
ACS, when due, any payment required of ACS under the Showboat Lease. In the
event of any such default, RII diligently will proceed to enforce its rights
under the Showboat Lease. (SECTION 5.09).
TERMINATION OR MODIFICATION OF THE SHOWBOAT LEASE
RII will not consent to or cause any termination of, amendment to or waiver
of any provision of the Showboat Lease that would materially and adversely
affect the interests of the Showboat Note Trustee or the holders of the Showboat
Notes under the Showboat Note Indenture and the Showboat Mortgage without the
prior written consent of the Showboat Note Trustee, which consent is not to be
withheld if the holders of at least two-thirds in aggregate principal amount of
the outstanding Showboat Notes give their consent.
EVENTS OF DEFAULT
The following events constitute "Events of Default" under the Showboat
Indenture: (i) failure to pay principal of the Showboat Notes when due, whether
at maturity, upon redemption, by declaration or otherwise; (ii) at any time that
lease payments under the Showboat Lease are not made directly to the Showboat
Note Trustee, failure by RII to pay interest on the Showboat Notes when due and
such Default continues for 30 days; (iii) failure by the lessee under the
Showboat Lease to make any lease payment due under the Showboat Lease if such
failure continues for 30 days; (iv) failure on the part of RII to observe or
perform any other covenant or agreement contained in the Showboat Indenture or
the Showboat Mortgage if such failure continues unremedied for 30 days after
written notice given by the Showboat Note Trustee or the holders of at least 25%
in aggregate principal amount of the Showboat Notes then outstanding; and (v)
certain events of bankruptcy, insolvency, receivership or reorganization of RII.
If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency, receivership or reorganization) has occurred and is
continuing, the Showboat Note Trustee or the holders of not less than 40% in
aggregate principal amount of the Showboat Notes then outstanding may declare
immediately due and payable all unpaid principal and interest accrued and unpaid
on the Showboat Notes then outstanding. If an Event of Default resulting from
certain events of bankruptcy, insolvency, receivership or reorganization occurs,
all unpaid principal and interest accrued and unpaid shall be due and payable
immediately, without any declaration or other act on the part of the Showboat
Note Trustee or any of the holders of the Showboat Notes. Subject to certain
conditions, the holders of a majority in aggregate principal amount of the
Showboat Notes then outstanding may waive any past Event of Default and its
consequences, except a default in the payment of principal of or interest on any
of the Showboat Notes.
MODIFICATION OF INDENTURE
The terms of the Showboat Indenture governing modifications and amendments
thereto are substantially similar to the corresponding provisions of the Old
Series Note Indenture. See "Description of the Old Series Notes -- Modification
of Indenture".
REPORTS TO HOLDERS
RII will furnish the holders of Showboat Notes and the Showboat Note Trustee
with annual reports containing audited financial statements and quarterly
reports containing unaudited financial statements.
LIMITATION ON MERGERS
RII, without the consent of the holders of the Showboat Notes, may
consolidate with or merge into any other entity or convey, transfer or lease all
or substantially all its properties and assets to any person, provided that: (1)
the entity formed by such consolidation or into which RII is merged or the
person which acquires by conveyance or transfer, or which leases, the properties
and assets of RII is a corporation, partnership or trust, organized and existing
under the laws of the United States of America, any State thereof or the
District of Columbia; (2) the successor entity shall expressly assume,
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by a supplemental indenture executed and delivered to the Showboat Note Trustee,
in form satisfactory to the Showboat Note Trustee, the performance of every
covenant of the Showboat Notes, the Showboat Note Indenture and the Security
Documents (as defined in the Showboat Indenture) on the part of RII to be
performed or observed; (3) immediately before and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing; and (4) RII or the successor entity shall have a net worth,
determined in accordance with generally accepted accounting principles, not less
than RII's net worth immediately preceding such transaction. (SECTION 6.01).
Upon compliance with these provisions by a successor entity, RII would be
relieved of its obligations under the Showboat Notes and the Showboat Note
Indenture. (SECTION 6.02).
DISCHARGE OF SHOWBOAT NOTE INDENTURE; DEFEASANCE
RII may terminate substantially all obligations under the Showboat Note
Indenture at any time by delivering all outstanding Showboat Notes to the
Showboat Note Trustee for cancellation and paying any other sums payable under
the Showboat Note Indenture. (SECTION 10.02).
The Indenture also provides that RII may elect to defease and be discharged
from any and all obligations with respect to the Showboat Notes and that the
provisions of the Showboat Note Indenture will no longer be in effect with
respect to the Showboat Notes (except for certain obligations, including the
obligations to register the transfer or exchange of the Showboat Notes, to
replace temporary or mutilated, destroyed, lost or stolen Showboat Notes, to
maintain an office or agency in respect of Showboat Notes and to hold funds for
payment in trust).
Such defeasance will take effect only upon the deposit with the Showboat
Note Trustee, in trust for such purpose, of money and/or U.S. Government
Obligations that, through the payment of principal and interest in accordance
with their terms, will provide money, in an amount sufficient to pay the
principal of and interest on the Showboat Notes on the date such payments are
due in accordance with the terms of the Showboat Notes. Such a trust may be
established with respect to the Showboat Notes only upon satisfaction of certain
conditions specified in the Showboat Note Indenture. (ARTICLE TEN).
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes all the material Federal income tax
consequences of the Restructuring to the Company and to the holders of Old
Series Notes and, to the extent it relates to matters of law and subject to the
qualifications, limitations and assumptions stated herein, constitutes the
opinion of Gibson, Dunn and Crutcher, counsel to the Company. The following
discussion does not include all matters that may be relevant to any particular
holder in light of such holder's particular facts and circumstances. Certain
holders, including financial institutions, broker-dealers, tax-exempt entities,
insurance companies, foreign persons and stockholders who acquired their stock
through the exercise of an employee stock option or otherwise as compensation,
may be subject to special rules not discussed below.
The discussion assumes that holders hold their Old Series Notes as "capital
assets" (generally property held for investment) within the meaning of Section
1221 of the Tax Code, and will hold the RII Common Stock, the SIHL Series A
Shares (or if the SIHL Sale is not consummated on the Effective Date, the PIRL
Ordinary Shares), New RIHF Mortgage Notes, Units comprised of New RIHF Junior
Mortgage Notes and RII Class B Common Stock, and rights to receive payments from
Deferred Cash received in exchange therefor as capital assets.
The discussion is based upon the provisions of the Tax Code, final,
temporary and proposed U.S. Treasury regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all as in effect as of the
date hereof and all of which are subject to change (possibly on a retroactive
basis) by legislation, administrative action or judicial decision. There can be
no assurance that the Service will not challenge one or more of the tax
consequences of the Restructuring described herein. Moreover, due to the lack of
definitive judicial or administrative authority, substantial uncertainties exist
with respect to many of the tax consequences of the Plan described herein.
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The transactions to be undertaken pursuant to the Plan present numerous
issues of law and of fact as to which there is no controlling authority under
current law. Due to the lack of definitive judicial or administrative authority,
substantial uncertainties exist with respect to many of the tax consequences
described herein and as to which counsel is unable to render an unqualified
legal opinion. The principal Federal income tax issues as to which counsel is
unable to render an unqualified legal opinion are as follows:
1. whether the New Debt Securities will be treated as indebtedness of RIH
or RIHF;
2. classification of the New Debt Securities as debt rather than equity;
3. whether or not the exchange of the Old Series Notes for the RII Class B
Common Stock and the RII Common Stock will be treated as pursuant to a
recapitalization as such term is defined in Section 368(a)(1)(E) of the Tax
Code;
4. the treatment of the New Debt Securities under the rules relating to
original issue discount;
5. consequences of the rights to receive payments from Deferred Cash, Net
Reserved Cash and Net Plan Consummation Cash;
6. whether the exchange of the Old Series Notes for the RII Common Stock
will qualify for the stock-for-debt exception from the recognition of COD
income; and
7. whether an ownership change within the meaning of Section 382 of the Tax
Code will occur in connection with the Exchange, and, if such an ownership
change were to occur, whether the "bankruptcy exception" contained in Section
382(1)(5) of the Tax Code will apply.
Counsel believes that it is more likely than not that the New RIHF Mortgage
Notes will be treated as debt for Federal income tax purposes, as discussed
below. In each of the other above described instances, Counsel believes that
there is substantial authority for the positions that the Company intends to
take, as more fully described below. However, because of factual uncertainties
and the lack of controlling judicial or regulatory authority, all as described
more fully below, Counsel is unable to opine that such positions are more likely
than not to be upheld if they are litigated. The substantial authority standard
is an objective standard involving an analysis of the law and the application of
the law to the relevant facts, and is less stringent than the more likely than
not standard. There is substantial authority for the tax treatment of an item
only if the weight of the authority supporting the treatment is substantial in
relation to the weight of authority supporting contrary treatment, taking all
relevant authorities into account. There may be substantial authority for more
than one position.
Except as specifically discussed below (see "Tax Consequences to the Company
- -- Net Operating Loss Carryovers and Limitations," relating to the effect of the
transfer of the RIB stock on the NOLs of the Company), no rulings from the
Service have been or will be requested with respect to any of the tax issues
discussed herein. Moreover, as noted in the discussion, certain of the issues
material to the income tax consequences of certain transactions are inherently
factual in nature, and other issues involve areas of the law that are ambiguous
or with respect to which legal authority is lacking and as to which Counsel only
is able to offer limited guidance. Accordingly, there can be no assurances that
the Service will not challenge one or more of the tax consequences of the
Restructuring described herein.
In addition, Counsel is unable to provide any opinion with respect to the
Bahamian tax consequences as they relate to PIRL and the receipt of dividends
paid on PIRL Ordinary Shares.
THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX, AND, AS
DESCRIBED BELOW, THERE IS UNCERTAINTY WITH RESPECT TO THE TAX TREATMENT OF
CERTAIN ASPECTS OF THE PLAN. THIS SUMMARY DOES NOT PURPORT TO DEAL WITH ALL
ASPECTS OF FEDERAL, STATE, LOCAL OR FOREIGN INCOME TAXATION THAT MAY BE RELEVANT
TO AN INVESTOR'S DECISIONS WITH RESPECT TO THE RESTRUCTURING. THE FEDERAL INCOME
TAX DISCUSSION AND OPINIONS SET FORTH IN THIS SECTION "CERTAIN FEDERAL INCOME
TAX CONSIDERATIONS" ARE BASED UPON THE PROVISIONS OF THE TAX CODE, REGULATIONS,
PROPOSED REGULATIONS, RULINGS AND JUDICIAL DECISIONS NOW IN EFFECT, ALL OF WHICH
ARE SUBJECT TO CHANGE. ANY SUCH CHANGES MAY BE APPLIED
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RETROACTIVELY IN A MANNER THAT COULD ADVERSELY AFFECT INVESTORS. EACH INVESTOR
SHOULD CONSULT WITH ITS OWN TAX ADVISER CONCERNING THE SPECIFIC TAX CONSEQUENCE
TO SUCH INVESTOR OF THE PLAN, INCLUDING THE APPLICATION AND EFFECT OF STATE,
LOCAL, FOREIGN OR OTHER TAX LAWS BEFORE VOTING ON THE PLAN.
TREATMENT OF NEW DEBT SECURITIES AS DEBT OF RIH FOR FEDERAL INCOME TAX PURPOSES
Whether the formal, or nominal, obligor of any given instrument will be
treated as the obligor of the instrument for Federal income tax purposes depends
upon all of the facts and circumstances, and no single characteristic or factor
is determinative. Among the factors examined in determining the identity of the
true obligor for Federal income tax purposes where another party guarantees or
otherwise provides credit support to the nominal obligor are the economic
independence and substance of the obligor and ability of the nominal obligor to
service interest and principal on the debt from its own cash flows. Where the
nominal obligor exists solely to be the nominal issuer of the instrument and the
instrument is "mirrored" by an instrument with virtually identical terms issued
by a related party, the Service will closely scrutinize the reality of the
nominal obligor's "obligation." In addition, there is substantial authority in
the law for the position that, where a person issues debt to a third party
pursuant to a disclosed nominee arrangement with a related person, the debt can
be deemed to be indebtedness of the related person for Federal income tax
purposes, provided that certain formalities are observed. With respect to the
New Debt Securities, a conclusion that RIHF rather than RIH is the true obligor
for Federal income tax purposes would disregard totally the economic substance
of the transaction and would elevate "empty forms" over substance, something
that the courts generally have not done. Counsel does note, however, that
generally a validly formed and maintained corporate entity will not be ignored
for federal income tax purposes and the courts have held taxpayers to strict
standards when such taxpayers have sought to disregard the form of transactions
chosen by them. Accordingly, although the issue is not free from doubt, based on
the foregoing factors, the issuance of the RIH Senior Mortgage and the RIH
Junior Mortgage to support the New Debt Securities, the identical terms (when
combined with the RIH Mortgages) of the RIH Promissory Note and the New RIHF
Mortgage Notes, and of the RIH Junior Promissory Note and the New RIHF Junior
Mortgage Notes, the existence of the Nominee Agreement between RIHF and RIH and
the fact that at all times the assets of RIH will be the ultimate and only
source of payment on the New Debt Securities, the Company intends to take the
position for Federal income tax purposes that the New Debt Securities are to be
treated as obligations of RIH for Federal income tax purposes, and the following
discussion assumes such treatment.
If, however, the IRS were to treat RIHF, the formal obligor of the New Debt
Securities, as the obligor for Federal income tax purposes, such treatment
should not materially adversely affect the treatment of the New RIHF Mortgage
Notes or the New RIHF Junior Mortgage Notes as debt for Federal income tax
purposes as discussed below (see "-- Classification of New Debt Securities as
Debt Rather than Equity").
CLASSIFICATION OF NEW DEBT SECURITIES AS DEBT RATHER THAN EQUITY
Whether an instrument constitutes debt or equity for Federal income tax
purposes is an inherently factual question, and no single characteristic is
determinative. Although courts have used a number of factors to determine the
characterization of an instrument as debt or equity, each situation is different
and must be decided based upon its own set of facts. The following thirteen
factors recently have been analyzed by the Tax Court in determining the
characterization of an instrument: (1) the name given to the instrument; (2) the
presence or absence of a fixed maturity date; (3) the source of principal
repayments; (4) the right to enforce payments; (5) the participation in
management as a result of the advances; (6) the status of the advances in
relation to advances made by other corporate creditors; (7) the intent of the
parties; (8) the "thinness" of the company's capital structure; (9) the identity
of interest between creditors and stockholders; (10) the source of interest
payments; (11) the ability of the corporation to obtain credit from outside
sources; (12) the use to which advances were put; and (13) the failure of the
debtor to repay on the due date.
Based upon an analysis of the above factors and the applicable legal
authorities, it is more likely than not that the New RIHF Mortgage Notes will be
treated as debt, and there is substantial authority
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that the Old Series Notes and the New RIHF Junior Mortgage Notes will be treated
as debt obligations for Federal income tax purposes, and the following
discussion assumes such treatment in both such cases.
Due to the factual nature of the determination as to the treatment of
instruments such as the Old Series Notes or the New Debt Securities, however,
there can be no assurance that in any of such cases the Service would not
challenge such treatment, or that a court would not sustain such a challenge. If
it were determined that any of the New Debt Securities constitute equity for
Federal income tax purposes, then (a) payments of interest on such New Debt
Securities would not be deductible by the Company and could be taxed as dividend
income to the holders; (b) payments of principal on such New Debt Securities
would be treated as redemption distributions under Section 302 of the Tax Code,
which could result in either gain or dividend income to the holders; and (c)
certain corporate holders may be entitled to a dividends-received deduction with
respect to payments of principal or interest that are taxed as dividends. Such
determination also could affect the amount, timing and character of income, gain
or loss to be recognized by a holder as a result of the Exchange, or in the
future. The loss of the interest deduction with respect to all or a portion of
the New Debt Securities also would increase the Company's taxable income,
resulting in a greater utilization of the Company's NOL Carryovers and,
ultimately, potentially substantially increasing the Company's Federal income
tax liability sooner than currently anticipated.
Except where expressly noted to the contrary, the following discussion
assumes that, at the time of the Exchange, the Old Series Notes and the New Debt
Securities will be treated as debt obligations, and, in the case of the New Debt
Securities, debt obligations of RIH, for Federal income tax purposes.
EXCHANGE OF OLD SERIES NOTES
As discussed below, Counsel believes that there is substantial authority
that the Old Series Notes will not be treated as "securities" within the meaning
of the Tax Code provisions governing reorganizations. Accordingly, the Company
intends to take the position that the receipt of RII Class B Common Stock and
RII Common Stock (including fractional shares and/or odd-lot holdings of RII
Class B Common Stock and RII Common Stock deemed to have been received by a
holder) in exchange for Old Series Notes pursuant to the Plan will not be
treated as the receipt of such stock pursuant to a recapitalization as such term
is defined in Tax Code Section 368(a)(1)(E).
In order for a holder to avoid the recognition of gain or loss in connection
with a recapitalization as defined in Section 368(a)(1)(E) of the Tax Code, such
holder must exchange stock or securities for stock or securities. Whether a debt
instrument constitutes a "security" depends on an overall evaluation of the
nature of the debt instrument, with the term of the debt instrument usually
regarded as the most important factor. Under present law, debt instruments with
a term of five years or less generally have not been treated by the Service or
the courts as securities, whereas debt instruments with a term of ten years or
more generally have been treated as securities. Therefore, because the stated
term of the Old Series Notes is less than five years, Counsel believes that the
Old Series Notes will not be treated as "securities" for Federal income tax
purposes. Accordingly, because no stock or "securities" will be surrendered,
gain (or loss) will be recognized by a holder of Old Series Notes as a result of
the Restructuring to the extent such holder's basis for his Old Series Notes
exchanged is less than (or greater than) the sum of the respective fair market
values (which should be equal to the "issue price", determined as discussed
below) (see " -- OID With Respect to the New Debt Securities") of the New Debt
Securities, and the aggregate fair market values of the RII Class B Common
Stock, the RII Common Stock, the SIHL Series A Shares and the SIHL Aggregate
Cash Purchase Price (or if the SIHL Sale is not consummated on the Effective
Date, the PIRL Ordinary Shares), Excess Cash and rights to receive payments from
Net Reserved Cash, if any, Net Plan Consummation Cash, if any, and Deferred Cash
received in exchange for such Old Series Notes (except to the extent that the
amount realized is attributable to accrued interest not previously included in
income, which amount will be taxed as ordinary income).
Any gain or loss recognized by a holder will be long-term capital gain or
loss if the holding period with respect to the Old Series Notes exceeds one
year, and otherwise will be short-term capital gain or
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loss. The ability of a holder to use long-term capital losses to offset income
other than capital gains is subject to significant limitations. Currently, the
maximum tax rate with respect to long-term capital gains realized by an
individual is 28%, and the maximum tax rate on ordinary income is 39.6%.
A holder's aggregate basis in the New RIHF Junior Mortgage Notes and the RII
Class B Common Stock (allocated between them in accordance with their
respective, relative fair market values), and its respective bases in the New
RIHF Senior Mortgage Notes, the RII Common Stock, the SIHL Series A Shares (or,
if the SIHL Sale is not consummated on the Effective Date, the PIRL Ordinary
Shares) and, although the issue is not free from doubt, the Net Reserved Cash
and the Net Plan Consummation Cash, will be equal to their respective fair
market values. A holder's basis in the right to receive payments from Deferred
Cash will be equal to the "issue price" of such right (see "-- Consequences of
the Rights to Receive Payments from Deferred Cash" below). The holding period
with respect to each instrument will commence on the day after the Exchange.
Although the Company intends to take the position that the Exchange will not
be treated as a recapitalization as defined in Section 368(a)(1)(E) of the Tax
Code, if the Exchange were so treated as a recapitalization no loss would be
recognized by any holder of the Old Series Notes, and gain, if any, would be
recognized only to the extent that a holder receives "boot" (I.E. cash and
property other than stock or securities of the Company) in the Exchange that is
not deemed to be in payment of accrued interest. Any such gain would be
long-term capital gain if the holding period with respect to the Old Series
Notes exceeds one year, and otherwise would be short-term capital gain. In
general, a holder's tax basis in the RII Common Stock and the RII Class B Common
Stock received pursuant to the Exchange would equal the holder's adjusted tax
basis in the Old Debt Securities surrendered in the Exchange decreased by the
value of property other than the RII Common Stock and the RII Class B Common
Stock received, and increased by the gain, if any, recognized as a result of the
Exchange, and a holder's holding period in the RII Common Stock and the RII
Class B Common Stock would include its holding period for the Old Debt
Securities surrendered in the Exchange. In general, a holder's tax basis and
holding period in the property other than the RII Common Stock and the RII Class
B Common Stock received in the Exchange would be determined as discussed in the
preceding paragraph.
EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISER CONCERNING THE
SPECIFIC TAX CONSEQUENCES IN THE EVENT THAT THE EXCHANGE IS TREATED AS A
RECAPITALIZATION.
OID WITH RESPECT TO THE NEW DEBT SECURITIES
On December 21, 1992, the Service issued proposed regulations (the "New
Proposed Regulations") relating to the determination and treatment of OID with
respect to debt instruments. The New Proposed Regulations revised certain, and
withdrew certain other, proposed regulations relating to OID issued on April 8,
1986 and subsequently amended in 1989 and 1991 (the "Old Proposed Regulations").
The New Proposed Regulations (and, to the extent not withdrawn, the Old
Regulations) constitute "authority" for purposes of the substantial
understatement penalty provisions of Tax Code Section 6662. Therefore, the
discussion below is based upon the New Proposed Regulations (and, to the extent
not withdrawn, the Old Regulations). Both the Old and the New Proposed
Regulations are vague in many respects, however, and do not address certain
issues. Further, there can be no assurance that the final U.S. Treasury
regulations or further clarification from the Service will not differ materially
from the New Proposed Regulations (and, to the extent not withdrawn, the Old
Regulations). Accordingly, the ultimate federal income tax treatment of the New
Debt Securities may differ from that described below.
In general, subject to a DE MINIMIS rule, a debt obligation will be treated
as being issued with OID if there exists a difference between the "stated
redemption price at maturity" of the instrument and such instrument's "issue
price."
The stated redemption price at maturity of a debt obligation is the
aggregate of all payments due to the holder under such debt obligation at or
prior to its maturity date, other than interest that is actually and
unconditionally payable at a single fixed (or a qualified floating) rate (or a
permitted combination of the two) at least annually (qualified stated periodic
interest payments or "QSIPs").
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Interest is payable at a single fixed rate only if the rate appropriately takes
into account the length of the interval between payments. QSIPs are included in
income at the time they are accrued or received, in accordance with the holder's
usual method of accounting for Federal income tax purposes.
Pursuant to Section 1273(a)(3) of the Tax Code and the New Proposed
Regulations promulgated thereunder, if the OID with respect to an obligation is
less than .25% of the obligation's stated redemption price at maturity
multiplied by the number of complete years from the issue date to the maturity
date, the amount of OID with respect to such obligation is considered to be
zero.
Under the New Proposed Regulations, the determination of the "issue price"
of a debt obligation will depend, in part, on whether such obligation, or the
property for which the debt obligation is exchanged, is treated as "traded on an
established market" at any time during the 60 day period ending 30 days after
the Effective Date (the "Trading Testing Period"). If the debt obligation is
listed on an established exchange, or such obligations are otherwise "traded on
an established market," the "issue price" of the debt obligations will be the
fair market value of such obligations as of the issue date (I.E. the trading
price). If the debt obligation is not treated as "traded on an established
market" because at no time during the Trading Testing Period is such obligation
(i) listed on certain national securities exchanges or interdealer quotation
systems registered under the Exchange Act or certain specified foreign
exchanges, (ii) traded on certain boards of trade or interbank markets, (iii)
reported in a "quotation medium" disseminating either recent price quotations of
identified brokers and dealers or actual prices of recent sales transactions, or
(iv) subject to readily available price quotations from dealers and brokers,
then the "issue price" will equal the fair market value, as of the Effective
Date, of the portion of the property deemed to be exchanged therefor (assuming
such property is publicly traded).
In the case of the New RIHF Mortgage Notes, interest will be payable in cash
on a semi-annual basis, commencing on the March 15 or September 15 next
following the Effective Date. Such semi-annual interest payments on the New RIHF
Mortgage Notes should qualify as QSIPs. Therefore, assuming the New Proposed
Regulations are adopted as "final" regulations, and assuming further that the
New RIHF Mortgage Notes are, as expected by the Company, listed on the AMEX,
whether the New RIHF Mortgage Notes will be treated as being issued with OID
will depend upon whether the trading price of such Notes is less than, equal to,
or in excess of, the stated redemption price at maturity of such Notes.
Moreover, the New RIHF Mortgage Notes will be treated as issued with OID only if
their "issue price" is less than their face amount by more than the statutory DE
MINIMIS amount. Thus, assuming that the maturity date of the New RIHF Mortgage
Notes is nine years from their issue date, the New RIHF Mortgage Notes will be
treated as issued without OID if their "issue price" exceeds 97.75% of their
stated redemption price at maturity.
However, in the case of the New RIHF Junior Mortgage Notes, interest is
payable on a semi-annual basis commencing on the June 15 or December 15 next
following the Effective Date either in cash, or, under certain circumstances, in
kind. Because interest on such Notes may, under certain circumstances, be paid
through the issuance of additional Payment-In-Kind notes and the rate of
interest of such Payment-In-Kind notes will be the same as the rate of interest
on the New RIHF Junior Mortgage Notes, the Company intends to take the position
that none of the interest payments on the New RIHF Junior Mortgage Notes will
qualify as QSIPs, and such Notes, therefore, will be treated as issued with OID
without regard to the initial trading price of such Notes.
Although the issue is not free from doubt, the Company also intends to take
the position that the provisions of Section 1273(c)(2) of the Tax Code (relating
to debt instruments issued as part of an "investment unit") do not apply in
determining the issue price of the New Debt Securities. Although the Exchange
involves the transfer of the New Debt Securities as well as other property to
the holders of the Old Series Notes, such exchange is between RII and the
holders, and not between RIHF and such holders. Therefore, at the time of
issuance, the New Debt Securities should not be treated as having been issued as
part of an investment unit for purposes of Section 1273(c)(2) of the Tax Code.
If, however, the provisions of Section 1273(c)(2) of the Tax Code were held to
apply to any of the New Debt Securities, under the New Proposed Regulations the
issue price of an investment unit is to be allocated between (or among) the
unit's components based on their relative fair market values. Unlike the Old
Proposed Regulations, the New Proposed Regulations do not provide specific
allocation rules;
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however, the issuer's allocation of the issue price of the investment unit is
binding on all holders of the investment unit except for a holder who explicitly
discloses (on such holder's Federal income tax return for the year in which the
investment unit is acquired) that such holder's allocation of the issue price of
the investment unit is different from the issuer's allocation. (Because the
Company intends to take the position that none of the New Debt Securities should
be treated as having been issued as part of an investment unit for purposes of
Section 1273(c)(2) of the Tax Code and calculate and report OID with respect to
the New Debt Securities accordingly, a holder wishing to take a different
position should consult such holder's own tax advisor.)
CONSEQUENCES IF THE NEW DEBT SECURITIES ARE ISSUED WITH OID
If a New Debt Security is issued with OID, a holder, subject to the
adjustments discussed below, must include in gross income for Federal income tax
purposes the sum of the daily portions of OID for each day during the taxable
year or portion thereof during which the holder holds the New Debt Security,
whether or not the holder actually receives a payment relating to OID in such
year. The daily portion is determined by allocating to each day of the relevant
"accrual period" a pro rata portion of an amount equal to (a) the product of (i)
the "adjusted issue price" of the New Debt Security at the beginning of each
accrual period, multiplied by (ii) the yield to maturity of the New Debt
Security (determined by semi-annual compounding) less (b) the sum of any QSIPs
during the accrual period. The "adjusted issue price" of a New Debt Security at
the beginning of any accrual period is its issue price increased by all accrued
OID for prior accrual periods and decreased by the amount of any payment
previously made on the New Debt Security other than a QSIP. The accrual period
for a New Debt Security (except for any initial short period) is each six-month
period which ends on the day in each calendar year corresponding to the maturity
date of the New Debt Security or the date six months before such maturity date.
Therefore, prospective holders of the New Debt Securities should be aware
that a holder will be required to include OID in income as such OID accrues,
regardless of the holder's method of accounting and regardless of when such
holder receives cash payments relating to the OID. A holder's tax basis in a New
Debt Security will be increased by the amount of OID included in the holder's
income and reduced by the amount of all interest payments on the New Debt
Security that are not QSIPs.
Under the New Proposed Regulations, the issuance of Payment-In-Kind notes in
lieu of a cash payment does not constitute payment. (As discussed in the
preceding paragraphs, a cash payment (other than a payment that is QSIP) is not
treated as interest but rather reduces the adjusted issue price of the
instrument). Accordingly, the Company intends to treat, for Federal income tax
purposes, the issuance of any Payment-In-Kind notes in lieu of a cash payment of
interest as not constituting a payment of interest with respect to the New RIHF
Junior Mortgage Notes. Moreover, since each holder of a New RIHF Junior Mortgage
Note will recognize, as ordinary income, through the accrual of OID, the full
amount of interest with respect to the New RIHF Junior Mortgage Notes (as well
as with respect to any Payment-In-Kind notes issued in payment of interest with
respect to such Notes), such holder generally should not also recognize
additional ordinary income upon receipt of a Payment-In-Kind note or a cash
payment of stated interest.
Further, the New Proposed Regulations would treat a New RIHF Junior Mortgage
Note and any additional debt instrument issued with respect thereto as part of
the same debt issue. Accordingly, the adjusted basis and adjusted issue price of
a New RIHF Junior Mortgage Note would be allocated between such instruments and
any additional debt instruments received with respect thereto, based on their
respective principal amounts. The New Proposed Regulations treat payments made
with respect to Payment-In-Kind notes as payments made on the original debt
instrument.
A subsequent purchaser of a New Debt Security issued with OID who purchases
the note at a cost less than the remaining stated redemption price at maturity
but greater than its adjusted issue price immediately before such purchase (a
purchase at an "acquisition premium") also will be required to include in gross
income the sum of the daily portions of OID on that New Debt Security. In
computing the daily portions of OID for such a purchaser, however, the daily
portion is reduced by the amount that would be the daily portion for such day
(computed in accordance with the rules set forth above) multiplied by a
fraction, the numerator of which is the amount, if any, by which the holder's
basis in
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the New Debt Security on the date of receipt exceeds the Adjusted Issue Price of
the New Debt Security at that time, and the denominator of which is the sum of
the daily portions for that New Debt Security for all days beginning on the date
after the purchase date and ending on the maturity date.
A purchaser of a New Debt Security who purchases the New Debt Security at a
cost greater than its remaining stated redemption price at maturity will be
considered to have purchased the New Debt Security at a premium, and may elect
to amortize such premium under a constant yield method. The Tax Code provides
that amortizable premium will be treated (except as provided in U.S. Treasury
Regulations) as an offset to interest income for all purposes rather than as a
separate interest deduction item.
The Company will be required to furnish annually to the IRS and to each U.S.
holder information regarding the amount of OID attributable to that year.
CONSEQUENCES OF THE RIGHTS TO RECEIVE PAYMENTS FROM DEFERRED CASH
As noted above, the Company expects to receive a distribution of its share
of the assets of the Litigation Trust early in 1994. See "Description of
Litigation Trust Units." If the Company receives such a distribution, no amount
will be paid in respect of Deferred Cash, and the distribution will be included
in Excess Cash.
The following discussion assumes that amounts remain to be distributed in
respect of Deferred Cash on the Distribution Date.
As part of the Old Proposed Regulations, the Service issued proposed
regulations under Section 1275 of the Tax Code relating to contingent debt
instruments (the "Proposed Contingent Debt Regulations"). In January 1993, the
Service filed with the Federal Register a new set of proposed regulations
dealing with contingent debt instruments (the "Pending Contingent Debt
Regulations") that would withdraw the Proposed Contingent Debt Regulations.
However, the Pending Contingent Debt Regulations were withdrawn by executive
order and currently have no force and effect. The Proposed Contingent Debt
Regulations constitute "authority" for purposes of the substantial
understatement penalty provisions of Tax Code Section 6662. Therefore, the
discussion below is based upon the Proposed Contingent Debt Regulations. Both
the Proposed Contingent Debt Regulations and the Pending Contingent Debt
Regulations are vague in many respects, however, and do not address certain
issues. Further, there can be no assurance that the final U.S. Treasury
regulations or further clarification from the Service will not differ materially
from the Proposed Contingent Debt Regulations. Accordingly, the ultimate Federal
income tax treatment of the Deferred Cash may differ from that described below.
The Company intends to take the position that the rights to receive payments
from Deferred Cash constitute valid indebtedness for federal income tax purposes
and that, under the Proposed Contingent Debt Regulations, the payments made by
RII in respect of such rights are contingent payments. Under such Regulations, a
holder of a right to receive payments of Deferred Cash will not recognize
interest income with respect to the right until such time as a payment is made
by RII in respect of the right or the holder disposes of the right. Any payments
made by RII to a holder of a right to receive payments of Deferred Cash other
than a payment made at the maturity date of such right, are treated as interest
income to the extent of "interest deemed accrued" with respect to the right for
the current and all prior accrual periods, and principal to the extent of the
balance of the payment amount. For this purpose, "interest deemed accrued"
during an accrual period is the "adjusted issue price" of the right multiplied
by the Federal long-term rate.
The "adjusted issue price" of the right is the "issue price" of the right,
plus the cumulative amount of interest deemed accrued as of the date of the
determination of the adjusted issue price. The "issue price" of a right to
receive payments from Deferred Cash is equal to the excess, if any, of the fair
market value of the Old Debt Securities as of the issue date of such right
(I.E., the trading price of the Old Debt Securities on such date) over the sum
of the respective fair market values, as of such date, of (i) the New RIHF
Junior Mortgage Notes, (ii) the RII Class B Common Stock, (iii) the New RIHF
Mortgage Notes, (iv) the RII Common Stock, (iv) the SIHL Series A Shares and the
SIHL Aggregate Cash Purchase Price (or, if the SIHL Sale is not consummated on
the Effective Date, the PIRL Ordinary Shares), and (v) the Excess Cash.
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Upon the maturity of a right to receive payments from Deferred Cash, if the
"outstanding principal amount" (which is defined as the issue price of the right
reduced by any prior payments treated as principal under the preceding
paragraph) of the right exceeds the final payment, the entire amount of the
final payment is treated as principal. Conversely, if the final payment exceeds
the "outstanding principal amount," the payment is treated as principal to the
extent of such outstanding principal balance and interest income to the extent
of the excess.
CONSEQUENCES OF RIGHTS TO RECEIVE PAYMENTS FROM NET RESERVED CASH AND NET PLAN
CONSUMMATION CASH
Whether any amount ultimately is paid in respect of the Net Reserved Cash
and the Net Plan Consummation Cash is contingent upon the occurrence of future
events, which may or may not occur. Although there is substantial authority for
the position that the right to receive payments from the Net Reserved Cash and
the Net Plan Consummation Cash likely are susceptible to valuation and,
consequently, a holder of Old Series Notes will be treated as receiving an
amount pursuant to the Exchange equal to the respective fair market values of
the right to receive payments from the Net Reserved Cash and the Net Plan
Consummation Cash, because the amount of Reserved Cash and Plan Consummation
Cash is based upon an estimate of amounts required to be expended by the
Company, the Company intends to take the position that the right to receive
payments from the Net Reserved Cash and the Net Plan Consummation Cash will be
treated as having a zero value. Under this position, any amount ultimately
realized with respect to either the right to receive payments from the Net
Reserved Cash or the Net Plan Consummation Cash would result in gain at the time
such amount is realized.
Alternatively, it also is possible that, if a holder or the IRS were to take
the position that it is impossible to value the right to receive payments from
the Net Reserved Cash and the Net Plan Consummation Cash at the time of the
Exchange, and such position is sustained, with respect to such holder the entire
Exchange would be treated as an open transaction in making the determination of
the amount of gain or loss, if any, realized by the holder with respect to the
Exchange. Thus, such holder would not recognize any gain (except to the extent
the sum of the respective fair market values of the New Debt Securities, and the
aggregate fair market values of the RII Class B Common Stock, the RII Common
Stock, the SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price (or
if the SIHL Sale is not consummated on the Effective Date, the PIRL Ordinary
Shares), Excess Cash and the right to receive payments from Deferred Cash
received pursuant to the Exchange exceeds such holder's basis in the Old Series
Notes) or loss with respect to the Old Debt Securities until all amounts payable
under the Net Reserved Cash and the Net Plan Consummation Cash have been
received or the right to receive such amounts has been fixed.
CONSEQUENCES OF HOLDING THE RII COMMON STOCK AND THE RII CLASS B COMMON STOCK
Distributions, if any, made on the RII Common Stock and the RII Class B
Common Stock will, to the extent of the current or accumulated earnings and
profits of RII be treated as a dividend for Federal income tax purposes and be
taxable as ordinary income. Corporate holders receiving such distributions may,
however, be eligible for a dividends received deduction. A distribution not
treated as a dividend first will reduce a holder's tax basis in the stock with
respect to which the distribution is received and the remainder, if any, will be
treated as proceeds received on the sale of such stock.
CONSEQUENCES OF HOLDING THE PIRL ORDINARY SHARES
For purposes of the following discussion, a "United States Holder" means an
individual, citizen or resident of the United States, a corporation organized
under the laws of the United States or of any state or political subdivision
thereof, any partner in a partnership only to the extent that the partnership's
income is subject to United States federal income tax or an estate or trust the
income of which is includible in gross income for United States Federal income
tax purposes regardless of its source. The following discussion also assumes
that no United States Holder will own (directly, indirectly or by attribution)
at any time 10% or more of the total combined voting power of PIRL.
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Dividends with respect to the PIRL Ordinary Shares paid to United States
Holders will be treated as dividend income for U.S. Federal income tax purposes
to the extent of PIRL's undistributed current or accumulated earnings and
profits as computed for U.S. Federal income tax purposes. Such dividends
generally will not be eligible for the dividends received deduction generally
available for United States corporations.
RII believes that PIRL is not a "passive foreign investment company"
("PFIC"), a "foreign personal holding company" ("FPHC") or a "controlled foreign
corporation" ("CFC") for United States Federal income tax purposes, and RII does
not expect PIRL to become a PFIC, a FPHC or a CFC. If PIRL were, or were to
become, a PFIC, a FPHC or a CFC, some or all United States Holders would be
required to include in their taxable income certain undistributed amounts of
PIRL's income, or, in certain circumstances, to pay an interest charge together
with tax calculated at maximum rates on certain "excess distributions" defined
as including gain on the sale of stock. EACH INVESTOR WHO IS A UNITED STATES
HOLDER SHOULD CONSULT WITH ITS OWN TAX ADVISOR CONCERNING THE SPECIFIC TAX
CONSEQUENCES IN THE EVENT THAT PIRL IS OR BECOMES A PFIC, FPHC OR CFC.
Any United States person who owns 5% or more (determined on the basis of
value) of the stock of PIRL may be required to file Internal Revenue Service
Form 5471 with respect to PIRL and its non-U.S. subsidiaries to report certain
acquisitions or dispositions of the stock of PIRL. Annual filings of Form 5471
would be required from any United States person owning 50% (by vote or by value)
or more of the stock of PIRL, or if PIRL were a FPHC or a CFC, from certain
United States persons owning 10% or more of the stock of PIRL.
CERTAIN BAHAMIAN TAX CONSIDERATIONS
In the opinion of Harry B. Sands & Company, special Bahamian counsel to the
Company, the following is a general summary of certain Bahamian tax matters as
they relate to PIRL and the receipt of dividends paid on PIRL Ordinary Shares.
The discussion is not exhaustive and is based on the laws of The Bahamas
currently in effect.
The Bahamas does not impose any income, capital gains or withholding taxes.
Accordingly, PIRL will not be subject to income tax in The Bahamas, and
dividends paid with respect to the PIRL Ordinary Shares to United States Holders
will not be subject to withholding tax by The Bahamas.
SALE, EXCHANGE OR REDEMPTION
Upon the sale, exchange or redemption of a New Debt Security, RII Class B
Common Stock, RII Common Stock, a right to receive payments from Net Reserved
Cash or Net Plan Consummation Cash, or, if issued, PIRL Ordinary Shares for
cash, a holder generally will recognize gain or loss in an amount equal to the
difference between the amount of cash received and the holder's adjusted basis
in such property (except to the extent that (i) the amount realized is
attributable to accrued interest or dividends not previously included in income,
which amount will be taxed as ordinary income, or (ii) in the case of a
redemption of RII Common Stock, RII Class B Common Stock or PIRL Ordinary
Shares, the holder disposes of less than all of such holder's stock, in which
case the redemption proceeds may be treated as a dividend, which, if so treated,
will be taxed as ordinary income). Assuming that the holder holds the property
as a capital asset, such gain or loss will be capital gain or loss, except (in
the case of a New Debt Security) to the extent of any accrued market discount
(see "-- Market Discount" below), and will be long-term capital gain or loss if
the property has been held for more than one year at the time of the sale or
exchange, or redemption.
In addition, it is possible that the redemption provisions of the New Debt
Security might be considered to be evidence of an intention on the part of the
Company at the time of the issuance of the New Debt Security to call the New
Debt Security before maturity within the meaning of Section 1271(a)(2)(A) of the
Tax Code. In that event, any gain realized by a holder on a sale, exchange, or a
redemption of a New Debt Security prior to maturity (other than a holder who
purchased a New Debt Security at a price which exceeds the stated redemption
price at maturity of the New Debt Security)
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would be considered ordinary income to the extent of the amount of OID, if any,
not previously includible in the gross income of any holder. RIHF has no present
intention to call the New Debt Securities prior to maturity.
With regard to the sale, exchange or redemption for cash of a right to
receive payments from Deferred Cash, the Company believes that a holder
generally will recognize gain or loss in an amount equal to the difference
between the amount of cash received and the holder's adjusted basis in the
right. Assuming that the holder holds the property as a capital asset, any such
loss will be capital loss, and will be long-term capital loss if the property
has been held for more than one year at the time of the sale, exchange or
redemption. However, the Proposed Contingent Debt Regulations do not address the
character of any gain recognized by a holder of a right to receive payments of
Deferred Cash upon the sale or exchange of the right (other than a payment made
upon the maturity of the right; see "-- Consequences of the Rights to Receive
Payments from Deferred Cash" above). Thus, it is unclear under current law
whether any amount received by the holder in connection with the sale or
exchange of the right (other than a payment made upon the maturity of the right)
that is in excess of the holder's adjusted basis would be treated as capital
gain or as interest income. Under the Pending Contingent Debt Regulations
(which, as noted above, currently have no force or effect), however, any gain on
the sale or exchange of the right would be treated an interest income.
MARKET DISCOUNT
A holder of a New Debt Security generally will be required to treat any gain
recognized on the sale, exchange, redemption or other disposition of the New
Debt Security as ordinary income to the extent of any accrued market discount.
The market discount rules also provide that a holder who acquires a New Debt
Security at a market discount may be required to defer a portion of any interest
expense that may otherwise be deductible on any indebtedness incurred or
maintained to purchase or carry such New Debt Security until the holder disposes
of the New Debt Security in a taxable transaction.
"Market discount" can be defined generally as the excess of the stated
redemption price at maturity of a New Debt Security (adjusted to exclude any
unaccrued OID) over the tax basis of the New Debt Security in the hands of the
holder immediately after its acquisition. In addition, under a DE MINIMIS
exception, the amount of market discount is considered to be zero if it is less
than the product of .25% of the stated redemption price of the New Debt Security
at maturity (possibly adjusted to exclude unaccrued OID) multiplied by the
number of complete years from acquisition to maturity. Market discount generally
will accrue ratably during the period from the date of acquisition to the
maturity date of the New Debt Security, unless the holder elects to accrue such
discount on the basis of the constant yield method.
A holder of a New Debt Security acquired at a market discount may elect to
include the market discount in income as interest as it accrues, in which case
the foregoing rules would not apply. This election would apply to all New Debt
Securities with market discount acquired by the electing holder on or after the
first day of the first taxable year to which the election applies. The election
may be revoked only with the consent of the Service.
TAX CONSEQUENCES TO THE COMPANY
CANCELLATION OF INDEBTEDNESS. If a taxpayer satisfies its outstanding debt
obligations for less than its principal amount (or, if the debt obligation was
issued with OID, its adjusted issue price), such taxpayer generally realizes COD
income for federal income tax purposes. In the case of an Exchange such as that
contemplated by the Plan, where outstanding indebtedness is canceled in exchange
for newly issued indebtedness (E.G., the New Debt Securities) and other property
(E.G., the RII Common Stock, the RII Class B Common Stock and the PIRL Ordinary
Shares), the amount of such COD income is, in general, equal to the excess of
the adjusted issue price (including accrued but unpaid interest) of the
indebtedness satisfied over the sum of the fair market value of the new debt
obligations and the fair market value of the other property issued therefor.
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Section 108(a) of the Tax Code provides an exception to the recognition of
COD income for taxpayers who are insolvent (to the extent of the insolvency) or
who are debtors in a bankruptcy proceeding under the Bankruptcy Code at the time
of discharge. Instead of requiring the recognition of income, Section 108(b) of
the Tax Code provides that certain tax losses and credits of a taxpayer,
including any NOL carryovers, must be reduced by the amount of the taxpayer's
COD income that is excluded under Section 108(a) of the Tax Code. To the extent
that the amount excluded exceeds these tax attributes, the taxpayer's tax basis
in its property will be reduced by the amount of such excluded COD income,
except that such reduction is limited to the excess of the aggregate tax bases
of the property held by the debtor over the aggregate liabilities of the
taxpayer immediately after the transaction. No income is realized, and no
reduction of tax attributes is required, however, to the extent that debt is
discharged by issuing stock qualifying under a special exception applicable to
certain stock-for-debt exchanges, provided that such stock-for-debt exchange
occurs on or before December 31, 1994. The following discussion assumes that the
Exchange will occur on or before December 31, 1994.
The stock-for-debt exception will be available to RII in an exchange with a
particular holder of Old Series Notes only if (a) the RII Class B Common Stock
and the RII Common Stock issued to the holder is not "nominal or token", and (b)
the ratio of the aggregate value of the RII Common Stock and the RII Class B
Common Stock received by the holder to the amount of such holder's Old Series
Notes exchanged for such stock is not less than 50% of a similar ratio computed
for all such holders participating in the Restructuring. While there are legal
uncertainties involved, assuming that all holders of Old Series Notes receiving
RII Common Stock receive the same consideration for their Notes as part of the
Exchange, RII intends to take the position that the RII Common Stock issued in
the Restructuring to holders of Old Series Notes will qualify for the
stock-for-debt exception and that no reduction of its tax attributes will be
required with respect to the Old Series Notes deemed exchanged for RII Common
Stock. (Because the RII Class B Common Stock is not separately tradable from the
New RIHF Junior Mortgage Notes, it may be viewed as having a fixed redemption
date or being subject to a right of redemption. Accordingly, the RII Class B
Common Stock is at a substantial risk of being "disqualified stock" and such RII
Class B Common Stock has not been included as stock for purposes of determining
whether the exchange qualifies for the stock-for-debt exception.) There can be
no assurance, however, that the Service would not challenge the availability, in
total or in part, of the stock-for-debt exception.
If the Service were to determine that the stock-for-debt transaction did not
qualify for the stock-for-debt exception described above, to the extent that the
sum of (a) the value of the New Equity Securities, (b) Excess Cash, (c) the
issue price of the rights to receive payments from Deferred Cash (see "--
Consequences of the Rights to Receive Payments from Deferred Cash"), (d) the
issue price of the New Debt Securities (see "-- Original Issue Discount With
Respect to New Debt Securities"), and (e) if the SIHL Sale is consummated on the
Effective Date, the value of SIHL Series A Shares and the SIHL Aggregate Cash
Purchase Price, is less than the adjusted issue price of the Old Series Notes,
RII will realize (but not recognize) COD income equal to such difference. Such
income will be excluded from RII's gross income under Section 108(a) of the Tax
Code, but RII will be required to reduce its tax attributes by such amount as
discussed above.
CREATION AND DISTRIBUTION OF PIRL. The distribution by GRI to RII of 100%
of the stock of RIB will be a taxable distribution. GRI will recognize gain upon
such distribution equal to the difference between the fair market value of such
RIB stock and GRI's basis therefor. RII's basis in the stock of RIB will be
equal to the fair market value of such stock. The gain recognized by GRI (the
"RIB Gain") will be deferred, in accordance with the U.S. Treasury Regulations
promulgated under Section 1502 of the Tax Code, until the earlier of (i) GRI's
ceasing to be a member of the RII Group, (ii) the cessation of the RII Group, or
(iii) the day no member of the RII Group owns the stock of RIB (any of (i),
(ii), or (iii), a "Restoration Event").
Upon the occurrence of a Restoration Event, GRI will include in its gross
income the amount of the RIB Gain. Pursuant to a ruling letter issued by the
Service in connection with certain transactions
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effected as part of the Old Plan (the "1990 Letter Ruling"), the RIB Gain will
be treated as a "built-in" gain for purposes of loss limitation provisions of
Section 382 of the Tax Code (see discussion below). Consequently, to the extent
that the RII Group's losses for tax purposes for the year which includes the
Effective Date are not sufficient to offset the RIB Gain, NOL carryovers from
taxable years ending on or before September 30, 1990 will be available to be
used to offset such gain, notwithstanding the fact that such NOL carryovers are
otherwise subject to a Section 382 annual limitation. To the extent that the RIB
Gain is offset by NOL carryovers, such gain will be subject to the alternative
minimum tax, at an effective rate of 2 percent.
In accordance with the Plan, RII will be under a binding obligation to
effect the SIHL Sale, or, if the SIHL Sale is not consummated on the Effective
Date, to distribute 100% of the stock of PIRL to the holders of the Old Series
Notes on the Effective Date. Because RII will not be in control of PIRL within
the meaning of Section 368(c) of the Tax Code, RII's contribution of the stock
of RIB to PIRL will be a taxable transaction. However, because such transactions
will occur immediately after GRI's distribution of the stock of RIB to RII in a
taxable transaction, no additional gain or loss should be recognized upon either
the contribution or the SIHL Sale. If the SIHL Sale is consummated on the
Effective Date, the U.S. Paradise Island Subsidiaries will recognize gain (or
loss) on the sale of such subsidiaries' assets to the SIHL subsidiaries equal to
the difference between the amount of consideration allocated to such assets and
such selling subsidiaries' basis in the assets sold. If the SIHL Sale is not
consummated, because the U.S. Paradise Island Subsidiaries will not be in
control of the PIRL subsidiaries within the meaning of Section 368(c) of the Tax
Code, each Paradise Island Subsidiary will recognize gain (or loss) upon the
contribution of such subsidiaries' assets to subsidiaries of PIRL to the extent
the fair market value of the assets of each such corporation exceeds (or is less
than) RII's basis therefor. In the event the SIHL Sale is not consummated on the
Effective Date, RII's basis in the stock of PIRL received in exchange for the
stock of RIB, the RII Real Estate Assets and the assets of the U.S. Paradise
Island Subsidiaries will equal the fair market value of such stock. Accordingly,
because such PIRL Ordinary Shares will be distributed to the holders of the Old
Series Notes immediately after RII acquires it, no additional gain or loss
should be recognized by RII with respect to the PIRL stock upon its distribution
to the holders of the Old Series Notes.
NET OPERATING LOSS CARRYOVERS AND LIMITATIONS. After giving effect to the
recognition of gain with respect to the transactions resulting in the
distribution of the stock of RIB to the holders of the Old Series Notes (but
prior to any reduction of NOLs as discussed below), RII and its subsidiaries
expect to have substantial consolidated NOL carryforwards, totaling
approximately $140,000,000, from their taxable year ended December 31, 1992 and
prior taxable years beginning after September 30, 1990, plus unutilized
unrestricted NOLs from taxable years ending on or before September 30, 1990 of
approximately $18 million, resulting in a total amount of unrestricted NOLs of
approximately $158 million. In addition, RII and its subsidiaries have
approximately $464,000,000 of NOL carryforwards from prior taxable years ending
on or before September 30, 1990, which NOLs are subject to an annual limitation
on use as a result of the ownership change that occurred in connection with the
Old Plan. Moreover, because the RIB Gain is, as described above, a "built-in
gain" for purposes of Section 382 of the Tax Code, and will be recognized within
five years of the date of the change in control caused by the Old Plan, the RIB
Gain will be a "recognized built-in gain" for purposes of Section 382 of the Tax
Code. A corporation, such as RII, that has (i) a recognized built-in gain in a
year and (ii) NOL carryovers that are subject to an annual limitation under
Section 382 of the Tax Code increases the amount of its annual limitation for
such year by the amount of the recognized built-in gain. If the annual
limitation amount is not used fully (for example, because of current losses),
such amount is carried forward and added to the next year's annual limitation
amount. Consequently, to the extent that the RII Group's losses for tax purposes
for the year which includes the Effective Date (I.E., "current year losses") are
used to offset the RIB Gain, an equal amount of RII's pre-change NOL carryovers
will, in effect, become free of their Section 382 limitation and be available
for RII's unlimited use in subsequent periods (until their expiration).
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The Company intends to take the position that the Exchange that will occur
in connection with the Plan, when combined with prior transfers of the stock of
the Company, will result in the Company undergoing an "ownership change" within
the meaning of Section 382 of the Tax Code.
Section 382 provides that, following an ownership change with respect to a
"loss corporation" such as the Company, unless the Bankruptcy Exception
(described below) applies, the amount of post-ownership change annual taxable
income of the loss corporation that can be offset by the loss corporation's
pre-ownership change NOL carryovers generally cannot exceed an amount equal to
the value of the equity of the loss corporation immediately after the ownership
change (subject to various adjustments) multiplied by a prescribed long-term tax
exempt rate (5.27% for November 1993) (the "Annual Limitation").
An exception (the "Bankruptcy Exception") to the general rules imposing a
limitation on the ability to utilize losses after an ownership change is set
forth in Section 382(1)(5) of the Tax Code. The Bankruptcy Exception applies if,
immediately after an ownership change, shareholders and qualified creditors of
the old loss corporation (E.G., the Company) own at least 50% of the stock of
the new loss corporation (E.G., the Company post-Restructuring). Qualified
creditors include creditors who held their claim at least 18 months before the
filing of the chapter 11 case (or, if claims are held by the public, certain
public creditors), and ordinary course of business trade creditors.
If the Bankruptcy Exception applies (and no election is made by the loss
corporation for such exception not to apply), the amount of pre-change NOL
carryovers of the old loss corporation that may be carried to a post-change year
are required to be reduced by the amount of the deductions for interest
(including OID) paid or accrued on the indebtedness which was converted into
stock pursuant to the chapter 11 case during (i) any taxable year ending during
the three-year period preceding the taxable year in which the ownership change
occurs or (ii) the portion of the taxable year ending on the change date, but
only to the extent that such deductions generated an NOL for such year or other
period. In addition, if the Bankruptcy Exception applies (and no election is
made for it not to apply), 50% of the amount of unrecognized COD income
(excluding COD income arising from the discharge of any indebtedness for
interest described in the preceding sentence) that would have been applied to
reduce the tax attributes of the Company but for the operation of the
stock-for-debt exception must be applied to reduce such attributes. See "--
Cancellation of Indebtedness". Moreover, if the Bankruptcy Exception applies
(and no election is made for such exception not to apply), and a second
ownership change occurs within a two-year period, the Annual Limitation
following the second ownership change will be zero.
Based on its analysis of the transactions that will occur on the Effective
Date and on information available to the Company with respect to the identity of
the holders of the Old Debt Securities, the Company intends to take the position
that the Bankruptcy Exception will apply to the ownership change that the
Company believes will occur as a result of the Exchange that will occur in
connection with the Restructuring. Moreover, assuming the Bankruptcy Exception
does apply, the Company does not intend to elect for it not to apply.
Accordingly, the Company believes that it will have in excess of $194,700,000 in
NOLs available (after taking into account the reductions described above) not
subject to an Annual Limitation, plus an additional $388,500,000 of NOLs that
are subject to an Annual Limitation as a result of the ownership change that
occurred in connection with the Old Plan. In addition, because certain transfers
of the Old Debt Securities may adversely affect the availability of the
Bankruptcy Exception in connection with the Restructuring, RII, with the consent
of TCW and Fidelity, may request the Bankruptcy Court to enter into an order to
enjoin certain transfers while the bankruptcy case is pending if the Company,
TCW and Fidelity determine that such an order is necessary or appropriate in
order to preserve the unrestricted availability of the NOLs available to the
Company.
Because the Company believes that an ownership change will occur in
connection with the Plan, if the Bankruptcy Exception (described above) were not
to apply, the use of the Company's NOL carryovers by the Company after the
exchange would be subject to the Annual Limitation. The
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Company estimates that, based on the current long-term tax exempt rate and the
value of the Company (taking into account the discharge of indebtedness pursuant
to the Plan), the Annual Limitation for the years following the Effective Date
would be approximately $3.7 million. No restrictions on transferability are
being imposed with respect to the RII Common Stock in connection with the Plan.
Accordingly, if an ownership change is determined not to have occurred in
connection with the Plan, the Company's NOL carryovers likely would become
subject to the Annual Limitation as a result of transfers of RII Common Stock
after the Effective Date, at which time the Bankruptcy Exception would not be
available.
POTENTIAL APPLICATION OF HIGH YIELD DEBT OBLIGATION RULES
As noted above, the New RIHF Junior Mortgage Notes will be, and the New RIHF
Mortgage Notes may be, issued with original issue discount for Federal income
tax purposes. Under the "AHYDO" rules contained in Sections 163(e) and (i) of
the Tax Code, if a debt obligation with a term of more than five years has
"significant" OID, and has a yield to maturity of five percentage points or more
in excess of a specified rate (generally the U. S. Treasury note rate for
instruments of similar maturities), interest deductions with respect to OID
accruing on such instrument may be deferred until such OID is paid in cash, or,
if the yield to maturity exceeds six percentage points above the specified rate,
the deduction for such excess may be denied completely and the OID may be
treated as dividend income, rather than interest income, to the holder (provided
the issuer has adequate earnings and profits to support such a dividend). The
New RIHF Junior Mortgage Notes will be issued with significant OID. Accordingly,
depending on interest rates in effect on the Effective Date, it is possible that
the AHYDO rules will apply to accruals of OID on the New RIHF Junior Mortgage
Notes.
BACKUP WITHHOLDING
Under the Tax Code, a holder of a New Debt Security may be subject, under
certain circumstances, to "backup withholding" at a rate of 31% with respect to
payments in respect of interest and OID thereon or the gross proceeds from the
disposition thereof. This withholding generally applies only if the holder (i)
fails to furnish his or her social security or other taxpayer identification
number ("TIN"), (ii) furnishes an incorrect TIN, (iii) is notified by the
Service that he or she has failed to report properly payments of interest and
dividends and the Service has notified the Company that he or she is subject to
backup withholding, or (iv) fails, under certain circumstances, to provide a
certified statement, signed under penalty of perjury, that the TIN provided is
its correct number and that it is not subject to backup withholding. Any amount
withheld from a payment to a holder under the backup withholding rules does not
constitute additional tax, and is allowable as a credit against such holder's
Federal income tax liability, provided that the required information is
furnished to the Service. Holders of New Debt Securities should consult their
tax advisers as to their qualification for exemption from backup withholding and
the procedure for obtaining such an exemption.
APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS TO
RESALES OF SECURITIES
Holders of the Old Series Notes will receive the New Debt Securities and the
New Equity Securities under the Plan. Section 1145 of the Bankruptcy Code
creates certain exemptions from the registration and licensing requirements of
federal and state securities laws with respect to the distribution of securities
pursuant to a plan of reorganization as well as resales of the securities by
certain recipients thereof. The discussion set forth below does not cover the
SIHL Series A Shares.
FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND
PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE
ACCOMPANYING SIHL PROSPECTUS RELATING TO THE SIHL SERIES A SHARES. RII HAS
SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS
FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN
INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN
THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT
FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES ACT). RII AND
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ITS ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE
AND FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS
(AND RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE
ISLAND PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO
THE ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN
THE SUN PROSPECTUS (AND RELATED REGISTRATION STATEMENT).
ISSUANCE OF SECURITIES UNDER THE PLAN
Section 1145 of the Bankruptcy Code exempts the issuance of securities under
a plan of reorganization from registration under the Securities Act, and under
state securities laws if three principal requirements are satisfied: (i) the
securities must be issued "under a plan" of reorganization by the debtor or its
successors under a plan or an affiliate participating in a joint plan of
reorganization with the debtor; (ii) the recipients of the securities must hold
a claim against the debtor, an interest in the debtor or a claim for an
administrative expense against the debtor; and (iii) the securities must be
issued entirely in exchange for the recipient's claim against or interest in the
debtor, or "principally" in such exchange and "partly" for cash or property.
Although the Company believes that the issuance of the New Debt Securities and
the New Equity Securities under the Plan satisfies the requirements of section
1145(a) of the Bankruptcy Code and, therefore, would be exempt from registration
under federal and state securities laws, under certain circumstances subsequent
transfers of the New Debt Securities and the New Equity Securities may be
subject to registration requirements under such securities laws.
TRANSFERS OF SECURITIES
The New Debt Securities and the New Equity Securities to be issued pursuant
to the Plan may be freely transferred by most recipients thereof, and all
resales and subsequent transactions in the New Debt Securities and the New
Equity Securities are exempt from registration under federal and state
securities laws, unless the holder is an "underwriter" with respect to such
securities. Section 1145(b) of the Bankruptcy Code defines four types of
"underwriters":
(i) persons who purchase a claim against, an interest in, or a claim for
administrative expense against the debtor with a view to distributing any
security received or to be received in exchange for such a claim or
interest;
(ii) persons who offer to sell securities offered or sold under the plan
for the holders of such securities;
(iii) persons who offer to buy such securities from the holders of such
securities, if the offer to buy is (a) with a view to distributing such
securities, and (b) made under an agreement made in connection with the
plan, with the consummation of the plan or with the offer or sale of
securities under the plan; and
(iv) a person who is an "issuer" with respect to the securities, as the
term "issuer" is defined in section 2(11) of the Securities Act.
Under section 2(11) of the Securities Act, an "issuer" includes any person
directly or indirectly controlling or controlled by the issuer, or any person
under direct or indirect common control with the issuer. Any person, or group of
persons who act in concert, who receives a substantial amount of securities
pursuant to the Plan may be deemed to be an "issuer" and therefore an
"underwriter" under the foregoing definition.
To the extent that persons deemed to be "underwriters" receive the New Debt
Securities and the New Equity Securities pursuant to the Plan, resales by such
persons would not be exempted by section 1145 of the Bankruptcy Code from
registration under the Securities Act or other applicable law. Persons deemed to
be underwriters under section 1145, however, may be able to sell the New Debt
Securities and the New Equity Securities without registration subject to the
provisions of Rule 144 under the Securities Act, subject to the availability to
the public of current information regarding the
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issuer and to volume limitations and certain other conditions. A person deemed
to be an "underwriter" under section 1145 of the Bankruptcy Code may be an
"affiliate" for purposes of Rule 144 of the Securities Act. While there is no
clear test for determining "affiliate" status and such determination depends on
all the facts and circumstances, directors, executive officers and holders of
10% or more of a RII's voting stock or PIRI's voting stock, among others, might
under certain circumstances be deemed "affiliates".
Whether or not any particular person would be deemed to be an "underwriter"
or an "affiliate" with respect to the New Debt Securities and the New Equity
Securities to be issued pursuant to the Plan would depend upon various facts and
circumstances applicable to that person. Accordingly, the Company expresses no
view as to whether any person would be an "underwriter" or an "affiliate" with
respect to the New Debt Securities and the New Equity Securities to be issued
pursuant to the Plan.
GIVEN THE COMPLEX, SUBJECTIVE NATURE OF THE QUESTION OF WHETHER A PARTICULAR
PERSON MAY BE AN UNDERWRITER OR AN AFFILIATE, THE COMPANY MAKES NO
REPRESENTATIONS CONCERNING THE RIGHT OF ANY PERSON TO TRADE IN THE NEW DEBT
SECURITIES AND THE NEW EQUITY SECURITIES TO BE DISTRIBUTED PURSUANT TO THE PLAN.
THE COMPANY RECOMMENDS THAT POTENTIAL RECIPIENTS OF SECURITIES CONSULT THEIR OWN
COUNSEL CONCERNING WHETHER THEY MAY FREELY TRADE SUCH SECURITIES.
CERTAIN TRANSACTIONS BY STOCKBROKERS
Under section 1145(a)(4) of the Bankruptcy Code, stockbrokers are required
to deliver a copy of the Information Statement/Prospectus (and supplements
hereto, if any, if ordered by the Bankruptcy Court) at or before the time of
delivery of the New Debt Securities and the New Equity Securities issued under
the Plan to their customers for the first 40 days after the Effective Date. This
requirement specifically applies to trading and other aftermarket transactions
in the New Debt Securities and the New Equity Securities.
SHARES ELIGIBLE FOR FUTURE SALE
After consummation of the Restructuring pursuant to the Plan, there will be
approximately 46,654,034 shares of RII Common Stock outstanding on a fully
diluted basis, and (if the SIHL Sale is not consummated on the Effective Date)
5,000,000 shares of PIRL Ordinary Shares outstanding (assuming all distributions
to be made under the Plan are made on the Distribution Date). As noted above,
all the shares of RII Common Stock and (if the SIHL Sale is not consummated on
the Effective Date) PIRL Ordinary Shares to be issued pursuant to the Plan will
be freely transferable and will not be subject to further registration under the
Securities Act, unless the holder is an "underwriter" under section 1145 of the
Bankruptcy Code and/or an affiliate for purposes of Rule 144 of the Securities
Act. No precise predictions can be made of the effect, if any, that market sales
of shares or the availability of shares for sale will have on the market prices
of RII Common Stock or (if the SIHL Sale is not consummated on the Effective
Date) PIRL Ordinary Shares prevailing from time to time. Nevertheless, sales of
substantial amounts of RII Common Stock or (if the SIHL Sale is not consummated
on the Effective Date) PIRL Ordinary Shares in the public market could adversely
affect the prevailing market prices of RII Common Stock or (if the SIHL Sale is
not consummated on the Effective Date) PIRL Ordinary Shares and could impair
RII's or (if the SIHL Sale is not consummated on the Effective Date) PIRL's
ability to raise capital at that time through the sale of its equity securities.
LEGAL MATTERS
The validity of the New Debt Securities and the New Equity Securities under
New Jersey law will be passed upon for the Company by Ravin, Sarasohn, Cook,
Baumgarten, Fisch & Baime. Certain
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matters governed by the laws of the Commonwealth of The Bahamas will be passed
upon for the Company by Harry B. Sands & Company. Certain legal matters in
connection with the Restructuring will be passed upon for the Company by Gibson,
Dunn & Crutcher.
EXPERTS
The consolidated financial statements and schedules of Resorts
International, Inc., Resorts International Hotel, Inc., and the combined
financial statements and schedules of PIRL Group at December 31, 1992 and 1991,
and for each of the three years in the period ended December 31, 1992, and the
balance sheets of Resorts International Hotel Financing, Inc. at September 30,
1993 and P.I. Resorts Limited at October 15, 1993 appearing in this Prospectus
and Registration Statement have been audited by Ernst & Young, independent
auditors, as set forth in their reports thereon appearing elsewhere herein and
in the Registration Statement, and are included in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
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INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
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FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS OF RESORTS INTERNATIONAL, INC.:
Report of Independent Auditors............................................................................. F-3
Consolidated Balance Sheets at December 31, 1991 and 1992 and September 30, 1993 (unaudited)............... F-4
Consolidated Statements of Operations for the periods January 1, 1990 through August 31, 1990 and September
1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters
ended September 30, 1992 and 1993 (unaudited)............................................................. F-5
Consolidated Statements of Cash Flows for the periods January 1, 1990 through August 31, 1990 and September
1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters
ended September 30, 1992 and 1993 (unaudited)............................................................. F-6
Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the periods January 1, 1990
through August 31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991
and 1992, and the three quarters ended September 30, 1993 (unaudited)..................................... F-7
Notes to Consolidated Financial Statements................................................................. F-8
CONSOLIDATED FINANCIAL STATEMENTS OF RESORTS INTERNATIONAL HOTEL, INC.:
Report of Independent Auditors............................................................................. F-28
Consolidated Balance Sheets at December 31, 1991 and 1992 and September 30, 1993 (unaudited)............... F-29
Consolidated Statements of Operations for the periods January 1, 1990 through August 31, 1990 and September
1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters
ended September 30, 1992 and 1993 (unaudited)............................................................. F-30
Consolidated Statements of Cash Flows for the periods January 1, 1990 through August 31, 1990 and September
1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters
ended September 30, 1992 and 1993 (unaudited)............................................................. F-31
Consolidated Statements of Changes in Shareholder's Deficit for the periods January 1, 1990 through August
31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and
the three quarters ended September 30, 1993 (unaudited)................................................... F-32
Notes to Consolidated Financial Statements................................................................. F-33
FINANCIAL STATEMENT OF RESORTS INTERNATIONAL HOTEL FINANCING, INC.:
Report of Independent Auditors............................................................................. F-44
Balance Sheet at September 30, 1993........................................................................ F-45
Notes to Balance Sheet..................................................................................... F-46
FINANCIAL STATEMENT OF P. I. RESORTS LIMITED:
Report of Independent Auditors............................................................................. F-48
Balance Sheet at October 15, 1993.......................................................................... F-49
Notes to Balance Sheet..................................................................................... F-50
</TABLE>
F-1
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<TABLE>
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COMBINED FINANCIAL STATEMENTS OF RESORTS INTERNATIONAL (BAHAMAS) 1984 LIMITED, CONSOLIDATED WITH ITS
SUBSIDIARIES; RESORTS INTERNATIONAL DISBURSEMENT, INC.; PARADISE ISLAND VACATIONS, INC.; RESORTS
REPRESENTATION INTERNATIONAL, INC.; INTERNATIONAL SUPPLIERS, INC.; PARADISE ISLAND AIRLINES, INC.; AND
ANTL, INC. (the "PIRL GROUP"):
Report of Independent Auditors............................................................................. F-51
Combined Balance Sheets at December 31, 1991 and 1992, and September 30, 1993 (unaudited).................. F-52
Combined Statements of Operations for the periods January 1, 1990 through August 31, 1990 and September 1,
1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended
September 30, 1992 and 1993 (unaudited)................................................................... F-53
Combined Statements of Cash Flows for the periods January 1, 1990 through August 31, 1990 and September 1,
1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended
September 30, 1992 and 1993 (unaudited)................................................................... F-54
Combined Statements of Changes in Shareholders' Equity for the periods January 1, 1990 through August 31,
1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the
three quarters ended September 30, 1993 (unaudited)....................................................... F-55
Notes to Combined Financial Statements..................................................................... F-56
SUPPLEMENTARY DATA
Consolidated Selected Quarterly Financial Data for Resorts International, Inc. (unaudited)................. F-66
Consolidated Selected Quarterly Financial Data for Resorts International Hotel, Inc. (unaudited)........... F-67
Combined Selected Quarterly Financial Data for PIRL Group (unaudited)...................................... F-68
</TABLE>
F-2
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REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Resorts International, Inc.
We have audited the accompanying consolidated balance sheets of Resorts
International, Inc. as of December 31, 1992 and 1991, and the related
consolidated statements of operations, changes in shareholders' equity
(deficit), and cash flows for each of the three years in the period ended
December 31, 1992. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
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 obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As explained in Notes 7 and 15, until the Old Series Notes become due and
payable in April 1994, the Company may satisfy its interest obligations on the
Old Series Notes by issuing additional Old Series Notes. As a result, the
Company expects to have the ability to meet its cash obligations until the Old
Series Notes become due and payable in April 1994. The Company's ability to pay
the Old Series Notes at maturity was premised upon the contemplated sale of the
Company's operations on Paradise Island and of its non-operating real estate
holdings in Atlantic City generating sufficient proceeds to reduce the
obligation under the Old Series Notes to a level that, if refinanced at maturity
in April 1994, could be serviced by cash flow from the remaining operations. It
presently appears unlikely the proceeds from a possible sale of these operations
will provide a reduction of principal to this level. Consequently, the Company
is reviewing other financial alternatives. One such alternative is described in
Note 17. However, specific terms and conditions have not been finalized.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Resorts
International, Inc. at December 31, 1992 and 1991, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1992, in conformity with generally accepted accounting
principles.
ERNST & YOUNG
Philadelphia, Pennsylvania
February 19, 1993 except for
Note 17, as to which the date is
December 29, 1993
F-3
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RESORTS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT PAR VALUE)
<TABLE>
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DECEMBER 31,
------------------------- SEPTEMBER 30,
1991 1992 1993
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(UNAUDITED)
ASSETS
Current assets:
Cash (including cash equivalents of $23,721, $36,344 and $53,753)..... $ 41,618 $ 56,818 $ 71,026
Restricted cash equivalents........................................... 11,561 10,069 8,076
Receivables, net...................................................... 32,226 25,457 13,961
Note receivable from related party.................................... 2,310
Inventories........................................................... 8,465 8,531 8,484
Prepaid expenses...................................................... 7,405 7,062 13,492
----------- ------------ -------------
Total current assets................................................ 101,275 107,937 117,349
----------- ------------ -------------
Note receivable from related party...................................... 3,008
-------------
Property and equipment:
Land and land rights, including land held for investment, development
and resale........................................................... 246,520 243,900 243,557
Land improvements and utilities....................................... 21,942 22,519 22,606
Hotels and other buildings............................................ 157,312 170,250 179,609
Furniture, machinery and equipment.................................... 60,700 67,693 77,272
Construction in progress.............................................. 2,796 1,215 6,174
----------- ------------ -------------
489,270 505,577 529,218
Less accumulated depreciation......................................... (29,870) (54,761) (75,163)
----------- ------------ -------------
Net property and equipment.......................................... 459,400 450,816 454,055
Deferred charges and other assets....................................... 7,215 10,197 12,220
----------- ------------ -------------
$ 567,890 $ 568,950 $ 586,632
----------- ------------ -------------
----------- ------------ -------------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt, net of unamortized discount..... $ 1,571 $ 828 $ 429,500
Accounts payable and accrued liabilities.............................. 84,553 71,672 83,223
----------- ------------ -------------
Total current liabilities........................................... 86,124 72,500 512,723
----------- ------------ -------------
Long-term debt, net of unamortized discount............................. 392,667 460,712 84,541
----------- ------------ -------------
Deferred income taxes................................................... 53,000 53,000 54,000
----------- ------------ -------------
Commitments and contingencies (Note 15)
Shareholders' equity (deficit):
RII Common Stock -- 20,138,688, 20,157,234 and 20,157,234 shares
outstanding -- $.01 par value........................................ 201 202 202
Capital in excess of par.............................................. 102,000 102,092 102,092
Accumulated deficit................................................... (55,102) (108,556) (166,926)
----------- ------------ -------------
47,099 (6,262) (64,632)
Note receivable from shareholder...................................... (11,000) (11,000)
----------- ------------ -------------
Total shareholders' equity (deficit)................................ 36,099 (17,262) (64,632)
----------- ------------ -------------
$ 567,890 $ 568,950 $ 586,632
----------- ------------ -------------
----------- ------------ -------------
</TABLE>
See Notes to Consolidated Financial Statements of RII.
F-4
<PAGE>
RESORTS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------
1990 FOR THE THREE QUARTERS
------------------------ ENDED SEPTEMBER 30,
THROUGH FROM ----------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenues:
Casino.......................... $ 182,787 $ 86,199 $ 279,884 $ 299,900 $ 224,681 $ 236,488
Rooms........................... 36,933 12,034 41,247 39,001 30,672 27,992
Food and beverage............... 39,809 16,527 52,459 48,907 37,958 35,933
Other casino/hotel revenues..... 15,532 6,936 21,676 22,028 16,538 17,713
Other operating revenues........ 10,431 5,257 15,435 19,072 14,347 13,704
Real estate related............. 8,480 2,638 7,542 8,026 6,058 6,028
----------- ----------- ---------- ---------- ---------- ----------
293,972 129,591 418,243 436,934 330,254 337,858
----------- ----------- ---------- ---------- ---------- ----------
Expenses:
Casino.......................... 116,763 53,441 166,133 176,119 131,838 141,600
Rooms........................... 8,403 4,343 12,112 11,799 8,949 8,064
Food and beverage............... 32,219 15,824 45,508 42,819 32,883 31,332
Other casino/hotel operating
expenses....................... 41,373 21,424 64,054 64,654 48,502 49,995
Other operating expenses........ 8,411 4,345 12,055 15,549 11,564 11,122
Selling, general and
administrative................. 43,570 23,642 71,732 73,262 55,192 53,835
Provision for doubtful
receivables.................... 3,530 1,692 6,373 4,047 2,803 2,284
Depreciation.................... 20,047 6,232 23,814 25,322 19,011 20,942
Real estate related............. 5,338 625 1,612 1,599 1,320 1,114
Unallocated corporate expense... 778 (763) (1,186) 262 (1,915) (3,110)
----------- ----------- ---------- ---------- ---------- ----------
280,432 130,805 402,207 415,432 310,147 317,178
----------- ----------- ---------- ---------- ---------- ----------
Earnings (loss) from operations... 13,540 (1,214) 16,036 21,502 20,107 20,680
Other income (deductions):
Interest income................. 2,318 1,740 4,824 4,969 2,311 2,485
Interest expense................ (434) (5,476) (31,157) (40,856) (30,795) (38,336)
Amortization of debt discount... (8,581) (32,105) (37,569) (26,509) (37,320)
Recapitalization costs.......... (187,018) (2,848) (2,337) (4,879)
----------- ----------- ---------- ---------- ---------- ----------
Loss before income taxes and
extraordinary item............... (171,594) (13,531) (42,402) (54,802) (37,223) (57,370)
Income tax benefit (expense)...... 831 1,348 (1,000)
----------- ----------- ---------- ---------- ---------- ----------
Loss before extraordinary item.... (171,594) (13,531) (41,571) (53,454) (37,223) (58,370)
Extraordinary item and related
income tax benefit -- gain on
exchange of debt................. 429,809
----------- ----------- ---------- ---------- ---------- ----------
Net earnings (loss)............... $ 258,215 $ (13,531) $ (41,571) $ (53,454) $ (37,223) $ (58,370)
----------- ----------- ---------- ---------- ---------- ----------
----------- ----------- ---------- ---------- ---------- ----------
Net loss per share of RII Common
Stock............................ $ (.68 ) $ (2.07) $ (2.65) $ (1.85) $ (2.90)
----------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ----------
Weighted average number of shares
outstanding...................... 20,000 20,092 20,146 20,143 20,157
----------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ----------
</TABLE>
See Notes to Consolidated Financial Statements of RII. Note 2 describes
a change in entity and related presentation for periods presented.
F-5
<PAGE>
RESORTS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------
FOR THE THREE
1990 QUARTERS ENDED
---------------------- SEPTEMBER 30,
THROUGH FROM --------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
--------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Cash received from customers........... $ 285,238 $ 127,256 $ 411,456 $ 432,212 $ 332,529 $ 343,738
Cash paid to suppliers and employees... (256,474) (122,113) (378,312) (390,012) (293,074) (297,057)
--------- ----------- --------- --------- --------- ---------
Cash flow from operations before
interest and income taxes........... 28,764 5,143 33,144 42,200 39,455 46,681
Interest received...................... 2,337 1,467 4,014 5,211 2,775 3,149
Interest paid.......................... (486) (284) (9,228) (8,463) (8,277) (8,338)
Income taxes refunded (paid), net...... (86) (7) 729 1,484 166 317
--------- ----------- --------- --------- --------- ---------
Net cash provided by operating
activities.......................... 30,529 6,319 28,659 40,432 34,119 41,809
--------- ----------- --------- --------- --------- ---------
Cash flows from investing activities:
Payments for property and equipment.... (22,054) (7,833) (25,587) (19,832) (18,380) (23,876)
Proceeds from sales of property and
equipment............................. 5,272 6,757 147 213 213
Proceeds from prior year sales of
property and equipment................ 1,676 2,484
CRDA deposits and bond purchases....... (1,816) (739) (2,689) (2,871) (2,024) (2,121)
Proceeds from sales of short-term money
market securities with maturities
greater than three months............. 2,083 2,083 1,377
Purchases of short-term money market
securities with maturities greater
than three months..................... (1,200) (1,768) (1,768) (492)
--------- ----------- --------- --------- --------- ---------
Net cash used in investing
activities.......................... (19,798) (1,815) (26,453) (19,691) (19,876) (25,112)
--------- ----------- --------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of RII Common
Stock................................. 15,000
Collection on note receivable from
shareholder........................... 3,477
Payments of recapitalization costs..... (7,024) (5,504) (5,883) (5,414) (4,181) (5,748)
Repayments of non-public debt.......... (2,507) (1,570) (2,064) (1,619) (1,358) (2,211)
--------- ----------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities................ (9,531) 7,926 (7,947) (7,033) (5,539) (4,482)
--------- ----------- --------- --------- --------- ---------
Net increase (decrease) in cash and cash
equivalents............................. 1,200 12,430 (5,741) 13,708 8,704 12,215
Cash and cash equivalents at beginning of
period.................................. 45,290 46,490 58,920 53,179 53,179 66,887
--------- ----------- --------- --------- --------- ---------
Cash and cash equivalents at end of
period.................................. $ 46,490 $ 58,920 $ 53,179 $ 66,887 $ 61,883 $ 79,102
--------- ----------- --------- --------- --------- ---------
--------- ----------- --------- --------- --------- ---------
</TABLE>
See Notes to Consolidated Financial Statements of RII. Note 2 describes
a change in entity and related presentation for periods presented.
F-6
<PAGE>
RESORTS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
CAPITAL STOCK
----------------------------------------- CAPITAL IN
RII COMMON EXCESS OF ACCUMULATED NOTES
STOCK CLASS A CLASS B PAR DEFICIT RECEIVABLE
--------------- ----------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1989............ $ 160 $ 713 $ 109,127 $ (320,641) $ (50,000)
Net income for period through August 31,
1990................................... 258,215
Effects of reorganization:
Elimination of accumulated deficit.... (62,426) 62,426
Cancellation of loan to Griffco
Resorts Holding, Inc................. (50,000) 50,000
Cancellation of Class A and Class B
shares............................... (160) (713) 873
Issuance of RII Common Stock.......... $ 200 103,798 (11,000)
----- ----------- ----------- ---------- ------------ ----------
Balance at August 31, 1990.............. 200 -0- -0- 101,372 -0- (11,000)
Net loss for period from September 1,
1990................................... (13,531)
----- ----------- ----------- ---------- ------------ ----------
Balance at December 31, 1990............ 200 -0- -0- 101,372 (13,531) (11,000)
Settlement of Other Class 3C Claims..... 1 594
Stock awards............................ 34
Net loss for year 1991.................. (41,571)
----- ----------- ----------- ---------- ------------ ----------
Balance at December 31, 1991............ 201 -0- -0- 102,000 (55,102) (11,000)
Settlement of Other Class 3C Claims..... 1 92
Net loss for year 1992.................. (53,454)
----- ----------- ----------- ---------- ------------ ----------
Balance at December 31, 1992............ 202 -0- -0- 102,092 (108,556) (11,000)
Collection on note receivable........... 3,477
Cancellation of note receivable......... 7,523
Net loss for three quarters ended
September 30, 1993 (unaudited)......... (58,370)
----- ----------- ----------- ---------- ------------ ----------
Balance at September 30, 1993
(unaudited)............................ $ 202 $ -0- $ -0- $ 102,092 $ (166,926) $ -0-
----- ----------- ----------- ---------- ------------ ----------
----- ----------- ----------- ---------- ------------ ----------
</TABLE>
See Notes to Consolidated Financial Statements of RII. Note 2 describes
a change in entity and related presentation for periods presented.
F-7
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial statements and footnote data with respect to September 30, 1993
and the three quarters ended September 30, 1992 and 1993 are unaudited. In the
opinion of management, such unaudited financial statements include all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation, in accordance with generally accepted accounting principles.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Resorts
International, Inc. ("RII") and all significant subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation.
The accounts of foreign subsidiaries are maintained in U.S. dollars. The term
"Company" as used herein includes RII and/or one or more of its subsidiaries, as
the context may require.
REVENUE RECOGNITION
The Company records as revenue the win from casino gaming activities which
represents the difference between amounts wagered and amounts won by patrons.
Revenues from hotel and related services and from theatre ticket sales are
recognized at the time the related service is performed.
COMPLIMENTARY SERVICES
The Statements of Operations reflect each category of operating revenues
excluding the retail value of complimentary services provided to casino patrons
without charge. The rooms, food and beverage, and other casino/hotel operations
departments allocate a percentage of their total operating expenses to the
casino department for complimentary services provided to casino patrons. These
allocations do not necessarily represent the incremental cost of providing such
complimentary services to casino patrons. Amounts allocated to the casino
department from the other operating departments were as follows:
<TABLE>
<CAPTION>
1990
----------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
--------- ----------- --------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Rooms........................................ $ 2,749 $ 1,200 $ 3,563 $ 3,738
Food and beverage............................ 11,780 6,325 19,254 20,805
Other casino/hotel operations................ 5,587 1,946 5,839 6,408
--------- ----------- --------- ---------
Total allocated to casino................ $ 20,116 $ 9,471 $ 28,656 $ 30,951
--------- ----------- --------- ---------
--------- ----------- --------- ---------
</TABLE>
CASH EQUIVALENTS
The Company considers all of its short-term money market securities
purchased with maturities of three months or less to be cash equivalents. The
carrying value of cash equivalents approximates fair value due to the short
maturity of these instruments.
INVENTORIES
Inventories of provisions, supplies and spare parts are carried at the lower
of cost (first-in, first-out) or market.
PROPERTY AND EQUIPMENT
Property and equipment are depreciated over their estimated useful lives
using the straight-line method for financial reporting purposes.
F-8
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASINO REINVESTMENT DEVELOPMENT AUTHORITY ("CRDA") OBLIGATIONS
Under the New Jersey Casino Control Act ("Casino Control Act"), the Company
is obligated to purchase CRDA bonds, which will bear a below-market interest
rate, or make an alternative qualifying investment. The Company charges to
expense an estimated discount related to CRDA investment obligations as of the
date the obligation arises based on fair market interest rates of similar
quality bonds in existence as of that date. On the date the Company actually
purchases the CRDA bond, the estimated discount previously recorded is adjusted
to reflect the actual terms of the bonds issued and the then existing fair
market interest rate for similar quality bonds.
The discount on CRDA bonds purchased is amortized to interest income over
the life of the bonds using the effective interest rate method.
INTEREST ACCRUAL ON SENIOR SECURED REDEEMABLE NOTES DUE APRIL 15, 1994 ("OLD
SERIES NOTES")
When RII elects to issue additional Old Series Notes to satisfy its interest
obligation on such notes, for financial statement purposes interest is accrued
at the estimated market value of the Old Series Notes to be issued. The discount
resulting from the difference between face value and estimated market value of
the additional notes decreases interest expense of the current period and is
amortized to expense over the remaining life of the issue.
INCOME TAXES
RII and all of its domestic subsidiaries file consolidated U.S. federal
income tax returns.
The Company accounts for income taxes under the liability method prescribed
by Statement of Financial Accounting Standards No. 96, "Accounting for Income
Taxes", ("SFAS 96"). Under this method, the deferred tax liability is determined
based on the difference between the financial reporting and tax bases of assets
and liabilities and enacted tax rates which will be in effect for the years in
which the differences are expected to reverse. The deferred tax liability is
reduced by cumulative tax credits and losses being carried forward for tax
purposes, subject to applicable limitations.
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes", ("SFAS
109"). SFAS 109 supersedes SFAS 96 but retains the liability method of
accounting for income taxes. One of the principal differences of SFAS 109 from
SFAS 96 is that in measuring deferred tax assets future taxable income may be
considered in evaluating the likelihood of utilizing net operating loss or tax
credit carryforwards. Adoption of SFAS 109 is required for fiscal years
beginning after December 15, 1992. Upon adoption, the principles of SFAS 109 may
be applied retroactively through restatement of previously issued financial
statements, or on a prospective basis. The Company will adopt SFAS 109 for
fiscal 1993 and anticipates no significant impact on the Company's consolidated
financial statements.
There are no income taxes in The Bahamas and the income of RII's
subsidiaries in The Bahamas is generally not subject to U.S. federal income
taxation until it is distributed to a U.S. parent. Deferred federal income taxes
are provided on the undistributed earnings of Bahamian subsidiaries.
PER SHARE DATA
For the period through August 31, 1990 there was a sole shareholder of RII.
Accordingly, no per share data is disclosed for that period. For the periods
from September 1, 1990 per share data was computed using the weighted average
number of shares of common stock outstanding during those periods.
NOTE 2 -- REORGANIZATION
In November 1989 certain creditors of RII and its former subsidiary, Resorts
International Financing, Inc. ("RIFI"), filed involuntary petitions for relief
under chapter 11 of the United States
F-9
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- REORGANIZATION (CONTINUED)
Bankruptcy Code. In December 1989 RII and RIFI filed consents to the involuntary
petitions and Griffin Resorts Inc. ("GRI"), a subsidiary of RII, and Griffin
Resorts Holding Inc. ("GRH"), another former subsidiary of RII, filed voluntary
petitions for relief under chapter 11 (collectively, the "Old Chapter 11
Cases").
RII, RIFI, GRI and GRH (the "Old Debtors") filed the Second Amended Joint
Plan of Reorganization dated as of May 31, 1990 (the "Old Plan"), which was
confirmed by the New Jersey bankruptcy court in August 1990. On September 17,
1990 (the "Old Effective Date"), all conditions to the effectiveness of the Old
Plan were either met or waived and the Old Plan became effective.
Pursuant to the Old Plan, the previously outstanding public debt issued by
RII, RIFI and GRI (the "Old Debt Securities") was cancelled, the Old Debtors
were discharged from all other claims arising prior to the commencement of the
Old Chapter 11 Cases and all previously outstanding shares of stock of RII were
cancelled. In exchange for the Old Debt Securities, RII issued new debt
securities consisting of $187,500,000 principal amount of Series A Senior
Secured Redeemable Notes due April 15, 1994 ("Old Series A Notes"), $137,500,000
principal amount of Series B Senior Secured Redeemable Notes due April 15, 1994
("Old Series B Notes"), and $105,333,000 principal amount of First Mortgage
Non-Recourse Pass-Through Notes due June 30, 2000 ("Showboat Notes") and
15,100,000 shares of new common stock of RII ("RII Common Stock"). The Old
Series A Notes and the Old Series B Notes are referred to collectively as the
"Old Series Notes". See Note 7 for a description of the Old Series Notes and
Showboat Notes and the collateral therefor.
Further, pursuant to the Old Plan, Merv Griffin acquired 4,400,000 shares of
RII Common Stock for which the Company received $12,345,000 in cash and an
$11,000,000 promissory note secured by a letter of credit issued by a bank. See
Note 8. In addition, pursuant to the Old Plan, in exchange for the tendering of
voluntary releases by holders of Old Debt Securities issued by GRI, Merv Griffin
paid to such tendering holders ("Electing GRI Noteholders") the sum of
$2,655,000 which amount was required to be used by such persons to fund the
purchase of an additional 500,000 shares of RII Common Stock to be distributed
pro rata to the Electing GRI Noteholders.
Additionally, pursuant to the Old Plan, Merv Griffin was released by the Old
Debtors and their affiliates from all claims arising prior to the commencement
of the Old Chapter 11 Cases and Merv Griffin waived certain claims he asserted
against the Old Debtors. Further, Merv Griffin entered into a contract with RII
pursuant to which, for the two years ended September 16, 1992, RII was granted a
non-exclusive license to use his name and likeness to promote its facilities and
operations and Merv Griffin agreed to act as Chairman of the Board of RII and to
provide certain other services without compensation, subject to certain
conditions relating principally to the continuation of his control of the
Company.
The Old Plan further provided for the establishment of a litigation trust
("the Litigation Trust") to pursue, for the benefit of unsecured creditors of
the Old Debtors, all claims the Old Debtors or certain of their affiliates may
have against Donald Trump, the former Chairman of the Board and controlling
shareholder of RII, and certain of his affiliates. In October 1990, the Company
funded the Litigation Trust by depositing with the trustee under the Litigation
Trust (the "Litigation Trustee") the sum of $5,000,000 which sum is used to
cover expenses of the Litigation Trustee in pursuing such claims, with any
unused balance of such amount to be distributed to the beneficiaries of the
Litigation Trust. Pursuant to the Old Plan, RII had an additional obligation to
repurchase certain beneficial interests in the Litigation Trust in an amount up
to $3,880,000 if certain conditions were not met by September 17, 1991. The
$3,880,000 was deposited with the Litigation Trustee in October 1990 and the
repurchase was made in October 1991.
F-10
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- REORGANIZATION (CONTINUED)
On October 1, 1990 (the "Initial Distribution Date"), among other things,
(i) the indentures governing the Old Debt Securities were cancelled and of no
further force and effect, (ii) the distributions of RII Common Stock and the Old
Series Notes and Showboat Notes provided for under the Old Plan were commenced,
and (iii) Merv Griffin was issued certificates representing 4,400,000 shares of
RII Common Stock and, in addition to the $12,345,000 in cash delivered to RII on
the Old Effective Date, Merv Griffin delivered to RII the promissory note in the
amount of $11,000,000.
FRESH START ACCOUNTING
The Company accounted for the reorganization using "fresh start" accounting.
Accordingly, all assets and liabilities were restated to reflect their estimated
fair values and the accumulated deficit was eliminated. Although the
confirmation date was August 28, 1990, the Company recorded the effects of the
reorganization as of August 31, 1990.
The financial information contained herein relating to RII's 1990
Consolidated Statements of Operations and Cash Flows is presented separately for
the periods "Through August 31" and "From September 1" due to the new basis of
accounting which resulted from the application of fresh start accounting.
The exchange of securities in connection with the reorganization resulted in
a gain of $421,611,000 which, together with the related deferred income tax
benefit of $8,198,000, has been reported as an extraordinary item.
The revaluation of the Company's other assets and liabilities as of August
31, 1990, which was based on independent appraisals, discounted cash flows,
evaluations, estimations, and other studies, resulted in a net loss of
$153,219,000, with the following components:
<TABLE>
<CAPTION>
(IN THOUSANDS OF
DOLLARS)
<S> <C>
Decrease in working capital......................................... $ 3,565
Decrease in property and equipment.................................. 153,132
Decrease in deferred charges and other assets....................... 1,230
Decrease in deferred tax liability.................................. (4,708)
----------
$ 153,219
----------
----------
</TABLE>
The loss on revaluation is included in recapitalization costs in 1990 in the
accompanying Consolidated Statements of Operations along with (i) the accrual of
approximately $9,030,000 of potential liabilities associated with the funding of
the Litigation Trust described above, of which $8,880,000 was deposited with the
Litigation Trustee, and (ii) legal and financial advisory fees and other costs
associated with the reorganization amounting to $24,769,000.
The accumulated deficit at August 31, 1990 of $62,426,000, which included
the effects of the reorganization, was reclassified to capital in excess of par.
Also, $50,000,000 of notes receivable from Griffco Resorts Holding, Inc.
("Griffco"), which were cancelled as part of the Old Plan, were reclassified to
capital in excess of par. Griffco was owned by Merv Griffin and was RII's parent
from November 15, 1988 to immediately prior to the Old Effective Date, at which
time Griffco merged into a subsidiary of RII.
The Company began accruing interest and amortizing discounts on the Old
Series Notes and the Showboat Notes on the Initial Distribution Date.
F-11
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- REORGANIZATION (CONTINUED)
BANKRUPTCY ACCOUNTING
For the period ended August 31, 1990, during which the Company operated
subject to the jurisdiction of the New Jersey bankruptcy court, the Company did
not accrue interest or amortize debt issuance costs on Old Debt Securities.
NOTE 3 -- REVERSE REPURCHASE AGREEMENTS
Cash equivalents and restricted cash equivalents at December 31, 1992
included reverse repurchase agreements (federal government securities purchased
under agreements to resell those securities) with the institutions listed in the
following table under which the Company had not taken delivery of the underlying
securities. These agreements matured January 4, 1993 except for $615,000 with
City National Bank of Florida which matured January 29, 1993.
<TABLE>
<CAPTION>
(IN THOUSANDS OF
DOLLARS)
<S> <C>
Prudential Securities, Inc.......................................... $ 26,621
City National Bank of Florida....................................... $ 6,893
Summit Trust Company................................................ $ 4,969
National Westminster Bank NJ........................................ $ 4,945
First Fidelity Bank N.A., South Jersey.............................. $ 2,185
Bear, Stearns & Co. Inc............................................. $ 1,809
</TABLE>
NOTE 4 -- RESTRICTED CASH EQUIVALENTS
Components of restricted cash equivalents at December 31 were as follows:
<TABLE>
<CAPTION>
1991 1992
--------- ---------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Amount, including interest earned, on deposit with Litigation
Trustee............................................................ $ 5,233 $ 4,969
Showboat Lease payments and interest earned thereon held by trustee
(see Note 11)...................................................... 3,216 3,303
Collateral account for Old Series Notes............................. 1,139 1,183
Cash equivalents securing letters of credit and other guarantees.... 273 614
Escrow for legal settlement......................................... 1,700
--------- ---------
$ 11,561 $ 10,069
--------- ---------
--------- ---------
</TABLE>
F-12
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- RECEIVABLES
Components of receivables at December 31 were as follows:
<TABLE>
<CAPTION>
1991 1992
--------- ---------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Gaming.............................................................. $ 22,707 $ 19,476
Less allowance for doubtful accounts.............................. (8,169) (6,952)
--------- ---------
14,538 12,524
--------- ---------
Non-gaming:
Hotel and related................................................. 6,764 5,850
Interest on note receivable from Merv Griffin..................... 1,154 927
Bahamian duty refunds receivable.................................. 3,766 719
Refundable state income taxes..................................... 436 499
Contracts and notes............................................... 213 211
Other............................................................. 7,064 5,939
--------- ---------
19,397 14,145
Less allowance for doubtful accounts.............................. (1,709) (1,212)
--------- ---------
17,688 12,933
--------- ---------
$ 32,226 $ 25,457
--------- ---------
--------- ---------
</TABLE>
NOTE 6 -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Components of accounts payable and accrued liabilities at December 31 were
as follows:
<TABLE>
<CAPTION>
1991 1992
--------- ---------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Accrued payroll and related taxes and benefits...................... $ 15,364 $ 16,178
Accrued interest.................................................... 8,700 9,928
Accrued gaming taxes, fees and related assessments.................. 12,271 8,166
Customer deposits and unearned revenues............................. 11,291 7,976
Trade payables...................................................... 8,923 6,701
Litigation Trust and related expenses............................... 4,768 4,327
Accrued costs of recapitalization................................... 4,613 2,372
Progressive slot liability.......................................... 3,616 877
Other accrued liabilities........................................... 15,007 15,147
--------- ---------
$ 84,553 $ 71,672
--------- ---------
--------- ---------
</TABLE>
F-13
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- LONG-TERM DEBT
The carrying value and fair value by component of long-term debt at December
31 were as follows:
<TABLE>
<CAPTION>
1991 1992
------------------------ ------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
----------- ----------- ----------- -----------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Old Series A Notes due 1994............... $ 208,021 $ 120,652 $ 230,410 $ 131,334
Less unamortized discount............... (38,874) (24,636)
----------- -----------
169,147 205,774
----------- -----------
Old Series B Notes due 1994............... 164,525 98,715 190,182 107,453
Less unamortized discount............... (24,025) (19,265)
----------- -----------
140,500 170,917
----------- -----------
Showboat Notes due 2000................... 105,333 76,893 105,333 88,480
Less unamortized discount............... (24,309) (22,485)
----------- -----------
81,024 82,848
Capitalized leases........................ 3,567 3,567 2,001 2,001
----------- ----------- ----------- -----------
394,238 299,827 461,540 329,268
Less due within one year................ (1,571) (1,571) (828) (828)
----------- ----------- ----------- -----------
$ 392,667 $ 298,256 $ 460,712 $ 328,440
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The fair value presented above for the Company's long-term debt is based on
December 31 closing market prices for publicly traded debt and carrying value
for capitalized leases, as capitalized leases are not considered material to the
total.
The Old Series Notes are guaranteed as to payment of principal and interest
by GRI, the subsidiary of RII which, through its Bahamian subsidiaries, owns and
operates the Company's Bahamian properties, and are secured by the collateral
described below. The Old Series A Notes and the Old Series B Notes will rank
pari passu with respect to amounts realized upon any sale or other disposition
of the collateral.
The collateral consists of:
(i) RII's fee and leasehold interests in substantially all of its real
properties other than the 99-year net lease of a 10 acre site underlying the
Showboat Hotel and Casino in Atlantic City (the "Showboat Lease") and the real
property that is subject to the Showboat Lease;
(ii) the fee and leasehold interests in the real and personal property of
Merv Griffin's Resorts Casino Hotel (the "Resorts Casino Hotel") and the
contiguous parking garage which interests are owned by Resorts International
Hotel, Inc. ("RIH"), a subsidiary of RII;
(iii) all of the outstanding capital stock of RIH and GRI and all of RII's
other direct and indirect domestic subsidiaries;
(iv) promissory notes made by RIH in the aggregate principal amount of
$325,000,000;
(v) 66% of the outstanding voting stock and 100% of the non-voting stock of
Resorts International (Bahamas) 1984 Limited ("RIB"), the Bahamian subsidiary of
GRI which together with its subsidiaries owns and operates the Company's
Bahamian properties; and
F-14
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- LONG-TERM DEBT (CONTINUED)
(vi) a $50,000,000 promissory note made by RIB and guarantees thereof by
certain of RIB's subsidiaries.
The collateral described above consists of substantially all of the assets
of the Company other than the Showboat Lease and the real property that is
subject to the Showboat Lease.
The Old Series Notes bear interest as follows:
<TABLE>
<CAPTION>
OLD SERIES A OLD SERIES B
------------ ------------
<S> <C> <C>
April 11, 1990 through April 15, 1991............................. 6%
May 8, 1990 through April 15, 1991................................ 11%
Year ended April 15, 1992......................................... 9% 15%
Year ending April 15, 1993........................................ 12% 15%
Year ending April 15, 1994........................................ 15% 15%
</TABLE>
The Company considered such cost through the Initial Distribution Date to be a
cost of the exchange.
Interest on the Old Series Notes is payable semi-annually on April 15 and
October 15 in each year. RII may pay all or any portion of interest accruing on
Old Series A Notes by issuing additional Old Series A Notes, and may pay all or
any portion of interest accruing on Old Series B Notes by issuing additional Old
Series B Notes (payment in kind or "Old PIK Payments"). Interest on each of the
Old Series Notes may be paid in cash only if interest is concurrently paid in
cash on both series in proportion to the total interest due.
On each interest payment date through October 15, 1992, the Company elected
to satisfy its interest obligations by issuing additional Old Series Notes. The
cumulative principal amounts of Old Series A and Old Series B Notes issued to
satisfy such interest obligations were $42,910,000 and $51,432,000,
respectively. The interest accrued on the Old Series Notes subsequent to October
15, 1992 was calculated as though additional Old Series Notes will be issued to
satisfy RII's interest obligation on April 15, 1993.
The indenture for the Old Series Notes contains certain restrictive
covenants on the part of RII, including restrictions on (i) the payment of cash
dividends or redemptions of capital stock by RII; (ii) the repurchase of any Old
Series Notes other than at par, unless certain conditions are met; (iii) the
incurrence of additional indebtedness, with certain exceptions; (iv) mergers and
consolidations with entities other than affiliates of RII; and (v) the ability
of RII and its subsidiaries to sell their assets. The indenture for the Old
Series Notes also requires RII to maintain a consolidated tangible net worth
equal to at least $50,000,000. Consolidated tangible net worth is defined as
consolidated shareholders' equity (deficit) adjusted for, among other things,
cumulative amortization of debt discounts.
The indenture for the Old Series Notes also gives each holder of Old Series
Notes the right to require RII to repurchase such holder's notes at 100% of the
principal amount plus accrued interest in the event of a change in control, as
defined. Such change in control includes, among other events, (i) any person or
group not including Merv Griffin or his affiliates acquiring RII Common Stock
constituting 50% or more of the total voting power of RII and (ii) Merv Griffin
and his affiliates no longer being the beneficial owners of RII Common Stock
constituting more than 15% of the voting power of RII, other than as a result of
the issuance and sale by RII of additional shares of such RII Common Stock.
The Old Plan provided for the issuance of additional Old Series B Notes in
settlement of certain other claims against the Old Debtors which were
outstanding as of the date the Company filed for relief under chapter 11 ("Other
Class 3C Claims"). An additional $1,250,000 principal amount of Old
F-15
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- LONG-TERM DEBT (CONTINUED)
Series B Notes were issued through December 31, 1992 in settlement of such
claims which had been accrued for previously. Additional Old Series B Notes are
expected to be issued in the future in settlement of Other Class 3C Claims.
The Showboat Notes are non-recourse notes secured by a mortgage encumbering
the real property which is subject to the Showboat Lease, by a collateral
assignment of the Showboat Lease, and by a pledge of any proceeds of the sale of
such mortgage and collateral assignment.
Interest on the Showboat Notes commenced on July 1, 1990 and consists of a
pass-through (subject to certain adjustments) of the lease payments received
under the Showboat Lease. The Company considered such cost through the Initial
Distribution Date to be a cost of the exchange. See Note 11 for a description of
the Showboat Lease. Interest is payable semi-annually on January 15 and July 15.
The weighted average effective interest rates on RII's publicly held debt at
December 31, 1992 were as follows: Old Series A Notes -- 25.0%; Old Series B
Notes -- 25.4%; and Showboat Notes -- 11.1%.
Minimum principal payments of long-term debt outstanding as of December 31,
1992, for the five years thereafter are as follows: 1993 -- $828,000; 1994 --
$421,469,000; 1995 -- $258,000; 1996 -- $38,000; 1997 -- None. If the Company
continues to satisfy interest obligations on the Old Series Notes by issuing
additional Old Series Notes, and if no Old Series Notes are retired from
proceeds of asset sales, the total obligation at maturity in 1994 will amount to
approximately $519,000,000. See Note 15.
NOTE 8 -- SHAREHOLDERS' EQUITY (DEFICIT)
Pursuant to the Old Plan described in Note 2, all previously issued and
outstanding equity securities were cancelled and 50,000,000 shares of RII Common
Stock were authorized. On October 1, 1990, the Initial Distribution Date,
20,000,000 shares of RII Common Stock were issued. The Old Plan calls for
issuance of additional shares of RII Common Stock in settlement of Other Class
3C Claims. An additional 137,234 shares of RII Common Stock were issued through
December 31, 1992 in settlement of such claims. Additional shares are expected
to be issued in the future in settlement of Other Class 3C Claims.
On June 21, 1991, the Company awarded 5,000 shares of RII Common Stock to
each of the four members of the Board of Directors serving as of that date other
than Merv Griffin, Chairman of RII, and David P. Hanlon, President and Chief
Executive Officer of RII. These 20,000 shares were issued on August 15, 1991.
Under the terms of the Old Plan, in September 1990 RII received $12,345,000
in cash and an $11,000,000 promissory note from Merv Griffin (the "Griffin
Note") for the shares purchased by him. The promissory note is secured by a
letter of credit issued by a bank. The note bears interest at the rate of 8% per
annum and is payable on demand.
NOTE 9 -- STOCK OPTION PLAN
As of September 17, 1990, the Company established the Resorts International,
Inc. Senior Management Stock Option Plan (the "1990 Stock Option Plan"). The
1990 Stock Option Plan authorizes the grant of stock options to members of the
Company's management. The number of shares which may be granted under the 1990
Stock Option Plan may not exceed ten percent (10%) of the shares of Common Stock
Outstanding, as defined in the 1990 Stock Option Plan, subject to adjustment.
Pursuant to the 1990 Stock Option Plan, options to purchase up to five percent
(5%) of
F-16
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- STOCK OPTION PLAN (CONTINUED)
the shares of Common Stock Outstanding may be granted to Mr. Hanlon; the
remaining options may be granted to other eligible employees at the discretion
of a committee appointed by the Board of Directors of RII.
Pursuant to the 1990 Stock Option Plan, the Company granted an option to Mr.
Hanlon to purchase five percent of the Common Stock Outstanding at an exercise
price of $1.875 per share, the fair market value on the date of grant. Having
met certain performance and other criteria, the option was fully exercisable at
December 31, 1992.
In addition to Mr. Hanlon's option, options to purchase the following shares
of RII Common Stock were outstanding at December 31, 1992:
<TABLE>
<CAPTION>
EXERCISE OPTIONS OPTIONS
PRICE OUTSTANDING EXERCISABLE
- --------- ----------- -----------
<S> <C> <C>
$ 1.875 684,000 437,326
$ 1.75 30,000
----------- -----------
714,000 437,326
----------- -----------
----------- -----------
</TABLE>
No options had been exercised as of December 31, 1992.
NOTE 10 -- RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH MERV GRIFFIN
See Note 2 for a description of the impact of the Old Plan on Merv Griffin's
ownership interest and contractual relationship with the Company through
September 16, 1992. The Company is currently engaged in discussions with Mr.
Griffin's representatives concerning the terms and conditions of a potential new
license and services agreement between the Company and The Griffin Group, Inc.
(the "Griffin Group"), a corporation owned by Mr. Griffin. The Company
anticipates that any new agreement would provide for the continued services of
Mr. Griffin, would be effective as of September 17, 1992, and would provide for
compensation payments over a period of several years. Although at this time no
definitive agreement has been reached, in 1992 the Company accrued $521,000 for
the period from September 17 through December 31, 1992 in anticipation of a new
agreement.
See Note 8 for a description of RII's note receivable from Merv Griffin.
The Company reimbursed the Griffin Group $400,000, $358,000 and $211,000 for
charter air services related to Company business rendered in 1990, 1991 and
1992, respectively.
In 1991 and 1992 the Company did business with various subsidiaries of
January Enterprises, Inc., of which Merv Griffin is Chief Executive Officer. In
1991 the Company paid $235,000 and provided certain facilities and personnel for
the production of the "Ruckus Game Show" at Resorts Casino Hotel. Also in 1991,
the Company provided facilities, labor and accommodations relative to the
production of "Merv Griffin's 1991 New Year's Eve Special" which was broadcast
live from Resorts Casino Hotel. In 1992 the Company agreed to pay $100,000 and
provided certain facilities, labor and accommodations in connection with the
production of the live television broadcast of "Merv Griffin's New Year's Eve
Special 1992" from Resorts Casino Hotel. The Company received certain
promotional considerations in connection with the television broadcast of these
shows.
LOANS TO GRIFFCO
On November 17, 1988 the Company loaned $50,000,000 to Griffco, under two
non-interest bearing, demand notes. As part of the Old Plan, these notes were
cancelled as of the Old Effective Date.
F-17
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 -- RELATED PARTY TRANSACTIONS (CONTINUED)
OTHER
Antonio C. Alvarez II, a shareholder of Alvarez & Marsal, Inc., has been a
member of the Board of Directors of RII since September 1990. The Company paid
Alvarez & Marsal, Inc. $2,145,000, $241,000 and $300,000 for financial advisory
services rendered in 1990, 1991 and 1992, respectively.
Warren Cowan, who was Chairman of Rogers & Cowan, Inc. until July 1992, has
been a member of the Board of Directors of RII since September 1990. The Company
paid Rogers & Cowan, Inc. $179,000, $147,000 and $128,000 for public relations
services rendered for the Company's Atlantic City and Paradise Island properties
in 1990, 1991 and 1992, respectively.
NOTE 11 -- SHOWBOAT LEASE
The Company leases to a subsidiary ("ACS") of Showboat, Inc., a resort and
casino operator, approximately 10 acres of land adjacent to the Boardwalk in
Atlantic City. Under the 99-year net lease, lease payments are payable in equal
monthly installments on the first day of each month. The annual lease payment
for the lease year ending March 31, 1993, is $7,875,000. The lease payment is to
be adjusted annually, as of April 1, for changes in the consumer price index.
Pursuant to the lease agreement, the Company is unable to transfer its
interest in the lease, other than to an affiliate, without giving ACS the
opportunity to purchase such interest at terms no less favorable than agreed to
by any other party.
As described in Note 7, the Showboat Notes are secured by a mortgage
encumbering the real property which is subject to the Showboat Lease, by a
collateral assignment of the Showboat Lease, and by a pledge of any proceeds of
the sale of such mortgage and collateral assignment. Since July 1, 1990, lease
payments under the Showboat Lease are required to be passed-through to holders
of the Showboat Notes.
NOTE 12 -- RETIREMENT PLANS
RII and certain of its subsidiaries participate in a defined contribution
plan covering substantially all of their non-union, full-time employees. The
Company makes contributions to this plan based on a percentage of eligible
employee contributions. Total pension expense for this plan was $553,000,
$740,000 and $767,000 in 1990, 1991 and 1992, respectively.
In 1991 the Company recorded a gain of $344,000 resulting from the
settlement of a defined benefit plan (the "Retirement Plan") which was
terminated in 1989. Net periodic pension income for the Retirement Plan for 1990
and 1991 amounted to $156,000 and $121,000, respectively.
The total net pension expense, exclusive of the previously noted settlement
gain, for RII's and its subsidiaries' single-employer pension plans amounted to
$397,000, $619,000 and $767,000 for 1990, 1991 and 1992, respectively.
In addition to the plans described above, union and certain other employees
of several subsidiary companies are covered by multi-employer defined benefit
pension plans to which subsidiaries make contributions. Such contributions
totaled $2,764,000, $2,404,000 and $1,403,000 in 1990, 1991 and 1992,
respectively.
NOTE 13 -- INCOME TAXES
As a result of the application of fresh start accounting in 1990, the
Company's consolidated assets and liabilities were adjusted to their estimated
fair values for financial statement purposes. Such revaluation is not permitted
for income tax return purposes. The resulting basis differences account for
substantially all of the deferred tax liability in the accompanying Consolidated
Balance Sheets.
F-18
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 -- INCOME TAXES (CONTINUED)
No tax provision was recorded for the two periods of 1990 due to the
generation of net operating losses for federal and state income tax purposes.
The gain on exchange of debt was not taxable. A deferred tax benefit resulted
from the elimination of basis differences on the Old Debt Securities, and is
included in the extraordinary item.
During 1991 the Company received a federal income tax refund of $831,000.
The refund related to the carryback of certain 1983 credits to 1980 and was
issued when the examination of the Company's 1983 tax return was waived. Such
amount was recorded as a federal income tax benefit in 1991. During 1992 the
Company received federal income tax refunds of $1,348,000 when the audit of the
Company's 1981 and 1982 tax returns was completed. Such amount was recorded as a
federal income tax benefit in 1992.
Net operating losses were generated for federal tax purposes in 1991 and
1992, so no federal tax provision was recorded in those years to offset benefits
noted above. No state tax provision was recorded in those years due to the
utilization of state net operating loss carryforwards in states where the
Company generated taxable income.
The effective income tax rate on the loss before income taxes and
extraordinary item varies from the statutory federal income tax rate as a result
of the following factors:
<TABLE>
<CAPTION>
1990
-------------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
---------- ------------ -------- --------
<S> <C> <C> <C> <C>
Statutory federal income
tax rate................ (34.0)% (34.0)% (34.0)% (34.0)%
Net operating losses for
which no tax benefit was
recognized.............. 32.7% 33.6% 33.4% 33.6%
Income taxes refunded.... (2.0)% (2.5)%
Other.................... 1.3% .4% .6% .4%
----- ----- -------- --------
Effective tax expense
(benefit) rate.......... 0 % 0 % (2.0)% (2.5)%
----- ----- -------- --------
----- ----- -------- --------
</TABLE>
Effective with the reorganization, the Company provided deferred taxes on
the unremitted earnings of its Bahamian subsidiaries by allowing for the sale of
the Bahamian assets at their restated value in the SFAS 96 computations. It is
the intention of the Company to sell its Bahamian assets (see Note 15). The
Company anticipates that taxes on any such sale will be offset by net operating
loss carryforwards under the provisions of the Internal Revenue Code for gains
existing as of the date of change in ownership.
For both federal tax and financial reporting purposes, the Company had net
operating loss carryforwards of approximately $622,000,000 at December 31, 1992.
Of this amount, approximately $140,000,000 is not limited as to use and expires
from 2005 through 2007. Due to the change in ownership of RII resulting from the
reorganization, the balance of the tax loss carryforward which expires from 1999
through 2005 is limited in its availability to offset future taxable income of
the Company. Though otherwise limited, such loss carryforwards would be
available to offset gains on sales of assets owned at the date of change in
ownership of the Company which are sold within five years of that date.
At December 31, 1992 RII and its subsidiaries had significant net operating
loss carryforwards in New Jersey, which expire from 1993 to 1999, and in
Florida, which expire from 1994 to 2007.
Also, for both federal tax and financial reporting purposes, the Company had
tax credit carryforwards of $2,800,000 at December 31, 1992 which expire from
1998 through 2007.
F-19
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 -- INCOME TAXES (CONTINUED)
The source of loss before income taxes and extraordinary item was as
follows:
<TABLE>
<CAPTION>
1990
-------------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
------------ ----------- ---------- ----------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
U.S. source loss......................... $ (133,865) $ (5,439) $ (30,095) $ (41,526)
Foreign source loss...................... (37,729) (8,092) (12,307) (13,276)
------------ ----------- ---------- ----------
Loss before income taxes and
extraordinary item...................... $ (171,594) $ (13,531) $ (42,402) $ (54,802)
------------ ----------- ---------- ----------
------------ ----------- ---------- ----------
</TABLE>
F-20
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14 -- STATEMENTS OF CASH FLOWS
Supplemental disclosures required by Statement of Financial Accounting
Standards No. 95 "Statement of Cash Flows" are presented below.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, FOR THE THREE
--------------------------------------------
QUARTERS
1990 ENDED SEPTEMBER 30,
----------------------
THROUGH FROM --------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
--------- ----------- --------- --------- --------- ---------
(IN THOUSANDS OF DOLLARS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Reconciliation of net earnings (loss) to net cash
provided by operating activities:
Net earnings (loss).............................. $ 258,215 $ (13,531) $ (41,571) $ (53,454) $ (37,223) $ (58,370)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation................................... 20,047 6,232 23,814 25,322 19,011 20,942
Amortization (principally debt discounts)...... 438 8,683 32,415 37,565 26,507 37,349
Interest expense settled by issuance of
long-term debt................................ 765 19,584 31,165 15,445 16,787
Provision for doubtful receivables............. 3,530 1,692 6,373 4,047 2,803 2,284
Provision for discount on CRDA obligations..... 993 504 1,574 1,451 1,117 1,196
Deferred tax provision......................... 1,000
Recapitalization costs......................... 187,018 2,848 2,337 4,879
Stock awards................................... 34
Extraordinary item -- gain on exchange of
debt.......................................... (429,809)
Net (gain) loss on sales of property and
equipment..................................... (878) (59) 533 113 17
Net (increase) decrease in accounts
receivable.................................... 1,430 (2,582) (9,719) 2,744 9,487 8,177
Net (increase) decrease in inventories and
prepaids...................................... (3,492) 1,278 (433) 429 (3,315) (3,297)
Net (increase) decrease in deferred charges and
other assets.................................. 1,090 109 296 (1,499) (1,379) (439)
Net increase (decrease) in accounts payable and
accrued liabilities........................... (8,053) 3,228 (4,241) (10,299) (688) 11,301
--------- ----------- --------- --------- --------- ---------
Net cash provided by operating activities...... $ 30,529 $ 6,319 $ 28,659 $ 40,432 $ 34,119 $ 41,809
--------- ----------- --------- --------- --------- ---------
--------- ----------- --------- --------- --------- ---------
Non-cash investing and financing transactions:
Issuance of RII Common Stock for receivable...... $ 26,000
Issuance of long-term debt (at estimated market
value) in satisfaction of Old Plan
obligations..................................... $ 9,290
Other Class 3C Claims settled for RII Common
Stock and Old Series B Notes.................... $ 1,448 $ 227 $ 227
Reduction in long-term debt resulting from
exchange........................................ $ 536,277
Exchange of note receivable from shareholder for
note receivable from Griffin Group.............. $ 7,523
Reduction in note receivable from Griffin Group
applied to prepaid services..................... $ 2,205
Increase in liabilities for additions to property
and equipment and other assets.................. $ 3,473 $ 1,505 $ 1,180 $ 112 $ 242 $ 843
Reclassifications to deposits and other assets
from receivables and property and equipment..... $ 675 $ 674 $ 337 $ 450
Receivables from sale of property................ $ 1,185 $ 491
</TABLE>
F-21
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 -- COMMITMENTS AND CONTINGENCIES
INTENTION TO SELL PARADISE ISLAND ASSETS
Since the Company's announcement in 1990 of its intention to sell its
Paradise Island assets, including its operations and properties, there has not
been substantial interest on the part of prospective purchasers. In August 1991
the Company received an offer for its Paradise Island assets which would have
netted the Company approximately $150,000,000, if the transaction had been
consummated. However, the Company considers that offer to be terminated and
continues to solicit offers.
The price that was offered in 1991 was far below the Company's expectations
in 1990, when the sale of its Paradise Island assets became an integral part of
the Company's Business Plan, and is well below an amount that would be adequate
to retire sufficient Old Series Notes at par so as to permit the Company's then
remaining Atlantic City operations to service the balance of the debt
outstanding after such a sale. For this reason, prior to or contemporaneously
with completion of a sale of the Paradise Island assets for such a depressed
price, the Company would be required to accomplish in one or more related
transactions significant further reductions in its debt service requirements. In
the absence of further reductions, the Company does not expect that it would be
able to accept a price for its Paradise Island assets in the range that was
offered. See "Servicing of Old Series Notes" below.
Pursuant to the indenture governing the Old Series Notes, in the event of
any sale of its Paradise Island assets, (i) the Company is required to deliver
to the indenture trustee an opinion of an independent financial adviser that the
sales price is not less than the fair market value of the property being sold;
(ii) not less than 85% of the aggregate sales price must be paid in cash
immediately upon closing and the balance in promissory notes with terms
acceptable to the Company's Board of Directors; and (iii) all cash proceeds (and
cash proceeds of non-cash proceeds) must be deposited in a collateral account
and thereafter used to redeem the Old Series Notes pro rata at par. However,
these conditions to a sale can be waived if holders of at least two-thirds in
aggregate principal amount of the outstanding Old Series Notes and holders of at
least the majority in aggregate principal amount of each Series have consented
in writing.
In connection with the approval of the acquisition of RII by Griffco in
November 1988 by the relevant Bahamian governmental authorities, RII granted to
The Hotel Corporation of The Bahamas ("HCB"), a corporation owned by the
Government of The Bahamas, a right of first refusal in respect of any sale of
its principal Bahamian subsidiary for a five year period ending November 15,
1993. Such right is exercisable for a period of ninety days following written
notice from RII to HCB setting forth the terms of a proposed sale. Any sale of
the Company's Paradise Island assets will be dependent upon receipt of necessary
authorizations or waivers from Bahamian governmental authorities.
For information as to revenues and contribution to consolidated loss before
income taxes and extraordinary item of these operations, see the segment tables
included in "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Amounts reported for the Paradise Island segment of such
tables include the operations of certain domestic subsidiaries which provide
support services to the Paradise Island properties, which may or may not be
included in any sale that may be consummated.
SERVICING OF OLD SERIES NOTES
If interest obligations on the Old Series Notes continue to be satisfied by
Old PIK Payments, and assuming there are no principal retirements resulting from
a sale of the Paradise Island assets or any other assets, the April 15, 1993
interest obligation would approximate $28,000,000, the October 15, 1993 interest
obligation would approximate $34,000,000 and the final interest obligation would
approximate $36,000,000. These increases would result in a total obligation of
approximately $519,000,000 at the maturity date, April 15, 1994.
F-22
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
Although, due to Old PIK Payments, the Company is able to service the Old
Series Notes in the near term, in the longer term it must reduce its debt to a
level that can be supported by the cash flow reasonably anticipated on a
continuing basis. The depressed market for asset sales makes it unlikely that
their proceeds would provide a reduction of principal to a level capable of
being serviced by remaining operations. However, failure to achieve such sales
results in an increasing amount of principal outstanding due to Old PIK
Payments, which amount raises substantial uncertainties regarding sources of
repayment or refinancing at maturity in April 1994.
The Company is continuing to pursue a business strategy that combines an
effort to improve the profitability of both its Atlantic City and Paradise
Island operations together with continued efforts to consummate a sale of the
Paradise Island assets at as high a price as can be reasonably achieved.
However, it is evident that the Company must attempt to develop financial
alternatives other than, or in conjunction with, a sale of its Paradise Island
assets.
Thus, the Company is utilizing financial advisers to assist it in the
development and analysis of financial alternatives as well as the development of
a long-term financial plan. In this connection, management of the Company, with
the assistance of its financial advisers, has been engaged in discussions with
representatives of the principal holders of the Old Series Notes in an effort to
reach an agreement as to the terms of a possible restructuring of the Old Series
Notes. Although no definitive agreement has yet been reached, it is anticipated
that any restructuring would involve an exchange of the Old Series Notes for a
combination of cash, new debt, certain operating assets and equity in the
remaining Company. The Company's objective in such a recapitalization would be
to reduce its outstanding debt sufficiently so that it may be serviced from the
Company's continuing operations, while allowing for certain additional
borrowings for capital improvements, working capital and possible expansion. The
specific terms and conditions, and other details, of any restructuring would, of
course, be set forth in definitive agreements, indentures and other documents.
At this time, no representation can be made as to whether, when or on what terms
any such restructuring, or other financial alternative, may be proposed or
effected.
CRDA
The Casino Control Act, as originally adopted, required a licensee to make
investments equal to 2% of the licensee's net casino win (as defined under the
Casino Control Act) (the "investment obligation") for each calendar year,
commencing in 1979, in which such net casino win exceeded its "cumulative
investments" (as defined in the Casino Control Act). A licensee had five years
from the end of each calendar year to satisfy this investment obligation or
become liable for an "alternative tax" in the same amount. In 1984 the New
Jersey legislature amended the Casino Control Act so that these provisions now
apply only to investment obligations for the years 1979 through 1983.
Effective for 1984 and subsequent years, the amended Casino Control Act
requires a licensee to satisfy its investment obligation by purchasing bonds to
be issued by the CRDA, or by making other investments authorized by the CRDA, in
an amount equal to 1.25% of a licensee's net casino win. If the investment
obligation is not satisfied, then the licensee will be subject to an investment
alternative tax of 2.5% of net casino win. Since 1985, a licensee has been
required to make quarterly deposits with the CRDA against its current year
investment obligation.
F-23
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
An analysis of RIH's investment obligations under the Casino Control Act and
RIH's means of settlement since 1979 follows:
<TABLE>
<CAPTION>
1979-1983 1984-1992 TOTAL
---------- ---------- ----------
(IN THOUSAND OF DOLLARS)
<S> <C> <C> <C>
Investment obligations...................................................... $ (21,637) $ (26,118) $ (47,755)
Means of settlement:
Housing related investments under audit................................... 13,104 13,104
Housing related investments previously approved........................... 1,000 1,000
CRDA deposits/bond purchases.............................................. 7,533 25,454 32,987
---------- ---------- ----------
Remaining investment obligation at December 31, 1992, which was deposited in
January 1993............................................................... $ -0- $ (664) $ (664)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
With regard to the housing related investments under audit, in January 1988
the CRDA notified the Company of its interpretation as to the periods of time
during which expenditures could be made to satisfy investment obligations.
CRDA's interpretation differs from RIH's and if found to be correct would
decrease the amount of RIH's qualifying expenditures by approximately $5,000,000
to $6,000,000. RIH believes that its interpretation is correct and intends to
contest this issue.
RIH also received a letter dated November 9, 1989, from the State of New
Jersey Department of the Treasury (the "Treasury") stating that the housing
related investments made by RIH were not sufficient to meet its investment
obligation for the years 1979 through 1983. The letter also stated that
alternative tax in the amount of $21,637,000 was due for those years, in
addition to penalties and interest thereon which amounted to $12,514,000 as of
the date of the letter. As set forth in the table above, the Company believes
that $8,533,000 of such obligations have been settled; $7,533,000 in cash and
$1,000,000 by previously approved housing related investments. Also, the Company
has received an audit report issued by an agency acting on behalf of the
Treasury identifying qualifying credits from housing related investments of
$10,165,000. This leaves a total of $2,939,000 of housing related investments
under audit in question. The Company has notified the Treasury that it takes
exception to the Treasury's computation of amounts due. Further, the Company
believes that the $2,939,000 of housing related investments in question will be
found, under further audit, to have been satisfied.
Although these matters have been dormant for some time, the Company's
counsel was recently contacted by the Treasury and expects an update of the
status of these matters in the near future. If the CRDA's interpretation as to
the periods of time during which qualifying expenditures can be made is found to
be correct, or if the Treasury's issue is determined adversely, RIH could be
required to pay the relevant amount in cash to the CRDA. In the opinion of
management, based upon advice of counsel, the aggregate liability, if any,
arising from these issues will not have a material adverse effect on the
accompanying consolidated financial statements.
As reflected in the table above, through December 31, 1992, RIH had made
CRDA deposits/bond purchases totalling $32,987,000. However, in August 1989 RIH
donated $12,048,000 to the CRDA in exchange for which RIH was relieved of its
obligation to purchase CRDA bonds of $18,193,000. Because RIH already had the
$18,193,000 for bond purchases on deposit with the CRDA, the difference between
this amount and the amount of the donation, or $6,145,000, was refunded to RIH
in August 1989. Thus, at December 31, 1992, RIH had a remaining balance of
$4,873,000 face value of bonds issued by the CRDA and had $9,921,000 on deposit
with the CRDA. These bonds and deposits, net of an estimated discount charged to
expense to reflect the below-market interest rate payable on the bonds, were
recorded as other assets in the Company's Consolidated Balance Sheets.
F-24
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
RIH records charges to expense to reflect the below-market interest rate
payable on the bonds it may have to purchase to fulfill its investment
obligation at the date the obligation arises. The charges in 1990, 1991 and 1992
for discounts on obligations arising in those years were $1,497,000, $1,574,000
and $1,451,000, respectively.
LITIGATION
RII and certain of its subsidiaries are defendants in certain litigation. In
the opinion of management, based upon advice of counsel, the aggregate
liability, if any, arising from such litigation will not have a material adverse
effect on the accompanying consolidated financial statements.
NOTE 16 -- GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION
Schedules of geographic and business segment information relating to (i)
revenues, (ii) contribution to consolidated loss before income taxes and
extraordinary item and (iii) identifiable assets, depreciation and capital
additions are included in "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
NOTE 17 -- SUBSEQUENT EVENTS
RESTRUCTURING
In April 1993 RII reached an agreement in principle with two representatives
(the "Representatives") of major holders of its Old Series Notes as to terms of
a restructuring of Old Series Notes. Such restructuring was to include the
exchange of the Old Series Notes for, among other things, cash, new debt, an
equity interest in RII and 100% of the equity of RII's Bahamian subsidiaries,
Paradise Island Airlines, Inc. ("PIA") and certain domestic subsidiaries which
support the Bahamian operations (PIA and these other domestic subsidiaries are
hereinafter referred to as the "U.S. Paradise Island Subsidiaries").
Since that time, management of the Company has been cooperating with the
Representatives in negotiating the possible sale to a third party (the
"Purchaser") of a majority of the equity of RII's Bahamian subsidiaries and the
assets and related liabilities of the U.S. Paradise Island Subsidiaries.
Further negotiations among the Company, the Purchaser and the
Representatives have led to the currently proposed restructuring which
contemplates, among other things, the exchange of the Old Series Notes for the
following:
(a) the Company's excess cash, as defined, presently estimated to be not
less than $30,000,000,
(b) $125,000,000 principal amount of nine-year, 11% mortgage notes to be
issued by a subsidiary of RII and to be secured by a mortgage on the Resorts
Casino Hotel and guaranteed by RIH,
(c) $35,000,000 principal amount of ten-year, 11.375%, junior mortgage
notes to be issued by a subsidiary of RII and to be secured by a junior
mortgage on the Resorts Casino Hotel and guaranteed by RIH,
(d) shares of RII Common Stock in an amount representing approximately
40% of the total outstanding shares, and
(e) either (i) $65,000,000 cash and 40% of the equity of a company
formed by the Purchaser to purchase 100% of the equity of RII's Bahamian
subsidiaries and, through subsidiaries, the assets and related liabilities
of the U.S. Paradise Island Subsidiaries or, if that purchase is not
consummated, (ii) 100% of the equity of a holding company formed to own 100%
of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the
assets and related liabilities of the U.S. Paradise Island Subsidiaries.
F-25
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 17 -- SUBSEQUENT EVENTS (CONTINUED)
Before any restructuring can be completed, specific terms and conditions
must be finalized and set forth in definitive agreements, indentures and other
documents. Also, any restructuring must be approved by various governmental
agencies, and the proposed restructuring will require certain shareholder and
creditor approvals, as well as confirmation by the Bankruptcy Court. The Company
cannot provide any assurances as to whether or when the proposed restructuring
will be effected, or that the restructuring will be on terms similar to those
described above.
NON-COMPLIANCE WITH INDENTURE FOR OLD SERIES NOTES
As of October 31, 1993 the Company's consolidated tangible net worth (see
Note 7) was below $50,000,000, the balance which the indenture for the Old
Series Notes requires the Company to maintain. The Old Series Note Trustee on
January 3, 1994, furnished a notice of default to the Company stating that if
such Default were not cured within 30 days of receipt it would become an Event
of Default under the Old Series Note Indenture.
RELATED PARTY TRANSACTIONS
In April 1993, RII, RIH and Griffin Group, entered into a license and
services agreement (the "New Griffin Services Agreement") effective as of
September 17, 1992, upon the expiration of the previous license and services
agreement.
Pursuant to the New Griffin Services Agreement, Griffin Group granted RII
and RIH a non-exclusive license to use the name and likeness of Merv Griffin to
advertise and promote the Company's facilities and operations. Also pursuant to
the New Griffin Services Agreement, Mr. Griffin is to provide certain services
to the Company, including serving as Chairman of the Board of RII and as a host,
producer and featured performer in various shows to be presented in Resorts
Casino Hotel, and furnishing marketing and consulting services.
The New Griffin Services Agreement is to continue until the later of
September 17, 1996 or the fourth anniversary of the consummation of a
Reorganization (as defined, which would include a restructuring such as that
discussed under "Restructuring" above) of RII; but in no event shall the term
extend beyond September 17, 1997. If a Reorganization has not been consummated
by September 17, 1996, then the New Griffin Services Agreement shall terminate
on that date. The New Griffin Services Agreement provides for earlier
termination under certain circumstances including, among others, a change of
control (as defined) of the Company and Mr. Griffin ceasing to serve as Chairman
of the Board of RII.
The New Griffin Services Agreement provides for compensation to Griffin
Group in the amount of $2,000,000 for the year ended September 16, 1993, and in
specified amounts for each of the following years, which increase at
approximately 5% per year. In accordance with the New Griffin Services
Agreement, upon signing, the Company paid Griffin Group $4,100,000, representing
compensation for the first two years. Thereafter, the New Griffin Services
Agreement calls for annual payments on September 17, each representing a
prepayment for the year ending two years hence. In lieu of paying in cash, at
the Company's option, it may satisfy its obligation to make any of the payments
required under the New Griffin Services Agreement by reducing the amount of the
note receivable from Griffin Group (the "Griffin Group Note") described below.
In September 1993 the Company notified Griffin Group that it would satisfy its
obligation to make the $2,205,000 payment for the year ending September 16, 1995
by reducing the Griffin Group Note by that amount. In the event of an early
termination of the New Griffin Services Agreement, and depending on the
circumstances of such early termination, all or a portion of the compensation
paid to Griffin Group in respect of the period subsequent to the date of
termination may be required to be repaid to the Company.
The New Griffin Services Agreement also provides for the issuance to Griffin
Group, on the effective date of a Reorganization of RII, of warrants (the
"Griffin Warrants") to purchase 10% of the
F-26
<PAGE>
RESORTS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 17 -- SUBSEQUENT EVENTS (CONTINUED)
common stock of the reorganized entity. In connection with the events described
in "Restructuring" above, RII's Board of Directors subsequently approved certain
revisions to the exercise price of the Griffin Warrants. The Griffin Warrants,
as amended, are to be exercisable at the lesser of (i) the average market price
of RII's common stock for the 20 trading days following the effective date of a
Reorganization and (ii) $1.875.
The Company agreed to indemnify, defend and hold harmless Griffin Group and
Mr. Griffin against certain claims, losses and costs, and to maintain certain
insurance coverage with Mr. Griffin and Griffin Group as named insureds.
In conjunction with the New Griffin Services Agreement, Mr. Griffin made a
partial payment of $4,100,000 on his note payable to RII, the Griffin Note. The
Griffin Note, which was issued in 1990, had an outstanding balance of
$11,623,333 at September 17, 1992 comprised of the original principal amount of
$11,000,000 and accrued interest of $623,333. After applying Mr. Griffin's
payment, the remaining balance on the Griffin Note was $7,523,333. In accordance
with the New Griffin Services Agreement, the Griffin Note was then cancelled and
a new note from Griffin Group, the Griffin Group Note, in the amount of
$7,523,333 was substituted therefor. As noted above, in September 1993 the
balance of this note was reduced to $5,318,333. The Griffin Group Note, which is
unconditionally guaranteed as to principal and interest by Mr. Griffin, due on
demand and bears interest at the rate of 3% per annum, comprises the note
receivable from related party reflected on the accompanying Consolidated Balance
Sheet as of September 30, 1993.
INCOME TAX ACCOUNTING
Effective January 1, 1993, the Company adopted SFAS 109. There was no effect
on the accompanying Consolidated Statement of Operations for the three quarters
ended September 30, 1993, nor was there a cumulative effect of adopting SFAS
109.
In August 1993 tax law changes were enacted which resulted in an increase in
the Company's federal income tax rate. The increase resulted in a $1,000,000
increase in the Company's deferred income tax liability and a deferred income
tax provision of the same amount.
F-27
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of Resorts International, Inc.
Resorts International Hotel, Inc.
We have audited the accompanying consolidated balance sheets of Resorts
International Hotel, Inc. as of December 31, 1992 and 1991, and the related
consolidated statements of operations, changes in shareholder's deficit, and
cash flows for each of the three years in the period ended December 31, 1992.
Resorts International Hotel, Inc. ("RIH") is a wholly owned subsidiary of
Resorts International, Inc. ("RII"). These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these 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 obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As noted above, RIH is a wholly owned subsidiary of RII and, as disclosed in the
financial statements and related notes, has extensive intercompany relationships
and transactions with RII and its affiliates. RII has significant debt which
becomes due and payable in April 1994. Through April 1994, RII may satisfy its
interest obligations on this debt with the issuance of additional debt. RII's
ability to pay this debt at maturity was premised upon the contemplated sale of
RII's operations on Paradise Island and of its non-operating real estate
holdings in Atlantic City generating sufficient proceeds to reduce the
obligations under this debt to a level that, if refinanced at maturity in April
1994, could be serviced by cash flow from the remaining operations. It presently
appears unlikely the proceeds from a possible sale of these operations will
provide a reduction of principal to this level. Consequently, RII is reviewing
other financial alternatives. One such alternative is described in Note 14.
However, specific terms and conditions have not been finalized.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of RIH at
December 31, 1992 and 1991, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1992, in conformity with generally accepted accounting principles.
ERNST & YOUNG
Philadelphia, Pennsylvania
February 19, 1993 except for
Note 14, as to which the date is
December 29, 1993
F-28
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS, EXCEPT PAR VALUE)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1991 1992
---------- ---------- SEPTEMBER 30,
1993
-------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash (including cash equivalents of $4,769,
$9,728 and $18,792)....................... $ 16,886 $ 22,643 $ 30,820
Receivables, net........................... 6,474 5,406 5,682
Interest receivable from affiliate......... 1,125 4,500 2,813
Note receivable from affiliate............. 50,000 50,000 50,000
Inventories................................ 1,469 1,542 1,464
Prepaid expenses........................... 1,528 1,862 7,260
---------- ---------- -------------
Total current assets..................... 77,482 85,953 98,039
Property and equipment, net of accumulated
depreciation.............................. 151,551 155,689 166,424
Deferred charges and other assets.......... 6,202 8,994 10,888
---------- ---------- -------------
$ 235,235 $ 250,636 $ 275,351
---------- ---------- -------------
---------- ---------- -------------
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Current maturities of long-term debt....... $ 958 $ 643 $ 81
Accounts payable and accrued liabilities... 27,718 26,073 24,622
Notes payable to affiliate................. 325,000
Due to parent company...................... 60,792 62,374 51,325
---------- ---------- -------------
Total current liabilities................ 89,468 89,090 401,028
---------- ---------- -------------
Notes payable to affiliate................... 325,000 325,000
---------- ----------
Other long-term debt......................... 1,539 904 15
---------- ---------- -------------
Deferred income taxes........................ 19,400
-------------
Commitments and contingencies (Notes 7 and
13)
Shareholder's deficit:
Common stock -- $1 par value, 100 shares
issued and outstanding
Excess of liabilities over assets at August
31, 1990 reorganization................... (198,829) (198,829) (198,829)
Retained earnings.......................... 18,057 34,471 53,737
---------- ---------- -------------
Total shareholder's deficit.............. (180,772) (164,358) (145,092)
---------- ---------- -------------
$ 235,235 $ 250,636 $ 275,351
---------- ---------- -------------
---------- ---------- -------------
</TABLE>
See Notes to Consolidated Financial Statements of RIH.
F-29
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------
1990 FOR THE THREE QUARTERS
-------------------------- ENDED SEPTEMBER 30,
THROUGH FROM ------------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
------------ ------------ ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Casino......................... $ 139,466 $ 66,259 $ 218,881 $ 233,780 $ 180,510 $ 187,803
Rooms.......................... 5,093 2,599 8,074 8,766 6,688 5,370
Food and beverage.............. 10,492 5,320 16,406 16,056 12,801 12,340
Other casino/hotel revenues.... 3,754 2,038 4,113 4,138 3,081 3,301
------------ ------------ ----------- ----------- ----------- -----------
158,805 76,216 247,474 262,740 203,080 208,814
------------ ------------ ----------- ----------- ----------- -----------
Expenses:
Casino......................... 85,473 39,532 123,523 127,847 97,226 105,013
Rooms.......................... 1,974 1,213 3,367 3,582 2,681 2,502
Food and beverage.............. 10,614 6,216 17,679 17,658 13,802 13,430
Other casino/hotel operating
expenses...................... 19,713 10,566 31,499 33,281 25,045 25,748
Selling, general and
administrative................ 24,675 13,582 44,023 46,507 35,441 35,516
Provision for doubtful
receivables................... 1,307 801 3,480 1,414 839 536
Depreciation................... 10,720 1,902 9,084 11,402 8,625 10,264
Real estate related............ 880 100
------------ ------------ ----------- ----------- ----------- -----------
155,356 73,912 232,655 241,691 183,659 193,009
------------ ------------ ----------- ----------- ----------- -----------
Earnings from operations......... 3,449 2,304 14,819 21,049 19,421 15,805
Other income (deductions):
Interest income................ 5,515 2,832 7,505 7,576 5,648 5,631
Interest expense............... (306) (136) (563) (395) (317) (190)
Recapitalization costs......... (119,804) (874) (704) (1,580)
Affiliated bad debt write-
off........................... (98,983)
------------ ------------ ----------- ----------- ----------- -----------
Earnings (loss) before income
taxes and extraordinary item.... (210,129) 5,000 21,761 27,356 24,048 19,666
Income tax expense............... (8,704) (10,942) (9,620) (400)
------------ ------------ ----------- ----------- ----------- -----------
Earnings (loss) before
extraordinary item.............. (210,129) 5,000 13,057 16,414 14,428 19,266
Extraordinary item............... (17,335)
------------ ------------ ----------- ----------- ----------- -----------
Net earnings (loss).............. $ (227,464) $ 5,000 $ 13,057 $ 16,414 $ 14,428 $ 19,266
------------ ------------ ----------- ----------- ----------- -----------
------------ ------------ ----------- ----------- ----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements of RIH. Note 2 describes
a change in entity and related presentation for periods presented.
F-30
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------
1990 FOR THE THREE QUARTERS
-------------------------- ENDED SEPTEMBER 30,
THROUGH FROM --------------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
------------ ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers......... $ 155,935 $ 74,485 $ 244,825 $ 261,462 $ 201,624 $ 208,297
Cash paid to suppliers and
employees........................... (144,100) (70,291) (216,805) (229,911) (175,444) (189,019)
------------ ------------ ------------ ------------ ------------ ------------
Cash flow from operations before
interest and income taxes......... 11,835 4,194 28,020 31,551 26,180 19,278
Interest received.................... 4,361 3,966 7,526 4,204 3,951 7,289
Interest paid........................ (318) (136) (563) (395) (317) (190)
Income taxes paid to parent.......... (8,704) (10,942) (9,620)
------------ ------------ ------------ ------------ ------------ ------------
Net cash provided by operating
activities........................ 15,878 8,024 26,279 24,418 20,194 26,377
------------ ------------ ------------ ------------ ------------ ------------
Cash flows from investing activities:
Payments for property and
equipment........................... (17,454) (4,326) (21,570) (15,495) (14,996) (20,394)
Proceeds from sale of property and
equipment........................... 67
CRDA deposits and bond purchases..... (1,816) (739) (2,689) (2,871) (2,024) (2,121)
------------ ------------ ------------ ------------ ------------ ------------
Net cash used in investing
activities........................ (19,270) (5,065) (24,192) (18,366) (17,020) (22,515)
------------ ------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Advances from (repayments to) parent
company and affiliates.............. 38,136 (20,286) 2,200 1,582 4,456 7,951
Recapitalization costs paid to
parent.............................. (11,216) (874) (704) (1,580)
Debt repayments...................... (1,844) (1,302) (1,498) (1,003) (889) (2,056)
------------ ------------ ------------ ------------ ------------ ------------
Net cash provided by (used in)
financing activities.............. 25,076 (21,588) 702 (295) 2,863 4,315
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash and
cash equivalents...................... 21,684 (18,629) 2,789 5,757 6,037 8,177
Cash and cash equivalents at beginning
of period............................. 11,042 32,726 14,097 16,886 16,886 22,643
------------ ------------ ------------ ------------ ------------ ------------
Cash and cash equivalents at end of
period................................ $ 32,726 $ 14,097 $ 16,886 $ 22,643 $ 22,923 $ 30,820
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements of RIH. Note 2 describes
a change in entity and related presentation for periods presented.
F-31
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S DEFICIT
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
NOTE
EXCESS OF RECEIVABLE
LIABILITIES RETAINED FROM GRIFFCO
CAPITAL IN OVER ASSETS EARNINGS RESORTS
EXCESS OF AT (ACCUMULATED HOLDING,
PAR REORGANIZATION DEFICIT) INC.
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1989............................ $ 180,030 $ (151,395) $ (35,000)
Net loss for period through August 31, 1990............. (227,464)
Effects of reorganization:
Elimination of accumulated deficit.................... (180,030) $ (198,829) 378,859
Cancellation of note receivable from Griffco Resorts
Holding, Inc......................................... 35,000
------------ ------------- ------------ ------------
Balance at August 31, 1990.............................. -0- (198,829) -0- -0-
Net earnings for period from September 1, 1990.......... 5,000
------------ ------------- ------------ ------------
Balance at December 31, 1990............................ -0- (198,829) 5,000 -0-
Net earnings for year 1991.............................. 13,057
------------ ------------- ------------ ------------
Balance at December 31, 1991............................ -0- (198,829) 18,057 -0-
Net earnings for year 1992.............................. 16,414
------------ ------------- ------------ ------------
Balance at December 31, 1992............................ -0- (198,829) 34,471 -0-
Net earnings for three quarters ended September 30, 1993
(unaudited)............................................ 19,266
------------ ------------- ------------ ------------
Balance at September 30, 1993 (unaudited)............... $ -0- $ (198,829) $ 53,737 $ -0-
------------ ------------- ------------ ------------
------------ ------------- ------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements of RIH. Note 2 describes
a change in entity and related presentation for periods presented.
F-32
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Resorts International Hotel, Inc. ("RIH"), a wholly owned subsidiary of
Resorts International, Inc. ("RII"), owns and operates Merv Griffin's Resorts
Casino Hotel ("Resorts Casino Hotel"), a casino/hotel complex located in
Atlantic City, New Jersey.
Financial statements and footnote data with respect to September 30, 1993
and the three quarters ended September 30, 1992 and 1993 are unaudited. In the
opinion of management, such unaudited financial statements include all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation, in accordance with generally accepted accounting principles.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of RIH and its
subsidiaries. All significant intercompany balances and transactions have been
eliminated in consolidation.
REVENUE RECOGNITION
RIH records as revenue the win from gaming activities which represents the
difference between amounts wagered and amounts won by patrons. Revenues from
hotel and related services and from theatre ticket sales are recognized at the
time the related service is performed.
COMPLIMENTARY SERVICES
The Consolidated Statements of Operations reflect each category of operating
revenues excluding the retail value of complimentary services provided to casino
patrons without charge. The rooms, food and beverage, and other casino/hotel
operations departments allocate a percentage of their total operating expenses
to the casino department for complimentary services provided to casino patrons.
These allocations do not necessarily represent the incremental cost of providing
such complimentary services to casino patrons. Amounts allocated to the casino
department from the other operating departments were as follows for the years
ended December 31:
<TABLE>
<CAPTION>
1990
------------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
--------- ------------- --------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Rooms....................................... $ 2,264 $ 1,019 $ 2,949 $ 3,010
Food and beverage........................... 9,447 5,203 15,963 16,709
Other casino/hotel operations............... 5,495 1,914 5,699 6,174
--------- ------------- --------- ---------
Total allocated to casino................. $ 17,206 $ 8,136 $ 24,611 $ 25,893
--------- ------------- --------- ---------
--------- ------------- --------- ---------
</TABLE>
CASH EQUIVALENTS
RIH considers all of its short-term money market securities purchased with
maturities of three months or less to be cash equivalents. The carrying value of
cash equivalents approximates fair value due to the short maturity of these
instruments.
INVENTORIES
Inventories of provisions, supplies and spare parts are carried at the lower
of cost (first-in, first-out) or market.
PROPERTY AND EQUIPMENT
Property and equipment are depreciated over their estimated useful lives
using the straight-line method for financial reporting purposes.
F-33
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASINO REINVESTMENT DEVELOPMENT AUTHORITY ("CRDA") OBLIGATIONS
Under the New Jersey Casino Control Act ("Casino Control Act"), RIH is
obligated to purchase CRDA bonds, which will bear a below-market interest rate,
or make an alternative qualifying investment. RIH charges to expense an
estimated discount related to CRDA investment obligations as of the date the
obligation arises based on fair market interest rates of similar quality bonds
in existence as of that date. On the date RIH actually purchases the CRDA bond,
the estimated discount previously recorded is adjusted to reflect the actual
terms of the bonds issued and the then existing fair market interest rate for
similar quality bonds. The discount on CRDA bonds purchased is amortized to
interest income over the life of the bonds using the effective interest rate
method.
INCOME TAXES
RIH and RII's other domestic subsidiaries file consolidated U.S. federal
income tax returns with RII.
In 1990, RIH provided income taxes based on the liability method prescribed
in Statement of Financial Accounting Standards No. 96, "Accounting For Income
Taxes" ("SFAS 96"). Under this method, the deferred tax liability is determined
based on the difference between the financial reporting and tax bases of assets
and liabilities and enacted tax rates which will be in effect for the years in
which the differences are expected to reverse. The deferred tax liability is
reduced by cumulative tax credits and losses being carried forward for tax
purposes, subject to applicable limitations. Prior to the reorganization in
1990, RIH's deferred tax liability was transferred to RII.
Commencing in 1991, RIH agreed with RII to provide for federal and state
income taxes using a combined rate of 40%. Material transactions which would be
subject to combined tax rates that are significantly different from the 40% rate
are to be separately tax effected. The resulting liability is settled on a
current basis.
NOTE 2 -- BASIS OF PRESENTATION
During 1989, RII and certain of its subsidiaries (the "Old Debtors") filed
voluntary petitions or consented to involuntary petitions for relief under
chapter 11 of the United States Bankruptcy Code. The Old Debtors filed the
Second Amended Joint Plan of Reorganization dated as of May 31, 1990 (the "Old
Plan") which was confirmed by the New Jersey bankruptcy court in August 1990. On
September 17, 1990 (the "Old Effective Date"), all conditions to effectiveness
of the Old Plan were either met or waived and the Old Plan became effective.
Under the Old Plan, all previously outstanding debt securities of the Old
Debtors were cancelled and exchanged for new debt and equity securities of RII.
Also pursuant to the Old Plan, all previously outstanding shares of stock of RII
were cancelled. As a result of these and other transactions prescribed in the
Old Plan, Merv Griffin, who prior to the reorganization indirectly owned 100% of
RII, owned 22% of RII as of October 1, 1990, the initial distribution date of
the new securities.
RII accounted for the reorganization using "fresh start" accounting.
Accordingly, all assets and liabilities of RII and its subsidiaries were
restated to reflect their estimated fair values and the accumulated deficit was
eliminated. Although the confirmation date was August 28, 1990, RIH recorded the
effects of the reorganization as of August 31, 1990.
In 1990, RIH recorded a charge from the write-off of the remaining balance
of $17,335,000 of deferred debt issuance costs related to certain debt
securities of the Old Debtors that were cancelled pursuant to the Old Plan. This
write-off was reported as an extraordinary item.
RIH also recorded affiliated bad debt write-offs of $98,983,000 in 1990
composed of $63,983,000, the net amount of intercompany receivables from the Old
Debtors cancelled pursuant to the Old Plan,
F-34
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- BASIS OF PRESENTATION (CONTINUED)
and a $35,000,000 note receivable from Griffco Resorts Holding, Inc.
("Griffco"), a company that prior to the Old Effective Date was owned by Merv
Griffin and was RII's parent, which was also cancelled pursuant to the Old Plan.
The revaluation of RIH's other assets and liabilities, which was based on
independent appraisals, discounted cash flows, evaluations, estimations and
other studies, resulted in a net loss of $108,588,000, with the following
components:
<TABLE>
<CAPTION>
(IN THOUSANDS OF
DOLLARS)
<S> <C>
Decrease in working capital......................................... $ 8,355
Decrease in property and equipment.................................. 99,849
Decrease in deferred charges and other assets....................... 384
----------
$ 108,588
----------
----------
</TABLE>
The loss on revaluation was included in recapitalization costs in 1990 in
the accompanying Consolidated Statements of Operations along with RIH's
allocated portion (approximately one-third) of legal and financial advisory fees
and other costs associated with the reorganization amounting to $11,216,000.
The accumulated deficit at August 31, 1990 of $378,859,000, which included
the effects of the reorganization, was eliminated. This deficit was first
reclassified to offset the balance of capital in excess of par, with the
remainder recorded as excess of liabilities over assets at reorganization.
The financial information contained herein relating to RIH's 1990
Consolidated Statements of Operations and Cash Flows is presented separately for
the periods "Through August 31" and "From September 1" due to the new basis of
accounting which resulted from the application of fresh start accounting.
BANKRUPTCY ACCOUNTING
For the period ended August 31, 1990, during which RII operated subject to
the jurisdiction of the New Jersey bankruptcy court, RIH did not accrue interest
on its notes payable to affiliate or amortize debt issuance costs on public debt
outstanding prior to the Old Effective Date of the Old Plan.
NOTE 3 -- RECEIVABLES
Components of receivables at December 31 were as follows:
<TABLE>
<CAPTION>
1991 1992
--------- ---------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Gaming.............................................................. $ 10,912 $ 8,703
Less allowance for doubtful accounts.............................. (5,326) (4,200)
--------- ---------
5,586 4,503
--------- ---------
Non-gaming:
Hotel and related................................................. 566 450
Other............................................................. 649 501
--------- ---------
1,215 951
Less allowance for doubtful accounts.............................. (327) (48)
--------- ---------
888 903
--------- ---------
$ 6,474 $ 5,406
--------- ---------
--------- ---------
</TABLE>
F-35
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- NOTE RECEIVABLE FROM AFFILIATE
In 1988, RIH loaned $50,000,000 pursuant to a pre-arranged back-to-back loan
to Resorts International (Bahamas) 1984 Limited ("RIB"), an indirect wholly
owned subsidiary of RII, in exchange for a promissory note (the "RIB Note").
Such note is payable on demand and bears interest at 13 1/2% per annum, with
interest payments due each May 1 and November 1. The note is guaranteed by
certain of RIB's subsidiaries. The guarantees are secured by mortgages on the
Paradise Island Resort & Casino, the Ocean Club Golf & Tennis Resort, and the
Paradise Paradise Beach Resort on Paradise Island in The Bahamas, and all
furniture, machinery and equipment used in connection therewith. The RIB Note
and the mortgages securing payment thereof have been assigned as part of the
collateral for the Senior Secured Redeemable Notes due April 15, 1994 (the "Old
Series Notes") issued by RII pursuant to the Old Plan. See Note 7.
NOTE 5 -- PROPERTY AND EQUIPMENT
Components of property and equipment at December 31 were as follows:
<TABLE>
<CAPTION>
1991 1992
----------- -----------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Land and land rights................................................ $ 53,250 $ 53,250
Land improvements................................................... 97 130
Hotel and other buildings........................................... 80,718 93,235
Furniture, machinery and equipment.................................. 26,665 31,168
Construction in progress............................................ 1,848 326
----------- -----------
162,578 178,109
Less accumulated depreciation..................................... (11,027) (22,420)
----------- -----------
$ 151,551 $ 155,689
----------- -----------
----------- -----------
</TABLE>
Substantially all of RIH's property and equipment has been pledged as
collateral for the Old Series Notes issued by RII pursuant to the Old Plan. See
Note 7.
NOTE 6 -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Components of accounts payable and accrued liabilities at December 31 were
as follows:
<TABLE>
<CAPTION>
1991 1992
--------- ---------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Accrued payroll and related taxes and benefits...................... $ 9,332 $ 10,530
Accrued gaming taxes, fees and related assessments.................. 6,493 6,556
Customer deposits and unearned revenues............................. 2,520 2,294
Trade payables...................................................... 2,338 1,528
Insurance reserves.................................................. 1,301 1,272
Progressive slot liability.......................................... 3,147 315
Other accrued liabilities........................................... 2,587 3,578
--------- ---------
$ 27,718 $ 26,073
--------- ---------
--------- ---------
</TABLE>
NOTE 7 -- NOTES PAYABLE TO AFFILIATE
In 1988, Griffin Resorts Inc. ("GRI"), a subsidiary of RII, issued
$325,000,000 principal amount of publicly traded notes. GRI loaned the proceeds
of such notes to RIH in exchange for (i) two promissory notes payable to GRI
(the "RIH-GRI Notes"); (ii) a senior mortgage on the Resorts Casino Hotel and
the other properties owned by RIH, and a first priority security interest in the
personal property of RIH; and (iii) the assignment of the RIB Note for
$50,000,000 and mortgage securing such note (see Note 4).
F-36
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- NOTES PAYABLE TO AFFILIATE (CONTINUED)
In 1990, the terms of the RIH-GRI Notes were modified and such amended notes
were pledged as collateral for the Old Series Notes issued by RII. In 1992, the
notes were further amended (the "Second Amended RIH-GRI Notes").
The sole purpose of the Second Amended RIH-GRI Notes is to collateralize
RII's Old Series Notes. The Second Amended RIH-GRI Notes are payable on demand
after April 15, 1994 and are non-interest bearing, but the principal due upon
demand by GRI accretes according to a schedule. As of April 15, 1994, the
principal amount of the notes would accrete to $446,150,000. However, GRI and
RIH have entered into an intercompany agreement whereby GRI will not require
payment of the amount in excess of the original $325,000,000 principal amount of
the notes unless GRI is instructed to do so by the indenture trustee or other
collateral pledgee of the Old Series Notes. At December 31, 1992 the accretion
in principal amount of these notes in excess of $325,000,000 amounted to
$73,290,000.
The Second Amended RIH-GRI Notes and the RIB Note described in Note 4 relate
to intercompany loans which were not anticipated to be repaid in the ordinary
course of business. Also, RII is contemplating a restructuring of the Old Series
Notes, which may also affect these and other intercompany relationships among
RII's subsidiaries; however, the terms and effects of any possible restructuring
are uncertain at this time. Thus, it is not practicable to estimate the fair
value of RIH's intercompany notes without incurring excessive costs. RIH's
assets were restated to their estimated fair values at August 31, 1990. See Note
5 for a summary of RIH's property and equipment balances.
The indentures for RII's Old Series Notes restrict RIH from the incurrence
of additional indebtedness, with certain exceptions.
NOTE 8 -- OTHER LONG-TERM DEBT
Other long-term debt consists of capitalized lease obligations under which
RIH is the lessee of computer equipment, slot machines and printing equipment.
These leases expire in various years through 1996 and bear interest rates from
8.5% to 33.3%.
F-37
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- RELATED PARTY TRANSACTIONS
RIH recorded the following income and expenses from RII and other
affiliates:
<TABLE>
<CAPTION>
1990
------------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
----------- ----------- --------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Income -- Resorts International (Bahamas) 1984
Limited
Interest...................................... $ 4,500 $ 2,250 $ 6,750 $ 6,750
----------- ----------- --------- ---------
----------- ----------- --------- ---------
Expenses:
Resorts International, Inc.
Parent services fee......................... $ 3,200 $ 2,455 $ 8,154 $ 8,629
Property rentals............................ 229 108 325 325
Steeplechase Transport and Parking, Inc.
Parking fees................................ 1,118
Trams Atlantic
Limousine fees.............................. 376
Other......................................... 189
----------- ----------- --------- ---------
$ 5,112 $ 2,563 $ 8,479 $ 8,954
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
For periods through August 31, 1990, RII charged RIH for services provided
based on an allocation of corporate overhead costs incurred by RII. Effective
with the reorganization, RII began charging RIH a fee of three (3) percent of
gross revenues for such services. Also, recapitalization costs reflected on the
Consolidated Statements of Operations include charges of $11,216,000 for 1990
and $874,000 for 1992 representing RIH's allocated portion (approximately
one-third) of RII's consolidated recapitalization costs.
In addition to the above, charges for insurance cost are allocated to RIH
based on relative amounts of operating revenue, payroll, property value, or
other appropriate measures.
Also, see Note 2 for discussion of the write-off of certain affiliated
receivables in 1990.
NOTE 10 -- RETIREMENT PLANS
RIH has a defined contribution plan (the "Savings Plan"), in which
substantially all non-union employees are eligible to participate. Employees of
certain other affiliated companies are also eligible to participate in the
Savings Plan. Under the Savings Plan, eligible participating employees may
contribute up to a total of 4% of their annual cash compensation as a basic
contribution and may also elect to contribute up to an additional 10% as a
voluntary contribution. RIH and other subsidiaries of RII contribute an amount
equal to 50% of their employees' basic contributions and, on a discretionary
basis, may make additional contributions. RIH's contributions under the Savings
Plan were approximately $492,000, $654,000 and $665,000 in 1990, 1991 and 1992,
respectively.
Union employees are covered by various multi-employer pension plans to which
contributions are made by RIH and other unrelated employers. Contributions by
RIH were approximately $661,000, $745,000 and $827,000 in 1990, 1991 and 1992,
respectively.
NOTE 11 -- INCOME TAXES
No tax provision was recorded for the two periods of 1990 due to the
generation of additional net operating losses for federal and state income tax
purposes during the period through August 31 which were sufficient to offset
taxable income generated during the period from September 1.
F-38
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 -- INCOME TAXES (CONTINUED)
The effective income tax rate on the earnings (loss) before income taxes and
extraordinary item varies from the statutory federal income tax rate as a result
of the following factors:
<TABLE>
<CAPTION>
1990
--------------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1
---------- ------------
<S> <C> <C>
Statutory federal income tax rate (benefit)....... (34.0%) 34.0%
Net operating losses utilized..................... (34.1%)
Net operating losses for which no tax benefit was
recognized....................................... 17.5%
Affiliated bad debt write-off..................... 16.0%
Other, net........................................ 0.5% 0.1%
----- -----
0.0% 0.0%
----- -----
----- -----
</TABLE>
As described in Note 1, commencing in 1991 RIH agreed with RII to provide
for federal and state income taxes at a combined rate of 40%. For the years 1991
and 1992 this resulted in income tax expense of $8,704,000 and $10,942,000,
respectively.
For federal tax purposes RIH had net operating loss carryforwards of
approximately $188,000,000 at December 31, 1992, which expire in 2003 through
2005. These loss carryforwards were produced in periods prior to the change in
ownership of the consolidated group of which RIH is a part; therefore, these
loss carryforwards are limited in their availability to offset future taxable
income.
For state tax purposes RIH had net operating loss carryforwards of
approximately $170,000,000 at December 31, 1992, which expire in 1994 through
1997.
F-39
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 -- STATEMENTS OF CASH FLOWS
Supplemental disclosure required by Statement of Financial Accounting
Standards No. 95, "Statement of Cash Flows" is presented below for the periods
indicated.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------
FOR THE THREE
1990 QUARTERS ENDED
------------------------ SEPTEMBER 30,
THROUGH FROM --------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
--------- ------------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS OF DOLLARS)
Reconciliation of net earnings (loss) to net cash
provided by operating activities:
Net earnings (loss).................................. $(227,464) $ 5,000 $ 13,057 $ 16,414 $ 14,428 $ 19,266
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Extraordinary item -- loss on exchange of debt..... 17,335
Recapitalization costs............................. 119,804 874 704 1,580
Deferred tax provision............................. 400
Affiliated bad debt write-off...................... 98,983
Depreciation and amortization...................... 10,956 1,905 9,084 11,398 8,625 10,264
Provision for doubtful receivables................. 1,307 801 3,480 1,414 839 536
Net loss on sale of property....................... 268 8
Provision for discount on CRDA obligations......... 993 504 1,574 1,451 1,117 1,196
Net (increase) decrease in accounts receivable..... (2,115) 44 (2,199) (346) (266) (812)
Net (increase) decrease in interest receivable from
affiliate......................................... (1,125) 1,125 (3,375) (1,688) 1,687
Net (increase) decrease in inventories and prepaid
expenses.......................................... (2,946) 1,439 1,724 (580) (1,208) (5,320)
Net (increase) decrease in deferred charges and
other assets...................................... 449 75 189 (1,309) (1,146) (731)
Net decrease in accounts payable and accrued
liabilities....................................... (299) (2,869) (898) (1,531) (1,211) (1,689)
--------- ------------- --------- --------- --------- ---------
Net cash provided by operating activities............ $ 15,878 $ 8,024 $ 26,279 $ 24,418 $ 20,194 $ 26,377
--------- ------------- --------- --------- --------- ---------
--------- ------------- --------- --------- --------- ---------
Non-cash investing and financing transactions:
Increase in liabilities for additions to property and
equipment and other assets.......................... $ 2,960 $ 912 $ 1,180 $ 112 $ 242 $ 843
--------- ------------- --------- --------- --------- ---------
--------- ------------- --------- --------- --------- ---------
</TABLE>
NOTE 13 -- COMMITMENTS AND CONTINGENCIES
CRDA
The Casino Control Act, as originally adopted, required a licensee to make
investments equal to 2% of the licensee's net casino win (as defined under the
Casino Control Act) (the "investment obligation") for each calendar year,
commencing in 1979, in which such net casino win exceeded its "cumulative
investments" (as defined in the Casino Control Act). A licensee had five years
from the end of each calendar year to satisfy this investment obligation or
become liable for an "alternative tax" in the same amount. In 1984 the New
Jersey legislature amended the Casino Control Act so that these provisions now
apply only to investment obligations for the years 1979 through 1983.
Effective for 1984 and subsequent years, the amended Casino Control Act
requires a licensee to satisfy its investment obligation by purchasing bonds to
be issued by the CRDA, or by making other investments authorized by the CRDA, in
an amount equal to 1.25% of a licensee's net casino win. If the investment
obligation is not satisfied, then the licensee will be subject to an investment
alternative tax of 2.5% of net casino win. Since 1985, a licensee has been
required to make quarterly deposits with the CRDA against its current year
investment obligation.
F-40
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
An analysis of RIH's investment obligations under the Casino Control Act and
RIH's means of settlement since 1979 follows:
<TABLE>
<CAPTION>
1979-1983 1984-1992 TOTAL
---------- ---------- ----------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Investment obligations...................................................... $ (21,637) $ (26,118) $ (47,755)
Means of settlement:
Housing related investments under audit................................... 13,104 13,104
Housing related investments previously approved........................... 1,000 1,000
CRDA deposits/bond purchases.............................................. 7,533 25,454 32,987
---------- ---------- ----------
Remaining investment obligation at December 31, 1992, which was deposited in
January 1993............................................................... $ -0- $ (664) $ (664)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
With regard to the housing related investments under audit, in January 1988
the CRDA notified RIH of its interpretation as to the periods of time during
which expenditures could be made to satisfy investment obligations. CRDA's
interpretation differs from RIH's and if found to be correct would decrease the
amount of RIH's qualifying expenditures by approximately $5,000,000 to
$6,000,000. RIH believes that its interpretation is correct and intends to
contest this issue.
RIH also received a letter dated November 9, 1989, from the State of New
Jersey Department of the Treasury (the "Treasury") stating that the housing
related investments made by RIH were not sufficient to meet its investment
obligation for the years 1979 through 1983. The letter also stated that
alternative tax in the amount of $21,637,000 was due for those years, in
addition to penalties and interest thereon which amounted to $12,514,000 as of
the date of the letter. As set forth in the table above, RIH believes that
$8,533,000 of such obligations have been settled; $7,533,000 in cash and
$1,000,000 by previously approved housing related investments. Also, RIH has
received an audit report issued by an agency acting on behalf of the Treasury
identifying qualifying credits from housing related investments of $10,165,000.
This leaves a total of $2,939,000 of housing related investments under audit in
question. RIH has notified the Treasury that it takes exception to the
Treasury's computation of amounts due. Further, RIH believes that the $2,939,000
of housing related investments in question will be found, under further audit,
to have been satisfied.
Although these matters have been dormant for some time, the Company's
counsel was recently contacted by the Treasury and expects an update of the
status of these matters in the near future. If the CRDA's interpretation as to
the periods of time during which qualifying expenditures can be made is found to
be correct, or if the Treasury's issue is determined adversely, RIH could be
required to pay the relevant amount in cash to the CRDA. In the opinion of
management, based upon advice of counsel, the aggregate liability, if any,
arising from these issues will not have a material adverse effect on the
accompanying consolidated financial statements.
As reflected in the table above, through December 31, 1992, RIH had made
CRDA deposits/bond purchases totalling $32,987,000. However, in August 1989 RIH
donated $12,048,000 to the CRDA in exchange for which RIH was relieved of its
obligation to purchase CRDA bonds of $18,193,000. Because RIH already had the
$18,193,000 for bond purchases on deposit with the CRDA, the difference between
this amount and the amount of the donation, or $6,145,000, was refunded to RIH
in August 1989. Thus, at December 31, 1992, RIH had a remaining balance of
$4,873,000 face value of bonds issued by the CRDA and had $9,921,000 on deposit
with the CRDA. These bonds and deposits, net of an estimated discount charged to
expense to reflect the below-market interest rate payable on the bonds, were
recorded as other assets in RIH's Consolidated Balance Sheets.
F-41
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
RIH records charges to expense to reflect the below-market interest rate
payable on the bonds it may have to purchase to fulfill its investment
obligation at the date the obligation arises. The charges in 1990, 1991 and 1992
for discounts on obligations arising in those years were $1,497,000, $1,574,000
and $1,451,000, respectively.
LITIGATION
RIH is a defendant in certain litigation. In the opinion of management, and
based upon advice of counsel, the aggregate liability, if any, arising from such
litigation will not have a material adverse effect on the accompanying
consolidated financial statements.
NOTE 14 -- SUBSEQUENT EVENTS
RII RESTRUCTURING
In April 1993 RII reached an agreement in principle with two representatives
(the "Representatives") of major holders of its Old Series Notes as to terms of
a restructuring of Old Series Notes. Such restructuring was to include the
exchange of the Old Series Notes for, among other things, cash, new debt, an
equity interest in RII and 100% of the equity of RII's Bahamian subsidiaries,
Paradise Island Airlines, Inc. ("PIA") and certain domestic subsidiaries which
support the Bahamian operations (PIA and these other domestic subsidiaries are
hereinafter referred to as the "U.S. Paradise Island Subsidiaries").
Since that time, management of RII has been cooperating with the
Representatives in negotiating the possible sale to a third party (the
"Purchaser") of a majority of the equity of RII's Bahamian subsidiaries and the
assets and related liabilities of the U.S. Paradise Island Subsidiaries.
Further negotiations among RII, the Purchaser and the Representatives have
led to the currently proposed restructuring which contemplates, among other
things, the exchange of the Old Series Notes for the following:
(a) excess cash, as defined, of RII consolidated with its subsidiaries,
(b) $125,000,000 principal amount of nine-year, 11% mortgage notes to be
issued by a subsidiary of RII and to be secured by a mortgage on the Resorts
Casino Hotel and guaranteed by RIH,
(c) $35,000,000 principal amount of ten-year, 11.375%, junior mortgage
notes to be issued by a subsidiary of RII and to be secured by a junior
mortgage on the Resorts Casino Hotel and guaranteed by RIH,
(d) shares of common stock of RII in an amount representing
approximately 40% of the total outstanding shares, and
(e) either (i) $65,000,000 cash and 40% of the equity of a company
formed by the Purchaser to purchase 100% of the equity of RII's Bahamian
subsidiaries and, through subsidiaries, the assets and related liabilities
of the U.S. Paradise Island Subsidiaries or, if that purchase is not
consummated, (ii) 100% of the equity of a holding company formed to own 100%
of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the
assets and related liabilities of the U.S. Paradise Island Subsidiaries.
Before any restructuring can be completed, specific terms and conditions
must be finalized and set forth in definitive agreements, indentures and other
documents. Also, any restructuring must be approved by various governmental
agencies, and the proposed restructuring will require certain shareholder and
creditor approvals, as well as confirmation by the Bankruptcy Court. RII cannot
provide any assurances as to whether or when the proposed restructuring will be
effected, or that the restructuring will be on terms similar to those described
above.
F-42
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14 -- SUBSEQUENT EVENTS (CONTINUED)
RELATED PARTY TRANSACTIONS
In April 1993, RII, RIH and The Griffin Group, Inc. (the "Griffin Group"), a
corporation owned by Merv Griffin, Chairman of the Board of RII, entered into a
license and services agreement (the "New Griffin Services Agreement") effective
as of September 17, 1992, upon the expiration of the previous license and
services agreement.
Pursuant to the New Griffin Services Agreement, Griffin Group granted RII
and RIH a non-exclusive license to use the name and likeness of Merv Griffin to
advertise and promote the facilities and operations of RII and its subsidiaries.
Also pursuant to the New Griffin Services Agreement, Mr. Griffin is to provide
certain services to RII and RIH, including serving as Chairman of the Board of
RII and as a host, producer and featured performer in various shows to be
presented in Resorts Casino Hotel, and furnishing marketing and consulting
services.
The New Griffin Services Agreement is to continue until the later of
September 17, 1996 or the fourth anniversary of the consummation of a
Reorganization (as defined, which would include a restructuring such as that
discussed under "RII Restructuring" above) of RII; but in no event shall the
term extend beyond September 17, 1997. If a Reorganization has not been
consummated by September 17, 1996, then the New Griffin Services Agreement shall
terminate on that date. The New Griffin Services Agreement provides for earlier
termination under certain circumstances including, among others, a change of
control (as defined) of RII and RIH and Mr. Griffin ceasing to serve as Chairman
of the Board of RII.
The New Griffin Services Agreement provides for compensation to Griffin
Group in the amount of $2,000,000 for the year ended September 16, 1993, and in
specified amounts for each of the following years, which increase at
approximately 5% per year. In accordance with the New Griffin Services
Agreement, upon signing, RIH paid Griffin Group $4,100,000, representing
compensation for the first two years. Thereafter, the New Griffin Services
Agreement calls for annual payments on September 17, each representing a
prepayment for the year ending two years hence. In the event of an early
termination of the New Griffin Services Agreement, and depending on the
circumstances of such early termination, all or a portion of the compensation
paid to Griffin Group in respect of the period subsequent to the date of
termination may be required to be repaid to RII and RIH.
RII and RIH agreed to indemnify, defend and hold harmless Griffin Group and
Mr. Griffin against certain claims, losses and costs, and to maintain certain
insurance coverage with Mr. Griffin and Griffin Group as named insureds.
INCOME TAX ACCOUNTING
Effective January 1, 1993 RIH adopted Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes," which supersedes
SFAS 96 but retains the liability method of accounting for income taxes.
Although RIH is a member of a consolidated group for federal income tax
purposes, RIH will be applying SFAS 109 on a separate return basis for financial
reporting purposes.
Effective with the adoption of SFAS 109, RIH will no longer be providing for
federal and state income taxes at the combined rate of 40%, and settling such
liability on a current basis, as had been its practice under an agreement with
RII. Also, in connection with the adoption of SFAS 109, RIH's deferred income
tax liability was transferred to RIH from RII. This liability results primarily
from basis differences on property and equipment, which were restated to their
estimated fair values in 1990 for financial reporting purposes, while such
revaluation was not permitted for income tax return purposes.
In August 1993 tax law changes were enacted which resulted in an increase in
RIH's federal income tax rate. The increase resulted in a $400,000 increase in
RIH's deferred income tax liability and a deferred income tax provision of the
same amount.
F-43
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of Resorts International, Inc.
Resorts International Hotel Financing, Inc.
We have audited the accompanying balance sheet of Resorts International Hotel
Financing, Inc. ("RIHF") as of September 30, 1993. RIHF, a company formed by
Resorts International, Inc. ("RII"), was organized for the purpose of issuing
public debt securities in connection with a plan of reorganization of RII. RIHF
is a wholly owned subsidiary of RII. This balance sheet is the responsibility of
RIHF's management. Our responsibility is to express an opinion on this balance
sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
of the balance sheet provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of RIHF at September 30, 1993, in
conformity with generally accepted accounting principles.
ERNST & YOUNG
Philadelphia, Pennsylvania
December 29, 1993
F-44
<PAGE>
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
---------------------
<S> <C>
Due from RII.................................................................................. $ 10
---
---
SHAREHOLDER'S EQUITY
Shareholder's equity -- Capital in excess of par.............................................. $ 10
---
---
</TABLE>
See Notes to Balance Sheet of RIHF.
F-45
<PAGE>
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
NOTES TO BALANCE SHEET
NOTE 1 -- ORGANIZATION AND OPERATIONS
Resorts International Hotel Financing, Inc. ("RIHF") was incorporated under
the laws of the State of Delaware in June 1993 and has had no operations to
date. RIHF, a wholly owned subsidiary of Resorts International, Inc. ("RII"),
was organized for the purpose of issuing public debt securities in connection
with a plan of reorganization of RII. RIHF is authorized to issue 1,000 shares
with a par value of $.01 per share. No shares were issued as of the date of the
accompanying Balance Sheet; however, RII purchased one share for $10 in October
1993.
NOTE 2 -- PROPOSED ISSUANCE OF NOTES
In April 1993 RII reached an agreement in principle with two representatives
(the "Representatives") of major holders of its Senior Secured Redeemable Notes
due April 15, 1994 (the "Old Series Notes") as to terms of a restructuring of
Old Series Notes. Such restructuring was to include the exchange of the Old
Series Notes for, among other things, cash, new debt, an equity interest in RII
and 100% of the equity of RII's Bahamian subsidiaries, Paradise Island Airlines,
Inc. ("PIA") and certain domestic subsidiaries which support the Bahamian
operations (PIA and these other domestic subsidiaries are hereinafter referred
to as the "U.S. Paradise Island Subsidiaries").
Since that time, management of RII has been cooperating with the
Representatives in negotiating the possible sale to a third party (the
"Purchaser") of a majority of the equity of RII's Bahamian subsidiaries and the
assets and related liabilities of the U.S. Paradise Island Subsidiaries.
Further negotiations among RII, the Purchaser and the Representatives have
led to the currently proposed restructuring which contemplates, among other
things, the exchange of the Old Series Notes for the following:
(a) excess cash, as defined, of RII consolidated with its subsidiaries,
(b) $125,000,000 principal amount of nine-year, 11% mortgage notes to be
issued by RIHF and to be secured by a mortgage on Merv Griffin's Resorts
Casino Hotel in Atlantic City (the "Resorts Casino Hotel") and guaranteed by
Resorts International Hotel, Inc. ("RIH"), RII's subsidiary that owns and
operates Resorts Casino Hotel,
(c) $35,000,000 principal amount of ten-year, 11.375%, junior mortgage
notes to be issued by RIHF and to be secured by a junior mortgage on the
Resorts Casino Hotel and guaranteed by RIH,
(d) shares of common stock of RII in an amount representing
approximately 40% of the total outstanding shares, and
(e) either (i) $65,000,000 cash and 40% of the equity of a company
formed by the Purchaser to purchase 100% of the equity of RII's Bahamian
subsidiaries and, through subsidiaries, the assets and related liabilities
of the U.S. Paradise Island Subsidiaries or, if that purchase is not
consummated, (ii) 100% of the equity of a holding company formed to own 100%
of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the
assets and related liabilities of the U.S. Paradise Island Subsidiaries.
The proposed restructuring also contemplates that RIHF will have a senior prime
loan (the "RIHF Senior Facility") of up to $20,000,000 available for drawdown
for twelve months following the restructuring. Such RIHF Senior Facility would
be secured by a first priority lien on Resorts Casino Hotel and would be senior
to both the senior mortgage notes and the junior mortgage notes. This loan would
bear interest at 11% from drawdown and mature eight years from that date.
In connection with the proposed restructuring, it is also anticipated that
RIHF will obtain notes receivable from RIH with terms that mirror RIHF's debt so
that RIHF will be able to service its debt.
F-46
<PAGE>
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
NOTES TO BALANCE SHEET (CONTINUED)
NOTE 2 -- PROPOSED ISSUANCE OF NOTES (CONTINUED)
Before any restructuring can be completed, specific terms and conditions
must be finalized and set forth in definitive agreements, indentures and other
documents. Also, any restructuring must be approved by various governmental
agencies, and the proposed restructuring will require certain shareholder and
creditor approvals, as well as confirmation by the Bankruptcy Court. RII cannot
provide any assurances as to whether or when the proposed restructuring will be
effected, or that the restructuring will be on terms similar to those described
above.
F-47
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of Resorts International, Inc.
P. I. Resorts Limited
We have audited the accompanying balance sheet of P. I. Resorts Limited ("PIRL")
as of October 15, 1993. PIRL, a wholly owned subsidiary of Resorts
International, Inc. ("RII"), was organized for the purpose of effecting a
transfer of ownership of certain of RII's subsidiaries to certain of RII's
creditors in connection with a plan of reorganization of RII. This balance sheet
is the responsibility of PIRL's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
of the balance sheet provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of PIRL at October 15, 1993, in
conformity with generally accepted accounting principles.
ERNST & YOUNG
Philadelphia, Pennsylvania
December 29, 1993
F-48
<PAGE>
P. I. RESORTS LIMITED
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
OCTOBER 15, 1993
-----------------
<S> <C>
Due from parent.................................................................................. $ 0.02
-----
-----
SHAREHOLDER'S EQUITY
Shareholder's equity -- Capital stock:
Ordinary -- $.01 par value; 25,000,000 shares authorized; 2 shares issued and outstanding...... $ 0.02
Preference -- $.01 par value; 10,000,000 shares authorized; none issued and outstanding........
-----
$ 0.02
-----
-----
</TABLE>
See Notes to Balance Sheet of PIRL.
F-49
<PAGE>
P. I. RESORTS LIMITED
NOTES TO BALANCE SHEET
NOTE 1 -- ORGANIZATION AND OPERATIONS
P. I. Resorts Limited ("PIRL") was incorporated under the laws of the
Commonwealth of The Bahamas in October 1993 and has had no operations to date.
PIRL, a wholly owned subsidiary of Resorts International, Inc. ("RII"), was
organized for the purpose of effecting a transfer of ownership of certain of
RII's subsidiaries to certain of RII's creditors in connection with a plan of
reorganization of RII.
NOTE 2 -- PROPOSED TRANSACTIONS
In April 1993 RII reached an agreement in principle with two representatives
(the "Representatives") of major holders of its Senior Secured Redeemable Notes
due April 15, 1994 (the "Old Series Notes") as to terms of a restructuring of
Old Series Notes. Such restructuring was to include the exchange of the Old
Series Notes for, among other things, cash, new debt, an equity interest in RII
and 100% of the equity of RII's Bahamian subsidiaries, Paradise Island Airlines,
Inc. ("PIA") and certain domestic subsidiaries which support the Bahamian
operations (PIA and these other domestic subsidiaries are hereinafter referred
to as the "U.S. Paradise Island Subsidiaries").
Since that time, management of RII has been cooperating with the
Representatives in negotiating the possible sale to a third party (the
"Purchaser") of a majority of the equity of RII's Bahamian subsidiaries and the
assets and related liabilities of the U.S. Paradise Island Subsidiaries.
Further negotiations among RII, the Purchaser and the Representatives have
led to the currently proposed restructuring which contemplates, among other
things, the exchange of the Old Series Notes for the following:
(a) excess cash, as defined, of RII consolidated with its subsidiaries,
(b) $125,000,000 principal amount of nine-year, 11% mortgage notes to be
issued by a subsidiary of RII and to be secured by a mortgage on Merv
Griffin's Resorts Casino Hotel in Atlantic City (the "Resorts Casino Hotel")
and guaranteed by Resorts International Hotel, Inc. ("RIH"), RII's
subsidiary that owns and operates Resorts Casino Hotel,
(c) $35,000,000 principal amount of ten-year, 11.375%, junior mortgage
notes to be issued by a subsidiary of RII and to be secured by a junior
mortgage on the Resorts Casino Hotel and guaranteed by RIH,
(d) shares of common stock of RII in an amount representing
approximately 40% of the total outstanding shares, and
(e) either (i) $65,000,000 cash and 40% of the equity of a company
formed by the Purchaser to purchase 100% of the equity of RII's Bahamian
subsidiaries and, through subsidiaries, the assets and related liabilities
of the U.S. Paradise Island Subsidiaries or, if that purchase is not
consummated, (ii) 100% of the equity of RII's Bahamian subsidiaries and the
assets and related liabilities of the U.S. Paradise Island Subsidiaries.
In connection with such an exchange including alternative (ii) of (e) above
it is anticipated that all of the equity of RII's Bahamian subsidiaries will be
transferred to PIRL, the assets and liabilities of the U.S. Paradise Island
Subsidiaries will be transferred to subsidiaries of PIRL (none of which
currently exist), and PIRL's ordinary shares will be distributed to holders of
Old Series Notes.
Before any restructuring can be completed, specific terms and conditions
must be finalized and set forth in definitive agreements, indentures and other
documents. Also, any restructuring must be approved by various governmental
agencies, and the proposed restructuring will require certain shareholder and
creditor approvals, as well as confirmation by the Bankruptcy Court. RII cannot
provide any assurance as to whether or when the proposed restructuring will be
effected, or that the restructuring will be on terms similar to those described
above.
F-50
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of Resorts International, Inc.
PIRL Group
We have audited the accompanying combined balance sheets of PIRL Group as of
December 31, 1992 and 1991, and the related combined statements of operations,
changes in shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1992. These financial statements are the
responsibility of the PIRL Group's management. Our responsibility is to express
an opinion on these 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 obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
PIRL Group, as disclosed in the financial statements and related notes, has
extensive intercompany relationships and transactions with Resorts
International, Inc. ("RII") and its affiliates. RII has significant debt which
becomes due and payable in April 1994. Through April 1994, RII may satisfy its
interest obligations on this debt with the issuance of additional debt. RII's
ability to pay this debt at maturity was premised upon the contemplated sale of
RII's operations on Paradise Island and of its non-operating real estate
holdings in Atlantic City generating sufficient proceeds to reduce the
obligations under this debt to a level that, if refinanced at maturity in April
1994, could be serviced by cash flow from the remaining operations. It presently
appears unlikely the proceeds from a possible sale of these operations will
provide a reduction of principal to this level. Consequently, RII is reviewing
other financial alternatives. One such alternative is described in Note 13.
However, specific terms and conditions have not been finalized.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of PIRL Group at December
31, 1992 and 1991, and the combined results of its operations and its cash flows
for each of the three years in the period ended December 31, 1992, in conformity
with generally accepted accounting principles.
ERNST & YOUNG
Philadelphia, Pennsylvania
April 23, 1993 except for
Note 13, as to which the date is
December 29, 1993
F-51
<PAGE>
PIRL GROUP
COMBINED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1991 1992
-------- -------- SEPTEMBER 30,
1993
-------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash (including cash equivalents of $1,983,
$4,674 and $7,657)........................ $ 7,727 $ 12,200 $ 12,870
Restricted cash equivalents................ 236 601 1,099
Receivables, net........................... 22,215 18,013 7,380
Inventories................................ 6,996 6,989 7,020
Prepaid expenses........................... 5,376 4,870 5,221
-------- -------- -------------
Total current assets..................... 42,550 42,673 33,590
Property and equipment, net of accumulated
depreciation................................ 194,195 184,058 176,606
Deferred charges and other assets............ 753 945 1,332
-------- -------- -------------
$237,498 $227,676 $ 211,528
-------- -------- -------------
-------- -------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt....... $ 613 $ 185 $ 130
Accounts payable and accrued liabilities... 26,957 18,440 18,688
Due to parent company...................... 31,421 40,614 35,676
Interest payable to affiliate.............. 1,125 4,500 2,813
Note payable to affiliate.................. 50,000 50,000 50,000
-------- -------- -------------
Total current liabilities................ 110,116 113,739 107,307
-------- -------- -------------
Long-term debt............................... 457 269 169
-------- -------- -------------
Commitments and contingencies (Note 13)
Shareholders' equity:
Capital stock -- shares issued and
outstanding:
Resorts International (Bahamas) 1984
Limited:
Class A -- 500 shares.................. 1 1 1
Class B -- 400 shares.................. 1 1 1
Class C -- 900 shares.................. 3 3 3
Resorts International Disbursement, Inc.
-- 100 shares...........................
Paradise Island Vacations, Inc. -- 1,000
shares.................................. 1 1 1
Resorts Representation International,
Inc. -- 100 shares......................
International Suppliers, Inc. -- 100
shares..................................
Paradise Island Airlines, Inc. -- 10
shares.................................. 26 26 26
ANTL, Inc. -- 100 shares................. 1 1 1
-------- -------- -------------
33 33 33
Capital in excess of par................... 147,546 147,546 147,546
Accumulated deficit........................ (20,654) (33,911) (43,527 )
-------- -------- -------------
Total shareholders' equity............... 126,925 113,668 104,052
-------- -------- -------------
$237,498 $227,676 $ 211,528
-------- -------- -------------
-------- -------- -------------
</TABLE>
See Notes to Combined Financial Statements of PIRL Group.
F-52
<PAGE>
PIRL GROUP
COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------
1990 FOR THE THREE QUARTERS
------------------------- ENDED SEPTEMBER 30,
THROUGH FROM ------------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
----------- ------------ ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Casino.......................... $ 43,321 $ 19,940 $ 61,003 $ 66,120 $ 44,171 $ 48,685
Rooms........................... 31,840 9,435 33,173 30,235 23,984 22,622
Food and beverage............... 29,317 11,207 36,053 32,851 25,157 23,593
Other casino/hotel revenues..... 11,584 4,895 17,563 17,890 13,457 14,412
Other operating revenues........ 9,630 5,248 15,424 19,072 14,347 13,704
Real estate related............. 3,721 212 213 213
----------- ------------ ----------- ----------- ----------- -----------
129,413 50,937 163,216 166,381 121,329 123,016
----------- ------------ ----------- ----------- ----------- -----------
Expenses:
Casino.......................... 31,293 13,896 42,610 48,272 34,612 36,587
Rooms........................... 6,429 3,130 8,745 8,217 6,268 5,562
Food and beverage............... 21,605 9,608 27,829 25,161 19,081 17,902
Other casino/hotel operating
expenses....................... 21,681 10,859 32,555 31,373 23,457 24,247
Other operating expenses........ 7,203 4,230 12,055 15,549 11,564 11,122
Selling, general and
administrative................. 18,502 10,079 27,711 26,821 19,809 18,327
Provision for doubtful
receivables.................... 2,199 891 2,893 2,633 1,964 1,748
Depreciation.................... 8,963 4,254 14,605 13,792 10,288 10,612
Real estate related............. 3,533 153 230 230
----------- ------------ ----------- ----------- ----------- -----------
121,408 57,100 169,003 172,048 127,273 126,107
----------- ------------ ----------- ----------- ----------- -----------
Earnings (loss) from operations... 8,005 (6,163) (5,787) (5,667) (5,944) (3,091)
Other income (deductions):
Interest income................. 698 208 407 359 310 291
Interest expense................ (4,546) (2,300) (7,019) (6,850) (5,145) (5,097)
Recapitalization costs.......... (41,270) (1,099) (929) (1,719)
Affiliated bad debt write-off... (2,251)
----------- ------------ ----------- ----------- ----------- -----------
Net loss.......................... $ (39,364) $ (8,255) $ (12,399) $ (13,257) $ (11,708) $ (9,616)
----------- ------------ ----------- ----------- ----------- -----------
----------- ------------ ----------- ----------- ----------- -----------
</TABLE>
See Notes to Combined Financial Statements of PIRL Group.
Note 2 describes a change in entity and related presentation for periods
presented.
F-53
<PAGE>
PIRL GROUP
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------
1990 FOR THE THREE QUARTERS
-------------------------- ENDED SEPTEMBER 30,
THROUGH FROM --------------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
------------ ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers.............. $ 123,270 $ 43,497 $ 158,653 $ 163,083 $ 125,183 $ 129,410
Cash paid to suppliers and employees...... (111,194) (44,861) (155,828) (157,615) (116,306) (112,214)
------------ ------------ ------------ ------------ ------------ ------------
Cash flow from operations before
interest............................... 12,076 (1,364) 2,825 5,468 8,877 17,196
Interest received......................... 701 208 408 358 309 291
Interest paid............................. (3,439) (3,425) (7,015) (3,473) (3,456) (6,782)
------------ ------------ ------------ ------------ ------------ ------------
Net cash provided by (used in) operating
activities............................. 9,338 (4,581) (3,782) 2,353 5,730 10,705
------------ ------------ ------------ ------------ ------------ ------------
Cash flows from investing activities:
Payments for property and equipment....... (4,564) (3,593) (4,007) (4,321) (3,365) (3,460)
Proceeds from sales of property and
equipment................................ 5,272 6,419 147 213 213
Proceeds from prior year sales of property
and equipment............................ 1,676
Proceeds from sale of short-term money
market security with maturity greater
than three months........................ 883 883 1,377
Purchase of short-term money market
security with maturity greater than three
months................................... (1,768) (1,768) (492)
------------ ------------ ------------ ------------ ------------ ------------
Net cash provided by (used in) investing
activities............................. 708 2,826 (2,184) (4,993) (4,037) (2,575)
------------ ------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Advances from (repayments to)
affiliates............................... (14,878) 8,774 (1,676) 9,193 (1,912) (4,938)
Recapitalization costs, including payments
to parent................................ (8,356) (1,099) (929) (1,869)
Debt repayments........................... (646) (166) (566) (616) (469) (155)
------------ ------------ ------------ ------------ ------------ ------------
Net cash provided by (used in) financing
activities............................. (23,880) 8,608 (2,242) 7,478 (3,310) (6,962)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents................................ (13,834) 6,853 (8,208) 4,838 (1,617) 1,168
Cash and cash equivalents at beginning of
period..................................... 23,152 9,318 16,171 7,963 7,963 12,801
------------ ------------ ------------ ------------ ------------ ------------
Cash and cash equivalents at end of
period..................................... $ 9,318 $ 16,171 $ 7,963 $ 12,801 $ 6,346 $ 13,969
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
See Notes to Combined Financial Statements of PIRL Group.
Note 2 describes a change in entity and related presentation for periods
presented.
F-54
<PAGE>
PIRL GROUP
COMBINED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
CAPITAL STOCK
----------------------------------------------------------------------------
RIB
----------------------------
CLASS A CLASS B CLASS C RIDI PIVI RRII ISI PIA ANTL
-------- -------- -------- ------ ------ ------ ------ ------ ------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shares authorized....................... 500 400 900 100 5,000 5,000 1,000 10 100
--- --- --- ------ ------ ------ ------ ------ ------
--- --- --- ------ ------ ------ ------ ------ ------
Balance at December 31, 1989............ $ 1 $ 1 $ 3 $ 1 $ 26 $ 1
Net loss for period through August 31,
1990...................................
Effect of reorganization:
Elimination of accumulated deficit....
--- --- --- ------ ------ ------
Balance at August 31, 1990.............. 1 1 3 1 26 1
Net loss for period from September 1,
1990...................................
--- --- --- ------ ------ ------
Balance at December 31, 1990............ 1 1 3 1 26 1
Net loss for year 1991..................
--- --- --- ------ ------ ------
Balance at December 31, 1991............ 1 1 3 1 26 1
Net loss for year 1992..................
--- --- --- ------ ------ ------
Balance at December 31, 1992............ 1 1 3 1 26 1
Net loss for three quarters ended
September 30, 1993 (unaudited).........
--- --- --- ------ ------ ------
Balance at September 30, 1993
(unaudited)............................ $ 1 $ 1 $ 3 $ 1 $ 26 $ 1
--- --- --- ------ ------ ------
--- --- --- ------ ------ ------
<CAPTION>
CAPITAL
IN EXCESS ACCUMULATED
OF PAR DEFICIT
---------- ------------
<S> <C> <C>
Shares authorized.......................
Balance at December 31, 1989............ $ 273,555 $ (86,645 )
Net loss for period through August 31,
1990................................... (39,364 )
Effect of reorganization:
Elimination of accumulated deficit.... (126,009) 126,009
---------- ------------
Balance at August 31, 1990.............. 147,546 -0-
Net loss for period from September 1,
1990................................... (8,255 )
---------- ------------
Balance at December 31, 1990............ 147,546 (8,255 )
Net loss for year 1991.................. (12,399 )
---------- ------------
Balance at December 31, 1991............ 147,546 (20,654 )
Net loss for year 1992.................. (13,257 )
---------- ------------
Balance at December 31, 1992............ 147,546 (33,911 )
Net loss for three quarters ended
September 30, 1993 (unaudited)......... (9,616 )
---------- ------------
Balance at September 30, 1993
(unaudited)............................ $ 147,546 $ (43,527 )
---------- ------------
---------- ------------
</TABLE>
See Notes to Combined Financial Statements of PIRL Group.
Note 2 describes a change in entity and related presentation for periods
presented.
F-55
<PAGE>
PIRL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Resorts International (Bahamas) 1984 Limited ("RIB") is a wholly owned
subsidiary of Griffin Resorts Inc. ("GRI"). GRI, Paradise Island Airlines, Inc.
("PIA"), ANTL, Inc. ("ANTL"), Paradise Island Vacations, Inc. ("PIVI"), Resorts
Representation International, Inc. ("RRII"), International Suppliers, Inc.
("ISI") and Resorts International Disbursement, Inc. ("RIDI") are wholly owned
subsidiaries of Resorts International, Inc. ("RII"). The term "RIB" as used
herein includes RIB and/ or one or more of its subsidiaries, all of which are
wholly owned, as the context may require. The term "PIRL Group" includes all
companies included in the combined group described below under "Principles of
Combination".
RIB, through its subsidiaries, owns and operates the Paradise Island Resort
& Casino, the Ocean Club Golf & Tennis Resort, the Paradise Paradise Beach
Resort, a golf course, a utility plant, a short takeoff and landing ("STOL")
airport facility and other improvements on Paradise Island, The Bahamas.
Subsidiaries of RIB also own land available for sale or development on Paradise
Island and Grand Bahama Island.
PIA provides airline transportation between Paradise Island and Miami, Fort
Lauderdale, West Palm Beach and Orlando, Florida; offers a program of casino
night flights to and from Fort Lauderdale, Florida; and provides scheduled
service between Fort Lauderdale and Marsh Harbor and Treasure Cay in The Abacos.
PIA operates five Dash 7 STOL aircraft, four of which are leased from third
parties and one of which is owned by ANTL.
PIVI and RRII provide travel reservations and wholesale tour services. ISI
provides purchasing services and RIDI provides disbursement services to
affiliated companies.
Financial statements and footnote data with respect to September 30, 1993
and the three quarters ended September 30, 1992 and 1993 are unaudited. In the
opinion of management, such unaudited financial statements include all
adjustments (consisting of normal recurring adjustments) necessary for a fair
presentation, in accordance with generally accepted accounting principles.
PRINCIPLES OF COMBINATION
Negotiations among RII, two representatives (the "Representatives") of major
holders of a certain issue of RII's debt and an unrelated third party (the
"Purchaser") have led to terms of the currently proposed restructuring of that
debt outlined in Note 13. Such terms include the disposition by RII, through one
of two alternatives, of 100% of the equity of RII's Bahamian subsidiaries and
the assets and liabilities of PIA, ANTL, PIVI, RRII, ISI, and RIDI. The combined
financial statements were prepared in anticipation of this restructuring and
include the accounts of RIB and its subsidiaries on a consolidated basis
combined with the accounts of PIA, ANTL, PIVI, RRII, ISI and RIDI. All
significant intercompany transactions and balances have been eliminated in the
consolidation and the combination. RIB and its subsidiaries are incorporated
under the laws of The Bahamas. PIA, ANTL, PIVI, RRII, ISI and RIDI are
incorporated in the United States and are hereinafter referred to as the "U.S.
Paradise Island Subsidiaries." The accounts of the Bahamian companies are
maintained in U.S. dollars.
REVENUE RECOGNITION
The PIRL Group records as revenue the win from casino gaming activities
which represents the difference between amounts wagered and amounts won by
patrons. Revenues from hotel and related services and from theatre ticket sales
are recognized at the time the related service is performed. Revenue from
airline operations are recognized when the transportation or other service is
provided.
F-56
<PAGE>
PIRL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COMPLIMENTARY SERVICES
The Combined Statements of Operations reflect each category of operating
revenues excluding the retail value of complimentary services provided to casino
patrons without charge. The rooms, food and beverage, and other casino/hotel
operations departments allocate a percentage of their total operating expenses
to the casino department for complimentary services provided to casino patrons.
These allocations do not necessarily represent the incremental cost of providing
such complimentary services to casino patrons. Amounts allocated to the casino
department from the other operating departments were as follows:
<TABLE>
<CAPTION>
1990
------------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
----------- ----------- --------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Rooms........................................... $ 485 $ 181 $ 614 $ 728
Food and beverage............................... 2,333 1,122 3,291 4,096
Other casino/hotel operations................... 92 32 140 234
----------- ----------- --------- ---------
Total allocated to casino..................... $ 2,910 $ 1,335 $ 4,045 $ 5,058
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
CASH EQUIVALENTS
The PIRL Group considers all of its short-term money market securities
purchased with maturities of three months or less to be cash equivalents.
Restricted cash equivalents are cash equivalents securing letters of credit and
other guarantees. The carrying value of cash equivalents approximates fair value
due to the short maturity of these instruments.
INVENTORIES
Inventories of provisions, supplies and spare parts are carried at the lower
of cost (first-in, first-out) or market.
PROPERTY AND EQUIPMENT
Property and equipment are depreciated over their estimated useful lives
using the straight-line method for financial reporting purposes.
INCOME TAXES
The U.S. Paradise Island Subsidiaries file consolidated U.S. federal income
tax returns with RII and its other U.S. subsidiaries.
The companies in the PIRL Group account for income taxes under the liability
method prescribed by Statement of Financial Accounting Standards No. 96,
"Accounting for Income Taxes" ("SFAS 96"). Under this method, the deferred tax
liability is determined based on the difference between the financial reporting
and tax bases of assets and liabilities and enacted tax rates which will be in
effect for the years in which the differences are expected to reverse. The
deferred tax liability is reduced by cumulative tax credits and losses being
carried forward for tax purposes, subject to applicable limitations.
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes," ("SFAS
109"). SFAS 109 supersedes SFAS 96 but retains the liability method of
accounting for income taxes. The companies composing the PIRL Group will adopt
SFAS 109 for fiscal 1993 and anticipate no significant impact on the PIRL
Group's combined financial statements.
F-57
<PAGE>
PIRL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
There are no income taxes in The Bahamas and RIB's income is generally not
subject to U.S. federal income taxation until it is distributed to a U.S.
parent. Therefore, no taxes are provided in the accompanying combined financial
statements relative to RIB's earnings.
NOTE 2 -- BASIS OF PRESENTATION
During 1989, RII and certain of its subsidiaries (the "Old Debtors"), none
of which are in the PIRL Group, filed voluntary petitions or consented to
involuntary petitions for relief under chapter 11 of the United States
Bankruptcy Code. The Old Debtors filed the Second Amended Joint Plan of
Reorganization dated as of May 31, 1990 (the "Old Plan") which was confirmed by
the New Jersey bankruptcy court in August 1990. On September 17, 1990 (the "Old
Effective Date"), all conditions to effectiveness of the Old Plan were either
met or waived and the Old Plan became effective.
Under the Old Plan, all previously outstanding debt securities of the Old
Debtors were cancelled and exchanged for new debt and equity securities of RII.
Also pursuant to the Old Plan, all previously outstanding shares of stock of RII
were cancelled. As a result of these and other transactions prescribed in the
Old Plan, Merv Griffin, who prior to the reorganization indirectly owned 100% of
RII, owned 22% of RII as of October 1, 1990, the initial distribution date of
the new securities.
RII accounted for the reorganization using "fresh start" accounting.
Accordingly, all assets and liabilities of RII and its subsidiaries were
restated to reflect their estimated fair values and the accumulated deficit was
eliminated. Although the confirmation date was August 28, 1990, the PIRL Group
recorded the effects of the reorganization as of August 31, 1990.
In 1990, the PIRL Group recorded affiliated bad debt write-offs of
$2,251,000, the net amount of intercompany receivables from the Old Debtors
cancelled pursuant to the Old Plan.
The revaluation of the PIRL Group's other assets and liabilities, which was
based on independent appraisals, discounted cash flows, evaluations, estimations
and other studies, resulted in a net loss of $29,904,000, with the following
components:
<TABLE>
<CAPTION>
(IN THOUSANDS OF
DOLLARS)
------------------------
<S> <C>
Decrease in working capital................................................... $ 3,416
Decrease in property and equipment............................................ 26,413
Decrease in deferred charges and other assets................................. 75
--------
$ 29,904
--------
--------
</TABLE>
The loss on revaluation was included in recapitalization costs in 1990 in
the accompanying Combined Statements of Operations along with PIRL Group's
allocated portion (approximately one-third) of legal and financial advisory fees
and other costs associated with the reorganization amounting to $11,366,000.
The accumulated deficit at August 31, 1990 of $126,009,000 which included
the effects of the reorganization was reclassified to capital in excess of par.
The financial information contained herein relating to the PIRL Group's 1990
Combined Statements of Operations and Cash Flows is presented separately for the
periods "Through August 31" and "From September 1" due to the new basis of
accounting which resulted from the application of fresh start accounting.
F-58
<PAGE>
PIRL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- RECEIVABLES
Components of receivables at December 31 were as follows:
<TABLE>
<CAPTION>
1991 1992
--------- ---------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Gaming.............................................................. $ 11,795 $ 10,773
Less allowance for doubtful accounts.............................. (2,843) (2,752)
--------- ---------
8,952 8,021
--------- ---------
Non-gaming:
Hotel and related................................................. 6,198 5,400
Bahamian duty refunds receivable.................................. 3,766 719
Other............................................................. 4,681 5,037
--------- ---------
14,645 11,156
Less allowance for doubtful accounts.............................. (1,382) (1,164)
--------- ---------
13,263 9,992
--------- ---------
$ 22,215 $ 18,013
--------- ---------
--------- ---------
</TABLE>
NOTE 4 -- PROPERTY AND EQUIPMENT
Components of property and equipment at December 31 were as follows:
<TABLE>
<CAPTION>
1991 1992
----------- -----------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Land and land rights, including land held for investment,
development and resale.......................................... $ 80,385 $ 80,249
Land improvements and utilities.................................. 21,845 22,389
Hotels and other buildings....................................... 75,927 76,348
Furniture, machinery and equipment............................... 33,732 36,196
Construction in progress......................................... 948 889
----------- -----------
212,837 216,071
Less accumulated depreciation.................................. (18,642) (32,013)
----------- -----------
$ 194,195 $ 184,058
----------- -----------
----------- -----------
</TABLE>
Substantially all of the PIRL Group's property and equipment has been
pledged as collateral for the Senior Secured Redeemable Notes due April 15, 1994
(the "Old Series Notes") issued by RII.
NOTE 5 -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Components of accounts payable and accrued liabilities at December 31 were
as follows:
<TABLE>
<CAPTION>
1991 1992
--------- ---------
<S> <C> <C>
(IN THOUSANDS OF
DOLLARS)
Accrued payroll and related taxes and benefits........................ $ 2,128 $ 2,154
Accrued gaming taxes, fees and related assessments.................... 5,778 1,610
Customer deposits and unearned revenues............................... 8,583 5,682
Trade payables........................................................ 6,138 5,026
Progressive slot liability............................................ 469 562
Other accrued liabilities............................................. 3,861 3,406
--------- ---------
$ 26,957 $ 18,440
--------- ---------
--------- ---------
</TABLE>
F-59
<PAGE>
PIRL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- NOTE PAYABLE TO AFFILIATE
In 1988, Resorts International Hotel, Inc. ("RIH"), a wholly owned
subsidiary of RII, loaned $50,000,000 to RIB pursuant to a pre-arranged
back-to-back loan in exchange for a promissory note. Such note is payable on
demand and bears interest at 13 1/2% per annum, with interest payments due each
May 1 and November 1. The note is guaranteed by certain of RIB's subsidiaries.
The guarantees are secured by mortgages on the Paradise Island Resort & Casino,
the Ocean Club Golf & Tennis Resort, and the Paradise Paradise Beach Resort on
Paradise Island in The Bahamas, and all furniture, machinery and equipment used
in connection therewith. The promissory note and the mortgages securing payment
thereof have been assigned as part of the collateral for the Old Series Notes.
It was not anticipated that this intercompany promissory note payable be
repaid in the ordinary course of business. Also, RII is contemplating a
restructuring of the Old Series Notes, which may also affect this and other
intercompany relationships among RII's subsidiaries; however, the terms and
effects of any possible restructuring are uncertain at this time. Thus, it is
not practicable to estimate the fair value of this intercompany note without
incurring excessive costs.
NOTE 7 -- LONG-TERM DEBT
The long-term debt consists of capitalized lease obligations under which the
PIRL Group is the lessee of computer and other equipment. These leases expire in
1993 and 1995 and bear interest rates from 9.7% to 10.75%.
NOTE 8 -- RELATED PARTY TRANSACTIONS
The PIRL Group recorded the following income and expense from RII and other
affiliates:
<TABLE>
<CAPTION>
1990
------------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
----------- ----------- --------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Income -- RIH -- Charter flights................................. $ 151
-----------
-----------
Expenses:
RII -- Parent services fee..................................... $ 3,560 $ 1,587 $ 5,126 $ 5,284
-- Building rental.......................................... 29 15 44 44
RIH -- Interest expense........................................ 4,500 2,250 6,750 6,750
----------- ----------- --------- ---------
$ 8,089 $ 3,852 $ 11,920 $ 12,078
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
For periods through August 31, 1990, RII charged the PIRL Group for services
provided based on an allocation of corporate overhead costs incurred by RII.
Effective with the reorganization, RII began charging the PIRL Group a fee of
three (3) percent of certain gross revenues for such services. This three
percent parent services fee compensates RII for accounting, data processing and
other support services which RII incurs on behalf of the PIRL Group's operations
(estimated to amount to $1,100,000, $3,900,000 and $3,700,000 for the period
from September 1, 1990 and the years 1991 and 1992, respectively), as well as a
portion of the costs of RII executives and certain corporate office functions
not directly related to the PIRL Group operations.
Also, recapitalization costs reflected on the Combined Statements of
Operations include charges of $11,366,000 for 1990 and $1,099,000 for 1992
representing the PIRL Group's allocated portion (approximately one-third) of
RII's consolidated recapitalization costs.
In addition to the above, charges for insurance cost are allocated to the
PIRL Group based on relative amounts of operating revenue, payroll, property
value, or other appropriate measures.
Also, see Note 2 for discussion of the write-off of certain affiliated
receivables in 1990.
F-60
<PAGE>
PIRL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- RETIREMENT PLANS
Certain of the U.S. Paradise Island Subsidiaries participate in a defined
contribution plan covering substantially all of their full-time employees. The
companies make contributions to this plan based on a percentage of eligible
employee contributions. Total pension expense for this plan was $44,000, $35,000
and $47,000 in 1990, 1991 and 1992, respectively.
In addition to the plan described above, union and certain other employees
of Bahamian companies included in the PIRL Group are covered by multi-employer
defined benefit pension plans to which the companies make contributions. Such
contributions totalled $2,074,000, $1,659,000 and $576,000 in 1990, 1991 and
1992, respectively.
NOTE 10 -- INCOME TAXES
No tax provision was recorded for 1990, 1991 and 1992 due to either the
generation of net operating losses or application of net operating loss
carryforwards for federal and state income tax purposes by the U.S. Paradise
Island Subsidiaries. The source of net loss was as follows:
<TABLE>
<CAPTION>
1990
-----------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
---------- ----------- ---------- ----------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
U.S. source earnings (loss)................................... $ (791) $ (163) $ 167 $ 19
Foreign source loss........................................... (38,573) (8,092) (12,566) (13,276)
---------- ----------- ---------- ----------
Net loss...................................................... $ (39,364) $ (8,255) $ (12,399) $ (13,257)
---------- ----------- ---------- ----------
---------- ----------- ---------- ----------
</TABLE>
Due to the availability of net operating loss carryforwards and/or tax bases
of assets exceeding the financial reporting bases, through December 31, 1992, no
deferred tax liability was required for any of the U.S. Paradise Island
Subsidiaries. RIB has no deferred tax liability as there is no income tax in The
Bahamas and RIB is generally not subject to U.S. federal income taxation on its
income.
F-61
<PAGE>
PIRL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 -- STATEMENTS OF CASH FLOWS
Supplemental disclosures required by Statement of Financial Accounting
Standards No. 95 "Statement of Cash Flows" are presented below.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------
FOR THE THREE
1990 QUARTERS ENDED
------------------------ SEPTEMBER 30,
THROUGH FROM ---------------------
AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993
---------- ------------ ---------- ---------- ---------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS OF DOLLARS)
Reconciliation of net loss to net cash
provided by (used in) operating
activities:
Net loss................................. $ (39,364) $ (8,255) $ (12,399) $ (13,257) $ (11,708) $ (9,616)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Recapitalization costs................. 41,270 1,099 929 1,719
Affiliated bad debt write-off.......... 2,251
Depreciation and amortization.......... 9,160 4,354 14,914 13,792 10,288 10,643
Provision for doubtful receivables..... 2,199 891 2,893 2,633 1,964 1,748
Net (gain) loss on sales of property
and equipment......................... (855) (55) 132 116 17
Net (increase) decrease in accounts
receivable............................ 3,635 (2,744) (7,287) 2,791 8,764 7,850
Net (increase) decrease in inventories
and prepaids.......................... (1,420) (504) (2,064) 513 (908) (182)
Net (increase) decrease in deferred
charges and other assets.............. (25) (27) (44) (192) (191) 32
Net increase (decrease) in accounts
payable and accrued liabilities....... (8,638) 2,884 73 (8,517) (5,113) 198
Net increase (decrease) in interest
payable to affiliate.................. 1,125 (1,125) 3,375 1,688 (1,687)
---------- ------------ ---------- ---------- ---------- ---------
Net cash provided by (used in)
operating activities.................. $ 9,338 $ (4,581) $ (3,782) $ 2,353 $ 5,730 $ 10,705
---------- ------------ ---------- ---------- ---------- ---------
---------- ------------ ---------- ---------- ---------- ---------
Non-cash investing and financing
transactions:
Increase in liabilities for additions to
property and equipment.................. $ 513 $ 593
Reclassifications to deposits and other
assets from receivables and property and
equipment............................... $ 675 $ 674 $ 337 $ 450
Receivables from sale of property........ $ 1,185 $ 491
</TABLE>
F-62
<PAGE>
PIRL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 -- GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION
Geographic and business segment information for the PIRL Group is as
follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------
1990
-------------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
----------- ------------ ----------- -----------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Revenues
Paradise Island, The Bahamas:
Casino/hotel:
Casino.................................................. $ 43,321 $ 19,940 $ 61,003 $ 66,120
Rooms................................................... 31,840 9,435 33,173 30,235
Food and beverage....................................... 29,317 11,207 36,053 32,851
Other casino/hotel...................................... 11,584 4,895 17,563 17,890
----------- ------------ ----------- -----------
Total casino/hotel.................................... 116,062 45,477 147,792 147,096
Real estate related....................................... 3,721 212 213
----------- ------------ ----------- -----------
119,783 45,689 147,792 147,309
Airline..................................................... 11,071 6,083 18,234 22,483
Other....................................................... 191 18 86 162
Intersegment eliminations................................... (1,632) (853) (2,896) (3,573)
----------- ------------ ----------- -----------
Revenues from operations.................................. $ 129,413 $ 50,937 $ 163,216 $ 166,381
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
Contribution to Combined Loss
Paradise Island, The Bahamas:
Casino/hotel*............................................. $ 7,370 $ (6,166) $ (5,707) $ (5,592)
Real estate related....................................... 188 59 (17)
----------- ------------ ----------- -----------
7,558 (6,107) (5,707) (5,609)
Airline*.................................................... 5 (4) 83 77
Other....................................................... 442 (52) (163) (135)
----------- ------------ ----------- -----------
Earnings (loss) from operations............................. 8,005 (6,163) (5,787) (5,667)
Other income (deductions):
Interest income........................................... 698 208 407 359
Interest expense.......................................... (4,546) (2,300) (7,019) (6,850)
Recapitalization costs.................................... (41,270) (1,099)
Affiliated bad debt write-off............................. (2,251)
----------- ------------ ----------- -----------
Net loss................................................ $ (39,364) $ (8,255) $ (12,399) $ (13,257)
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
</TABLE>
- ------------------------
*The Paradise Island casino/hotel segment subsidized the operation of PIA in the
amount of $1,320,000, $571,000 and $760,000 for the two periods presented for
1990 and the year 1991, respectively. The Paradise Island casino/hotel segment
did not subsidize the operation of PIA in 1992.
F-63
<PAGE>
PIRL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 -- GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION (CONTINUED)
Identifiable Assets, Depreciation and Capital Additions (In Thousands of
Dollars)
<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS
-------------------------------------------
LESS ACCUMULATED
DEPRECIATION AND
VALUATION
GROSS ASSETS ALLOWANCES NET ASSETS DEPRECIATION
------------ ---------------- ---------- ------------
CAPITAL
ADDITIONS
---------
FOR THE YEAR ENDED
DECEMBER 31, 1992 DECEMBER 31, 1992
------------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C>
Paradise Island, The
Bahamas:
Casino/hotel........... $ 208,899 $ (33,899) $ 175,000 $ 12,973 $ 4,317
Real estate related.... 33,414 33,414
------------ -------- ---------- ------------ ---------
242,313 (33,899) 208,414 12,973 4,317
Airline.................. 12,923 (1,995) 10,928 805 4
Other.................... 1,542 (34) 1,508 13
Corporate (A)............ 6,827 (1) 6,826 1
------------ -------- ---------- ------------ ---------
$ 263,605 $ (35,929) $ 227,676 $ 13,792 $ 4,321
------------ -------- ---------- ------------ ---------
------------ -------- ---------- ------------ ---------
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1991 DECEMBER 31, 1991
------------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C>
Paradise Island, The
Bahamas:
Casino/hotel........... $ 207,924 $ (21,684) $ 186,240 $ 13,782 $ 3,726
Real estate related.... 33,400 33,400
------------ -------- ---------- ------------ ---------
241,324 (21,684) 219,640 13,782 3,726
Airline.................. 11,734 (1,163) 10,571 809 280
Other.................... 1,545 (20) 1,525 14 1
Corporate (A)............ 5,762 5,762
------------ -------- ---------- ------------ ---------
$ 260,365 $ (22,867) $ 237,498 $ 14,605 $ 4,007
------------ -------- ---------- ------------ ---------
------------ -------- ---------- ------------ ---------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1990
----------------------------------------------
<S> <C> <C> <C>
Paradise Island, The Bahamas:
Casino/hotel.......................... $ 198,825 $ (8,256) $ 190,569
Real estate related................... 34,075 34,075
------------- ------- ----------
232,900 (8,256) 224,644
Airline................................. 11,568 (319) 11,249
Other................................... 1,747 (42) 1,705
Corporate (A)........................... 14,468 14,468
------------- ------- ----------
$ 260,683 $ (8,617) $ 252,066
------------- ------- ----------
------------- ------- ----------
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1990
----------------------------------------------
THROUGH FROM THROUGH FROM
AUGUST 31 SEPTEMBER 1 AUGUST 31 SEPTEMBER 1
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Paradise Island, The Bahamas:
Casino/hotel.......................... $ 8,133 $ 3,878 $ 5,020 $ 4,320
Real estate related...................
--------- ----------- --------- -----------
8,133 3,878 5,020 4,320
Airline................................. 746 370 56 35
Other................................... 84 6
Corporate (A)...........................
--------- ----------- --------- -----------
$ 8,963 $ 4,254 $ 5,076 $ 4,355
--------- ----------- --------- -----------
--------- ----------- --------- -----------
<FN>
- ------------------------
(A) Includes cash equivalents and other corporate assets.
</TABLE>
NOTE 13 -- COMMITMENTS AND CONTINGENCIES
DISPOSITION OF PIRL GROUP
In April 1993 RII reached an agreement in principle with the Representatives
of major holders of its Old Series Notes as to terms of a restructuring of Old
Series Notes. Such restructuring was to include the exchange of the Old Series
Notes for, among other things, cash, new debt, an equity interest in RII and
100% of the equity of the members of the PIRL Group.
Since that time, management of RII has been cooperating with the
Representatives in negotiating the possible sale to the Purchaser of a majority
of the equity of RII's Bahamian subsidiaries and the assets and related
liabilities of the U.S. Paradise Island Subsidiaries.
F-64
<PAGE>
PIRL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
Further negotiations among RII, the Purchaser and the Representatives have
led to the currently proposed restructuring which contemplates, among other
things, the exchange of the Old Series Notes for the following:
(a) excess cash, as defined, of RII consolidated with its subsidiaries,
(b) $125,000,000 principal amount of nine-year, 11% mortgage notes to be
issued by a subsidiary of RII and to be secured by a mortgage on Merv
Griffin's Resorts Casino Hotel in Atlantic City (the "Resorts Casino Hotel")
and guaranteed by RIH,
(c) $35,000,000 principal amount of ten-year, 11.375%, junior mortgage
notes to be issued by a subsidiary of RII and to be secured by a junior
mortgage on the Resorts Casino Hotel and guaranteed by RIH,
(d) shares of common stock of RII in an amount representing
approximately 40% of the total outstanding shares, and
(e) either (i) $65,000,000 cash and 40% of the equity of a company
formed by the Purchaser to purchase 100% of the equity of RII's Bahamian
subsidiaries and, through subsidiaries, the assets and related liabilities
of the U.S. Paradise Island Subsidiaries or, if that purchase is not
consummated, (ii) 100% of the equity of a holding company formed to own 100%
of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the
assets and related liabilities of the U.S. Paradise Island Subsidiaries.
The proposed restructuring also contemplates that RIB's $50,000,000 note payable
to RIH (see Note 6) will be assumed by GRI, thus, relieving RIB of its
obligation thereunder.
Before any restructuring can be completed, specific terms and conditions
must be finalized and set forth in definitive agreements, indentures and other
documents. Also, any restructuring must be approved by various governmental
agencies, and the proposed restructuring will require certain shareholder and
creditor approvals, as well as confirmation by the Bankruptcy Court. RII cannot
provide any assurances as to whether or when the proposed restructuring will be
effected, or that the restructuring will be on terms similar to those described
above.
UNION NEGOTIATIONS
Approximately 1,900 of PIRL Group's Bahamian employees are members of The
Bahamas Catering and Allied Workers Union (the "Union"), whose contract expires
in January 1995. In light of the downturn in business being experienced by
hotels in the Paradise-New Providence Island area, PIRL Group, along with other
affected operators in that area, did not pay wage and pension increases
scheduled for January 1993 as they were negotiating with the Union for certain
concessions under the contract. Since then the Union filed claims against the
employers and, after attempting to mediate the dispute, the Minister of Labour
referred it to arbitrators. The dispute remains unsettled and negotiations among
the parties continue. The accompanying combined financial statements do not
reflect any accrual for unpaid wage and pension increases; however, the
estimated liability for such increases may amount to approximately $750,000 for
the first three quarters of 1993.
LITIGATION
Members of the PIRL Group are defendants in certain litigation. In the
opinion of management, based upon advice of counsel, the aggregate liability, if
any, arising from such litigation will not have a material adverse effect on the
accompanying combined financial statements.
F-65
<PAGE>
RESORTS INTERNATIONAL, INC.
CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
The table below reflects selected quarterly financial data for the years
1991 and 1992 and the first three quarters of 1993.
<TABLE>
<CAPTION>
1991 1992
------------------------------------------ ------------------------------------------
FOR THE QUARTER FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
- ------------------------------ --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues............ $ 101,429 $ 106,438 $ 113,005 $ 97,371 $ 111,631 $ 106,246 $ 112,377 $ 106,680
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Earnings (loss) from
operations................... $ 2,893 $ 5,042 $ 11,516 $ (3,415) $ 5,789 $ 4,847 $ 9,471 $ 1,395
Recapitalization costs........ (300) (1,043) (994) (511)
Other income (deductions),
net (A)...................... (13,586) (13,834) (15,356) (15,662) (18,501) (18,748) (17,744) (18,463)
--------- --------- --------- --------- --------- --------- --------- ---------
Loss before income taxes...... (10,693) (8,792) (3,840) (19,077) (13,012) (14,944) (9,267) (17,579)
Income tax benefit (expense).. 831 1,348
--------- --------- --------- --------- --------- --------- --------- ---------
Net loss...................... $ (10,693) $ (8,792) $ (3,840) $ (18,246) $ (13,012) $ (14,944) $ (9,267) $ (16,231)
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Net loss per share of RII
Common Stock................. $ (.53) $ (.44) $ (.19) $ (.91) $ (.65) $ (.74) $ (.46) $ (.80)
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
1993
-------------------------------
FOR THE QUARTER FIRST SECOND THIRD
- ------------------------------ --------- --------- ---------
<S> <C> <C> <C>
Operating revenues............ $ 114,154 $ 106,697 $ 117,007
--------- --------- ---------
--------- --------- ---------
Earnings (loss) from
operations................... $ 9,106 $ 1,791 $ 9,783
Recapitalization costs........ (593) (1,156) (3,130)
Other income (deductions),
net (A)...................... (21,411) (26,003) (25,757)
--------- --------- ---------
Loss before income taxes...... (12,898) (25,368) (19,104)
Income tax benefit (expense).. (1,000)
--------- --------- ---------
Net loss...................... $ (12,898) $ (25,368) $ (20,104)
--------- --------- ---------
--------- --------- ---------
Net loss per share of RII
Common Stock................. $ (.64) $ (1.26) $ (1.00)
--------- --------- ---------
--------- --------- ---------
<FN>
- ------------------------------
(A) Includes interest income, interest expense and amortization of debt
discount.
</TABLE>
F-66
<PAGE>
RESORTS INTERNATIONAL HOTEL, INC.
CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
The table below reflects selected quarterly financial data for the years
1991 and 1992 and the first three quarters of 1993.
<TABLE>
<CAPTION>
1991 1992
------------------------------------------ ------------------------------------------
FOR THE QUARTER FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
- ------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues................... $ 53,732 $ 64,682 $ 73,294 $ 55,766 $ 61,587 $ 65,907 $ 75,586 $ 59,660
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Earnings (loss) from operations...... $ (1,103) $ 4,210 $ 12,109 $ (397) $ 2,159 $ 5,287 $ 11,975 $ 1,628
Recapitalization costs............... (75) (335) (294) (170)
Other income (deductions), net (A)... 1,778 1,746 1,693 1,725 1,735 1,754 1,842 1,850
--------- --------- --------- --------- --------- --------- --------- ---------
Earnings before income taxes......... 675 5,956 13,802 1,328 3,819 6,706 13,523 3,308
Income tax expense................... (2,653) (5,521) (530) (1,529) (2,681) (5,410) (1,322)
--------- --------- --------- --------- --------- --------- --------- ---------
Net earnings......................... $ 675 $ 3,303 $ 8,281 $ 798 $ 2,290 $ 4,025 $ 8,113 $ 1,986
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
1993
-------------------------------
FOR THE QUARTER FIRST SECOND THIRD
- ------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Operating revenues................... $ 60,336 $ 67,678 $ 80,800
--------- --------- ---------
--------- --------- ---------
Earnings (loss) from operations...... $ 2,444 $ 2,565 $ 10,796
Recapitalization costs............... (198) (317) (1,065)
Other income (deductions), net (A)... 1,796 1,763 1,882
--------- --------- ---------
Earnings before income taxes......... 4,042 4,011 11,613
Income tax expense................... (400)
--------- --------- ---------
Net earnings......................... $ 4,042 $ 4,011 $ 11,213
--------- --------- ---------
--------- --------- ---------
<FN>
- ------------------------------
(A) Includes interest income and interest expense.
</TABLE>
F-67
<PAGE>
PIRL GROUP
COMBINED SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
The table below reflects selected quarterly financial data for the years
1991 and 1992 and the first three quarters of 1993.
<TABLE>
<CAPTION>
1991 1992
------------------------------------------ ------------------------------------------
FOR THE QUARTER FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
- ------------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues................... $ 45,878 $ 39,850 $ 37,793 $ 39,695 $ 48,136 $ 38,370 $ 34,823 $ 45,052
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Earnings (loss) from operations...... $ 2,262 $ (758) $ (2,931) $ (4,360) $ 1,336 $ (2,443) $ (4,837) $ 277
Recapitalization costs............... (150) (348) (431) (170)
Other income (deductions), net (A)... (1,658) (1,623) (1,661) (1,670) (1,598) (1,597) (1,640) (1,656)
--------- --------- --------- --------- --------- --------- --------- ---------
Net earnings (loss).................. $ 604 $ (2,381) $ (4,592) $ (6,030) $ (412) $ (4,388) $ (6,908) $ (1,549)
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
1993
-------------------------------
FOR THE QUARTER FIRST SECOND THIRD
- ------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Operating revenues................... $ 51,849 $ 36,989 $ 34,178
--------- --------- ---------
--------- --------- ---------
Earnings (loss) from operations...... $ 4,063 $ (3,230) $ (3,924)
Recapitalization costs............... (198) (517) (1,004)
Other income (deductions), net (A)... (1,594) (1,617) (1,595)
--------- --------- ---------
Net earnings (loss).................. $ 2,271 $ (5,364) $ (6,523)
--------- --------- ---------
--------- --------- ---------
<FN>
- ------------------------------
(A) Includes interest income and interest expense.
</TABLE>
F-68
<PAGE>
APPENDIX A
PLAN OF REORGANIZATION
<PAGE>
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
<TABLE>
<S> <C>
IN RE CASE NOS.
RESORTS INTERNATIONAL, INC., A AND
DELAWARE CORPORATION, AND GGRI, INC., A
DELAWARE CORPORATION, FORMERLY JOINTLY ADMINISTERED
KNOWN AS GRIFFIN RESORTS, INC., UNDER CASE NO.
DEBTORS. CHAPTER 11
</TABLE>
JOINT PLAN OF REORGANIZATION PROPOSED BY
RESORTS INTERNATIONAL, INC., GGRI, INC.,
RESORTS INTERNATIONAL HOTEL, INC.,
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
AND P.I. RESORTS LIMITED
DATED AS OF ____________, 1994
MICHAEL A. ROSENTHAL, ESQ.
KEITH D. ROSS, ESQ.
GIBSON, DUNN & CRUTCHER
200 Park Avenue
New York, New York 10166
(212) 351-4000
Attorneys for RESORTS INTERNATIONAL,
INC. and GGRI, INC.,
Debtors and Debtors in Possession
and
RESORTS INTERNATIONAL HOTEL, INC.,
RESORTS INTERNATIONAL HOTEL
FINANCING, INC. and P.I. RESORTS
LIMITED
A-2
<PAGE>
JOINT PLAN OF REORGANIZATION
FOR
RESORTS INTERNATIONAL, INC.
AND
GGRI, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----------
<C> <S> <C> <C>
ARTICLE I DEFINITIONS AND INTERPRETATION 1
1.1 Definitions............................................................ 1
1.1.1 1990 Stock Option Plan...................................... 1
1.1.2 1990 Stock Options.......................................... 1
1.1.3 1994 Stock Option Plan...................................... 1
1.1.4 Administrative Claim........................................ 2
1.1.5 Affiliate................................................... 2
1.1.6 Allowed, Allowed Claim or Allowed Interest.................. 2
1.1.7 Alternative Closing......................................... 2
1.1.8 Alternative Closing Date.................................... 2
1.1.9 Amended RII Bylaws.......................................... 2
1.1.10 Amended RII Certificate of Incorporation.................... 2
1.1.11 Available Cash.............................................. 2
1.1.12 Bahamian Government......................................... 2
1.1.13 Bankruptcy Code............................................. 2
1.1.14 Bankruptcy Court............................................ 3
1.1.15 Bankruptcy Rules............................................ 3
1.1.16 Business Day................................................ 3
1.1.17 Caesars Payment............................................. 3
1.1.18 Cash........................................................ 3
1.1.19 CCC......................................................... 3
1.1.20 Claim....................................................... 3
1.1.21 Class....................................................... 3
1.1.22 Confirmation................................................ 3
1.1.23 Confirmation Date........................................... 3
1.1.24 Confirmation Hearing........................................ 3
1.1.25 Confirmation Order.......................................... 3
1.1.26 Contingent Claim............................................ 3
1.1.27 Creditor.................................................... 3
1.1.28 Debtors..................................................... 3
1.1.29 Deferred Cash............................................... 3
1.1.30 Disallowed Claim or Disallowed Interest..................... 3
1.1.31 Disbursing Agent............................................ 3
1.1.32 Disbursing Agreement........................................ 4
1.1.33 Disputed Claim or Disputed Interest......................... 4
1.1.34 Distribution Date........................................... 4
1.1.35 Distribution Record Date.................................... 4
1.1.36 Effective Date.............................................. 4
1.1.37 Encumbrances................................................ 4
1.1.38 Entity...................................................... 5
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----------
<C> <S> <C> <C>
1.1.39 Estate...................................................... 5
1.1.40 Excess Cash................................................. 5
1.1.41 Fidelity.................................................... 5
1.1.42 Final Order................................................. 5
1.1.43 GRH......................................................... 5
1.1.44 GRI......................................................... 5
1.1.45 GRI Bylaws..................................................
1.1.46 GRI Certificate of Incorporation............................
1.1.47 GRI Common Stock............................................ 5
1.1.48 GRI Guaranty Claims......................................... 5
1.1.49 Griffin Group Note.......................................... 5
1.1.50 Griffin Group Note Proceeds................................. 5
1.1.51 Griffin Warrants............................................ 5
1.1.52 Holder...................................................... 5
1.1.53 Indenture Trustee Charging Liens............................ 6
1.1.54 Interest.................................................... 6
1.1.55 Lien........................................................ 6
1.1.56 Litigation Trust............................................ 6
1.1.57 Litigation Trust Units...................................... 6
1.1.58 National Securities Exchange................................ 6
1.1.59 Net Plan Consummation Cash.................................. 6
1.1.60 Net SIHL Reserved Cash...................................... 6
1.1.61 Net Standby Reserved Cash................................... 6
1.1.62 New Debt Securities......................................... 6
1.1.63 New Equity Securities....................................... 6
1.1.64 New Indentures.............................................. 6
1.1.65 New RIHF Indenture Trustees................................. 6
1.1.66 New RIHF Junior Indenture Trustee........................... 6
1.1.67 New RIHF Junior Mortgage Indenture.......................... 7
1.1.68 New RIHF Junior Mortgage Notes.............................. 7
1.1.69 New RIHF Indenture Trustee.................................. 7
1.1.70 New RIHF Mortgage Indenture................................. 7
1.1.71 New RIHF Mortgage Notes..................................... 7
1.1.72 New RII Common Stock........................................ 7
1.1.73 Old Chapter 11 Cases........................................ 7
1.1.74 Old Debtors................................................. 7
1.1.75 Old Plan.................................................... 7
1.1.76 Old RII Common Stock........................................ 7
1.1.77 Old Security Documents...................................... 7
1.1.78 Old Series Note Indenture................................... 7
1.1.79 Old Series Indenture Trustee................................ 8
1.1.80 Old Series Note Claims...................................... 8
1.1.81 Old Series Notes............................................ 8
1.1.82 Old Series Public Debt Claims............................... 8
1.1.83 Paradise Island Approval Order.............................. 8
1.1.84 Paradise Island Assets...................................... 8
1.1.85 Paradise Island Purchase Agreement.......................... 8
1.1.86 Paradise Island Shares...................................... 8
1.1.87 Paradise Subsidiary Claims.................................. 8
1.1.88 Payments-In-Kind............................................ 8
1.1.89 Petition Date............................................... 8
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----------
<C> <S> <C> <C>
1.1.90 PIRL........................................................ 8
1.1.91 PIRL Aggregate Purchase Price............................... 8
1.1.92 PIRL Articles............................................... 8
1.1.93 PIRL Ordinary Shares........................................ 8
1.1.94 PIRL Spin-Off............................................... 8
1.1.95 PIRL Standby Distribution Agreement......................... 9
1.1.96 PIRL Subsidiaries........................................... 9
1.1.97 PIRL Subsidiaries Certificates of Incorporation............. 9
1.1.98 Plan........................................................ 9
1.1.99 Plan Consummation Cash...................................... 9
1.1.100 Plan Documents.............................................. 9
1.1.101 Plan Expenses............................................... 9
1.1.102 Plan Securities............................................. 9
1.1.103 Prepackaged Chapter 11 Cases................................ 9
1.1.104 Priority Claim.............................................. 9
1.1.105 Priority Tax Claim.......................................... 10
1.1.106 Pro Rata Share.............................................. 10
1.1.107 Professional Persons........................................ 10
1.1.108 Proponents.................................................. 10
1.1.109 Registrar................................................... 10
1.1.110 Registration Statement...................................... 10
1.1.111 Reorganized Debtors......................................... 10
1.1.112 Reorganized GRI............................................. 10
1.1.113 Reorganized RII............................................. 10
1.1.114 Reorganized RII Common Stock................................ 10
1.1.115 Restructuring Transactions.................................. 10
1.1.116 Retiree..................................................... 10
1.1.117 Retiree Administrative Claim................................ 10
1.1.118 Retiree Benefit Plans....................................... 10
1.1.119 RIB......................................................... 10
1.1.120 RIH......................................................... 10
1.1.121 RIHF........................................................ 10
1.1.122 RIHF Senior Facility........................................ 10
1.1.123 RIHF Senior Facility Indenture.............................. 10
1.1.124 RIHF Senior Facility Notes.................................. 11
1.1.125 RIHF Senior Facility Term Sheet............................. 11
1.1.126 RII......................................................... 11
1.1.127 RII Bylaws..................................................
1.1.128 RII Certificate of Incorporation............................
1.1.129 RII Class B Common Stock.................................... 11
1.1.130 RII Intercompany Claim...................................... 11
1.1.131 RII Paradise Assets......................................... 11
1.1.132 RII Paradise Subsidiaries................................... 11
1.1.133 RII Real Estate Assets...................................... 11
1.1.134 RII Retained Cash........................................... 11
1.1.135 Secured Claim............................................... 11
1.1.136 Showboat Note Claim......................................... 11
1.1.137 Showboat Notes.............................................. 11
1.1.138 Showboat Notes Indenture.................................... 12
1.1.139 SIHL........................................................ 12
1.1.140 SIHL Aggregate Cash Purchase Price.......................... 12
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----------
<C> <S> <C> <C>
1.1.141 SIHL Aggregate Purchase Price............................... 12
1.1.142 SIHL Articles............................................... 12
1.1.143 SIHL Buyer Expense Escrow................................... 12
1.1.144 SIHL Closing................................................ 12
1.1.145 SIHL Closing Date........................................... 12
1.1.146 SIHL Escrow................................................. 12
1.1.147 SIHL Escrow Agreement....................................... 12
1.1.148 SIHL Management Agreement................................... 12
1.1.149 SIHL Put Rights............................................. 12
1.1.150 SIHL Reserved Cash.......................................... 12
1.1.151 SIHL Series A Shares........................................ 12
1.1.152 SIHL Subsidiaries........................................... 13
1.1.153 SIHL Target Adjusted Cash................................... 13
1.1.154 Standby Management Agreement................................ 13
1.1.155 Standby Reserved Cash....................................... 13
1.1.156 Standby Target Adjusted Cash................................ 13
1.1.157 Subsidiaries................................................ 13
1.1.158 TCW......................................................... 13
1.1.159 Unsecured Claim............................................. 13
1.2 Interpretation and Rules of Construction............................... 13
1.3 Other Terms............................................................ 13
1.4 Headings............................................................... 13
1.5 Incorporation of Exhibits.............................................. 13
ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS 14
2.1 Claims and Equity Interests Classified................................. 14
2.2 Administrative Claims and Priority Tax Claims.......................... 14
2.3 Claims Against and Equity Interests in RII............................. 14
2.3.1 RII Class 1 Claims.......................................... 14
2.3.2 RII Class 2 Claims.......................................... 14
2.3.3 RII Class 3 Claims.......................................... 14
2.3.4 RII Class 4 Claims.......................................... 14
2.3.5 RII Class 5 Claims.......................................... 14
2.3.6 RII Class 6 Claims.......................................... 14
2.3.7 RII Class 7 Interests....................................... 14
2.3.8 RII Class 8 Interests....................................... 14
2.4 Claims Against and Equity Interests in GRI............................. 14
2.4.1 GRI Class 1 Claims.......................................... 14
2.4.2 GRI Class 2 Claims.......................................... 14
2.4.3 GRI Class 3 Claims.......................................... 14
2.4.4 GRI Class 4 Claims.......................................... 14
2.4.5 GRI Class 5 Interests....................................... 14
ARTICLE III IDENTIFICATION OF IMPAIRED CLASSES OF CLAIMS AND EQUITY INTERESTS
14
3.1 Unimpaired Classes of Claims........................................... 14
3.2 Impaired Classes of Claims and Equity Interests........................ 14
3.3 Impairment Controversies............................................... 15
ARTICLE IV TREATMENT OF ADMINISTRATIVE AND PRIORITY TAX CLAIMS 15
4.1 Payment of Administrative Claims....................................... 15
4.1.1 Treatment of Retiree Administrative Claims.................. 15
4.2 Claim of Old Series Indenture Trustee.................................. 15
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----------
<C> <S> <C> <C>
4.3 Claims of Fidelity and TCW............................................. 15
4.4 Payment of Priority Tax Claims......................................... 15
ARTICLE V TREATMENT OF CLAIMS AND INTERESTS 16
5.1 Claims Against and Equity Interests in RII............................. 16
5.1.1 RII Class 1................................................. 16
5.1.2 RII Class 2................................................. 16
5.1.3 RII Class 3................................................. 17
5.1.4 RII Class 4................................................. 17
5.1.5 RII Class 5................................................. 17
5.1.6 RII Class 6................................................. 17
5.1.7 RII Class 7................................................. 17
5.1.8 RII Class 8................................................. 17
5.2 Claims Against and Equity Interests in GRI............................. 18
5.2.1 GRI Class 1................................................. 18
5.2.2 GRI Class 2................................................. 18
5.2.3 GRI Class 3................................................. 18
5.2.4 GRI Class 4................................................. 18
5.2.5 GRI Class 5................................................. 18
5.3 No Prepayment of Unimpaired Claims..................................... 18
5.4 Accrual and Payment of Post-Petition Interest and Fees................. 18
5.5 Satisfaction of Claims and Interests................................... 19
ARTICLE VI MEANS FOR EXECUTION OF THE PLAN 19
6.1 Sale of Paradise Island Assets to SIHL................................. 19
6.2 Standby Distribution of Paradise Island Assets......................... 19
6.2.1 Alternative Paradise Island Restructuring Transactions...... 19
6.2.2 PIRL Board of Directors..................................... 19
6.2.3 PIRL Obligations under the Paradise Island Purchase
Agreement................................................... 19
6.3 General Implementation Matters......................................... 20
6.3.1 Other Restructuring Transactions............................ 20
6.3.2 General Corporate Matters................................... 20
6.4 Reorganized RII........................................................ 20
6.4.1 Reconstituted Board of Directors of RII..................... 20
6.4.2 Officers of RII............................................. 20
6.5 Reorganized GRI........................................................ 20
6.5.1 Board of Directors of GRI................................... 20
6.5.2 Officers of GRI............................................. 20
6.6 Approval of 1994 Stock Option Plan..................................... 21
6.7 Corporate Action....................................................... 21
6.8 Sources of Cash for Plan Distribution.................................. 21
6.9 SIHL Reserved Cash, Standby Reserved Cash and Plan Consummation Cash...
21
6.10 New Indentures......................................................... 21
6.11 Distributions.......................................................... 21
6.11.1 Generally................................................... 21
6.11.2 Service of Old Series Indenture Trustee..................... 22
6.11.3 Distribution to be Made to Holders as of the Distribution
Record Date................................................. 22
6.11.4 Distribution To Holders of Old Series Public Debt Claims.... 22
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----------
<C> <S> <C> <C>
6.11.5 Procedures for Distribution to Holders of Old Series Public
Debt Claims................................................. 22
6.11.6 Means of Cash Payment....................................... 23
6.11.7 Calculation of Distribution Amounts of Securities........... 23
6.11.8 Delivery of Distributions................................... 24
6.11.9 Fees and Expenses of Disbursing Agents...................... 24
6.11.10 Time Bar to Cash Payments................................... 24
6.12 Vesting of Property of RII............................................. 24
6.13 Vesting of Property of GRI............................................. 24
6.14 Maintenance of Causes of Action........................................ 24
6.15 Assumption of Liabilities.............................................. 25
6.16 RIHF Senior Facility................................................... 25
6.17 Use of RIHF Senior Facility Funds...................................... 25
ARTICLE VII ACCEPTANCE OR REJECTION OF THE PLAN 25
7.1 Classes Entitled to Vote 25
7.2 Class Acceptance Requirement........................................... 25
7.3 Cramdown............................................................... 25
ARTICLE VIII PROCEDURES FOR RESOLVING AND TREATING DISPUTED CLAIMS 26
8.1 Objection Deadline..................................................... 26
8.2 Responsibility for Objection to Disputed Claims........................ 26
8.3 Prosecution of Objections.............................................. 26
8.4 No Distributions Pending Allowance..................................... 26
8.5 Distributions After Allowance.......................................... 26
8.6 Treatment of Contingent Claims......................................... 26
8.7 Estimation of Claims................................................... 26
ARTICLE IX EXECUTORY CONTRACTS 27
9.1 General Treatment...................................................... 27
9.2 Bar to Rejection Damages............................................... 27
9.3 Cure of Defaults for Executory Contracts and Unexpired Leases.......... 27
ARTICLE X RIGHTS AND OBLIGATIONS OF THE DISBURSING AGENT 27
10.1 Exculpation............................................................ 27
10.2 Powers of the Disbursing Agent......................................... 28
10.3 Duties of the Disbursing Agent......................................... 28
ARTICLE XI CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVE DATE
28
11.1 Conditions Precedent to Confirmation of the Plan....................... 28
11.2 Conditions to Effective Date........................................... 29
11.3 Waiver of Conditions................................................... 29
ARTICLE XII EFFECTS OF CONFIRMATION AND EFFECTIVENESS OF PLAN 29
12.1 Discharge of Claims.................................................... 29
12.2 Discharge of Debtors................................................... 29
12.3 Injunction............................................................. 30
12.4 Survival of Indemnification Claims and Obligations..................... 30
12.5 Exculpations and Limitation of Liability............................... 30
12.6 Satisfaction of Intercompany Claims.................................... 30
ARTICLE XIII RETENTION OF JURISDICTION 30
13.1 Scope of Jurisdiction.................................................. 30
13.2 Failure of the Bankruptcy Court to Exercise Jurisdiction............... 31
</TABLE>
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ARTICLE XIV MISCELLANEOUS PROVISIONS 31
14.1 Compliance with Tax Requirements....................................... 31
14.2 Compliance with All Applicable Laws.................................... 31
14.3 Cancellation of Old Series Note Indenture.............................. 32
14.4 Discharge of Old Series Indenture Trustee.............................. 32
14.5 Payment of Statutory Fees.............................................. 32
14.6 Post-Confirmation Date Fees and Expenses of Professional Persons....... 32
14.7 Binding Effect......................................................... 32
14.8 Governing Law.......................................................... 32
14.9 Filing of Additional Documents......................................... 33
14.10 Amendments and Modifications........................................... 33
14.11 Revocation............................................................. 33
14.12 Severability........................................................... 33
14.13 Notices................................................................ 33
14.14 De Minimis Distributions............................................... 33
14.15 Consent Rights of Fidelity and TCW..................................... 33
SCHEDULES
Schedule 6.1 SIHL Related Restructuring Transactions.............................. 36
Schedule 6.2 PIRL Related Restructuring Transactions.............................. 37
Schedule 6.3 Other Restructuring Transactions..................................... 38
EXHIBITS
Exhibit A Paradise Island Purchase Agreement
Exhibit B PIRL Standby Distribution Agreement
Exhibit C 1994 Stock Option Plan
Exhibit D RIHF Senior Facility Term Sheet
</TABLE>
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UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
<TABLE>
<S> <C>
IN RE CASE NOS.
RESORTS INTERNATIONAL, INC., A AND
DELAWARE CORPORATION, AND GGRI, INC., A
DELAWARE CORPORATION, FORMERLY JOINTLY ADMINISTERED
KNOWN AS GRIFFIN RESORTS, INC., UNDER CASE NO.
DEBTORS. CHAPTER 11
</TABLE>
JOINT PLAN OF REORGANIZATION PROPOSED BY
RESORTS INTERNATIONAL, INC., GGRI, INC.,
RESORTS INTERNATIONAL HOTEL, INC.,
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
AND P.I. RESORTS LIMITED
DATED AS OF ____________, 1994
Resorts International, Inc. ("RII") and GGRI, Inc., formerly known as
Griffin Resorts, Inc. ("GRI"), as debtors and debtors in possession (hereinafter
collectively, the "Debtors"), and Resorts International Hotel, Inc. ("RIH"),
Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited
("PIRL"), non-debtor affiliates of the Debtors, propose the following joint plan
of reorganization (the "Plan") pursuant to chapter 11 of title 11 of the United
States Code (the "Bankruptcy Code").
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. All capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth below.
1.1.1 "1990 STOCK OPTION PLAN" shall mean the RII Senior Management Stock
Option Plan, dated as of September 17, 1990, created for the benefit of certain
senior management employees of RII pursuant to and in conjunction with the
consummation of the Old Plan.
1.1.2 "1990 STOCK OPTIONS" shall mean the options to purchase shares of Old
RII Common Stock granted pursuant to the 1990 Stock Option Plan.
1.1.3 "1994 STOCK OPTION PLAN" shall mean the new RII Senior Management
Stock Option Plan pursuant to which, in conjunction with the Plan, options to
purchase Reorganized RII Common Stock shall be offered, in the discretion of the
board of directors of Reorganized RII, to certain officers, directors and key
employees of Reorganized RII and its Subsidiaries. The 1994 Stock Option Plan
shall be in substantially the form attached hereto as Exhibit C, and shall
provide for the issuance of options to purchase not more than five percent (5%)
of the total number of shares of issued and outstanding Reorganized RII Common
Stock on the Effective Date, assuming the exercise of the Griffin Warrants,
which options shall be exercisable at no less than the average closing trading
price of Reorganized RII Common Stock during the twenty (20) day period
following the date of issuance of such options. The final form of the 1994 Stock
Option Plan shall be filed as a Plan Document.
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1.1.4 "ADMINISTRATIVE CLAIM" shall mean a Claim or portion of a Claim which
is a cost or expense of administration of the Debtors' estates allowed under
sections 503(b) or 507(b) of the Bankruptcy Code that is entitled to priority
under section 507(a)(1) of the Bankruptcy Code, including but not limited to (i)
any actual and necessary costs and expenses of preserving the Debtors' estates
and operating the Debtors' businesses, (ii) the fees and expenses of
Professional Persons in such amounts as are allowed by Final Order under section
330 of the Bankruptcy Code, (iii) the fees and expenses (including the fees and
expenses of their Professional Persons) of the Old Series Indenture Trustee,
Fidelity and TCW incurred in connection with the Prepackaged Chapter 11 Cases
and the negotiation, documentation, implementation and consummation of the
transactions contemplated by the Plan in such amounts as determined and awarded
by Final Order of the Bankruptcy Court and (iv) any fees or charges assessed
against the Debtors' estates under section 1930 of title 28 of the United States
Code.
1.1.5 "AFFILIATE" shall mean any Entity that is an "affiliate" of a Debtor
within the meaning of section 101(2) of the Bankruptcy Code.
1.1.6 "ALLOWED", "ALLOWED CLAIM" OR "ALLOWED INTEREST" shall mean, with
reference to any Claim or Interest (i) any Claim against or Interest in any
Debtor, proof of which was filed within the applicable period of limitation
fixed by the Bankruptcy Court in accordance with Bankruptcy Rule 3003(c)(3),
which is not a Disputed Claim or Disputed Interest, (ii) if no proof of claim or
interest was so filed, any Claim against or Interest in any Debtor which has
been listed by such Debtor in its chapter 11 schedules, as such schedules may be
amended from time to time in accordance with Bankruptcy Rule 1009, as liquidated
in amount and not disputed or contingent, or (iii) any Claim allowed hereunder
or by Final Order. An Allowed Claim or Allowed Interest does not include any
Claim or Interest or portion thereof which is a Disallowed Claim or Disallowed
Interest or which has been subsequently withdrawn, disallowed, released or
waived by the Holder thereof or pursuant to a Final Order.
1.1.7 "ALTERNATIVE CLOSING" shall mean the closing under the PIRL Standby
Distribution Agreement.
1.1.8 "ALTERNATIVE CLOSING DATE" shall mean the date on which the
Alternative Closing occurs.
1.1.9 "AMENDED RII BYLAWS" shall mean the Amended and Restated By-Laws of
Reorganized RII substantially in the form attached as Appendix D to the
Registration Statement. The final form of the Amended RII Bylaws shall be filed
as a Plan Document.
1.1.10 "AMENDED RII CERTIFICATE OF INCORPORATION" shall mean the Amended
and Restated Certificate of Incorporation of Reorganized RII substantially in
the form attached as Appendix C to the Registration Statement. The final form of
the Amended RII Certificate of Incorporation shall be filed as a Plan Document.
1.1.11 "AVAILABLE CASH" shall mean all Cash of the Debtors and their
Subsidiaries on the Effective Date, before giving effect to the SIHL Closing or
the Alternative Closing, as the case may be, and the distributions under the
Plan, and shall include, among other things, the SIHL Buyer Expense Escrow, the
SIHL Escrow and the Griffin Group Note Proceeds, but shall specifically exclude
(i) any Cash actually received by RII on or prior to the Effective Date, from
Atlantic City Showboat, Inc. as tenant under the Showboat Lease, which has been
escrowed by RII to pay its current obligations with respect to the Showboat
Notes, (ii) any restricted Cash held by RII on behalf of the beneficiaries of
the Litigation Trust, (iii) the proceeds of the November 1993 sale of the .63
acre tract of land on Paradise Island, The Bahamas which shall be distributed on
the SIHL Closing Date in accordance with the Paradise Island Purchase Agreement
or, alternatively, on the Standby Distribution Date in accordance with the PIRL
Standby Distribution Agreement and (iv) any portion of the SIHL Aggregate Cash
Purchase Price.
1.1.12 "BAHAMIAN GOVERNMENT" shall mean and be the collective reference to
The Commonwealth of The Bahamas and any governmental units or subdivisions
thereof.
1.1.13 "BANKRUPTCY CODE" shall mean the Bankruptcy Reform Act of 1978, as
amended, codified at title 11 of the United States Code as the same may from
time to time be in effect and as applicable to the Prepackaged Chapter 11 Cases.
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1.1.14 "BANKRUPTCY COURT" shall mean the United States Bankruptcy Court for
the District of Delaware or, to the extent of any withdrawal of the reference
made pursuant to 28 U.S.C. Section 157, the United States District Court for the
District of Delaware.
1.1.15 "BANKRUPTCY RULES" shall mean the Federal Rules of Bankruptcy
Procedure, as promulgated by the United States Supreme Court pursuant to 28
U.S.C. Section 2075 and, to the extent not inconsistent, the local rules of the
Bankruptcy Court, as amended from time to time.
1.1.16 "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
any other day on which commercial banks in the City of New York, State of New
York are required or authorized to close.
1.1.17 "CAESARS PAYMENT" shall mean the Cash payment in the amount of
$400,000.00 to be made to Caesars World, Inc. on the Distribution Date pursuant
to that certain letter agreement, dated August 18, 1993, by and among Caesars
World, Inc., Fidelity and TCW.
1.1.18 "CASH" shall mean legal tender of the United States of America or
cash equivalents, including but not limited to Cash deposited in depository
accounts, Cash on hand and cage Cash.
1.1.19 "CCC" shall mean the New Jersey Casino Control Commission.
1.1.20 "CLAIM" shall mean (1) any right to payment from either of the
Debtors, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured or (2) any right to an equitable remedy
for breach of performance if such breach gives rise to a right of payment from
any of the Debtors, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured.
1.1.21 "CLASS" shall mean a category or group of Holders of Claims or
Interests as designated in Article II herein pursuant to section 1123(a)(1) of
the Bankruptcy Code.
1.1.22 "CONFIRMATION" shall mean entry of the Confirmation Order.
1.1.23 "CONFIRMATION DATE" shall mean the date upon which the Confirmation
Order is entered on the docket by the Clerk of the Bankruptcy Court, within the
meaning of Bankruptcy Rules 5003 and 9021.
1.1.24 "CONFIRMATION HEARING" shall mean the hearing held by the Bankruptcy
Court on the confirmation of the Plan pursuant to section 1128 of the Bankruptcy
Code, as it may be adjourned or continued from time to time.
1.1.25 "CONFIRMATION ORDER" shall mean the order of the Bankruptcy Court
confirming the Plan pursuant to section 1129 of the Bankruptcy Code.
1.1.26 "CONTINGENT CLAIM" shall mean a Claim that is contingent or
unliquidated.
1.1.27 "CREDITOR" shall mean any Entity that holds a Claim against either
RII or GRI (i) that arose at the time of or before the order for relief
concerning the Debtors or (ii) of a kind specified in sections 502(g), 502(h) or
502(i) of the Bankruptcy Code.
1.1.28 "DEBTORS" shall mean RII and GRI, collectively, as debtors and
debtors in possession.
1.1.29 "DEFERRED CASH" shall mean the aggregate amount of Cash received by
Reorganized RII or any of its Subsidiaries from time to time after the Effective
Date in respect of the Litigation Trust Units.
1.1.30 "DISALLOWED CLAIM" OR "DISALLOWED INTEREST" shall mean an alleged
Claim against or Interest in RII or GRI, or any portion thereof, that has been
disallowed by Final Order.
1.1.31 "DISBURSING AGENT" shall mean any Entity designated by the Debtors
(and, with respect to the distributions to Holders of Old Series Public Debt
Claims only, acceptable to Fidelity and TCW) and approved by the Bankruptcy
Court to make distributions required under the Plan which may include, without
limitation, Reorganized RII or Reorganized GRI, the Old Series Indenture Trustee
or any financial institution of recognized standing.
1.1.32 "DISBURSING AGREEMENT" shall mean, with respect to any Disbursing
Agent (other than Reorganized RII or Reorganized GRI), the agreement referenced
in Article VI of the Plan which shall
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govern the rights and obligations of such Disbursing Agent. Each Disbursing
Agreement will be filed as a Plan Document, be subject to the approval of the
Bankruptcy Court and, with respect to the distributions to Holders of Old Series
Public Debt Claims, be in substantially the form approved by the Debtors, TCW
and Fidelity.
1.1.33 "DISPUTED CLAIM" OR "DISPUTED INTEREST" shall mean a Claim against
or Interest in GRI or RII, to the extent that a proof of claim or interest has
been filed or deemed filed under applicable law, (i) as to which an objection
has been or may be timely filed and which objection, if so filed, has not been
withdrawn or denied by Final Order and (ii) which Claim or Interest is not a
Disallowed Claim or a Disallowed Interest. If any portion of a Claim or Interest
is disputed, then the entire Claim or Interest shall be a Disputed Claim or
Disputed Interest, as the case may be. Prior to the time that an objection has
been or may be timely filed, for the purposes of the Plan, a Claim or Interest
shall be considered a Disputed Claim or Disputed Interest, as the case may be,
if the amount of the Claim or Interest specified in the proof of claim or
interest exceeds the amount of the Claim or Interest scheduled by the Debtors as
other than disputed, contingent or unliquidated. Until such time as a Contingent
Claim becomes fixed and absolute by Final Order, such Claim shall be treated as
a Disputed Claim for all purposes, including those related to estimations,
allocations, payments and distributions of Cash, Plan Securities and other
property under the Plan.
1.1.34 "DISTRIBUTION DATE" shall mean, (A) for any Claim or Interest that
is an Allowed Claim or Allowed Interest on the Effective Date, the Effective
Date or as soon thereafter as practicable, but in no event later than twenty
(20) days after the Effective Date, and (B) for any Claim or Interest that is a
Disputed Claim or Disputed Interest on the Effective Date, the date as soon as
practicable, but in no event later than thirty (30) days, after the date upon
which such Claim or Interest becomes an Allowed Claim or Allowed Interest.
Notwithstanding the foregoing, the Distribution Date with respect to
distribution to the Disbursing Agent for Holders of Old Series Public Debt
Claims shall be as follows: (i) for the SIHL Aggregate Cash Purchase Price and
Plan Securities, the Distribution Date shall be the Effective Date, (ii) for Net
SIHL Reserved Cash, or Net Standby Reserved Cash, as the case may be, the
Distribution Date shall be as soon as practicable after the Effective Date, but
in no event later than ninety (90) days after the Effective Date, (iii) for Net
Plan Consummation Cash, the Distribution Date shall be as set forth in section
5.1.2 of the Plan, (iv) for Deferred Cash, the Distribution Date shall be as
soon as practicable, but in no event later than three (3) Business Days after
the receipt by Reorganized RII of immediately available funds giving rise to the
Deferred Cash and (v) for Excess Cash, the Distribution Date shall be as soon as
practicable after the Effective Date, but in no event later than twenty (20)
days after the Effective Date; provided, however, that the Disbursing Agent for
Holders of Old Series Public Debt Claims shall be required to make distributions
of the SIHL Aggregate Cash Purchase Price, Plan Securities, Net SIHL Reserved
Cash or Net Standby Reserved Cash, Net Plan Consummation Cash, Deferred Cash and
Excess Cash as provided in section 6.11.4 of the Plan.
1.1.35 "DISTRIBUTION RECORD DATE" shall mean the close of business in the
City of New York, State of New York on the Effective Date.
1.1.36 "EFFECTIVE DATE" shall mean the later of (i) the first Business Day
on which no stay of the Confirmation Order is in effect and that is ten (10)
days (as calculated in accordance with Bankruptcy Rule 9006(a)) after the
Confirmation Date and (ii) the date on which each of the conditions precedent
set forth in section 11.2 hereof have been either satisfied or waived in
accordance with section 11.3 hereof.
1.1.37 "ENCUMBRANCES" shall mean any Lien, imperfection of title, claim,
encumbrance, security interest, option, charge or restriction of any kind.
1.1.38 "ENTITY" shall mean an individual, a corporation, a partnership, an
association, a joint stock company, a joint venture, an estate, a trust, an
unincorporated organization, a government or any subdivision thereof or any
other entity.
1.1.39 "ESTATE" shall mean, with respect to each Debtor, the estate of the
Debtor created by section 541 of the Bankruptcy Code upon the commencement of
the Debtors' Prepackaged Chapter 11 Cases.
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1.1.40 "EXCESS CASH" shall mean the Available Cash on the Effective Date
minus the sum of (i) RII Retained Cash, (ii) the SIHL Target Adjusted Cash or,
if applicable, the Standby Target Adjusted Cash, (iii) the SIHL Reserved Cash
or, if applicable, the Standby Reserved Cash, (iv) the Plan Consummation Cash
and (v) the Caesars Payment.
1.1.41 "FIDELITY" shall mean Fidelity Management and Research Company, in
its capacity as investment advisor to various funds which hold Old Series Notes.
1.1.42 "FINAL ORDER" shall mean an order of the Bankruptcy Court (i) as to
which the time to appeal, petition for certiorari or move for reargument or
rehearing has expired and as to which no timely appeal, petition for certiorari
or other proceedings for reargument or rehearing shall then be pending, or (ii)
if a timely appeal, writ of certiorari, reargument or rehearing thereof has been
sought, which shall have been affirmed by the highest court to which such order
was appealed, or certiorari shall have been denied or reargument or rehearing
shall have been denied or resulted in no modification of such order, and the
time to take any further appeal, petition for certiorari or move for reargument
or rehearing shall have expired; provided, however, that the possibility that a
motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any
analogous rule under the Bankruptcy Rules, may be filed with respect to such
order shall not cause such order not to be a Final Order.
1.1.43 "GRH" shall mean Griffin Resorts Holding, Inc., a Delaware
corporation.
1.1.44 "GRI" shall mean GGRI, Inc., a Delaware corporation, formerly known
as Griffin Resorts, Inc.
1.1.45 "GRI BYLAWS" shall mean the certain Bylaws of GRI in force on the
day immediately preceding the Petition Date.
1.1.46 "GRI CERTIFICATE OF INCORPORATION" shall mean that certain
Certificate of Incorporation of GRI filed with the Secretary of State of the
State of Delaware on July 8, 1988, as amended from time to time.
1.1.47 "GRI COMMON STOCK" shall mean the authorized common stock, par value
$.01 per share, of GRI issued and outstanding on the Petition Date.
1.1.48 "GRI GUARANTY CLAIMS" shall mean the Claims arising from GRI's
guaranty of RII's obligations with respect to the Old Series Notes, which Claims
shall be Allowed, for the purposes of the Plan, in the aggregate, at the face
amount of the Old Series Notes outstanding together with the amount of the
accrued and unpaid interest thereon and any other costs and expenses of
collection, other than the claims which are governed by section 4.2 of the Plan.
1.1.49 "GRIFFIN GROUP NOTE" shall mean that certain promissory note, dated
September 17, 1992, in the original principal amount of $7,523,333 made by The
Griffin Group, Inc. and payable to RII.
1.1.50 "GRIFFIN GROUP NOTE PROCEEDS" shall mean the aggregate amount of
principal and interest owing under the Griffin Group Note on the earlier of the
date such note is repaid or the Effective Date (after offsetting, on the date
that such note is paid in full, $2,310,000 in fees owed to The Griffin Group,
Inc. under that certain License and Services Agreement, dated as of September
17, 1992, by and among RII, RIH, The Griffin Group, Inc. and Merv Griffin),
which amount shall be paid to RII by The Griffin Group, Inc. on or before the
Effective Date.
1.1.51 "GRIFFIN WARRANTS" shall mean the warrants issued on the
Distribution Date by Reorganized RII to The Griffin Group, Inc., pursuant to
that certain agreement between RII and The Griffin Group, Inc., dated as of
September 17, 1992, as amended, and substantially in the form attached as
Exhibit to the Registration Statement, which warrants shall be exercisable to
purchase 4,665,000 shares of Reorganized RII Common Stock at the lesser of
$1.875 and the average closing trading price of Reorganized RII Common Stock
during the twenty (20) day period following the Effective Date. The final form
of the Griffin Warrants shall be filed as a Plan Document.
1.1.52 "HOLDER" shall mean an Entity holding a Claim or Interest.
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1.1.53 "INDENTURE TRUSTEE CHARGING LIENS" shall mean any Lien or other
priority in payment available to the Old Series Indenture Trustee pursuant to
the Old Series Note Indenture against distributions made to Holders of Allowed
Old Series Note Claims for payment of any fees, costs or disbursements incurred
by such Old Series Indenture Trustee.
1.1.54 "INTEREST" shall mean an equity security interest in either of the
Debtors within the meaning of section 101(16) of the Bankruptcy Code.
1.1.55 "LIEN" shall mean any charge against or interest in property to
secure payment of a debt or performance of an obligation.
1.1.56 "LITIGATION TRUST" shall mean the trust established pursuant to the
Old Plan to pursue, for the benefit of the Old Debtors and certain of their
creditors, all claims the Old Debtors or certain of their affiliates may have
against Donald J. Trump and certain of his affiliates.
1.1.57 "LITIGATION TRUST UNITS" shall mean those units evidencing RII's
beneficial interest in the Litigation Trust.
1.1.58 "NATIONAL SECURITIES EXCHANGE" shall mean any exchange registered
pursuant to section 6(a) of the Securities Exchange Act of 1934, as amended,
including the New York Stock Exchange, the American Stock Exchange and the
National Association of Securities Dealers Automated Quotation System.
1.1.59 "NET PLAN CONSUMMATION CASH" shall mean the aggregate amount of Plan
Consummation Cash held by RII and its Subsidiaries on the date when the Plan
Expenses have been satisfied, together with interest on Net Plan Consummation
Cash from and including the Effective Date to but excluding the date of payment
at the average rate of return received by RII on invested Cash.
1.1.60 "NET SIHL RESERVED CASH" shall mean the aggregate amount of SIHL
Reserved Cash held by RII and its Subsidiaries on the earlier of (i) the date
when all adjustments as set forth in section 2.05(c) of the Paradise Island
Purchase Agreement have been made, or (ii) the ninetieth day following the
Effective Date, together with interest on Net SIHL Reserved Cash from and
including the Effective Date to but excluding the date of payment at the average
rate of return received by RII and its Subsidiaries on invested Cash.
1.1.61 "NET STANDBY RESERVED CASH" shall mean the aggregate amount of
Standby Reserved Cash held by RII and its Subsidiaries on the earlier of (i) the
date when all adjustments as set forth in section 2.05(c) of the PIRL Standby
Distribution Agreement have been made, or (ii) the ninetieth day following the
Effective Date, together with interest on Net Standby Reserved Cash from and
including the Effective Date to but excluding the date of payment at the average
rate of return received by RII and its Subsidiaries on invested Cash.
1.1.62 "NEW DEBT SECURITIES" shall mean, collectively, the New RIHF
Mortgage Notes, the New RIHF Junior Mortgage Notes and, if issued on the
Effective Date, the RIHF Senior Facility Notes.
1.1.63 "NEW EQUITY SECURITIES" shall mean, collectively, the shares of New
RII Common Stock, RII Class B Common Stock and either the SIHL Series A Shares
or the PIRL Ordinary Shares, as the case may be, to be issued pursuant to the
Plan.
1.1.64 "NEW INDENTURES" shall mean, collectively, the New RIHF Mortgage
Indenture and the New RIHF Junior Mortgage Indenture and, if the New RIHF Senior
Facility Notes are issued on the Effective Date, the RIHF Senior Facility
Indenture.
1.1.65 "NEW RIHF INDENTURE TRUSTEES" shall mean, collectively, the New RIHF
Junior Indenture Trustee, the New RIHF Indenture Trustee and, if applicable, the
trustee designated in the RIHF Senior Facility Indenture.
1.1.66 "NEW RIHF JUNIOR INDENTURE TRUSTEE" shall mean U.S. Trust Company of
California, N.A., as trustee under the New RIHF Junior Mortgage Indenture.
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1.1.67 "NEW RIHF JUNIOR MORTGAGE INDENTURE" shall mean that certain
Indenture, dated as of the Effective Date, between RIHF, as issuer, RIH, as
guarantor and U.S. Trust Company of California, N.A., as trustee, substantially
in the form attached as Exhibit to the Registration Statement, pursuant to
which the New RIHF Junior Mortgage Notes will be issued. The final form of the
New RIHF Junior Mortgage Indenture shall be filed as a Plan Document.
1.1.68 "NEW RIHF JUNIOR MORTGAGE NOTES" shall mean the 11.375% Junior
Mortgage Notes due 2004 of RIHF, substantially in the form described in the New
RIHF Junior Mortgage Indenture, in the aggregate principal amount of $35,000,000
to be issued by RIHF pursuant to the New RIHF Junior Mortgage Indenture to
Holders of Old Series Public Debt Claims, as provided in Article V of this Plan.
1.1.69 "NEW RIHF INDENTURE TRUSTEE" shall mean State Street Bank and Trust
Company of Connecticut, N.A., as trustee under the New RIHF Mortgage Indenture.
1.1.70 "NEW RIHF MORTGAGE INDENTURE" shall mean that certain Indenture,
dated as of the Effective Date, between RIHF, as issuer, RIH, as guarantor, and
State Street Bank and Trust Company of Connecticut, N.A., as trustee,
substantially in the form attached as Exhibit to the Registration Statement,
pursuant to which the New RIHF Mortgage Notes will be issued. The final form of
the New RIHF Mortgage Indenture shall be filed as a Plan Document.
1.1.71 "NEW RIHF MORTGAGE NOTES" shall mean the 11% Mortgage Notes due
2003, substantially in the form described in the New RIHF Mortgage Indenture, in
the aggregate principal amount of $125,000,000 to be issued by RIHF pursuant to
the New RIHF Mortgage Indenture to Holders of Old Series Public Debt Claims, as
provided in Article V of this Plan.
1.1.72 "NEW RII COMMON STOCK" shall mean, collectively, the [ ]shares of
common stock, par value $.01 per share, of Reorganized RII to be issued to the
Holders of Old Series Public Debt Claims under the Plan which, upon issuance,
shall constitute 40% of the total number of shares of issued and outstanding
Reorganized RII Common Stock, assuming the exercise of the Griffin Warrants, and
after giving effect to all distributions to be made under the Plan, but subject
to dilution solely as a result of the exercise of outstanding 1990 Stock Options
and the issuance and exercise of options under the 1994 Stock Option Plan.
1.1.73 "OLD CHAPTER 11 CASES" shall mean collectively the cases resulting
from the involuntary petitions for relief under chapter 11 of the Bankruptcy
Code filed against RII and Resorts International Financing, Inc. on November 12,
1989, and the voluntary petitions for relief under chapter 11 of the Bankruptcy
Code filed by GRH and GRI on December 22, 1989.
1.1.74 "OLD DEBTORS" shall mean collectively RII, Resorts International
Financing, Inc., GRI and GRH in their capacity as debtors in the Old Chapter 11
Cases.
1.1.75 "OLD PLAN" shall mean the Second Amended Joint Plan of
Reorganization dated as of May 31, 1990, for the Old Debtors, which Old Plan was
confirmed by the United States Bankruptcy Court for the District of New Jersey
in August 1990.
1.1.76 "OLD RII COMMON STOCK" shall mean the authorized common stock, par
value $.01 per share, of RII issued and outstanding on the Petition Date.
1.1.77 "OLD SECURITY DOCUMENTS" shall mean collectively the RIH Mortgage,
the RIH Security Agreement, the RIH Pledge Agreement, the RIH Notes Pledge
Agreement, the RIB Note, the RIB Subsidiary Guaranty Agreements, the RIB
Mortgage, the RIB Collateral Assignment Agreement and the RIB Stock Pledge
Agreement (each as defined in the Old Series Note Indenture).
1.1.78 "OLD SERIES NOTE INDENTURE" shall mean that certain Indenture, dated
as of September 14, 1990, between RII, as issuer, and the Old Series Indenture
Trustee pursuant to which the Old Series Notes in an aggregate principal amount
of $325,000,000 were issued by RII under the Old Plan.
1.1.79 "OLD SERIES INDENTURE TRUSTEE" shall mean Chemical Bank as successor
to Manufacturers Hanover Trust Company, as trustee under the Old Series Note
Indenture.
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1.1.80 "OLD SERIES NOTE CLAIMS" shall mean the Claims against RII arising
from the indebtedness evidenced by the Old Series Notes, which Claims shall be
Allowed, for the purposes of the Plan, in the aggregate, at the face amount of
the Old Series Notes outstanding together with the amount of the accrued and
unpaid interest thereon and any other costs and expenses of collection, other
than the claims which are governed by section 4.2 of the Plan.
1.1.81 "OLD SERIES NOTES" shall mean collectively RII's Series A Senior
Secured Redeemable Notes due 1994 and RII's Series B Senior Secured Redeemable
Notes due 1994.
1.1.82 "OLD SERIES PUBLIC DEBT CLAIMS" shall mean Old Series Note Claims
and GRI Guaranty Claims, collectively.
1.1.83 "PARADISE ISLAND APPROVAL ORDER" shall mean that order, which may be
the Confirmation Order, approving the sale of the Paradise Island Assets to SIHL
pursuant to the Paradise Island Purchase Agreement.
1.1.84 "PARADISE ISLAND ASSETS" shall mean the Paradise Island Shares, RII
Paradise Assets, including without limitation the proceeds plus accrued interest
thereon of the November 1993 sale of the .63 acre tract of land on Paradise
Island, The Bahamas, and RII Real Estate Assets sold pursuant to the Paradise
Island Purchase Agreement, which comprise substantially all of the Paradise
Island properties and assets owned by RII and its Affiliates.
1.1.85 "PARADISE ISLAND PURCHASE AGREEMENT" shall mean that certain
Purchase Agreement, dated as of October 11, 1993, by and between RII and SIHL,
including all exhibits and schedules thereto, relating to the sale of the
Paradise Island Assets, as amended by those certain letter agreements dated as
of November 30, 1993. A copy of the Paradise Island Purchase Agreement, as
amended, is attached hereto as Exhibit A.
1.1.86 "PARADISE ISLAND SHARES" shall have the meaning ascribed to the term
"Shares" in the Paradise Island Purchase Agreement and the PIRL Standby
Distribution Agreement.
1.1.87 "PARADISE SUBSIDIARY CLAIMS" shall mean the Claims held by any of
the RII Paradise Subsidiaries against RII.
1.1.88 "PAYMENTS-IN-KIND" shall mean the distribution(s) to holders of New
RIHF Junior Mortgage Notes of additional New RIHF Junior Mortgage Notes and RII
Class B Common Stock in lieu of cash interest payments due to such holders under
the New RIHF Junior Mortgage Indenture.
1.1.89 "PETITION DATE" shall mean the date on which the Debtors filed their
petitions for relief commencing the Prepackaged Chapter 11 Cases.
1.1.90 "PIRL" shall mean P.I. Resorts Limited, a Bahamian corporation and a
Subsidiary of RII, which has been formed by RII to effect the PIRL Spin-Off.
1.1.91 "PIRL AGGREGATE PURCHASE PRICE" shall mean the Aggregate Purchase
Price as defined in the PIRL Standby Distribution Agreement.
1.1.92 "PIRL ARTICLES" shall mean the Articles of Association for PIRL,
substantially in the form attached as Exhibit to the Registration Statement.
The final form of the PIRL Articles shall be filed as a Plan Document.
1.1.93 "PIRL ORDINARY SHARES" shall mean the estimated five million
ordinary shares, par value $.01 (U.S.) per share, of PIRL issued under the PIRL
Articles which, upon issuance to the Holders of Old Series Public Debt Claims
under the Plan, shall constitute 100% of the issued and outstanding shares of
PIRL.
1.1.94 "PIRL SPIN-OFF" shall mean the transactions contemplated by the PIRL
Standby Distribution Agreement.
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1.1.95 "PIRL STANDBY DISTRIBUTION AGREEMENT" shall mean that certain
Standby Distribution Agreement, dated as of October __, 1993, between RII and
PIRL, relating to the PIRL Spin-Off, as amended by that certain letter agreement
dated as of December __, 1993. A copy of the PIRL Standby Distribution
Agreement, as amended, is attached hereto as Exhibit B.
1.1.96 "PIRL SUBSIDIARIES" shall mean the direct or indirect wholly-owned
subsidiaries of PIRL to be formed by PIRL to receive the RII Paradise Assets
from the RII Paradise Subsidiaries and the RII Real Estate Assets from RII
pursuant to the PIRL Standby Distribution Agreement.
1.1.97 "PIRL SUBSIDIARIES CERTIFICATES OF INCORPORATION" shall mean the
Certificates of Incorporation for the PIRL Subsidiaries, each of which shall be
substantially in the form attached as Exhibits to the Registration Statement.
The final forms of the PIRL Subsidiaries Certificates of Incorporation shall be
filed as Plan Documents.
1.1.98 "PLAN" shall mean this Joint Plan of Reorganization proposed by RII,
GRI, RIH, RIHF and PIRL, including the schedules and exhibits hereto, as well as
the Plan Documents, each of which shall constitute provisions of this Joint Plan
of Reorganization as if fully set forth herein, as the same may be amended,
modified or supplemented from time to time by any duly authorized amendment or
modification to the extent permitted herein and by the Bankruptcy Rules, which
Plan will be filed with the Bankruptcy Court within five (5) days after the
Petition Date.
1.1.99 "PLAN CONSUMMATION CASH" shall mean Available Cash which, on the
Effective Date, Reorganized RII reasonably estimates is necessary to pay Plan
Expenses.
1.1.100 "PLAN DOCUMENTS" shall mean the documents that aid in effectuating
the Plan certain of which are specifically identified as such herein, the final
forms of which are subject to the review and approval of Fidelity and TCW and
will be filed with the Bankruptcy Court no later than ten (10) Business Days
prior to commencement of the Confirmation Hearing.
1.1.101 "PLAN EXPENSES" shall mean that portion of the unpaid
Administrative Claims (other than Administrative Claims of Professional Persons,
Fidelity, TCW and the Old Series Indenture Trustee) and RII Classes 1, 4 and 5
and GRI Classes 1 and 3 Claims (whether or not such Claims are Disputed Claims)
which, apart from the filing of the Prepackaged Chapter 11 Cases, would in the
ordinary course of business and consistent with past practice have been paid on
or before the Effective Date plus (i) any actual payments required to be made by
RII or the RII Paradise Subsidiaries for transfer taxes or federal alternative
minimum taxes incurred solely as a result of the consummation of the
transactions contemplated by the Paradise Island Purchase Agreement or,
alternatively, the PIRL Standby Distribution Agreement (after giving effect to
all available deductions or credits allowed to the affiliated group of which RII
is the common parent for the taxable year in which such transaction occurs), and
for costs and liabilities pursuant to section 6.10 of the Paradise Island
Purchase Agreement or, alternatively, section 5.09 of the PIRL Standby
Distribution Agreement, (ii) the Administrative Claims of Professional Persons,
Fidelity, TCW and the Old Series Indenture Trustee and (iii) costs or expenses
incurred in connection with the implementation and consummation of the Plan for
(a) amounts payable to the Disbursing Agent under the Plan as provided in
section 6.11.9 hereof and (b) the reasonable post-Confirmation Date fees and
expenses of Professional Persons, Fidelity, TCW and the Old Series Indenture
Trustee associated with litigating Disputed Claims or Disputed Interests and
implementing and consummating the Plan.
1.1.102 "PLAN SECURITIES" shall mean, collectively, the New Debt Securities
and the New Equity Securities.
1.1.103 "PREPACKAGED CHAPTER 11 CASES" shall mean the voluntary cases to be
commenced by RII and GRI under chapter 11 of the Bankruptcy Code on the Petition
Date.
1.1.104 "PRIORITY CLAIM" shall mean a Claim which is entitled to priority
treatment under sections 507(a)(3), (4), (5), (6) or (8) of the Bankruptcy Code.
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1.1.105 "PRIORITY TAX CLAIM" shall mean any Claim of a governmental unit
specified in section 507(a)(7) of the Bankruptcy Code.
1.1.106 "PRO RATA SHARE" shall mean with reference to any distribution on
account of any Allowed Claim in any particular class of Claims, a distribution
equal in amount to the ratio (expressed as a percentage) that the amount of such
Allowed Claim bears at the time of such distribution to the aggregate amount of
all Claims in such class of Claims, including Disputed Claims, but not including
Disallowed Claims.
1.1.107 "PROFESSIONAL PERSONS" shall mean (i) those professionals retained
in the Prepackaged Chapter 11 Cases pursuant to an order of the Bankruptcy Court
in accordance with sections 327 and 1103 of the Bankruptcy Code, (ii) all
professionals rendering services on behalf of Fidelity or TCW and (iii) all
professionals seeking compensation or reimbursement of expenses pursuant to
section 503(b)(4) of the Bankruptcy Code.
1.1.108 "PROPONENTS" shall mean, collectively, the Debtors, RIHF, RIH and
PIRL.
1.1.109 "REGISTRAR" shall mean , in its capacity as registrar
under the Old Series Note Indenture of transfers and exchanges of Old Series
Notes.
1.1.110 "REGISTRATION STATEMENT" shall mean that certain registration
statement of RII, RIHF, RIH and PIRL on Form S-4 filed with the Securities and
Exchange Commission, in accordance with the Securities Act of 1933, on October
25, 1993, as such Registration Statement may be amended, supplemented, or
modified from time to time prior to the date on which it shall become effective,
including but not limited to the Information Statement/Prospectus contained
therein and the exhibits attached thereto.
1.1.111 "REORGANIZED DEBTORS" shall mean Reorganized RII and Reorganized
GRI.
1.1.112 "REORGANIZED GRI" shall mean GRI, as reorganized on and after the
Effective Date.
1.1.113 "REORGANIZED RII" shall mean RII, as reorganized on and after the
Effective Date.
1.1.114 "REORGANIZED RII COMMON STOCK" shall mean the common stock of
Reorganized RII which shall be outstanding on or after the Effective Date,
including the Old RII Common Stock, the New RII Common Stock, common stock of
Reorganized RII to be issued in connection with the 1990 Stock Option Plan or
the 1994 Stock Option Plan, and any common stock of Reorganized RII which may be
issued upon the issuance and exercise of the Griffin Warrants.
1.1.115 "RESTRUCTURING TRANSACTIONS" shall mean, collectively, the
transactions described in Schedules 6.1, 6.2 and 6.3 hereof.
1.1.116__"RETIREE" shall mean a person who retired from employment with the
Debtors before the Petition Date and was and continues to be eligible for
medical, death, and/or insurance benefits provided in the Retiree Benefit Plans
as required by section 1114 of the Bankruptcy Code.
1.1.117__"RETIREE ADMINISTRATIVE CLAIM" shall mean the Claim of a Retiree
under the Retiree Benefit Plans, to the extent such Claim is entitled to
treatment as an Administrative Claim.
1.1.118__"RETIREE BENEFIT PLANS" shall mean any plan or policy of the
Debtors in full force and effect as of the Petition Date pursuant to which
medical, death, and/or insurance benefits are provided to Retirees, as any such
plan or policy may have been modified during the pendency of the Prepackaged
Chapter 11 Cases.
1.1.119 "RIB" shall mean Resorts International (Bahamas) 1984 Limited, a
Bahamian corporation which on the Petition Date was a Subsidiary of RII.
1.1.120 "RIH" shall mean Resorts International Hotel, Inc., a New Jersey
corporation which on the Petition Date was a Subsidiary of RII.
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1.1.121 "RIHF" shall mean Resorts International Hotel Financing, Inc., a
Delaware corporation which on the Petition Date was a Subsidiary of RII.
1.1.122 "RIHF SENIOR FACILITY" shall mean that certain senior secured note
facility which will allow RIHF to borrow up to $20,000,000 in aggregate
principal amount for working capital and other purposes as permitted pursuant to
the RIHF Senior Facility Indenture.
1.1.123 "RIHF SENIOR FACILITY INDENTURE" shall mean that certain Indenture,
dated as of the Effective Date, to be entered into between RIHF, as issuer, RIH,
RII and such other Entities as may become parties thereto from time to time, as
guarantors, and the designated trustee for the RIHF Senior Facility Indenture,
substantially in the form attached as Exhibit to the Registration Statement
and containing those terms set forth on the RIHF Senior Facility Term Sheet and
such other terms as the parties thereto shall agree, pursuant to which the RIHF
Senior Facility Notes may be issued. The final form of the RIHF Senior Facility
Indenture shall be filed as a Plan Document.
1.1.124 "RIHF SENIOR FACILITY NOTES" shall mean the 11% secured notes due
2002, substantially in the form described in the RIHF Senior Facility Indenture,
in the aggregate principal amount not to exceed $20,000,000 which may be issued
by RIHF under the RIHF Senior Facility Indenture.
1.1.125 "RIHF SENIOR FACILITY TERM SHEET" shall mean that certain term
sheet setting forth the material terms and conditions of the RIHF Senior
Facility. The RIHF Senior Facility Term Sheet is attached hereto as Exhibit D.
1.1.126 "RII" shall mean Resorts International, Inc., a Delaware
corporation.
1.1.127 "RII BYLAWS" shall mean the certain Bylaws of RII in force on the
day immediately preceding the Petition Date.
1.1.128 "RII CERTIFICATE OF INCORPORATION" shall mean that certain
Certificate of Incorporation of RII filed with the Secretary of State of the
State of Delaware on October 24, 1958, as amended from time to time.
1.1.129 "RII CLASS B COMMON STOCK" shall mean the [ ] shares of Class B
common stock, par value $.01 per share, of Reorganized RII issued to the Holders
of Old Series Public Debt Claims pursuant to the terms of the Plan and the New
RIHF Junior Mortgage Indenture, which shall not be independently transferable
except in connection with the New RIHF Junior Mortgage Notes to which they
relate and shall at all times equal 100% of the issued and outstanding shares of
RII Class B Common Stock.
1.1.130 "RII INTERCOMPANY CLAIM" shall mean the Claim of RII against GRI.
1.1.131 "RII PARADISE ASSETS" shall have the meaning ascribed to that term
in the Paradise Island Purchase Agreement and the PIRL Standby Distribution
Agreement and shall include without limitation the proceeds plus accrued
interest thereon of the November 1993 sale of the .63 acre tract of land on
Paradise Island, The Bahamas.
1.1.132 "RII PARADISE SUBSIDIARIES" shall mean, collectively, (i) ANTL,
Inc., a Florida corporation and a Subsidiary of RII, (ii) International
Supplies, Inc., a Florida corporation and a Subsidiary of RII, (iii) Paradise
Island Airlines, Inc., a Florida corporation and a Subsidiary of RII, (iv)
Paradise Island Vacations, Inc., a Florida corporation and a Subsidiary of RII,
(v) Resorts International Disbursement, Inc., a Florida corporation and a
Subsidiary of RII and (vi) Resorts Representation International, Inc., a Florida
corporation and a Subsidiary of RII.
1.1.133 "RII REAL ESTATE ASSETS" shall have the meaning ascribed to that
term in the Paradise Island Purchase Agreement and the PIRL Standby Distribution
Agreement.
1.1.134 "RII RETAINED CASH" shall mean $20 million of Available Cash to be
retained by Reorganized RII and its Subsidiaries, in the aggregate, as of the
Effective Date.
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1.1.135 "SECURED CLAIM" shall mean a Claim that is secured by a Lien on
property in which the Estate has an interest or that is subject to setoff under
section 553 of the Bankruptcy Code, to the extent of the value of the Claim
Holder's interest in the Estate's interest in such property or to the extent of
the amount subject to setoff, as applicable, as determined pursuant to section
506(a) of the Bankruptcy Code; provided, however, that this definition of
Secured Claim shall not include an Old Series Note Claim, GRI Guaranty Claim or
Showboat Note Claim.
1.1.136 "SHOWBOAT NOTE CLAIM" shall mean a Claim arising from the
indebtedness evidenced by the Showboat Notes. The Showboat Note Claims shall be
Allowed, for the purposes of the Plan, in the aggregate, at the face amount of
the Showboat Notes outstanding together with the amount of the accrued and
unpaid interest thereon.
1.1.137 "SHOWBOAT NOTES" shall mean RII's First Mortgage Non-Recourse
Pass-Through Notes due 2000 issued under the Showboat Notes Indenture.
1.1.138 "SHOWBOAT NOTES INDENTURE" shall mean that certain Indenture, dated
as of September 14, 1990, between RII, as issuer, and Bank of New York, as
trustee, pursuant to which the Showboat Notes in an aggregate principal amount
of $105,333,000 were issued by RII.
1.1.139 "SIHL" shall mean Sun International Hotels Limited, a Bahamian
corporation, and the buyer of the Paradise Island Assets under the Paradise
Island Purchase Agreement.
1.1.140 "SIHL AGGREGATE CASH PURCHASE PRICE" shall mean the Cash portion of
the SIHL Aggregate Purchase Price, plus interest on such amount at the
Applicable Rate (as defined in the Paradise Island Purchase Agreement) from and
including January 1, 1994, to but excluding the SIHL Closing Date, payable in
full to the Disbursing Agent for the Holders of Allowed Old Series Public Debt
Claims upon the consummation of the sale of the Paradise Island Assets in
accordance with the Paradise Island Purchase Agreement.
1.1.141 "SIHL AGGREGATE PURCHASE PRICE" shall mean the Aggregate Purchase
Price as defined in the Paradise Island Purchase Agreement.
1.1.142 "SIHL ARTICLES" shall mean the Articles of Association for SIHL in
the form attached as Exhibit A to the Paradise Island Purchase Agreement.
1.1.143 "SIHL BUYER EXPENSE ESCROW" shall mean the U.S. $4,000,000.00
placed in escrow by RII pursuant to the SIHL Escrow Agreement to fund, if
necessary, any obligations of RII with respect to the Buyer Expense
Reimbursement (as defined in the Paradise Island Purchase Agreement) as set
forth in section 7.02 of the Paradise Island Purchase Agreement, including
interest earned on such escrowed funds.
1.1.144 "SIHL CLOSING" shall mean the closing under the Paradise Island
Purchase Agreement.
1.1.145 "SIHL CLOSING DATE" shall mean the date on which the SIHL Closing
occurs.
1.1.146 "SIHL ESCROW" shall mean the U.S. $5,000,000.00 placed in escrow by
SIHL for the benefit of RII pursuant to the SIHL Escrow Agreement, including
interest earned on such escrowed funds.
1.1.147 "SIHL ESCROW AGREEMENT" shall mean that certain Escrow Agreement
dated as of December , 1993 by and between RII, SIHL and , as escrow
agent, a copy of which is attached as Exhibit G to the Paradise Island Purchase
Agreement. The final form of the SIHL Escrow Agreement shall be filed as a plan
document.
1.1.148 "SIHL MANAGEMENT AGREEMENT" shall mean that certain Management
Agreement, dated as of October 11, 1993, among SIHL and Sun International
Management (U.K.) Ltd., relating to the management and operation of the Paradise
Island Business after the SIHL Closing Date, the form of which is attached as
Exhibit C to the Paradise Island Purchase Agreement. The final form of the SIHL
Management Agreement shall be filed as a plan document.
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1.1.149 "SIHL PUT RIGHTS" shall mean the rights under the SIHL Articles of
holders of SIHL Series A Shares distributed under the Plan to put all or any
portion of such Shares to SIHL and to receive from SIHL, on or before the fifth
anniversary of the SIHL Closing Date, consideration equal to $35 (U.S.) per
share (assuming the issuance of two million shares of SIHL Series A Shares), as
may be adjusted for any consolidation or division of the SIHL Series A Shares or
other similar alteration to the SIHL Series A Shares after the date of adoption
of the SIHL Articles.
1.1.150 "SIHL RESERVED CASH" shall mean that portion of Available Cash
which, on the Effective Date, Reorganized RII reasonably estimates will be
required to fund adjustments as set forth in section 2.05(c) of the Paradise
Island Purchase Agreement, plus any amounts paid by SIHL to RII after the SIHL
Closing Date pursuant to section 2.05 of the Paradise Island Purchase Agreement,
plus any interest paid by SIHL in connection therewith.
1.1.151 "SIHL SERIES A SHARES" shall mean the Series A Ordinary Shares, par
value $.01 per share, of SIHL issued under the SIHL Articles, which, upon
distribution to the Holders of Old Series Public Debt Claims under the Plan,
shall constitute 40% of the capital stock of SIHL.
1.1.152 "SIHL SUBSIDIARIES" shall mean direct or indirect wholly-owned
subsidiaries of SIHL to be formed by SIHL to receive the RII Paradise Assets and
the RII Real Estate Assets from RII and the RII Paradise Subsidiaries pursuant
to the Paradise Island Purchase Agreement.
1.1.153 "SIHL TARGET ADJUSTED CASH" shall mean $5 million of Available Cash
which constitutes Target Adjusted Cash as defined in the Paradise Island
Purchase Agreement.
1.1.154 "STANDBY MANAGEMENT AGREEMENT" shall mean that certain management
agreement between Reorganized RII and PIRL for the interim management of the
Paradise Island Assets upon consummation of the PIRL Spin-Off substantially in
the form attached as Exhibit D to the PIRL Standby Distribution Agreement. The
final form of the Standby Management Agreement shall be filed as a Plan
Document.
1.1.155 "STANDBY RESERVED CASH" shall mean that portion of Available Cash
which, on the Effective Date, Reorganized RII reasonably estimates will be
required to fund the adjustments set forth in section 2.05(c) of the PIRL
Standby Distribution Agreement, plus any Cash paid by PIRL to RII after the
Alternative Closing Date pursuant to section 2.05 of the PIRL Standby
Distribution Agreement.
1.1.156 "STANDBY TARGET ADJUSTED CASH" shall mean $5 million of Available
Cash which constitutes Target Adjusted Cash as defined in the PIRL Standby
Distribution Agreement.
1.1.157 "SUBSIDIARIES" shall mean any and all Entities of which 50% or more
of the outstanding capital stock or other stock or other equity having ordinary
voting power to elect a majority of the board of directors or other managers of
such Entity is owned directly or indirectly by either of the Debtors.
1.1.158 "TCW" shall mean TCW Special Credits, in its capacity as investment
advisor to various funds which hold Old Series Notes.
1.1.159 "UNSECURED CLAIM" shall mean any Claim against either of the
Debtors that is not a Showboat Note Claim, an Old Series Public Debt Claim, the
RII Intercompany Claim, or a Paradise Subsidiary Claim, Secured Claim, Priority
Claim, Priority Tax Claim or Administrative Claim.
1.2 INTERPRETATION AND RULES OF CONSTRUCTION. Unless otherwise specified,
all section, article, schedule and exhibit references in the Plan are to the
respective section in, article of, or schedule or exhibit to, the Plan, as the
same may be amended, waived, or modified from time to time. The rules of
construction contained in section 102 of the Bankruptcy Code shall apply to the
construction of the Plan.
1.3 OTHER TERMS. The words "herein," "hereof," "hereto," "hereunder," and
others of similar import refer to the Plan as a whole and not to any particular
section, subsection, or clause contained in the Plan. A capitalized term used
herein that is not defined herein shall have the meaning ascribed to that term,
if any, in the Bankruptcy Code or Bankruptcy Rules.
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1.4 HEADINGS. Headings are used in the Plan for convenience of reference
only, and shall not constitute a part of the Plan for any other purpose.
Headings shall not limit or otherwise affect the provisions of the Plan.
1.5 INCORPORATION OF EXHIBITS. Each Schedule and Exhibit to the Plan
annexed hereto and each of the Plan Documents and Exhibits attached to the
Registration Statement is incorporated into and is a part of the Plan as if set
forth in full herein.
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
2.1 CLAIMS AND EQUITY INTERESTS CLASSIFIED. For purposes of voting on and
making distributions under the Plan, all Claims (except for Administrative
Claims and Priority Tax Claims) and all Interests shall be classified as set
forth in sections 2.3 and 2.4 of the Plan.
2.2 ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS. As provided in section
1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority Tax Claims
against the Debtors shall not be classified for purposes of voting on or
receiving distributions under the Plan. Rather, all such Claims shall be treated
separately as unclassified Claims on the terms set forth in Article IV of the
Plan.
2.3 CLAIMS AGAINST AND EQUITY INTERESTS IN RII.
2.3.1 RII CLASS 1 CLAIMS. RII Class 1 consists of all Priority Claims
against RII.
2.3.2 RII CLASS 2 CLAIMS. RII Class 2 consists of all Old Series Note
Claims.
2.3.3 RII CLASS 3 CLAIMS. RII Class 3 consists of all Showboat Note Claims.
2.3.4 RII CLASS 4 CLAIMS. RII Class 4 consists of all Secured Claims
against RII other than Old Series Note Claims and Showboat Note Claims. For
purposes of the Plan, each such Secured Claim shall be deemed a separate
subclass for voting and distribution.
2.3.5 RII CLASS 5 CLAIMS. RII Class 5 consists of all Unsecured Claims
against RII.
2.3.6 RII CLASS 6 CLAIMS. RII Class 6 consists of all Paradise Subsidiary
Claims against RII.
2.3.7 RII CLASS 7 INTERESTS. RII Class 7 consists of all Interests of
Holders of the Old RII Common Stock.
2.3.8 RII CLASS 8 INTERESTS. RII Class 8 consists of all Interests of
Holders of 1990 Stock Options.
2.4 CLAIMS AGAINST AND EQUITY INTERESTS IN GRI.
2.4.1 GRI CLASS 1 CLAIMS. GRI Class 1 consists of all Priority Claims
against GRI.
2.4.2 GRI CLASS 2 CLAIMS. GRI Class 2 consists of all GRI Guaranty Claims.
2.4.3 GRI CLASS 3 CLAIMS. GRI Class 3 consists of all Unsecured Claims
against GRI.
2.4.4 GRI CLASS 4 CLAIMS. GRI Class 4 consists of the RII Intercompany
Claim.
2.4.5 GRI CLASS 5 INTERESTS. GRI Class 5 consists of the Interest in GRI
held by RII, as the Holder of all of the issued and outstanding GRI Common
Stock.
ARTICLE III
IDENTIFICATION OF IMPAIRED
CLASSES OF CLAIMS AND EQUITY INTERESTS
3.1 UNIMPAIRED CLASSES OF CLAIMS. With the exception of the impaired
classes specified in section 3.2 of the Plan, all classes of Claims are
unimpaired under the Plan.
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3.2. IMPAIRED CLASSES OF CLAIMS AND EQUITY INTERESTS. RII Class 2 Claims,
GRI Class 2 Claims, the GRI Class 4 Claim, RII Class 7 Interests, RII Class 8
Interests, and GRI Class 5 Interests are impaired under the Plan.
3.3. IMPAIRMENT CONTROVERSIES. If a controversy arises as to whether any
Claim or Interest, or any class of Claims or class of Interests, is impaired
under the Plan, the Bankruptcy Court shall, after notice and a hearing,
determine such controversy.
ARTICLE IV
TREATMENT OF
ADMINISTRATIVE AND PRIORITY TAX CLAIMS
4.1 PAYMENT OF ADMINISTRATIVE CLAIMS. Subject to the provisions of
sections 330 and 331 of the Bankruptcy Code, each Holder of an Allowed
Administrative Claim against either of the Debtors shall receive on the
Distribution Date from the Debtor liable for such claim, in full satisfaction of
such Allowed Administrative Claim, Cash equal to the amount of such Allowed
Claim, unless such holder shall have agreed to different treatment of such
Claim; PROVIDED, HOWEVER, that Allowed Administrative Claims representing
obligations incurred in the ordinary course of business or otherwise assumed by
either of the Debtors pursuant to the Plan will be paid or performed by such
Debtor in accordance with the terms and conditions of each agreement relating
thereto and consistent with past practice. Notwithstanding the foregoing, all
Administrative Claims of Professional Persons incurred prior to the Confirmation
Date shall be paid in full, in cash, as soon as reasonably practicable, but in
no event later than ten days after such Claim is Allowed by a Final Order and
all Administrative Claims of Professional Persons incurred after the
Confirmation Date shall be paid as provided in section 14.6 hereof.
4.1.1 TREATMENT OF RETIREE ADMINISTRATIVE CLAIMS. Holders of Retiree
Administrative Claims shall continue to receive benefits provided for by the
terms and conditions of the Retiree Benefit Plans to the extent required by
section 1129(a)(13) of the Bankruptcy Code.
4.2 CLAIM OF OLD SERIES INDENTURE TRUSTEE. The Proponents consent to the
compensation and reimbursement of the Old Series Indenture Trustee and its
agents (including Professional Persons) for their reasonable fees and expenses
incurred in the Prepackaged Chapter 11 Cases. The Proponents acknowledge that
the Old Series Indenture Trustee has made and will continue to make a
"substantial contribution" to these cases as that term is used in section 503(b)
of the Bankruptcy Code, and Reorganized RII shall compensate the Old Series
Indenture Trustee, subject to approval of the Bankruptcy Court upon application
made therefor by the Old Series Indenture Trustee, for the reasonable fees and
costs incurred by the Old Series Indenture Trustee (including the reasonable
fees and expenses of its Professional Persons) under the Old Series Note
Indenture. This payment or payments will constitute full satisfaction of the Old
Series Indenture Trustee's Claims for compensation and reimbursement pursuant to
the Old Series Note Indenture, including the Claims secured by the Indenture
Trustee Charging Liens.
4.3 CLAIMS OF FIDELITY AND TCW. The Proponents consent to the compensation
and reimbursement of Fidelity and TCW and their agents (including Professional
Persons) for their reasonable fees and expenses incurred on or after the
Petition Date (including the reasonable fees and expenses of their Professional
Persons) incurred in connection with the Prepackaged Chapter 11 Cases, including
but not limited to the negotiation and preparation of the Plan, the Plan
Documents and the implementation and effectuation of the transactions
contemplated thereby and the conduct or commission of an audit in accordance
with section 5.3 of the Plan. Subject to the approval of the Bankruptcy Court,
such fees and expenses shall be paid in full, in Cash, as soon as practicable
but in no event no later than ten days after such Claims are Allowed by a Final
Order. The Proponents acknowledge that Fidelity and TCW have made and will
continue to make a "substantial contribution" to these cases as that term is
used in section 503(b) of the Bankruptcy Code.
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4.4 PAYMENT OF PRIORITY TAX CLAIMS. Unless otherwise agreed between the
Holder of a Priority Tax Claim and the Debtor liable on such Claim, in
accordance with section 1129(a)(9)(c) of the Bankruptcy Code, each Holder of an
Allowed Priority Tax Claim shall be distributed, from the Debtor liable on such
Claim and at the option of such Debtor, either (a) Cash, in the full amount of
such Allowed Priority Tax Claim, on the later of the Distribution Date and the
date such Claim becomes due and payable or (b) deferred payments of Cash in the
full amount of such Allowed Priority Tax Claim, payable in equal annual
principal installments beginning on the first anniversary of the Effective Date
and ending on the earlier of the sixth anniversary of the Effective Date and the
sixth anniversary of the date of the assessment of such Claim, together with
interest (payable quarterly in arrears) on the unpaid balance of such Allowed
Priority Tax Claim at an annual rate equal to [ ]; provided, however, that
notwithstanding any other provision of this Plan, any distributions of Cash on
account of Priority Tax Claims under subsection (a) or (b) hereinabove shall be
funded from RII Retained Cash. The amount of any Allowed Priority Tax Claim for
which the time for filing a return, if required, under applicable law or under
any authorized extension thereof, has not expired on or prior to the Effective
Date, and the rights of the Holder of such Claim, if any, to payment in respect
thereof shall (a) be determined in the manner in which the amount of such Claim
and the rights of the Holder of such Claim would have been resolved or
adjudicated if the Prepackaged Chapter 11 Cases had not been commenced, (b)
survive the Effective Date and consummation of the Plan as if the Prepackaged
Chapter 11 Cases had not been commenced, and (c) not be discharged pursuant to
section 1141 of the Bankruptcy Code. In accordance with section 1124 of the
Bankruptcy Code, the Plan shall leave unaltered the legal, equitable, and
contractual rights of the Holders of Priority Tax Claims referred to in the
immediately preceding sentence.
ARTICLE V
TREATMENT OF CLAIMS AND INTERESTS
5.1 CLAIMS AGAINST AND EQUITY INTERESTS IN RII.
5.1.1 RII CLASS 1. RII Class 1 Claims are unimpaired. At RII's option, each
Holder of an Allowed Priority Claim under sections 507(a)(3), (4), (5), (6) or
(8) of the Bankruptcy Code shall retain unaltered the legal, equitable and
contractual rights to which such Allowed Priority Claim entitles the Holder
thereof or will be treated in accordance with section 1124(2) of the Bankruptcy
Code.
5.1.2 RII CLASS 2. RII Class 2 Claims are impaired. The Old Series Note
Claims shall be Allowed, for the purposes of voting on and receiving
distributions under the Plan, in the aggregate, at the face amount of the Old
Series Notes outstanding on the Petition Date, together with the amount of the
accrued and unpaid interest thereon and any other costs and expenses of
collection, other than the claims which are governed by section 4.2 of the Plan.
Each Holder of record of an RII Class 2 Claim on the Distribution Record Date
(as reflected in the register maintained by the Registrar) shall receive on the
Distribution Date on account of its Old Series Public Debt Claims, its Pro Rata
Share of (i) $125,000,000 aggregate principal amount of New RIHF Mortgage Notes,
(ii) $35,000,000 aggregate principal amount of New RIHF Junior Mortgage Notes,
(iii) the RII Class B Common Stock, (iv) the SIHL Series A Shares and the SIHL
Aggregate Cash Purchase Price received on the SIHL Closing Date in connection
with the Paradise Island Purchase Agreement (or, alternatively, if the SIHL
Closing does not occur and the Alternative Closing occurs, the PIRL Ordinary
Shares), (v) the New RII Common Stock, and (vi) Excess Cash. Additionally, each
Holder of record of RII Class 2 Claims on the Distribution Record Date (as
reflected in the register maintained by the Registrar) shall receive on the
Distribution Date, on account of its Old Series Public Debt Claims, its Pro Rata
Share of Net SIHL Reserved Cash (or Net Standby Reserved Cash, as the case may
be), Net Plan Consummation Cash, and the Deferred Cash. Finally, on the
Distribution Date, RII shall make the Caesars Payment.
The Distribution Date with respect to distribution to the Disbursing Agent
for Holders of Old Series Public Debt Claims of Net Plan Consummation Cash shall
be as soon as practicable but no later than 90 days after the Effective Date;
provided, however, that if all Plan Expenses have not been
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paid by the ninetieth day after the Effective Date, the Debtors may continue to
hold back for an additional sixty (60) days the portion of Net Plan Consummation
Cash deemed by the Bankruptcy Court to be necessary to satisfy remaining Plan
Expenses. After such sixty (60) day period, the
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remaining Plan Consummation Cash shall be distributed, unless otherwise ordered
by the Bankruptcy Court. Notwithstanding the foregoing, if the amount of Net
Plan Consummation Cash to be distributed by the Reorganized Debtors is less than
$100,000.00, the Reorganized Debtors shall not be required to make such
distribution and shall retain the amount of such Net Plan Consummation Cash
until the aggregate amount of Cash to be distributed to the Holders of Old
Series Public Debt Claims under this section 5.1.2 exceeds $100,000.00.
No Holder of an Old Series Public Debt Claim shall receive a distribution
hereunder that would require the issuance of a New RIHF Mortgage Note or a New
RIHF Junior Mortgage Note in a principal amount other than a principal amount of
$1,000 or an integral multiple thereof. Additionally, no fractional shares of
New Equity Securities will be issued. The Disbursing Agent, as soon as
practicable after the Effective Date, shall aggregate and sell all fractional
amounts of New Equity Securities, New RIHF Mortgage Notes and New RIHF Junior
Mortgage Notes at then-prevailing prices and distribute the net proceeds to the
Holders of Old Series Public Debt Claims entitled to such proceeds.
5.1.3 RII CLASS 3. RII Class 3 Claims are unimpaired. At RII's option, each
Holder of an Allowed RII Class 3 Claim shall retain unaltered the legal,
equitable and contractual rights to which such Allowed RII Class 3 Claim
entitles the Holder thereof or will be treated in accordance with section
1124(2) of the Bankruptcy Code. Each Holder of an Allowed RII Class 3 Claim will
also receive on the Distribution Date any amounts payable pursuant to section
5.4 of the Plan.
5.1.4 RII CLASS 4. RII Class 4 Claims are unimpaired. At RII's option, each
Holder of an Allowed RII Class 4 Claim shall retain unaltered the legal,
equitable and contractual rights to which such Allowed RII Class 4 Claim
entitles the holder thereof or will be treated in accordance with section
1124(2) of the Bankruptcy Code. Each Holder of an Allowed RII Class 4 Claim will
also receive on the Distribution Date any amounts payable pursuant to section
5.4 of the Plan.
5.1.5 RII CLASS 5. RII Class 5 Claims are unimpaired. At RII's option, each
Holder of an Allowed RII Class 5 Claim shall retain unaltered the legal,
equitable and contractual rights to which such Allowed RII Class 5 Claim
entitles the Holder thereof or will be treated in accordance with section
1124(2) of the Bankruptcy Code.
5.1.6 RII CLASS 6. RII Class 6 Claims are unimpaired. At RII's option, each
Holder of an Allowed RII Class 6 Claim shall retain unaltered the legal,
equitable and contractual rights to which such Allowed RII Class 6 Claim
entitles the Holder thereof or will be treated in accordance with section
1124(2) of the Bankruptcy Code.
5.1.7 RII CLASS 7. RII Class 7 Interests are impaired. On the Effective
Date, each Holder of an Allowed RII Class 7 Interest shall retain the shares of
Old RII Common Stock held by such Holder. The Interests held by the Holders of
Allowed RII Class 7 Interests shall be diluted on the Effective Date by the
issuance of New RII Common Stock, the options to be issued under the 1994 Stock
Option Plan and, with respect to voting rights only, RII Class B Common Stock as
provided herein.
5.1.8 RII CLASS 8. RII Class 8 Interests are impaired. On the Effective
Date, each Holder of an Allowed RII Class 8 Interest shall retain the 1990 Stock
Options held by such Holders. The Interests held by the Holders of Allowed RII
Class 8 Interests shall be diluted on the Effective Date by the issuance of New
RII Common Stock, the options to be issued under the 1994 Stock Option Plan,
and, with respect to voting rights only, RII Class B Common Stock as provided
herein. The 1990 Stock Option Plan shall terminate on the Effective Date and the
exercise price for the 1990 Stock Options held by Holders of Allowed RII Class 8
Interests shall thereafter remain fixed at the exercise price at the time of the
grant thereof and shall not be altered.
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5.2 CLAIMS AGAINST AND EQUITY INTERESTS IN GRI.
5.2.1 GRI CLASS 1. GRI Class 1 Claims are unimpaired. At GRI's option, each
Holder of an Allowed Priority Claim under sections 507(a)(3), (4), (5), (6) or
(8) of the Bankruptcy Code shall retain unaltered the legal, equitable and
contractual rights to which such Allowed Priority Claim entitles the Holder
thereof or will be treated in accordance with section 1124(2) of the Bankruptcy
Code.
5.2.2 GRI CLASS 2. GRI Class 2 Claims are impaired. The GRI Guaranty Claim
shall be Allowed, for purposes of voting on and receiving distributions under
this Plan only, in the aggregate, at the face amount of the Old Series Notes
outstanding on the Petition Date, together with the amount of the accrued and
unpaid interest thereon and any other costs and expenses of collection, other
than the claims which are governed by section 4.2 of the Plan. Each Holder of
record of a GRI Class 2 Claim on the Distribution Record Date (as reflected in
the register maintained by the Registrar) shall receive on account of such GRI
Class 2 Claim the consideration provided to Holders of RII Class 2 Claims under
section 5.1.2 of the Plan. The distributions made to Holders of GRI Class 2
Claims shall be in full satisfaction, release and discharge of any and all
liabilities and other obligations of GRI to such Holders on account of GRI
Guaranty Claims.
5.2.3 GRI CLASS 3. GRI Class 3 Claims are unimpaired. At GRI's option, each
holder of an Allowed GRI Class 3 Claim shall retain unaltered the legal,
equitable and contractual rights to which such claim entitles the Holder thereof
or will be treated in accordance with section 1124(2) of the Bankruptcy Code.
5.2.4 GRI CLASS 4. GRI Class 4 Claims are impaired. On the Effective Date,
RII, the Holder of the GRI Class 4 Claim, will contribute to GRI the
intercompany obligation of GRI to RII and will be treated in accordance with the
implementation of the Restructuring Transactions.
5.2.5 GRI CLASS 5. GRI Class 5 Interests are impaired. On the Effective
Date, RII, the Holder of GRI Class 5 Interests, will retain the shares of GRI
Common Stock which it then holds and will be treated in accordance with the
implementation of the Restructuring Transactions.
5.3 NO PREPAYMENT OF UNIMPAIRED CLAIMS. Notwithstanding any other
provision in this Plan, the Debtors shall not, and shall not permit their
Subsidiaries to, pay any pre-petition Allowed Claims or post-petition Allowed
Administrative Claims on or before the Effective Date, except in the ordinary
course of business and consistent with past practice, and shall continue to
collect receivables in the ordinary course of business and consistent with past
practice. In addition, neither shall the Debtors permit their Subsidiaries to
pay an obligation of such Subsidiaries on or before the Effective Date except in
the ordinary course of business and consistent with past practice or to collect
receivables other than in the ordinary course of business and consistent with
past practice. Subject to the foregoing, after the Effective Date, RII Retained
Cash rather than Plan Consummation Cash shall be used to pay pre-petition
Allowed Claims or post-petition Allowed Administrative Claims which, in the
ordinary course of business and consistent with past practice, would not have
been paid by the Effective Date. Fidelity and TCW shall have the right to
conduct and commission an audit of the books and records of the Debtors and
their Subsidiaries to insure their compliance with the foregoing. The fees and
expenses attributable to any such audit shall be satisfied in accordance with
section 4.3 of the Plan. With respect to any debts, liabilities or other
obligations, the payment terms of which have been accelerated as a result of the
occurrence of a default, the Debtors shall reinstate the maturities of such
debts, liabilities or other obligations in accordance with section 1124(2) of
the Bankruptcy Code and shall pay out of Plan Consummation Cash only that
portion of such debts, liabilities or other obligations which, in the ordinary
course of business and consistent with past practice, would have been paid on or
before the Effective Date. Nothing herein contained shall prohibit or shall be
deemed to prohibit the Debtors from making any payments, or causing their
Subsidiaries to make any payments, required by any provision of the Paradise
Island Purchase Agreement or the PIRL Standby Distribution Agreement.
5.4 ACCRUAL AND PAYMENT OF POST-PETITION INTEREST AND FEES. Interest on
the Showboat Notes and Allowed RII Class 4 Claims shall continue to accrue
through the Effective
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Date at the applicable, non-default contractual rate. To the extent not
previously paid when due or otherwise provided for under the Plan, such interest
shall be paid in Cash on the Distribution Date, together with any additional
amounts required to be paid in order to render such Claims unimpaired pursuant
to section 1124(2) of the Bankruptcy Code.
5.5 SATISFACTION OF CLAIMS AND INTERESTS. The treatment of, and
consideration to be received by, Holders of Allowed Claims and Allowed Interests
pursuant to this Article V of the Plan will be in full satisfaction, release and
discharge of their respective Claims against or Interests in the Debtors.
ARTICLE VI
MEANS FOR EXECUTION OF THE PLAN
6.1 SALE OF PARADISE ISLAND ASSETS TO SIHL. Provided the Paradise Island
Purchase Agreement shall not have been previously terminated in accordance with
its terms, RII shall take all actions necessary or appropriate to the
performance of its duties and obligations thereunder and to implement the terms
of and to effectuate the transactions contemplated by the Paradise Island
Purchase Agreement. If the SIHL Closing occurs on or prior to the Effective
Date, the transactions set forth on Schedule 6.1 hereto or substantially similar
transactions shall be effected on or before the SIHL Closing Date. To the extent
that any provision in the Plan relating to the sale of the Paradise Island
Assets to SIHL or any provision in Schedule 6.1 is inconsistent with the
Paradise Island Purchase Agreement, the Paradise Island Purchase Agreement shall
control.
6.2 STANDBY DISTRIBUTION OF PARADISE ISLAND ASSETS. The following
provisions of this section 6.2 shall apply in the event of the Alternative
Closing.
6.2.1 ALTERNATIVE PARADISE ISLAND RESTRUCTURING TRANSACTIONS. If the
Paradise Island Purchase Agreement shall have been terminated in accordance with
its terms prior to the SIHL Closing Date and the conditions to the consummation
of the PIRL Standby Distribution Agreement shall have been satisfied or waived
in accordance with the terms thereof, the transactions set forth on Schedule 6.2
hereto or substantially similar transactions shall be effected on or prior to
the Alternative Closing Date. If TCW and Fidelity shall reasonably determine
that it is necessary and appropriate to extend the Alternative Closing Date,
then the Alternative Closing shall be extended for a reasonable period not to
exceed thirty (30) days after the later of (i) the date on which all conditions
to the consummation of the Alternative Closing set forth in the PIRL Standby
Distribution Agreement shall have been satisfied and (ii) the date on which the
Paradise Island Purchase Agreement shall have been terminated in accordance with
its terms. To the extent that any provision in the Plan relating to the PIRL
Spin-Off or any provision in Schedule 6.2 is inconsistent with the PIRL Standby
Distribution Agreement, the PIRL Standby Distribution Agreement shall control.
6.2.2 PIRL BOARD OF DIRECTORS. The classification and composition of the
board of directors of PIRL shall be in accordance with the PIRL Articles. The
initial members of the board of directors and officers of PIRL are or shall be
stated in the Registration Statement or such other filing as may be made by the
Debtors, with the consent of Fidelity and TCW, with the Bankruptcy Court within
ten (10) days prior to the Confirmation Hearing.
6.2.3 PIRL OBLIGATIONS UNDER THE PARADISE ISLAND PURCHASE AGREEMENT. If the
Paradise Island Purchase Agreement shall have been terminated in accordance with
its terms prior to the SIHL Closing Date and the conditions to the consummation
of the PIRL Standby Distribution Agreement shall have been satisfied or waived
in accordance with the terms of thereof, (i) on the Alternative Closing Date,
the obligations of RII pursuant to section 7.02(a)(vi) and (vii) of the Paradise
Island Purchase Agreement shall become obligations of PIRL, and (ii) prior to
the Alternative Closing Date, RII shall cause PIRL to enter into a security and
pledge agreement with SIHL, pursuant to which
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PIRL shall pledge assets reasonably acceptable to SIHL and having a fair market
value of $6 million to secure PIRL's obligations under section 7.02(a)(vi) and
(vii) of the Paradise Island Purchase Agreement.
6.3 GENERAL IMPLEMENTATION MATTERS.
6.3.1 OTHER RESTRUCTURING TRANSACTIONS. On the Effective Date, each of the
restructuring transactions set forth on Schedule 6.3 hereto or substantially
similar transactions shall be effected in the manner in which scheduled to
occur.
6.3.2 GENERAL CORPORATE MATTERS. Reorganized RII and Reorganized GRI shall
take such action as is necessary under the laws of the State of Delaware,
federal law and other applicable law to effect the terms and provisions of the
Plan. On the Effective Date, Reorganized RII shall file the Amended RII
Certificate of Incorporation with the Secretary of the State of Delaware in
accordance with sections 102 and 103 of the Delaware General Corporation Law.
The Amended RII Certificate of Incorporation shall contain appropriate
provisions consistent with the Plan and other Plan Documents (i) governing the
issuance of the New RII Common Stock and the RII Class B Common Stock, (ii)
prohibiting the issuance of non-voting shares as required by section 1123(a)(6)
of the Bankruptcy Code and (iii) implementing such other matters as the Debtors
believe are necessary and appropriate to effectuate the terms and conditions of
this Plan.
6.4 REORGANIZED RII.
6.4.1 RECONSTITUTED BOARD OF DIRECTORS OF RII. After the Effective Date,
the Board of Directors of Reorganized RII shall remain at six (6) members.
Subject to qualification by the CCC, the initial Board of Directors of
Reorganized RII shall consist of Mervyn E. Griffin, Thomas E. Gallagher, Jay
Green, Charles Masson, Vince Naimoli and William Fallon. If a vacancy among the
initial members of the Board of Directors of Reorganized RII arises, such
vacancy shall be filled in accordance the Amended RII Certificate of
Incorporation and Amended RII Bylaws. As specified more particularly in the
Amended RII Certificate of Incorporation and Amended RII Bylaws, commencing with
the first annual meeting of Reorganized RII's stockholders after the Effective
Date, (i) the holders of the Reorganized RII Common Stock, voting as a class,
will elect four directors of Reorganized RII and (ii) the holders of the RII
Class B Common Stock, voting as a class, will elect two Class B directors of
Reorganized RII. As set forth in the Amended RII Certificate of Incorporation,
under certain conditions relating to Payments-in Kind in respect of the New RIHF
Junior Mortgage Notes, the Holders of the RII Class B Common Stock, voting as a
class, shall have the right to convene a meeting of stockholders and elect four
additional Class B Directors.
6.4.2 OFFICERS OF RII. The corporate officers of RII shall serve as the
initial officers of Reorganized RII on the Effective Date. The selection of
officers of Reorganized RII after the Effective Date shall be as provided in the
Amended RII Certificate of Incorporation and Amended RII Bylaws.
6.5 REORGANIZED GRI.
6.5.1 BOARD OF DIRECTORS OF GRI. On the Effective Date, the Board of
Directors of Reorganized GRI shall consist of the members of the Board of
Directors of GRI immediately prior to the Effective Date. The individuals
designated to serve on the Board of Directors of Reorganized GRI immediately
following the Effective Date shall be identified in a writing filed with the
Bankruptcy Court at least ten (10) days prior to the Confirmation Hearing. If a
vacancy among the initial members of the Board of Directors of Reorganized GRI
arises, such vacancy shall be filled in accordance with applicable law and the
GRI's certificate of incorporation and bylaws.
6.5.2 OFFICERS OF GRI. The corporate officers of GRI shall serve as the
initial officers of Reorganized GRI on the Effective Date. The selection of
officers of Reorganized GRI after the Effective Date shall be as provided in
GRI's certificate of incorporation and bylaws.
6.6 APPROVAL OF 1994 STOCK OPTION PLAN. The 1994 Stock Option Plan for
certain officers, directors and key employees of Reorganized RII shall be
implemented on the Effective Date.
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The 1994 Stock Option Plan shall be substantially in the form attached hereto as
Exhibit C. The Plan and the Registration Statement shall be deemed a
solicitation to the Holders of the Old RII Common Stock and to the Holders of
the Old Series Notes as prospective Holders of Reorganized RII Common Stock for
approval of the 1994 Stock Option Plan, and the approval of the Plan by such
Holders shall constitute stockholder approval of the 1994 Stock Option Plan for
purposes of Rule 16b-3 under the Securities Exchange Act of 1934.
6.7 CORPORATE ACTION. Except as specifically provided in the Plan, the
adoption of the Amended RII Certificate of Incorporation or similar constituent
documents, the amendment of the bylaws for Reorganized RII, the selection of
directors and officers for the Reorganized Debtors, the distribution of Cash,
issuance and distribution of the Plan Securities and the adoption, execution and
delivery of all contracts, instruments, indentures and other agreements related
to any of the foregoing, and the other matters provided for under the Plan
involving corporate action to be taken by or required of the Reorganized Debtors
shall be deemed to have occurred and be effective as provided herein, and shall
be authorized and approved in all respects without any requirement of further
action by stockholders or directors of the Debtors or the Reorganized Debtors,
except to the extent the consent of Fidelity and TCW is required by the Plan or
any of the Plan Documents, or any exhibits thereto.
6.8 SOURCES OF CASH FOR PLAN DISTRIBUTION. All Cash necessary for the
Reorganized Debtors to make payments pursuant to the Plan on the Distribution
Date shall be obtained from Available Cash, the operations of the Debtors or the
Reorganized Debtors and their Subsidiaries, post-Effective Date borrowings under
the RIHF Senior Facility, or in the case of Old Series Public Debt Claims only,
the SIHL Aggregate Cash Purchase Price. The Reorganized Debtors may also make
such payments on the Distribution Date using Available Cash received from their
Subsidiaries through the Reorganized Debtors' consolidated cash management
system and from advances or dividends from such Subsidiaries in the ordinary
course.
6.9 SIHL RESERVED CASH, STANDBY RESERVED CASH AND PLAN CONSUMMATION
CASH. On the Effective Date, the Reorganized Debtors shall estimate the amount
of SIHL Reserved Cash or Standby Reserved Cash, as the case may be, and Plan
Consummation Cash. As soon as practicable, but in no event later than ninety
(90) days after the Effective Date, the Reorganized Debtors shall determine the
exact amount available to distribute as Net SIHL Reserved Cash or Net Standby
Reserved Cash, as the case may be, and Net Plan Consummation Cash and make such
distributions to the Holders of Old Series Public Debt Claims in accordance with
sections 5.1.2 above and 6.11.4 below.
6.10 NEW INDENTURES. On the Effective Date, RIHF, RIH and the respective
New RIHF Indenture Trustees shall enter into the New RIHF Mortgage Note
Indenture and the New RIHF Junior Mortgage Note Indenture which shall be in the
form attached as exhibits to the Registration Statement and qualified on or
before the Effective Date under the Trust Indenture Act of 1939 with the
Securities and Exchange Commission.
6.11 DISTRIBUTIONS.
6.11.1 GENERALLY. All distributions required hereunder to Holders of
Allowed Claims shall be made by a Disbursing Agent pursuant to a Disbursing
Agreement, provided however, that no Disbursing Agreement shall be required if
Reorganized RII or Reorganized GRI make such distributions. The Disbursing
Agreement relative to any distribution to a Class of Claims or Interests shall
provide for an appropriate reserve to be maintained by the Disbursing Agent
(other than Reorganized RII or Reorganized GRI) relative to Disputed Claims or
Disputed Interests as of the Distribution Date and to Old Series Notes and Old
RII Common Stock not distributed pursuant to the Old Plan because of failure to
comply with section 7.5(b) thereof.
6.11.2 SERVICE OF OLD SERIES INDENTURE TRUSTEE. The Debtors, with the
consent of Fidelity and TCW, will designate a Disbursing Agent for purposes of
effecting distributions to Holders of Old Series
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Public Debt Claims pursuant to this Article VI. The Old Series Indenture Trustee
may be such Disbursing Agent. In any such event (except where the context
otherwise requires), any reference in this Article VI to "Disbursing Agent"
shall instead be deemed to refer to the Old Series Indenture Trustee. In the
event that the Old Series Indenture Trustee is designated (and approved by the
Bankruptcy Court) as the Disbursing Agent with respect to the Old Series Notes,
the Old Series Indenture Trustee shall enter into a Disbursing Agreement
specifying the terms and conditions under which the Old Series Indenture Trustee
is to make distributions to Holders of Old Series Public Debt Claims under the
Plan.
6.11.3 DISTRIBUTIONS TO BE MADE TO HOLDERS AS OF THE DISTRIBUTION RECORD
DATE. Only Holders of record as of the Distribution Record Date shall be
entitled to receive the distributions provided under the Plan. As of the close
of business on the Distribution Record Date, the respective transfer ledgers in
respect of the Old Series Notes shall be closed. The Debtors and the Disbursing
Agent, and their agents, shall have no obligation to recognize any transfer of
Old Series Notes occurring after the Distribution Record Date. The Debtors and
the Disbursing Agent, and their agents, shall be entitled instead to recognize
and, for purposes of making distributions under the Plan, deal only with those
Holders of record stated on the transfer ledgers maintained by the Registrar for
the Old Series Notes as of the close of business on the Distribution Record
Date.
6.11.4 DISTRIBUTION TO HOLDERS OF OLD SERIES PUBLIC DEBT CLAIMS. On the
Effective Date, all Old Series Public Debt Claims shall be settled and
compromised in full by the treatment accorded to such Claims in this Plan.
Distributions to Holders of Old Series Public Debt Claims shall be delivered on
the Distribution Date to the Disbursing Agent, which shall, in turn, deliver the
distributions to the Holders of record of the Old Series Public Debt Claims on
the Distribution Record Date in accordance with the provisions of the Plan, the
Old Series Note Indenture and the Disbursing Agreement. For purposes of any
distributions by the Debtors to Holders of Old Series Public Debt Claims, the
Disbursing Agent shall be deemed to be the sole holder of all such Old Series
Public Debt Claims. The Disbursing Agreement relative to the distribution to the
Holders of Old Series Public Debt Claims shall provide that the Disbursing Agent
shall distribute to any Holder that has complied with the requirements of
6.11.5(b) or (c) below such Holder's Pro Rata Share of the SIHL Aggregate Cash
Purchase Price, Plan Securities, Net SIHL Reserved Cash or Net Standby Reserved
Cash, as the case may be, Net Plan Consummation Cash and Deferred Cash. The
Disbursing Agreement shall further provide that distributions of a Holder's Pro
Rata Share of the SIHL Aggregate Cash Purchase Price, Plan Securities, Net SIHL
Reserved Cash or Net Standby Reserved Cash, as the case may be, Net Plan
Consummation Cash and Deferred Cash shall be made by the Disbursing Agent as
soon as practicable after compliance by such Holder with the requirements of
6.11.5(b) or (c) below; provided, however, that the Disbursing Agent shall only
be required to make distributions of the Net SIHL Reserved Cash or Net Standby
Reserved Cash, as the case may be, Net Plan Consummation Cash and Deferred Cash
(i) from time to time when the aggregate amount of such Cash to be distributed
exceeds $1 million and (ii) upon receipt of the final distribution to be made on
account of Net SIHL Reserved Cash or Net Standby Reserved Cash, as the case may
be, Net Plan Consummation Cash and Deferred Cash regardless of the amount of
such Cash then held.
6.11.5 PROCEDURES FOR DISTRIBUTION TO HOLDERS OF OLD SERIES PUBLIC DEBT
CLAIMS.
(a) On the Distribution Date, the Disbursing Agent shall receive from
Reorganized RII (or, in the case of SIHL Series A Shares and the SIHL Aggregate
Cash Purchase Price, SIHL) as applicable (i) certificates representing New RIHF
Mortgage Notes, New RIHF Junior Mortgage Notes, SIHL Series A Shares or PIRL
Ordinary Shares, as the case may be, New RII Common Stock, RII Class B Common
Stock and (ii) Cash. As soon as practicable, the Disbursing Agent, in accordance
with the Disbursing Agreement and this Plan, shall deliver such Cash and
certificates to the Holders of Old Public Debt Claims that have validly
surrendered the Old Series Notes held by such Holders.
(b) As a condition to receiving distributions provided for by the Plan in
respect of the Old Series Notes, any Holder of an Old Series Public Debt Claim
shall be required to surrender such securities,
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accompanied by duly executed and completed letters of transmittal, to the
Disbursing Agent. All instruments surrendered to the Disbursing Agent shall be
canceled, marked "Compromised and Settled Only as Provided in the Plan of
Reorganization for Resorts International, Inc. and GGRI, Inc." and delivered to
Reorganized RII. The Disbursing Agent shall make distributions only to Holders
of Old Series Notes that have surrendered such instruments as herein provided.
Except as provided in section 6.11.5(c), no distribution shall be made to any
Holder of an Old Series Note that has not so surrendered such instruments held
by it.
(c) Unless waived by the Disbursing Agent, any Holder of an Old Series
Public Debt Claim based upon an Old Series Note which has been lost, stolen,
mutilated or destroyed shall, in lieu of surrendering such Old Series Note as
provided in this section, deliver to the Disbursing Agent (i) evidence
satisfactory to the Disbursing Agent of the loss, theft, mutilation or
destruction of such instrument and (ii) such security or indemnity as may be
reasonably required by Reorganized RII and the Disbursing Agent to hold
Reorganized RII and the Disbursing Agent harmless from any damages, liabilities,
or costs incurred in treating such Entity as a Holder of such Old Series Public
Debt Claim. Thereafter, such Entity shall be treated as the Holder of an Old
Series Public Debt Claim for all purposes of the Plan and shall, for all
purposes under this Plan, be deemed to have surrendered the instrument
representing such Old Series Public Debt Claim.
(d) Any Holder of an Old Series Public Debt Claim who shall not have
surrendered or be deemed to have surrendered the certificates representing its
Old Series Note within twenty-four (24) months after the Effective Date shall
have its Claim based on such Old Series Note disallowed, shall receive no
distributions on such Claim under this Plan and shall be forever barred from
asserting any claim thereon. In such case, the Disbursing Agent shall return to
Reorganized RII (or, in the case of New RIHF Mortgage Notes and New RIHF Junior
Mortgage Notes, RIHF), and Reorganized RII or RIHF, as may be applicable, shall
retain all certificates representing New RIHF Mortgage Notes, New RIHF Junior
Mortgage Notes, SIHL Series A Shares or PIRL Ordinary Shares, as the case may
be, RII Class B Common Stock, New RII Common Stock and all Cash allocable to
such non-surrendering Holders. All such certificates representing New RIHF
Mortgage Notes, New RIHF Junior Mortgage Notes, RII Class B Common Stock, and
New RII Common Stock which are so returned to Reorganized RII or, as applicable,
RIHF shall be canceled. All Cash and certificates representing SIHL Series A
Shares or PIRL Ordinary Shares which are so returned to Reorganized RII shall be
redistributed as soon as practicable after the end of the twenty-fourth month
after the Effective Date to the other Holders of Old Series Public Debt Claims
as of the Distribution Record Date who previously surrendered their Old Series
Notes.
6.11.6 MEANS OF CASH PAYMENT. Cash payments made pursuant to the Plan shall
be in U.S. funds, by check drawn on a domestic bank, or, at Reorganized RII's or
Reorganized GRI's option, by wire transfer from a domestic bank, except that
payments made to foreign trade creditors holding Unsecured Claims or to foreign
governmental units holding Priority Tax Claims shall be in such funds and by
such means as are customary or as may be necessary in a particular foreign
jurisdiction.
6.11.7 CALCULATION OF DISTRIBUTION AMOUNTS OF SECURITIES. No fractional
shares of New RII Common Stock, RII Class B Common Stock or SIHL Series A Shares
or PIRL Ordinary Shares, as the case may be, shall be issued or distributed. The
Disbursing Agent, as soon as practicable after the Effective Date and pursuant
to the Disbursing Agreement, shall aggregate and sell all fractional amounts of
such securities at then prevailing prices and distribute the net proceeds to the
Holders of Old Series Public Debt Claims entitled to such proceeds. New RIHF
Mortgage Notes and New RIHF Junior Mortgage Notes will be issued in
denominations of $1,000. The Disbursing Agent, as soon as practicable after the
Effective Date, shall aggregate and sell all fractional amounts of New RIHF
Mortgage Notes and New RIHF Junior Mortgage Notes at then prevailing prices and
distribute the net proceeds to the Holders of Old Series Public Debt Claims
entitled to such proceeds.
6.11.8 DELIVERY OF DISTRIBUTIONS. Subject to Bankruptcy Rule 9010,
distributions to Holders of Allowed Claims shall be made at the address of each
such Holder as set forth on the Schedules filed
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with the Bankruptcy Court unless superseded by the address as set forth on the
proofs of Claim or proofs of Interest filed by such Holders (or at the last
known addresses of such a Holder if no proof of Claim or proof of Interest is
filed or if the Debtors have been notified in writing of a change of address),
or in the case of Holders of Old Series Public Debt Claims, may be made at the
addresses contained in the records of the Registrar, except as provided below.
If any Holder's distribution is returned as undeliverable, no further
distributions to such Holder shall be made unless and until Reorganized RII or
the Disbursing Agent is notified of such Holder's then current address, at which
time all missed distributions shall be made to such Holder without interest.
Amounts in respect of undeliverable distributions made through the Disbursing
Agent shall be returned to the Disbursing Agent making such distribution until
such distributions are claimed. All Claims for undeliverable distributions shall
be made on or before the later of the second anniversary of the Effective Date
and the date ninety (90) days after such Claim is Allowed. After such date, all
unclaimed property shall be returned to the Reorganized Debtors or their
successors in accordance with section 6.11.5 of the Plan and the Claim of any
Holder with respect to such property shall be discharged and forever barred.
6.11.9 FEES AND EXPENSES OF DISBURSING AGENTS. Except as otherwise ordered
by the Bankruptcy Court, the amount of any reasonable fees and expenses incurred
by a Disbursing Agent, including but not limited to the Old Series Indenture
Trustee, as the case may be, on or after the Confirmation Date (including, but
not limited to, tax related expenses) and any compensation and expense
reimbursement claims (including reasonable fees and expenses of its agents) made
by such Disbursing Agent shall be paid as a Plan Expense by Reorganized RII in
accordance with the applicable Disbursing Agreement without further order of the
Bankruptcy Court; provided, however, that the Bankruptcy Court will hear and
determine any disputes in respect of such fees and expenses.
6.11.10 TIME BAR TO CASH PAYMENTS. Checks issued by Reorganized RII or
Reorganized GRI in respect of Allowed Claims shall be null and void if not
negotiated within six (6) months after the date of issuance thereof. Any amounts
paid to the Disbursing Agent in respect of such a check shall be promptly
returned to Reorganized RII or Reorganized GRI by the Disbursing Agent. Requests
for reissuance of any check shall be made directly to Reorganized RII or
Reorganized GRI by the Holder of the Allowed Claim with respect to which such
check originally was issued. Any claim in respect of such a voided check shall
be made on or before the later of the second anniversary of the Effective Date
and ninety (90) days after the six month period following the date of issuance
of such check. After such date, all claims in respect of void checks shall be
discharged and forever barred.
6.12 VESTING OF PROPERTY OF RII. Except as otherwise provided in the Plan
or the Confirmation Order, upon the Effective Date all property of RII's estate,
wherever situated, shall vest in Reorganized RII and shall be retained by
Reorganized RII or distributed to Creditors as provided in the Plan. Upon the
Effective Date, all property of RII's estate, whether retained by Reorganized
RII or distributed to Creditors, shall be free and clear of all Claims, Liens,
Encumbrances and interests, except the Claims, Liens, Encumbrances and interests
of Creditors expressly provided for in the Plan.
6.13 VESTING OF PROPERTY OF GRI. Except as otherwise provided in the Plan
or the Confirmation Order, upon the Effective Date all property of GRI's estate,
wherever situated, shall vest in Reorganized GRI and shall be retained by
Reorganized GRI or distributed to Creditors as provided in the Plan. Upon the
Effective Date, all property of GRI's estate, whether retained by Reorganized
GRI or distributed to Creditors, shall be free and clear of all Claims, Liens,
Encumbrances and interests, except the Claims, Liens, encumbrances and interests
of Creditors expressly provided for in the Plan.
6.14 MAINTENANCE OF CAUSES OF ACTION. Neither the Debtors nor the
Reorganized Debtors shall commence and/or prosecute any avoidance or recovery
actions under sections 544, 545, 547, 548, 549, 550, 551 and 553 of the
Bankruptcy Code other than such avoidance or recovery actions that have been or
are permitted to be filed in connection with the Old Chapter 11 Cases. On the
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Effective Date, all avoidance or recovery causes of action other than such
avoidance or recovery actions that have been or are permitted to be filed in
connection with the Old Chapter 11 Cases shall be deemed waived and released.
6.15 ASSUMPTION OF LIABILITIES. The liability for and obligation to make
the distributions required under the Plan shall be assumed by Reorganized RII
and Reorganized GRI, which shall have the liability for, and obligation to make,
all distributions of Cash, Plan Securities or other instruments to be issued by
Reorganized RII and Reorganized GRI under the Plan.
6.16 RIHF SENIOR FACILITY. RIHF, RIH, RII, one or more funds managed by
Fidelity and such other Entities as may become parties thereto from time to time
shall make reasonable efforts to enter into, on or before the Effective Date,
the RIHF Senior Facility, the material terms of which are set forth in the RIHF
Senior Facility Term Sheet attached hereto as Exhibit D.
6.17 USE OF RIHF SENIOR FACILITY FUNDS. Pursuant to the terms of the RIHF
Senior Facility to be entered in between RIHF, RIH, RII, one or more funds
managed by Fidelity and such other Entities as may become parties thereto from
time to time in conjunction with the consummation of the Plan, (i) RIHF shall be
the obligor thereunder, (ii) RIH, RII and such other Entities as may become
parties thereto from time to time shall be joint guarantors thereon, (iii) RIHF
shall be permitted to borrow any amounts advanced thereunder, (iv) RIHF will
lend the proceeds borrowed thereunder to RIH, and (v) RIH may, but shall not be
required to, lend all or any part of the proceeds borrowed from RIHF under the
RIHF Senior Facility to RII, and in such cases (as described in (iv) and (v)
above) such funds shall be used by RIH and RII for the purposes set forth in the
RIHF Senior Facility Indenture. Acceptance of the Plan by the Class of Holders
of Old Series Public Debt Claims and the entry of the Confirmation Order shall
constitute the approval of and consent by the Holders of Old Series Public Debt
Claims to the transfer to and use by RIH and RII of such RIHF Senior Facility
funds.
ARTICLE VII
ACCEPTANCE OR REJECTION OF THE PLAN
7.1 CLASSES ENTITLED TO VOTE. Each Holder of an Allowed Claim or Allowed
Interest in an impaired Class of Claims against or Interests in either Debtor
including any Holder of an RII Class 2 Claim, RII Class 7 Interest, RII Class 8
Interests, GRI Class 2 Claim, GRI Class 4 Claim and GRI Class 5 Interests, shall
be entitled to vote separately to accept or reject the Plan. Each Holder of a
Claim in an unimpaired class of Claims, including RII Class 1, RII Class 3, RII
Class 4, RII Class 5, RII Class 6, GRI Class 1 and GRI Class 3, shall be deemed
to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code.
7.2 CLASS ACCEPTANCE REQUIREMENT. An impaired Class of Claims shall have
accepted the Plan if (i) the Holders (other than any Holder designated under
section 1126(e) of the Bankruptcy Code) of at least two-thirds in amount of the
Allowed Claims actually voting in such Class have voted to accept the Plan and
(ii) the Holders (other than any Holder designated under section 1126(e) of the
Bankruptcy Code) of more than one-half in number of the Allowed Claims actually
voting in such Class have voted to accept the Plan. An impaired Class of
Interests shall have accepted the plan if the Holders (other than any Holder
designated under section 1126(e) of the Bankruptcy Code) of at least two-thirds
in amount of the Allowed Interests actually voting in such Class have voted to
accept the Plan.
7.3 CRAMDOWN. If any impaired Class of Claims or Interests shall fail to
accept the Plan with the requisite statutory majorities in accordance with
section 1126(c) of the Bankruptcy Code, the Debtors reserve the right to (i)
request that the Bankruptcy Court confirm the Plan in accordance with section
1129(b) of the Bankruptcy Code and/or (ii) modify the Plan in accordance with
section 14.10 of the Plan.
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ARTICLE VIII
PROCEDURES FOR RESOLVING
AND TREATING DISPUTED CLAIMS
8.1 OBJECTION DEADLINE. As soon as practicable, but in no event later than
sixty days after the Effective Date, objections to Disputed Claims shall be
filed with the Bankruptcy Court and served upon the Holders of each of the
Disputed Claims.
8.2 RESPONSIBILITY FOR OBJECTION TO DISPUTED CLAIMS. Reorganized RII and
Reorganized GRI shall have the exclusive responsibility for objecting to the
allowance of Disputed Claims following the Effective Date, the entire cost of
which, including any fees and expenses of counsel and other Professional
Persons, shall be paid by Reorganized RII and Reorganized GRI from Plan
Consummation Cash during the ninety (90) days following the Effective Date, and,
except to the extent otherwise agreed by Fidelity and TCW and ordered by the
Bankruptcy Court, from RII Retained Cash thereafter.
8.3 PROSECUTION OF OBJECTIONS. On and after the Effective Date, except as
the Bankruptcy Court may otherwise order, the filing, litigation, settlement, or
withdrawal of all objections shall be the responsibility of Reorganized RII and
Reorganized GRI.
8.4 NO DISTRIBUTIONS PENDING ALLOWANCE. Notwithstanding any other
provision of the Plan, no payments or distributions shall be made with respect
to a Disputed Claim unless and until all objections to such Disputed Claim have
been determined by Final Order.
8.5 DISTRIBUTIONS AFTER ALLOWANCE. Payments and distributions from
Reorganized RII or Reorganized GRI to each Holder of a Disputed Claim, to the
extent that it ultimately becomes an Allowed Claim, shall be made in accordance
with the provisions of the Plan governing the Class of Claims to which the
Disputed Claim belongs. As soon as practicable after the date the order or
judgment of the Bankruptcy Court allowing such Claim becomes a Final Order, but
in no event later than thirty (30) days after such Claim becomes an Allowed
Claim, any Cash or other consideration that would have been distributed in
respect of the Disputed Claim had it been an Allowed Claim at the Effective Date
shall be distributed, without interest, to the Holder of such Claim.
8.6 TREATMENT OF CONTINGENT CLAIMS. Until such time as a Contingent Claim
becomes fixed and absolute, such Claim shall be treated as a Disputed Claim for
purposes related to estimates, allocations and distributions under the Plan.
8.7 ESTIMATION OF CLAIMS. The Debtors or the Reorganized Debtors may, at
any time, request that the Bankruptcy Court estimate any Contingent Claim
pursuant to section 502(c) of the Bankruptcy Code regardless of whether the
Debtors or the Reorganized Debtors have previously objected to such Claim or
whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy
Court will retain jurisdiction to estimate any Claim at any time during
litigation concerning any objection to any Claim, including during the pendency
of any appeal relating to any such objection. In the event that the Bankruptcy
Court estimates any Contingent Claim, that estimated amount will constitute
either the allowed amount of such Claim or a maximum limitation on such Claim,
as determined by the Bankruptcy Court. If the estimated amount constitutes a
maximum limitation on such Claim, the Debtors or the Reorganized Debtors may
elect to pursue any supplemental proceedings to object to any ultimate payment
on such Claim. All of the aforementioned Claims objection, estimation and
resolution procedures are cumulative and not necessarily exclusive of one
another. Claims may be estimated and subsequently compromised, settled,
withdrawn or resolved by any mechanism approved by the Bankruptcy Court.
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ARTICLE IX
EXECUTORY CONTRACTS
9.1 GENERAL TREATMENT. All executory contracts and unexpired leases of RII
shall be assumed by Reorganized RII and all executory contracts and unexpired
leases of GRI shall be assumed by Reorganized GRI upon entry of the Confirmation
Order unless specifically rejected by order entered prior to the Confirmation
Order or unless a motion to reject any such executory contract or unexpired
lease is pending before the Bankruptcy Court on the Confirmation Date.
9.2 BAR TO REJECTION DAMAGES. If the rejection of an executory contract or
unexpired lease by the Debtors results in damages to the other party or parties
to such contract or lease, a Claim for such damages, if not previously evidenced
by a filed proof of Claim or barred by a Final Order, shall be forever barred
and shall not be enforceable against the Debtors or the Reorganized Debtors, or
their properties or agents, successors, or assigns, unless a proof of Claim
relating thereto is filed with the Bankruptcy Court within thirty (30) days
after the Confirmation Date, or within such shorter period as ordered by the
Bankruptcy Court.
9.3 CURE OF DEFAULTS FOR EXECUTORY CONTRACTS AND UNEXPIRED LEASES. Each
executory contract and unexpired lease to be assumed pursuant to the Plan shall
be reinstated and rendered unimpaired in accordance with sections 1124(2) and
365(b)(1) of the Bankruptcy Code. In connection therewith, the Debtor obligated
on each such contract and lease to be assumed pursuant to the Plan shall cure
any monetary default (other than of the kind specified in section 365(b)(2) of
the Bankruptcy Code), by payment of the default amount in Cash on the
Distribution Date or on such other terms as the parties to such executory
contract or unexpired lease may otherwise agree, compensate, or provide adequate
assurance that the applicable Debtor will promptly compensate, parties other
than the Debtor to such contract or lease for any actual pecuniary loss to such
parties resulting from such default and provide adequate assurance of future
performance under such contract or lease. In the event of a dispute regarding:
(i) the amount of any cure payments, (ii) the ability of Reorganized RII or
Reorganized GRI or any of their assignees to provide "adequate assurance of
future performance" (within the meaning of section 365 of the Bankruptcy Code)
under the contract or lease to be assumed, or (iii) any other matter pertaining
to assumption, the cure payments or performance required by section 365(b)(1) of
the Bankruptcy Code shall be made following the entry of a Final Order resolving
the dispute and approving the assumption.
ARTICLE X
RIGHTS AND OBLIGATIONS
OF THE DISBURSING AGENT
10.1 EXCULPATION. The Disbursing Agent, from and after the Effective Date,
is hereby exculpated by all Entities, Holders of Claims or Interests, and
parties in interest receiving distributions or retaining property under the
Plan, from any and all claims, causes of action, and other assertions of
liability (including breach of fiduciary duty) arising out of the Disbursing
Agent's discharge of the powers and duties conferred upon it by the Plan or any
order of the Bankruptcy Court entered pursuant to or in furtherance of the Plan,
or applicable law, except solely for actions or omissions arising out of the
Disbursing Agent's gross negligence or willful misconduct and except as may
otherwise be provided in the Disbursing Agreement. No Holder of a Claim or an
Interest, or representative thereof, shall have or pursue any claim or cause of
action (i) against the Disbursing Agent for making payments in accordance with
the Plan, or for implementing the provisions of the Plan, or (ii) against any
Holder of a Claim or Interest for receiving or retaining payments or other
distributions as provided for by the Plan.
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10.2 POWERS OF THE DISBURSING AGENT. Pursuant to the terms and provisions
of the Disbursing Agreement, the Disbursing Agent shall be empowered to (i) take
all steps and execute all instruments and documents necessary to effectuate the
Plan; (ii) make distributions contemplated by the Plan; (iii) comply with the
Plan and the obligations thereunder; (iv) employ, retain, or replace
professionals to represent it with respect to the fulfillment of its
responsibilities under the Plan, the Disbursing Agreement and/or the Old Series
Note Indenture, as applicable; and (v) exercise such other powers as may be
vested in the Disbursing Agent pursuant to order of the Bankruptcy Court or
pursuant to the Plan, or as necessary and proper to carry out the provisions of
the Plan.
10.3 DUTIES OF THE DISBURSING AGENT. Pursuant to and subject to the terms
and provisions of (and except as may otherwise be provided in) the Disbursing
Agreement, the Disbursing Agent shall have the duties of:
(a) carrying out the provisions of the Plan, which shall include taking
or not taking any action which the Disbursing Agent deems to be in
furtherance of the Plan, including, from the date of the Disbursing Agent's
appointment, making payments and conveyances and effecting other transfers
necessary in furtherance of the Plan;
(b) managing property to be distributed in a manner designed to
effectuate the Plan;
(c) making quarterly and other periodic reports regarding the
distributions to be made to the Holders of Claims; and
(d) complying with all tax withholding and reporting requirements
imposed on it by any governmental unit.
The duties of the Disbursing Agent set forth in this section 10.3 shall not
relieve the Debtors of their duties and obligations under the Plan and
applicable law.
ARTICLE XI
CONDITIONS PRECEDENT TO
CONFIRMATION AND EFFECTIVE DATE
11.1 CONDITIONS PRECEDENT TO CONFIRMATION OF THE PLAN. Confirmation of the
Plan will not occur unless all of the following conditions precedent have been
satisfied or waived:
11.1.1 The Confirmation Date shall occur no later than December 31, 1994.
11.1.2 The Confirmation Order shall approve in all respects all of the
provisions, terms, and conditions of the Plan.
11.1.3 The Confirmation Order shall provide for the confirmation of the
Plan as to both RII and GRI.
11.1.4 The Confirmation Order shall be acceptable in form and substance to
the Debtors, TCW, Fidelity and, to the extent provided in the Paradise Island
Purchase Agreement, SIHL.
11.1.5 The Confirmation Order shall contain a finding, supported by
evidence adduced by the Debtors at the Confirmation Hearing, that, except as
expressly provided in the Plan, all of the property distributed under the Plan
shall vest in the recipients thereof free and clear of all Liens, claims,
Encumbrances and interests of any nature whatsoever except as permitted by the
Plan and that consummation of the Plan shall not result in a fraudulent transfer
with respect to either of the Debtors or any of their Affiliates.
11.1.6 The entry of a Bankruptcy Court order, which may be the Confirmation
Order, declaring that, as of the Effective Date, the Old Security Documents
under which the Liens on the property securing the Old Series Notes were granted
or created shall be deemed released and terminated.
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11.2 CONDITIONS TO EFFECTIVE DATE. The Effective Date of the Plan will not
occur unless all of the following conditions precedent have been satisfied or
waived:
11.2.1 The Confirmation Order shall have been duly entered and not be
stayed.
11.2.2 The New RIHF Mortgage Indenture and New RIHF Junior Mortgage
Indenture shall have been qualified under the Trust Indenture Act of 1939 and
the securities to be issued thereunder as well as the RII Class B Common Stock,
New RII Common Stock, and SIHL Series A Shares or PIRL Ordinary Shares, as the
case may be, shall be registered under the Securities Act and accepted or
admitted on a National Securities Exchange.
11.2.3 The Effective Date shall occur no later than January 31, 1995.
11.2.4 All required regulatory approvals shall have been obtained
(including without limitation any regulatory approvals from the CCC, the
Bahamian Government and the U.S. Department of Transportation).
11.2.5 All indentures, mortgages, security agreements and other agreements
and instruments to be delivered under or necessary to effectuate the Plan,
including without limitation the RIHF Senior Facility Indenture, shall have been
executed and delivered.
11.2.6 Either (a) the conditions to the SIHL Closing under the Paradise
Island Purchase Agreement shall have been satisfied or waived in accordance with
the terms thereof and the Paradise Island Approval Order shall have been entered
and the SIHL Closing shall have occurred, or (b) the Paradise Island Purchase
Agreement shall have terminated in accordance with its terms, the conditions to
the consummation of the PIRL Spin-Off pursuant to the PIRL Standby Distribution
Agreement shall have been satisfied or waived in accordance with the terms
thereof and the Alternative Closing shall have occurred.
11.2.7 The Griffin Group Note Proceeds shall have been received, in full,
by RII.
11.3 WAIVER OF CONDITIONS. Except for the condition contained in section
11.2.1 above, the Debtors, with the consent of Fidelity and TCW, may waive any
condition or any portion of any condition set forth in this Article XI, at any
time without notice and without leave of or order of the Bankruptcy Court.
ARTICLE XII
EFFECTS OF CONFIRMATION
AND EFFECTIVENESS OF PLAN
12.1 DISCHARGE OF CLAIMS. Except as otherwise provided herein or in the
Confirmation Order, the rights afforded in the Plan and the payments and
distributions to be made hereunder shall discharge all existing debts and Claims
of any kind, nature, or description whatsoever against the Debtors, any of their
assets or properties or any property dealt with under the Plan to the extent
permitted by section 1141 of the Bankruptcy Code; upon the Effective Date, all
existing Claims against the Debtors shall be, and shall be deemed to be
discharged; and all Holders of Claims and Interests shall be precluded from
asserting against the Debtors, any of their assets or properties, or any
property dealt with under the Plan any other or further Claim based upon any act
or omission, transaction, or other activity of any kind or nature that occurred
prior to the Confirmation Date, whether or not such Holder filed a proof of
Claim.
12.2 DISCHARGE OF DEBTORS. Any consideration distributed under the Plan
shall be in exchange for and in complete satisfaction, discharge, and release of
all Claims of any nature whatsoever against the Debtors or any of their assets
or properties; and, except as otherwise provided herein, upon the Effective
Date, the Debtors shall be deemed discharged and released to the extent
permitted by section 1141 of the Bankruptcy Code from any and all Claims,
including but not limited to demands
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and liabilities that arose before the Confirmation Date, and all debts of the
kind specified in section 502(g), 502(h), or 502(i) of the Bankruptcy Code,
whether or not (i) a proof of Claim based upon such debt is filed or deemed
filed under section 501 of the Bankruptcy Code; (ii) a Claim based upon such
debt is Allowed under section 502 of the Bankruptcy Code; or (iii) the Holder of
a Claim based upon such debt has accepted the Plan. Except as provided herein
and therein, the Confirmation Order shall be a judicial determination of
discharge of all liabilities of the Debtors. As provided in section 524 of the
Bankruptcy Code, such discharge shall void any judgment against the Debtors at
any time obtained to the extent it relates to a Claim discharged, and operates
as an injunction against the prosecution of any action against the Debtors, or
the Debtors' property, to the extent it relates to a Claim discharged.
12.3 INJUNCTION. Except as provided herein or in the Confirmation Order,
from and after the Effective Date, all Holders of Claims against either of the
Debtors' estates are permanently restrained and enjoined from continuing, or
taking any act, to enforce any Claim against Reorganized RII and Reorganized
GRI; PROVIDED, HOWEVER, that each Holder of a Claim may continue to prosecute
its proof of claim in the Bankruptcy Court or such other court to which the
matter may be referred, and all Holders of Claims shall be entitled to enforce
their rights under the Plan.
12.4__SURVIVAL OF INDEMNIFICATION CLAIMS AND OBLIGATIONS.__Notwithstanding
any other provision of this Plan, all obligations of the Debtors for
indemnification of current and former officers and directors, and all claims of
such officers and directors related thereto, under the RII or GRI Certificates
of Incorporation or Bylaws or other applicable law or agreements shall expressly
survive confirmation of the Plan and be binding on and enforceable against
Reorganized RII or Reorganized GRI, as may be applicable, irrespective of
whether indemnification is owed in connection with an event occurring before, on
or after the Petition Date.
12.5 EXCULPATIONS AND LIMITATION OF LIABILITY. Notwithstanding any other
provisions of this Plan, none of the directors, officers, employees, agents,
representatives, financial advisors, or attorneys of (i) the Debtors, (ii) any
subsidiary of the Debtors, (iii) TCW, (iv) Fidelity, or (v) the Old Series
Indenture Trustee, and neither the Debtors, any subsidiary of the Debtors, TCW,
Fidelity nor the Old Series Indenture Trustee, shall have any liability for
actions taken or omitted to be taken in good faith under or in connection with
this Plan or in connection with the Prepackaged Chapter 11 Cases.
12.6 SATISFACTION OF INTERCOMPANY CLAIMS. On the Effective Date and after
giving effect to the Restructuring Transactions, neither RIHF nor RIH nor any of
their respective Subsidiaries will have any liability or indebtedness to any
then present or former Subsidiary or Affiliate of RII other than to RIH, RIHF or
their own respective Subsidiaries.
ARTICLE XIII
RETENTION OF JURISDICTION
13.1 SCOPE OF JURISDICTION. Pursuant to sections 1334 and 157 of title 28
of the United States Code, from and after the Confirmation Date, the Bankruptcy
Court shall retain and have jurisdiction of all matters arising in, arising
under, and related to the Reorganization Cases and the Plan pursuant to, and for
the purposes of, sections 105(a) and 1142 of the Bankruptcy Code and for, among
other things, the following purposes:
(a) To hear and determine any and all objections to the allowance of
Claims or actions to equitably subordinate Claims or any controversy as to
the classification of Claims;
(b) To hear and determine any and all adversary proceedings,
applications or litigated matters pending on the Effective Date or brought
after the Effective Date;
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(c) To hear and determine any and all applications for substantial
contribution and for compensation and reimbursement of expenses filed by
Professional Persons;
(d) To hear and determine Claims arising from the rejection of executory
contracts or unexpired leases;
(e) To hear and determine, pursuant to the provisions of section 505 of
the Bankruptcy Code, all issues related to the liability of the Debtors for
any tax incurred prior to the Effective Date;
(f) To enable Reorganized RII and Reorganized GRI to commence and
prosecute any and all proceedings relating to claims or causes of action
which arose prior to the Effective Date or to recover any transfers, assets,
properties or damages to which RII or GRI may be entitled under applicable
provisions of the Bankruptcy Code and which are not waived and released
pursuant to section 6.14 hereof;
(g) To liquidate any Disputed or Contingent Claim;
(h) To enforce the provisions of the Plan and to determine any and all
disputes arising under the Plan;
(i) To enter and implement such orders as may be appropriate in the
event Confirmation is for any reason stayed, reversed, revoked, modified or
vacated;
(j) To modify any provision of the Plan to the extent permitted by the
Bankruptcy Code and to correct any defect, cure any omission or reconcile
any inconsistency in the Plan or the Confirmation Order as may be necessary
to carry out the purposes and intent of the Plan; and
(k) To enter such orders as may be necessary or appropriate in
furtherance of consummation and implementation of the Plan.
13.2 FAILURE OF THE BANKRUPTCY COURT TO EXERCISE JURISDICTION. If the
Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction
or is otherwise without jurisdiction over any matter arising in, arising under,
or related to the Reorganization Cases, including the matters set forth in
section 13.1 of the Plan, this Article XIII shall have no effect upon and shall
not control, prohibit, or limit the exercise of jurisdiction by any other court
having jurisdiction with respect to such matter.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 COMPLIANCE WITH TAX REQUIREMENTS. In connection with the Plan, RII,
GRI, and the Disbursing Agent shall comply with all withholding and reporting
requirements imposed by federal, state, local and foreign taxing authorities,
and all distributions hereunder shall be subject to such withholding and
reporting requirements. Creditors may be required to provide certain tax
information as a condition to receipt of distributions pursuant to the Plan.
14.2 COMPLIANCE WITH ALL APPLICABLE LAWS. If notified by any governmental
authority that it is in violation of any applicable law, rule, regulation, or
order of such governmental authority relating to its businesses, the Debtors,
Reorganized RII or Reorganized GRI, as the case may be, shall comply with such
law, rule, regulation, or order; provided, however, that nothing contained
herein shall require such compliance by the Debtors, Reorganized RII or
Reorganized GRI, as the case may be, where the legality or applicability of any
such requirement is being contested in good faith in appropriate proceedings by
the Debtors, Reorganized RII or Reorganized GRI, as the case may be, and, if
appropriate, for which an adequate reserve has been set aside on the books of
the Debtors, Reorganized RII or Reorganized GRI, as the case may be.
32
<PAGE>
14.3 CANCELLATION OF OLD SERIES NOTE INDENTURE. On the Effective Date, the
Old Series Note Indenture shall, except for purposes of making distributions
under the Plan, be deemed canceled, terminated, and of no further force or
effect. Except as otherwise provided in the Plan, such cancellation of the Old
Series Note Indenture shall extinguish the rights and obligations of RII and the
Holders of the Old Series Notes under the Old Series Note Indenture and the
rights of the Old Series Note Indenture Trustee to assert any Indenture Trustee
Charging Lien against the distributions to the Holders of Old Series Public Debt
Claims for unpaid fees and expenses. Notwithstanding the foregoing, RII shall be
obligated to pay the unpaid fees and expenses of the Old Series Indenture
Trustee in accordance with the provisions of section 4.2 of the Plan. On the
Effective Date, all outstanding Old Series Notes shall be canceled on the books
of the Debtors and become settled and compromised solely as provided herein in
consideration for the right to participate in distributions hereunder. The
cancellation of the Old Series Note Indenture and surrender of instruments
pursuant to section 6.11.5 of the Plan shall extinguish the right of any Holder
of Old Series Notes to commence any cause of action against any Entity for
unpaid principal and interest thereon. The Old Series Notes shall not be
canceled other than pursuant to section 6.11.5 of the Plan and, until such
cancellation, such Old Series Notes shall be evidence of the entitlement of the
Holder thereof to receive distributions pursuant to the Plan.
14.4 DISCHARGE OF OLD SERIES INDENTURE TRUSTEE. Subsequent to the
performance of the Old Series Indenture Trustee or its agents of its or their
duties and obligations under the provisions of the Plan and the Confirmation
Order, if any, and under the terms of the Old Series Note Indenture, the Old
Series Indenture Trustee and its agents shall be relieved of all obligations
associated with the Old Series Note Indenture.
14.5 PAYMENT OF STATUTORY FEES. All fees payable pursuant to section 1930
of title 28 of the United States Code, as determined by the Bankruptcy Court at
the Confirmation Hearing, shall be paid on or before the Effective Date.
14.6 POST-CONFIRMATION DATE FEES AND EXPENSES OF PROFESSIONAL
PERSONS. After the Confirmation Date, the Debtors and, after the Effective
Date, the Reorganized Debtors shall, in the ordinary course of business and
without the necessity for any approval by the Bankruptcy Court, pay as Plan
Expenses the reasonable fees and reasonable expenses of the Professional Persons
employed by the Debtors and the Reorganized Debtors related to implementation
and consummation of the Plan; provided, however, that no such fees and expenses
shall be paid except upon receipt by the Debtors or the Reorganized Debtors, as
may be applicable, of a detailed written invoice, which invoice shall also be
served upon the United States Trustee, Fidelity and TCW, from the Professional
Person seeking fee and expense reimbursement and provided, further, however,
that any such party may, within ten (10) days after receipt of an invoice for
fees and expenses, request that the Bankruptcy Court determine any such request.
14.7 BINDING EFFECT. The Plan shall be binding upon and inure to the
benefit of the Debtors, the Holders of Claims, the Holders of Interests, and
their respective successors and assigns; provided, however, that if the Plan is
not confirmed, the Plan shall be deemed null and void and nothing contained
herein shall be deemed (i) to constitute a waiver or release of any Claims by
the Debtors or any other Entity, (ii) to prejudice in any manner the rights of
the Debtors or any other Entity, or (iii) to constitute any admission by the
Debtors or any other Entity.
14.8 GOVERNING LAW. Unless a rule of law or procedure is supplied by
federal law (including the Bankruptcy Code and the Bankruptcy Rules) or the
Delaware General Corporation Law or the law of the jurisdiction of organization
of any entity formed or to be formed pursuant to the Plan, the internal laws of
the State of New York shall govern the construction and implementation of the
Plan and any agreements, documents, and instruments executed in connection with
the Plan or the Reorganization Cases, except as may otherwise be provided in
such agreements, documents, and instruments.
33
<PAGE>
14.9 FILING OF ADDITIONAL DOCUMENTS. On or before the conclusion of the
Confirmation Hearing, the Debtors shall file with the Bankruptcy Court such
agreements and other documents as may be necessary or appropriate to effectuate
and further evidence the terms and conditions of the Plan.
14.10 AMENDMENTS AND MODIFICATIONS. The Debtors may, in accordance with
section 1127(a) of the Bankruptcy Code and subject to the approval of the
Fidelity and TCW, amend or modify this Plan prior to the entry of the
Confirmation Order. After the entry of the Confirmation Order, the Debtors may,
in accordance with section 1127(b) of the Bankruptcy Code and subject to the
approval of Fidelity and TCW, amend or modify this Plan, or remedy any defect or
omission or reconcile any inconsistency in this Plan in such manner as may be
necessary to carry out the purpose and intent of this Plan.
14.11 REVOCATION. The Debtors reserve the right, subject to the consent of
Fidelity and TCW, to revoke and withdraw this Plan prior to Confirmation. If the
Debtors revoke or withdraw the Plan pursuant to this section 14.11, then the
Plan shall be deemed null and void and, in such event, nothing contained herein
shall be deemed to constitute a waiver or release of any Claims by or against
the Debtors or any Entity in any further proceedings involving the Debtors.
14.12 SEVERABILITY. Should any provision in the Plan be determined to be
unenforceable, such determination shall in no way limit or affect the
enforceability and operative effect of any other provisions of the Plan.
14.13 NOTICES. All notices, requests, or demands for payments provided for
in the Plan shall be in writing and shall be deemed to have been given when
personally delivered by hand, or deposited in any general or branch post office
of the United States postal service, or received by telex or telecopier;
PROVIDED, HOWEVER that the Old Series Indenture Trustee shall give any required
notices to the Holders of Old Series Notes in accordance with the terms of the
Old Series Note Indenture. Notices, requests and demands for payments shall be
addressed and sent, postage prepaid, or delivered as follows:
(A) in the case of notices, requests, or demands for payments to Debtors
or Reorganized RII or Reorganized GRI, at 1133 Boardwalk, Atlantic City, New
Jersey 08401, Attn: Christopher D. Whitney, and at any other address
designated by Debtors, Reorganized RII or Reorganized GRI by notice to each
Holder of an Allowed Claim or Interest, with copies to: Gibson, Dunn &
Crutcher, 1717 Main Street, Suite 5400, Dallas, Texas 75201, Attn: Michael
A. Rosenthal, Esq.,
(B) in the case of notices to Holders of Claims or Interests, at the
last known address according to RII's or Reorganized RII's books and
records, or at any other address designated by a Holder of a Claim or
Interest, by notice to RII or Reorganized RII; PROVIDED, HOWEVER, any notice
of change of address shall be effective only upon receipt. In addition, all
notices to the Holders of Allowed Old Series Public Debt Claims shall also
be given to the Old Series Indenture Trustee as follows:
____________________________________________________________; and
(C) in the case of notices to Fidelity and TCW, at the offices of Weil,
Gotshal & Manges, 767 Fifth Avenue, New York, New York 10153, Attn: Bruce R.
Zirinsky, Esq. and at any other address designated by Fidelity and TCW.
14.14 DE MINIMIS DISTRIBUTIONS. No distribution of less than twenty-five
dollars ($25) in Cash or less than five (5) shares of New RII Common Stock shall
be made to any Holder of an Allowed Claim. Such undistributed amount will be
retained by Reorganized RII or Reorganized GRI, as the case may be, and in the
case of undistributed New RII Common Stock, held as treasury shares.
14.15 CONSENT RIGHTS OF FIDELITY AND TCW. If, and only if, at any time
prior to the Effective Date, Fidelity and TCW shall cease to beneficially own an
aggregate of at least twenty percent (20%) of the aggregate principal amount of
outstanding of Old Series Notes, all the rights of
34
<PAGE>
consent, approval, acceptance or directions granted to Fidelity and TCW under
the Plan shall thereupon automatically cease to exist; provided, however, that
nothing in this section 14.15 of the Plan shall limit or otherwise prejudice in
any manner any rights which Fidelity and TCW may have under the Bankruptcy Code
and the Bankruptcy Rules. In addition, if either of TCW and Fidelity shall cease
to beneficially own any Old Series Notes whatsoever (but the other retains an
aggregate of at least twenty percent (20%) of the aggregate principal amount of
outstanding Old Series Notes), then the obligations of the Debtors to obtain
consent shall be extinguished solely as to the person ceasing to own any such
Old Series Notes, without prejudice to the rights of the other hereunder.
35
<PAGE>
DATED: NEW YORK, NEW YORK
AS OF ___________, 1994
Respectfully submitted,
RESORTS INTERNATIONAL, INC.
By ___________________________________
Christopher D. Whitney,
Executive Vice President
GGRI, INC.
By ___________________________________
Christopher D. Whitney,
Executive Vice President
RESORTS INTERNATIONAL HOTEL, INC.
By ___________________________________
Christopher D. Whitney,
Executive Vice President
RESORTS INTERNATIONAL HOTEL FINANCING,
INC.
By ___________________________________
Christopher D. Whitney,
Executive Vice President
P. I. RESORTS LIMITED
By ___________________________________
Christopher D. Whitney,
Executive Vice President
OF COUNSEL:
MICHAEL A. ROSENTHAL, ESQ.
KEITH D. ROSS, ESQ.
GIBSON, DUNN & CRUTCHER
200 Park Avenue
New York, New York 10166
(212) 351-4000
Attorneys for RESORTS
INTERNATIONAL, INC. and GGRI, INC.
Debtors and Debtors in Possession
and
RESORTS INTERNATIONAL HOTEL, INC.,
RESORTS INTERNATIONAL HOTEL
FINANCING, INC. AND P. I.
RESORTS LIMITED
36
<PAGE>
SCHEDULE 6.1(1)
SIHL RELATED RESTRUCTURING TRANSACTIONS:
The following transactions shall be effected on or prior to the SIHL Closing
Date:
1. GRI shall assume the obligation of RIB to repay the intercompany debt
owed by RIB to RIH ($50,000,000) plus accrued interest thereon, and the
intercompany debt owed by RIB to RII (which as of September 30, 1993 was
$11,192,000). As a result of such assumptions, RIB will have no obligations to
repay any intercompany debt.
2. The transactions contemplated to occur on or before the SIHL Closing
Date in the Parent Subscription Agreement and Buyer Subscription Agreement shall
have occurred.
3. The following transactions shall be effected on the SIHL Closing Date:
a. GRI will distribute to its immediate parent, RII, the RIB Shares that
are owned by GRI.
b. In accordance with the terms of the Paradise Island Purchase Agreement,
in exchange for 2,000,000 SIHL Series A Shares and the SIHL Aggregate
Cash Purchase Price, (i) SIHL will purchase from RII all of the RIB
Shares free and clear of all Encumbrances, other than those Encumbrances
arising from acts of SIHL or its Affiliates and other than any
applicable Transfer Taxes, and (ii) directly or through subsidiaries of
SIHL will purchase the RII Real Estate Assets and all right, title and
interest of each RII Paradise Subsidiary in the RII Paradise Assets,
free and clear of all Encumbrances, other than Permitted Encumbrances,
those Encumbrances arising from acts of SIHL or its Affiliates and any
applicable Transfer Taxes.
c. In accordance with the terms of the Paradise Island Purchase Agreement,
SIHL shall cause (or if SIHL shall fail to so cause, Parent, pursuant to
the Parent Purchase Guaranty, shall cause) the SIHL Aggregate Cash
Purchase Price and the SIHL Series A Shares to be delivered to the
Disbursing Agent for distribution to Holders of Old Series Public Debt
Claims pursuant to sections 5.1.2, 5.2.2 and 6.11 of the Plan.
d. In accordance with the terms of the Paradise Island Purchase Agreement,
RII shall and shall cause the RII Paradise Subsidiaries to deliver to
the Buyer Subsidiaries such specific assignments, bills of sale,
endorsements, deeds and other good and sufficient instruments of
conveyance and transfer, in form and substance reasonably satisfactory
to SIHL and its counsel, as shall be effective to vest in the Buyer
Subsidiaries title to all the RII Paradise Assets and the RII Real
Estate Assets.
e. In accordance with the terms of the Paradise Island Purchase Agreement,
SIHL shall cause designated Buyer Subsidiaries to severally assume the
Assumed Liabilities and shall cause each designated Buyer Subsidiary to
execute an Assumption Agreement relating to the Assumed Liabilities
assumed by such designated Buyer Subsidiary.
f. SIHL shall file the SIHL Articles with the Commonwealth of The Bahamas
and such SIHL Articles shall be in full force and effect.
g. Parent and shall execute and deliver the Non-Recourse Guarantee
and such Non-Recourse Guarantee shall be in full force and effect.
h. SIHL, Fidelity and TCW shall execute and deliver the Registration Rights
Agreement and such Registration Rights Agreement shall be in full force
and effect.
i. Each suspensive condition contained in Article 17 of the Management
Agreement shall have been satisfied or waived by each party authorized
to waive such condition thereunder.
j. The Management Agreement and the Heads of Agreement shall be in full
force and effect.
- ------------------------
(1) Each capitalized term in this Schedule 6.1, not otherwise defined in Article
I of the Plan, shall have the meaning ascribed to such term in the Paradise
Island Purchase Agreement.
37
<PAGE>
SCHEDULE 6.2(2)
PIRL RELATED RESTRUCTURING TRANSACTIONS:
The following transactions shall be effected on or prior to the Alternative
Closing Date:
1. GRI shall assume the obligation of RIB to repay the intercompany debt
owed by RIB to RIH ($50,000,000), plus accrued interest thereon, and the
intercompany debt owed by RIB to RII (which as of September 30, 1993 was
$11,192,000). As a result of such assumptions, RIB will have no obligations to
repay any intercompany debt.
2. RII shall cause PIRL to form the PIRL Subsidiaries and to file the PIRL
Subsidiaries Certificates of Incorporation with the Commonwealth of the Bahamas.
3. The following transactions shall be effected on the Alternative Closing
Date:
a. GRI will distribute to RII the RIB Shares owned by GRI.
b. In accordance with the terms of the PIRL Standby Distribution Agreement,
(i) RII will contribute all of the RIB Shares then directly owned by RII
to the capital of PIRL in exchange for PIRL Ordinary Shares (which, when
added to the PIRL Ordinary Shares already owned by RII shall equal all
of the issued and outstanding PIRL Ordinary Shares which are to be
distributed to the Holders of Old Series Notes on the Distribution Date)
free and clear of all Encumbrances except as otherwise provided in the
PIRL Standby Distribution Agreement and (ii) subsidiaries of PIRL
designated by PIRL, with the consent of Fidelity and TCW, will acquire
all right, title and interest of RII in the RII Real Estate Assets and
all right, title and interest of each RII Paradise Subsidiary in the RII
Paradise Assets, free and clear of all Encumbrances except as otherwise
provided in the PIRL Standby Distribution Agreement.
c. In accordance with the terms of the PIRL Standby Distribution Agreement,
PIRL shall cause the PIRL Ordinary Shares to be delivered to the
Disbursing Agent for distribution to Holders of Old Series Public Debt
Claims pursuant to sections 5.1.2, 5.2.2 and 6.11 of the Plan.
d. In accordance with the terms of the PIRL Standby Distribution Agreement,
RII shall and shall cause the RII Paradise Subsidiaries to deliver to
the PIRL Subsidiaries such specific assignments, bills of sale,
endorsements, deeds and other good and sufficient instruments of
conveyance and transfer, in a form reasonably satisfactory to TCW,
Fidelity and RII, and their counsel, as shall be effective to vest in
the PIRL Subsidiaries title to all the RII Paradise Assets and the RII
Real Estate Assets.
e. In accordance with the terms of the Purchase Agreement, PIRL shall cause
designated PIRL Subsidiaries to severally assume the Assumed Liabilities
and shall cause each designated PIRL Subsidiary to execute an Assumption
Agreement relating to the Assumed Liabilities assumed by such designated
PIRL Subsidiary.
f. PIRL shall file the PIRL Articles with the Commonwealth of The Bahamas
and such PIRL Articles shall be in full force and effect.
g. PIRL, Fidelity and TCW shall execute and deliver the Registration Rights
Agreement and such Registration Rights Agreement shall be in full force
and effect.
h. Each of the suspensive conditions in Article of the Standby Management
Agreement shall have been satisfied or waived by each party authorized
to waive such condition thereunder and the Standby Management Agreement
shall be in full force and effect.
- ------------------------
(2) Each capitalized term in this Schedule 6.2, not otherwise defined in Article
I of the Plan, shall have the meaning ascribed to such term in the PIRL
Standby Distribution Agreement.
38
<PAGE>
SCHEDULE 6.3 (3)
OTHER RESTRUCTURING TRANSACTIONS:
The following transactions shall be effected on the Effective Date in the
order set forth below:
1. RIHF, RIH, RII and the New RIHF Indenture Trustees, as may be
appropriate, shall execute the operative documents relative to the New RIHF
Mortgage Indenture and the New RIHF Junior Mortgage Indenture.
2. RII shall issue 17,025,000 shares of New RII Common Stock and 35,000
shares of RII Class B Common Stock.
3. RIH will distribute the RIH Promissory Note and the RIH Junior
Promissory Note, secured by the RIH Mortgage and the RIH Junior Mortgage,
respectively, to RII in repayment of the intercompany debt owed to RII by RIH
(which as of September 30, 1993 was $51,325,000) and as a distribution to RII as
a shareholder of RIH.
4. RII will exchange the RIH Promissory Note and the RIH Junior Promissory
Note, together with the related RIH Mortgage, RIH Assignment of Leases and
Rents, RIH Assignment of Operating Assets, RIH Junior Mortgage, RIH Junior
Assignment of Leases and Rents, and RIH Junior Assignment of Operating Assets,
for the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes to be
issued by RIHF.
5. RII will deliver the New RIHF Mortgage Notes, the New RIHF Junior
Mortgage Notes and an appropriate number of shares of New RII Common Stock and
the RII Class B Common Stock to the Disbursing Agent for distribution to Holders
of Old Series Public Debt Claims in accordance with the Plan, and RIHF will
assign to the Collateral Agent on behalf of the New RIHF Indenture Trustee and
the New RIHF Junior Indenture Trustee, as may be appropriate, the RIH Promissory
Note, the RIH Junior Promissory Note, the RIH Mortgage and the RIH Junior
Mortgage.
6. RII will contribute to GRI the intercompany obligation of GRI to RII
(which as of September 30, 1993 was $51,388,000).
7. Upon termination and release of the RIH Pledge Agreement, GRI will
exchange with RIH the $325,000,000 of non-interest bearing RIH Notes for an
amount of stock representing, on a fully diluted basis, ninety-nine and
ninety-nine one-hundredths percent (99.99%) of the issued and outstanding common
stock of RIH.
8. RII will contribute to the capital of GRI the remaining one-hundredth
percent (.01%) of the issued and outstanding stock of RIH held by RII prior to
the Effective Date. RIH will become a wholly-owned first-tier subsidiary of GRI
and an indirect subsidiary of RII. RIH will then distribute to GRI, as a return
of surplus, the intercompany debt of $50,000,000 plus accrued interest thereon
assumed by GRI pursuant either to paragraph 1 of Schedule 6.1 hereof or
paragraph 1 of Schedule 6.2 hereof.
9. RIHF, as issuer, RIH, RII and such other Entities as may become parties
thereto from time to time, as guarantors, and , as trustee,
shall execute the operative documents relative to the RIHF Senior Facility
Indenture.
10. To secure its obligations under the RIHF Senior Facility Notes, RIHF,
pursuant to the RIHF Senior Facility Assignment of Agreements, shall assign the
RIH Senior Facility Note, RIH Senior Facility Mortgage, RIH Senior Facility
Assignment of Leases and Rents, and RIH Senior Facility Assignment of Operating
Assets to the Collateral Agent on behalf of the RIHF Senior Facility Trustee.
11. To secure its guaranty of the RIHF Senior Facility Notes, RIH will
execute and deliver the RIH Senior Facility First Mortgage, RIH Senior Facility
First Assignment of Leases and Rents, and RIH Senior Facility First Assignment
of Operating Assets to the Collateral Agent on behalf of the RIHF Senior
Facility Trustee.
- ------------------------
(3) Each capitalized term in this Schedule 6.3, not otherwise defined in Article
I of the Plan, shall have the meaning ascribed to such term in the
Registration Statement.
39
<PAGE>
APPENDIX B
LIQUIDATION ANALYSIS
<PAGE>
APPENDIX B
RESORTS INTERNATIONAL, INC.
AND GGRI, INC.
NOTES TO ESTIMATED LIQUIDATION VALUE
AS OF DECEMBER 31, 1993
PRINCIPAL ASSETS OF THE DEBTORS
1. The principal assets of RII, other than GRI, and those associated with
the Showboat Casino consist of (i) RIH, which owns Resort's casino gaming,
resort and hotel facilities and operations in Atlantic City, elsewhere herein
defined as the Resorts Casino Hotel, (ii) certain real estate related to RII's
Paradise Island business, elsewhere herein defined as the RII Real Estate
Assets, (iii) the U.S. Paradise Island Subsidiaries, (iv) Atlantic City
undeveloped real estate, (v) cash, and (vi) obligations of various direct and
indirect subsidiaries. RII has pledged all of the capital stock of RIH, GRI and
all RII's other direct and indirect subsidiaries to secure its obligations under
the Old Series Notes. Additionally, RII has pledged the Resorts Casino Hotel,
the RII Real Estate Assets and the Atlantic City undeveloped real estate to
secure such obligations.
2. The principal assets of GRI consist of (i) RIB which owns Resort's
casino gaming, resort and hotel facilities and operations and associated real
estate in the Bahamas, elsewhere defined herein as the Paradise Island Resorts
and (ii) the RIH Notes. GRI has guaranteed the Old Series Notes. The RIH Notes
and 66% of the capital stock of RIB have been pledged by GRI to secure the GRI
Guaranty.
KEY ASSUMPTIONS
In estimating the liquidation values of their assets, the Debtors have made
the following assumptions:
1. Liquidation would occur under the direction of a court appointed
trustee in the context of a chapter 7 case.
2. The trustee would complete the sale of all of the Debtors' assets
within six months beginning October 15, 1993.
3. Distributions by the chapter 7 trustee would not be made to creditors
until April 15, 1994 when the sale of the assets is complete.
4. The Resorts Casino Hotel and the Paradise Island Resorts will be
liquidated as going concerns.
5. In a chapter 7 liquidation, the going concern values of the Resorts
Casino Hotel and the Paradise Island Resorts would be discounted by potential
acquirors by an adjustment factor attributable to the limited time given to sell
the component businesses, the limited representations and warranties provided by
the trustee in a chapter 7 liquidation, and such other factors and uncertainties
which are likely to give interested purchasers negotiating leverage and may
therefore reduce the potentially realizable value of these assets. Among these
factors and uncertainties is the possibility that a protracted sale process
and/or potential litigation arising in the context of a Chapter 7 case could
make it difficult to continue to operate the Resorts Casino Hotel and the
Paradise Island Resorts as going concerns.
6. The adjustment factor impacting the sale of the Resorts Casino Hotel
and the Paradise Island Resorts would be a discount of approximately 35% and
40%, respectively, from the estimated going concern value of these operations.
B-2
<PAGE>
7. A loss of casino licenses or a significant disruption in the operations
could cause the adjustment factor to be higher than the approximately 35% and
40% assumed in the liquidation analysis for the Resorts Casino Hotel and
Paradise Island, respectively.
8. Atlantic City undeveloped real estate is assumed to be sold for $3.3
million which reflects a discount of approximately 35% from what might be
realized over a period of several years time due to the continuing low level of
activity in the Atlantic City real estate market.
9. Excess cash on hand as of April 15, 1994 is estimated to be
approximately $ million and includes cash estimated to be accumulated through
continuing earnings up until that time.
10. The present value as of October 15, 1993 of the proceeds of asset sales
and the amount of excess cash expected to be on hand on April 15, 1994 is
determined using an annual discount rate of 15%.
11. Total liquidation expenses will be $14.1 million, including those of the
trustee, investment bankers retained to sell the Resorts Casino Hotel and the
Paradise Island Resorts, and legal counsel. Such liquidation expenses include,
but are not limited to the following: trustee expenses -- $8.0 million,
investment banking fees of $2.2 million and legal and other expenses of $4.0
million.
12. In a liquidation, the RIH Notes provide no equity value to GRI because
the RIH Notes are pledged to collateralize the Old Series Notes.
13. In a liquidation, the common equity of RIB owned by GRI provides no
equity value to GRI in view of (i) the pledge of 66% of such common equity to
secure the Old Series Notes and (ii) the GRI Guaranty.
B-3
<PAGE>
RESORTS INTERNATIONAL, INC.
AND GRI, INC.
ESTIMATED LIQUIDATION VALUE OF KEY OPERATING ASSETS AND CASH
AS OF OCTOBER 15, 1993 ($ MILLIONS)
<TABLE>
<CAPTION>
ESTIMATED
ESTIMATED NET PRESENT VALUE
LIQUIDATION OF LIQUIDATION
ASSET PROCEEDS PROCEEDS
- -------------------------------------------------------------------------- ----------- -----------------
<S> <C> <C> <C>
Cash...................................................................... $ 43.3 $ 40.4
Resorts Casino Hotel...................................................... 143.2 133.5
Atlantic City Undeveloped Real Estate..................................... 3.3 3.0
Paradise Island Resorts................................................... 75.0 69.9
Other..................................................................... 0.3 0.3
----------- -------
Total................................................................. $ 265.0 $ 247.1
ESTIMATED LIQUIDATION EXPENSES
Trustee Expenses.......................................................... 3.0% 8.0 7.4
Investment Banking Fees................................................... 1.0% 2.2 2.0
Legal & Other Expenses.................................................... 1.5% 4.0 3.7
--
-----------
Total................................................................. 14.1 13.2
----------- -------
Total Net Proceeds........................................................ $ 250.9 $ 234.0
----------- -------
----------- -------
</TABLE>
<TABLE>
<CAPTION>
ESTIMATED
PRESENT
VALUE
ESTIMATED OF IMPUTED
CLAIM ESTIMATED LIQUIDATION IMPUTED
AMOUNT LIQUIDATION IMPUTED DISTRIBUTION NPV
CLASS UNDER PLAN TYPE OF CH. 7 CLAIM @ 10/15/93 DISTRIBUTION RECOVERY @ 10/15/93 RECOVERY
- ------------------------- ------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
RII Class 1.............. Priority Claims $ 14.1 $ 14.1 100.0% $ N/A N/A
RII Class 2.............. Old Series Notes (1) 482.0 250.9 52.1 % 234.0 48.5 %
RII Class 3.............. Showboat Note Secured
Claim UNIMPAIRED
RII Class 4.............. Misc. Secured Claims UNIMPAIRED
RII Class 5.............. Gen. Unsecured-- Trade &
Other (2) LESS THAN 100% RECOVERY
RII Class 6.............. Paradise Subsidiary Claim
(3) NONE
RII Class 7 and 8........ Equity--Old RII Common
Stock & Options N/A None N/A None N/A
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED
PRESENT
VALUE
ESTIMATED OF IMPUTED
CLAIM ESTIMATED LIQUIDATION IMPUTED
AMOUNT LIQUIDATION IMPUTED DISTRIBUTION NPV
CLASS UNDER PLAN TYPE OF CH. 7 CLAIM @ 10/15/93 DISTRIBUTION RECOVERY @ 10/15/93 RECOVERY
- ------------------------- ------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
GRI Class 2.............. Gen. Unsecured-- GRI
Guaranty RECOVERY IMPLIED IN RECOVERY OF RII CLASS 2
GRI Class 3.............. Gen. Unsecured-- Trade &
Other None N/A None N/A
GRI Class 4.............. Gen. Unsecured--
Intercompany (4) NOT APPLICABLE
GRI Class 5.............. Equity N/A None N/A None N/A
</TABLE>
<TABLE>
<S> <C>
<FN>
- ------------------------
(1) Recovery by RII Class 2 claimants may be reduced below that estimated here
to the extent that RII Class 5 Claims share distributions with any RII
Class 2 deficiency claims arising from any assets of RII which are not
subject to the security interests benefitting the RII Class 2 Claims.
(2) RII Class 5 Claims will not be paid in full in a chapter 7 context, but
will rank pari passu with any RII Class 2 deficiency claims and will
obtain recoveries based upon the level of assets at RII which are not
subject to the security interests benefitting the RII Class 2 Claims.
(3) Because it is assumed that Paradise Island Resorts will be sold as a going
concern free and clear of any intercompany claims, the Paradise Subsidiary
Claims are not expected to receive any recovery.
(4) The GRI Class 4 Claim consists of a single claim which will be voted in
favor of the Plan.
</TABLE>
B-5
<PAGE>
APPENDIX C
AMENDED RII CERTIFICATE OF INCORPORATION
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
RESORTS INTERNATIONAL, INC.
We, Christopher D. Whitney, Executive Vice President and Secretary, and
Matthew B. Kearney, Executive Vice President and Treasurer, of Resorts
International, Inc., a corporation existing under the laws of the State of
Delaware (the "Corporation"), do hereby certify that:
ONE: The name of the Corporation is "Resorts International, Inc.", which was
formed under the name "Mary Carter Paint Co.".
TWO: The original Certificate of Incorporation of the Corporation was filed
in the office of the Secretary of State of the State of Delaware on the 24th day
of October, 1958.
THREE: Provision for the making of this Amended and Restated Certificate of
Incorporation is contained in an order of the United States Bankruptcy Court for
the District of Delaware (the "Court") in In Re Resorts International, Inc., et
al. Case Nos. [________].
FOUR: This Amended and Restated Certificate of Incorporation has been duly
executed and acknowledged by the officers of the Corporation so designated in
such order of the Court in accordance with Sections 242, 245 and 303 of the
General Corporation Law of the State of Delaware.
FIVE: The text of the Certificate of Incorporation of the Corporation is
hereby amended and restated, in its entirety, to read as follows:
ARTICLE I
NAME
The name of the Corporation is "Resorts International, Inc.".
ARTICLE II
ADDRESS
The address of the Corporation's registered office in the State of Delaware
is 229 South State Street, City of Dover, County of Kent, and the name of its
registered agent at such address is United States Corporation Company.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
CAPITALIZATION
A. AUTHORIZATION; TRANSFER RESTRICTIONS. The total number of shares of
capital stock of all classifications which the Corporation shall have authority
to issue is [________], consisting of (i) [________] shares of Preferred Stock,
par value $.01 per share (the "Preferred Stock"), and (ii) [________] shares of
common stock, consisting of [________] shares of Common Stock, par value $.01
per share (the "Common Stock"), and [________] shares of Class B Common Stock,
par value $.01 per share (the "Class B Stock", and collectively with the Common
Stock, the "RII Common Stock"). Each share of Class B Stock shall be issued in
connection with and upon the issuance of each $1,000 in principal amount of
Junior Notes (as defined in Article IX hereof), whether upon original issuance
of the Junior Notes or upon surrender for transfer or exchange of any
outstanding Junior Notes or pursuant to the interest payment provisions thereof,
and may not be transferred separately from such principal amount of Junior
Notes.
<PAGE>
The shares of Preferred Stock may be issued from time to time in one or more
series. The Board of Directors hereby is vested with authority from time to time
to issue the Preferred Stock as Preferred Stock of any series. In connection
with the creation of each such series of Preferred Stock, the Board of Directors
hereby is vested with authority to fix by resolution or resolutions the
designations and the powers, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions
thereof, of such series, to the full extent now or hereafter permitted by the
laws of the State of Delaware, including without limitation the dividend rate,
conversion or exchange rights, redemption price and liquidating preference of
any series of Preferred Stock, and to fix the number of shares constituting any
such series, and to increase or decrease the number of shares of any such series
(but not below the number of shares thereof outstanding); PROVIDED, HOWEVER,
that no shares of Preferred Stock may be designated or issued with any rights to
vote together with the holders of the Class B Stock for any purpose. In case the
number of shares of any such series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution or resolutions originally fixing the number of shares
of such series.
B. VOTING AND QUORUM.
1. Each holder of RII Common Stock entitled to vote shall have one vote for
each share thereof held. Except for the election of Class B Directors (as
defined in Article IX hereof), the holders of the Common Stock shall be entitled
to vote on all matters on which stockholders are entitled to vote. Except as may
be prescribed by Delaware law, the holders of the Class B Stock shall not be
entitled to vote on any matter except that the holders of the Class B Stock are
entitled to vote separately as a class on the following matters: (a) the
election of Class B Directors; (b) to the extent required under Delaware law,
any amendment to the last sentence of the first paragraph of Paragraph A of
Article IV hereof; the proviso in the second paragraph of Paragraph A of Article
IV hereof; Paragraphs B(1), C(2), D or E of Article IV hereof; Paragraphs A,
B(3), B(4), B(6) or E(2) of Article VII hereof; or Paragraph A of Article IX
hereof; (c) any amendment to the last sentence of Section 3 of Article II of the
By-Laws of the Corporation; (d) any amendment to the second sentence of Section
7 of Article III of the By-laws of the Corporation; or (e) any amendment to the
last sentence of Section 8 of Article III of the By-Laws of the Corporation.
2. At any meeting of the stockholders of the Corporation at which the
holders of any class of RII Common Stock are entitled to vote, the presence, in
person or by proxy, of the holders of a majority of the outstanding shares of
such class shall constitute a quorum of the class entitled to vote of such
class. No action may be taken by any class of RII Common Stock at a meeting at
which a quorum of such class is not present, except a vote to adjourn such
meeting.
C. DIVIDENDS.
1. The Board of Directors of the Corporation may cause dividends to be paid
to the holders of shares of Common Stock from time to time out of funds legally
available therefor. When and as dividends are declared, they may be payable in
cash, in property or in shares of Common Stock.
2. Holders of Class B Stock are not entitled to the payment of dividends,
except that in the event of an interest payment on the Junior Notes which is
paid in Additional Junior Notes (as defined in Article IX hereof), holders shall
be entitled to, and there shall be declared and paid, a stock dividend such that
one share of Class B Stock shall be issued in respect of each $1,000 in
principal amount of Additional Junior Notes.
D. MANDATORY REDEMPTION OF CLASS B STOCK. Upon the payment in full of any
Junior Note, or the redemption, or cancellation following purchase thereof, of
each $1,000 principal amount of Junior Notes, the Corporation shall redeem the
share of Class B Stock issued in respect of such Junior Note at a redemption
price of $.01 per share (adjusted to reflect stock splits and stock combinations
since the original date of issuance).
E. LIQUIDATION. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of RII
Common Stock then outstanding shall be
C-3
<PAGE>
entitled to receive ratably, in accordance with the number of shares held by
each holder, out of the assets of the Corporation legally available for
distribution to its stockholders, $.01 per share (adjusted to reflect stock
splits and stock combinations since the original date of issuance). After the
payment in full of the amount described in the immediately preceding sentence to
the holders of RII Common Stock, the holders of Common Stock shall be entitled
to share ratably, in accordance with the number of shares held by each holder,
in all the remaining assets of the Corporation available for distribution and
the holders of Class B Stock shall not be entitled to share in the distribution
of such remaining assets.
F. NO NONVOTING STOCK. No nonvoting equity securities of the Corporation
shall be issued. This provision is included in this Amended and Restated
Certificate of Incorporation in compliance with section 1123 of the United
States Bankruptcy Code, 11 U.S.C. Section 1123, and shall have no further force
and effect beyond that required by said section and for so long as said section
is in effect and applicable to the Corporation.
ARTICLE V
INDEMNIFICATION
A. ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS. A director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after the Effective Date (as defined in
Article IX hereof) to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended. Any repeal or modification
of this Section by the stockholders of the Corporation shall be prospective only
and shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
B. ACTIONS, SUITS OR PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was or has agreed to become a director or
officer of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, against costs,
charges, expenses (including attorneys fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction or upon a plea of
NOLO CONTENDERE or its equivalent shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation.
C. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Corporation to procure a judgment in its favor by reason of the fact that
he is or was or has agreed to become a director or officer of the Corporation,
or is or was serving or has agreed to serve at the request of the Corporation as
a director or officer of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any action
C-4
<PAGE>
alleged to have been taken or omitted in such capacity, against costs, charges
and expenses (including attorneys' fees) actually and reasonably incurred by him
or on his behalf in connection with the defense or settlement of such action or
suit and any appeal therefrom, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such costs, charges and expenses which the
Court of Chancery or such other court shall deem proper.
D. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL
PARTY. Notwithstanding the other provisions of this Article V, to the extent
that a director or officer of the Corporation has been successful on the merits
or otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit or proceeding referred to in Sections
A and B of this Article V, or in defense of any claim, issue or matter therein,
he shall be indemnified against all costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection therewith.
E. DETERMINATION OF RIGHT TO INDEMNIFICATION. Any indemnification under
Sections A and B of this Article V (unless ordered by a court) shall be paid by
the Corporation unless a determination is made (i) by a majority of the members
of the Board of Directors who were not parties to such action, suit or
proceeding even if less than a quorum, or (ii) if such a majority of the
disinterested members of the Board of Directors so direct, by independent legal
counsel in a written opinion, or (iii) by the stockholders, that indemnification
of the director or officer is not proper in the circumstances because he has not
met the applicable standard of conduct set forth in Sections A and B of this
Article V.
F. ADVANCE OF COSTS, CHARGES AND EXPENSES. Costs, charges and expenses
(including attorneys' fees) incurred by a person referred to in Sections A and B
of this Article V in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding; PROVIDED,
HOWEVER, that the payment of such costs, charges and expenses (including
attorneys' fees) incurred by a director or officer in advance of the final
disposition of such action, suit or proceeding shall be made only upon receipt
of an undertaking by or on behalf of the director or officer to repay all
amounts so advanced in the event that it shall ultimately be determined that
such director or officer is not entitled to be indemnified by the Corporation as
authorized in this Article V. Such costs, charges and expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the majority of the Board of Directors deems
appropriate. The majority of the Board of Directors may, in the manner set forth
above, and upon approval of such director, officer, employer, employee or agent
of the Corporation, authorize the Corporation's counsel to represent such
person, in any action, suit or proceeding, whether or not the Corporation is a
party to such action, suit or proceeding.
G. PROCEDURE FOR INDEMNIFICATION. Any indemnification under Sections B, C
and D, or advance of costs, charges and expenses (including attorneys' fees)
under Section F of this Article V, shall be made promptly, and in any event
within 60 days, upon the written request of the director or officer. The right
to indemnification or advances as granted by this Article V shall be enforceable
by the director or officer in any court of competent jurisdiction, if the
Corporation denies such request, in whole or in part, or if no disposition
thereof is made within 60 days. Such person's costs and expenses (including
attorneys' fees) incurred in connection with successfully establishing his right
to indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such action that
the claimant has not met the standard of conduct set forth in Sections B or C of
this Article V, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel and its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
C-5
<PAGE>
standard of conduct set forth in Sections B or C of this Article V, nor the fact
that there has been an actual determination by the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
H. OTHER RIGHTS; CONTINUATION OF RIGHT TO INDEMNIFICATION. The
indemnification provided by this Article V shall not be deemed exclusive of any
other rights to which any director, officer, employee or agent seeking
indemnification may be entitled under any law (common or statutory), agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
office or while employed by or acting as agent for the Corporation, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent, and shall inure to the benefit of the estate, heirs, executors and
administrators of such person. All rights to indemnification under this Article
V shall be deemed to be a contract between the Corporation and each director,
officer, employee or agent of the Corporation who serves or served in such
capacity at any time while this Article V is in effect. Any repeal or
modification of this Article V or any repeal or modification of relevant
provisions of the General Corporation Law of the State of Delaware or any other
applicable laws shall not in any way diminish any rights to indemnification of
such director, officer, employee or agent or the obligations of the Corporation
arising hereunder. This Article V shall be binding upon any successor
corporation to this Corporation, whether by way of acquisition, merger,
consolidation or otherwise.
I. INSURANCE. The Corporation shall purchase and maintain insurance on
behalf of any person who is or was or has agreed to become a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf in any such capacity,
or arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability under the provisions of this
Article V, PROVIDED, HOWEVER, that such insurance is available on reasonable and
acceptable terms, which determination shall be made by a vote of a majority of
the Board of Directors.
J. SAVINGS CLAUSE. If this Article V or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation (i) shall nevertheless indemnify each director and officer of the
Corporation, and (ii) may nevertheless indemnify each employee and agent of the
Corporation, as to costs, charges and expenses (including attorneys' fees),
judgments, fine and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Corporation, to the full extent
permitted by any applicable portion of this Article V that shall not have been
invalidated and to the full extent permitted by applicable law.
K. SUBSEQUENT AMENDMENT. No amendment, modification or repeal of this
Article V shall affect or impair in any way the rights of any director or
officer of the Corporation to indemnification under the provisions hereof with
respect to any action, suit or proceeding arising out of, or relating to, any
actions, transactions or facts occurring prior to the final adoption of such
amendment, termination or appeal.
L. SUBSEQUENT LEGISLATION. If the General Corporation Law of the State of
Delaware is amended to further expand the indemnification permitted to
directors, officers, employees or agents of the Corporation, then the
Corporation shall indemnify such persons to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as so amended.
C-6
<PAGE>
ARTICLE VI
NEW JERSEY CASINO CONTROL ACT
This Certificate of Incorporation shall be subject to the New Jersey Casino
Control Act, N.J.S.A. 5:1 ET SEQ., and the rules and regulations of the New
Jersey Casino Control Commission (the "Commission") as they currently exist or
as they hereinafter may be amended (the "Act"), including without limitation the
following:
A. The securities of the Corporation shall always be subject to
redemption by the Corporation, by action of the Board of Directors, if, in
the judgment of the Board of Directors, such action should be taken,
pursuant to Section 151(b) of the General Corporation Law of Delaware or any
other applicable provision of law, to the extent necessary to prevent the
loss or secure the reinstatement of any government-issued license or
franchise held by the Corporation or any Subsidiary (as defined in Paragraph
E of this Article VI) to conduct any portion of the business of the
Corporation or such Subsidiary, which license or franchise is conditioned
upon some or all of the holders of the Corporation's securities possessing
prescribed qualifications. In the event a holder of the Corporation's
securities is found not to possess such prescribed qualifications by the
Commission pursuant to the Act (a "Disqualified Holder"), such Disqualified
Holder shall indemnify the Corporation for any and all direct or indirect
costs, including attorneys' fees, incurred by the Corporation as a a result
of such holder's continuing ownership or failure to divest promptly.
B. Except as is otherwise expressly provided in instruments containing
the terms of the Corporation's securities, which instruments have been
approved by the Commission, so long as the Corporation shall remain a
publicly traded holding company as defined in the Act, in accordance with
N.J.S.A. 5:12-82(d)(7) and (9), all securities of the Corporation shall be
held subject to the condition that if a holder thereof is found to be a
Disqualified Holder, such holder shall dispose of his interest in the
Corporation within 120 days following the Corporation's receipt of notice
(the "Notice Date") of the holder's disqualification. Promptly following its
receipt of notice from the Commission that a holder of securities of the
Corporation has been found disqualified, the Corporation shall either
deliver such written notice personally to the Disqualified Holder, mail it
to such Disqualified Holder at the address shown on the Corporation's books
and records, or use any other reasonable means. Failure of the Corporation
to provide notice to a Disqualified Holder after making reasonable efforts
to do so shall not preclude the Corporation from exercising its rights.
If any Disqualified Holder fails to dispose of his securities within 120
days following receipt by the Corporation of notice that such holder has
been found disqualified, the Corporation may redeem such securities at the
lesser of (i) the lowest closing sale price of such securities between the
Notice Date and the date 120 days after the Notice Date, or (ii) such
holder's original purchase price.
C. If the Corporation shall become, and so long as it shall remain, a
privately-held holding company as defined in the Act, in accordance with
N.J.S.A. 5:12-82(d)(7), (8) and (10), the Commission shall have the right of
prior approval with regard to transfers of securities, shares, and other
interests in the Corporation and the Corporation shall have the absolute
right to redeem at the market price or purchase price, whichever is the
lesser, any security, share or other interest in the Corporation in
accordance with the Act.
D. So long as the Corporation shall remain a holding company as defined
in the Act, in accordance with N.J.S.A. 5:12-105(e), commencing on the date
the Commission serves notice on the Corporation that a security holder has
been found disqualified, it shall be unlawful for the Disqualified Holder to
(i) receive any dividends or interest upon any such securities of the
Corporation held by such holder; (ii) exercise, directly or through any
trustee or nominee, any right conferred by such securities; or (iii) receive
any remuneration in any form, for services rendered or otherwise, from any
subsidiary of the Corporation that holds a casino license.
C-7
<PAGE>
E. For purpose of this Article VI, the term "Subsidiary" shall be
defined in accordance with N.J.S.A. 5:12-47.
ARTICLE VII
BOARD OF DIRECTORS
A. NUMBER AND DESIGNATIONS OF DIRECTORS. Until such time as a Class B
Triggering Event (as defined in Article IX hereof) shall have occurred, the
number of directors which shall constitute the Board as of the Effective Date
(as defined in Article IX hereof) shall be six, consisting of four Common Stock
Directors (as defined in Article IX hereof) and two Class B Directors (but
subject to Paragraph F below). After the Effective Date, the number of directors
which shall constitute the whole Board may be increased or decreased to such
other number as from time to time shall be fixed by resolution of the Board;
PROVIDED, HOWEVER, that at all times the number of Class B Directors prior to
the occurrence of a Class B Triggering Event shall be one-third (rounded up to
the nearest whole number) of the number of directors which constitutes the
entire Board (but subject to Paragraph F below). Upon the occurrence of a Class
B Triggering Event, the number of directors which shall constitute the Board
shall be increased, with such vacancies created thereby filled by the vote of a
majority of the Class B Directors then in office, such that the number of Class
B Directors equals a majority of the number of directors which constitutes the
entire Board after giving effect to the creation of such vacancies (but subject
to Paragraph F below).
B. ELECTION OF DIRECTORS.
1. Election of directors need not be by written ballot unless the By-Laws
so provide.
2. The Board of Directors shall be divided into three classes: Class I,
Class II, and Class III. Such Classes shall be as nearly equal in number of
directors as possible. Each director shall serve for a term ending at the third
annual stockholders' meeting following the annual meeting at which such director
was elected; PROVIDED, HOWEVER, that the directors first appointed to Class I
shall serve for a term ending at the annual meeting to be held in 1995, the
directors first appointed to Class II shall serve for a term ending at the
annual meeting to be held in 1996, and the directors first appointed to Class
III shall serve for a term ending at the annual meeting to be held in 1997.
Notwithstanding any of the foregoing provisions of this Article VII and subject
to Paragraph F below, each director shall serve until his successor is elected
and qualified or until his earlier death, resignation or removal.
3. At each annual meeting of stockholders (which shall be held on such date
as shall be determined pursuant to the By-Laws of the Corporation), or at any
duly called special meeting of stockholders, the Common Stock Directors to be
elected shall be elected by the holders of the Common Stock voting as a separate
class and the Class B Director(s) to be elected shall be elected by the holders
of the Class B Stock voting as a separate class.
4. At each annual election, the directors chosen to succeed those whose
terms then expire shall be identified as being of the same Class as the
directors they succeed, unless, by reason of any intervening changes in the
authorized number of directors, the Board of Directors shall designate one or
more directorships whose term then expires as directorships of another Class in
order to more nearly achieve equality in the number of directors among the
Classes. When the directors fill a vacancy resulting from the death, resignation
or removal of a director in accordance with Paragraph F below, the director
chosen to fill that vacancy shall be of the same Class as the director he
succeeds.
5. Notwithstanding the rule that the three Classes shall be as nearly equal
in number of directors as possible, in the event of any change in the authorized
number of directors, each Common Stock Director and each Class B Director then
continuing to serve as such will nevertheless continue as a director of the
Class of which such director is a member until the expiration of his current
term or his earlier death, resignation or removal.
C-8
<PAGE>
C. EFFECTIVE DATE BOARD. As of the Effective Date, the Board of Directors
of the Corporation shall be reconstituted to consist of the following persons in
the Classes and of the designations indicated:
<TABLE>
<CAPTION>
DIRECTOR CLASS DESIGNATION
- ---------------------------------------------------- --------- ----------------------------------------------------
<S> <C> <C>
[] I Common Stock Director
[] I Class B Director
[] II Common Stock Director
[] II Class B Director
[] III Common Stock Director
[] III Common Stock Director
</TABLE>
D. REMOVAL OF DIRECTORS. Subject to Paragraph F below, any director, may
be removed from office at any time, but only (i) for cause, and (ii) by the
affirmative vote of the holders of 80% of the voting power of all the shares of
the class of stock which elected such director.
E. FILLING OF VACANCIES.
1. Any vacancy among the Common Stock Directors, occurring from any cause
whatsoever, may be filled by a majority of the remaining Common Stock Directors,
even if such remaining Common Stock Directors do not constitute a quorum;
PROVIDED, HOWEVER, that the holders of the Common Stock removing any Common
Stock Director may at the same meeting fill the vacancy caused by such removal;
PROVIDED FURTHER, HOWEVER, that if the remaining Common Stock Directors fail to
fill any such vacancy, the holders of the Common Stock entitled to vote thereon
may fill such vacancy at any special meeting of stockholders called for that
purpose. Any person elected or appointed to fill a vacancy shall hold office,
subject to the right of removal as herein before provided, until the next
election for such Class of directors and until his successor is elected and
qualifies.
2. Subject to Paragraph F below, any vacancy among the Class B Directors,
occurring from any cause whatsoever (including (i) as a result of an increase in
the number of directors which shall constitute the entire Board, or (ii) as a
result of the occurrence of a Class B Triggering Event), may be filled only by a
majority of the remaining Class B Directors, even if such remaining Class B
Directors do not constitute a quorum; PROVIDED, HOWEVER, that the holders of the
Class B Stock removing any Class B Director may at the same meeting fill the
vacancy caused by such removal; PROVIDED FURTHER, HOWEVER, that if the remaining
Class B Directors fail to fill any such vacancy, the holders of the Class B
Stock entitled to vote thereon may fill such vacancy at any special meeting of
stockholders called for that purpose. Any person elected or appointed to fill a
vacancy shall hold office, subject to the right of removal as herein before
provided, until the next election for such Class of directors and until his
successor is elected and qualifies.
F. FINAL PAYMENT DATE. After the Final Payment Date (as defined in Article
IX hereof), (i) all the Class B Directors then in office shall resign and if
such Class B Directors fail to resign, a majority of the Common Stock Directors
shall be entitled to remove, without cause, such Class B Directors then in
office, and (ii) the number of directors constituting the Board shall be
decreased to four directors, who shall be elected by the holders of Common
Stock.
ARTICLE VIII
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BY-LAWS
A. In addition to any affirmative vote required by applicable law, any
alteration, amendment, repeal or rescission of any provision of this Amended and
Restated Certificate of Incorporation must be approved by a majority of the
directors of the Corporation then in office and by the affirmative vote of the
holders of a majority of the outstanding shares of the Common Stock.
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B. Except as provided in Paragraph B(1) of Article IV hereof, the Board of
Directors shall have the power without the assent or vote of the stockholders to
make, alter, amend, change, add to or repeal the By-Laws of the Corporation.
ARTICLE IX
DEFINITIONS
A. As used in this Amended and Restated Certificate of Incorporation, the
following terms shall have the meanings indicated below:
"Additional Junior Notes" shall mean Junior Notes issued by RIHF in payment
of interest on outstanding Junior Notes, in accordance with the terms of the
Junior Notes and the New RIHF Second Mortgage Junior Note Indenture.
"Class B Directors" shall mean the directors of the Corporation elected by
the holders of the Class B Stock.
"Class B Triggering Event" shall mean either (i) the payment on any Interest
Payment Date by RIHF of interest on the Junior Notes in the form of Additional
Junior Notes or (ii) the failure on any Interest Payment Date by RIHF to pay
interest in full on the Junior Mortgage Notes, if, in either case, on any prior
six Interest Payment Dates (whether consecutive or non-consecutive), interest on
the Junior Notes either has been paid in Additional Junior Notes or has not been
paid in full.
"Final Payment Date" means the date on which all the Junior Notes are
retired, redeemed or paid in full.
"Interest Payment Date" shall mean each date on which interest is due and
payable on the Junior Notes, in accordance with the New RIHF Second Mortgage
Junior Note Indenture.
"Junior Notes" shall mean the 11.375% Junior Mortgage Junior Notes due 2004
of RIHF, including the Additional Junior Notes.
"New RIHF Second Mortgage Junior Note Indenture" shall mean the Indenture
dated as of [_________], 1994, between RIHF and The Chase Manhattan Bank
(National Association), as Trustee, under which the Junior Notes have been or
will be issued.
"RIHF" shall mean Resorts International Hotel Finance, Inc., a Delaware
Corporation.
B. As used in this Amended and Restated Certificate of Incorporation, the
following terms shall have the meanings indicated below:
"Common Stock Directors" shall mean the directors of the Corporation elected
by the holders of the Common Stock.
"Effective Date" shall mean [_________], 1994.
"Plan" shall mean the Plan of Reorganization of the Corporation, dated
[_________], 1994.
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IN WITNESS WHEREOF, the undersigned have signed this Certificate of
Incorporation, under penalties of perjury, and caused the corporate seal of the
Corporation to be hereunto affixed this __ day of ________, 1994.
By: __________________________________
Christopher D. Whitney
EXECUTIVE VICE PRESIDENT AND
SECRETARY
BY: __________________________________
Matthew B. Kearney
EXECUTIVE VICE PRESIDENT AND
TREASURER
[Corporate Seal]
Attest:
By: __________________________________
Christopher D. Whitney
SECRETARY
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APPENDIX D
AMENDED RII BY-LAWS
<PAGE>
AMENDED AND RESTATED BY-LAWS
OF
RESORTS INTERNATIONAL, INC.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of Resorts
International, Inc. (the "Corporation") in the State of Delaware shall be
established and maintained at the office of the United States Corporation
Company in the City of Dover, County of Kent, and said corporation shall be the
resident agent of this Corporation in charge thereof.
SECTION 2. OTHER OFFICES. The Corporation may also have an office or
offices and keep the books and records of the Corporation, except as may
otherwise be required by the laws of the State of Delaware, at such other place
or places either within or without the State of Delaware as the Board of
Directors of the Corporation (the "Board") may from time to time determine or
the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders shall be
held at such place, within or without the State of Delaware, as may from time to
time be fixed by the Board or as shall be specified or fixed in the respective
notices or waivers of notice thereof.
SECTION 2. ANNUAL MEETINGS. The annual meeting of the stockholders of the
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held on a date and at
a time and place as designated by resolution of the Board of Directors of the
Corporation.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders, unless
otherwise provided by law, may be called at any time by the Chairman of the
Board or by a majority of the Board of Directors. Special meetings of the
holders of Class B Common Stock (as such term is defined in the Certificate of
Incorporation) may be called at any time by the Chairman of the Board or by a
majority of the Class B Directors (as such term is defined in the Certificate of
Incorporation).
SECTION 4. NOTICE OF MEETINGS. Except as otherwise expressly required by
law or the Certificate of Incorporation of the Corporation, written notice
stating the place and time of the meeting and, in the case of a special meeting,
the purpose or purposes of such meeting, shall be given by the Secretary to each
stockholder entitled to vote thereat at the last known post office address not
less than ten nor more than sixty days prior to the date of meeting. No business
other than that stated in the notice shall be transacted at any special meeting.
Notice of any meeting of stockholders shall not be required to be given to any
stockholder who shall attend such meeting in person or by proxy; and if any
stockholder shall, in person or by attorney thereunto duly authorized, in
writing or by telegraph, cable or wireless, waive notice of any meeting, whether
before or after such meeting be held, the notice thereof need not be given to
him. Notice of any adjourned meeting of stockholders need not be given except as
provided in SECTION 7 of this ARTICLE II.
SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the Secretary or
other officer who shall have charge of the stock ledger of the Corporation,
either directly or through a transfer agent appointed by the Board, to prepare
and make, at least 10 days before every election of directors, a complete list
of the stockholders entitled to vote at said election, arranged in alphabetical
order and
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showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open for said 10 days to the
examination of any stockholder in the place where said election is to be held
and shall be produced and kept at the time and place of the election for the
whole time thereof, and subject to the inspection of any stockholder who may be
present. The original or a duplicate stock ledger shall be the only evidence as
to who are the stockholders entitled to examine such list or the books of the
Corporation or to vote in person or by proxy at such election.
SECTION 6. QUORUM. At any meeting of the stockholders of the Corporation,
the presence, in person or by proxy, of stockholders then entitled to cast a
majority in number of votes upon a question to be considered at the meeting
shall constitute a quorum for the consideration of such question.
SECTION 7. ADJOURNMENTS. In the absence of a quorum at any annual or
special meeting of stockholders, a majority in interest of those present in
person or by proxy and entitled to vote may adjourn the meeting from time to
time without further notice, other than by announcement at the meeting at which
such adjournment shall be taken, until a quorum shall be present; provided,
however, that if an adjournment is for more than thirty days, a notice of the
adjourned meeting shall be given to each stockholder of record entitled to vote.
At any such adjourned meeting at which a quorum may be present any business may
be transacted which might have been transacted at the meeting as originally
called.
SECTION 8. ORDER OF BUSINESS. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum shall be
present may be changed by a vote of the stockholders present in person or by
proxy at the meeting and holding a majority of the shares entitled to vote
thereat.
SECTION 9. VOTING. Except as otherwise provided by the General Corporation
Law of the State of Delaware or in the Certificate of Incorporation, each
stockholder shall at each meeting of the stockholders be entitled to one vote in
person or by proxy for each share entitled to be voted thereat and held by him
and registered in his name on the books of the Corporation:
(a) On such date as may be fixed pursuant to SECTION 3 of ARTICLE VI of
these By-Laws as the record date for the determination of stockholders
entitled to notice of and to vote at such meeting; or
(b) In the event that no record date shall have been so fixed, the
record date for determining stockholders entitled to notice of or to vote at
a meeting of stockholders hall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held.
Shares of stock belonging to the Corporation shall not be voted directly or
indirectly. Persons holding stock having voting power in a fiduciary capacity
shall be entitled to vote the shares so held, and persons whose stock having
voting power is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the Corporation he shall have expressly empowered the
pledgee to vote thereon, in which case only the pledgee, or his proxy, may
represent such stock and vote thereon. Any vote on stock may be given at any
meeting of the stockholders by the stockholder entitled thereto in person or by
his proxy appointed by an instrument in writing, subscribed by such stockholder
or by his attorney thereunto duly authorized and delivered to the secretary of
the meeting; provided, however, that no proxy shall be voted on after three
years from its date, unless said proxy provides for a longer period. At all
meetings of the stockholders all matters, except those the manner of deciding
upon which is otherwise expressly regulated by statute or by the Certificate of
Incorporation or by these By-Laws, shall be decided by the vote of the
stockholders holding a majority of the shares present in person or by proxy and
entitled to vote on such matters. Unless demanded by a stockholder present in
person or by proxy at such meeting and entitled to vote thereat or determined by
the chairman of the meeting to be advisable, the vote on any matter need not be
by written ballot.
SECTION 10. INSPECTORS OF ELECTION OR JUDGES. Before, or at, each meeting
of the stockholders at which a vote by ballot is to be taken, the Board, or the
chairman of such meeting, shall appoint two
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Inspectors of Election or judges to act thereat. Each Inspector of Election or
Judge so appointed shall first subscribe an oath or affirmation faithfully to
execute the duties of an Inspector of Election or Judge at such meeting with
strict impartiality and according to the best of his ability. Such Inspectors of
Election or Judges shall take charge of the ballot at such meeting and after the
balloting thereat on any question shall count the ballots cast thereon and shall
make a report in writing to the secretary of such meeting of the results
thereof. The Inspectors of Election or Judges need not be stockholders; and any
officer or director may be an Inspector of Election or Judge on any question
other than a vote for or against his election to any position with the
Corporation or on any other question in which he may be directly interested.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The Board shall manage the business and affairs
of the Corporation and may exercise all such authority and powers of the
Corporation and do all such lawful acts and things as are not by law, the
Certificate of Incorporation or these By-Laws directed or required to be
exercised or done by the stockholders.
SECTION 2. NUMBER, QUALIFICATION AND TERM OF OFFICE. The number of
directors of the Corporation shall be as set forth in the Certificate of
Incorporation. Directors need not be stockholders. The Certificate of
Incorporation of the Corporation provides for a classified Board, wherein each
director shall serve for a term as provided therein. The Certificate of
Incorporation also provides for two designations of directors, elected by the
holders of the Common Stock and the Class B Stock (as such terms are defined in
the Certificate of Incorporation), respectively.
SECTION 3. ELECTION OF DIRECTORS. At each meeting of the stockholders for
the election of a director or directors, the person or persons receiving the
greater number of votes, up to the number of directors then to be elected, cast
by the stockholders present in person or by proxy and entitled to vote for such
director or directors shall be the director or directors elected by such
stockholders. The election of directors is subject to any provisions contained
in the Certificate of Incorporation relating thereto, including any provisions
for a classified Board and any provisions relating to the election of Common
Stock Directors (as such term is defined in the Certificate of Incorporation)
and Class B Directors, respectively.
SECTION 4. QUORUM. At all meetings of the Board the presence of a majority
of the whole Board shall be necessary to constitute a quorum for the transaction
of business at such meeting. Any act of a majority present at a meeting at which
there is a quorum shall be the act of the Board, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation or by
these By-Laws. In the absence of a quorum, a majority of the directors present
may adjourn any meeting from time to time until a quorum shall be present. At
any adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally called.
Notice of any adjourned meeting need not be given.
SECTION 5. PLACE OF MEETING. The Board may hold its meetings at such place
or places within or without the State of Delaware as it may from time to time by
resolution determine or as shall be fixed or specified in the respective notices
or waivers of notice thereof. Members of the Board, or any committee thereof,
may participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear and communicate with each other.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board may be held
without notice at such places and times as may be fixed from time to time by
resolution of the Board.
SECTION 7. SPECIAL MEETINGS. Special meetings of the Board may be called
by the Chairman of the Board. Special meetings of the Class B Directors with
respect to matters to be determined by the
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Class B Directors only may be called by any Class B Director. At least
twenty-four hours' written or telegraphic notice of each special meeting shall
be given to each director. The notice of any meeting, or any waiver thereof,
need not state the purpose or purposes of such meeting.
SECTION 8. ACTION BY CONSENT. Any action required or permitted to be taken
at any meeting of the Board or of any committee thereof may be taken without a
meeting, if prior to such action a written consent thereto is signed by all
members of the Board or all members of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board or
committee. Any action required or permitted to be taken at any meeting of the
Class B Directors may be taken without a meeting, if prior to such action a
written consent thereto is signed by all Class B Directors, and such written
consent is filed with the minutes of proceedings of the Board.
SECTION 9. RESIGNATIONS; REMOVAL. Any director may resign at any time by
giving written notice to the Chairman of the Board or the Secretary. Such
resignation shall take effect at the time specified therein or, if no time is
specified, upon receipt of such notice. The acceptance of a resignation shall
not be necessary to make it effective. Directors may only be removed in
accordance with the Certificate of Incorporation.
SECTION 10. VACANCIES. A vacancy in the Board caused by death, resignation
or removal may only be filled in accordance with the Certificate of
Incorporation. Each director so chosen to fill a vacancy shall, unless otherwise
provided or as provided in the Certificate of Incorporation, hold office until
his successor shall have been elected and shall qualify or until he shall resign
or shall have been removed.
SECTION 11. COMPENSATION. Each director, in consideration of his or her
serving as such, shall be entitled to receive from the Corporation such amount
per annum or such fees for attendance at directors' meetings, or both, as the
Board shall from time to time determine, together with reimbursement for the
reasonable expenses incurred by him in connection with the performance of his
duties. Each director who shall serve as a member of the Executive Committee or
any other committee of the Board in consideration of his serving as such, shall
be entitled to such additional amount per annum or such fees for attendance at
committee meetings, or both, as the Board shall from time to time determine.
Nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving proper compensation
therefor.
ARTICLE IV
COMMITTEES
SECTION 1. DESIGNATION AND POWERS OF COMMITTEES. The Board may, by
resolution or resolutions passed by a majority of the whole Board, designate two
or more of its members to constitute an Executive Committee, which, during the
intervals between the meetings of the Board, shall have, and may exercise, all
the powers of the Board in the management of the business, affairs, and property
of the Corporation, to the extent permitted by Delaware law. The Board, by
resolution passed by a majority of the whole Board, may designate members of the
Board to constitute other committees, including an Audit Committee and a
Compensation Committee, which shall consist of such numbers of directors and
shall have, and may exercise, such powers as the Board may determine and specify
in the respective resolutions appointing them, to the extent permitted by
Delaware law. The Board shall have power at any time to change the members of
the Executive Committee or any such other committee, to fill vacancies and to
discharge the Executive Committee or any such other committee.
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ARTICLE V
OFFICERS
SECTION 1. ELECTION AND NUMBER. The principal officers of the Corporation
shall be a Chairman of the Board, a President, one or more Vice Presidents, a
Treasurer and a Secretary, all of whom shall be chosen by the Board, and such
other officers as may be appointed in accordance with the provisions of SECTION
3 of this ARTICLE V. One person may hold the office and perform the duties of
any two or more of said officers other than those of President and Secretary.
SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Each officer, except such as
may be appointed in accordance with the provisions of SECTION 3 of this ARTICLE
V, shall hold office until the next annual election of officers and until his
successor shall have been chosen and shall qualify or until his death or until
he shall have resigned or until he shall have been removed in the manner
provided in SECTION 4 of this ARTICLE V.
SECTION 3. APPOINTIVE OFFICERS. The Chairman of the Board or the Board may
from time to time appoint such other officers as they may deem necessary,
including one or more Assistant Treasurers, one or more Assistant Secretaries
and such other agents and employees of the Corporation as they may deem proper.
Such officers and agents and employees shall hold office for such period, have
such authority and perform such duties, subject to the control of the Board, as
the Chairman of the Board or the Board may from time to time prescribe.
SECTION 4. REMOVAL. Any elected officer may be removed, either with or
without cause, at any time, by the vote of a majority of the whole Board at any
meeting of the Board, and any appointive officer may be removed, either with or
without cause, at any time by the Chairman of the Board.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board or to the President or to the Secretary. Such
resignation shall take effect upon receipt of such notice or at any later time
specified therein: and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office because of death,
resignation, removal or any other cause shall be filled for the unexpired
portion of the term in the manner prescribed in SECTIONS 2 and 3 of this ARTICLE
V for election or appointment, respectively, to such office.
SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board if present
shall preside at all meetings of stockholders and at all meetings of the Board
and shall have such other powers and duties as from time to time may be assigned
to him by the Board or these By-Laws.
SECTION 8. PRESIDENT. The President shall be the chief executive officer
of the Corporation, and shall have general supervision over the business of the
Corporation, subject to the control of the Board. In general, he shall perform
all duties incident to the office of President and have such other powers and
duties as from time to time may be assigned to him by the Board.
SECTION 9. VICE PRESIDENT. Each Vice President shall have such powers and
shall perform such duties as from time to time may be assigned to him by the
Board. The Board may elect, or designate, one or more of the Vice Presidents as
an Executive Vice President. At the request of the President, or in the case of
his absence or inability to act, the Executive Vice President or, if there shall
be more than one Executive Vice President, an Executive Vice President
designated by the Board, or if the Board shall have not have elected or
designated an Executive Vice President then one of the Vice Presidents who shall
be designated for the purpose by the Board, shall perform the duties of the
President, and, when so acting, shall have all the powers of the President.
SECTION 10. SECRETARY. The Secretary shall keep or cause to be kept in
books provided for this purpose the minutes of all meetings of the stockholders
and of the Board; shall see that all notices are duly given in accordance with
the provisions of these By-Laws and as required by law; shall be the
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custodian of the seal of the Corporation and shall affix the seal or cause it to
be affixed to all certificates of stock of the Corporations and to all documents
the execution of which on behalf of the Corporation under its seal shall be duly
authorized in accordance with the provisions of these By-Laws; shall have charge
of the stock records of the Corporation; shall see that all reports, statements
and other documents required by law are properly kept and filed; may sign, with
any other proper officer of the Corporation thereunto authorized, certificates
for stock of the Corporation; and, in general, shall perform all the duties
incident to the office of Secretary, and such other duties as from time to time
may be assigned to him by the Board.
SECTION 11. ASSISTANT SECRETARIES. The Assistant Secretaries shall have
such powers and duties as from time to time may be assigned to them by the
Board. At the request of the Secretary or in case of his absence or inability to
act, any Assistant Secretary may act in his place.
SECTION 12. TREASURER. The Treasurer shall have charge and custody of, and
be responsible for, all funds, securities, evidences of indebtedness and other
valuable documents of the Corporation; shall deposit all such funds in the name
of the Corporation in such banks or other depositaries as shall be selected by
the Board; shall receive, and give or cause to be given receipts and
acquittances for, moneys paid in on account of the Corporation and shall pay out
of the funds on hand all just debts of the Corporation of whatever nature upon
maturity of the same; shall enter or cause to be entered in books of the
Corporation to be kept for that purpose full and accurate accounts of all moneys
received and paid out on account of the Corporation, and whenever required by
the Board, shall render a statement of his cash accounts; shall keep or cause to
be kept such other books as will show the true record of the expenses, losses,
gains, asset and liabilities of the Corporation; and in general shall perform
all duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the Board.
SECTION 13. ASSISTANT TREASURERS. The Assistant Treasurers shall have such
powers and duties as from time to time may be assigned to them by the Board. At
the request of the Treasurer, or in case of his absence or inability to act, any
Assistant Treasurer may act in his place.
SECTION 14. SALARIES. The salaries of the elective officers and any
appointive officers of the Corporation shall be fixed from time to time by the
Board. An officer shall not be prevented from receiving such salary by reason of
the fact that he is also a director of the Corporation or a member of any
committee contemplated by the By-Laws.
ARTICLE VI
CAPITAL STOCK
SECTION 1. CERTIFICATE FOR STOCK. Every holder of shares of stock shall be
entitled to have a certificate, in such form as the Board shall prescribe,
certifying the number and class of shares of stock of the Corporation owned by
him. Each such certificate shall be signed in the name of the Corporation by the
President or a Vice President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary; PROVIDED, HOWEVER, that where such
certificate is signed by a transfer agent or an assistant transfer agent or by a
transfer clerk acting on behalf of the Corporation and a registrar, the
signature of any such officer may be a facsimile.
SECTION 2. TRANSFER OF SHARES. The shares of stock of the Corporation
shall be transferable only upon its books by the registered holders thereof or
by their duly authorized attorneys or legal representatives, and upon such
transfer the old certificates shall be surrendered to the Corporation by the
delivery thereof to the Secretary or to such other person as the Board may
designate, by whom such old certificates shall be cancelled and new certificates
shall thereupon be issued. A record shall be made of each transfer. Each share
of Class B Stock shall be issued in connection with and upon the issuance of
each $1,000 in principal amount of Junior Notes (as such term is defined in the
Certificate of Incorporation), and may not be transferred separately from such
principal amount of Junior Notes.
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SECTION 3. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors and which record date: (1) in the case of determination of
stockholders entitled to vote at any meeting of stockholders of adjournment
thereof, shall not be more than sixty nor less than ten days before the date of
such meeting; (2) in the case of determination of stockholders entitled to
express consent to corporate action in writing without a meeting, shall not be
more than ten days from the date upon which the resolution fixing the record
date is adopted by the Board of Directors; and (3) in the case of any other
action shall not be more than sixty days prior to such other action. If no
record date is fixed: (1) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (2) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting
when no prior action of the Board of Directors is required by law, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 4. LOST OR DESTROYED CERTIFICATES. The Board may determine the
conditions upon which a new certificate of stock will be issued in place of a
certificate which is alleged to have been lost or destroyed, and may, in its
discretion, require the owner of such certificate or his legal representative to
give bond, with sufficient surety to the Corporation to indemnify it against any
and all losses or claims which may arise by reason of the issue of a new
certificate in the place of the one so lost or destroyed.
ARTICLE VII
CORPORATE SEAL
The seal of the Corporation shall be in the form of a circle and shall bear
the full name of the Corporation, the year of its incorporation and the words
"CORPORATE SEAL DELAWARE".
ARTICLE VIII
SIGNATURES
All checks, bonds, notes, contracts, agreements or other obligations or
instruments of the Corporation shall be signed by such officer or officers as
the Board may from time to time designate.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 1. WAIVER OF NOTICE. Whenever any notice whatever is required to
be given by these By-Laws or by statute, the person entitled thereto may in
person, or in the case of a stockholder by his
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attorney thereunto duly authorized, waive such notice in writing (including
telegraph, cable, radio or wireless), whether before or after the meeting or
other matter with respect of which such notice is to be given, and in such event
such notice need not be given to such person and such waiver shall be equivalent
to such notice, and any action to be taken after such notice or after the lapse
of a prescribed period of time may be taken without such notice and without the
lapse of any period of time.
SECTION 2. EMPLOYMENT CONTRACTS. No contract of employment shall be
entered into for or on behalf of the Corporation for a period of more than one
year without prior approval of the Board.
ARTICLE X
AMENDMENTS
Except as otherwise may be provided herein or in the Certificate of
Incorporation, these By-Laws, or any of them, may be amended, modified or
repealed, or new By-Laws may be adopted, either by vote of a majority of the
directors present at any annual, regular or special meeting, or by a vote
constituting a majority in number of the votes cast by stockholders present in
person or represented by proxy and entitled to vote at any annual or special
meeting.
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RESORTS INTERNATIONAL, INC.
IMPORTANT
Any holder of Old Series Notes, RII Common Stock or 1990 Stock Options who
wishes to vote with respect to the Plan should complete and sign the applicable
Ballot or Master Ballot in accordance with the instructions set forth in this
Information Statement/Prospectus and return such Ballot or Master Ballot in
accordance with the instructions set forth thereon. See "Solicitation --
Procedures for Voting on the Plan".
SOLICITATION AGENT:
Hill and Knowlton
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By Hand Delivery or Overnight Courier: By Mail:
Hill and Knowlton Hill and Knowlton
Ballot Tabulation Department P.O. Box 5508
420 Lexington Avenue, 12th Floor Grand Central Station
New York, New York 10017 New York, New York 10163-5503
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BY FACSIMILE:
(212) 682-3289
TELEPHONE:
(212) 210-8850
ADDITIONAL COPIES
Requests for additional copies of this Information Statement/Prospectus should
be directed to the Solicitation Agent. You also may contact your local broker,
dealer, commercial bank or trust company for assistance concerning the
Solicitation.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
RII and RIHF are Delaware corporations. Section 145 ("Section 145") of the
Delaware General Corporation Law ("DGCL") provides a Delaware corporation with
broad powers to indemnify its officers and directors in certain circumstances.
Additionally, Section 102(a)(7) of the DGCL permits Delaware corporations to
include a provision in their certificates of incorporation eliminating or
limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provisions shall not eliminate or limit the liability of a
director (i) for any breach of faith or that involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payment of dividends or other
unlawful distributions, or (iv) for any transactions from which the director
derived an improper personal benefit.
RII. As permitted under the DGCL, Article Fifth of RII's Restated
Certificate of Incorporation ("Article Fifth") provides that:
(1) A director of RII shall not be personally liable to RII or its
shareholders for monetary damages for breach of fiduciary duty as a director
except for liability (i) for any breach of the director's duty of loyalty to
RII or its shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit. If the DGCL is amended after
approval by the shareholders of this Article Fifth to authorize corporate
action further eliminating or limiting the personal liability of directors,
then the liability of a director of RII shall be eliminated or limited to
the fullest extent permitted by the DGCL, as so amended. Any repeal or
modification of this Section by the shareholders of RII shall be prospective
only and shall not adversely affect any right or protection of a director of
RII existing at the time of such repeal or modification.
(2) RII shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal administrative or
investigative (other than an action by or in the right of RII) by reason of
the fact that he is or was or has agreed to become a director or officer of
RII, or is or was serving or has agreed to serve at the request of RII as a
director or officer of another corporation, partnership, joint venture,
trust or other enterprise, or by reason of any action alleged to have been
taken or omitted in such capacity, against costs, charges, expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with
such action, suit or proceeding and any appeal therefrom, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of RII. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of RII.
(3) RII shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of RII to procure a judgment in its favor by
reason of the fact that he is or was or has agreed to become a director or
officer of RII, or is or was serving or has agreed to serve at the request
of RII as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to
have been taken or omitted in such capacity, against costs, charges and
expenses (including attorneys' fees) actually and reasonably incurred by him
or on his behalf in connection with the defense or settlement of such action
or suit and any appeal therefrom, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of RII
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except that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to
RII unless and only to the extent that the Court of Chancery of Delaware or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of such liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such costs, charges and expenses which the Court
of Chancery or such other court shall deem proper.
(4) Notwithstanding the other provisions of Article Fifth, to the extent
that a director or officer of RII has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit or proceeding referred to in
Sections 1 and 2 above, or in defense of any claim, issue or matter therein,
he shall be indemnified against all costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection therewith.
(5) Any indemnification under Sections 1 and 2 above (unless ordered by
a court), shall be paid by RII unless a determination is made (i) by a
majority of the members of the Board of Directors who were not parties to
such action, suit or proceeding even if less than a quorum, or (ii) if such
a majority of the disinterested members of the Board of Directors so direct,
by independent legal counsel in a written opinion, or (iii) by the
stockholders, that indemnification of the director or officer is not proper
in the circumstances because he has not met the applicable standard of
conduct set forth in Sections 1 and 2 of Article Fifth.
(6) Costs, charges and expenses (including attorneys' fees) incurred by
a person referred to in Sections 1 and 2 above in defending any civil,
criminal, administrative or investigative action, suit or proceeding shall
be paid by RII in advance of the final disposition of such action, suit or
proceeding, PROVIDED, HOWEVER, that the payment of such costs, charges and
expenses (including attorneys' fees) incurred by a director or officer in
his capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director or officer)
in advance of the final disposition of such action, suit or proceeding shall
be made only upon receipt of an undertaking by or on behalf of the director
or officer to repay all amounts so advanced in the event that it shall
ultimately be determined that such director or officer is not entitled to be
indemnified by RII as authorized in Article Fifth. Such costs, charges and
expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the majority of
the Board of Directors deems appropriate. The majority of the Board of
Directors may, in the manner set forth above, and upon approval of such
director, officer, employer, employee or agent of RII, authorize RII's
counsel to represent such person, in any action, suit or proceeding, whether
or not RII is a party to such action, suit or proceeding.
(7) The indemnification provided by Article Fifth shall not be deemed
exclusive of any other rights to which any director, officer, employee or
agent seeking indemnification may be entitled under any law (common or
statutory), agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and so as to action in
another capacity while holding office or while employed by or acting as
agent for RII, and shall continue as to a person who has ceased to be a
director, officer, employee or agent, and shall inure to the benefit of the
estate, heirs, executors and administrators of such person. All rights to
indemnification under Article Fifth shall be deemed to be a contract between
RII and each director, officer, employee or agent of RII who serves or
served in such capacity at any time while Article Fifth is in effect. Any
repeal or modification of Article Fifth or any repeal or modification of
relevant provisions of the DGCL or any other applicable laws shall not in
any way diminish any rights to indemnification of such director, officer,
employee or agent or the obligations of RII arising hereunder. Article Fifth
shall be binding upon any successor corporation of this Company, whether by
way of acquisition, merger, consolidation or otherwise.
(8) RII shall purchase and maintain insurance on behalf of any person
who is or was or has agreed to become a director, officer, employee or agent
of RII, or is or was serving at the request of
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RII as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of Article Fifth; PROVIDED, HOWEVER, that such
insurance is available on acceptable terms, which determination shall be
made by a vote of a majority of the Board of Directors.
RIHF. As permitted under DGCL, Article IX of RIHF's By-laws ("Article
Ninth") provides that:
(1) RIHF shall indemnify any person who shall be or shall have been a
party or shall be threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
RIHF) by reason of the fact that he shall be or shall have been a director,
officer, employee or agent of RIHF, or shall be or shall have been serving
at the request of RIHF as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he shall have acted in good faith and in a
manner he reasonably shall have believed to be in or not opposed to the best
interests of RIHF, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct shall have been unlawful. The
termination of any action, suit or proceedings by judgment, order,
settlement, conviction or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, create a presumption that the person shall not have
acted in good faith and in a manner which he reasonably shall have believed
to be in or not opposed to the best interests of RIHF, and, with respect to
any criminal action or proceeding, that he shall have had reasonable cause
to believe that his conduct shall have been unlawful.
(2) RIHF shall indemnify any person who shall be or shall have been a
party or shall be threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of RIHF to procure a judgment
in its favor by reason of the fact that he shall be or shall have been a
director, officer, employee or agent of RIHF, or shall be or shall have been
serving at the request of RIHF as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action
or suit if he shall have acted in good faith and in a manner he reasonably
shall have believed to be in or not opposed to the best interests of RIHF,
except that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to
RIHF unless and only to the extent that the court of Chancery or the court
in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person shall be fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(3) Any indemnification under Section 1 or 2 above (unless ordered by a
court) shall be made by RIHF only as authorized in the specific case upon
a determination that indemnification of the director, officer, employee or
agent shall be proper in the circumstances because he shall have met the
applicable standard of conduct set forth in Section 1 or 2 above. Such
determination shall be made (i) by the Board by a majority vote of a quorum
consisting of directors who shall not have been parties to such action, suit
or proceeding, (ii) if such a quorum shall not be obtainable, or, even if
obtainable, if a quorum of disinterested directors shall so direct, by
independent legal counsel in a written opinion, or (iii) by the
stockholders.
(4) Notwithstanding the other provisions of Article Ninth, to the extent
that a director, officer, employee or agent of RIHF shall be successful
on the merits or otherwise in defense of any action, suit or proceeding
referred to in Section 1 or 2 above, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
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(5) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by RIHF in advance of
the final disposition of such action, suit or proceeding as authorized by
the Board in the specific case upon receipt of an undertaking by or on
behalf of such officer or director to repay such amount if it shall
ultimately be determined that he shall not be entitled to be indemnified by
RIHF as authorized in this Article. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms
and conditions, if any, as the Board deems appropriate.
(6) The indemnification provided by Article Ninth shall not be deemed
exclusive of any other rights to which a person seeking indemnification
may be entitled by law or under any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(7) Upon resolution passed by the Board, RIHF may purchase and maintain
insurance on behalf of any person who shall be or shall have been a
director, officer, employee or agent of RIHF, or shall be or shall have been
serving at the request of RIHF as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not RIHF would
have the power to indemnify him against such liability under the provisions
of Article Ninth.
PIRL. PIRL is a Bahamian corporation. Sections 18 through 22 of the
Companies Act, 1992 of the Laws of the Commonwealth of The Bahamas ("the
Companies Act") provides a Bahamian corporation with board powers to indemnify
its officers and directors in certain circumstances.
PIRL. As permitted under the Companies Act, Article 75 through 82 of PIRL's
Articles of Association provide that:
1. PIRL shall, subject to the provisions of Paragraph 5 below,
indemnify to the fullest extent permitted by the Companies Act any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether external or internal to PIRL by
reason of the fact that he is or was a director or officer of PIRL, or is or
was serving at the request of PIRL as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
suit, action or proceeding if he acted in good faith and in a manner which
he reasonably believed to be in, or not opposed to, the best interests of
PIRL, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful.
2. Subject to Paragraph 5 below, expenses incurred by a director or
officer in defending a civil or criminal action, suit or proceeding shall be
paid by PIRL in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he is
not entitled under Paragraph [ ] to be indemnified by PIRL in respect of
such expenses.
3. The board shall from time to time cause PIRL to purchase and
maintain insurance from reputable insurance carriers on behalf of any person
who is or was a director or officer of PIRL, or is or was serving at the
request of PIRL as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising
out of his status as such with reasonable limits and subject to reasonable
and customary deductibles, for so long as such insurance is available form
such carriers.
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4. PIRL's indemnification under Paragraph 2 above of any person who is
or was a director or officer of PIRL, or is or was serving, at the request
of PIRL as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, shall be reduced by amounts such person
receives as indemnification (i) under any policy of insurance purchased and
maintained on his behalf by PIRL. (ii) from such other corporation,
partnership, joint venture, trust or other enterprise, or (iii) under any
other applicable indemnification provision.
5. (a) It shall be a condition of PIRL's obligation to indemnify or
advance expenses under Paragraphs 1 and 2 above that the person asserting,
or proposing to assert, the right to be indemnified, promptly after receipt
of notice of commencement of any action, suit or proceeding in respect of
which a claim for indemnification is or is to be made against PIRL notify
PIRL of the commencement of such action, suit or proceeding, including
therewith a copy of all papers served and the name of counsel retained or to
be retained by such person in connection with such action, suit or
proceeding, and thereafter to keep PIRL timely and fully apprised of all
developments and proceedings in connection with such action, suit or
proceeding or as PIRL shall request; and the fees and expenses of any
counsel retained by a person asserting, or proposing to assert, the right to
be indemnified under Paragraph 1 above shall be at the expense of such
person unless the counsel retained shall have been approved by PIRL in
writing, which approval shall not be unreasonably withheld.
(b) If a claim for indemnification or advancement of expenses under
Paragraph 1 and 2 above is not paid in full by PIRL within forty five (45) days
after a written claim there for has been received by PIRL, the claimant may
at any time thereafter bring suit against PIRL to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim.
6. To the fullest extent permitted by the Companies Act as it exists on
the date hereof or as it may hereafter be amended, no director or officer of
PIRL shall be liable to PIRL or its members for monetary or other damages
for breach of fiduciary duty as a director or officer.
7. The provisions of Paragraphs 1 and 6 above shall continue as to, and
for the benefit of, a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of
such a person.
8. No amendment to or repeal of the provisions of Paragraphs 1 through
6 above shall apply to or have any effect on the eligibility for, or
entitlement to, indemnification, advancement of expenses and the other
rights provided by, or granted pursuant to, Paragraphs 1 through 6 above for
or with respect to any acts or omissions of any director or officer
occurring prior to any such amendment or repeal.
RIH. RIH is a New Jersey corporation. Section 14A:3-5 of the New Jersey
Business Corporation Act ("NJBCA") grants a corporation broad powers to
indemnify officers and directors of the corporation, in certain situations. As
permitted under the NJBCA, Article VIII of RIH's By-Laws provides that RIH shall
indemnify each present and future director and officer of the corporation
against, and each such director and officer shall be entitled without further
act on his part to indemnity from RIH for, all expenses (including the amount of
judgments and the amount of reasonable settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to RIH itself)
reasonably incurred by him in connection with or arising out of any action, suit
or proceeding in which he may be involved by reason of his being or having been
a director or officer of the corporation which he serves as a director or
officer at the request of RIH, whether or not he continues to be such director
or officer at the time of incurring such expenses; provided, however, that such
indemnity shall not include any expenses incurred by any such director or
officer (a) in respect of matters as to which he shall be finally adjudged in
any such action, suit or proceeding to have been derelict in the performance of
his duties as such director or officer or (b) in respect of any matter in which
any settlement is effected, to any amount in excess of the amount of expenses
which might reasonably have been incurred by such director or officer in
conducting such litigation to a final conclusion; provided, further, that in no
event
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shall anything herein contained be so construed as to protect, or to authorize
the corporation to indemnify, such director, or officer against any liability to
RIH or to its security holders to which he would otherwise be subject by reason
of his willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office as such director or officer.
The foregoing right of indemnification shall inure to the benefit of the
heirs, executors or administrators of each such director or officer and shall be
in addition to all other right to which such director or officer may be entitled
as a matter of law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A. EXHIBITS
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2.01 Plan of Reorganization. (Incorporated by reference to Appendix A of the Information
Statement/Prospectus included in this Registration Statement.)...............................
3.01 Form of proposed Amended and Restated Certificate of Incorporation of RII. (Incorporated by
reference to Appendix C of the Information Statement/Prospectus included in this Registration
Statement.)..................................................................................
3.02 Form of proposed Amended and Restated By-Laws of RII. (Incorporated by reference to Appendix D
of the Information Statement/Prospectus included in this Registration Statement.)............
3.03 Restated Certificate of Incorporation of RII. (Incorporated by reference to Exhibit (3)(a) to
RII's Form 10-K Annual Report for the fiscal year ended December 31, 1990, in File No.
1-4748.).....................................................................................
3.04 By-laws, as amended, of RII. (Incorporated by reference to Exhibit (4)(d) to RII's Form 10-Q
Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.)..............
3.05 Certificate of Incorporation of RIH*..........................................................
3.06 By-laws of RIH*...............................................................................
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3.07 Certificate of Incorporation of RIHF*.......................................
3.08 By-laws of RIHF.............................................................
3.09 Amended and Restated Articles of Association of PIRL........................
4.01 See Exhibits 3.01 and 3.02 as to the rights of holders of RII Common Stock
and RII Class B Common Stock after giving effect to the Restructuring......
4.02 See Exhibits 3.03 and 3.04 as to the rights of holders of RII Common Stock
prior to giving effect to the Restructuring................................
4.03 See Exhibit 3.09 as to the rights of holders of PIRL Common Stock...........
4.04 Form of Indenture among RIHF, as issuer, RIH, as guarantor, and State Street
Bank and Trust Company of Connecticut, National Association, as trustee,
with respect to RIHF 11% Mortgage Notes due 2003...........................
4.05 Form of Indenture between RIHF, as issuer, RIH, as guarantor, and U.S. Trust
Company of California, N.A., as trustee, with respect to RIHF 11.375%
Junior Mortgage Notes due 2004.............................................
4.06 Indenture dated as of September 14, 1990, between RII and Chemical Bank
(successor to Manufacturers Hanover Trust Company), as Trustee, with
respect to RII's Senior Secured Redeemable Notes due April 15, 1994, with
Exhibits as executed. (Incorporated by reference to Exhibit (4)(a)(1) to
RII's Form 10-Q Quarterly Report for the quarter ended September 30, 1990,
in File No. 1-4748.).......................................................
4.07 Amended and Restated RIH $200,000,000 Senior Note. (Incorporated by
reference to Exhibit (4)(a)(2) to RII's 10-Q Quarterly Report for the
quarter ended September 30, 1990, in File No. 1-4748.).....................
4.08 Amended and Restated RIH $125,000,000 Senior Note. (Incorporated by
reference to Exhibit to RII's 10-Q Quarterly Report for the quarter ended
September 30, 1990, in File No. 1-4748.)...................................
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* Previously filed.
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4.09 RII Pledge Agreement. (Incorporated by reference to Exhibit Q to RII's Form 8-A Registration
Statement dated July 19, 1990, in File No. 1-4748.)..........................................
4.10 Assignment of Leases and Rents, RII as Assignor. (Incorporated by reference to Exhibit U to
RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)..............
4.11 RIB $50,000,000 Promissory Note to RIH. (Incorporated by reference to Exhibit V to RII's Form
8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).........................
4.12 Indenture of Mortgage from Paradise Island Limited. (Incorporated by reference to Exhibit W to
RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)..............
4.13 Indenture of Mortgage from Paradise Beach Inn Limited. (Incorporated by reference to Exhibit X
to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)...........
4.14 Guaranty by Paradise Beach Inn Limited. (Incorporated by reference to Exhibit Z to RII's Form
8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).........................
4.15 Indenture of Mortgage from Island Hotel Company Limited. (Incorporated by reference to Exhibit
AA to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)........
4.16 Guaranty by Island Hotel Company Limited (Incorporated by reference to Exhibit BB to RII's
Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)....................
4.17 RIB Collateral Assignment Agreement among RIH, GRI, RIB, Paradise Island Limited, Island Hotel
Company Limited, Paradise Beach Inn Limited and the Bank of New York. (Incorporated by
reference to Exhibit CC to RII's Form 8-A Registration Statement dated July 19, 1990, in File
No. 1-4748.).................................................................................
4.18 RII Security Agreement. (Incorporated by reference to Exhibit P to RII's Form 8-A Registration
Statement dated July 19, 1990, in File No. 1-4748.)..........................................
4.19 Indenture dated as of September 14, 1990, between RII and The Bank of New York as Trustee,
with respect to RII's Mortgage Non-Recourse Pass-Through Notes due June 30, 2000, with
Exhibits as executed. (Incorporated by reference to Exhibit (4)(b) to RII's 10-Q Quarterly
Report for the quarter ended September 30, 1990, in File No. 1-4748.)........................
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4.20 Resorts International, Inc. Senior Management 1990 Stock Option Plan.
(Incorporated by reference to Exhibit 8.5 to Exhibit 35 to RII's Form 8
Amendment No. 1 to it's 8-K Current Report dated August 30, 1990, in File
No. 1-4748.)...............................................................
4.21 Griffin Group Warrant**.....................................................
4.22 Form of Mortgage between RIH and State Street Bank and Trust Company of
Connecticut, National Association, securing Guaranty of RIHF Mortgage
Notes......................................................................
4.23 Form of Mortgage between RIH and RIHF, securing RIH Promissory Note.........
4.24 Form of Assignment of Agreements made by RIHF, as Assignor, to State Street
Bank and Trust Company of Connecticut, National Association, as Assignee,
regarding RIH Promissory Note..............................................
4.25 Form of Assignment of Leases and Rents made by RIH, as Assignor, to RIHF, as
Assignee, regarding RIH Promissory Note....................................
4.26 Form of Assignment of Leases and Rents made by RIH, as Assignor, to State
Street Bank and Trust Company of Connecticut, National Association, as
Assignee, regarding Guaranty of RIHF Mortgage Notes........................
4.27 Form of Assignment of Operating Assets made by RIH, as Assignor, to RIHF, as
Assignee, regarding RIH Junior Promissory Note.............................
4.28 Form of Assignment of Operating Assets made by RIH, as Assignor, to State
Street Bank and Trust Company of Connecticut, National Association, as
Assignee, regarding Guaranty of RIHF Mortgage Notes........................
4.29 Form of Mortgage between RIH and U.S. Trust Company of California, N.A.,
securing Guaranty of RIHF Junior Mortgage Notes............................
</TABLE>
- ------------------------
_* Previously filed.
** To be filed by amendment.
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- --------- ---------------------------------------------------------------------------- ---------
<C> <S> <C> <S> <C>
4.30 Form of Mortgage between RIH and RIHF, securing RIH Junior Promissory Note....................
4.31 Form of Assignment of Agreements made by RIHF, as Assignor, to, U.S. Trust Company of
California, N.A., as Assignee, regarding RIH Junior Promissory Note..........................
4.32 Form of Assignment of Leases and Rents made by RIH, as Assignor, to RIHF, as Assignee,
regarding RIH Junior Promissory Note.........................................................
4.33 Form of Assignment of Leases and Rents made by RIH, as Assignor, to U.S. Trust Company of
California, N.A., as Assignee, regarding Guaranty of RIHF Junior Mortgage Notes..............
4.34 Form of Assignment of Operating Assets made by RIH, as Assignor, to RIHF, as Assignee,
regarding RIH Promissory Note................................................................
4.35 Form of Assignment of Operating Assets made by RIH, as Assignor, to U.S. Trust Company of
California, N.A., as Assignee, regarding the Guaranty of the RIHF Junior Mortgage Notes......
4.36 Form of Amended and Restated $125,000,000 RIH Promissory Note (Incorporated by reference to
Exhibit A to Exhibit 4.04 hereto)............................................................
4.37 Form of Amended and Restated $35,000,000 RIH Junior Promissory Note (Incorporated by reference
to Exhibit A to Exhibit 4.05)................................................................
5.01 Opinion of Gibson, Dunn & Crutcher*...........................................................
5.02 Opinion of Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime**.................................
</TABLE>
<TABLE>
<C> <S> <C>
5.03 Opinion of Harry B. Sands & Co.*............................................
8.01 Opinion of Gibson, Dunn & Crutcher regarding tax matters**..................
10.01 Form of Interim Management Agreement between PIRL and RII (Incorporated by
referrence to Exhibit D to Exhibit 10.59)*.................................
10.02 [Not used]..................................................................
10.03 Agreement, dated May 23, 1978, between The Hotel Corporation of The Bahamas
("HCB") and Paradise Enterprises Limited. (Incorporated by reference to
Exhibit (10)(b)(i) to RII's 10-K Annual Report for the fiscal year ended
December 31, 1988, in File No. 1-4748.)....................................
10.04 Letter, dated July 2, 1985, from HCB to the RII amending Exhibit 10.03
hereto. (Incorporated by reference to exhibit to RII's Form 8-K Current
Report dated July 9, 1985, in File No. 1-4748.)............................
10.05 Agreement, dated May 23, 1978, between HCB and Paradise Realty Limited (now
RIB). (Incorporated by reference to Exhibit 10.01 to GRI's Form S-1
Registration Statement filed July 13, 1988, in File No. 33-23063.).........
10.06 Letter, dated September 26, 1988, from HCB to RIB extending Exhibit
(10)(a)(3) hereto. (Incorporated by reference to Exhibit (10(b)(iv) to
RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in
File No. 1-4748.)..........................................................
10.07 Supplement, dated February 21, 1990, to license granted March 30, 1978 to
Paradise Enterprises Limited. (Incorporated by reference to Exhibit
(10)(b)(v) to RII's 10-K Annual Report for the fiscal year ended December
31, 1989, in File No. 1-4748.).............................................
10.08(a) Supplement, dated September 7, 1990, to license granted March 30, 1978 to
Paradise Enterprises Limited. (Incorporated by reference to Exhibit
10(a)(6) to RII's 10-K Annual Report for the fiscal year ended December 31,
1988, in File No. 1-4748.).................................................
10.08(b) Supplement, dated January 15, 1991, to license granted March 30, 1978 to
Paradise Enterprises Limited. (Incorporated by reference to Exhibit
10(b)(7) to RII's 10-K Annual Report for the fiscal year ended December 31,
1990, in File No. 1-4748.)
10.09 Supplement, dated February 13, 1992, to license granted March 30, 1978 to
Paradise Enterprises Limited. (Incorporated by reference to Exhibit
10(a)(8) to RII's 10-K Annual Report for the fiscal year ended December 31,
1992, in File No. 1-4748.).................................................
</TABLE>
- ------------------------
_* Previously filed.
** To be filed by amendment.
II-8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- --------- ---------------------------------------------------------------------------- ---------
<C> <S> <C> <S> <C>
10.10 Supplement, dated December 30, 1992, to license granted March 30, 1978 to Paradise Enterprises
Limited. (Incorporated by reference to Exhibit 10(a)(9) to RII's 10-K Annual Report for the
fiscal year ended December 31, 1992, in File No. 1-4748.)....................................
10.11 Lease Agreement, dated October 26, 1983, between RII and Ocean Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(i) to RII's 10-K Annual Report for the fiscal year ended
December 31, 1986, in File No. 1-4748.)......................................................
10.12 First Amendment, dated January 15, 1985, to Lease Agreement, dated October 26, 1983, between
RII and Atlantic City Showboat, Inc. (assignee from affiliate -- Ocean Showboat, Inc.).
(Incorporated by reference to Exhibit (10)(c)(ii) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1984, in File No. 1-4748.)...........................................
10.13 Second and Third Amendments, dated July 5 and October 28, 1985, respectively, to Lease
Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated
by reference to Exhibit (10)(c)(iii) to RII's 10-K Annual Report for the fiscal year ended
December 31, 1985, in File No. 1-4748.)......................................................
10.14 Restated Third Amendment, dated August 28, 1986, to Lease Agreement, dated October 26, 1983,
between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit
(10)(c)(iv) to RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File
No. 1-4748.).................................................................................
10.15 Fourth Amendment, dated December 16, 1986, to Lease Agreement, dated October 26, 1983, between
RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(v) to
RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)...
</TABLE>
<TABLE>
<C> <S> <C>
10.16 Fifth Amendment, dated February 1987, to Lease Agreement, dated October 26,
1983, between RII and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(vi) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1986, in File No. 1-4748.).........................
10.17 Seventh Amendment, dated October 18, 1988, to Lease Agreement, dated Octo-
ber 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(viii) to RII's 10-K Annual Report for the
fiscal year ended December 31, 1988, in File No. 1-4748.)..................
10.18 RII Executive Health Plan (Incorporated by reference to Exhibit 10(c)(1) to
RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in
File No. 1-4748.)..........................................................
10.19 Resorts Retirement Savings Plan. (Incorporated by reference to Exhibit
(10)(c)(2) to RII's 10-K Annual Report for the fiscal year ended December
31, 1991, in File No. 1-4748.).............................................
10.20 Employment Agreement, dated as of September 17, 1990, between RII and David
P. Hanlon. (Incorporated by reference to Exhibit 9.3A to Exhibit 35 to the
Form 8 Amendment dated November 16, 1990, to RII's 8-K Current Report dated
August 30, 1990, in File No. 1-4748.)......................................
10.21 Employment Agreement, dated May 3, 1991, between the RII and Christopher D.
Whitney. (Incorporated by reference to Exhibit (10(d)(2) to RII's 10-K
Annual Report for the fiscal year ended December 31, 1991, in File No.
1-4748.)...................................................................
10.22 Amendment to Employment Agreement, dated as of December 3, 1992, between RII
and Christopher D. Whitney*................................................
10.23 Employment Agreement, dated May 3, 1991, between RII and Matthew B. Kearney.
(Incorporated by reference to Exhibit (10)(d)(3) to RII's 10-K Annual
Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)...
10.24 Amendment to Employment Agreement, dated December 3, 1992, between RII and
Matthew B. Kearney*........................................................
10.25 Second Amendment to Employment Agreement, dated September 24, 1993, between
RII and Matthew B. Kearney*................................................
10.26 Employment Agreement, dated as of September 17, 1992, between RII and David
P. Hanlon. (Incorporated by reference to Exhibit 10(d)(4) to RII's 10-K
Annual Report for the fiscal year ended December 31, 1992, in File No.
1-4748.)...................................................................
</TABLE>
- ------------------------
* Previously filed.
II-9
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- --------- ---------------------------------------------------------------------------- ---------
<C> <S> <C> <S> <C>
10.27 Termination Agreement, dated as of September 27, 1993, between RII and David P. Hanlon*.......
10.28 Stock Option Agreement, dated as of May 3, 1991, between RII and David P. Hanlon.
(Incorporated by reference to Exhibit (10)(e)(1) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1991, in File No. 1-4748.)...........................................
10.29 Stock Option Agreement, dated as of May 3, 1991, between RII and Christopher D. Whitney.
(Incorporated by reference to Exhibit (10)(e)(2) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1991, in File No. 1-4748.)...........................................
10.30 Stock Option Agreement, dated as of May 3, 1991, between RII and Matthew B. Kearney.
(Incorporated by reference to Exhibit (10)(e)(5) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1991, in File No. 1-4748.)...........................................
10.31 Stock Option Agreement, dated as of May 3, 1991, between RII and David G. Bowden.
(Incorporated by reference to Exhibit (10)(e)(5) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1991, in File No. 1-4748.)...........................................
10.32 Stock Option Agreement, dated as of May 3, 1991, between RII and Thomas F. O'Donnell.
(Incorporated by reference to Exhibit (10)(e)(6) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1991, in File No. 1-4748.)...........................................
10.33 Amendment No. 1, dated as of September 17, 1992, to Exhibit 10.30 (Incorporated by reference
to Exhibit 10(e)(6) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992,
in File No. 1-4748)..........................................................................
10.34(a) License and Services Agreement, dated as of September 17, 1992, among the Griffin Group, RII
and RIH*.....................................................................................
10.34(b) Amendment to License and Services Agreement, dated as of September 17, 1992 among the Griffin
Group Inc., RII and RIH**....................................................................
</TABLE>
<TABLE>
<C> <S> <C>
10.35 License and Services Agreement, dated as of September 17, 1990, among Merv
Griffin, the Griffin Group and RII. (Incorporated by reference to Exhibit
1.46 to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to the
registrant's 8-K Current Report dated August 30, 1990, in File No.
1-4748.)...................................................................
10.36 Litigation Trust Agreement, dated as of September 17, 1990, among RII, RIFI,
GRH, and GRI. (Incorporated by reference to Exhibit 1.46 to Exhibit 35 to
the Form 8 Amendment dated November 16, 1990, to the registrant's 8-K
Current Report dated August 30, 1990, in File No. 1-4748.).................
10.37(a) Promissory Note, dated September 28, 1990, between Merv Griffin and RII.
(Incorporated by reference to Exhibit 9.1B to Exhibit 35 to the Form 8
Amendment dated November 16, 1990, to the registrant's 8-K Current Report
dated August 30, 1990, in File No. 1-4748.)................................
10.37(b) Griffin Group Note. (Incorporated by reference to Exhibit 1 to Exhibit
10.34(a) to this Registration Statement.)..................................
10.37(c) Guaranty dated September 17, 1992 by Mervyn E. Griffin in favor of RII
(Incorporated by reference to Exhibit 2 to Exhibit 10.34(a) to this
Registration Statement.)...................................................
10.38 Letter of Credit, dated October 1, 1990, by Morgan Guaranty Trust Company of
New York. (Incorporated by reference to Exhibit 9.1B to Exhibit 35 to the
Form 8 Amendment dated November 16, 1990, to RII's 8-K Current Report dated
August 30, 1990, in File No. 1-4748.)......................................
10.39 Letters extending the termination date of Exhibit 10.38 (Incorporated by
reference to Exhibit 10(i)(2) to RRI's 10-K Annual Report for the fiscal
year ended December 31, 1992 in File No. 1-4748............................
10.40 Indemnity Agreement, executed on September 19, 1990, between Merv Griffin
and RII. (Incorporated by reference to Exhibit 9.6 to Exhibit 35 to the
Form 8 Amendment dated November 16, 1990, to the registrant's 8-K Current
Report dated August 30, 1990, in File No. 1-4748.).........................
10.41 Hotel Corporation of The Bahamas Right of First Refusal. (Incorporated by
reference to Exhibit (10)(n) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1988, in File No. 1-4748.).........................
</TABLE>
- ------------------------
_* Previously filed.
** To be filed by amendment.
II-10
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- --------- ---------------------------------------------------------------------------- ---------
<C> <S> <C> <S> <C>
10.42 Service contract between Rogers & Cowan, Inc. and RII, effective July 1, 1991. (Incorporated
by reference to Exhibit (10)(m) to RII's 10-K Annual Report for the fiscal year ended
December 31, 1988, in File No. 1-4748.)......................................................
10.43 Consulting agreement between Alvarez & Marsal, Inc. and RII, effective March 1, 1992
(Incorporated by reference to Exhibit 10(m)(i) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1992, in File No. 1-4748)............................................
10.44 Amendment, dated September 14, 1992, to the consulting agreement between Alvarez & Marsal,
Inc. and RII (Incorporated by reference to Exhibit 10(m)(2) to RII's 10-K Annual Report for
the fiscal year ended December 31, 1992, in File No. 1-4748).................................
10.45 Form of Ballot for Allowed Claims of Holders of Series A Notes and GRI Guaranty...............
10.46 Form of Ballot for Allowed Interests of Holders of RII Common Stock...........................
10.47 Form of Ballot for Allowed Interests of Holders of 1990 Stock Options.........................
10.48 Form of Master Ballot for Allowed Interests of Holders of RII Common Stock....................
10.49 Form of Master Ballot for Allowed Claims of Holders of Series A Notes and GRI Guaranty........
</TABLE>
<TABLE>
<C> <S> <C>
10.50 Form of Ballot for Allowed Interests of Holders of Series B Notes and GRI
Guaranty...................................................................
10.51 Form of Master Ballot for Allowed Claims of Holders of Series B Notes and
GRI Guaranty...............................................................
10.52 Bondholders Support Agreement dated October 11, 1993 among RII, GRI, Sun
International Investments, Ltd., Sun International Hotels Limited, TCW
Special Credits and Fidelity Management and Research Company, concerning
bondholders support*.......................................................
10.53 Letter Agreement dated October 11, 1993 among Fidelity Management and Re-
search Company, TCW Special Credits, RII and Sun International Hotels
Limited concerning consent rights of holders of Old Series Notes*..........
10.54 Revised term Sheet for 11.0% Senior Secured Loan due 2002 with RIHF as
issuer.....................................................................
10.55 Paradise Island Purchase Agreement dated October 11, 1993 between RII and
Sun International Hotels Limited, with Exhibits and Schedules*.............
10.56 Letter Agreement dated October 19, 1993 among RII, Fidelity Management, TCW
Special Credits, Sun International Hotels Limited, Sun International
Investments Ltd. and GGRI regarding GGRI, Inc.*............................
10.57 Stock Subscription Agreement dated October 11, 1993 between Sun
International Investments Limited and Sun International Hotels Limited*....
10.58 Letter Agreement dated October 15, 1993, among RII, Fidelity Management, TCW
Special Credits and Sun International Hotels Limited regarding P.I. Resorts
Limited*...................................................................
10.59 PIRL Standby Distribution Agreement dated October 15, 1993 between RII and
PIRL.......................................................................
10.60 Letter Agreement between RII and PIRL concerning airline support
services*..................................................................
10.61 Letter Agreement concerning appointment of agent for service of process
pursuant to the Standby Distribution Agreement*............................
10.62 Letter Agreement concerning appointment of agent for service of process
pursuant to this Registration Statement....................................
10.63 Letter Agreement dated July 1, 1993 between RII and Bear Stearns & Co. Inc.
for retention of services..................................................
12.01 RII Computation of Ratio of Earnings to Fixed Charges.......................
12.02 RIH Computation of Ratio of Earnings to Fixed Charges.......................
</TABLE>
- ------------------------
* Previously filed.
II-11
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- --------- ---------------------------------------------------------------------------- ---------
<C> <S> <C> <S> <C>
12.03 RII Computation of Pro Forma Ratio of Earnings to Fixed Charges...............................
12.04 RIH Computation of Pro Forma Ratio of Earnings to Fixed Charges...............................
21.01 List of the Subsidiaries of the Registrants*..................................................
23.01 Consent of Ernst & Young......................................................................
23.02 Consent of Gibson, Dunn & Crutcher (Incorporated by reference to exhibit 5.02)................
23.03 Consent of Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime (Incorporated by reference to
exhibit 5.02)................................................................................
23.04 Consent of Harry B. Sands & Co. (Incorporated by reference to exhibit 5.03)...................
25.01 Statement of eligibility on Form T-1 of State Street Bank and Trust Company of Connecticut,
National Association, as trustee under the New RIHF Mortgage Notes Indenture*................
25.02 Statement of eligibility on Form T-1 of U.S. Trust Company of California, N.A., as trustee
under the New RIHF Junior Mortgage Notes Indenture*..........................................
</TABLE>
B. FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULES FOR RESORTS INTERNATIONAL, INC. AND
SUBSIDIARIES
<TABLE>
<S> <C> <C> <C>
Report of Independent Auditors.......................................................... II-14
Schedule II -- Amounts Receivable from Related Parties....................... II-15
Schedule V -- Property and Equipment........................................ II-16
Schedule VI -- Accumulated Depreciation of Property and Equipment............ II-17
Schedule VIII -- Valuation Accounts............................................ II-18
Schedule X -- Supplementary Statements of Operations Information............ II-19
</TABLE>
FINANCIAL STATEMENT SCHEDULES FOR RESORTS INTERNATIONAL HOTEL, INC. AND
SUBSIDIARIES
<TABLE>
<S> <C> <C> <C>
Report of Independent Auditors.......................................................... II-20
Schedule II -- Amounts Receivable from Related Parties....................... II-21
Schedule IV -- Indebtedness to Related Parties............................... II-22
Schedule V -- Property and Equipment........................................ II-23
</TABLE>
<TABLE>
<S> <C> <C> <C>
Schedule VI -- Accumulated Depreciation of Property and Equipment............ II-24
Schedule VIII -- Valuation Accounts............................................ II-25
Schedule X -- Supplementary Statements of Operations Information............ II-26
</TABLE>
FINANCIAL STATEMENT SCHEDULES FOR PIRL GROUP
<TABLE>
<S> <C> <C> <C>
Report of Independent Auditors.......................................................... II-27
Schedule II -- Amounts Receivable from Related Parties....................... II-28
Schedule V -- Property and Equipment........................................ II-29
Schedule VI -- Accumulated Depreciation of Property and Equipment............ II-30
Schedule VIII -- Valuation Accounts............................................ II-31
Schedule X -- Supplementary Statements of Operations Information............ II-32
</TABLE>
Financial statement schedules not included have been omitted because they
are either not applicable or the required information is shown in the
consolidated or combined financial statements, as applicable, or notes thereto.
ITEM 22. UNDERTAKINGS
(1) The undersigned registrants hereby undertake as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of
II-12
<PAGE>
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for in the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The registrants undertake that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment 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 Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, 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 that a claim for indemnification against
such liabilities (other than the payment by the registrants of expenses 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 registrant 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 indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-13
<PAGE>
REPORT OF INDEPENDENT AUDITORS ON
FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Shareholders
Resorts International, Inc.
We have audited the consolidated financial statements of Resorts International,
Inc. as of December 31, 1992 and 1991, and for each of the three years in the
period ended December 31, 1992, and have issued our report thereon dated
February 19, 1993 except for Note 17, as to which the date is December 29, 1993,
included elsewhere in this Registration Statement. Our audits also included the
financial statement schedules listed in Item 21B of this Registration Statement.
These schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
ERNST & YOUNG
Philadelphia, Pennsylvania
February 19, 1993
II-14
<PAGE>
SCHEDULE II
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
BALANCE AT END OF
BALANCE AT AMOUNTS PERIOD
BEGINNING WRITTEN ----------------------
OF PERIOD ADDITIONS OFF CURRENT NOT CURRENT
----------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1992:
Merv Griffin (A).................................. $ 11,000 $ 11,000
For the year ended December 31, 1991:
Merv Griffin (A).................................. $ 11,000 $ 11,000
For the period September 1, 1990 through December
31, 1990:
Merv Griffin (A).................................. $ 11,000 $ 11,000
For the period January 1, 1990 through August 31,
1990:
Merv Griffin (A).................................. $ 11,000 $ 11,000
Griffco (B)....................................... $ 50,000 $ (50,000) $ -0-
Griffco (C)....................................... $ 386 $ (386) $ -0-
<FN>
- ------------------------
(A) Pursuant to the Old Plan, the Company received cash and this promissory
note from Merv Griffin for the purchase of RII Common Stock. This note is
due on demand after September 17, 1991 and bears interest at the rate of 8%
per annum. The effect of this transaction was recorded at August 31, 1990.
(B) On November 17, 1988 the Company loaned $50,000,000 to Griffco under two
non-interest bearing demand notes. Effective August 31, 1990, these notes
were cancelled as part of the Old Plan.
(C) This represented the net effect of expenditures made by the Company on
behalf of Griffco, expenditures made by Griffco on behalf of the Company,
and cash transfers made between the parties to settle the resulting
differences. This amount was eliminated as a result of the merger of
Griffco into a subsidiary of RII.
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RII describes a
change in entity and related presentation for periods presented.
II-15
<PAGE>
SCHEDULE V
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
BALANCE
AT
BEGINNING BASIS ACCUMULATED BALANCE AT
OF ADDITIONS RETIREMENTS ADJUSTMENT DEPRECIATION END OF
PERIOD AT COST OR SALES (D) RECLASS (D) OTHER PERIOD
-------- --------- ----------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended December 31,
1992:
Land and land rights............. $246,520 $ (136) $ (2,484)(A) $ 243,900
Land improvements and
utilities....................... 21,942 $ 240 (94) 431(B) 22,519
Hotels and other buildings....... 157,312 3,892 (8) 9,084(B) 170,250
(30)(C)
Furniture, machinery and
equipment....................... 60,700 4,315 (451) 3,436(B) 67,693
(307)(C)
Construction in progress......... 2,796 11,438 (12,951)(B) 1,215
(68)(C)
-------- --------- ----------- ------------ ----------
$489,270 $ 19,885 $ (689) $ (2,889) $ 505,577
-------- --------- ----------- ------------ ----------
-------- --------- ----------- ------------ ----------
For the year ended December 31,
1991:
Land and land rights............. $246,610 $ (90) $ 246,520
Land improvements and
utilities....................... 21,467 $ 15 $ 460(B) 21,942
Hotels and other buildings....... 146,309 4,382 (486) 7,129(B) 157,312
(22)(C)
Furniture, machinery and
equipment....................... 43,224 8,190 (206) 10,144(B) 60,700
(652)(C)
Construction in progress......... 6,366 14,163 (17,733)(B) 2,796
-------- --------- ----------- ------------ ----------
$463,976 $ 26,750 $ (782) $ (674) $ 489,270
-------- --------- ----------- ------------ ----------
-------- --------- ----------- ------------ ----------
For the period September 1, 1990
through December 31, 1990:
Land and land rights............. $247,409 $ (124) $ (675)(C) $ 246,610
Land improvements and
utilities....................... 21,790 (337) 14(B) 21,467
Hotels and other buildings....... 143,266 $ 1,620 (218) 1,731(B) 146,309
(90)(C)
Furniture, machinery and
equipment....................... 35,836 2,320 (4,535) 9,722(B) 43,224
(119)(C)
Construction in progress......... 12,110 5,723 (11,467)(B) 6,366
-------- --------- ----------- ------------ ----------
$460,411 $ 9,663 $ (5,214) $ (884) $ 463,976
-------- --------- ----------- ------------ ----------
-------- --------- ----------- ------------ ----------
For the period January 1, 1990
through August 31, 1990:
Land and land rights............. $276,989 $ (3,532) $ (26,037) $ (11) $ 247,409
Land improvements and
utilities....................... 27,657 (2,705) (3,205) $ 43(B) 21,790
Hotels and other buildings....... 247,329 $ 7,481 (97,937) (20,141) 6,588(B) 143,266
(54)(C)
Furniture, machinery and
equipment....................... 77,395 6,759 (2,599) (23,248) (28,609) 6,766(B) 35,836
(628)(C)
Construction in progress......... 18,531 10,181 (3,205) (13,397)(B) 12,110
-------- --------- ----------- ---------- ----------- ------------ ----------
$647,901 $ 24,421 $ (6,131) $ (153,132) $ (51,966) $ (682) $ 460,411
-------- --------- ----------- ---------- ----------- ------------ ----------
-------- --------- ----------- ---------- ----------- ------------ ----------
<FN>
- ------------------------
(A) Basis adjustment.
(B) Transfer of completed projects out of construction in progress.
(C) Reclassification out of property and equipment.
(D) In accordance with fresh start accounting, accumulated depreciation was
reclassified to property and equipment, and net property and equipment was
restated to its estimated fair value as of August 31, 1990.
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RII describes a
change in entity and related presentation for periods presented.
II-16
<PAGE>
SCHEDULE VI
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
RECLASS TO
BALANCE AT ADDITIONS PROPERTY AND BALANCE AT
BEGINNING CHARGED TO RETIREMENTS EQUIPMENT END OF
OF PERIOD EXPENSE OR SALES (A) PERIOD
---------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1992:
Land improvements and utilities....... $ 2,746 $ 1,797 $ 4,543
Hotels and other buildings............ 11,448 9,271 20,719
Furniture, machinery and equipment.... 15,676 14,254 $ (431) 29,499
---------- ---------- ----------- ----------
$ 29,870 $ 25,322 $ (431) $ 54,761
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
For the year ended December 31, 1991:
Land improvements and utilities....... $ 651 $ 2,095 $ 2,746
Hotels and other buildings............ 2,561 8,898 $ (11) 11,448
Furniture, machinery and equipment.... 2,946 12,821 (91) 15,676
---------- ---------- ----------- ----------
$ 6,158 $ 23,814 $ (102) $ 29,870
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
For the period September 1, 1990 through
December 31, 1990:
Land improvements and utilities....... $ 662 $ (11) $ 651
Hotels and other buildings............ 2,568 (7) 2,561
Furniture, machinery and equipment.... 3,002 (56) 2,946
---------- ---------- ----------- ----------
$ -0- $ 6,232 $ (74) $ 6,158
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
For the period January 1, 1990 through
August 31, 1990:
Land rights........................... $ 11 $ (11)
Land improvements and utilities....... 2,230 $ 975 (3,205)
Hotels and other buildings............ 12,530 7,611 (20,141)
Furniture, machinery and equipment.... 18,144 11,461 $ (996) (28,609)
---------- ---------- ----------- ------------ ----------
$ 32,915 $ 20,047 $ (996) $ (51,966) $ -0-
---------- ---------- ----------- ------------ ----------
---------- ---------- ----------- ------------ ----------
<FN>
- ------------------------
(A) In accordance with fresh start accounting, accumulated depreciation at
August 31, 1990 was reclassified to property and equipment.
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RII describes a
change in entity and related presentation for periods presented.
II-17
<PAGE>
SCHEDULE VIII
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
VALUATION ACCOUNTS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
OF PERIOD EXPENSES DEDUCTIONS (A) OTHER (B) PERIOD
----------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1992:
Allowance for doubtful receivables:
Gaming........................................ $ 8,169 $ 3,098 $ (4,315) $ 6,952
Other......................................... 1,709 949 (1,446) 1,212
----------- ----------- ------- -----------
$ 9,878 $ 4,047 $ (5,761) $ 8,164
----------- ----------- ------- -----------
----------- ----------- ------- -----------
For the year ended December 31, 1991:
Allowance for doubtful receivables:
Gaming........................................ $ 8,397 $ 5,397 $ (5,625) $ 8,169
Other......................................... 1,881 976 (1,148) 1,709
----------- ----------- ------- -----------
$ 10,278 $ 6,373 $ (6,773) $ 9,878
----------- ----------- ------- -----------
----------- ----------- ------- -----------
For the period September 1, 1990 through December
31, 1990:
Allowance for doubtful receivables:
Gaming........................................ $ 9,834 $ 1,289 $ (2,726) $ 8,397
Other......................................... 2,483 403 (1,005) 1,881
----------- ----------- ------- -----------
$ 12,317 $ 1,692 $ (3,731) $ 10,278
----------- ----------- ------- -----------
----------- ----------- ------- -----------
For the period January 1, 1990 through August 31,
1990:
Allowance for doubtful receivables:
Gaming........................................ $ 8,136 $ 2,646 $ (2,059) $ 1,111 $ 9,834
Other......................................... 1,383 884 (625) 841 2,483
----------- ----------- ------- ----------- -----------
$ 9,519 $ 3,530 $ (2,684) $ 1,952 $ 12,317
----------- ----------- ------- ----------- -----------
----------- ----------- ------- ----------- -----------
<FN>
- ------------------------
(A) Write-off of uncollectible accounts, net of recoveries.
(B) Adjustment in connection with the revaluation of the Company's assets and
liabilities as of August 31, 1990.
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RII describes a
change in entity and related presentation for periods presented.
II-18
<PAGE>
SCHEDULE X
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
SUPPLEMENTARY STATEMENTS OF OPERATIONS INFORMATION
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------
1990
----------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
--------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Maintenance and repairs.......................................... $ 11,709 $ 6,007 $ 18,845 $ 20,843
Gaming taxes..................................................... $ 16,977 $ 6,463 $ 24,376 $ 26,053
Property taxes................................................... $ 4,950 $ 2,842 $ 9,193 $ 9,279
Advertising...................................................... $ 6,081 $ 4,570 $ 12,438 $ 11,019
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RII describes a
change in entity and related presentation for periods presented.
II-19
<PAGE>
REPORT OF INDEPENDENT AUDITORS ON
FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Shareholders of Resorts International, Inc.
Resorts International Hotel, Inc.
We have audited the consolidated financial statements of Resorts International
Hotel, Inc. as of December 31, 1992 and 1991, and for each of the three years in
the period ended December 31, 1992, and have issued our report thereon dated
February 19, 1993 except for Note 14, as to which the date is December 29, 1993,
included elsewhere in this Registration Statement. Our audits also included the
financial statement schedules listed in Item 21B of this Registration Statement.
These schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
ERNST & YOUNG
Philadelphia, Pennsylvania
February 19, 1993
II-20
<PAGE>
SCHEDULE II
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
BALANCE AT AMOUNTS BALANCE AT END
BEGINNING WRITTEN OF PERIOD --
OF PERIOD ADDITIONS OFF CURRENT
----------- --------- ---------- ----------------
<S> <C> <C> <C> <C>
For the year ended December 31, 1992:
RIB (A).................................................. $ 50,000 $ 50,000
For the year ended December 31, 1991:
RIB (A).................................................. $ 50,000 $ 50,000
For the period September 1, 1990 through December 31, 1990:
RIB (A).................................................. $ 50,000 $ 50,000
For the period January 1, 1990 through August 31, 1990:
RIB (A).................................................. $ 50,000 $ 50,000
Griffco (B).............................................. $ 35,000 $ (35,000) $ -0-
<FN>
- ------------------------
(A) In 1988 RIH loaned $50,000,000 to RIB, an indirect, wholly owned
subsidiary of RII, in exchange for a promissory note. Such note is payable
on demand and bears interest at 13 1/2% per annum. Interest is payable
semi-annually on May 1 and November 1 of each year.
(B) In 1988 RIH loaned $35,000,000 to Griffco, RII's then parent. Such note
was payable on demand and non-interest bearing. Effective August 31, 1990
this note was cancelled as part of the Old Plan.
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RIH describes a
change in entity and related presentation for periods presented.
II-21
<PAGE>
SCHEDULE IV
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
INDEBTEDNESS TO RELATED PARTIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING END OF
OF PERIOD ADDITIONS DEDUCTIONS PERIOD
----------- --------- --------------- -----------
<S> <C> <C> <C> <C>
For the year ended December 31, 1992:
GRI..................................................... $ 325,000 $ 325,000
For the year ended December 31, 1991:
GRI..................................................... $ 325,000 $ 325,000
For the period September 1, 1990 through December 31,
1990:
GRI..................................................... $ 325,000 $ 325,000
For the period January 1, 1990 through August 31, 1990:
GRI..................................................... $ 355,231 $ (30,231)(A) $ 325,000
<FN>
- ------------------------
(A) Interest receivable was reclassified to long-term debt at the end of 1989
as the terms of these notes mirrored the terms of GRI's public
indebtedness, and there was a moratorium on the payment of interest on
GRI's public indebtedness during the period GRI was involved in bank-
ruptcy proceedings. This interest was written off as of the Old Effective
Date of the Old Plan.
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RIH describes a
change in entity and related presentation for periods presented.
II-22
<PAGE>
SCHEDULE V
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
BALANCE
AT
BEGINNING ACCUMULATED BALANCE AT
OF ADDITIONS RETIREMENTS BASIS DEPRECIATION END OF
PERIOD AT COST OR SALES ADJUSTMENT(B) RECLASS(B) OTHER(A) PERIOD
-------- --------- ----------- ------------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended December 31,
1992:
Land and land rights............. $53,250 $ 53,250
Land improvements................ 97 $ 33 130
Hotel and other buildings........ 80,718 3,794 $ (8) $ 8,731 93,235
Furniture, machinery and
equipment....................... 26,665 4,203 (9) 309 31,168
Construction in progress......... 1,848 7,518 (9,040) 326
-------- --------- ----------- -------- ----------
$162,578 $ 15,548 $ (17) $ -0- $ 178,109
-------- --------- ----------- -------- ----------
-------- --------- ----------- -------- ----------
For the year ended December 31,
1991:
Land and land rights............. $53,250 $ 53,250
Land improvements................ 82 $ 15 97
Hotel and other buildings........ 70,643 4,356 $ (346) $ 6,065 80,718
Furniture, machinery and
equipment....................... 14,135 8,175 4,355 26,665
Construction in progress......... 2,080 10,188 (10,420) 1,848
-------- --------- ----------- -------- ----------
$140,190 $ 22,734 $ (346) $ -0- $ 162,578
-------- --------- ----------- -------- ----------
-------- --------- ----------- -------- ----------
For the period September 1, 1990
through December 31, 1990:
Land and land rights............. $53,250 $ 53,250
Land improvements................ 82 82
Hotel and other buildings........ 67,890 $ 1,620 $ (40) $ 1,173 70,643
Furniture, machinery and
equipment....................... 11,828 2,317 (78) 68 14,135
Construction in progress......... 1,950 1,371 (1,241) 2,080
-------- --------- ----------- -------- ----------
$135,000 $ 5,308 $ (118) $ -0- $ 140,190
-------- --------- ----------- -------- ----------
-------- --------- ----------- -------- ----------
For the period January 1, 1990
through August 31, 1990:
Land and land rights............. $54,607 $ (1,346) $ (11) $ 53,250
Land improvements................ 2,086 (1,804) (211) $ 11 82
Hotel and other buildings........ 141,915 $ 7,481 (77,180) (9,977) 5,651 67,890
Furniture, machinery and
equipment....................... 39,140 6,742 $ (520) (19,519) (15,616) 1,601 11,828
Construction in progress......... 4,108 5,105 (7,263) 1,950
-------- --------- ----------- ------------- ----------- -------- ----------
$241,856 $ 19,328 $ (520) $ (99,849) $ (25,815) $ -0- $ 135,000
-------- --------- ----------- ------------- ----------- -------- ----------
-------- --------- ----------- ------------- ----------- -------- ----------
<FN>
- ------------------------
(A) Transfer of completed projects out of construction in progress.
(B) In accordance with fresh start accounting, accumulated depreciation was
reclassified to property and equipment, and net property and equipment was
restated to its estimated fair value as of August 31, 1990.
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RIH describes a
change in entity and related presentation for periods presented.
II-23
<PAGE>
SCHEDULE VI
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED RECLASS TO BALANCE AT
BEGINNING TO RETIREMENTS PROPERTY AND END OF
OF PERIOD EXPENSE OR SALES OTHER EQUIPMENT(A) PERIOD
---------- --------- ----------- ----- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
For the year ended December 31,
1992:
Land improvements................ $ 11 $ 13 $ 24
Hotel and other buildings........ 5,059 4,636 9,695
Furniture, machinery and
equipment....................... 5,957 6,753 $ (9) 12,701
---------- --------- ----------- ----------
$ 11,027 $ 11,402 $ (9) $ 22,420
---------- --------- ----------- ----------
---------- --------- ----------- ----------
For the year ended December 31,
1991:
Land improvements................ $ 3 $ 8 $ 11
Hotel and other buildings........ 1,021 4,049 $ (11) 5,059
Furniture, machinery and
equipment....................... 930 5,027 5,957
---------- --------- ----------- ----------
$ 1,954 $ 9,084 $ (11) $ 11,027
---------- --------- ----------- ----------
---------- --------- ----------- ----------
For the period September 1, 1990
through December 31, 1990:
Land improvements................ $ 3 $ 3
Hotel and other buildings........ 1,001 $ 20 1,021
Furniture, machinery and
equipment....................... 898 $ (37) 69 930
---------- --------- ----------- ----- ----------
$ -0- $ 1,902 $ (37) $ 89 $ 1,954
---------- --------- ----------- ----- ----------
---------- --------- ----------- ----- ----------
For the period January 1, 1990
through August 31, 1990:
Land rights...................... $ 11 $ (11)
Land improvements................ 139 $ 72 (211)
Hotel and other buildings........ 6,079 3,898 (9,977)
Furniture, machinery and
equipment....................... 9,196 6,750 $ (330) (15,616)
---------- --------- ----------- ------------- ----------
$ 15,425 $ 10,720 $ (330) $ (25,815) $ -0-
---------- --------- ----------- ------------- ----------
---------- --------- ----------- ------------- ----------
<FN>
- ------------------------
(A) In accordance with fresh start accounting, accumulated depreciation at
August 31, 1990 was reclassified to property and equipment.
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RIH describes a
change in entity and related presentation for periods presented.
II-24
<PAGE>
SCHEDULE VIII
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
VALUATION ACCOUNTS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
OF PERIOD EXPENSES DEDUCTIONS (A) OTHER (B) PERIOD
----------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1992:
Allowance for doubtful receivables:
Gaming......................................... $ 5,326 $ 1,334 $ (2,460) $ 4,200
Other.......................................... 327 80 (359) 48
----------- ----------- ------- -----------
$ 5,653 $ 1,414 $ (2,819) $ 4,248
----------- ----------- ------- -----------
----------- ----------- ------- -----------
For the year ended December 31, 1991:
Allowance for doubtful receivables:
Gaming......................................... $ 5,496 $ 3,328 $ (3,498) $ 5,326
Other.......................................... 221 152 (46) 327
----------- ----------- ------- -----------
$ 5,717 $ 3,480 $ (3,544) $ 5,653
----------- ----------- ------- -----------
----------- ----------- ------- -----------
For the period September 1, 1990 through December
31, 1990:
Allowance for doubtful receivables:
Gaming......................................... $ 5,642 $ 688 $ (834) $ 5,496
Other.......................................... 197 113 (89) 221
----------- ----------- ------- -----------
$ 5,839 $ 801 $ (923) $ 5,717
----------- ----------- ------- -----------
----------- ----------- ------- -----------
For the period January 1, 1990 through August 31,
1990:
Allowance for doubtful receivables:
Gaming......................................... $ 4,814 $ 1,165 $ (812) $ 475 $ 5,642
Other.......................................... 101 142 (148) 102 197
----------- ----------- ------- ----- -----------
$ 4,915 $ 1,307 $ (960) $ 577 $ 5,839
----------- ----------- ------- ----- -----------
----------- ----------- ------- ----- -----------
<FN>
- ------------------------
(A) Write-off of uncollectible accounts, net of recoveries.
(B) Adjustment in connection with the revaluation of RIH's assets and
liabilities as of August 31, 1990.
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RIH describes a
change in entity and related presentation for periods presented.
II-25
<PAGE>
SCHEDULE X
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
SUPPLEMENTARY STATEMENTS OF OPERATIONS INFORMATION
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------
1990
----------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
--------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Maintenance and repairs.......................................... $ 5,205 $ 2,692 $ 8,585 $ 9,480
Gaming taxes..................................................... $ 11,706 $ 5,465 $ 18,223 $ 19,642
Property taxes................................................... $ 3,866 $ 1,972 $ 5,966 $ 6,113
Advertising...................................................... $ 3,637 $ 2,222 $ 8,031 $ 6,986
</TABLE>
Note 2 of Notes to Consolidated Financial Statements of RIH describes a
change in entity and related presentation for periods presented.
II-26
<PAGE>
REPORT OF INDEPENDENT AUDITORS ON
FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Shareholders of Resorts International, Inc.
PIRL Group
We have audited the combined financial statements of PIRL Group as of December
31, 1992 and 1991, and for each of the three years in the period ended December
31, 1992, and have issued our report thereon dated April 23, 1993 except for
Note 13, as to which the date is December 29, 1993, included elsewhere in this
Registration Statement. Our audits also included the financial statement
schedules listed in Item 21B of this Registration Statement. These schedules are
the responsibility of PIRL Group's management. Our responsibility is to express
an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
ERNST & YOUNG
Philadelphia, Pennsylvania
April 23, 1993
II-27
<PAGE>
SCHEDULE II
PIRL GROUP
AMOUNTS RECEIVABLE FROM RELATED PARTIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DEDUCTIONS BALANCE AT
BALANCE AT -------------------------- END OF PERIOD
BEGINNING AMOUNTS AMOUNTS --------------------------
OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT NOT CURRENT
----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
For the year ended December 31, 1992:
George R. Myers (A)........................ $ 83 $ 19 $ (102) -0- -0-
For the year ended December 31, 1991:
George R. Myers (A)........................ $ 41 $ 42 $ 83
George R. Myers (B)........................ $ 298 $ (250) $ (48) -0- -0-
For the period September 1, 1990 through
December 31, 1990:
George R. Myers (A)........................ $ 41 $ 41
George R. Myers (B)........................ $ 298 $ 38 $ 260
For the period January 1, 1990 through August
31, 1990:
George R. Myers (B)........................ $ 323 $ (25) $ 38 $ 260
<FN>
- ------------------------
(A) This represents purchases and/or advances made on behalf of Mr. Myers,
President of RIB through December 1991, in connection with the
construction of his home on Paradise Island. This receivable was offset
against amounts payable to Mr. Myers in conjunction with his termination
settlement in 1992.
(B) This receivable resulted from the sale of property on Paradise Island in
1987 to a corporation controlled by Mr. Myers. This receivable was secured
by a mortgage on the property. $125,000 of the original receivable of
$350,000 was to be repaid based on employment service credit at the rate
of $25,000 per year for five years beginning in 1988. The remainder of the
receivable originally bore interest at the rate of 10% per annum and
required monthly payments; however, in 1988 the Company agreed to suspend
principal and interest payments and negotiate new terms. Of the balance
outstanding at January 1, 1990, $225,000 was repaid in cash and $50,000
was repaid in employment service credits.
</TABLE>
Note 2 of Notes to Combined Financial Statements of PIRL Group describes a
change in entity and related presentation for periods presented.
II-28
<PAGE>
SCHEDULE V
PIRL GROUP
PROPERTY AND EQUIPMENT
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
BALANCE AT BASIS ACCUMULATED BALANCE AT
BEGINNING ADDITIONS RETIREMENTS ADJUSTMENT DEPRECIATION END OF
OF PERIOD AT COST OR SALES (D) RECLASS (D) OTHER PERIOD
---------- --------- ----------- ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
For the year ended December 31,
1992:
Land and land rights............. $ 80,385 $ (136) $ 80,249
Land improvements and
utilities....................... 21,845 $ 207 (94) $ 431(A) 22,389
Hotels and other buildings....... 75,927 98 353(A) 76,348
(30)(B)
Furniture, machinery and
equipment....................... 33,732 96 (442) 3,117(A) 36,196
(307)(B)
Construction in progress......... 948 3,920 (3,901)(A) 889
(68)(B)
(10)(C)
---------- --------- ----------- ------------ ----------
$ 212,837 $ 4,321 $ (672) $ (415) $ 216,071
---------- --------- ----------- ------------ ----------
---------- --------- ----------- ------------ ----------
For the year ended December 31,
1991:
Land and land rights............. $ 80,385 $ 80,385
Land improvements and
utilities....................... 21,385 $ 460(A) 21,845
Hotels and other buildings....... 74,999 $ 26 $ (140) 1,064(A) 75,927
(22)(B)
Furniture, machinery and
equipment....................... 28,817 6 (200) 5,761(A) 33,732
(652)(B)
Construction in progress......... 4,286 3,975 (7,285)(A) 948
(28)(C)
---------- --------- ----------- ------------ ----------
$ 209,872 $ 4,007 $ (340) $ (702) $ 212,837
---------- --------- ----------- ------------ ----------
---------- --------- ----------- ------------ ----------
For the period September 1, 1990
through December 31, 1990:
Land and land rights............. $ 81,150 $ (90) $ (675)(B) $ 80,385
Land improvements and
utilities....................... 21,708 (337) 14(A) 21,385
Hotels and other buildings....... 74,647 (116) 558(A) 74,999
(90)(B)
Furniture, machinery and
equipment....................... 22,874 $ 3 (3,590) 9,649(A) 28,817
(119)(B)
Construction in progress......... 10,160 4,352 (10,221)(A) 4,286
(5)(C)
---------- --------- ----------- ------------ ----------
$ 210,539 $ 4,355 $ (4,133) $ (889) $ 209,872
---------- --------- ----------- ------------ ----------
---------- --------- ----------- ------------ ----------
For the period January 1, 1990
through August 31, 1990:
Land and land rights............. $ 85,043 $ (3,532) $ (361) $ 81,150
Land improvements and
utilities....................... 25,571 (901) $ (2,994) $ 32(A) 21,708
Hotels and other buildings....... 101,586 (18,189) (9,633) 937(A) 74,647
(54)(B)
Furniture, machinery and
equipment....................... 36,671 (1,811) (3,757) (12,724) 5,122(A) 22,874
(628)(B)
1(C)
Construction in progress......... 14,423 $ 5,076 (3,205) (6,091)(A) 10,160
(43)(C)
---------- --------- ----------- ----------- ------------ ------------ ----------
$ 263,294 $ 5,076 $ (5,343) $ (26,413) $ (25,351) $ (724) $ 210,539
---------- --------- ----------- ----------- ------------ ------------ ----------
---------- --------- ----------- ----------- ------------ ------------ ----------
<FN>
- ----------------------------------
(A) Transfer of completed projects out of construction in progress.
(B) Reclassification out of property and equipment.
(C) Transfers (to) from affiliates.
(D) In accordance with fresh start accounting, accumulated depreciation was
reclassified to property and equipment, and net property and equipment was
restated to its estimated fair value as of August 31, 1990.
</TABLE>
Note 2 of Notes to Combined Financial Statements of PIRL Group describes a
change in entity and related presentation for periods presented.
II-29
<PAGE>
SCHEDULE VI
PIRL GROUP
ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED RECLASS TO BALANCE AT
BEGINNING TO RETIREMENTS PROPERTY AND END OF
OF PERIOD EXPENSE OR SALES EQUIPMENT (A) PERIOD
----------- --------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1992:
Land improvements and utilities................ $ 2,735 $ 1,784 $ 4,519
Hotels and other buildings..................... 6,332 4,595 10,927
Furniture, machinery and equipment............. 9,575 7,413 $ (421) 16,567
----------- --------- ------ -----------
$ 18,642 $ 13,792 $ (421) $ 32,013
----------- --------- ------ -----------
----------- --------- ------ -----------
For the year ended December 31, 1991:
Land improvements and utilities................ $ 648 $ 2,087 $ 2,735
Hotels and other buildings..................... 1,524 4,808 6,332
Furniture, machinery and equipment............. 1,954 7,710 $ (89) 9,575
----------- --------- ------ -----------
$ 4,126 $ 14,605 $ (89) $ 18,642
----------- --------- ------ -----------
----------- --------- ------ -----------
For the period September 1, 1990 through December
31, 1990:
Land improvements and utilities................ $ 659 $ (11) $ 648
Hotels and other buildings..................... 1,531 (7) 1,524
Furniture, machinery and equipment............. 2,064 (110) 1,954
----------- --------- ------ -----------
$ -0- $ 4,254 $ (128) $ 4,126
----------- --------- ------ -----------
----------- --------- ------ -----------
For the period January 1, 1990 through August 31,
1990:
Land improvements and utilities................ $ 2,091 $ 903 $ (2,994)
Hotels and other buildings..................... 6,114 3,519 (9,633)
Furniture, machinery and equipment............. 8,649 4,541 $ (466) (12,724)
----------- --------- ------ ------------- -----------
$ 16,854 $ 8,963 $ (466) $ (25,351) $ -0-
----------- --------- ------ ------------- -----------
----------- --------- ------ ------------- -----------
<FN>
- ------------------------
(A) In accordance with fresh start accounting, accumulated depreciation at
August 31, 1990 was reclassified to property and equipment.
</TABLE>
Note 2 of Notes to Combined Financial Statements of PIRL Group describes a
change in entity and related presentation for periods presented.
II-30
<PAGE>
SCHEDULE VIII
PIRL GROUP
VALUATION ACCOUNTS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
OF PERIOD EXPENSES DEDUCTIONS (A) OTHER (B) PERIOD
----------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1992:
Allowance for doubtful receivables:
Gaming........................................ $ 2,843 $ 1,764 $ (1,855) $ 2,752
Other......................................... 1,382 869 (1,087) 1,164
----------- ----------- ------- -----------
$ 4,225 $ 2,633 $ (2,942) $ 3,916
----------- ----------- ------- -----------
----------- ----------- ------- -----------
For the year ended December 31, 1991:
Allowance for doubtful receivables:
Gaming........................................ $ 2,901 $ 2,069 $ (2,127) $ 2,843
Other......................................... 1,590 824 (1,032) 1,382
----------- ----------- ------- -----------
$ 4,491 $ 2,893 $ (3,159) $ 4,225
----------- ----------- ------- -----------
----------- ----------- ------- -----------
For the period September 1, 1990 through December
31, 1990:
Allowance for doubtful receivables:
Gaming........................................ $ 4,192 $ 601 $ (1,892) $ 2,901
Other......................................... 2,104 290 (804) 1,590
----------- ----------- ------- -----------
$ 6,296 $ 891 $ (2,696) $ 4,491
----------- ----------- ------- -----------
----------- ----------- ------- -----------
For the period January 1, 1990 through August 31,
1990:
Allowance for doubtful receivables:
Gaming........................................ $ 3,322 $ 1,481 $ (1,247) $ 636 $ 4,192
Other......................................... 1,240 718 (593) 739 2,104
----------- ----------- ------- ----------- -----------
$ 4,562 $ 2,199 $ (1,840) $ 1,375 $ 6,296
----------- ----------- ------- ----------- -----------
----------- ----------- ------- ----------- -----------
<FN>
- ------------------------
(A) Write-off of uncollectible accounts, net of recoveries.
(B) Adjustment in connection with the revaluation of PIRL Group's assets and
liabilities as of August 31, 1990.
</TABLE>
Note 2 of Notes to Combined Financial Statements of PIRL Group describes a
change in entity and related presentation for periods presented.
II-31
<PAGE>
SCHEDULE X
PIRL GROUP
SUPPLEMENTARY STATEMENTS OF OPERATIONS INFORMATION
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------
1990
------------------------
THROUGH FROM
AUGUST 31 SEPTEMBER 1 1991 1992
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Maintenance and repairs............................................ $ 6,371 $ 3,261 $ 9,946 $ 11,156
Gaming taxes....................................................... $ 5,271 $ 998 $ 6,153 $ 6,411
Property taxes..................................................... $ 134 $ 429 $ 1,732 $ 1,670
Advertising........................................................ $ 2,444 $ 2,348 $ 4,407 $ 4,033
</TABLE>
Note 2 of Notes to Combined Financial Statements of PIRL Group describes a
change in entity and related presentation for periods presented.
II-32
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrants
have duly caused this Amendment to the registration statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of
Atlantic City, State of New Jersey, on , 199 .
RESORTS INTERNATIONAL, INC.
By ___________________________________
Christopher D. Whitney
Executive Vice President
and Chief of Staff
RESORTS INTERNATIONAL HOTEL, INC.
By ___________________________________
Christopher D. Whitney
Executive Vice President
and Chief of Staff
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
By ___________________________________
Christopher D. Whitney
President
P. I. RESORTS LIMITED
By ___________________________________
Christopher D. Whitney
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the registration statement has been signed by the following persons in the
capacities indicated on , 199 .
RESORTS INTERNATIONAL, INC.
<TABLE>
<C> <S> <C>
By
Merv Griffin Chairman of the Board
By
Antonio C. Alvarez II Director
By
Warren Cowan Director
</TABLE>
II-33
<PAGE>
<TABLE>
<C> <S> <C>
By
Thomas E. Gallagher Director
By
Joseph G. Kordsmeier Director
By
Paul C. Sheeline Director
Executive Vice President and
By Chief of Staff (Principal
Christopher D. Whitney Executive Officer)
Executive Vice President --
By Finance and Chief Financial
Matthew B. Kearney Officer (Principal Executive
and Financial Officer)
Vice President -- Controller,
By Chief Accounting Officer and
David G. Bowden Assistant Secretary (Principal
Accounting Officer)
</TABLE>
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
<TABLE>
<C> <S> <C>
By Director and President
Christopher D. Whitney (Principal Executive Officer)
Director, Executive Vice
President -- Finance and Chief
By Financial Officer (Principal
Matthew B. Kearney Financial and Accounting
Officer)
</TABLE>
RESORTS INTERNATIONAL HOTEL, INC.
<TABLE>
<C> <S> <C>
Director, Executive Vice
By President and Chief of Staff
Christopher D. Whitney (Principal Executive Officer)
Director, Executive Vice
President and Chief Financial
By Officer (Principal Executive,
Matthew B. Kearney Financial and Accounting
Officer)
</TABLE>
II-34
<PAGE>
P. I. RESORTS LIMITED
<TABLE>
<C> <S> <C>
By Director and President
Christopher D. Whitney (Principal Executive Officer)
Director, Vice President --
By Finance and Chief Financial
Matthew B. Kearney Officer (Principal Financial
and Accounting Officer)
</TABLE>
II-35
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- ----------- ---------------------------------------------------------------------------------------------- ---------
<C> <S> <C>
2.01 Plan of Reorganization. (Incorporated by reference to Appendix A of the Information
Statement/Prospectus included in this Registration Statement.)...............................
3.01 Form of proposed Amended and Restated Certificate of Incorporation of RII. (Incorporated by
reference to Appendix C of the Information Statement/Prospectus included in this Registration
Statement.)..................................................................................
3.02 Form of proposed Amended and Restated By-Laws of RII. (Incorporated by reference to Appendix D
of the Information Statement/Prospectus included in this Registration Statement.)............
3.03 Restated Certificate of Incorporation of RII. (Incorporated by reference to Exhibit (3)(a) to
RII's Form 10-K Annual Report for the fiscal year ended December 31, 1990, in File No.
1-4748.).....................................................................................
3.04 By-laws, as amended, of RII. (Incorporated by reference to Exhibit (4)(d) to RII's Form 10-Q
Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.)..............
3.05 Certificate of Incorporation of RIH*..........................................................
3.06 By-laws of RIH*...............................................................................
</TABLE>
<TABLE>
<C> <S> <C>
3.07 Certificate of Incorporation of RIHF*.......................................
3.08 By-laws of RIHF.............................................................
3.09 Amended and Restated Articles of Association of PIRL........................
4.01 See Exhibits 3.01 and 3.02 as to the rights of holders of RII Common Stock
and RII Class B Common Stock after giving effect to the Restructuring......
4.02 See Exhibits 3.03 and 3.04 as to the rights of holders of RII Common Stock
prior to giving effect to the Restructuring................................
4.03 See Exhibit 3.09 as to the rights of holders of PIRL Common Stock...........
4.04 Form of Indenture among RIHF, as issuer, RIH, as guarantor, and State Street
Bank and Trust Company of Connecticut, National Association, as trustee,
with respect to RIHF 11% Mortgage Notes due 2003...........................
4.05 Form of Indenture between RIHF, as issuer, RIH, as guarantor, and U.S. Trust
Company of California, N.A., as trustee, with respect to RIHF 11.375%
Junior Mortgage Notes due 2004.............................................
4.06 Indenture dated as of September 14, 1990, between RII and Chemical Bank
(successor to Manufacturers Hanover Trust Company), as Trustee, with
respect to RII's Senior Secured Redeemable Notes due April 15, 1994, with
Exhibits as executed. (Incorporated by reference to Exhibit (4)(a)(1) to
RII's Form 10-Q Quarterly Report for the quarter ended September 30, 1990,
in File No. 1-4748.).......................................................
4.07 Amended and Restated RIH $200,000,000 Senior Note. (Incorporated by
reference to Exhibit (4)(a)(2) to RII's 10-Q Quarterly Report for the
quarter ended September 30, 1990, in File No. 1-4748.).....................
4.08 Amended and Restated RIH $125,000,000 Senior Note. (Incorporated by
reference to Exhibit to RII's 10-Q Quarterly Report for the quarter ended
September 30, 1990, in File No. 1-4748.)...................................
4.09 RII Pledge Agreement. (Incorporated by reference to Exhibit Q to RII's Form
8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).......
4.10 Assignment of Leases and Rents, RII as Assignor. (Incorporated by reference
to Exhibit U to RII's Form 8-A Registration Statement dated July 19, 1990,
in File No. 1-4748.).......................................................
4.11 RIB $50,000,000 Promissory Note to RIH. (Incorporated by reference to
Exhibit V to RII's Form 8-A Registration Statement dated July 19, 1990, in
File No. 1-4748.)..........................................................
4.12 Indenture of Mortgage from Paradise Island Limited. (Incorporated by
reference to Exhibit W to RII's Form 8-A Registration Statement dated July
19, 1990, in File No. 1-4748.).............................................
4.13 Indenture of Mortgage from Paradise Beach Inn Limited. (Incorporated by
reference to Exhibit X to RII's Form 8-A Registration Statement dated July
19, 1990, in File No. 1-4748.).............................................
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- --------- ---------------------------------------------------------------------------- ---------
<C> <S> <C> <S> <C>
4.14 Guaranty by Paradise Beach Inn Limited. (Incorporated by reference to Exhibit Z to RII's Form
8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).........................
4.15 Indenture of Mortgage from Island Hotel Company Limited. (Incorporated by reference to Exhibit
AA to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)........
4.16 Guaranty by Island Hotel Company Limited (Incorporated by reference to Exhibit BB to RII's
Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)....................
4.17 RIB Collateral Assignment Agreement among RIH, GRI, RIB, Paradise Island Limited, Island Hotel
Company Limited, Paradise Beach Inn Limited and the Bank of New York. (Incorporated by
reference to Exhibit CC to RII's Form 8-A Registration Statement dated July 19, 1990, in File
No. 1-4748.).................................................................................
4.18 RII Security Agreement. (Incorporated by reference to Exhibit P to RII's Form 8-A Registration
Statement dated July 19, 1990, in File No. 1-4748.)..........................................
4.19 Indenture dated as of September 14, 1990, between RII and The Bank of New York as Trustee,
with respect to RII's Mortgage Non-Recourse Pass-Through Notes due June 30, 2000, with
Exhibits as executed. (Incorporated by reference to Exhibit (4)(b) to RII's 10-Q Quarterly
Report for the quarter ended September 30, 1990, in File No. 1-4748.)........................
</TABLE>
<TABLE>
<C> <S> <C>
4.20 Resorts International, Inc. Senior Management 1990 Stock Option Plan.
(Incorporated by reference to Exhibit 8.5 to Exhibit 35 to RII's Form 8
Amendment No. 1 to it's 8-K Current Report dated August 30, 1990, in File
No. 1-4748.)...............................................................
4.21 Griffin Group Warrant**.....................................................
4.22 Form of Mortgage between RIH and State Street Bank and Trust Company of
Connecticut, National Association, securing Guaranty of RIHF Mortgage
Notes......................................................................
4.23 Form of Mortgage between RIH and RIHF, securing RIH Promissory Note.........
4.24 Form of Assignment of Agreements made by RIHF, as Assignor, to State Street
Bank and Trust Company of Connecticut, National Association, as Assignee,
regarding RIH Promissory Note..............................................
4.25 Form of Assignment of Leases and Rents made by RIH, as Assignor, to RIHF, as
Assignee, regarding RIH Promissory Note....................................
4.26 Form of Assignment of Leases and Rents made by RIH, as Assignor, to State
Street Bank and Trust Company of Connecticut, National Association, as
Assignee, regarding Guaranty of RIHF Mortgage Notes........................
4.27 Form of Assignment of Operating Assets made by RIH, as Assignor, to RIHF, as
Assignee, regarding RIH Junior Promissory Note.............................
4.28 Form of Assignment of Operating Assets made by RIH, as Assignor, to State
Street Bank and Trust Company of Connecticut, National Association, as
Assignee, regarding Guaranty of RIHF Mortgage Notes........................
4.29 Form of Mortgage between RIH and U.S. Trust Company of California, N.A.,
securing Guaranty of RIHF Junior Mortgage Notes............................
4.30 Form of Mortgage between RIH and RIHF, securing RIH Junior Promissory Note..
4.31 Form of Assignment of Agreements made by RIHF, as Assignor, to, U.S. Trust
Company of California, N.A., as Assignee, regarding RIH Junior Promissory
Note.......................................................................
4.32 Form of Assignment of Leases and Rents made by RIH, as Assignor, to RIHF, as
Assignee, regarding RIH Junior Promissory Note.............................
4.33 Form of Assignment of Leases and Rents made by RIH, as Assignor, to U.S.
Trust Company of California, N.A., as Assignee, regarding Guaranty of RIHF
Junior Mortgage Notes......................................................
4.34 Form of Assignment of Operating Assets made by RIH, as Assignor, to RIHF, as
Assignee, regarding RIH Promissory Note....................................
4.35 Form of Assignment of Operating Assets made by RIH, as Assignor, to U.S.
Trust Company of California, N.A., as Assignee, regarding the Guaranty of
the RIHF Junior Mortgage Notes.............................................
4.36 Form of Amended and Restated $125,000,000 RIH Promissory Note (Incorporated
by reference to Exhibit A to Exhibit 4.04 hereto)..........................
</TABLE>
- ------------------------
_* Previously filed.
** To be filed by amendment.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- --------- ---------------------------------------------------------------------------- ---------
<C> <S> <C> <S> <C>
4.37 Form of Amended and Restated $35,000,000 RIH Junior Promissory Note (Incorporated by reference
to Exhibit A to Exhibit 4.05)................................................................
5.01 Opinion of Gibson, Dunn & Crutcher*...........................................................
5.02 Opinion of Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime**.................................
</TABLE>
<TABLE>
<C> <S> <C>
5.03 Opinion of Harry B. Sands & Co.*............................................
8.01 Opinion of Gibson, Dunn & Crutcher regarding tax matters**..................
10.01 Form of Interim Management Agreement between PIRL and RII (Incorporated by
referrence to Exhibit D to Exhibit 10.59)*.................................
10.02 [Not used]..................................................................
10.03 Agreement, dated May 23, 1978, between The Hotel Corporation of The Bahamas
("HCB") and Paradise Enterprises Limited. (Incorporated by reference to
Exhibit (10)(b)(i) to RII's 10-K Annual Report for the fiscal year ended
December 31, 1988, in File No. 1-4748.)....................................
10.04 Letter, dated July 2, 1985, from HCB to the RII amending Exhibit 10.03
hereto. (Incorporated by reference to exhibit to RII's Form 8-K Current
Report dated July 9, 1985, in File No. 1-4748.)............................
10.05 Agreement, dated May 23, 1978, between HCB and Paradise Realty Limited (now
RIB). (Incorporated by reference to Exhibit 10.01 to GRI's Form S-1
Registration Statement filed July 13, 1988, in File No. 33-23063.).........
10.06 Letter, dated September 26, 1988, from HCB to RIB extending Exhibit
(10)(a)(3) hereto. (Incorporated by reference to Exhibit (10(b)(iv) to
RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in
File No. 1-4748.)..........................................................
10.07 Supplement, dated February 21, 1990, to license granted March 30, 1978 to
Paradise Enterprises Limited. (Incorporated by reference to Exhibit
(10)(b)(v) to RII's 10-K Annual Report for the fiscal year ended December
31, 1989, in File No. 1-4748.).............................................
10.08(a) Supplement, dated September 7, 1990, to license granted March 30, 1978 to
Paradise Enterprises Limited. (Incorporated by reference to Exhibit
10(a)(6) to RII's 10-K Annual Report for the fiscal year ended December 31,
1988, in File No. 1-4748.).................................................
10.08(b) Supplement, dated January 15, 1991, to license granted March 30, 1978 to
Paradise Enterprises Limited. (Incorporated by reference to Exhibit
10(b)(7) to RII's 10-K Annual Report for the fiscal year ended December 31,
1990, in File No. 1-4748.)
10.09 Supplement, dated February 13, 1992, to license granted March 30, 1978 to
Paradise Enterprises Limited. (Incorporated by reference to Exhibit
10(a)(8) to RII's 10-K Annual Report for the fiscal year ended December 31,
1992, in File No. 1-4748.).................................................
10.10 Supplement, dated December 30, 1992, to license granted March 30, 1978 to
Paradise Enterprises Limited. (Incorporated by reference to Exhibit
10(a)(9) to RII's 10-K Annual Report for the fiscal year ended December 31,
1992, in File No. 1-4748.).................................................
10.11 Lease Agreement, dated October 26, 1983, between RII and Ocean Showboat,
Inc. (Incorporated by reference to Exhibit (10)(c)(i) to RII's 10-K Annual
Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)...
10.12 First Amendment, dated January 15, 1985, to Lease Agreement, dated October
26, 1983, between RII and Atlantic City Showboat, Inc. (assignee from
affiliate -- Ocean Showboat, Inc.). (Incorporated by reference to Exhibit
(10)(c)(ii) to RII's 10-K Annual Report for the fiscal year ended December
31, 1984, in File No. 1-4748.).............................................
10.13 Second and Third Amendments, dated July 5 and October 28, 1985,
respectively, to Lease Agreement, dated October 26, 1983, between RII and
Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit
(10)(c)(iii) to RII's 10-K Annual Report for the fiscal year ended December
31, 1985, in File No. 1-4748.).............................................
10.14 Restated Third Amendment, dated August 28, 1986, to Lease Agreement, dated
October 26, 1983, between RII and Atlantic City Showboat, Inc.
(Incorporated by reference to Exhibit (10)(c)(iv) to RII's 10-K Annual
Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)...
</TABLE>
- ------------------------
_* Previously filed.
** To be filed by amendment.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- --------- ---------------------------------------------------------------------------- ---------
<C> <S> <C> <S> <C>
10.15 Fourth Amendment, dated December 16, 1986, to Lease Agreement, dated October 26, 1983, between
RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(v) to
RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)...
</TABLE>
<TABLE>
<C> <S> <C>
10.16 Fifth Amendment, dated February 1987, to Lease Agreement, dated October 26,
1983, between RII and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(vi) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1986, in File No. 1-4748.).........................
10.17 Seventh Amendment, dated October 18, 1988, to Lease Agreement, dated Octo-
ber 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by
reference to Exhibit (10)(c)(viii) to RII's 10-K Annual Report for the
fiscal year ended December 31, 1988, in File No. 1-4748.)..................
10.18 RII Executive Health Plan (Incorporated by reference to Exhibit 10(c)(1) to
RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in
File No. 1-4748.)..........................................................
10.19 Resorts Retirement Savings Plan. (Incorporated by reference to Exhibit
(10)(c)(2) to RII's 10-K Annual Report for the fiscal year ended December
31, 1991, in File No. 1-4748.).............................................
10.20 Employment Agreement, dated as of September 17, 1990, between RII and David
P. Hanlon. (Incorporated by reference to Exhibit 9.3A to Exhibit 35 to the
Form 8 Amendment dated November 16, 1990, to RII's 8-K Current Report dated
August 30, 1990, in File No. 1-4748.)......................................
10.21 Employment Agreement, dated May 3, 1991, between the RII and Christopher D.
Whitney. (Incorporated by reference to Exhibit (10(d)(2) to RII's 10-K
Annual Report for the fiscal year ended December 31, 1991, in File No.
1-4748.)...................................................................
10.22 Amendment to Employment Agreement, dated as of December 3, 1992, between RII
and Christopher D. Whitney*................................................
10.23 Employment Agreement, dated May 3, 1991, between RII and Matthew B. Kearney.
(Incorporated by reference to Exhibit (10)(d)(3) to RII's 10-K Annual
Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)...
10.24 Amendment to Employment Agreement, dated December 3, 1992, between RII and
Matthew B. Kearney*........................................................
10.25 Second Amendment to Employment Agreement, dated September 24, 1993, between
RII and Matthew B. Kearney*................................................
10.26 Employment Agreement, dated as of September 17, 1992, between RII and David
P. Hanlon. (Incorporated by reference to Exhibit 10(d)(4) to RII's 10-K
Annual Report for the fiscal year ended December 31, 1992, in File No.
1-4748.)...................................................................
10.27 Termination Agreement, dated as of September 27, 1993, between RII and David
P. Hanlon*.................................................................
10.28 Stock Option Agreement, dated as of May 3, 1991, between RII and David P.
Hanlon. (Incorporated by reference to Exhibit (10)(e)(1) to RII's 10-K
Annual Report for the fiscal year ended December 31, 1991, in File No.
1-4748.)...................................................................
10.29 Stock Option Agreement, dated as of May 3, 1991, between RII and Christopher
D. Whitney. (Incorporated by reference to Exhibit (10)(e)(2) to RII's 10-K
Annual Report for the fiscal year ended December 31, 1991, in File No.
1-4748.)...................................................................
10.30 Stock Option Agreement, dated as of May 3, 1991, between RII and Matthew B.
Kearney. (Incorporated by reference to Exhibit (10)(e)(5) to RII's 10-K
Annual Report for the fiscal year ended December 31, 1991, in File No.
1-4748.)...................................................................
10.31 Stock Option Agreement, dated as of May 3, 1991, between RII and David G.
Bowden. (Incorporated by reference to Exhibit (10)(e)(5) to RII's 10-K
Annual Report for the fiscal year ended December 31, 1991, in File No.
1-4748.)...................................................................
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- --------- ---------------------------------------------------------------------------- ---------
<C> <S> <C> <S> <C>
10.32 Stock Option Agreement, dated as of May 3, 1991, between RII and Thomas F. O'Donnell.
(Incorporated by reference to Exhibit (10)(e)(6) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1991, in File No. 1-4748.)...........................................
10.33 Amendment No. 1, dated as of September 17, 1992, to Exhibit 10.30 (Incorporated by reference
to Exhibit 10(e)(6) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992,
in File No. 1-4748)..........................................................................
10.34(a) License and Services Agreement, dated as of September 17, 1992, among the Griffin Group, RII
and RIH*.....................................................................................
10.34(b) Amendment to License and Services Agreement, dated as of September 17, 1992 among the Griffin
Group Inc., RII and RIH**....................................................................
</TABLE>
<TABLE>
<C> <S> <C>
10.35 License and Services Agreement, dated as of September 17, 1990, among Merv
Griffin, the Griffin Group and RII. (Incorporated by reference to Exhibit
1.46 to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to the
registrant's 8-K Current Report dated August 30, 1990, in File No.
1-4748.)...................................................................
10.36 Litigation Trust Agreement, dated as of September 17, 1990, among RII, RIFI,
GRH, and GRI. (Incorporated by reference to Exhibit 1.46 to Exhibit 35 to
the Form 8 Amendment dated November 16, 1990, to the registrant's 8-K
Current Report dated August 30, 1990, in File No. 1-4748.).................
10.37(a) Promissory Note, dated September 28, 1990, between Merv Griffin and RII.
(Incorporated by reference to Exhibit 9.1B to Exhibit 35 to the Form 8
Amendment dated November 16, 1990, to the registrant's 8-K Current Report
dated August 30, 1990, in File No. 1-4748.)................................
10.37(b) Griffin Group Note. (Incorporated by reference to Exhibit 1 to Exhibit
10.34(a) to this Registration Statement.)..................................
10.37(c) Guaranty dated September 17, 1992 by Mervyn E. Griffin in favor of RII
(Incorporated by reference to Exhibit 2 to Exhibit 10.34(a) to this
Registration Statement.)...................................................
10.38 Letter of Credit, dated October 1, 1990, by Morgan Guaranty Trust Company of
New York. (Incorporated by reference to Exhibit 9.1B to Exhibit 35 to the
Form 8 Amendment dated November 16, 1990, to RII's 8-K Current Report dated
August 30, 1990, in File No. 1-4748.)......................................
10.39 Letters extending the termination date of Exhibit 10.38 (Incorporated by
reference to Exhibit 10(i)(2) to RRI's 10-K Annual Report for the fiscal
year ended December 31, 1992 in File No. 1-4748............................
10.40 Indemnity Agreement, executed on September 19, 1990, between Merv Griffin
and RII. (Incorporated by reference to Exhibit 9.6 to Exhibit 35 to the
Form 8 Amendment dated November 16, 1990, to the registrant's 8-K Current
Report dated August 30, 1990, in File No. 1-4748.).........................
10.41 Hotel Corporation of The Bahamas Right of First Refusal. (Incorporated by
reference to Exhibit (10)(n) to RII's 10-K Annual Report for the fiscal
year ended December 31, 1988, in File No. 1-4748.).........................
10.42 Service contract between Rogers & Cowan, Inc. and RII, effective July 1,
1991. (Incorporated by reference to Exhibit (10)(m) to RII's 10-K Annual
Report for the fiscal year ended December 31, 1988, in File No. 1-4748.)...
10.43 Consulting agreement between Alvarez & Marsal, Inc. and RII, effective March
1, 1992 (Incorporated by reference to Exhibit 10(m)(i) to RII's 10-K Annual
Report for the fiscal year ended December 31, 1992, in File No. 1-4748)....
10.44 Amendment, dated September 14, 1992, to the consulting agreement between
Alvarez & Marsal, Inc. and RII (Incorporated by reference to Exhibit
10(m)(2) to RII's 10-K Annual Report for the fiscal year ended December 31,
1992, in File No. 1-4748)..................................................
10.45 Form of Ballot for Allowed Claims of Holders of Series A Notes and GRI
Guaranty...................................................................
</TABLE>
- ------------------------
_* Previously filed.
** To be filed by amendment.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBIT PAGE
- --------- ---------------------------------------------------------------------------- ---------
<C> <S> <C> <S> <C>
10.46 Form of Ballot for Allowed Interests of Holders of RII Common Stock...........................
10.47 Form of Ballot for Allowed Interests of Holders of 1990 Stock Options.........................
10.48 Form of Master Ballot for Allowed Interests of Holders of RII Common Stock....................
10.49 Form of Master Ballot for Allowed Claims of Holders of Series A Notes and GRI Guaranty........
</TABLE>
<TABLE>
<C> <S> <C>
10.50 Form of Ballot for Allowed Interests of Holders of Series B Notes and GRI
Guaranty...................................................................
10.51 Form of Master Ballot for Allowed Claims of Holders of Series B Notes and
GRI Guaranty...............................................................
10.52 Bondholders Support Agreement dated October 11, 1993 among RII, GRI, Sun
International Investments, Ltd., Sun International Hotels Limited, TCW
Special Credits and Fidelity Management and Research Company, concerning
bondholders support*.......................................................
10.53 Letter Agreement dated October 11, 1993 among Fidelity Management and Re-
search Company, TCW Special Credits, RII and Sun International Hotels
Limited concerning consent rights of holders of Old Series Notes*..........
10.54 Revised term Sheet for 11.0% Senior Secured Loan due 2002 with RIHF as
issuer.....................................................................
10.55 Paradise Island Purchase Agreement dated October 11, 1993 between RII and
Sun International Hotels Limited, with Exhibits and Schedules*.............
10.56 Letter Agreement dated October 19, 1993 among RII, Fidelity Management, TCW
Special Credits, Sun International Hotels Limited, Sun International
Investments Ltd. and GGRI regarding GGRI, Inc.*............................
10.57 Stock Subscription Agreement dated October 11, 1993 between Sun
International Investments Limited and Sun International Hotels Limited*....
10.58 Letter Agreement dated October 15, 1993, among RII, Fidelity Management, TCW
Special Credits and Sun International Hotels Limited regarding P.I. Resorts
Limited*...................................................................
10.59 PIRL Standby Distribution Agreement dated October 15, 1993 between RII and
PIRL.......................................................................
10.60 Letter Agreement between RII and PIRL concerning airline support
services*..................................................................
10.61 Letter Agreement concerning appointment of agent for service of process
pursuant to the Standby Distribution Agreement*............................
10.62 Letter Agreement concerning appointment of agent for service of process
pursuant to this Registration Statement....................................
10.63 Letter Agreement dated July 1, 1993 between RII and Bear Stearns & Co. Inc.
for retention of services..................................................
12.01 RII Computation of Ratio of Earnings to Fixed Charges.......................
12.02 RIH Computation of Ratio of Earnings to Fixed Charges.......................
12.03 RII Computation of Pro Forma Ratio of Earnings to Fixed Charges.............
12.04 RIH Computation of Pro Forma Ratio of Earnings to Fixed Charges.............
21.01 List of the Subsidiaries of the Registrants*................................
23.01 Consent of Ernst & Young....................................................
</TABLE>
<TABLE>
<C> <S> <C>
23.02 Consent of Gibson, Dunn & Crutcher (Incorporated by reference to exhibit
5.02)......................................................................
23.03 Consent of Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime (Incorporated by
reference to exhibit 5.02).................................................
23.04 Consent of Harry B. Sands & Co. (Incorporated by reference to exhibit
5.03)......................................................................
25.01 Statement of eligibility on Form T-1 of State Street Bank and Trust Company
of Connecticut, National Association, as trustee under the New RIHF
Mortgage Notes Indenture*..................................................
25.02 Statement of eligibility on Form T-1 of U.S. Trust Company of California,
N.A., as trustee under the New RIHF Junior Mortgage Notes Indenture*.......
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
EXHIBIT A
PARADISE ISLAND PURCHASE AGREEMENT
<PAGE>
Execution Copy
- ------------------------------------------------------------
PURCHASE AGREEMENT
between
RESORTS INTERNATIONAL, INC.
and
SUN INTERNATIONAL HOTELS LIMITED
----------------------------------------
Dated as of October 11, 1993
----------------------------------------
Purchase of Stock of Resorts International (Bahamas)
1984 Limited, and certain assets of RII and
RII Paradise Subsidiaries
- ------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . 2
ARTICLE II
PURCHASE AND SALE OF THE SHARES
AND THE RII PARADISE ASSETS
SECTION 2.01. Transfer of the Shares . . . . . . . . . . 2
SECTION 2.02. Purchase and Sale of the Shares,
the RII Real Estate Assets and
the RII Paradise Assets. . . . . . . . . 2
SECTION 2.03. Delivery of Certificates and Other
Instruments of Transfer. . . . . . . . . 2
SECTION 2.04. Aggregate Purchase Price . . . . . . . . . 3
SECTION 2.05. Preparation of the Closing Date
Balance Sheet and Operations
Statement; Adjustments . . . . . . . . . 3
SECTION 2.06. Closing. . . . . . . . . . . . . . . . . . 6
SECTION 2.07. Third-Party Consents . . . . . . . . . . . 6
SECTION 2.08. Further Assurances . . . . . . . . . . . . 6
SECTION 2.09 Power of Attorney, etc.. . . . . . . . . . 7
ARTICLE III
ASSUMPTION OF CERTAIN LIABILITIES
SECTION 3.01. Assumed Liabilities. . . . . . . . . . . . 8
SECTION 3.02. Liabilities Not Assumed. . . . . . . . . . 8
SECTION 3.03. No Successor . . . . . . . . . . . . . . . 8
SECTION 3.04. Indemnification. . . . . . . . . . . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RII
SECTION 4.01. Organization and Good Standing . . . . . .10
SECTION 4.02. Authorization. . . . . . . . . . . . . . .10
<PAGE>
2
Page
----
SECTION 4.03. No Conflict; Required Filings
and Consents . . . . . . . . . . . . . .11
SECTION 4.04. Capital Stock of the Company
and Subsidiaries . . . . . . . . . . . .12
SECTION 4.05. Financial Statements . . . . . . . . . . .13
SECTION 4.06. Absence of Undisclosed Liabilities
and Liens. . . . . . . . . . . . . . . .13
SECTION 4.07. Real Property and Improvements . . . . . .14
SECTION 4.08. Personal Property. . . . . . . . . . . . .15
SECTION 4.09. Intellectual Property . . . . . . . . . .16
SECTION 4.10. Litigation . . . . . . . . . . . . . . . .16
SECTION 4.11. Insurance . . . . . . . . . . . . . . . .17
SECTION 4.12. United States Benefit Plans. . . . . . . .17
SECTION 4.12A. Bahamas Benefit Plans . . . . . . . . . .19
SECTION 4.13. Absence of Changes of Events . . . . . . .21
SECTION 4.14. Compliance with Applicable
Environmental Laws . . . . . . . . . . .21
SECTION 4.15. Compliance with Laws; Licenses
and Permits. . . . . . . . . . . . . . .23
SECTION 4.16. The Shares; Entire Business. . . . . . . .23
SECTION 4.17. Contracts. . . . . . . . . . . . . . . . .24
SECTION 4.18. Inventory. . . . . . . . . . . . . . . . .24
SECTION 4.19. Receivables; Payables. . . . . . . . . . .25
SECTION 4.20. Employees. . . . . . . . . . . . . . . . .25
SECTION 4.21. Tax Returns and Payments . . . . . . . . .26
SECTION 4.22. Brokers. . . . . . . . . . . . . . . . . .27
SECTION 4.23. Transactions with Affiliates . . . . . . .27
SECTION 4.24. Payments . . . . . . . . . . . . . . . . .27
SECTION 4.25. Buyer Registration Statement;
Buyer Prospectus . . . . . . . . . . . .28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 5.01. Organization and Good Standing . . . . . .29
SECTION 5.02. Authorization. . . . . . . . . . . . . . .29
SECTION 5.03. No Conflict; Required Filings
and Consents . . . . . . . . . . . . . .30
SECTION 5.04. Reorganization Plan Solicitation
Documents. . . . . . . . . . . . . . . .30
SECTION 5.05. Brokers. . . . . . . . . . . . . . . . . .31
SECTION 5.06. Buyer Series A Shares. . . . . . . . . . .31
SECTION 5.07. Buyer Registration Statement;
Buyer Prospectus . . . . . . . . . . . .31
SECTION 5.08. Operation of Buyer . . . . . . . . . . . .32
SECTION 5.09. Capital Structure of Buyer . . . . . . . .32
<PAGE>
3
Page
----
SECTION 5.10. Subscription Agreements. . . . . . . . . .33
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Conduct of Paradise Island Business
Pending the Closing. . . . . . . . . . .33
SECTION 6.02. Securities Laws. . . . . . . . . . . . . .36
SECTION 6.03. Documents and Motions to Be Filed by
RII and GRI. . . . . . . . . . . . . . .36
SECTION 6.04. Reorganization Proceedings . . . . . . . .37
SECTION 6.05. Access to Information; Confidentiality . .38
SECTION 6.06. Notification of Certain Matters. . . . . .38
SECTION 6.07. Further Action; Reasonable Efforts . . . .39
SECTION 6.08. Public Announcements . . . . . . . . . . .39
SECTION 6.09. Employee Benefit Matters . . . . . . . . .39
SECTION 6.10. Bulk Transfer Laws . . . . . . . . . . . .41
SECTION 6.11. Intercompany Accounts, Contracts,
Guaranties and Indebtedness. . . . . . .41
SECTION 6.12. Reorganization Plan Solicitation
Documents. . . . . . . . . . . . . . . .42
SECTION 6.13. Reorganization Proceedings . . . . . . . .42
SECTION 6.14. Waiver of Certain Representations
and Warranties . . . . . . . . . . . . .43
SECTION 6.15. Certain Obligations of Buyer . . . . . . .43
SECTION 6.16. Bank Facility. . . . . . . . . . . . . . .44
SECTION 6.17. Airline Governmental Consents. . . . . . .44
SECTION 6.18. Comfort Letter . . . . . . . . . . . . . .45
SECTION 6.19. Escrow Agreement . . . . . . . . . . . . .45
SECTION 6.20 Insurance Proceeds . . . . . . . . . . . .45
ARTICLE VII
NO SHOP; BUYER'S FEES
SECTION 7.01. No Shop. . . . . . . . . . . . . . . . . .45
SECTION 7.02. Buyer Expense Reimbursement. . . . . . . .47
SECTION 7.03. Attorneys' Fees. . . . . . . . . . . . . .48
SECTION 7.04. Transfer Taxes . . . . . . . . . . . . . .48
<PAGE>
4
Page
----
ARTICLE VIII
CONDITIONS TO THE CLOSING
SECTION 8.01. Conditions to Obligations of Buyer . . . .49
SECTION 8.02. Conditions to Obligations of RII . . . . .51
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
SECTION 9.01. Survival of Representations. . . . . . . .52
SECTION 9.02. Indemnification by RII . . . . . . . . . .53
SECTION 9.03. Indemnification by Buyer . . . . . . . . .53
SECTION 9.04. Notice, etc. . . . . . . . . . . . . . . .54
SECTION 9.05. Reimbursement of Costs . . . . . . . . . .54
SECTION 9.06. Time Limitations . . . . . . . . . . . . .55
SECTION 9.07. Sole and Exclusive Remedy. . . . . . . . .55
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination. . . . . . . . . . . . . . . .55
SECTION 10.02. Rights of Termination. . . . . . . . . . .57
SECTION 10.03. Effect of Termination. . . . . . . . . . .57
SECTION 10.04. Waiver, Exercise of Rights . . . . . . . .57
SECTION 10.05. Amendments . . . . . . . . . . . . . . . .58
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Notices. . . . . . . . . . . . . . . . . .58
SECTION 11.02. Entire Agreement; Assignment . . . . . . .60
SECTION 11.03. Parties in Interest. . . . . . . . . . . .60
SECTION 11.04. GOVERNING LAW. . . . . . . . . . . . . . .60
SECTION 11.05. Headings . . . . . . . . . . . . . . . . .60
SECTION 11.06. Counterparts . . . . . . . . . . . . . . .61
SECTION 11.07. Specific Performance . . . . . . . . . . .61
SECTION 11.08. JURISDICTION . . . . . . . . . . . . . . .61
SECTION 11.09. Approvals; Knowledge . . . . . . . . . . .61
SECTION 11.10. Parent Guaranty. . . . . . . . . . . . . .62
<PAGE>
5
Page
----
EXHIBITS
Exhibit A Form of Articles of Association
of Buyer
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Management Agreement
Exhibit D Form of Non-Recourse Guaranty
and Pledge Agreement
Exhibit E Form of Commitment Letter
Exhibit F Form of Comfort Letter
Exhibit G Form of Escrow Agreement
Exhibit H Form of Parent Guarantee
Exhibit I Buyer Subscription Agreement
SCHEDULES
Schedule 2.04 Purchase Price Allocation
Schedule 3.01 Assumed Liabilities
Schedule 4.01 Qualification
Schedule 4.04 Subsidiaries and Equity Ownership
Schedule 4.05 Paradise Island Financial Statements
Schedule 4.06(a) Liabilities and Indebtedness to be
Discharged
Schedule 4.06(b) Liabilities and Indebtedness to Stay
with Company
Schedule 4.07 Real Property
Schedule 4.08 Personal Property
Schedule 4.09 Intellectual Property
Schedule 4.10 Litigation
Schedule 4.11 Insurance
Schedule 4.12 Benefit Plans
Schedule 4.12A Bahamas Benefit Plans
Schedule 4.14 Environmental Matters
Schedule 4.16(a) Agreements Affecting the Shares
Schedule 4.16(b) Shared Facilities/Contracts
Schedule 4.17 Material Contracts
Schedule 4.18 Inventory
Schedule 4.19 Receivables/Payables
Schedule 4.20 Employee Claims/Stoppages
Schedule 4.21 Tax Matters
Schedule 4.22 RII Brokers
Schedule 4.23 Affiliate Transactions
Schedule 5.05 Buyer Brokers
Schedule 5.08 Parent Expenses
Schedule 6.09 Certain RII Employees
Schedule 6.09(a) Paradise Employees
Schedule 6.09(c) Certain Officers and Directors
Schedule 10.01(n) Material Contract Consents
<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT dated as of October 11,
1993 (this "Agreement"), between RESORTS
INTERNATIONAL, INC., a Delaware corporation
("RII"), and SUN INTERNATIONAL HOTELS LIMITED, a
Bahamian corporation ("Buyer").
WHEREAS, Buyer desires to acquire the Shares from
RII, and RII desires to sell the Shares to Buyer on the
terms and conditions set forth herein (such purchase, the
"Stock Acquisition");
WHEREAS, in connection with the Stock Acquisition,
Buyer desires to cause the Buyer Subsidiaries to acquire the
RII Paradise Assets from the RII Paradise Subsidiaries and
the RII Real Estate Assets from RII, and RII desires to sell
the RII Real Estate Assets, and to cause the RII Paradise
Subsidiaries to sell the RII Paradise Assets, to the Buyer
Subsidiaries on the terms and conditions set forth herein
(such purchase, the "Asset Acquisition");
WHEREAS, in connection with the Stock Acquisition
and the Asset Acquisition, RII and GRI will file the
Reorganization Plan with the Bankruptcy Court, providing,
inter alia, under certain terms and conditions to be set
forth in the Reorganization Plan, for the (i) sale of the
Shares to Buyer, (ii) sale of the RII Paradise Assets and
the RII Real Estate Assets to the Buyer Subsidiaries,
(iii) distribution to holders of the Old Series Notes of RII
(as defined in the Reorganization Plan) of RII of the
Aggregate Cash Purchase Price and the Buyer Series A Shares
paid by Buyer and the Buyer Subsidiaries for the Shares and
the RII Paradise Assets and the RII Real Estate Assets and
(iv) the other distributions to holders of the Old Series
Notes of RII to be made pursuant to the Reorganization Plan;
WHEREAS, the respective Boards of Directors of
Buyer and RII deem it advisable and in the best interests of
such corporations that the Stock Acquisition and Asset
Acquisition occur upon the terms and subject to the condi-
tions set forth herein;
NOW, THEREFORE, in consideration of the premises
and the mutual covenants, agreements, representations and
warranties herein contained, and subject to the conditions
<PAGE>
2
hereinafter set forth, and for the purpose of prescribing
the terms and conditions of the Stock Acquisition and Asset
Acquisition, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms
used but not defined herein shall have the meanings set
forth in Appendix A.
ARTICLE II
PURCHASE AND SALE OF THE SHARES
AND THE RII PARADISE ASSETS
SECTION 2.01. TRANSFER OF THE SHARES. Prior to
Closing, RII shall cause GRI to transfer the Shares to RII
in a transaction reasonably acceptable to Buyer and its
counsel.
SECTION 2.02. PURCHASE AND SALE OF THE SHARES,
THE RII REAL ESTATE ASSETS AND THE RII PARADISE ASSETS. On
the terms and subject to the conditions of this Agreement,
on the Closing Date (a) RII agrees to sell, transfer and
deliver to Buyer, and Buyer agrees to purchase and accept
from RII, the Shares, free and clear of all Encumbrances,
other than those Encumbrances arising from acts of Buyer or
its Affiliates and other than any applicable Transfer Taxes,
and (b) RII shall, and shall cause each RII Paradise
Subsidiary to, sell, convey, assign, transfer and deliver to
a Buyer Subsidiary designated by Buyer, and Buyer shall
cause each such Buyer Subsidiary to purchase and accept from
RII and each such RII Paradise Subsidiary, all right, title
and interest of RII in the RII Real Estate Assets and all
right, title and interest of each such RII Paradise
Subsidiary in the RII Paradise Assets, free and clear of all
Encumbrances except Permitted Encumbrances and those
Encumbrances arising from acts of Buyer or its Affiliates
and other than any applicable Transfer Taxes.
SECTION 2.03. DELIVERY OF CERTIFICATES AND OTHER
INSTRUMENTS OF TRANSFER. On the Closing Date (a) RII shall
deliver to Buyer certificates representing the Shares
together with stock powers executed in blank and (b) RII
<PAGE>
3
shall, and shall cause the RII Paradise Subsidiaries to,
deliver to the Buyer Subsidiaries such specific assignments,
bills of sale (to be in a form reasonably satisfactory to
Buyer and RII), endorsements, deeds and other good and
sufficient instruments of conveyance and transfer, in form
and substance reasonably satisfactory to Buyer and its
counsel, as shall be effective to vest in the Buyer
Subsidiaries title to all the RII Paradise Assets and the
RII Real Estate Assets. All right, title and interest of
RII in the RII Real Estate Assets and of the RII Paradise
Subsidiaries in the RII Paradise Assets shall pass and
delivery of the RII Real Estate Assets and the RII Paradise
Assets shall take place in such location or locations as
Buyer and RII shall determine.
SECTION 2.04. AGGREGATE PURCHASE PRICE. As full
consideration for the transfer of the Shares and the RII
Real Estate Assets and the RII Paradise Assets, Buyer shall
cause on the Closing Date (a) the Aggregate Purchase Price
to be delivered, on behalf of RII and the RII Paradise Sub-
sidiaries, to the disbursing agent designated pursuant to
the Reorganization Plan or pursuant to an order of the
Bankruptcy Court for purposes of making distributions
thereunder to holders of the Old Series Notes of RII (as
defined in the Reorganization Plan) and (b) the Buyer
Subsidiaries to assume the Assumed Liabilities in accordance
with Article III hereof. The Aggregate Purchase Price shall
be allocated as set forth on Schedule 2.04.
SECTION 2.05 PREPARATION OF THE CLOSING DATE BAL-
ANCE SHEET AND OPERATIONS STATEMENT; ADJUSTMENTS.
(a) Within 45 days after the Closing Date, RII shall cause
to be prepared, in accordance with the books and records of
account of the Paradise Island Business and a physical
inventory, and shall deliver, an audited balance sheet for
the Paradise Island Business as of the Closing Date (the
"Preliminary Closing Date Balance Sheet") and an audited
statement of operations for the Paradise Island Business for
the period beginning at 12:01 a.m. on January 1, 1994, and
ending at the close of business on the Closing Date (the
"Preliminary Closing Date Operations Statement"),
accompanied by an opinion of Ernst & Young thereon to the
effect that such balance sheet and statement of operations
present fairly in all material respects the financial
position and results of operation of the Paradise Island
Business at such date and for such period in conformity with
GAAP and the preparation of the June 30 Balance Sheet and
the statement of operations for the six months ending
<PAGE>
4
June 30, 1993. Representatives of Buyer's auditors, Arthur
Andersen & Co., shall be entitled to review the scope of the
audit in advance thereof as well as the work of Ernst &
Young as it progresses and all drafts of the Preliminary
Closing Date Balance Sheet and the Preliminary Closing Date
Operations Statement. Within 10 days after the delivery to
Buyer of the Preliminary Closing Date Balance Sheet and the
Preliminary Closing Date Operations Statement, Buyer shall
notify RII if it disagrees in any respect with such Pre-
liminary Closing Date Balance Sheet or Preliminary Closing
Date Operations Statement. If Buyer does disagree, Buyer
and RII shall promptly attempt to settle such disagreement.
If Buyer and RII are unable to resolve such disagreement
within 7 days after such notice, such disagreement shall be
referred to the Accounting Arbitrator for a determination,
which shall be final and binding on the parties hereto for
all purposes of this Agreement. The fees of the Accounting
Arbitrator shall be allocated between Buyer and RII by the
Accounting Arbitrator based on its good faith view as to
which party's positions were more reasonable. The Pre-
liminary Closing Date Balance Sheet and Preliminary Closing
Date Operations Statement as agreed to by the parties or as
adjusted pursuant to the determination of the Accounting
Arbitrator are herein referred to as the "Closing Date Bal-
ance Sheet" and the "Closing Date Operations Statement".
Buyer and RII agree that if prior to 35 days after the
Closing Date there has not been a resolution of the dispute
(the "Union Contract Dispute") between the Company and The
Bahamas Hotel Catering and Allied Workers Union (the
"Union") with respect to amounts claimed by the Union to be
owed by the Company through December 31, 1993, under the
collective bargaining agreement dated as of January 7, 1990,
between The Bahamas Hotel Employers Association and the
Union, then RII and Buyer shall agree as to the amount they
believe it would reasonably take to settle the Union
Contract Dispute (the "Union Contract Dispute Amount"). If
Buyer and Seller are unable to agree on the Union Contract
Dispute Amount by the 40th after the Closing Date, then the
Union Contract Arbitrator shall determine such amount prior
to the sixtieth day after the Closing Date, and such
determination shall be final and binding on the parties
hereto. The Union Contract Dispute Amount, as agreed to by
the parties or determined by the Union Contract Arbitrator,
shall appear on the Preliminary Closing Date Balance Sheet
and the Closing Date Balance Sheet as a Current Liability.
Prior to the Closing Date, RII shall, as between the
parties, control the resolution of the Union Contract
Dispute; PROVIDED, HOWEVER, it shall consult with Buyer with
<PAGE>
5
respect thereto and allow a representative of Buyer to be
present when reasonable in all material negotiations in
connection therewith.
(b) Within three Business Days after the Closing
Date, Buyer and RII shall jointly prepare a cash statement
setting forth the amount of Adjusted Cash of the Paradise
Island Business as of the Closing Date. If the Adjusted
Cash of the Paradise Island Business shown on such cash
statement shall be less than the Target Adjusted Cash, on
the fourth Business Day after the Closing Date RII shall pay
to Buyer the difference in immediately available funds.
(c) If the Adjusted Working Capital of the
Paradise Island Business plus any Adjusted Cash in excess of
$5 million shown on the Closing Date Balance Sheet shall be
greater than the Target Adjusted Working Capital plus the
EBITDA Adjustment, on the Adjustment Date (as defined below)
Buyer shall pay to RII the difference in immediately
available funds, together with interest on such amount at
the Applicable Rate from and including the Closing Date to
but excluding the Adjustment Date. If the Adjusted Working
Capital of the Paradise Island Business plus any Adjusted
Cash in excess of $5 million shown on the Closing Date
Balance Sheet shall be less than the Target Adjusted Working
Capital plus the EBITDA Adjustment, on the Adjustment Date
RII shall pay to Buyer the difference in immediately
available funds, together with interest on such amount at
the Applicable Rate from and including the Closing Date to
but excluding the Adjustment Date. For purposes of the
foregoing, "Adjustment Date" shall mean (i) if Buyer does
not disagree in any respect with the Preliminary Closing
Date Balance Sheet, the 10th day following Buyer's receipt
of the Preliminary Closing Balance Sheet or (ii) if Buyer
shall disagree in any respect with the Preliminary Closing
Balance Sheet, the third Business Day following either the
resolution of such disagreement by the parties or a final
determination by the Accounting Arbitrator in accordance
with Section 2.05(a).
SECTION 2.06. CLOSING. The Closing of the trans-
actions contemplated by this Agreement shall take place at
the offices of Gibson Dunn & Crutcher, 200 Park Avenue,
New York, NY, on a date to be agreed upon by RII and Buyer,
as promptly as practicable following the satisfaction or
waiver of all of the conditions set forth in Article VIII
hereof, but in no event later than 10 Business Days there-
after.
<PAGE>
6
SECTION 2.07. THIRD-PARTY CONSENTS. To the
extent that any Contract relating to the RII Paradise Assets
to be assumed by a Buyer Subsidiary for which assignment to
such Buyer Subsidiary is provided for herein is not assign-
able without the consent of another party (a "Non-Assignable
Contract"), this Agreement shall not constitute an
assignment or an attempted assignment thereof if such
assignment or attempted assignment would constitute a breach
thereof. RII and Buyer agree to use their best efforts
(without the payment of money) to obtain the consent of such
other party to the assignment of any such Contract to the
relevant Buyer Subsidiary in all cases in which such consent
is or may be required for such assignment. If any such
consent shall not be obtained, RII agrees to cooperate with
Buyer in any reasonable arrangement (at the cost and for the
account of such Buyer Subsidiary) designed to provide for
the relevant Buyer Subsidiary the benefits intended to be
assigned to such Buyer Subsidiary under the relevant
Contract, including enforcement of any and all rights of the
relevant RII Paradise Subsidiary against the other party
thereto arising out of the breach or cancellation thereof by
such other party or otherwise. If and to the extent that
such arrangement cannot be made, except as provided in the
next sentence, neither Buyer nor any Buyer Subsidiary shall
have any obligation with respect to any such Contract. If
PIA is unable to assign to a designated Buyer Subsidiary the
Ft. Lauderdale Ground Space Lease (Hangar) with Broward
County, Florida (the "Hangar Lease"), or is otherwise unable
to arrange for such designated Buyer Subsidiary to obtain
the benefits of the Hangar Lease, then (i) PIA shall use its
reasonable best efforts to sub-lease the Hangar Lease and
(ii) Buyer and PIA shall each be responsible for 50% of the
obligations of lessee under the Hangar Lease and shall each
be entitled to receive 50% of the proceeds relating to any
sublease of the Hangar Lease.
SECTION 2.08. FURTHER ASSURANCES. (a) From and
after the Closing, upon request of Buyer, RII shall, and
shall cause any of its Affiliates formerly owning an
interest in the Paradise Island Assets to, execute,
acknowledge and deliver all such further acts, assurances,
deeds, assignments, transfers, conveyances and other
instruments and papers as may be reasonably required to
sell, assign, transfer, convey and deliver (at Buyer's
expense, unless otherwise provided in this Agreement) to and
vest in Buyer, the Company or its Subsidiaries or the Buyer
Subsidiaries, as the case may be, and more fully protect
their respective right, title and interest in and employment
<PAGE>
7
of, the Shares and all the Paradise Island Assets and the
RII Real Estate Assets and as otherwise may be appropriate
to carry out the transactions contemplated in this
Agreement.
(b) From and after the Closing, upon request of
RII, Buyer shall, and shall cause any of the Buyer
Subsidiaries, Parent or any Subsidiaries of Buyer or Parent
to, execute, acknowledge and deliver all such further acts,
assurances, assumptions and other instruments and papers as
may be reasonably required (i) in respect of the assumption
by the Buyer Subsidiaries of the Assumed Liabilities, and
(ii) as otherwise may be appropriate to carry out the
transactions contemplated in this Agreement.
SECTION 2.09. POWER OF ATTORNEY, ETC.
(a) Effective on the Closing Date, RII shall cause each RII
Paradise Subsidiary to constitute and appoint, and will
cause any Affiliate owning an interest in any RII Paradise
Assets to constitute and appoint, the applicable Buyer
Subsidiary designated by Buyer and its successors, legal
representatives and assigns, the true and lawful attorneys
of such RII Paradise Subsidiary and such Affiliates, with
full power of substitution, in the name of such RII Paradise
Subsidiary and such Affiliates, but on behalf of and for the
benefit of such Buyer Subsidiary and its successors, legal
representatives and assigns, and at the expense of such
Buyer Subsidiary: (i) to demand and receive from time to
time any and all of the RII Paradise Assets and to make
endorsements and give receipts and releases for and in
respect of the same and any part thereof; (ii) to institute,
prosecute, compromise and settle any and all proceedings at
law, in equity or otherwise that any Buyer Subsidiary and
its successors, legal representatives or assigns may deem
proper in order to collect, assert or enforce any claim,
right or title of any kind in or to the RII Paradise Assets;
(iii) to defend or compromise any or all actions, suits or
proceedings in respect of any of the RII Paradise Assets;
and (iv) to do all such acts and things in relation to the
matters set forth in the preceding clauses (i) through (iii)
as each such Buyer Subsidiary and its successors, legal
representatives or assigns shall deem desirable. RII hereby
agrees that the appointment to be hereby made and the powers
to be hereby granted are coupled with an interest and are
and shall be irrevocable by it in any manner or for any
reason. RII shall cause each RII Paradise Subsidiary to
deliver to the applicable Buyer Subsidiary designated by
Buyer at Closing an acknowledged power of attorney to the
<PAGE>
8
foregoing effect executed by each such RII Paradise
Subsidiary and any Affiliate selling any of the Paradise
Island Assets. Buyer agrees to indemnify and hold RII and
its Affiliates harmless from and against any Losses
resulting from Buyer's improper use of the power of attorney
described in this Section 2.09(a).
(b) Effective upon the Closing Date Buyer and the
Buyer Subsidiaries shall have the right to receive and open
all mail, packages and other communications which relate to
the Paradise Island Business addressed to any of the RII
Paradise Subsidiaries. RII agrees promptly to deliver to
Buyer and the Buyer Subsidiaries any mail, packages or other
communications received directly or indirectly by RII or any
of its Affiliates that relate to the Paradise Island
Business. Buyer and the Buyer Subsidiaries shall have the
right and authority to collect, for its own account, all
receivables and other items which shall be transferred or
are intended to be transferred to Buyer and the Buyer
Subsidiaries as provided in this Agreement, and to endorse
with the name of RII or any of its Affiliates any checks or
drafts received on account of any such receivables or other
items, and RII shall promptly transfer or deliver, or cause
its Affiliates to transfer or deliver, to Buyer and the
Buyer Subsidiaries any cash or other property received
directly or indirectly by RII or any of its Affiliates in
respect of such receivables or other items including any
amounts payable as interest. Buyer and the Buyer
Subsidiaries shall promptly deliver to RII packages and
other communications received by them which relate to RII or
any of its Affiliates but do not relate to the Paradise
Island Business.
ARTICLE III
ASSUMPTION OF CERTAIN LIABILITIES
SECTION 3.01. ASSUMED LIABILITIES. Buyer shall
cause designated Buyer Subsidiaries to severally assume on
the Closing Date the Assumed Liabilities, and shall cause
each designated Buyer Subsidiary to execute an Assumption
Agreement relating to the Assumed Liabilities assumed by
such designated Buyer Subsidiary.
SECTION 3.02. LIABILITIES NOT ASSUMED. Except
for the Assumed Liabilities and as provided in Section 3.04,
neither Buyer nor any Buyer Subsidiary, pursuant to this
<PAGE>
9
Agreement or the Assumption Agreements or otherwise,
assumes, agrees to perform, pay, discharge or indemnify RII
or any of its Affiliates against, or otherwise agrees to
have any responsibility for, any liabilities or obligations
of RII, GRI or any RII Paradise Subsidiary, fixed,
contingent or otherwise, known or unknown, relating to or
arising out of the RII Paradise Assets, whether arising
prior to, on or after the Closing.
SECTION 3.03. NO SUCCESSOR. It is expressly
understood that the parties intend that neither the Buyer
nor any Buyer Subsidiary shall be considered a successor to
any RII Paradise Subsidiary and that neither Buyer nor any
Buyer Subsidiary shall have any liability except as other-
wise provided in this Agreement or the Assumption Agree-
ments. Without limiting the generality of the foregoing,
neither Buyer nor any Buyer Subsidiary, pursuant to this
Agreement, the Assumption Agreements or otherwise, assumes
(a) any liability for or obligation with respect to (i) any
Indebtedness of RII or its Affiliates or (ii) any Taxes
relating to RII or its Affiliates (except Assumed Taxes),
(b) any liabilities or obligations owed to RII or any of its
Affiliates (except for liabilities owed to RII or any of its
Affiliates under this Agreement or any agreements,
certificates or other instruments delivered by Buyer or the
Buyer Subsidiaries pursuant to this Agreement) or (c) any
liabilities that do not constitute Assumed Liabilities.
SECTION 3.04. INDEMNIFICATION. (a) From and
after the Closing Date, RII and the RII Paradise Subsidiar-
ies shall indemnify Buyer, the Buyer Subsidiaries and their
respective Affiliates (each a "Buyer Indemnified Party")
against, and hold them harmless from, any Losses with
respect to the ownership, use or operation of the RII
Paradise Assets prior to the Closing Date (other than the
Assumed Liabilities), which any Buyer Indemnified Party may
be requested to pay, perform or discharge at any time. No
Buyer Indemnified Party shall be entitled to indemnification
under this Section 3.04(a) until the date on which the
aggregate amount of the claims made by Buyer Indemnified
Parties is at least equal to $25,000, at which time claims
may be asserted by any Buyer Indemnified Party against the
indemnifying parties regardless of amount.
(b) From and after the Closing Date, Buyer and
the Buyer Subsidiaries shall indemnify RII, the RII Paradise
Subsidiaries and their respective Affiliates (each an "RII
Indemnified Party") against, and hold them harmless from,
<PAGE>
10
any Losses with respect to (i) the Assumed Liabilities,
(ii) the ownership, use or operation of the RII Paradise
Assets on or after the Closing Date, and (iii) any liability
or obligation of the Company or any of its Subsidiaries
(fixed, contingent or otherwise, known or unknown (except to
the extent such liability or obligation was incurred after
the date of this Agreement and in breach of Section 6.01)),
which any RII Indemnified Party may be requested to pay,
perform or discharge at any time. No RII Indemnified Party
shall be entitled to indemnification under this
Section 3.04(b) until the date on which the aggregate amount
of the claims made by RII Indemnified Parties is at least
equal to $25,000, at which time claims may be asserted by
any RII Indemnified Party against the indemnifying parties
regardless of the amount.
(c) The provisions of Section 9.04 and 9.05 shall
apply to any indemnification under this Section 3.04.
(d) The indemnification obligations of the
applicable parties under this Section 3.04 shall constitute
the sole and exclusive remedies of the applicable Buyer
Indemnified Parties and RII Indemnified Parties, as the case
may be, with respect to the matters described in this
Section 3.04.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RII
RII represents and warrants to Buyer as follows:
SECTION 4.01. ORGANIZATION AND GOOD STANDING.
Each of RII, the Company, each Subsidiary of the Company and
each RII Paradise Subsidiary is a corporation duly organ-
ized, validly existing and in good standing under the laws
of the jurisdiction of its organization. The Company, each
Subsidiary of the Company and each RII Paradise Subsidiary
is duly qualified to do business in each jurisdiction in
which the ownership, leasing or operation of its assets or
the conduct of the Paradise Island Business requires such
qualification, except where the failure so to qualify would
not have a Material Adverse Effect. Each jurisdiction in
which each of the Company, any Subsidiary of the Company or
any RII Paradise Subsidiary is so qualified is set forth in
Schedule 4.01.
<PAGE>
11
SECTION 4.02. AUTHORIZATION. RII has all
necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations here-
under. The execution and delivery of this Agreement by RII
and the sale of the Shares by RII and the sale of the RII
Paradise Assets by the RII Paradise Subsidiaries have been
duly and validly authorized by all corporate action on the
part of RII and the RII Paradise Subsidiaries, and no other
corporate proceedings or shareholder actions (other than the
Reorganization Solicitation) on the part of RII or the RII
Paradise Subsidiaries are necessary to authorize this
Agreement or the sale of the Shares and the RII Paradise
Assets. This Agreement has been duly and validly executed
and delivered by RII and, assuming the due authorization,
execution and delivery by Buyer, this Agreement constitutes
the legal, valid and binding obligation of RII, enforceable
against RII in accordance with its terms (subject as to
enforcement to applicable bankruptcy, reorganization,
insolvency, fraudulent transfer and moratorium and similar
laws from time to time in effect affecting creditors' rights
generally and to legal and equitable limitations on
availability of specific performance and other equitable
remedies).
SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND
CONSENTS. (a) The execution and delivery of this Agreement
by RII does not, and the performance of this Agreement by
RII will not, (i) conflict with or violate the articles of
incorporation or by-laws or equivalent organizational docu-
ments of RII, GRI, the Company, any Subsidiary of the Com-
pany or any RII Paradise Subsidiary, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree
applicable to RII, GRI, the Company, any Subsidiary of the
Company or any RII Paradise Subsidiary or by which any of
the Paradise Island Assets is bound or affected or (iii)
other than breaches or defaults which would be cured or
discharged by reason of the effectiveness of the
Reorganization Plan, result in any breach of or constitute a
default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any
rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any
Encumbrance on any of the Paradise Island Assets pursuant
to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other
instrument or obligation to which RII, GRI, the Company, any
Subsidiary of the Company or any RII Paradise Subsidiary is
a party or by which RII, GRI, the Company, any Subsidiary of
<PAGE>
12
the Company or any RII Paradise Subsidiary or any of the
Paradise Island Assets is bound or affected, except, in the
case of this clause (iii) and clause (ii) above, for any
such breaches, defaults or other occurrences which would
not, individually or in the aggregate, have a Material
Adverse Effect.
(b) The execution and delivery of this Agreement
by RII does not, and the performance of this Agreement by
RII will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any
Governmental Authority except for (i) the Confirmation Order
and any other notices, motions or approvals required by the
Bankruptcy Court or the Bankruptcy Code and the rules
thereunder, (ii) the filing by Buyer and RII of premerger
notification with the Federal Trade Commission and the Anti-
trust Division of the United States Department of Justice
under the HSR Act, (iii) consents and approvals contemplated
by the Heads of Agreement or any approvals for exchange
controls required to be received from the Exchange Control
Department of the Central Bank of The Bahamas ("Exchange
Control Approval"), (iv) consents of the New Jersey Casino
Control Commission and under the New Jersey Casino Control
Act, (v) filings required by the Securities Act, the
Exchange Act and relevant state "blue sky" laws,
(vi) approval by the U.S. Department of Transportation and
the U.S. Federal Aviation Administration ("Airline
Governmental Consents") and (vii) where failure to obtain
such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or
materially delay consummation of the transactions
contemplated hereby, or otherwise prevent RII from
performing its obligations under this Agreement. The
consents, applications and approvals listed in
clauses (iii), (iv) and (v) above shall be hereinafter
referred to as the "Governmental Consents."
SECTION 4.04. CAPITAL STOCK OF THE COMPANY AND
SUBSIDIARIES. The authorized capital stock of the Company
consists of 500 shares of Class A Common Stock, B$2.86 par
value per share, 400 shares of Class B Common Stock, B$2.86
par value per share, and 900 shares of Non-Voting Class C
Common Stock, B$2.86 par value per share, of which
500 shares of Class A Common Stock, 400 shares of Class B
Common Stock and 900 shares of Class C Common Stock,
constituting the Shares, are duly authorized and validly
issued and outstanding, fully paid and nonassessable. As of
the date hereof, GRI is the registered holder of the Shares.
<PAGE>
13
In accordance with Section 2.01, RII shall become the
registered holder of the Shares prior to Closing. The
Shares have not been issued in violation of, and are not
subject to, any preemptive or subscription rights. Except
as set forth above, there are no shares of capital stock or
other equity securities of the Company outstanding. Except
as set forth in Schedule 4.04, there are no outstanding
warrants, options, agreements, convertible or exchangeable
securities or other commitments (other than this Agreement)
pursuant to which RII or any of its Affiliates is or may
become obligated to issue, sell, purchase, return or redeem
any shares of capital stock or other securities of the
Company or any Subsidiary of the Company, and there are not
any equity securities of the Company or any Subsidiary of
the Company reserved for issuance for any purpose.
Schedule 4.04 sets forth a list of all the Subsidiaries of
the Company. Except for Encumbrances disclosed in
Schedule 4.04, which Encumbrances shall be released upon
Closing, the Company directly has good and valid title to
all the outstanding shares of capital stock of each
Subsidiary of the Company, free and clear of Encumbrances,
and all such shares are duly authorized and validly issued
and outstanding, fully paid and nonassessable. Except as
disclosed in Schedule 4.04, the Company does not directly or
indirectly own any capital stock of or other equity
interests in any corporation, partnership or other entity.
SECTION 4.05. FINANCIAL STATEMENTS. The Paradise
Island Financial Statements are the financial statements of
the Paradise Island Business. The Paradise Island Financial
Statements, true, correct and complete copies of which are
set forth on Schedule 4.05, (a) are in accordance with the
books of account and records of the Paradise Island
Business, (b) are fair presentations in all material
respects of the financial position and results of operations
of the Paradise Island Business as of the dates and for the
periods indicated and (c) were prepared in conformity with
GAAP applied on a consistent basis throughout the periods
covered thereby.
SECTION 4.06. ABSENCE OF UNDISCLOSED LIABILITIES
AND LIENS. At June 30, 1993, and at the date of this
Agreement and the Closing Date, neither the Company nor any
Subsidiary of the Company did, does or will have any
indebtedness, obligation or liability (including any
liability for Taxes), absolute or contingent required to be
reflected on or adequately provided for in a balance sheet
prepared in accordance with GAAP and consistent with past
<PAGE>
14
practice, which is not reflected in or adequately provided
for in the June 30 Balance Sheet, except for liabilities or
obligations incurred in the ordinary course since June 30,
1993, consistent with past practice and not in violation of
this Agreement. Except as disclosed on Schedules 4.06(a)
and 4.06(b), neither the Company nor any Subsidiary of the
Company is or will be directly or indirectly liable upon or
with respect to (by discount, repurchase agreement or other-
wise) or obligated in any other way to provide funds in
respect of, or to guarantee or assume, any debt, obligation
or dividend of any person except endorsements in the
ordinary course of business in connection with the deposit
of items for collection. Except for Indebtedness disclosed
on Schedule 4.06(a), which shall be extinguished upon the
Closing, and Indebtedness described on Schedule 4.06(b),
neither the Company nor any of its Subsidiaries has any
Indebtedness.
SECTION 4.07. REAL PROPERTY AND IMPROVEMENTS.
Schedule 4.07 contains a complete list, by deed reference or
otherwise, of all real property and interests in real
property (the "Real Property") (a) owned or leased by the
Company or any Subsidiary of the Company, (b) owned by RII
in the State of Florida and used in connection with the
Paradise Island Business (the "RII Real Estate Assets") or
(c) owned or leased by any RII Paradise Subsidiary in
connection with the Paradise Island Business. The Paradise
Island Business does not use any material real property not
listed on Schedule 4.07. Except as set forth on
Schedule 4.07, RII, the Company, a Subsidiary of the Company
or a RII Paradise Subsidiary has good and marketable title
in fee simple to the Real Property listed on Schedule 4.07
as being owned by them, in each case free and clear of all
liens (including liens for Taxes), mortgages, security
interests, charges, claims, leases, survey exceptions,
options, rights of first refusal or first offer, easements,
restrictions, rights-of-way or other encumbrances of any
nature whatsoever, except for Permitted Encumbrances or
encumbrances described on Schedule 4.07. The buildings,
facilities, and other improvements located on the Real
Property (the "Improvements") are, and as of the Closing
will be, in operating condition and fit for operation in the
usual course of business, ordinary wear and tear excepted.
The uses for which the Improvements are zoned do not
materially restrict, or in any material manner impair, the
use of the Improvements for purposes of the Paradise Island
Business and to the knowledge of RII the construction of the
Improvements complied at the time thereof in all material
<PAGE>
15
respects with all applicable building and zoning codes, deed
restrictions, ordinances and rules, or appropriate variances
therefrom were obtained. The Company, a Subsidiary of the
Company or a RII Paradise Subsidiary, is the lessee of each
of the leasehold estates listed in Schedule 4.07 as being
leased by any of them, and, except as set forth in
Schedule 4.07, are in possession of each of the premises so
leased and have marketable title to each of such leasehold
estates. Except as set forth in Schedule 4.07 and for
Permitted Encumbrances, there exists no asserted claim
(including any lien for Taxes) which is adverse to the
rights of the Company, any Subsidiary of the Company or any
RII Paradise Subsidiary in any such leasehold estate.
Except as disclosed on Schedule 4.07, each such lease
pursuant to which such leasehold estate is granted is valid
without any material default thereunder by the lessee. Such
leases are the only leases of real property to which RII or
any of its Affiliates are parties pertaining to the Paradise
Island Business. Each lease pursuant to which a leasehold
estate is granted to any RII Paradise Subsidiary may be
assigned to the corresponding Buyer Subsidiary without any
restriction or required consent or other approval, except as
provided in Schedule 4.07. Except as disclosed in Sched-
ule 4.07, there is no pending, or, to the knowledge of RII
or any of its Affiliates, threatened, condemnation, eminent
domain or similar proceeding with respect to the Real
Property or the Improvements. True, complete and correct
copies of the deeds, title insurance policies, surveys,
parcel maps, mortgages, agreements, leases and other
documents granting or relating to the ownership or leasing
of the Real Property and the Improvements that are in the
possession of RII or its Affiliates have been delivered to
Buyer.
SECTION 4.08. PERSONAL PROPERTY. All machinery,
equipment and other tangible personal property (the
"Personal Property") (a) owned, leased or used by the
Company or any Subsidiary of the Company or (b) owned,
leased or used by any RII Paradise Subsidiary in connection
with the Paradise Island Business is in operating condition
and fit for operation in the usual course of business,
ordinary wear and tear excepted. Except as disclosed in
Schedule 4.08, the Company, any Subsidiary of the Company or
any RII Paradise Subsidiary has and will have on the Closing
Date good title to the Personal Property reflected in the
June 30 Balance Sheet as being owned by them, free and clear
of Encumbrances, except for Permitted Encumbrances. The
Company, any Subsidiary of the Company or any RII Paradise
<PAGE>
16
Subsidiary is the lessee of all the leasehold estates
pertaining to Personal Property granted by the leases
reflected in the June 30 Balance Sheet and their possession
thereof has not been disturbed, nor has any claim been
asserted against them (including any liens for Taxes)
adverse to their rights in such leasehold estates. Each
such lease or agreement pursuant to which any RII Paradise
Subsidiary leases any material Personal Property may be
assigned to the corresponding Buyer Subsidiary without any
restriction or required consent or other approval, except as
provided in Schedule 4.08.
SECTION 4.09. INTELLECTUAL PROPERTY. (a) Sched-
ule 4.09 lists all Intellectual Property.
(b) Except as disclosed on Schedule 4.09, the
Intellectual Property is owned by the Company, a Subsidiary
of the Company or a RII Paradise Subsidiary free and clear
of any Encumbrances, and (if required) has been or will be
duly registered or registration applied for, where
applicable, with the necessary jurisdictions. Except as
disclosed on Schedule 4.09, neither RII nor any of its
Affiliates has received any notice from, and neither RII nor
any of its Affiliates has knowledge of, any other person
challenging or questioning the right of the Company, any
Subsidiary of the Company or any RII Paradise Subsidiary to
use any Intellectual Property.
(c) The Intellectual Property constitutes all of
the patents, trademarks, trade names, service marks, service
names, brand names, copyrights and similar intellectual
property rights used in the conduct of the Paradise Island
Business, other than Excluded Assets.
(d) Except as disclosed in Schedule 4.09, neither
RII nor any of its Affiliates has received any written
notice alleging any infringement or improper use of any
patent, right, invention, copyright, trademark, service
mark, trade secret, trade right or trade name of any other
person or entity, registered or unregistered, and no claim
is pending, has been made or, to the knowledge of RII or any
of its Affiliates, is threatened to such effect which, if
true, would have, alone or in the aggregate, a Material
Adverse Effect.
SECTION 4.10. LITIGATION. Disclosed on Sched-
ule 4.10 is a list as of the date of this Agreement of all
pending and, to the knowledge of RII or any of its
<PAGE>
17
Affiliates, threatened Material Cases. Except as disclosed
on Schedule 4.10, there are no pending or, to the knowledge
of RII or any of its Affiliates, threatened Material Cases
which are not covered by insurance (subject to customary
deductibles). None of the Company, any of its Subsidiaries
or any RII Paradise Subsidiary with respect to the RII
Paradise Assets is in default under any judgment, order or
decree of any Governmental Authority applicable to it or any
of its respective properties, assets, operations or business
which default would have a Material Adverse Effect.
SECTION 4.11. INSURANCE. Disclosed on
Schedule 4.11 is a true and correct list as of the date of
this Agreement of all insurance policies held by RII, the
Company, any of its Subsidiaries or any RII Paradise
Subsidiary with respect to the RII Paradise Assets,
including, without limitation, policies of fire, life,
theft, product and public liability, property damage, other
casualty, workers' compensation, property and liability
insurance. Schedule 4.11 indicates as of the date of this
Agreement, in respect of each such policy, the type of
coverage, the name of the insured, the insurer, the premium,
all deductibles, the expiration date and the amount of the
coverage thereof. All such policies are in full force and
effect and none of RII or any of its Affiliates has received
notice in respect of any such policy regarding the
termination thereof, proposing to change the terms thereof
in any material respect or claiming material defects or
deficiencies or requiring the performance of any material
repairs, replacements, alterations or other work in respect
of the property insured thereunder.
SECTION 4.12. UNITED STATES BENEFIT PLANS.
(a) Schedule 4.12 contains a list and brief description of
each "employee pension benefit plan" (as defined in
Section 3(2) of ERISA, hereinafter a "Pension Plan"),
"employee welfare benefit plan" (as defined in Section 3(1)
of ERISA, hereinafter a "Welfare Plan") and each material
bonus, stock option, stock purchase, incentive compensation,
deferred or executive compensation plan or arrangement or
other employee fringe benefit plan maintained, contributed
to or required to be maintained or contributed to by RII or
an RII Paradise Subsidiary for the benefit of any current or
former employee of any RII Paradise Subsidiary or their
beneficiaries (all of the foregoing being herein called
"Benefit Plans"). RII has delivered or made available to
Buyer true, complete and correct copies of (1) each Benefit
Plan (or, in the case of any material unwritten Benefit
<PAGE>
18
Plans, descriptions thereof), (2) the most recent annual
report (Form 5500 Series) filed with the Internal Revenue
Service with respect to any Benefit Plan (if any such report
was filed), (3) the most recent summary plan description for
each Benefit Plan for which such a summary plan description
exists, (4) each trust agreement and insurance or annuity
contract funding any Benefit Plan and (5) other similar
information in its control regarding any Benefit Plan, upon
the reasonable request of Buyer. Except as disclosed in
Schedule 4.12, each Benefit Plan is maintained or
contributed to by RII or an RII Paradise Subsidiary for the
benefit of their employees and not the employees of the
Company or its Subsidiaries, and neither the Company nor any
of its Subsidiaries maintains, contributes to, or has any
obligations or liabilities with respect to, a Benefit Plan.
(b) Except as disclosed in Schedule 4.12, all
contributions to the Benefit Plans that were required to be
made by RII or an RII Paradise Subsidiary in accordance with
the Benefit Plans have been timely made.
(c) Except as disclosed in Schedule 4.12, any
Benefit Plan that is a Pension Plan, other than a
multiemployer plan as defined in Section 4001(a)(3) of
ERISA, has received a determination letter from the Internal
Revenue Service to the effect that such Pension Plan is
qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and
no such determination letter has been revoked nor, to the
knowledge of RII or any RII Paradise Subsidiary, has
revocation been threatened, nor has any such Pension Plan
been amended since the date of its most recent determination
letter or application therefor in any respect that might
reasonably be expected to adversely affect its
qualification.
(d) Schedule 4.12 contains a list and brief
description of each Pension Plan subject to Title IV of
ERISA maintained, contributed to or required to be
maintained or contributed to by an ERISA Affiliate (an "RII
Affiliate Pension Plan"). RII has furnished or made
available to Buyer the most recent actuarial report or
valuation, if any, with respect to each such RII Affiliate
Pension Plan.
(e) Each RII Affiliate Pension Plan has paid all
premiums when due to the PBGC, and no ERISA Affiliate has
<PAGE>
19
incurred any material liability to any such RII Affiliate
Pension Plan or to the PBGC.
(f) Except as disclosed on Schedule 4.12, no
ERISA Affiliate has incurred any withdrawal liability,
within the meaning of Section 4201 of ERISA, which liability
has not been fully paid as of the date hereof, or announced
an intention to withdraw, but not yet completed such with-
drawal, from any multiemployer plan.
(g) Except as disclosed in Schedule 4.12, no
ERISA Affiliate has engaged in a transaction described in
Section 4069 of ERISA that could subject the Company or any
of its Subsidiaries to material liability at any time after
the date hereof.
(h) With respect to each Welfare Plan that is a
"group health plan" (as such term is defined in
Section 5000(b)(1) of the Code), RII and the RII Paradise
Subsidiaries comply in all material respects with the
applicable requirements of Section 4980B(f) of the Code.
SECTION 4.12A. BAHAMAS BENEFIT PLANS.
(a) Schedule 4.12A contains a list and a brief description
of all non-governmental pension funds or plans, retirement
savings plans, retirement income funds, employee profit
sharing plans, deferred profit sharing plans, trust funds,
insurance plans, bonuses, deferred compensation, incentive
or other material compensation plans or arrangements and
other material employee fringe benefit plans maintained or
contributed to by the Company or any of its Subsidiaries for
the benefit of current or former employees of the Paradise
Island Business (all the foregoing being herein called
"Bahamas Benefit Plans"). RII has delivered or made
available to Buyer true, correct and complete copies of (1)
each Bahamas Benefit Plan (or in the case of any unwritten
Bahamas Benefit Plans, descriptions thereof), (2) the most
recent summary plan description for each Bahamas Benefit
Plan for which a summary plan description has been prepared
and (3) each trust agreement or other funding arrangement
relating to any Bahamas Benefit Plan. Except as disclosed
in Schedule 4.12A, each Bahamas Benefit Plan that is not
maintained pursuant to a collective bargaining agreement is
maintained or established solely under, and regulated solely
by, the laws of The Bahamas.
(b) Each Bahamas Benefit Plan that is not
maintained pursuant to a collective bargaining agreement has
<PAGE>
20
been administered in all material respects in accordance
with its terms. With respect to all Bahamas Benefit Plans,
the Company and its Subsidiaries are in compliance in all
material respects with any applicable laws, regulations or
provisions contained in any applicable collective bargaining
agreement as such agreement may have been duly amended or
modified. Except as disclosed in Schedule 4.12A, there are
no investigations by any governmental agency or other claims
(except claims for benefits payable in the normal operation
of the Bahamas Benefit Plans), suits or proceedings against
or involving any Bahamas Benefit Plan that is not maintained
pursuant to a collective bargaining agreement or asserting
any rights or claims to benefits under any such Bahamas
Benefit Plan that could give rise to any material liability,
and, to the knowledge of RII, the Company or its
Subsidiaries, there are not any facts that could give rise
to any material liability in the event of any such
investigation, claim, suit or proceeding.
(c) Neither the Company nor any of its
Subsidiaries has any obligation to create any additional
Bahamas Benefit Plans or any similar arrangements, or to
make contributions or to increase future contributions to
any Bahamas Benefit Plan other than those obligations
contained in the Bahamas Benefit Plan documents or in any
related participation agreement and in any applicable
collective bargaining agreement provided to Buyer.
(d) RII has provided or made available to Buyer
the most recent actuarial report or valuation (if any) with
respect to each Bahamas Benefit Plan. The information
supplied by RII, the Company and its Subsidiaries for use in
preparing those reports or valuations was complete and
accurate in all material respects and neither RII, the
Company nor any of its Subsidiaries have reason to believe
that the information provided by all other contributing
employers for use in, or the conclusions expressed in, those
reports or valuations are inaccurate in any material
respect.
(e) None of the Company or any of its
Subsidiaries has any current or projected liability or
contingent obligation, under any Bahamas Benefit Plan in
respect of medical or other benefits (l) for retired or
former employees of the Company or any of its Subsidiaries
or any predecessor thereof or (2) for current employees of
the Company or any of its Subsidiaries or any predecessor
<PAGE>
21
thereof in the event of the termination or retirement of any
current employee.
(f) No employee or former employee of the Company
or any of its Subsidiaries, or any beneficiary thereof, will
become entitled as a result of the transactions contemplated
hereby (1) to any additional material benefits, acceleration
of the time of payment or vesting of benefits, bonus,
retirement, severance, job security or similar benefit or
any enhanced benefit under any Bahamas Benefit Plan or
(2) any non-material benefits otherwise described in
clause (1) that, when aggregated together, are material.
(g) The Company and its Subsidiaries have timely
made all contributions required to be made under applicable
law to the Bahamian National Insurance Board (the "NIB"),
and neither the Company nor any of its Subsidiaries has any
liability, or is aware of any facts that might give rise to
liability, to the NIB or any current or former employee with
respect to such contributions.
(h) No RII Paradise Subsidiary has any
obligation, formal or informal, to provide any material
employee benefits to any employee of the Company or its
Subsidiaries. Neither the Company nor any of its
Subsidiaries has any obligation, formal or informal, to
provide any employee benefits to any person who is not an
employee of the Company or its Subsidiaries or any
beneficiary thereof.
SECTION 4.13. ABSENCE OF CHANGES OF EVENTS.
Since June 30, 1993, the Paradise Island Business has been
conducted only in the ordinary course, consistent with past
practice and the provisions of Section 6.01, and no Material
Adverse Effect has occurred.
SECTION 4.14. COMPLIANCE WITH APPLICABLE ENVIRON-
MENTAL LAWS. Except as disclosed in Schedule 4.14 or except
where a Material Adverse Effect would not occur as a result
thereof:
(a) The Company, each of its Subsidiaries and
each RII Paradise Subsidiary and the operation of the
Paradise Island Business is in compliance in all material
respects with all applicable Environmental Laws.
(b) Neither RII nor any of its Affiliates has
received any written communication from a Governmental
<PAGE>
22
Authority that alleges that the Company, any of its
Subsidiaries or any RII Paradise Subsidiary is not in
compliance, in any material respect, with any applicable
Environmental Law.
(c) To the knowledge of RII, none of the
operations or properties of the Paradise Island Business is
the subject of foreign, federal, state or local
investigation respecting (i) Environmental Laws,
(ii) Remedial Action or (iii) any Environmental Claim
arising from a release of any Hazardous Substance into the
environment.
(d) The Company, its Subsidiaries and the RII
Paradise Subsidiaries have filed all notices required to be
filed under all applicable Environmental Laws indicating
past or present treatment, storage or disposal of a
Hazardous Substance.
(e) The Company, each of its Subsidiaries and
each RII Paradise Subsidiary has filed all notices required
to be filed under all Environmental Laws reporting a spill
or release of a Hazardous Substance into the environment.
(f) To the knowledge of RII or any of its
Affiliates, none of the Company, any of its Subsidiaries or
any RII Paradise Subsidiary has any liabilities in
connection with any Hazardous Substance.
(g) To the knowledge of RII or any of its
Affiliates, there are no underground nonpropane storage
tanks or polychlorinated biphenyls on any Real Property.
(h) None of the Company, any of its Subsidiaries
or any RII Paradise Subsidiary is subject to any judicial,
administrative or arbitral actions, suits, proceedings, or
governmental proceedings alleging the violation of any
Environmental Law or Environment Permit.
(i) To the knowledge of RII or any of its
Affiliates, none of the Company, any of its Subsidiaries or
any RII Paradise Subsidiary, as a result of its respective
past and current operations, has caused or permitted any
Hazardous Substances to remain or be disposed of in
violation of applicable Environmental Laws, either on or
under any Real Property or on any real property not
permitted to accept, store or dispose of such Hazardous
Substances.
<PAGE>
23
SECTION 4.15. COMPLIANCE WITH LAWS; LICENSES AND
PERMITS. The Paradise Island Business is being conducted in
compliance in all material respects with all laws, ordi-
nances, regulations, licensing requirements, rules, decrees,
awards or orders, including, without limitation, any thereof
relating to wages, hours, hiring, promotions, working condi-
tions, use and occupancy of the Improvements, nondiscrim-
ination, health, safety, trade regulation, antitrust, war-
ranties and control of foreign exchange, except where fail-
ure to so comply would not have a Material Adverse Effect.
The Company, its Subsidiaries and RII Paradise Subsidiaries
have all governmental licenses and permits and other govern-
mental authorizations and approvals required for the opera-
tion of the Paradise Island Business and the use of the
Paradise Island Assets. All governmental licenses and per-
mits held by such parties are valid and in full force and
effect and there are not pending, or, to the knowledge of
RII, threatened, any proceedings which could result in the
termination or impairment of any such governmental license
or permit.
SECTION 4.16. THE SHARES; ENTIRE BUSINESS.
(a) As of the Closing Date RII will directly have good and
valid title to the Shares, free and clear of any
Encumbrances. Assuming Buyer has the requisite power and
authority to be the lawful owner of the Shares and The
Bahamas Exchange Control Approval has been received, upon
delivery to Buyer at the Closing of certificates
representing the Shares, duly endorsed by RII for transfer
to Buyer, and upon payment of the Aggregate Purchase Price
as provided in Section 2.04 and payment of any applicable
Transfer Taxes, good and valid title to the Shares will pass
to Buyer, free and clear of any Encumbrances other than
those arising from acts of Buyer or its Affiliates. Except
for the agreements set forth in Schedule 4.16(a), the Shares
are not subject to any voting trust agreement or other
contract, agreement, arrangement, commitment or under-
standing, including any such agreement, arrangement,
commitment or understanding restricting or otherwise
relating to the voting, dividend rights or disposition of
the Shares, other than this Agreement and any exchange
control approvals that may be required in connection with
the disposition of the Shares by the letter to be issued to
Buyer in connection with the Exchange Control Approval.
(b) RII, the Company, its Subsidiaries and the
RII Paradise Subsidiaries own, lease or license all the
Paradise Island Assets. The sale of the Shares by RII to
<PAGE>
24
Buyer and the sale of the RII Paradise Assets and the RII
Real Estate Assets by RII and the RII Paradise Subsidiaries
to the Buyer Subsidiaries pursuant to this Agreement will
effectively convey to the Buyer and the Buyer Subsidiaries
the entire Paradise Island Business and all of the Paradise
Island Assets. Except as set forth on Schedule 4.16(b),
there are no shared facilities or Contracts which are used
in connection with, or otherwise related to, the Paradise
Island Business and with other operations of RII or any of
its Affiliates.
SECTION 4.17. CONTRACTS. Set forth on
Schedule 4.17 is a true and correct list as of the date of
this Agreement of each Material Contract. True and correct
copies of all Material Contracts have been made available to
Buyer. Each Material Contract is valid and binding on, in
full force and effect with respect to, and is enforceable
by, RII, the Company, one of its Subsidiaries or one of the
RII Paradise Subsidiaries in accordance with its terms
(subject as to enforcement to applicable bankruptcy,
reorganization, insolvency, fraudulent transfer and
moratorium and similar laws from time to time in effect
affecting creditors' rights generally and to legal and
equitable limitations on availability of specific
performance and other equitable remedies). Except as
described on Schedule 4.17, each of RII, the Company, its
Subsidiaries and each RII Paradise Subsidiary has performed
all material obligations required to be performed by it to
date under the Material Contracts and is not (with or
without the lapse of time or the giving of notice, or both)
in breach or default in any material respect thereunder and,
to the knowledge of RII or any of its Affiliates, no other
party to any of the Material Contracts is (with or without
the lapse of time or the giving of notice, or both) in
breach or default in any material respect thereunder. The
Material Contracts of the RII Paradise Subsidiaries may be
assigned to the Buyer Subsidiaries without any restriction
or required consent or other approval, except as provided in
Schedule 4.17.
SECTION 4.18. INVENTORY. Except to the extent of
the reserves therefor reflected in the June 30 Balance Sheet
or as disclosed on Schedule 4.18, inventory reflected in the
June 30 Balance Sheet and all inventory existing as of
September 30, 1993, are of good, usable and merchantable
quality. Such inventory does not include any obsolete or
discontinued items or quantities in excess of the require-
ments of the Paradise Island Business in the ordinary course
<PAGE>
25
of business, except as reserved for on the June 30 Balance
Sheet or similar reserves with respect to inventories
acquired after June 30, 1993, which reserves are consistent
with past practice. All inventory reflected on the Paradise
Island Financial Statements was valued at the lower of cost
or market on a first-in, first-out basis in accordance with
GAAP.
SECTION 4.19. RECEIVABLES; PAYABLES. (a) Except
as set forth on Schedule 4.19, all the receivables reflected
in the June 30 Balance Sheet and all receivables existing as
of September 30, 1993, to be reflected on a balance sheet
dated as of September 30, 1993 (i) represent bona fide
indebtedness, (ii) arose in the ordinary course of business,
(iii) are subject to no prior assignment, claim, lien or
security interest (including any lien for Taxes) and (iv) to
the knowledge of RII or any of its Affiliates are
collectible in full when due in the ordinary course of
business, subject to no defenses, setoffs or counterclaims,
except to the extent of the reserves therefor reflected in
the June 30 Balance Sheet, or similar reserves with respect
to receivables generated after June 30, 1993.
(b) Except as set forth on Schedule 4.19, all
trade payables and accrued liabilities reflected in the
June 30 Balance Sheet and all trade payables and accrued
liabilities existing as of September 30, 1993, to be
reflected on a balance sheet dated September 30, 1993, were
incurred in the ordinary course of the Paradise Island
Business and were correctly classified as current, and all
payment terms were in accord with consistent past practice
and normal industry practice.
SECTION 4.20. EMPLOYEES. Except as set forth on
Schedule 4.20, there are no current or, to the knowledge of
RII or any of its Affiliates, threatened work stoppages by
any of the managers or the employees of the Company, any of
its Subsidiaries or any RII Paradise Subsidiaries with
respect to the RII Paradise Assets. There are no current
or, to the knowledge of RII or any of its Affiliates,
threatened work stoppages by any other persons which would,
as of the Closing Date, have a Material Adverse Effect.
Except to the extent provided for in the Paradise Island
Financial Statements as of the dates thereof or as disclosed
in Schedule 4.20, there was no material liability arising
out of claims made or suits brought (including, without
limitation, workers' compensation claims and claims or suits
for contribution to, or indemnification of, third parties,
<PAGE>
26
occupational health and safety, environmental, consumer
protection or equal employment matters) for injury, sick-
ness, disease, death or termination of employment of any
person to the extent attributable to an event occurring or a
state of facts existing prior to the Closing Date.
SECTION 4.21. TAX RETURNS AND PAYMENTS.
(a) None of the Taxpayers is required to pay any Taxes or
file or provide to its shareholders any returns, forms or
reports (other than information provided to RII or any of
its Subsidiaries for the purpose of enabling RII or such
Subsidiary to file returns or reports required to be filed
by RII or such Subsidiary) with respect to any Taxes in any
jurisdiction other than The Bahamas. None of the Taxpayers
is jointly or severally liable for any Taxes, or liabilities
relating to Taxes, of any person, corporation or entity
other than itself or another Taxpayer.
(b) The Taxpayers have filed or caused to be
filed, all Tax returns, declarations, forms and reports and
all information returns and statements required to be filed
by any taxing authority of any jurisdiction (collectively,
"Returns"). All such Returns were filed in a timely
fashion. The foregoing Returns correctly and accurately
reflected in all material respects the facts with respect to
which such Returns were filed, the Taxes due for the taxable
periods covered by such Returns and any other information
required to be shown thereon. Each Taxpayer has timely
paid, or will timely pay, in full all Taxes imposed on it
which are due and payable for each period ending before the
Closing Date. No tax liens have been filed and no claims
are being asserted against the Taxpayers with respect to any
Taxes, except as set forth on Schedule 4.21. Except as set
forth on Schedule 4.21, there are no outstanding agreements
or waivers extending the statutory period of limitations
applicable to any Return required to be filed with respect
to any Taxpayer, and no Taxpayer, nor any affiliated group
of which any Taxpayer is or has been a member, has requested
any extension of time within which any Return, which Return
has not yet been filed.
(c) Each of the RII Paradise Subsidiaries has
paid in full or will timely pay in full all Taxes relating
to the ownership or operation of the Paradise Island Assets
other than the Transfer Taxes. None of the Paradise Island
Assets prior to the Closing Date is subject to a lease made
pursuant to Section 168(f)(8) of the Internal Revenue Code
of 1954, as amended and in effect immediately prior to the
<PAGE>
27
enactment of the Tax Reform Act of 1986. Neither the
Company nor any of the RII Paradise Subsidiaries is a
"United States real property holding corporation" within the
meaning of Section 897 of the Code.
(d) Neither RII nor any of the RII Paradise
Subsidiaries is a "foreign person" within the meaning of
Section 1445 of the Code.
SECTION 4.22. BROKERS. No broker, finder or
investment banker, other than those specified on Sched-
ule 4.22, is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by and on
behalf of RII.
SECTION 4.23. TRANSACTIONS WITH AFFILIATES.
Since January 1, 1993, except as disclosed in Schedule 4.23,
none of the Company, any Subsidiary of the Company or any
RII Paradise Subsidiary has purchased, acquired or leased
any material property or material services from, or sold,
transferred or leased any material property or material
services to, or lent or advanced any money to, or borrowed
any money from, or guaranteed or otherwise become liable for
any indebtedness or other obligations of, or acquired any
capital stock, obligations or securities of, or made any
management, consulting or similar fee arrangement with, any
officer, director or employee of RII or any of its
Affiliates.
SECTION 4.24. PAYMENTS. Neither RII nor any of
its Affiliates nor any officer, agent or employee thereof
nor, to the knowledge of RII, any distributor or licensee
thereof nor any other person acting on behalf of RII or any
of its Affiliates, directly or indirectly, has, during the
past five years, on behalf of or with respect to RII or any
of its Affiliates, (1) made any unlawful domestic or foreign
political contributions, (2) made any payment or provided
services which were not legal to make or provide or which
RII or any of its Affiliates or any such officer, employee
or other person should have known were not legal for the
payee or the recipient of such services to receive,
(3) received any payment or any services which were not
legal to receive or which RII or any of its Affiliates or
any such officer, employee or other person should have known
were not legal for the payor or the provider of such
services to make or provide, or (4) had any transactions or
<PAGE>
28
payments which are not recorded in its accounting books and
records or disclosed in its financial statements.
SECTION 4.25. BUYER REGISTRATION STATEMENT; BUYER
PROSPECTUS. (a) The information to be supplied in writing
by RII to Buyer specifically for use in the latest draft
Buyer Registration Statement and draft Buyer Prospectus
available on November 30, 1993, will not as of November 30,
1993, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading. RII agrees that on
November 30, 1993, it shall deliver a letter to Buyer
attaching thereto such latest drafts of the Buyer
Registration Statement and Buyer Prospectus and
acknowledging therein the material supplied in writing by it
to Buyer specifically for use in such latest drafts of the
Buyer Registration Statement and Buyer Prospectus.
(b) The information to be supplied in writing by
RII to Buyer specifically for use in the Buyer Registration
Statement and the Buyer Prospectus therein will not (i) at
the time the Buyer Prospectus is first distributed pursuant
to the Reorganization Plan, (ii) at the time the Buyer
Registration Statement becomes effective, (iii) on the date
of the Bankruptcy Court's hearing with respect to the
Disclosure Statement, (iv) on the date of the confirmation
of the Reorganization Plan by the Bankruptcy Court or (v) at
the Closing, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading. RII agrees that
on each date referred to in clauses (i), (ii), (iii) and
(iv) above, it shall deliver a letter to Buyer attaching
thereto the Buyer Registration Statement and Buyer
Prospectus in effect on such date and acknowledging therein
the material supplied in writing by it to Buyer specifically
for use in such Buyer Registration Statement or Buyer
Prospectus.
(c) Notwithstanding the foregoing, RII makes no
representation or warranty with respect to any information
included in the draft Buyer Registration Statement and the
draft Buyer Prospectus referred to in Section 4.25(a) or in
the Buyer Registration Statement or the Buyer Prospectus
referred to in Section 4.25(b) that is not supplied in
writing by RII to Buyer specifically for use therein. If,
at any time prior to the Closing Date, any event relating to
<PAGE>
29
RII or any of its Affiliates, officers or directors actually
is discovered by RII or any of its Affiliates which is
required to be set forth in a supplement to the Buyer
Prospectus, RII shall promptly inform Buyer and assist Buyer
in preparing, filing with (and, if required, having approved
by) the SEC and the Bankruptcy Court and disseminating any
such supplements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to RII and GRI that:
SECTION 5.01. ORGANIZATION AND GOOD STANDING.
Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of The
Bahamas. Buyer has made available to RII an accurate and
complete copy of its current memorandum of association and
articles of association. Attached hereto as Exhibit A are
Articles of Association of Buyer, which Articles of
Association Buyer will cause to be filed without change on
or before the Closing Date, and on the Closing Date such
Articles of Association shall be in full force and effect
and shall supersede any previous Articles of Association.
SECTION 5.02. AUTHORIZATION. Buyer has all
necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations here-
under. The execution and delivery of this Agreement by
Buyer and the purchase of the Shares by Buyer have been, and
the purchase of the RII Paradise Assets by the Buyer
Subsidiaries will be at Closing, duly and validly authorized
by all necessary corporate action on the part of Buyer and
the Buyer Subsidiaries and no other corporate proceedings or
shareholder actions on the part of Buyer or the Buyer
Subsidiaries are or will be necessary to authorize this
Agreement or to purchase the Shares and the RII Paradise
Assets. This Agreement has been duly and validly executed
and delivered by Buyer and, assuming the due authorization,
execution and delivery by RII, constitutes the legal, valid
and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms (subject as to enforcement to
applicable bankruptcy, reorganization, insolvency,
fraudulent transfer and moratorium and similar laws from
time to time in effect affecting creditors' rights generally
<PAGE>
30
and to legal and equitable limitations on availability of
specific performance and other equitable remedies).
SECTION 5.03. NO CONFLICT; REQUIRED FILINGS AND
CONSENTS. (a) The execution and delivery of this Agreement
by Buyer does not, and the performance of this Agreement by
Buyer will not, (i) conflict with or violate the memorandum
of association or articles of association or equivalent
organizational documents of Buyer or any Buyer Subsidiary,
(ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Buyer or any Buyer
Subsidiary or by which any of them or their properties is
bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any
Encumbrance on any of the property or assets of Buyer or any
Buyer Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Buyer
or any Buyer Subsidiary is a party or by which any of them
or their properties is bound or affected, except, in the
case of this clause (iii) and clause (ii) above, for any
such breaches, defaults or other occurrences which would
not, individually or in the aggregate, have a material
adverse effect on the business, operations, properties
(including intangible properties), condition (financial or
otherwise), assets or liabilities of Buyer or any Buyer
Subsidiary.
(b) The execution and delivery of this Agreement
by Buyer does not, and the performance of this Agreement by
Buyer will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any
Governmental Authority except for (i) the Confirmation
Order, (ii) required filings under the HSR Act, (iii) the
Airline Governmental Consents, (iv) the Governmental
Consents and (v) where failure to obtain such consents,
approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially
delay consummation of the transactions contemplated hereby,
or otherwise prevent Buyer from performing its obligations
under this Agreement.
SECTION 5.04. REORGANIZATION PLAN SOLICITATION
DOCUMENTS. The information to be supplied in writing by
Buyer to RII specifically for use in the Registration
<PAGE>
31
Statement and the Disclosure Statement will not (i) at the
time the Disclosure Statement is first mailed, (ii) at the
time the Registration Statement becomes effective, (iii) on
the date of the Bankruptcy Court's hearing with respect to
the Disclosure Statement, (iv) on the date of confirmation
of the Reorganization Plan by the Bankruptcy Court or (v) at
the Closing, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading. Buyer agrees
that on each date referred to in clauses (i), (ii), (iii)
and (iv) above, it shall deliver a letter to RII attaching
thereto the Registration Statement and Disclosure Statement
in effect on such date and acknowledging therein the
material supplied in writing by it to RII specifically for
use in such Registration Statement and Disclosure Statement.
Notwithstanding the foregoing, Buyer makes no representation
or warranty with respect to any information included in the
Registration Statement or the Disclosure Statement that is
not supplied in writing by Buyer to RII specifically for use
therein. If, at any time prior to the Closing Date, any
event relating to Buyer or any of its Affiliates, officers
or directors actually is discovered by Buyer or any of its
Affiliates which is required by the Bankruptcy Court to be
set forth in a supplement to the Disclosure Statement, Buyer
will promptly inform RII and cooperate with RII in pre-
paring, filing with (and, if required, having approved by)
the SEC and the Bankruptcy Court and disseminating any such
supplements.
SECTION 5.05. BROKERS. No broker, finder or
investment banker, other than those specified on Sched-
ule 5.05, is entitled to any brokerage, finder's or other
fee or commission in connection with the transaction
contemplated hereby based upon arrangements made by and on
behalf of Buyer.
SECTION 5.06. BUYER SERIES A SHARES. The Buyer
Series A Shares have been duly authorized and, upon issuance
and delivery in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable.
SECTION 5.07. BUYER REGISTRATION STATEMENT; BUYER
PROSPECTUS. Each of the Buyer Registration Statement and
the Buyer Prospectus shall not (i) at the time the Buyer
Prospectus is first distributed pursuant to the Reorganiza-
tion Plan, (ii) at the time the Buyer Registration Statement
<PAGE>
32
becomes effective, (iii) on the date of the Bankruptcy
Court's hearing with respect to the Disclosure Statement,
(iv) on the date of the confirmation of the Reorganization
Plan by the Bankruptcy Court or (v) at the Closing, contain
any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, Buyer
makes no representation or warranty with respect to any
information included in the Buyer Registration Statement or
the Buyer Prospectus that was supplied by RII to Buyer
specifically for use therein. If, at any time prior to the
Closing Date, any event relating to Buyer or any of its
Affiliates, officers or directors should be discovered by
Buyer or any of its Affiliates which is required to be set
forth in a supplement to the Buyer Prospectus, Buyer will
prepare, file with (and, if required, use its best efforts
to have approved by) the SEC, the Bankruptcy Court and the
appropriate authorities of the government of The Bahamas and
disseminate any such supplements. The Buyer Registration
Statement and the Buyer Prospectus did, or shall, as the
case may be, comply as to form in all material respects with
the requirements of the Securities Act, and all other laws,
rules, regulations, decrees and orders promulgated
thereunder.
SECTION 5.08. OPERATION OF BUYER. Since its
inception Buyer has not engaged, and prior to Closing it
shall not engage, in any activity or business other than
those relating to the implementation of this Agreement,
preparation relating thereto and preparation for the
implementation of the plans for the Paradise Island Business
contemplated in the Buyer Registration Statement. Following
the Closing, Buyer will promptly reimburse Parent for
(i) all reasonable costs and expenses relating to
architecture matters, the Buyer Prospectus and Buyer
Registration Statement and bank financing incurred by Parent
for the benefit of Buyer as and when incurred or which have
already been incurred and (ii) all other reasonable costs
and expenses, up to an aggregate maximum amount of
$2 million, incurred by Parent for the benefit of Buyer as
and when incurred or which have already been incurred,
including without limitation the costs and expenses set
forth on Schedule 5.08, unless otherwise specifically
excluded on such Schedule. Except for Indebtedness
contemplated by this Agreement, Buyer has no Indebtedness.
<PAGE>
33
SECTION 5.09. CAPITAL STRUCTURE OF BUYER. The
authorized capital stock of Buyer consists of 3,000,000
Ordinary Shares, of which two shares, constituting all the
issued and outstanding shares (the "Buyer Shares"), are duly
authorized and validly issued and outstanding, fully paid
and nonassessable. Parent is the registered holder of the
Buyer Shares. The Buyer Shares have not been issued in
violation of, and are not subject to, any preemptive or
subscription rights. Except as set forth above, there are
no shares of capital stock or other equity securities of
Buyer outstanding. There are no outstanding warrants,
options, agreements, convertible or exchangeable securities
or other commitments (other than those contemplated by this
Agreement) pursuant to which Buyer is or may become
obligated to issue, sell, purchase, return or redeem any of
its shares of capital stock or other securities and there
are not any equity securities of Buyer reserved for issuance
for any purpose. As of the Closing, Buyer will directly
have good and valid title to all the outstanding shares of
capital stock of each Buyer Subsidiary, free and clear of
Encumbrances, and all such shares will have been duly
authorized and validly issued and outstanding, fully paid
and nonassessable. Buyer does not directly or indirectly
own any capital stock of or any other equity interests in
any corporation, partnership or other entity.
SECTION 5.10. SUBSCRIPTION AGREEMENTS. Each of
(i) the Subscription Agreement dated as of the date hereof
relating to the subscription of shares of Parent (the
"Parent Subscription Agreement"), and (ii) the Subscription
Agreement dated as of the date hereof between Parent and
Buyer, a copy of which is attached hereto as Exhibit I (as
in effect as of the date hereof, the "Buyer Subscription
Agreement"), has been executed and delivered by the parties
thereto, is valid and binding on, in full force and effect
with respect thereto and is enforceable by the parties
thereto in accordance with its terms (subject as to
enforcement to applicable bankruptcy, reorganization,
insolvency, fraudulent transfer and moratorium and similar
laws from time to time in effect affecting creditors' rights
generally and to legal and equitable limitations on
availability of specific performance and other equitable
remedies).
<PAGE>
34
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. CONDUCT OF PARADISE ISLAND BUSINESS
PENDING THE CLOSING. Except as contemplated by this Agree-
ment, RII covenants and agrees that, during the period
between the date of this Agreement and through and including
the Closing Date, unless Buyer shall otherwise agree in
writing, the Paradise Island Business shall be conducted
only in the ordinary course of business and in a manner con-
sistent with past practice; and RII and each of its Affili-
ates, subject to the applicable provisions of the Bankruptcy
Code, shall use its reasonable efforts (without expense
outside of the ordinary course of business) to preserve sub-
stantially intact the business organization of the Paradise
Island Business, to keep available the services of the
present officers, employees and consultants of the Paradise
Island Business and to preserve the present relationships of
the Paradise Island Business with customers, suppliers and
other persons with which the Paradise Island Business has
significant business relations; PROVIDED that RII shall not
be required to make, or cause any of its Affiliates to make,
any additional payments or enter into or amend any
contractual arrangements or understandings to satisfy the
foregoing obligation other than in the ordinary course of
business consistent with past practice. By way of
amplification and not limitation, except as contemplated by
this Agreement (including without limitation Section 6.11),
none of the Company or any of its Subsidiaries or any RII
Paradise Subsidiary shall, during the period between the
date of this Agreement and through and including the Closing
Date, directly or indirectly do, or propose or commit to do,
any of the following, except with the prior written consent
of Buyer:
(a) amend or otherwise change its Articles of
Association or Memorandum of Association or charter or
By-Laws;
(b) issue, sell, pledge, dispose of or encumber,
or authorize the issuance, sale, pledge, disposition or
encumbrance of, (A) any shares of capital stock of any
class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest, of the
Company or any of its Subsidiaries or (B) any Paradise
Island Assets, except for sales in the ordinary course
<PAGE>
35
of business and in a manner consistent with past
practice;
(c) declare, set aside, make or pay any dividend
or other distribution, payable in cash, stock, property
or otherwise, with respect to any of its capital stock,
other than dividends or other distributions of cash if,
in the good faith belief of management of RII, such
distributions will not cause the Paradise Island
Business to have, as of the Closing Date, Adjusted
Working Capital materially less than the Target
Adjusted Working Capital plus a good faith estimate of
the EBITDA Adjustment or Adjusted Cash materially less
than Targeted Adjusted Cash;
(d) reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock;
(e) (i) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation,
partnership or other business organization or division
thereof; (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or
endorse or otherwise as an accommodation become
responsible for, the obligations of any person, or make
any loans or advance, except in the ordinary course of
business and in a manner consistent with past practice;
(iii) enter into any Material Contract other than in
the ordinary course of business and in a manner con-
sistent with past practice; or (iv) enter into or amend
any contract, agreement, commitment or arrangement with
respect to any of the matters set forth in this Sec-
tion 6.01(e);
(f) increase the compensation payable or to become
payable to any of its officers or employees, except as
may be required by the terms of existing Benefit Plans,
Bahamas Benefit Plans, collective bargaining agreements
or individual employment contracts and except for
increases in salary or wages of any officers or
employees of the Paradise Island Business whose annual
cash compensation does not exceed $100,000 in the
ordinary course of business and in a manner consistent
with past practices, or grant any severance or
termination pay (except with respect to any Excluded
Employee) or enter into any employment, consulting or
severance agreement with any present or former
<PAGE>
36
director, officer or other employee of the Paradise
Island Business other than, in the case of severance
agreements with any officer or employee whose annual
cash compensation does not exceed $100,000, in the
ordinary course of business and in a manner consistent
with past practice, or amend (except as may be required
by law), establish, adopt, enter into any collective
bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any
directors, officers or employees;
(g) take any action other than in a manner
consistent with past practice (none of which actions
shall be unreasonable or unusual) with respect to
accounting policies or procedures;
(h) make any material tax election, other than in
the ordinary course of business and in a manner
consistent with past practice, or settle or compromise
any liability for Taxes in excess of $100,000 (this
paragraph (h) shall only apply to the Company and its
Subsidiaries); or
(i) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than (i)
the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved
against in the Paradise Island Financial Statements or
incurred in the ordinary course of business and in a
manner consistent with past practice, and (ii) the
payment, discharge or satisfaction of any intercompany
Indebtedness; PROVIDED, HOWEVER, such intercompany
transactions would not cause the Paradise Island
Business to have, as of the Closing Date, Adjusted
Working Capital materially less than the Targeted
Adjusted Working Capital plus a good faith estimate of
the EBITDA Adjustment, or Adjusted Cash materially less
than Targeted Adjusted Cash.
SECTION 6.02. SECURITIES LAWS. Each of RII and
Buyer shall make all filings under the Securities Act and
the Exchange Act necessitated by the provisions of this
Agreement. Buyer shall cause the Buyer Series A Shares to
be registered under the Exchange Act and authorized for
<PAGE>
37
quotation on the NASDAQ National Market System. Buyer shall
use its reasonable best efforts to file the Buyer
Registration Statement with the SEC as soon as possible.
SECTION 6.03. DOCUMENTS AND MOTIONS TO BE FILED
BY RII AND GRI. (a) Promptly upon completion of the
Reorganization Plan Solicitation, and in no event later than
February 15, 1994, RII and GRI shall commence the Bankruptcy
Cases. Notwithstanding anything to the contrary, RII and
GRI shall not be under any obligation to commence the
Bankruptcy Cases unless and until RII and GRI shall have
received in the Reorganization Plan Solicitation the
requisite number of acceptances from impaired creditors and
the requisite number of consents to terminate the Old
Security Documents (as defined in the Reorganization Plan).
(b) Promptly upon the commencement of the
Bankruptcy Cases, and in no event later than five Business
Days thereafter, RII and GRI shall (i) file the Disclosure
Statement and the Reorganization Plan and the certification
of votes for acceptance or rejection of the Reorganization
Plan with the Bankruptcy Court and (ii) seek from the
Bankruptcy Court and take all steps necessary to obtain a
hearing at the earliest practicable date for approval of the
Disclosure Statement and confirmation of the Reorganization
Plan.
(c) RII shall file, not later than five Business
Days after the Bankruptcy Date, the Interim Motion with the
Bankruptcy Court and use its best efforts to cause the
Bankruptcy Court to enter the Interim Order.
(d) RII shall use its reasonable best efforts to
file the Registration Statement with the SEC as soon as
possible.
SECTION 6.04. REORGANIZATION PROCEEDINGS.
(a) (i) RII shall, and shall cause GRI to, seek
confirmation of the Reorganization Plan by the Bankruptcy
Court using the acceptances of the Reorganization Plan
received by RII and GRI pursuant to the Reorganization Plan
Solicitation, (ii) RII shall, and shall cause GRI to, comply
in all material respects with the Bankruptcy Code and all
other laws, rules, regulations, decrees and orders
promulgated thereunder in connection with obtaining
confirmation of the Reorganization Plan, (iii) RII shall,
and shall cause GRI to, use its best efforts to obtain, and
shall, and shall cause GRI to, refrain from knowingly taking
<PAGE>
38
any action that would be likely to prevent, materially
impede or result in the revocation of, (A) the entry by the
Bankruptcy Court of the Confirmation Order and (B) the
vesting upon the date on which the Reorganization Plan shall
become effective of (y) the property of each of RII and GRI
in the reorganized entities and (z) the property dealt with
by the Reorganization Plan in the recipients thereof under
the Reorganization Plan, in each case free and clear of all
claims and interests of creditors and equity security
holders except as provided in and in accordance with the
Reorganization Plan and (iv) RII shall not, and shall cause
GRI not to, consent to any amendment or supplement to, or
modification of, the Reorganization Plan or the Disclosure
Statement that purports to change in any material respect
the terms or conditions of the transactions contemplated by
this Agreement without the prior written consent of Buyer.
(b) Buyer shall use its best efforts to assist
RII and GRI in performance of their obligations under
Section 6.04(a).
SECTION 6.05. ACCESS TO INFORMATION; CONFIDENTI-
ALITY. (a) From the date hereof to the Closing Date, RII
shall, and shall cause its Affiliates, officers, directors,
employees, auditors and other agents to, (i) afford the
officers, employees, auditors and other agents of Buyer
reasonable access at all reasonable times to its officers,
employees, agents, properties, offices, plants and other
facilities and to all books and records, and shall furnish
Buyer with all financial, operating and other data and
information with respect to the Paradise Island Business as
Buyer, through its officers, employees or agents, or such
financing sources may reasonably request and (ii) furnish,
and cause the officers and employees of RII and its
Affiliates to furnish, to Buyer and its authorized
representatives such additional financial and operating data
and other information regarding the Paradise Island Assets
and the Paradise Island Business as Buyer shall from time to
time reasonably request including, without limitation, all
monthly or other interim financial and operating reports
relating to the Paradise Island Business prepared by or for
officers of RII and its Affiliates. Without limiting the
foregoing, RII agrees to provide representatives of Buyer
with offices in Paradise Island and Miami and such
representatives shall be given adequate prior notice (if
time permits) of and allowed to attend all material meetings
of RII and its Subsidiaries relating to the Paradise Island
Business.
<PAGE>
39
(b) The confidentiality agreement dated
August 11, 1993, between RII and Parent shall continue in
full force and effect until the Closing and shall survive
the termination of this Agreement in the event that no
Closing occurs and the benefits thereof shall be assigned to
PIRI upon the Spin-off.
SECTION 6.06. NOTIFICATION OF CERTAIN MATTERS.
RII shall give prompt notice to Buyer, and Buyer shall give
prompt notice to RII, of (i) the occurrence or non-
occurrence of any event the occurrence or non-occurrence of
which would be likely to cause a representation or warranty
contained in this Agreement to be untrue or inaccurate in
any material respect and (ii) any failure of RII or Buyer,
as the case may be, to comply with or satisfy in any
material respect any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOW-
EVER, that the delivery of any notice pursuant to this
Section 6.06 shall not limit, increase, or otherwise affect
the remedies available hereunder to the party receiving such
notice.
SECTION 6.07. FURTHER ACTION; REASONABLE EFFORTS.
Upon the terms and subject to the conditions hereof, each of
the parties hereto shall use all reasonable best efforts
(without undue expense) to take or cause to be taken all
appropriate action and to do or cause to be done all things
reasonably necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
transactions contemplated hereby and by the Reorganization
Plan, including, without limitation, using all reasonable
efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to Material Contracts
as are necessary for the consummation of the transactions
contemplated hereby and by the Reorganization Plan and to
fulfill the conditions to the Closing.
SECTION 6.08. PUBLIC ANNOUNCEMENTS. Buyer and
RII shall consult with each other before issuing any press
release or otherwise making any public statements with
respect to the transactions contemplated hereby and by the
Reorganization Plan and shall not issue any such press
release or make any such public statement prior to such
consultation, except as may be required by law or any
listing agreement with a national securities exchange.
<PAGE>
40
SECTION 6.09. EMPLOYEE BENEFIT MATTERS. (a) As
of the Closing Date, Buyer shall cause the Buyer
Subsidiaries to offer employment to each person employed by
the RII Paradise Subsidiaries whose primary functions relate
to the operation of the Paradise Island Business and each
person set forth on Schedule 6.09 (a "Paradise Employee"),
except that Buyer may designate in writing within 60 days
from the date of this Agreement up to 40 Paradise Employees
to whom it does not wish to offer employment (the "Excluded
Employees"). Schedule 6.09(a) generally describes severance
benefits for Paradise Employees and sets forth a list of
each Paradise Employee and the salary as of the date hereof
and the employment commencement date of each such Paradise
Employee. The Buyer Subsidiaries shall not be required to
offer employment to any Excluded Employee and RII hereby
agrees that all obligations, including obligations under any
Benefit Plan or similar employee benefits, to such Excluded
Employees shall remain the responsibility solely of RII.
RII shall cooperate with and assist Buyer in any reasonable
manner in hiring Paradise Employees (other than any Excluded
Employees). Buyer agrees that, for a period of one year
from the Closing Date, Buyer will not, without the written
consent of RII, employ any Excluded Employees, as
consultants or otherwise. Any Paradise Employee who becomes
an employee of Buyer or the Buyer Subsidiaries shall be
referred to herein as a "Continuing Employee".
(b) Buyer shall have no obligation to maintain or
assume obligations under any Benefit Plan, or to provide any
employee benefits, other than the obligations contained in
this subsection. Within 90 days from the date of this
Agreement, Buyer shall determine whether it shall offer
Continuing Employees a 401(k) plan. If Buyer determines to
offer Continuing Employees a 401(k) plan, then on or prior
to the Closing, Buyer shall sponsor, or cause one or more of
its Affiliates to sponsor, a plan (the "Successor Plan")
that is qualified under Section 401 of the Code, under which
there is established a trust (the "Successor Trust") that is
exempt under Section 501 of the Code, to which the following
transfers shall be made. As promptly as practical after the
Closing Date, RII shall take all actions necessary to
transfer to the Successor Trust the account balances in the
Resorts Retirement Savings Plan (the "Savings Plan") of all
Continuing Employees. Such transfers shall be made solely
in cash or, where applicable, in cash plus any loan from an
account to a Continuing Employee that satisfies the
requirements of ERISA and the Code. The transfer of the
account balances referred to above shall take place upon
<PAGE>
41
receipt by RII of either (x) a copy of a favorable
determination letter or letters from the IRS that the
Successor Plan is qualified under Section 401 of the Code
and the Successor Trust is exempt from taxation under
Section 501 of the Code or (y) an opinion of counsel to
Buyer, on which to RII is entitled to rely and which is
reasonably satisfactory to RII, that the Successor Plan is
qualified under Section 401 of the Code and the Successor
Trust is exempt from taxation under Section 501 of the Code.
(c) Schedule 6.09(c) sets forth a list of the
officers and directors of the Company or any of its
Subsidiaries who are not directly involved in the business
and operations of the Company and its Subsidiaries. On the
Closing Date, RII shall cause to be delivered to Buyer duly
signed (i) resignations (with respect to their entire
association with or employment by the Company or any of its
Subsidiaries) effective as of the Closing Date of all such
officers and directors and (ii) releases of such officers
and directors releasing the Company and its Subsidiaries of
all obligations and liabilities relating to such
resignations.
(d) RII and Buyer agree to cooperate in making
all appropriate filings and taking all appropriate actions
required to implement this Section 6.09.
SECTION 6.10. BULK TRANSFER LAWS. RII shall
cause each RII Paradise Subsidiary to comply in all material
respects with the provisions of any so-called Bulk Transfer
Law of all states of the United States in which any of the
RII Paradise Assets subject to any such Bulk Transfer Law
are located in connection with the sale of the RII
Subsidiary Assets to the Buyer Subsidiaries. RII represents
and warrants to Buyer that the list of creditors to be
provided by RII pursuant to such Bulk Transfer Laws will, to
RII's knowledge, contain the names and business addresses of
all creditors of the RII Paradise Subsidiaries, with the
amounts of credit listed when known, and also the names of
all persons who are known to RII to assert claims against
any RII Paradise Subsidiary even though such claims are
disputed, and that such list will be true, correct and
complete in all material respects and will comply in all
material respects with such Bulk Transfer Laws. As promptly
as practicable after the Closing, RII shall pay and
discharge when known all amounts so listed (other than
Assumed Liabilities and claims disputed in good faith).
<PAGE>
42
SECTION 6.11. INTERCOMPANY ACCOUNTS, CONTRACTS,
GUARANTIES AND INDEBTEDNESS. On or prior to the Closing
Date, the net amount of all Indebtedness between RII and any
of its Affiliates (other than the Company and any Subsidiary
of the Company), on the one hand, and the Company and any
Subsidiary of the Company, on the other hand, shall be
cancelled or contributed to the capital of the relevant
entity. On or prior to the Closing Date, RII shall cause
the Company and each Subsidiary of the Company not to have
any Indebtedness, except for Indebtedness disclosed on
Schedule 4.06(b). On or prior to the Closing Date, RII
shall terminate or cause to be terminated all Contracts
between and among RII and its Affiliates and any of the
Company, the Subsidiaries of the Company and the RII
Paradise Subsidiaries (to the extent such Contracts relate
to the Paradise Island Business), and shall cancel or cause
to be cancelled all guarantees and security interests given
by the Company, the Subsidiaries of the Company or the RII
Paradise Subsidiaries on behalf of RII or any of its
Affiliates. On or prior to the Closing Date, RII shall
cancel or cause to be cancelled (a) all liens held by RII or
any of its Affiliates on any of the Paradise Island Assets
and (b) all liens held by the Company or any of its
Subsidiaries on any of the assets of RII or any of its
Affiliates (other than the Paradise Island Assets) and (c)
all liens on any of the Paradise Island Assets relating to
Indebtedness, except any such liens disclosed on
Schedule 4.06(b).
SECTION 6.12. REORGANIZATION PLAN SOLICITATION
DOCUMENTS. RII shall use its reasonable best efforts to
prepare each of the Registration Statement and the Dis-
closure Statement so that they shall not (i) at the time the
Disclosure Statement is first mailed, (ii) at the time the
Registration Statement becomes effective, (iii) on the date
of the Bankruptcy Court's hearing with respect to the
Disclosure Statement, (iv) on the date of the confirmation
of the Reorganization Plan by the Bankruptcy Court or (v) at
the Closing, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding
the foregoing, RII makes no such covenant with respect to
any information included in the Registration Statement or
the Disclosure Statement that was supplied by Buyer or any
holder of notes issued by RII (or any representative of such
holder) to RII specifically for use therein. If, at any
time prior to the Closing Date, any event relating to RII or
<PAGE>
43
any of its Affiliates, officers or directors should be dis-
covered by RII or any of its Affiliates which is required by
the Bankruptcy Court to be set forth in a supplement to the
Disclosure Statement, RII will prepare, file with (and, if
required, use its best efforts to have approved by) the SEC
and the Bankruptcy Court and disseminate any such
supplements. RII shall use its reasonable best efforts to
ensure that the Registration Statement and the Disclosure
Statement did, or shall, as the case may be, comply as to
form in all material respects with the requirements of the
Securities Act, the Exchange Act and the Bankruptcy Code and
all other laws, rules, regulations, decrees and orders
promulgated thereunder.
SECTION 6.13. REORGANIZATION PROCEEDINGS.
Neither RII nor GRI will knowingly take any action, or fail
to take any action, which could reasonably be expected to
prevent, materially impede or result in the revocation of
the confirmation of the Reorganization Plan (as provided in
Section 1144 of the Bankruptcy Code).
SECTION 6.14. WAIVER OF CERTAIN REPRESENTATIONS
AND WARRANTIES. (a) Except as provided in Section 6.14(b),
as of 11:59 p.m. on November 30, 1993, Buyer shall be deemed
to have waived and released any and all of Buyer's claims,
rights and remedies of any nature whatsoever (including
without limitation Buyer's ability, if any, to seek damages
or to terminate this Agreement) with respect to any
inaccuracies in or breaches of representations or warranties
of RII contained herein on account of any matter arising or
occurring on or before November 30, 1993.
(b) Notwithstanding Section 6.14(a), Buyer does
not waive (i) any claim, right, or remedy whatsoever
(including without limitation Buyer's ability, if any, to
seek damages or to terminate this Agreement) with respect to
any breaches of representations and warranties contained in
Sections 4.01, 4.02 and 4.16(a), (ii) any claim for damages
relating to any breach of the representations and warranties
contained in Section 4.25 or (iii) any claim, right, or
remedy whatsoever (including without limitation Buyer's
ability, if any, to seek damages or to terminate this
Agreement) with respect to any inaccuracies in or breaches
of the representations or warranties of RII contained herein
on account of any matter arising or occurring on or before
November 30, 1993 (x) which was known by RII or any of its
Affiliates or which would have been known by RII or any of
its Affiliates had they not been grossly negligent or (y)
<PAGE>
44
which was fraudulently or knowingly concealed from Buyer by
RII or any of its Affiliates; PROVIDED, HOWEVER, that as of
11:59 p.m. on November 30, 1993, Buyer shall be deemed to
waive all rights otherwise reserved in this Section 6.14(b)
with respect to any matter which was known to Buyer or any
of its Affiliates on or before November 30, 1993.
(c) As of the later of 11:59 p.m. on November 30,
1993, or, with respect to breaches by RII of Section 6.01
that Buyer or any of its Affiliates first became aware of
between November 25, 1993, and November 30, 1993, five
Business Days after Buyer or any of its Affiliates became
aware of such breach, Buyer shall be deemed to have waived
its right to terminate this Agreement (but not its right to
seek damages) for any breaches by RII of Section 6.01 that
were known to Buyer or would have been known to Buyer or any
of its Affiliates had they not been grossly negligent.
SECTION 6.15. CERTAIN OBLIGATIONS OF BUYER.
(a) Prior to or at the Closing, Buyer shall, and shall use
its best efforts to cause its relevant Affiliates to,
execute and deliver, and shall take all actions and perform
all material obligations required to be taken or performed
by it or its Affiliates at or prior to the Closing under,
(i) the Heads of Agreement dated August 18, 1993, among
Buyer, Parent and the Government of The Bahamas (and Buyer
shall use its best efforts to cause such Heads of Agreement
to remain in full force and effect as of the Closing Date),
(ii) the Registration Rights Agreement, in the form attached
hereto as Exhibit B, (iii) the Articles of Association of
Buyer, (iv) the Management Agreement, in the form attached
hereto as Exhibit C, and (v) the Non-Recourse Guaranty and
Pledge Agreement, in the form attached hereto as Exhibit D.
(b) Buyer covenants that upon the Closing, the
Buyer Subscription Agreement shall be consummated in
accordance with its terms.
(c) Promptly upon Closing, Buyer shall cause the
Articles of Association of the Company and the Subsidiaries
of the Company to be amended so that they are consistent
with the Articles of Association of Buyer, such amendments
to be reasonably acceptable to the independent directors of
Buyer.
SECTION 6.16. BANK FACILITY. Buyer shall use its
reasonable best efforts to enter into a definitive loan
agreement with a bank or group of banks for the provision to
<PAGE>
45
it of a principal amount of at least $75 million (the "Bank
Facility") substantially on the terms of the commitment
letter attached hereto as Exhibit E.
SECTION 6.17. AIRLINE GOVERNMENTAL CONSENTS. In
the event the Airline Governmental Consents are not obtained
before the Closing Date, RII and Buyer agree that until the
earlier of the date such Airline Governmental Consents are
obtained and one year after the Closing Date, RII and Buyer
will enter into a service agreement pursuant to which RII or
a Subsidiary of RII will, through PIA, operate scheduled air
service equivalent to that currently operated by PIA, such
scheduled air service to be operated for the account of
Buyer. Such service agreement will be mutually agreed upon
by RII and Buyer and shall generally provide that Buyer will
receive all revenues generated by PIA in its provision of
that scheduled air service operated for the account of the
Buyer. Such service agreement shall further provide that
Buyer will be responsible for all expenses related to such
scheduled air service. RII will be responsible for
procuring all other services for the airline, including
flight crews, maintenance and catering services, and will
receive a commercially reasonable fee for its participation
in such arrangement. In addition, Buyer would indemnify RII
and its Subsidiaries against any losses and liabilities
arising from its participation in such lease arrangement
other than losses or liabilities arising from the gross
negligence or willful misconduct of the indemnified party.
This Agreement may not be terminated and, assuming RII has
otherwise used its reasonable best efforts (without the
payment of money) to assist Buyer in obtaining the Airline
Governmental Consents, a breach of this Agreement shall not
be deemed to have occurred as a result of a failure to
obtain the Airline Governmental Consents or because RII is
prohibited by any governmental agency from complying with
this Section 6.17. This Agreement may not be terminated nor
shall a condition to Closing fail to be satisfied as a
result of RII and Buyer failing to enter into the service
agreement referred to above.
SECTION 6.18. COMFORT LETTER. RII shall cause
Ernst & Young to deliver to Buyer a comfort letter dated a
date not more than five Business days before November 30,
1993, which comfort letter shall be in the form of
Exhibit F.
SECTION 6.19. ESCROW AGREEMENT. (a) On or before
December 1, 1993, each of Buyer and RII shall execute and
<PAGE>
46
deliver the Escrow Agreement substantially in the form
attached hereto as Exhibit G, and each of Buyer and RII
agrees to perform its obligations thereunder.
(b) Buyer and RII agree that in the event the
Closing is to occur, they shall execute and deliver to the
Escrow Agent under the Escrow Agreement written instructions
directing the Escrow Agent to deliver (i) RII's Escrowed
Property (as defined in the Escrow Agreement) to RII and
(ii) Buyer's Escrowed Property (as defined in the Escrow
Agreement) as directed by Buyer.
(c) Buyer and RII agree that if the Bankruptcy
Court does not permit RII's Escrowed Property to be held
pursuant to the Escrow Agreement, then RII and Buyer shall
promptly execute and deliver to the Escrow Agent written
instructions directing the Escrow Agent to deliver
(i) $4 million of Buyer's Escrowed Property, plus applicable
interest that has accrued with respect to such $4 million,
as directed by Buyer and (ii) RII's Escrowed Property, plus
applicable interest that has accrued with the respect
thereto to the extent not included in RII's Escrowed
Property to RII.
SECTION 6.20. INSURANCE PROCEEDS. If any of the
Paradise Island Assets are destroyed or damaged or taken in
condemnation, the insurance proceeds or condemnation award
with respect thereto shall be a Paradise Island Asset. At
the Closing, RII shall pay to Buyer any such insurance
proceeds or condemnation awards received by RII on or prior
to the Closing and shall assign to or assert for the benefit
of Buyer all of its rights against any insurance companies,
governmental entities and others with respect to such
damage, destruction or condemnation. If and to the extent
that there is available insurance under policies maintained
by RII or its Subsidiaries in respect of any Assumed
Liability, except for any such insurance proceeds with
respect to which the insured is directly or indirectly
self-insured or has agreed to indemnify the insurer, RII
shall cause such insurance to be applied toward the payment
of such Assumed Liability.
<PAGE>
47
ARTICLE VII
NO SHOP; BUYER'S FEES
SECTION 7.01. NO SHOP. (a) Neither RII nor any
of its Affiliates nor any officer, director, employee, agent
(including without limitation, any investment bankers,
financial advisor, attorney or accountant) or other repre-
sentative of RII or any of its Affiliates shall, directly or
indirectly, initiate any contact with, solicit, or encour-
age, negotiate or enter into any agreement with, any Third
Party, or enter into or continue any discussions or negotia-
tions with, or disclose directly or indirectly any informa-
tion concerning the Paradise Island Business to any Third
Party in connection with any possible proposal regarding the
acquisition of any part of the Paradise Island Business
(whether by merger, purchase of capital stock, purchase of
assets, tender offer or otherwise) (each an "Acquisition
Proposal"); PROVIDED, HOWEVER, (i) prior to the entry of the
Interim Order, RII may, to the extent required by the
fiduciary obligations of the Board of Directors of RII, as
determined in good faith by the Board of Directors based
upon advice of outside counsel, (A) in response to an
unsolicited request therefor, furnish information with
respect to the Paradise Island Business (but specifically
excluding Buyer or Buyer's plans with respect to the
Paradise Island Business) to any person pursuant to a
customary confidentiality agreement (as determined by RII's
independent counsel) and discuss such information (but not
the terms of any Acquisition Proposal) with such person and
(B) upon receipt by RII of an Acquisition Proposal,
following delivery to Buyer of the notice required pursuant
to Section 7.01(b), participate in discussions and
negotiations regarding such Acquisition Proposal and
(ii) after entry of the Interim Order, RII may furnish
information to, and cooperate with Qualified Third Parties
(as defined below) with regard to information relating to
the Paradise Island Business (but specifically excluding
information regarding Buyer or regarding Buyer's plans with
respect to the Paradise Island Business) to a Third Party,
which Third Party RII reasonably believes is financially
able to and interested in consummating an Overbid
Transaction (a "Qualified Third Party"). Without limiting
the foregoing, it is understood that any violation of the
restrictions set forth in the provisions above by any
executive officer of RII or any of its Affiliates or any
investment banker or attorney of RII or any of its
Affiliates, whether or not such person is purporting to act
<PAGE>
48
on behalf of RII or any of its Affiliates or otherwise,
shall be deemed to be a breach of this Section 7.01(a) by
RII. Notwithstanding anything to the contrary in this
Section 7.01, RII may furnish to any person, including
without limitation any Third Party, copies of any filings
made by RII or any of its Subsidiaries with the SEC or the
New Jersey Casino Control Commission.
(b) In the event that RII shall directly or
indirectly receive any offer, proposal or inquiry regarding
an Acquisition Proposal, RII shall within two Business Days
notify Buyer of such proposal, offer or inquiry and shall,
in any such notice to Buyer, indicate in reasonable detail
the identity of the offeror and the terms and conditions of
any proposal, inquiry or offer. RII agrees not to modify,
or release any Third Party from any confidentiality or
standstill agreement to which RII is a party (exclusive of
those in which RII is the recipient rather than the provider
of confidential information).
(c) No Acquisition Proposal shall be considered,
approved, adopted or recommended by the Board of Directors
of RII, or presented by RII or its Board of Directors, to
the stockholders of RII for vote or approval by written
consent, and no meeting of stockholders of RII shall be
called or noticed for purposes of taking stockholder action
with respect to any Acquisition Proposal. Notwithstanding
the foregoing, in the exercise of its fiduciary duties the
Board of Directors may consider, approve, adopt or recommend
an Overbid Transaction with a Qualified Third Party, enter
into an agreement with a Qualified Third Party with respect
to such Overbid Transaction, or present such Overbid
Transaction to the stockholders of RII for vote or approval
by written consent, in each case at any time after the third
Business Day following Buyer's receipt of a written notice
advising Buyer that RII has received an offer for an Overbid
Transaction, specifying the material terms and conditions
thereof and the Qualified Third Party making such offer.
Nothing contained herein shall prohibit RII from complying
with Rule 14e-2(a) of the Exchange Act.
(d) Notwithstanding anything to the contrary
contained in this Section 7.01, (i) the provisions of this
Section 7.01 shall not apply to any sale or other
disposition of any Paradise Island Asset in the ordinary
course of business and in a manner consistent with past
practice, (ii) RII is not prohibited from supplying TCW and
<PAGE>
49
Fidelity with any information regarding the Paradise Island
Business or engaging in discussions or in negotiating the
terms of the Spin-off (as hereinafter defined) with TCW or
Fidelity and entering into a standby distribution agreement
and related documents with PIRI (as hereinafter defined) in
connection therewith or, if the Closing shall not have
occurred on the Effective Date (as defined in the
Reorganization Plan) for any reason whatsoever, from
effecting the Spin-off, and (iii) RII is not prohibited from
supplying the party identified prior to the date hereof by
RII (the "Identified Third Party") with respect to any
Acquisition Proposal that by its terms shall not be
effective until this Agreement is terminated in accordance
with its terms; PROVIDED, HOWEVER, that while this Agreement
is still in effect, RII shall not supply the Identified
Third Party with any information regarding the Paradise
Island Business that is not generally available to the
public (unless required to do so by its fiduciary duties),
and that before engaging in any discussions with the
Identified Third Party, RII and the Company shall enter into
a customary confidentiality agreement with the Identified
Third Party, pursuant to which, among other things, the
Identified Third Party agrees (x) not to, directly or
indirectly, have any contact with the Government of The
Bahamas or any employees or suppliers of the Paradise Island
Business and (y) that it shall not make any public
announcements of its discussion with RII, TCW or Fidelity,
unless otherwise required by law.
SECTION 7.02. BUYER EXPENSE REIMBURSEMENT.
(a) To the extent and in the circumstances set forth below
and provided that Buyer shall not have breached any of its
obligations hereunder qualified by materiality and shall not
have materially breached any of its obligations hereunder
not so qualified, RII shall reimburse Buyer for all of
Buyer's reasonable out-of-pocket costs and expenses incurred
since June 1, 1993, in connection with the preparation of
Buyer's plans for the Paradise Island Business and the
negotiation, execution, delivery and performance of Buyer's
obligations under this Agreement and the other agreements
related hereto, including, without limitation, reasonable
out-of-pocket costs and expenses of investors of Buyer and
its Affiliates relating to the transactions contemplated by
this Agreement (the "Buyer Expense Reimbursement"):
(i) in the event that this Agreement is terminated
pursuant to Section 10.01(c) [approval by the
<PAGE>
50
Bankruptcy Court of an Acquisition Proposal], then RII
shall promptly upon such termination pay to Buyer the
Buyer Expense Reimbursement up to $4 million;
(ii) in the event that this Agreement is
terminated by RII after November 30, 1993, pursuant to
Section 10.01(l) [Force Majeure Event in excess of
$20m], then RII shall promptly upon such termination
pay to Buyer the Buyer Expense Reimbursement up to
$4 million;
(iii) in the event that this Agreement is
terminated by Buyer after November 30, 1993, pursuant
to Section 10.01(b) [Force Majeure Event in excess of
$20m], then RII shall promptly upon such termination
pay to Buyer the Buyer Expense Reimbursement up to
$2 million;
(iv) in the event that this Agreement is
terminated pursuant to Section 10.01(m) [RII can not
deliver title], then RII shall promptly upon such
termination pay to Buyer the Buyer Expense
Reimbursement up to $3 million;
(v) in the event that this Agreement is terminated
after November 30, 1993 (or such later date with
respect to circumstances where the five Business Day
period referred to in Section 6.14(c) would apply)
pursuant to Section 10.01(o) [breach or ordinary course
covenant] or after November 30, 1993, pursuant to
Section 10.01(k) [Force Majeure Event less than $20m
and no adequate insurance], then RII shall promptly
upon such termination pay to Buyer the Buyer Expense
Reimbursement up to $2 million;
(vi) in the event that this Agreement is
terminated by RII pursuant to any of the provisions of
Section 10.01 or by Buyer pursuant to Section 10.01(b)
and a sale of the Paradise Island Business or any
portion thereof that would reasonably be expected to
generate 50% or more of the revenues of the Paradise
Island Business (whether by merger, purchase of capital
stock, purchase of assets, tender offer or otherwise)
is consummated within one year of such termination (a
"Post Termination Sale"), then upon the consummation of
such Post Termination Sale, RII, or if the spin-off
described in the Registration Statement (the "Spin-
off") shall have already occurred, Paradise Island
<PAGE>
51
Resorts Limited ("PIRI") shall pay to Buyer the Buyer
Expense Reimbursement up to $4 million in the event
such Post Termination Sale shall constitute an Overbid
Transaction or up to $2 million in the event such Post
Termination Sale is not an Overbid Transaction, in each
case less any amounts previously paid to Buyer pursuant
to subparagraphs (i), (ii), (iii), (iv) and (v) above;
and
(vii) in the event that this Agreement is
terminated by Buyer pursuant to any of the provisions
of Section 10.01 and a Post Termination Sale which
constitutes an Overbid Transaction occurs within one
year of such termination, then upon the consummation of
such Post Termination Sale, RII, or if the Spin-off
shall have already occurred, PIRI, shall pay to Buyer
the Buyer Expense Reimbursement up to $4 million less
any amounts previously paid to Buyer pursuant to
subparagraphs (i), (ii), (iii), (iv) and (v) above.
(b) RII and Buyer agree that the Reorganization
Plan will provide that if the Spin-off occurs (i) the
obligation to pay the Buyer Expense Reimbursement pursuant
to Sections 7.02(a)(vi) and (vii) of this Agreement shall be
an obligation of PIRI and not RII and (ii) prior to the
consummation of the Spin-off PIRI shall enter into a
security and pledge agreement with Buyer, pursuant to which
PIRI shall pledge assets reasonably acceptable to Buyer and
having a fair market value of $6 million to secure PIRI's
obligation to pay the Buyer Expense Reimbursement, such
security and pledge agreement to be in a form modeled after,
and to have terms generally consistent with the tenor of
those terms contained in, the Non-Recourse Guarantee and
Pledge Agreement. In the event the Spin-off is to occur,
Buyer and RII agree that RII's Escrowed Property (as defined
in the Escrow Agreement) shall not be released until PIRI
has entered into such security and pledge agreement.
(c) RII and Buyer agree and acknowledge, and the
Reorganization Plan will provide, that (i) the Spin-off
itself as contemplated by the Reorganization Plan shall not
constitute a Post Termination Sale and (ii) after the Spin-
off, the acquisition of shares of PIRI capital stock by any
person (as such term is used in Section 13(d) and 14(d)(2)
of the Exchange Act) in a transaction or series of related
transactions occurring within one year of the termination of
this Agreement that results in such person beneficially
<PAGE>
52
owning in excess of 50% of PIRI's outstanding capital stock
shall be deemed a Post Termination Sale.
(d) RII shall include in the Interim Motion a
request for approval of all Buyer Expense Reimbursement
items incurred up to and including the date of such Interim
Motion and shall support Buyer's fee application with
respect to reasonable Buyer Expense Reimbursement items
incurred after the entry of the Interim Order.
(e) Upon entry of the Interim Order, from and
after the Bankruptcy Date, until any obligation of RII to
pay the Buyer Expense Reimbursement is fully and
indefeasibly discharged, Buyer shall be entitled to an
administrative claim pursuant to Section 503(b) and
507(a)(1) of the Bankruptcy Code in the amount of the Buyer
Expense Reimbursement.
(f) Upon payment by RII to Buyer of Buyer Expense
Reimbursement pursuant to this Section 7.02, Buyer shall
deliver to RII the results of its due diligence
investigation.
(g) RII and Buyer agree, and in the event of the
Spin-off, PIRI will agree, that if Buyer is entitled to the
Buyer Expense Reimbursement, the amount thereof shall be
finally determined by Arthur Andersen & Co., subject to the
overall limitations contained in this Section 7.02 and, if
applicable, to the approval of the Bankruptcy Court.
(h) Notwithstanding anything contained herein to
the contrary, if RII has complied with its obligation under
this Section 7.02, after the consummation of the Spin-off
and upon the assumption by PIRI of the obligation to pay the
Buyer Expense Reimbursement pursuant to Sections 7.02(a)(vi)
and (vii), and the execution by PIRI of the security and
pledge agreement referred to in Section 7.02(b), RII shall
not have any obligation with respect to the Buyer Expense
Reimbursement.
SECTION 7.03. ATTORNEYS' FEES. In any action by
any party to enforce the terms of this Agreement, the
prevailing party shall be entitled to receive reimbursement
of all of its reasonable attorneys' fees and expenses
incurred in such action. Upon entry of the Interim Order,
from and after the Bankruptcy Date, any obligation of RII to
pay such fees and expenses shall constitute an
administrative claim pursuant to Section 503(b) and
<PAGE>
53
507(a)(1) of the Bankruptcy Code. The obligation of either
party hereto under this Section 7.03 is not subject to any
amount limitation nor can such obligation be set-off against
or credited towards other payments payable under this
Agreement.
SECTION 7.04. TRANSFER TAXES. Any sales,
transfer (including any real property transfer) and other
Taxes (excluding gross or net income taxes), including
without limitation any documentary stamp tax, and any
filing, recording or other fees applicable to the conveyance
and transfer pursuant to the provisions of this Agreement of
the Company and the Paradise Island Assets (collectively,
the "Transfer Taxes"), shall be borne and paid 50% by Buyer
and 50% by RII. The provisions of this Section shall
survive the Closing of this Agreement. RII and Buyer agree
to use reasonable best efforts to minimize as much as
possible any Transfer Taxes.
ARTICLE VIII
CONDITIONS TO THE CLOSING
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF
BUYER. The obligations of Buyer to effect the Closing shall
be subject to the prior fulfillment of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES; AGREEMENTS
AND COVENANTS. (i) Each of the representations and
warranties of RII contained in Sections 4.01, 4.02 and
4.16(a) of this Agreement shall be true and correct in all
respects, in each case when made and as of the Closing Date,
(ii) RII shall not have failed to comply with the covenants
in Sections 6.01 (unless compliance therewith was waived by
Buyer in accordance with Section 6.14(c)), 6.08, 6.09 and
6.10, where such failures in the aggregate would have a
Material Adverse Effect, (iii) RII shall have complied in
all respects with the covenants contained in Section 6.11,
(iv) except with respect to the covenants listed in
Section 10.01(h) and Section 10.01(i), each of the other
agreements and covenants contained in this Agreement and in
any certificate or agreement by RII delivered pursuant
hereto to be performed or complied with by RII, at or before
Closing, shall have been duly performed or complied with in
all material respects; PROVIDED, HOWEVER, that a breach of
Section 6.06 would not constitute a failure of a condition
<PAGE>
54
hereunder if the representation, warranty or covenant in
question would not have resulted in a failure of a condition
hereunder and (v) Buyer shall have received a certificate of
RII, signed by a Vice President thereof as to the
fulfillment of the conditions set forth in the foregoing
clauses (i), (ii), (iii) and (iv).
(b) HSR ACT. Any waiting period (and any
extension thereof) applicable to the consummation of the
transactions contemplated hereby under the HSR Act shall
have expired or been terminated.
(c) CONFIRMATION OF THE REORGANIZATION PLAN AND
ENTRY OF THE CONFIRMATION ORDER; CONSUMMATION OF THE
REORGANIZATION PLAN. The Confirmation Order shall have been
entered by the Bankruptcy Court and the Effective Date (as
defined in the Reorganization Plan) shall have occurred, or
there shall be no unsatisfied conditions to the occurrence
of the Effective Date other than the Closing, and such
Confirmation Order shall be in full force and effect and
shall not then be stayed, or the consummation of the
Acquisitions shall have been approved by another order of
the Bankruptcy Court and such other order shall be in full
force and effect and shall not then be stayed.
(d) CONSENTS. All Governmental Consents shall
have been received on or prior to the Closing Date.
(e) LITIGATION. There shall not be in effect any
injunction or restraining order issued by a court of
competent jurisdiction against the consummation of the sale
and purchase of the Shares and the RII Paradise Assets
pursuant to this Agreement.
(f) BANKRUPTCY; INSOLVENCY; ETC. No proceeding
shall have been instituted or consented to by or against any
of the Company, any of its Subsidiaries or any RII Paradise
Subsidiary seeking to adjudicate any of them a bankrupt or
insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief
or composition of any of their debts under any law relating
to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of any order for relief or the
appointment of a receiver, trustee, custodian or other
similar official for any of them or any substantial part of
any of their property, and such proceeding shall not have
been dismissed or terminated within 60 days of the
commencement thereof.
<PAGE>
55
(g) OPINION. Buyer shall have received an
opinion of Gibson, Dunn & Crutcher, counsel to RII,
reasonably acceptable to Buyer and its counsel.
(h) REGISTRATION RIGHTS AGREEMENT. The
Registration Rights Agreement shall have been executed and
delivered by the parties thereto and shall be in full force
and effect.
(i) RESIGNATIONS. Buyer shall have received
resignations and releases of all officers and directors of
the Company and its Subsidiaries who are not directly
involved in the business and operations of the Company and
its Subsidiaries in accordance with Section 6.09(c).
(j) SECURITY DOCUMENTS. The agreements listed in
Schedule 4.16 shall not be in force and effect.
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF RII.
The obligations of RII to effect the Closing shall be
subject to the prior fulfillment of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES; AGREEMENTS
AND COVENANTS. (i) Each of the representations and
warranties of Buyer contained in this Agreement and in any
certificate or agreement of Buyer delivered pursuant hereto
qualified as to materiality shall be true and correct in all
respects and those not so qualified shall be true and
correct in all material respects, in each case when made and
as of the Closing Date (except representations and
warranties that are made as of a specific date need be true
and correct only as of such date), (ii) each of the
agreements and covenants contained in this Agreement and in
any certificate or agreement of Buyer delivered pursuant
hereto to be performed or complied with by Buyer, at or
before the Closing, shall have been duly performed or
complied with in all material respects and (iii) RII shall
have received a certificate of Buyer, signed by a Vice
President thereof as to the fulfillment of the conditions
set forth in the foregoing clauses (i) and (ii).
(b) HSR ACT. Any waiting period (and any
extension thereof) applicable to the consummation of the
transactions contemplated hereby under the HSR Act shall
have expired or been terminated.
<PAGE>
56
(c) CONFIRMATION OF THE REORGANIZATION PLAN AND
ENTRY OF THE CONFIRMATION ORDER; CONSUMMATION OF THE
REORGANIZATION PLAN. The Confirmation Order shall have been
entered by the Bankruptcy Court and the Effective Date (as
defined in the Reorganization Plan) shall have occurred, or
there shall be no unsatisfied conditions to the occurrence
of the Effective Date other than the Closing, and such
Confirmation Order shall be in full force and effect and
shall not then be stayed, or the consummation of the
Acquisition shall have been approved by another order of the
Bankruptcy Court and such other order shall be in full force
and effect and shall not then be stayed.
(d) CONSENTS. All Governmental Consents shall
have been received on or prior to the Closing Date.
(e) NO INJUNCTIONS. There shall not be in effect
any injunction or restraining order issued by a court of
competent jurisdiction against the consummation of the sale
and purchase of the Shares and the RII Paradise Assets
pursuant to this Agreement.
(f) OPINION. RII shall have received an opinion
of Cravath, Swaine & Moore, counsel to Buyer reasonably
satisfactory to RII and its counsel.
(g) BANKRUPTCY; INSOLVENCY; ETC. No proceeding
shall have been instituted or consented to by or against any
of Buyer, Parent or Sun International Management Limited
seeking to adjudicate any of them a bankrupt or insolvent,
or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition
of any of their debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or
seeking the entry of any order for relief or the appointment
of a receiver, trustee, custodian or other similar official
for any of them or any substantial part of any of their
property.
(h) NO CHANGE IN CONTROL. Shares of each of
Parent, Sun International Management Limited and Buyer
carrying a controlling interest exercisable at general
meetings of Parent, Sun International Management (U.K.)
Limited and Buyer shall be directly or indirectly
beneficially owned by its current beneficial owners or any
persons affiliated with such entities.
<PAGE>
57
(i) MANAGEMENT AGREEMENT. All conditions under
the Management Agreement shall have been satisfied by the
Manager thereunder or waived by Buyer.
(j) SECURITY DOCUMENTS. The agreements listed in
Schedule 4.16 shall not be in force and effect.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
SECTION 9.01. SURVIVAL OF REPRESENTATIONS. The
representations and warranties set forth in Sections 4.01,
4.02, 4.16(a), 4.22, 4.25, 5.01, 5.02, 5.05, 5.06, 5.07,
5.08 and 5.09 (the "Surviving Representations"), and the
covenants and agreements contained in this Agreement (except
the covenants contained in Sections 6.12 and 6.13 which
shall not survive the Closing), and the covenants and
agreements contained in any agreements, certificates or
other instruments delivered pursuant to this Agreement,
shall survive the Closing and shall remain in full force and
effect, regardless of any investigation made by or on behalf
of any party, but subject to all limitations and other
provisions contained in this Agreement or any agreements,
certificates or other instruments delivered pursuant to this
Agreement. All representations and warranties contained in
this Agreement and in any agreements, certificates or other
instruments delivered pursuant hereto (other than the
Surviving Representations) shall not survive the Closing and
shall not remain in full force and effect.
SECTION 9.02. INDEMNIFICATION BY RII. Subject to
the other provisions of this Article IX, RII hereby agrees
to indemnify and hold Buyer and its Affiliates harmless from
and against any and all claims, damages, liabilities, liens,
losses or other obligations whatsoever, together with
reasonable costs and expenses, including reasonable fees and
disbursements of counsel and expenses of investigation
(collectively, "Losses"), arising out of, based upon or
caused by the inaccuracy of any representation or the breach
of any warranty of RII contained in Sections 4.01, 4.02,
4.16(a), 4.22 and 4.25 of this Agreement.
SECTION 9.03. INDEMNIFICATION BY BUYER. Subject
to the other provisions of this Article IX, Buyer hereby
agrees to indemnify and hold RII and its Affiliates harmless
from and against any and all Losses arising out of, based
<PAGE>
58
upon or caused by the inaccuracy of any representation or
the breach of any warranty of Buyer that is a Surviving
Representation.
SECTION 9.04. NOTICE, ETC. Each indemnified
party agrees to give the indemnifying party prompt written
notice of any action, claim, demand, discovery of fact,
proceeding or suit (collectively, "Claims") for which such
indemnified party intends to assert a right to
indemnification under this Agreement; PROVIDED, HOWEVER,
that failure to give such notification shall not affect the
indemnified party's entitlement to indemnification hereunder
except to the extent that the indemnifying party shall have
been actually prejudiced as a result of such failure. The
indemnifying party shall have the sole right to defend,
settle or otherwise dispose of any Claim, on such terms as
the indemnifying party, in its sole discretion, shall deem
appropriate; PROVIDED, HOWEVER, that (i) the indemnified
party may participate in the defense of any claim pursuant
to which the indemnified party could become subject to
injunctive or other equitable relief or the business of the
indemnified party could be materially and adversely affected
in any manner (such participation in the defense of any
claim to be at the indemnified party's expense unless the
use of separate counsel arises by reason of a material
conflict of interest between the indemnifying party and the
indemnified party in connection with the defense of such
claim) and (ii) the indemnifying party shall obtain the
written consent of the indemnified party, which shall not be
unreasonably withheld or delayed, prior to ceasing to
defend, settling or otherwise disposing of any such Claim,
or taking any course of action or omitting to take a
permitted course of action with respect thereto, if as a
result thereof the indemnified party would become subject to
injunctive or other equitable relief.
SECTION 9.05. REIMBURSEMENT OF COSTS. The costs
and expenses, including reasonable fees and disbursements of
counsel and expenses of investigation, incurred by any
indemnified party in connection with any claim for which the
indemnified party is entitled to indemnification hereunder
shall be reimbursed on a quarterly basis by the indemnifying
party.
SECTION 9.06. TIME LIMITATIONS. Notwithstanding
anything to the contrary contained herein, each party's
obligation to indemnify or otherwise hold harmless the other
party and its Affiliates for any Loss arising out of, based
<PAGE>
59
upon or caused by the inaccuracy or breach of any Surviving
Representation shall terminate at 11:59 New York City time,
on March 31, 1995, PROVIDED, HOWEVER, that claims pending on
or asserted prior to such date may continue to be asserted
and shall be indemnified against.
SECTION 9.07. SOLE AND EXCLUSIVE REMEDY. The
indemnification obligations of the applicable parties under
Sections 9.02 and 9.03 hereof shall constitute the sole and
exclusive remedies of the applicable indemnified parties
with respect to the matters described in Sections 9.02 and
9.03, respectively.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. TERMINATION. This Agreement may
be terminated at any time prior to the Closing Date,
notwithstanding the fact that votes may have been received
pursuant to the Reorganization Plan Solicitation:
(a) by mutual written consent of RII and Buyer at
any time prior to entry of the Confirmation Order;
(b) by Buyer or RII, if the Closing shall not have
occurred on or before June 30, 1994;
(c) in the event an Acquisition Proposal is
approved by the Bankruptcy Court this Agreement will
automatically be deemed terminated without the
necessity of providing written notice notwithstanding
any provision to the contrary herein;
(d) by Buyer, if any event or development first
occurring or arising after November 30, 1993, either
alone or taken in the aggregate with other matters
arising or occurring after November 30, 1993, shall
have caused inaccuracies or breaches in the
representations and warranties of RII contained herein
to occur, except the representations contained in
Section 4.13, and such inaccuracies or breaches would
have a Material Adverse Effect;
(e) by Buyer, if it has become aware that RII will
be unable to comply with Section 8.01(a) hereof and
such inability to so comply is not reasonably capable
<PAGE>
60
of being cured by June 30, 1994, or by RII, if it has
become aware that Buyer will be unable to comply with
Section 8.02(a) hereof and such inability to so comply
is not reasonably capable of being cured by June 30,
1994;
(f) by Buyer, on or prior to November 30, 1993, if
Buyer reasonably shall determine, on or prior to such
date and so notify RII, that (i) any of the
representations and warranties of RII contained in this
Agreement and qualified as to materiality shall not be
true and correct in all respects or that those not so
qualified shall not be true and correct in all material
respects, in each case when made or on November 30,
1993 (except representations and warranties that are
made as of a specific date, which need be true and
correct only as of such date) or (ii) there is a
reasonable likelihood that the Company's economic costs
with respect to the Union Contract would be an amount
which is materially different from the amount Buyer
expects; PROVIDED, HOWEVER, RII shall have 10 Business
Days from the date of notice from Buyer to cure such
problems and if such problems are cured no termination
shall occur;
(g) by Buyer or RII, on or prior to November 30,
1993, if on or prior to such date Buyer has not entered
into financing commitment letters with customary terms
and conditions with a bank or group of banks for an
amount of at least $67.5 million;
(h) by Buyer within five Business Days (i) of
becoming aware that RII has materially breached the
covenants contained in Sections 6.02, 6.03, 6.04, 6.12,
6.13 and 7.01 or (ii) after February 15, 1994, if the
Bankruptcy Cases shall not have been filed on or before
such date;
(i) by Buyer within five Business Days after
notifying RII that it is in material breach of the
covenants contained in Section 6.05 and RII has not
cured such breach;
(j) by RII, if the reorganization of Parent
described in the Parent Subscription Agreement has not
occurred prior to November 30, 1993;
<PAGE>
61
(k) by Buyer, if a Material Adverse Effect occurs
as a result of any fire, flood, hurricane, accident,
explosion or other calamity or casualty or any strike,
labor disturbance, riot, act of God or public enemy, or
the institution of condemnation proceedings affecting
any material portion of the Real Property or
Improvements (a "Force Majeure Event"); PROVIDED,
HOWEVER, that Buyer shall not have the right to
terminate this Agreement in the event that the loss
caused by a Force Majeure Event (including the present
value of lost profits) is less than $20 million and
there is adequate insurance to cover such loss, and
PROVIDED, FURTHER, HOWEVER, that a strike or labor
disturbance of the employees of the Paradise Island
Business after November 30, 1993, shall not constitute
a Force Majeure Event;
(l) by Buyer or RII in the event a Force Majeure
Event occurs and the loss related thereto (including
the present value of lost profits) exceeds $20 million,
regardless of whether or not such loss is covered by
adequate insurance;
(m) by Buyer, if Buyer reasonably determines that
RII will not be able to deliver good title free and
clear of encumbrances, other than Permitted
Encumbrances and those Encumbrances arising from acts
of Buyer or its Affiliates and other than applicable
Transfer Taxes, to a material portion of the Paradise
Island Business or the Shares by June 30, 1994;
(n) by Buyer, on or prior to November 30, 1993, if
Buyer reasonably determines that it will be unable to
obtain consents to the Material Contracts set forth on
Schedule 10.01(n);
(o) by Buyer, if as a result of a breach by RII of
its covenant to operate the Paradise Island Business in
the ordinary course contained in Section 6.01, a
Material Adverse Effect has occurred; PROVIDED,
HOWEVER, Buyer shall not have the right to terminate
this Agreement pursuant to this paragraph (o) if it has
waived such termination right pursuant to
Section 6.14(c); and
(p) by Buyer or RII, if on or before the close of
business on December 1, 1993, the other party has not
<PAGE>
62
executed, delivered and performed its obligations under
the Escrow Agreement.
SECTION 10.02. RIGHTS OF TERMINATION. Subject to
the provisions of Section 11.09, the right of termination
hereunder may be exercised by Buyer or RII, as the case may
be, only by giving written notice, signed on behalf of such
party by its duly authorized officer to the other party;
PROVIDED, HOWEVER, any exercise of such right of termination
by RII shall not be valid unless it shall have been approved
in writing by Fidelity and TCW. Notwithstanding anything
herein that is to the contrary, if the Closing shall not
have occurred on or prior to December 31, 1994, the right of
RII to terminate this Agreement after such date shall not
require the approval of Fidelity or TCW.
SECTION 10.03. EFFECT OF TERMINATION. In the
event of the termination of this Agreement pursuant to
Section 10.01, this Agreement shall forthwith become void
and have no effect, but no such termination shall prejudice
any party's rights and remedies against the other for
breaches of obligations under this Agreement, including,
without limitation, Buyer's right, if any, to payment of the
Buyer Expense Reimbursement. Notwithstanding anything
herein that may be to the contrary, if this Agreement is
terminated pursuant to Section 10.01(c) and RII has not
breached any of its obligations hereunder, Buyer shall not
have any rights or remedies against RII or any of its
Affiliates under this Agreement or otherwise other than
Buyer's right, if any, to payment of the Buyer Expense
Reimbursement.
SECTION 10.04. WAIVER, EXERCISE OF RIGHTS.
Subject to the provisions of Section 11.09, at any time
prior to the Closing Date, any party hereto may (a) extend
the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and
(c) waive compliance with any of the agreements or
conditions contained herein; PROVIDED, HOWEVER, that no such
extension or waiver by RII, and no such exercise of any
other rights of RII hereunder which would materially and
adversely affect the rights of the holders of the Old Series
Notes in the transactions contemplated hereby, shall be
valid unless Fidelity and TCW shall have consented thereto.
Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party to be bound
<PAGE>
63
thereby. Except as otherwise provided in Section 6.14, the
failure of any party to assert any of its rights hereunder
shall not constitute a waiver of any such rights.
SECTION 10.05. AMENDMENTS. Subject to the
provisions of Section 11.09, the parties hereto may, by
written agreement signed by such parties, modify any of the
covenants or agreements or extend the time for any
performance of any of the obligations contained in this
Agreement or any document delivered pursuant to this
Agreement; PROVIDED, HOWEVER, that no such amendment on
behalf of RII shall be valid unless Fidelity and TCW shall
have consented thereto.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. NOTICES. All notices, requests,
claims, demands and other communications hereunder shall be
in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by
cable, telecopy, telegram or telex or by registered or
certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses (or at
such other address for a party as shall be specified by like
notice):
if to Buyer:
c/o Sun International Management (U.K.) Ltd.
Gravel Hill, Badgemore House
Henley-On-Thames
Oxfordshire RG9 4NR,
United Kingdom
Attention: Mr. Howard B. Kernzer
in each case, with copies to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: James M. Edwards, Esq.
<PAGE>
64
Fidelity Management and
Research Company
82 Devonshire Street
Boston, MA 02109
Attention: Judy Mencher, Esq.
Trust Company of the West
865 South Figueroa Street
Los Angeles, CA 90017
Attention: Mr. Bruce A. Karsh
Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10153
Attention: Bruce R. Zirinsky, Esq.
if to RII:
Resorts International, Inc.
1133 Boardwalk
Atlantic City, NJ 08401
Attention: Christopher D. Whitney, Esq.
with copies to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attention: Steven R. Finley, Esq.
Fidelity Management and
Research Company
82 Devonshire Street
Boston, MA 02109
Attention: Judy Mencher, Esq.
Trust Company of the West
865 South Figueroa Street
Los Angeles, CA 90017
Attention: Mr. Bruce A. Karsh
Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10153
Attention: Bruce R. Zirinsky, Esq.
<PAGE>
65
SECTION 11.02. ENTIRE AGREEMENT; ASSIGNMENT.
This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both
written and oral, among the parties with respect to the
subject matter hereof. This Agreement shall not be assigned
by operation of law or otherwise, except that Buyer may
assign all or any of its rights and obligations hereunder to
any wholly owned Subsidiary of Buyer upon the execution of a
written instrument whereby such assignee agrees to assume
all of the assignor's obligations hereunder and be bound by
all the terms and conditions of this Agreement; PROVIDED,
that no such assignment shall relieve the assigning party of
its obligations hereunder if such assignee does not perform
such obligations. This Agreement may not be amended or
modified or any provisions hereof waived without the consent
of Fidelity and TCW.
SECTION 11.03. PARTIES IN INTEREST. This
Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and, except to the extent that
the consent or approval of TCW or Fidelity may be required
hereunder, nothing in this Agreement, express or implied,
is intended to or shall confer upon any other person any
rights, benefits or remedies of any nature whatsoever under
or by reason of this Agreement.
SECTION 11.04. GOVERNING LAW. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW THEREOF.
SECTION 11.05. HEADINGS. The descriptive
headings contained in this Agreement are included for
convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 11.06. COUNTERPARTS. This Agreement
may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the
same agreement.
SECTION 11.07. SPECIFIC PERFORMANCE. The
parties hereto agree that irreparable damage would occur in the
event any of the provisions of this Agreement were not to be
<PAGE>
66
performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or
equity.
SECTION 11.08. JURISDICTION. THE PARTIES
HEREBY WAIVE ANY OBJECTION THEY MAY HAVE TO PERSONAL
JURISDICTION AND VENUE IN THE U.S. DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND, WHERE NO DIVERSITY OR
OTHER SUBJECT MATTER JURISDICTION EXISTS IN SUCH U.S.
DISTRICT COURT, THE PARTIES WAIVE SUCH OBJECTIONS IN ANY
COURT OF THE STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW
YORK, AS TO LITIGATION RELATING TO THIS AGREEMENT. BUYER
HEREBY IRREVOCABLY APPOINTS AND DESIGNATES AS ITS LAWFUL
AGENT AND ATTORNEY FOR RECEIPT AND SERVICE OF PROCESS IN ANY
ACTION ARISING OR TAKEN HEREUNDER BY RII THE LAW FIRM OF
CRAVATH, SWAINE & MOORE, 825 EIGHTH AVENUE, NEW YORK, NEW
YORK 10019.
SECTION 11.09. APPROVALS; KNOWLEDGE. For the
purpose of this Agreement (including the Schedules and
appendices hereto), unless the context otherwise expressly
requires, (i) whenever a document or matter is subject to
the "approval", "consent", "satisfaction" or "acceptance"
(including any variations of such terms) of any party to
this Agreement or of Fidelity or TCW, such person shall not
unreasonably withhold or delay its approval, consent,
satisfaction or acceptance of such document or matter;
provided, however, that the foregoing is without prejudice
to RII's right to seek approval, consent, satisfaction or
acceptance of any documents or matters from the Bankruptcy
Court (in Fidelity's and TCW's stead) upon a showing by RII,
and a finding by the Bankruptcy Court, that any approval,
consent, satisfaction or acceptance is being unreasonably
withheld by Fidelity or TCW; and (ii) "knowledge" with
respect to any person (other than an individual) shall mean
the knowledge of an executive officer, director, partner,
executor or trustee of such person.
<PAGE>
67
SECTION 11.10. PARENT GUARANTY. On the date of
this Agreement, Buyer shall cause Parent to deliver its
guaranty of the obligations of Buyer and Buyer Subsidiaries
hereunder, such guaranty to be in substantially the form of
Exhibit H.
IN WITNESS WHEREOF, Buyer and RII have caused
this Agreement to be executed as of the date first written
above by their respective officers thereunto duly
authorized.
RESORTS INTERNATIONAL, INC.
By: /s/ David P. Hanlon
____________________________
Name: David P. Hanlon
Title: Pres. CEO
SUN INTERNATIONAL HOTELS LIMITED
By: /s/ Solomon Kerzner
By:____________________________
Name: Solomon Kerzner
Title: Chairman
<PAGE>
Appendix A
DEFINITIONS
"ACCOUNTING ARBITRATOR" means Price Waterhouse, or
another "Big 6" firm of independent certified public
accountants mutually acceptable to RII and Buyer.
"ACQUISITION PROPOSAL" shall have the meaning set
forth in Section 7.01(a).
"ACQUISITIONS" means the Stock Acquisition and the
Asset Acquisition.
"ADJUSTED CASH" means cash and cage cash.
"ADJUSTED CURRENT ASSETS" means Current Assets
minus Adjusted Cash.
"ADJUSTED WORKING CAPITAL" means Adjusted Current
Assets minus Current Liabilities.
"ADJUSTMENT DATE" shall have the meaning set forth
in Section 2.05(b).
"AFFILIATE" means, with respect to any person,
(a) any person controlling, controlled by or under common
control with such person, (b) any person owning or
controlling 10% or more of the outstanding voting interests
of such person, (c) any executive officer, director or
partner of any such person or (d) any person who is an
officer, director, partner, trustee or holder of 10% or more
of the voting interest of any person described in
clauses (a) through (c) of this sentence. For the purposes
of the foregoing definition, the term "CONTROLS", "IS
CONTROLLED BY" or "IS UNDER COMMON CONTROL WITH" means
possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a
person, whether through the ownership of voting securities,
by contract or otherwise. The term "PERSON" will be
interpreted broadly to include, without limitation, any
corporation, company, association, partnership, entity or
individual. "AFFILIATE" with respect to RII or Buyer shall
not include Fidelity or TCW, or any funds or accounts
managed or advised by either Fidelity or TCW or any other
creditors of RII.
"AGGREGATE CASH PURCHASE PRICE" means the cash
portion of the Aggregate Purchase Price, equal to
$65 million plus interest on such amount at the Applicable
<PAGE>
2
Rate from and including January 1, 1994 to and excluding the
Closing Date payable by Buyer and the Buyer Subsidiaries for
the Shares and the RII Paradise Assets in accordance with
Section 2.03.
"AGGREGATE PURCHASE PRICE" means the Aggregate
Cash Purchase Price plus the Buyer Series A Shares payable
by Buyer and the Buyer Subsidiaries for the Shares and the
RII Paradise Assets in accordance with Section 2.03.
"AGREEMENT" has the meaning assigned to that term
in the introductory paragraph.
"ANTL" means ANTL, Inc., a Florida corporation and
a direct or indirect wholly owned subsidiary of RII.
"APPLICABLE RATE" shall mean the rate per annum
(computed on the basis of a year of 365 days) equal to 7.5%.
"ASSET ACQUISITION" has the meaning set forth in
the second WHEREAS clause.
"ASSUMED LIABILITIES" shall have the meaning set
forth on Schedule 3.01.
"ASSUMED TAXES" shall have the meaning set forth
on Schedule 3.01.
"ASSUMPTION AGREEMENTS" means the Assumption
Agreements dated as of the Closing Date to be in a form
reasonably satisfactory to Buyer and RII, pursuant to which
each Buyer Subsidiary shall assume the Assumed Liabilities
of RII (in the case of the RII Real Estate Assets) and the
Assumed Liabilities of its corresponding RII Paradise
Subsidiary.
"BAHAMAS BENEFIT PLANS" shall have the meaning set
forth in Section 4.12A(a).
"BAHAMAS EXCHANGE CONTROL APPROVAL" shall have the
meaning set forth in Section 4.03(b).
"BANK FACILITY" shall have the meaning set forth
in Section 6.16.
"BANKRUPTCY CASES" means the cases to be commenced
under Chapter 11 of the Bankruptcy Code by RII and GRI.
<PAGE>
3
"BANKRUPTCY CODE" means Title 11 of the United
States Code, as amended.
"BANKRUPTCY COURT" means the United States
Bankruptcy Court for the District of Delaware or New Jersey,
having jurisdiction over the Bankruptcy Cases.
"BANKRUPTCY DATE" means the date on which the
Bankruptcy Cases are commenced.
"BENEFIT PLANS" shall have the meaning set forth
in Section 4.12(a).
"BUSINESS DAY" means a day of the year in which
banks are not required or authorized to close in the
Commonwealth of The Bahamas or New York City.
"BUYER" has the meaning assigned to that term in
the introductory paragraph.
"BUYER EXPENSE REIMBURSEMENT" shall have the
meaning set forth in Section 7.02(a).
"BUYER INDEMNIFIED PARTY" shall have the meaning
set forth in Section 3.04.
"BUYER PROSPECTUS" means the prospectus included
in the Buyer Registration Statement.
"BUYER REGISTRATION STATEMENT" means the
registration statement of Buyer with respect to the Buyer
Series A Shares on Form F-1 filed or to be filed with the
SEC, together with any pre- or post-effective amendments
thereto.
"BUYER SERIES A SHARES" means such number of
Series A Ordinary Shares, par value $.01 per share, of
Buyer, that at the Closing Date, after giving effect to the
Closing, shall constitute 40% of the capital stock of Buyer.
"BUYER SHARES" shall have the meaning set forth in
Section 5.09.
"BUYER SUBSIDIARIES" means direct or indirect
wholly owned Subsidiaries of Buyer to be formed to buy the
RII Paradise Assets from the RII Paradise Subsidiaries and
the RII Real Estate Assets from RII.
<PAGE>
4
"CLOSING" means the Closing of the purchase and
sale of the Shares and the RII Paradise Assets.
"CLOSING DATE" means the date on which the Closing
occurs.
"CLOSING DATE BALANCE SHEET" shall have the
meaning set forth in Section 2.05(a).
"CLOSING DATE OPERATIONS STATEMENT" shall have the
meaning set forth in Section 2.05(a).
"CODE" means the Internal Revenue Code of 1986, as
amended.
"COMPANY" means Resorts International (Bahamas)
1984 Limited, a Bahamian corporation.
"CONFIRMATION ORDER" means an order of the
Bankruptcy Court confirming the Reorganization Plan and
approving performance by RII of this Agreement, in form and
substance, with respect to matters relating to the Paradise
Island Business, satisfactory to Buyer.
"CONTRACTS" shall mean leases, rental agreements,
insurance policies, sales orders, collective bargaining
agreements, union contracts, licenses, agreements, permits,
purchase orders, registered user agreements, commitments and
any and all other contracts or binding arrangements
(including, without limitation, capital commitments and
arrangements with respect to construction in progress),
whether written or oral, express or implied.
"CONTINUING EMPLOYEES" shall have the meaning set
forth in Section 6.09(a).
"CURRENT ASSETS" means cash, cage cash, net
receivables, prepaid expenses, and inventory.
"CURRENT LIABILITIES" means accounts payable,
accrued liabilities and the current portion of the capital
lease obligations relating to the mini bars used in the
Paradise Island Business.
"DISCLOSURE STATEMENT" means the information
statement/prospectus included in the Registration Statement
and presented to the Bankruptcy Court for approval pursuant
<PAGE>
5
to Section 1125 of the Bankruptcy Code, as the same may be
supplemented or amended.
"EBITDA ADJUSTMENT" means the Earnings from
Operations appearing as a line item on the Closing Date
Operations Statement PLUS depreciation PLUS the amount, if
any, paid or accrued with respect to RII management fees to
the extent such fees were deducted in computing Earnings
from Operations, PLUS any expenses in excess of $25,000
appearing on the Closing Date Operations Statement that are
attributable to events occurring prior to January 1, 1994,
LESS $275,000 per month for overhead relating to RII and the
RII Paradise Subsidiaries (to be prorated for any portion of
a month) LESS capital expenditures; provided that any item
of capital expenditure in excess of $25,000 shall not be
deducted if not approved in writing by Buyer.
"ENCUMBRANCE" means any lien, imperfection of
title, claim, encumbrance, security interest, option, charge
or restriction of any kind.
"ENVIRONMENTAL CLAIM" means any notice of
violation, action, claim, lien, demand or order or direction
by any Governmental Authority or any person for personal
injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment,
nuisance, pollution, contamination or other adverse effects
on the environment, or for fines or penalties resulting from
or based upon (a) the existence, or the continuation of the
existence, of an Environmental Release (including, without
limitation, sudden or nonsudden accidental or non-accidental
Environmental Release) of, or exposure to, any Hazardous
Substance or other chemical, material, pollutant,
contaminant, odor, or other Environmental Release in, into
or onto the environment (including, without limitation, the
air, soil, surface water or groundwater) at, in, by, from or
related to the property or any activities conducted thereon;
(b) the environmental aspects of the transportation,
storage, treatment or disposal of Hazardous Substances in
connection with the Company's or any Subsidiary's
operations; or (c) the violation, or alleged violation, of
any Environmental Laws, orders or Environmental Permits of
or from any Governmental Authority relating to environmental
matters connected with the property.
"ENVIRONMENTAL LAW" means any applicable foreign,
federal, state or local law (including common law), statute,
<PAGE>
6
code, ordinance, rule or regulation concerning Environmental
Releases into any part of the natural environment, or
activities that might result in damage to the natural
environment, or relating to the environment and/or
protecting or improving the quality of the natural
environment or protecting public and employee health and
safety, including in the case of the United States, but not
limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Sections
9601 ET SEQ.), the Hazardous Materials Transportation Act
(49 U.S.C. Sections 1801 ET SEQ.), the Resource
Conservation and Recovery Act (42 U.S.C. Sections
6901 ET SEQ.), the Clean Water Act (33 U.S.C. Sections
1251 ET SEQ.), the Clean Air Act (33 U.S.C.
Sections 2601 ET SEQ.), the Toxic Substances Control Act
(15 U.S.C. Section Section 2601 ET SEQ.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Sections 136 ET SEQ.) and the Occupational Safety
and Health Act (29 U.S.C. Sections 651 ET SEQ.), as
such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and any and all
analogous state or local statutes.
"ENVIRONMENTAL LIEN" means any Encumbrance in
favor of any Governmental Authority for Environmental Claims
and/or Remedial Actions.
"ENVIRONMENTAL PERMIT" means any permit, approval,
authorization, license, variance, registration or permission
required under any applicable Environmental Laws.
"ENVIRONMENTAL RELEASE" means any release, spill,
emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or migration into the indoor
or outdoor environment, or into or out of any Property,
including the movement of any Hazardous Substances or other
materials through or in the air, soil, surface water,
groundwater or property.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA AFFILIATE" means any person or entity that,
together with the Company, is treated as a single employer
under Section 414(b), (c) or (m) of the Code.
"EXCLUDED ASSETS" means: (i) the corporate
records of the RII Paradise Subsidiaries; (ii) any tax
refunds relating to any of the RII Paradise Subsidiaries;
(iii) the names "Resorts", "Merv Griffin" and "Griffin", any
<PAGE>
7
variation thereof, any right to the use thereof and any
trademark, trade name, service mark and similar intellectual
property rights used in connection therewith; (iv) the
Non-Assignable Contracts for which consents to assignment
thereof to the Buyer Subsidiaries have not been obtained as
of the Closing Date; (v) assets and properties (including
financial, personnel and other books, records and data)
owned or held by RII or any of its Affiliates which do not
relate primarily to the Paradise Island Business and which
relate to the business of RII and its Affiliates other than
the Paradise Island Business; and (vi) intercompany
receivables.
"EXCLUDED EMPLOYEE" shall have the meaning set
forth in Section 6.09(a).
"EXCHANGE ACT" means the Securities Exchange Act
of 1934, as amended.
"FIDELITY" means Fidelity Management and Research
Company.
"GAAP" means generally accepted accounting
principles in the United States of America as in effect on
the date of this Agreement, or with respect to financial
statements prepared as of a date prior to this
Agreement, as in effect on the date such financial statements were
prepared.
"GOVERNMENTAL AUTHORITY" means any government or
governmental or regulatory body thereof, or any political
subdivision thereof, whether foreign, federal, state or
local, or any agency, commission, instrumentality or
authority thereof, or any court or arbitrator.
"GOVERNMENTAL CONSENTS" shall have the meaning set
forth in Section 4.03(b).
"GRI" means GRI, Inc., a Delaware corporation and
a direct or indirect wholly owned Subsidiary of RII and
formerly known as Griffin Resorts, Inc.
"HAZARDOUS SUBSTANCES" mean any substance,
material or waste which is regulated by any local
Governmental Authority, Governmental Authority in the
jurisdictions in which the Paradise Island Business
operates, or the United States, including, without
limitation, any material or substance which is defined as a
<PAGE>
8
"hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste" or "restricted
hazardous waste," "subject waste," "contaminant," "toxic
waste" or "toxic substance" under any provision of
Environmental Law, including, but not limited to, petroleum
products, asbestos and polychlorinated biphenyls.
"HEADS OF AGREEMENT" means the Heads of Agreement
dated August 18, 1993, among Parent, Buyer and the
Commonwealth of The Bahamas.
"HSR ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"INDEBTEDNESS" means, with respect to any person,
any liability or obligation of such person (whether incurred
by such person directly or by assumption or otherwise and
whether outstanding on the date of execution of this
Agreement or thereafter created, incurred or assumed)
(a) for money borrowed, (b) arising under guarantees by such
person of indebtedness for money borrowed by any other
person, (c) for purchase money indebtedness evidenced by
notes, lease-purchase agreements or similar instruments for
the payment of which such person is responsible or liable,
by guarantees or otherwise, (d) under any agreement to
lease, or lease of, any real or personal property which is
required to be capitalized in accordance with GAAP or (e)
arising under modifications, renewals, extensions or
refundings of any such liability or obligation.
"INTELLECTUAL PROPERTY" means all patents,
trademarks, trade names, service marks, copyrights and
similar intellectual property rights used in the conduct of
the Paradise Island Business, but specifically excluding the
Excluded Assets.
"INTERIM MOTION" means a motion filed with the
Bankruptcy Court by RII to enter the Interim Order.
"INTERIM ORDER" means an order in form and
substance reasonably satisfactory to Buyer and its counsel
(i) approving the provisions of and authorizing the
performance by RII of its obligations under Sections 6.05,
7.01, 7.02 and 7.03 and Article X, (ii) providing that the
Bankruptcy Court shall not permit consideration of or
approve, so long as this Agreement has not been terminated,
an Acquisition Proposal unless such Acquisition Proposal
constitutes an Overbid Transaction, (iii) subject to
<PAGE>
9
applicable Bankruptcy law and rules approving under the
terms and conditions set forth in Section 7.02, an amount of
Buyer Expense Reimbursement reasonably incurred by Buyer up
to the date of the Interim Order, (iv) approving the Escrow
Agreement and (v) providing that such Interim order cannot
be amended or modified without the consent of Fidelity and
TCW.
"IRS" means the Unites States Internal Revenue
Service.
"ISI" means International Suppliers, Inc., a
Florida corporation and a direct or indirect wholly owned
subsidiary of RII.
"JUNE 30 BALANCE SHEET" means the unaudited
combined balance sheet of the Paradise Island Business as of
June 30, 1993, as set forth in Schedule 4.05.
"LOSSES" shall have the meaning set forth in
Section 9.02.
"MATERIAL ADVERSE EFFECT" means any change in, or
effect on, the Paradise Island Business that is materially
adverse to the business, assets, results of operations or
financial condition of the Paradise Island Business,
excluding changes resulting from general economic conditions
or economic conditions relating specifically to the gaming
or hotel industry.
"MATERIAL CASES" means all lawsuits, claims,
proceedings or investigations by or against or affecting
(i) the Company or any of its Subsidiaries, (ii) any RII
Paradise Subsidiaries with respect to the RII Paradise
Assets, (iii) any of the Paradise Island Assets or (iv) the
Paradise Island Business, in each case as to which there is
a reasonable likelihood of adverse determination and which
would, if determined in a manner adverse to the Company, any
of its Subsidiaries or any RII Paradise Subsidiary with
respect to the RII Paradise Assets, individually or in the
aggregate, result in a monetary judgment in excess of
$100,000 or which would otherwise materially limit the
ability of the Company, its Subsidiaries and the RII
Paradise Subsidiaries to conduct the Paradise Island
Business.
"MATERIAL CONTRACT", means any Contract relating
to the Paradise Island Business (a) which has an aggregate
<PAGE>
10
future liability in excess of $100,000, or (b) which is not
terminable by notice of not more than 60 days for a cost of
less than $50,000.
"NON-ASSIGNABLE CONTRACT" shall have the meaning
set forth in Section 2.07.
"OVERBID TRANSACTION" means an Acquisition
Proposal or a Post Termination Sale which provides for
consideration attributable to, or in the case of transaction
involving less than all of the Paradise Island Business,
consideration that would result in, the entire Paradise
Island Business having a fair market value, as determined by
an investment banking firm of international standing
selected by RII and reasonably acceptable to Buyer, in an
amount in excess of $130,000,000.
"PARADISE EMPLOYEE" shall have the meaning set
forth in Section 6.09(a).
"PARADISE ISLAND ASSETS" means all the assets,
properties, goodwill, business and other rights of every
kind and nature whatsoever, tangible or intangible, real,
personal or mixed, and wherever located, used primarily in
connection with or relating primarily to the Paradise Island
Business, including, without limitation, any company name,
receivables, rights under Contracts, Intellectual Property,
investments, business and goodwill, and including all
property and assets used primarily in connection with or
relating primarily to the Paradise Island Business acquired
by RII or any Affiliate of RII between the date of this
Agreement and the Closing Date and not sold, transferred or
otherwise disposed of prior to the Closing Date in the
ordinary course of business and in accordance with the terms
hereof. The Paradise Island Assets include the RII Real
Estate Assets. The Paradise Island Assets shall not include
any of the Excluded Assets or cash, except to the extent
provided in Section 2.05.
"PARADISE ISLAND BUSINESS" means all the
operations and properties conducted and owned by RII and its
Affiliates relating primarily to Paradise Island, the
Bahamas and as described in the Registration Statement,
including, without limitation, the Paradise Island Resort &
Casino, Ocean Club Golf & Tennis Resort, Paradise Paradise
Beach Resort, and approximately 219 acres of land on
Paradise Island not used in the Company's operations,
approximately 1675 acres on Grand Bahama Island ,
<PAGE>
11
approximately 561 acres on Andros Island and other similarly
related assets not currently used actively in the Paradise
Island operations, but excluding any business relating to
Excluded Assets.
"PARADISE ISLAND FINANCIAL STATEMENTS" means with
respect to the Paradise Island Business (i) the audited
combined statements of operations for the fiscal years
ending December 31, 1990, December 31, 1991, and
December 31, 1992, and the unaudited combined statements of
operations for the six months ending June 30, 1993, and 1992
and (ii) the audited combined balance sheets as of December
31, 1991, and December 31, 1992, and the unaudited combined
balance sheet as of June 30, 1993, copies of which are
included in Schedule 4.05.
"PARENT" means Sun International Investments
Limited, a British Virgin Islands corporation and parent of
Buyer.
"PARENT SUBSCRIPTION AGREEMENT" shall have the
meaning set forth in Section 5.10.
"PBGC" means the Pension Benefit Guaranty
Corporation.
"PERMITTED ENCUMBRANCES" means Encumbrances
incurred by the Company, its Subsidiaries or the RII
Paradise Subsidiaries in connection with (a) mechanics',
carriers', workmen's, repairmen's or other like liens
arising or incurred in the ordinary course of business,
liens arising under purchase price conditional sales
contracts and equipment leases with third parties entered
into in the ordinary course of business, (b) liens for taxes
not yet due or which are being contested in good faith by
appropriate proceedings, (c) liens imposed by law securing
obligations which are not overdue, or, if due, are being
contested in good faith by appropriate proceedings,
(d) liens upon leases and contracts included in the Paradise
Island Assets or upon property subject to such leases and
contracts granted by lessors or parties to such leases or
contracts other than RII or any of its Affiliates
(e) assessments, servitudes and rights-of-way of record or
in actual or apparent use or restrictive covenants for any
approved subdivision, and (f) other Encumbrances, if any,
which other Encumbrances do not, individually or in the
aggregate, materially impair the continued use and operation
of the assets to which they relate in the Paradise Island
<PAGE>
12
Business, as presently conducted or, in the case of material
assets, do not materially detract from the value of such
assets.
"PIA" means Paradise Island Airlines, Inc., a
Florida corporation and a direct or indirect wholly owned
subsidiary of RII.
"PIV" means Paradise Island Vacations, Inc., a
Florida corporation and a direct or indirect wholly owned
subsidiary of RII.
"POST TERMINATION SALE" shall have the meaning set
forth in Section 7.02.
"PRELIMINARY CLOSING DATE BALANCE SHEET" has the
meaning set forth in Section 2.05(a).
"PRELIMINARY CLOSING DATE OPERATIONS STATEMENT"
shall have the meaning set forth in Section 2.05(a).
"QUALIFIED THIRD PARTY" shall have the meaning set
forth in Section 7.01(a).
"REAL PROPERTY" shall have the meaning set forth
in Section 4.07.
"REGISTRATION STATEMENT" means the registration
statement of RII and certain of its Subsidiaries on Form S-4
filed or to be filed with the SEC, together with any pre- or
post-effective amendments thereto.
"REMEDIAL ACTION" means all actions, including,
without limitation, any capital expenditures, required or
voluntarily undertaken to (a) clean up, remove, treat, or in
any other way address any Hazardous Substance or other
material in the indoor or outdoor environment; (b) prevent
the release or threat of release, or minimize the further
release of any Hazardous Substance or other material so it
does not migrate or endanger or threaten to endanger public
health or welfare of the indoor or outdoor environment;
(c) perform pre-remedial studies and investigations or post-
remedial monitoring and care; or (d) bring the properties
into compliance with all applicable Environmental Laws and
Environmental Permits.
<PAGE>
13
"REORGANIZATION PLAN" means the joint plan of
reorganization substantially in the form approved by
Fidelity and TCW, and with respect to matters relating to
the Paradise Island Business, approved by Buyer, and
attached to the Disclosure Statement to be filed by RII and
GRI with the Bankruptcy Court on the Bankruptcy Date, which
shall include as exhibits thereto, INTER ALIA, this
Agreement.
"REORGANIZATION PLAN SOLICITATION" means the RII's
and GRI's solicitation of acceptances of the Reorganization
Plan pursuant to Section 1126(b) of the Bankruptcy Code.
"RIDI" means Resorts International Disbursement,
Inc., a Florida corporation and a direct or indirect wholly
owned subsidiary of RII.
"RII INDEMNIFIED PARTY" shall have the meaning set
forth in Section 3.04.
"RII" has the meaning assigned to that term in the
introductory paragraph.
"RII PARADISE ASSETS" means all the assets,
properties, goodwill, business and other rights of every
kind and nature whatsoever, tangible or intangible, real,
personal or mixed, and wherever located, owned by the RII
Paradise Subsidiaries and used primarily in connection with
or relating primarily to the Paradise Island Business,
including, without limitation, any company name,
receivables, rights under Contracts, Intellectual Property,
investments, business and goodwill, and including all
property and assets used primarily in connection with or
relating primarily to the Paradise Island Business acquired
by the RII Paradise Subsidiaries between the date of this
Agreement and the Closing Date and not sold, transferred or
otherwise disposed of prior to the Closing Date in the
ordinary course of business and in accordance with the terms
hereof. RII Paradise Assets include the RII Real Estate
Assets. RII Paradise Assets shall not include any of the
Excluded Assets or cash, except to the extent provided in
Section 2.05.
"RII PARADISE SUBSIDIARIES" means RIDI, PIV, RRII,
ISI, PIA and ANTL.
"RII REAL ESTATE ASSETS" shall have the meaning
set forth in Section 4.07(a).
<PAGE>
14
"RRII" means Resorts Representation International,
Inc., a Florida corporation and a direct or indirect wholly
owned subsidiary of RII.
"SEC" means the United States Securities and
Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933,
as amended.
"SHARES" means 500 shares of Class A Common Stock,
B$2.86 par value per share, 400 shares of Class B Common
Stock, B$2.86 par value per share, and 900 shares of Non-
Voting Class C Common Stock, B$2.86 par value per share of
the Company, such shares constituting all of the issued and
outstanding shares of capital stock of the Company.
"STOCK ACQUISITION" has the meaning set forth in
the first WHEREAS clause.
"SUBSIDIARY" of a person means any corporation or
other entity of which 50% or more of the outstanding capital
stock or other equity having ordinary voting power to elect
a majority of the board of directors or other managers of
such corporation (irrespective of whether at the time
capital stock of any other class or classes of such
corporation will or might have voting power upon the
occurrence of any contingency) or other entity is at that
time directly or indirectly owned by such person, by such
person and one or more of its other Subsidiaries or by one
or more of such person's other Subsidiaries.
"TARGET ADJUSTED CASH" means Adjusted Cash of
$5,000,000.
"TARGET ADJUSTED WORKING CAPITAL" means Adjusted
Working Capital of $5,000,000.
"TAXES" means all federal, state, local and
foreign taxes and assessments, including all interest,
penalties and additions to tax imposed with respect to such
amounts, imposed by any taxing authority, domestic or
foreign.
"TAXPAYERS" shall mean the Company and its
Subsidiaries and any predecessor thereof.
"TCW" means TCW Special Credits.
<PAGE>
15
"THIRD PARTY" means any corporation, partnership,
person or other entity or group other than Buyer or RII.
"TRANSFER TAXES" has the meaning set forth in
Section 7.04.
"UNION" shall have the meaning set forth in
Section 2.05(a).
"UNION CONTRACT ARBITRATOR" shall mean Keith M.
Duncombe of Harry B. Sands & Company.
"UNION CONTRACT DISPUTE" shall have the meaning
set forth in Section 2.05(a).
"UNION CONTRACT DISPUTE AMOUNT" shall have the
meaning set forth in Section 2.05(a).
<PAGE>
- ------------------------------------------------------------
EXHIBITS /s/ DAVID P. HANLON
-------------------
to the R.I.I.
PURCHASE AGREEMENT /s/ SOLOMON KERZNER
-------------------
between Buyer
RESORTS INTERNATIONAL, INC.
and
SUN INTERNATIONAL HOTELS LIMITED
-------------------------------------
Dated as of October 11, 1993
-------------------------------------
Purchase of Stock of Resorts International (Bahamas)
1984 Limited, and certain assets of RII and
RII Paradise Subsidiaries
- ------------------------------------------------------------
<PAGE>
EXHIBIT A
SUN INTERNATIONAL HOTELS LIMITED
NEW ARTICLES OF ASSOCIATION
(ADOPTED ON ____________)
PRELIMINARY AND CONSTRUCTION
1. The regulations contained in the First
Schedule to the Companies Act shall not apply to the
Company.
2. (1) In these Articles, except where the
subject or context otherwise requires:
"Articles" means the articles of association of
the Company on the date hereof as the same may be
amended from time to time;
the "board" means the directors or any of them
acting as the board of directors of the Company;
"Closing Date" shall mean the date the Company
acquires the Paradise Island assets of Resorts
International, Inc.;
"Commonwealth" means the Commonwealth of The
Bahamas;
"Companies Act" means the Companies Act 1992
including any modification or re-enactment thereof for
the time being in force;
"Company" means Sun International Hotels Limited,
the company to which these Articles apply.
"director" means a director of the Company;
"dollar" or "$" means the lawful currency of the
United States of America;
"holder" means, in relation to any shares, the
member whose name is entered in the register of members
as the holder of such shares;
<PAGE>
2
"Ordinary Shares" means the Series A Ordinary
Shares and the Series B Ordinary Shares;
"Preference Shares" means the Preference Shares of
$0.01 each of the Company having the rights set forth
in these Articles;
"secretary" means the secretary of the Company and
includes a joint, assistant, deputy or temporary
secretary and any other person appointed to perform the
duties of the secretary;
"Series A Ordinary Shares" means the Series A
Ordinary Shares of $0.01 each of the Company having the
rights set forth in these Articles;
"Series A Put" means the put option in respect of
the Series A Ordinary Shares set forth in Articles 19
and 21;
"Series A Put Termination Date" means the date
when the Company shall have satisfied and discharged
all of its obligations under Articles 19 and 21;
"Series B Ordinary Shares" means the Series B
Ordinary Shares of $0.01 each of the Company having the
rights set forth in these Articles; and
"shares" means shares in the Company including the
Ordinary Shares and the Preference Shares.
(2) The following terms are defined in the
Article indicated:
Term Article
---- -------
"Company Notice" 19
"Independent Director" 49
"Pledge Agreement" 16
"Purchase Date" 19
"Purchase Price" 19
"Put Notice" 20
"Restricted Transactions" 68
"Tendered Shares" 21
(3) Save as aforesaid or as otherwise defined
herein any words or expressions defined in the Companies Act
(but excluding any modification thereof not in force at the
<PAGE>
3
date of adoption of these Articles) shall, if not
inconsistent with the subject or the context, bear the same
meaning in these Articles.
(4) For the purposes of these Articles,
references to writing include references to any visible
substitute for writing and to anything partly in one form
and partly in another form; words denoting the singular
number include the plural number and vice versa; words
denoting the masculine gender include the feminine gender
and vice versa; and references to persons include references
to bodies corporate.
3. In addition to the registered office of the
Company in the Commonwealth, which shall be at such place as
the directors shall from time to time appoint, the Company
may have an office for the transaction of business at any
other place, and meetings of the Company or of the directors
may be held either within or without the Commonwealth at
such place as the directors may determine.
SHARES
4. The authorized share capital of the Company at
the date of adoption of these Articles is $350,000 divided
into 25,000,000 Ordinary Shares of $0.01 each and
10,000,000 Preference Shares of $0.01 each. The Ordinary
Shares are, at the date of adoption of these Articles,
divided into 15,000,000 Series A Ordinary Shares and
10,000,000 Series B Ordinary Shares having, in each case,
the rights set forth in these Articles. Subject to
Article 68(e) and 68(h), so long as Article 68 is in effect,
the Preference Shares may be issued by the Directors from
time to time in one or more Series having such rights as the
board may by resolution determine. All the shares of the
Company shall be in registered form, shall be fully paid for
at the time of issuance and shall be nonassessable.
5. Without prejudice to any special rights
previously conferred on the holders of existing shares in
the Company, and subject to Article 68(e) and 68(h), so long
as Article 68 is in effect, any Preference Shares in the
Company may be issued with such preferred, deferred or other
special rights or such restrictions, whether in regard to
dividend, voting, return of share capital or otherwise, as
the board may from time to time by resolution determine.
Preference Shares may be voting, non-voting or voting only
for specific purposes or in specific circumstances;
<PAGE>
4
PROVIDED, HOWEVER that the Company shall be prohibited from
issuing any non-voting Preference Shares which are not
entitled to elect at least one director of the Company in
the specific case where an event of default in the payment
of dividends has occurred and is continuing with respect to
such shares. For purposes of Article 68, so long as it is
in effect, non-voting Preference Shares and Preference
Shares voting only to elect one or more directors in the
case of a default in payment of dividends thereon shall be
deemed non-voting Preference Shares and all others shall be
deemed voting Preference Shares.
6. Where at any time the share capital is divided
into different classes or series of shares, the rights
attached to any class or series (unless otherwise provided
by the terms of issue of the shares of that class or series)
may only be varied or abrogated with the sanction of a
resolution of the board and either (i) the consent in
writing of the holders of a majority in nominal value of the
issued shares of the class or series or (ii) the sanction of
a resolution of members holding shares of that class or
series passed at a separate general meeting of the holders
of the shares of that class or series.
CERTIFICATES
7. Every person whose name is entered as a member
in the register of members shall, without payment, be
entitled to a certificate under the common seal of the
Company specifying the share or shares held by him, provided
that in respect of a share or shares held jointly by several
persons the Company shall not be bound to issue more than
one certificate, and delivery of a certificate for a share
to one of several joint holders shall be sufficient delivery
to all.
8. A share certificate defaced, lost or destroyed
may be renewed or replaced on payment of such fee, if any,
as may be prescribed, and on such terms, if any, as to
evidence and indemnity as the directors think fit.
PURCHASE OF SHARES
9. Subject to and in accordance with the
provisions of the Companies Act and without prejudice to any
relevant special rights attached to any class or series of
shares, the Company may, with the agreement of the holders
of the relevant shares, purchase any of its own shares of
<PAGE>
5
any class or series (including redeemable shares) at any
price (whether at par or above or below par), and any shares
to be so purchased may be selected by the Company in any
manner whatsoever.
TRANSFER AND TRANSMISSION OF SHARES
10. Subject to Article 11, the instrument of
transfer of any share in the Company shall be executed by
the transferor (or its duly authorized agent), and the
transferor shall be deemed to remain the holder of the share
until the name of the transferee is entered in the register
of members in respect thereof.
11. Shares in the Company shall be transferred in
any usual or common form. The transfer agent for the
Company or the Company's board may determine if a form of
transfer is usual or common in the case of any question or
dispute concerning a transfer.
12. The board may:
(a) decline to register a transfer of shares
unless the instrument of transfer is accompanied by the
certificate or certificates of the shares to which it
relates, and such other evidence as the board may
reasonably require to show the right of the transferor
to make the transfer; and
(b) suspend the registration of transfers
during the fourteen days immediately preceding the
ordinary general meeting in each year.
13. The executors or administrators of a deceased
sole holder of a share shall be the only persons recognized
by the Company as having any title to the share. In the
case of a share registered in the names of two or more
holders, the survivors or the executors or administrators of
the deceased survivor shall be the only persons recognized
by the Company as having any title to the share.
14. Any person becoming entitled to a share in
consequence of the death or bankruptcy of a member shall,
upon such evidence being produced as may from time to time
be required by the board, have the right, either to be
<PAGE>
6
registered as a member in respect of the share or, instead
of being registered himself, to make such transfer of the
share as the deceased or bankrupt person could have made;
but the directors shall, in either case, have the same right
to decline or suspend registration as they would have had in
the case of a transfer of the share by the deceased or
bankrupt person before the death or bankruptcy.
15. A person becoming entitled to a share by
reason of the death or bankruptcy of the holder shall be
entitled to the same dividends and other advantages to which
he would be entitled if he were the registered holder of the
share, except that he shall not, before being registered as
a member in respect of the share, be entitled in respect of
it to exercise any right conferred by membership in relation
to meetings of the Company.
SPECIAL RESTRICTION ON THE VOTING
OF SERIES A ORDINARY SHARES BY
SUN INTERNATIONAL INVESTMENTS LIMITED
PRIOR TO THE SERIES A PUT TERMINATION DATE
16. In the event that Sun International
Investments Limited or any of its affiliates from time to
time acquires Series A Ordinary Shares, then at all times
prior to the Series A Put Termination Date, neither Sun
International Investments Limited nor any such affiliate
will be entitled to vote such Series A Ordinary Shares for
the election of Independent Directors (and any votes cast in
violation of this restriction shall not be counted) unless
Sun International Investments Limited and its affiliates
then own 50% or more of the then outstanding Series A
Ordinary Shares. In the event that prior to the Series A
Put Termination Date Sun International Investments Limited
and its affiliates own 50% or more of the then outstanding
Series A Ordinary Shares, they shall be entitled to vote
such shares to elect one Independent Director (or, if the
total number of Independent Directors is greater than two,
they shall be entitled to vote such shares to elect not more
than 50% of the Independent Directors).
ALTERATION OF CAPITAL
17. The Company may, by a resolution of the
holders of Ordinary Shares, increase the share capital by
such sum to be divided into shares of such amount as the
resolution shall prescribe.
<PAGE>
7
18. The Company may, by resolution of the board
(and the holders of the Ordinary Shares, if and to the
extent required by the Companies Act):
(a) consolidate and divide its share capital
into shares of larger amount than its
existing shares;
(b) subdivide its existing shares, or any of
them or divide the whole or any part of
its share capital into shares of smaller
amount than is fixed by the Articles; or
(c) reduce its share capital in any manner
and with and subject to any incident
authorized and consent required by law.
SERIES A PUT
19. Subject to the proviso in the first sentence
of Article 21 hereof, not earlier than one hundred but not
later than ninety days prior to the fifth anniversary of the
Closing Date, or such later date as may be required by the
proviso in the first sentence of Article 21 hereof (the
"Purchase Date") the Company shall give written notice (the
"Company Notice") to the holders of the Series A Ordinary
Shares (and for information to the holder of the Series B
Ordinary Shares) that the Series A Put is then exercisable
in accordance with the provisions of these Articles and
stating the Purchase Price (as defined below) payable on
exercise of the Series A Put. The Company Notice shall
constitute an offer by the Company to purchase on the
Purchase Date all or any outstanding Series A Ordinary
Shares properly tendered to it, for a consideration per
Series A Ordinary Share of $35 [if 2,000,000 Series A
Ordinary Shares are originally issued], adjusted so as to
avoid any reduction in the rights or interests of the
holders of such Series A Ordinary Shares as a result of any
consolidation or division of the Series A Ordinary Shares
pursuant to Article 18 or other similar alteration to the
Series A Ordinary Shares after the date of adoption of these
Articles (as so adjusted from time to time, the "Purchase
Price").
20. Each holder of Series A Ordinary Shares may,
but shall not be obligated to, accept the offer contained in
the Company Notice, by tendering to the Company not later
than two business days prior to the Purchase Date a notice
<PAGE>
8
in writing (the "Put Notice") signed by the holder of the
Series A Ordinary Shares indicating the number of Series A
Ordinary Shares in respect of which it is exercising the
Series A Put (which may be all or any portion of such
holder's shares) together with the certificates relating
thereto. A Put Notice may be withdrawn (in whole or in
part) by delivery to the Company of written notice to that
effect signed by the holder of the Series A Ordinary Shares
the subject of the Put Notice not later than two business
days prior to the Purchase Date.
21. The Purchase Price in respect of Series A
Ordinary Shares properly tendered in accordance with
Article 20 and not withdrawn (the "Tendered Shares") shall
be paid to the holders thereof by the Company on or before
the Purchase Date provided that the Company shall have no
liability under the Series A Put to make any payment to the
extent that such payment could not be made in compliance
with the Companies Act, and in particular Section 44(2)
thereof, and in such event, this obligation shall be
deferred until such time as it may be satisfied in
accordance with the Companies Act. Tendered Shares so
purchased shall immediately be cancelled. The Company may
discharge its obligations in full to the holders of Series A
Ordinary Shares by depositing with a reputable bank, trust
company or other financial institution having minimum
capital and surplus of at least $100,000,000, as agent for
the holders of the Series A Ordinary Shares (the
"Distribution Agent") an amount in cash sufficient to pay
the Purchase Price for the Series A Ordinary Shares so
properly tendered and not withdrawn and by instructing the
Distribution Agent to make payment of the Purchase Price
promptly to such holders. In the event that the Company is
unable to purchase the Tendered Shares on the Purchase Date
by reason of Section 44(2) (or any other provision) of the
Companies Act, such unpurchased Tendered Shares may
nonetheless be purchased at the Purchase Price from holders
delivering a Put Notice by Sun International Investment
Limited or any of its affiliates.
22. During the period commencing on the date of
the Company Notice and ending on the Series A Put
Termination Date the Company shall not issue any Series A
Ordinary Shares.
23. Immediately following the Series A Put
Termination Date, each of the Series B Ordinary Shares shall
automatically and without further action be converted into,
<PAGE>
9
and re-classified as, one Series A Ordinary Share and the
provisions of Articles 16, 19 to 22, 49 (first sentence
only), 51 and 68 shall cease to have any force or effect.
24. On and following the Series A Put Termination
Date each holder of Series B Ordinary Shares shall, on
tendering their share certificates in respect of their
Series B Ordinary Shares, be entitled to receive, without
payment, a new certificate under the common seal of the
Company representing an equal number of Series A Ordinary
Shares.
GENERAL MEETINGS
25. The statutory general meeting of the Company
shall be held within the period required by Section 70 of
the Companies Act.
26. (1) A general meeting shall be held once in
every year at such time (not being more than fifteen months
after the holding of the last preceding general meeting) and
at such place as may be prescribed by the board.
(2) In default of a general meeting so held, a
general meeting shall be held in the month next following
and may be convened by any two or more members holding
Ordinary Shares carrying at least one-tenth of the votes of
all members entitled to vote at general meetings, in the
same manner as nearly as possible as that in which meetings
are to be convened by the board and any such meeting shall
be held at such place as the members convening the meeting
may designate in the notice thereof.
27. The above-mentioned general meetings shall be
called annual general meetings; all other general meetings
shall be called extraordinary.
28. The board may, whenever it thinks fit,
convene an extraordinary general meeting, and extraordinary
general meetings shall also be convened by the board on the
requisition, in accordance with Section 71 of the Companies
Act, of members of the Company holding not less than
one-tenth of the paid-up capital of the Company, or, in
default, may be convened by such requisitionists, as
provided by Section 71(3) of the Companies Act.
<PAGE>
10
PROCEEDINGS AT GENERAL MEETINGS
29. (1) Thirty-days' notice at the least
(exclusive of the day on which the notice is served or
deemed to be served, but inclusive of the day for which
notice is given) specifying the place, the day and the hour
of meeting and, in case of special business, the general
nature of that business, shall be given in the manner
hereinafter mentioned, or in such other manner, if any, as
may be prescribed by the Company in general meeting, to such
persons as are under the Articles entitled to receive such
notices from the Company.
(2) Every notice convening a general meeting
shall include a statement having reasonable prominence that
a member entitled to attend and vote is entitled to appoint
a proxy to attend and vote instead of him, and that a proxy
need not also be a member.
30. All business shall be deemed special that is
transacted at an extraordinary meeting, as shall all
business that is transacted at an ordinary meeting with the
exception of (i) sanctioning a dividend, (ii) the
consideration of the accounts, balance-sheets and the
ordinary report of the directors and auditors,
(iii) election of directors and other officers in the place
of those retiring by rotation and (iv) the fixing of the
remuneration of the auditors.
31. No business shall be transacted by any
general meeting unless a quorum of members is present at the
time when the meeting proceeds to business; save as herein
otherwise provided, members present in person or by proxy
holding at least a majority of each series then outstanding
of Ordinary Shares shall be a quorum.
32. Where within half an hour from the time
appointed for the meeting a quorum is not present, the
meeting, if convened upon the requisition of members, shall
be dissolved; in any other case it shall stand adjourned to
the same day in the next week, at the same time and place
and where at the adjourned meeting a quorum is not present
within half an hour from the time appointed for the meeting,
the members present shall be a quorum.
33. The chairman, if any, of the board shall
preside as chairman at every general meeting of the Company.
<PAGE>
11
34. Where there is no such chairman or at any
meeting he is not present within fifteen minutes after the
time appointed for holding the meeting or at which he is
unwilling to act as chairman, the directors in office prior
to such meeting who are present shall choose some one of
their number to be chairman.
35. (1) The chairman may, with the consent of
any meeting (on a class-by-class basis) at which a quorum is
present (and shall if so directed by the meeting), adjourn
the meeting from time to time and from place to place, but
no business shall be transacted at any adjourned meeting
other than the business left unfinished at the meeting from
which the adjournment took place.
(2) When a meeting is adjourned for ten days or
more, notice of the adjourned meeting shall be given as in
the case of any original meeting.
(3) Save as aforesaid, it shall not be necessary
to give any notice of an adjournment or of the business to
be transacted at an adjourned meeting.
36. At any general meeting a resolution put to
the vote of the meeting shall be decided on a voice call or
show of hands, unless a poll is (before or on the
declaration of the result of the show of hands) demanded by
at least two members present in person or by proxy holding
Ordinary Shares carrying at least one-tenth of the votes of
all members entitled to vote at the meeting or by the
chairman and unless a poll is so demanded, a declaration by
the chairman that a resolution has, on a voice call or show
of hands, been carried or carried unanimously or by a
particular majority or lost, and an entry to that effect in
the book of the proceedings of the Company, shall be
conclusive evidence of the fact, without proof of the number
or proportion of the votes recorded in favor of or against
that resolution.
37. If a poll is duly demanded it shall be taken
in such manner as the chairman directs, and the result of
the poll shall be deemed to be the resolution of the meeting
at which the poll was demanded.
38. The demand for a poll may, before the poll is
taken, be withdrawn but only with the consent of the
chairman and a demand so withdrawn shall not be taken to
<PAGE>
12
have invalidated the result of the voice call or show of
hands taking place before the demand was made.
VOTES OF MEMBERS
39. Subject to the provisions of Article 16,
every member shall have one vote for each Ordinary Share of
which he is the holder. Voting rights of Preference Shares
(if any) shall be as specified in accordance with Article 5.
40. In the case of joint holders the vote of the
senior who tenders a vote, whether in person or by proxy,
shall be accepted to the exclusion of the votes of the other
joint holders; and for this purpose seniority shall be
determined by the order in which the names stand in the
register of members.
41. A member of unsound mind, or in respect of
whom an order has been made by any court having jurisdiction
with respect to persons of unsound mind, may vote, whether
on a voice call, show of hands or on a poll, by his
committee or other person in the nature of a committee
appointed by that court.
PROXIES
42. (1) The instrument appointing a proxy shall
be in writing under the hand of the appointer or his
attorney duly authorized in writing or, if the appointer is
a corporation, either under the common seal or under the
hand of an officer or attorney so authorized.
(2) An instrument appointing a proxy may be in
the following form or in any other form which the board may
approve:
"I of
being a member of Sun
International Hotels Limited,
hereby appoint
of as my proxy to vote
for me and on my behalf at the
general meeting of the Company
to be held on the day
of and at any
adjournment thereof."
Signed this day of .
<PAGE>
13
43. The instrument appointing a proxy and the
power of attorney or other authority, if any, under which it
is signed or a certified copy of that power or authority
shall be deposited at the registered office of the Company
not less than forty-eight hours before the holding of the
meeting at which the person named in the instrument proposes
to vote, or shall be delivered in person to the secretary of
the Company at such meeting or such person or persons as may
be designated by the secretary of the Company at such
meeting, and in default the instrument of proxy shall not be
treated as valid.
44. A vote given in accordance with the terms of
an instrument of proxy shall be valid notwithstanding the
previous death or insanity of the principal or revocation of
the instrument of proxy, or the authority under which the
instrument of proxy was executed, or transfer of the shares
in respect of which the vote is given, provided no
intimation in writing of the death, insanity, revocation or
transfer shall have been received at the registered office
of the Company before the meeting or adjourned meeting at
which the instrument or proxy is used.
CORPORATE REPRESENTATIVES
45. Any body corporate which is a member of the
Company may by resolution of its directors or other
governing body or by authority to be given under seal or
under the hand of an officer duly authorized by it authorize
such person as it thinks fit to act as its representative at
any meeting of the Company or at any separate meeting of the
holders of any class or series of shares and such authority
may be general or in respect of specific meetings. A person
so authorized shall be entitled to exercise the same power
on behalf of the grantor of the authority as the grantor
could exercise if it were an individual member of the
Company and the grantor shall for the purposes of these
Articles be deemed to be present in person at any such
meeting if a person so authorized is present at it.
CLASS MEETINGS
SERIES MEETINGS
46. All provisions of these Articles relating to
general meetings of the Company shall apply mutatis mutandis
to every separate meeting of the holders of any class or
series of shares in the capital of the Company.
<PAGE>
14
DIRECTORS
47. Unless otherwise determined by a resolution
of the members (and, prior to the Series A Put Termination
Date, by a resolution of the holders of the Series A
Ordinary Shares at a separate general meeting), the number
of the directors shall be five.
48. Subject to the provisions of Articles 49 to
52 the directors shall be appointed and may be removed in
accordance with the Companies Act.
49. (1) Of the five directors holding office
immediately following the Closing Date, two shall have been
nominated by the persons entitled to nominate such directors
under the Joint Plan of Reorganization Proposed by Resorts
International, Inc. and certain of its affiliates.
(2) During the period following the Closing Date
and ending on the Series A Put Termination Date, each of the
directors nominated by the holders of the Series A Ordinary
Shares and each of their successors from time to time (the
"Independent Directors") shall be exclusively entitled prior
to each general meeting at which their appointment
terminates, to nominate themselves or any other person to
serve as a director and if at any time during such period
any vacancy exists among the Independent Directors the right
to nominate the person to fill such vacancy shall be
exclusively that of the remaining Independent Director or,
if no such director remains in office, the board after
having consulted with, and to the extent permitted by
applicable law following the recommendation of, the three
holders of Series A Ordinary Shares believed in good faith
by the board to be the holders of the greatest number of
Series A Ordinary Shares then outstanding.
(3) During the period following the Closing Date
and ending on the Series A Put Termination Date, the holders
of the Series B Ordinary Shares shall be exclusively
entitled prior to each general meeting at which the
appointment of any director other than an Independent
Director terminates, to nominate a person to serve as
director in succession to each such retiring director, and
if at any time during such period any vacancy exists among
the directors nominated by the holders of the Series B
Ordinary Shares, such holders shall have the exclusive right
to fill such vacancy.
<PAGE>
15
(4) After the Series A Put Termination Date in
respect of all the directors (and prior to such date in
respect of any director if the persons entitled to nominate
such director in accordance with Articles 49(2) and 49(3)
fail to do so), the board may make such nominations as it
shall, in its discretion, determine. After the Series A Put
Termination Date, holders of Ordinary Shares may propose
candidates for nomination to the board in accordance with
such procedures and terms as the board shall in its
discretion determine, subject to such procedures being in
accordance with applicable laws, rules and regulations
including rules or regulations of any stock exchange or
quotation system on which the Company's shares are listed or
quoted.
50. (1) It shall be presumed that it is in the
best interests of the Company to allow directors to
participate in meetings of the board or of committees
thereof by telephonic communication as set forth in
Article 65 and, accordingly, it shall be a term of
appointment of each director that he irrevocably consents to
the holding of such meetings in the manner set forth in
Article 65 (such consents to be obtained, in the case of the
directors referred to in Article 49(1), no later than the
Closing Date).
(2) No person shall be eligible to serve as an
Independent Director unless the board has determined that
such person satisfies the criteria of Section 85 of the
Companies Act and the criteria of any applicable requirement
of any stock exchange or quotation system on which the
Company's shares are listed or quoted for the appointment of
independent directors.
51. In exercising their duties and
responsibilities as directors, the Independent Directors
shall, INTER ALIA, recognize the fact that the Series A Put
is an integral part of the Company's value, and the
preservation of the value of the rights created by the
Series A Put for the holders of the Series A Ordinary Shares
shall be deemed to be a matter in the Company's best
interests. Actions requiring the separate consent or
approval of the Independent Directors shall be deemed
authorized if given by 50% or more of the Independent
Directors (or such greater number as shall be required, if
any, by the Companies Act or by any stock exchange or
quotation system on which the Company's shares are listed or
quoted), except in the case of approvals contemplated by
<PAGE>
16
Article 68(c), which shall be deemed authorized if given by
a majority of the Independent Directors.
52. The directors of the Company holding office
immediately following the Closing Date shall hold office
until the date of the annual general meeting to be held in
1997. At the annual general meeting held in 1997 and at
each subsequent annual general meeting, directors shall be
appointed by resolution of the holders of Ordinary Shares in
accordance with these Articles (including provisions as to
nomination) and any director so appointed (and any director
appointed to fill a vacancy in the directors prior to the
next annual general meeting) shall hold office until the
date of the next annual general meeting of the Company, or
if later the date his successor shall be duly elected and
qualified.
EXECUTIVE DIRECTORS
53. The board may appoint one or more of its body
to be the holder of any one or more executive office (except
that of auditor) under the Company and may enter into an
agreement or arrangement with any director for his
employment by the Company or for the provision by him of any
services outside the scope of the ordinary duties of a
director. Any such appointment, agreement or arrangement
may be made upon such terms, including terms as to
remuneration, as the board determines, and any remuneration
which is so determined may be in addition to or in lieu of
any ordinary remuneration as a director. The board may
revoke or vary any such appointment but without prejudice to
any rights or claims which the person whose appointment is
revoked or varied may have against the Company by reason
thereof.
54. Any appointment of a director to an executive
office shall terminate if he ceases to be a director but
without prejudice to any rights or claims which he may have
against the Company by reason of the termination of such
appointment. A director appointed to an executive office
shall not ipso facto cease to be a director if his
appointment to such executive office terminates.
55. The emoluments of any director holding
executive office for his services as such shall be
determined by the board, and may be of any description, and
(without limiting the generality of the foregoing) may
include admission to or continuance of membership of any
<PAGE>
17
scheme (including any share acquisition scheme) or fund
instituted or established or financed or contributed to by
the Company for the provision of pensions, life assurance or
other benefits for employees or their dependents, or the
payment of a pension or other benefits to him or his
dependents on or after retirement or death, apart from
membership of any such scheme or fund.
POWERS AND DUTIES OF THE BOARD
56. The business of the Company shall be managed
by the board, which may exercise all such powers of the
Company as are not, by the Companies Act or by these
Articles, required to be exercised by the Company in general
or extraordinary meeting, subject nevertheless to these
Articles (including in particular Article 68 for so long as
it is in effect) and to the Companies Act.
PROCEEDINGS OF DIRECTORS
57. (1) The directors may meet together for the
dispatch of business, adjourn and otherwise regulate their
meetings, as they think fit.
(2) Subject to Article 68 for so long as it is in
effect, questions arising at any meeting shall be decided by
a majority of votes.
(3) A director may, and the secretary on the
requisition of a director shall, at any time summon a
meeting of the directors. Directors shall be given
reasonable notice (which, except in the case of emergencies,
shall be not less than three business days) of the time and
place appointed for such meeting of the directors, which
notice may be waived by any or all directors at any time
before or after such meeting.
58. The quorum necessary for the transaction of
the business of the directors may be fixed by the directors
and unless so fixed shall be three.
59. The continuing directors may act
notwithstanding any vacancy in their body, but, if and so
long as their number is reduced below the number fixed by or
pursuant to the Articles as the necessary quorum of
directors, the continuing directors may act for the purpose
of summoning a general meeting of the Company, but for no
other purpose.
<PAGE>
18
60. The directors may elect a chairman of their
meetings and determine the period for which he is to hold
office; but if no such chairman is elected or if at any
meeting the chairman is not present within five minutes
after the time appointed for holding the same, the directors
present may choose one of their number to be chairman of the
meeting.
61. Subject to Article 68, the directors may
delegate any of their powers to committees consisting of
such members of the Company or members of their body as they
think fit provided that at least one Independent Director
shall be appointed as a member of each committee unless all
Independent Directors elect to decline such appointment; any
committee so formed shall in the exercise of the powers so
delegated conform to any regulations that may be imposed on
them by the directors; provided, however, that no committee
shall be permitted to take any action restricted pursuant to
Article 68 hereof other than in strict compliance with such
Article 68.
62. A committee may elect a chairman of their
meetings; if no such chairman is elected or if at any
meeting the chairman is not present within five minutes
after the time appointed for holding the same, the members
present may choose one of their number to be chairman of the
meeting.
63. (1) A committee shall meet and adjourn as
determined by the board and otherwise as they think proper.
(2) Subject to Article 68 for so long as it is in
effect, questions arising at any meeting shall be determined
by a majority of votes of the members present.
64. Subject to Article 68 for so long as it is in
effect, a resolution in writing signed by a simple majority
of the directors entitled to vote on that resolution at a
meeting of the board or of the members of an existing
committee of the board with authority to consider and act on
the matter (not being less than the number of directors
required to form a quorum of the board) shall be as valid
and effectual as if it had been passed at a meeting of the
board or (as the case may be) a committee of the board duly
convened and held and for this purpose a resolution may
consist of several documents to the same effect, each signed
by one or more directors.
<PAGE>
19
65. A meeting of the board or of a committee of
the board may, if all the directors consent, consist of a
conference between directors who are not all in one place,
but of whom each is able (directly or by telephonic
communication) to speak to each of the others, and to be
heard and recognized by each of the others. A director
taking part in such a conference shall be deemed to be
present in person at the meeting and shall be entitled to
vote or be counted in a quorum accordingly. Such a meeting
shall be deemed to take place where the largest group of
those participating in the conference is assembled, or, if
there is no such group, where the chairman of the meeting
then is. The word MEETING in these Articles shall be
construed accordingly.
66. The board shall cause minutes to be made in
books provided for the purpose:
(a) of all appointments of officers made by
the board;
(b) of the names of the directors, members
or others present at each meeting of the
directors and of any committee of the
directors; and
(c) of all resolutions and proceedings at
all meetings of the Company and of the
board and of committees of the board.
POWERS OF ATTORNEY
67. The board may from time to time and at any
time by power of attorney appoint any company, firm or
person or body of persons, whether nominated directly or
indirectly by the board, to be the attorney or attorneys of
the Company for such purposes and with such powers,
authorities and discretion (not exceeding those vested in or
exercisable by the board under these Articles) and for such
period and subject to such conditions as they may think fit,
and any such powers of attorney may contain such provisions
for the protection and convenience of persons dealing with
any such attorney as the board may think fit and may also
authorize any such attorney to delegate all or any of the
powers, authorities and discretion vested in him.
<PAGE>
20
RESTRICTED TRANSACTIONS
68. At all times after the Closing Date and the
nomination of Independent Directors pursuant to Article 49
and until the Series A Put Termination Date, the following
actions ("Restricted Transactions") shall not be taken
without the separate approval of the Independent Directors:
(a) any amendment to these Articles or the
Memorandum of Association of the Company, the articles
association or the Memorandum of Association of any
subsidiary of the Company or to the arrangements provided
for in Section 14.2 of the Heads of Agreement dated August
18, 1993, with Sun International Investments Limited and the
Government of the Commonwealth of The Bahamas if such
amendment could reasonably be expected to have an adverse
effect on the Series A Put or the rights of the holders of
Series A Ordinary Shares;
(b) any merger or consolidation involving the
Company or any sale, lease or other direct or indirect
disposition of all or substantially all of the assets of the
Company and its subsidiaries in a transaction or series of
related transactions that could reasonably be expected to
have an adverse effect on the Series A Put or the rights of
the holders of Series A Ordinary Shares (and, in the case of
any merger or consolidation that would result in the holders
of Series A Ordinary Shares no longer having an interest in
the Company (or the resulting entity, successor or
acquiror), it shall be a condition to the consummation of
such transaction that the Company shall have obtained at its
own expense an opinion rendered by an internationally
recognized investment banking firm selected by the
Independent Directors and engaged by the Company, to the
effect that such transaction is fair to the holders of the
Series A Ordinary Shares);
(c) any material transaction with Sun
International Investments Limited or any affiliate of Sun
International Investments Limited, including without
limitation arrangements (or any material amendment thereto)
with any such affiliate for management of the properties of
the Company or its subsidiaries and including any material
amendment to or material waiver under the Management
Agreement to be entered into between the Company and Sun
International Management Ltd. on or prior to the Closing
Date or any determination as to whether to continue such
<PAGE>
21
Agreement in effect if such agreement becomes terminable by
the Company thereunder;
(d) any declaration or payment of dividends or
other distributions on or with respect to the Ordinary
Shares during any fiscal quarter of the Company (i) in cash
if in an amount exceeding, in the aggregate with any other
dividends since the Closing Date, one-half of the Company's
cumulative, aggregate, consolidated net income since the
Closing Date, plus the amount of all depreciation,
amortization, and other non-cash charges deducted therefrom
during such period and minus the amount of all ordinary
course capital expenditures other than expenditures in
respect of improvements, upgrading or construction of or
relating to properties of the Company or its subsidiaries
during such period or (ii) in property other than cash if
such property, in the aggregate, has a fair market value in
excess of $100,000;
(e) any incurrence or assumption of liability (by
way of guaranty or otherwise) for indebtedness for borrowed
money or any issuance of non-voting Preference Shares if as
a result thereof the aggregate principal amount of all
interest-bearing indebtedness for borrowed money of the
Company together with the greater of the redemption price,
liquidation value or nominal value of all Preference Shares
then outstanding or proposed to be issued would at such time
exceed $150,000,000 plus an amount equal to (i) the
cumulated consolidated net income, net of any consolidated
loss, of the Company plus (ii) the net proceeds to the
Company or its subsidiaries of any offering of equity
securities of the Company or its subsidiaries, minus
(iii) the aggregate amount of all dividends paid on shares
other than Preference Shares by the Company in cash or other
property, in each case since the date of the Company's
incorporation through the date of the incurrence or
assumption of such indebtedness or the issuance of such
Preference Shares;
(f) any filing or approval for filing or
undertaking any bankruptcy, reorganization,
recapitalization, liquidation or dissolution of the Company;
(g) any issuance of Series A Ordinary Shares other
than Series A Ordinary Shares issued fully paid at a cash
price per share of not less than the greater of (i) the then
prevailing Purchase Price (as defined in Article 19) or
(ii) the Market Price prevailing on the date of such
<PAGE>
22
issuance less customary amounts, not to exceed 3% of the
then prevailing Market Price, in respect of underwriting
discounts or other reductions (and, in addition to the
foregoing restrictions, no Series A Ordinary Shares shall be
issued without the prior written consent of the holders of a
majority of the then outstanding Series B Ordinary Shares).
For the purposes of this Article 68(g), "Market Price"
means, for any given day, the last reported per share sale
price (or, if no sale price is reported, the average of the
bid and ask prices or, if more than one in either case, the
average of the closing bid and closing ask prices) on such
day of the Series A Ordinary Shares as quoted on the
National Association of Securities Dealers Automated
Quotation System or, if not so quoted, on the New York Stock
Exchange or, in the event Series A Ordinary Shares are not
listed on the New York Stock Exchange, such other national
or regional securities exchange upon which the Series A
Ordinary Shares are listed, or, if the Series A Ordinary
Shares are not listed on a national or regional securities
exchange, as quoted by the National Quotation Bureau
Incorporated. In the absence of one or more such
quotations, the Company shall be entitled to determine the
Market Price on the basis of such quotations as it may in
its reasonable opinion consider appropriate;
(h) any issuance of Series B Ordinary Shares or
voting Preference Shares (and, in addition to the foregoing
restriction, no Series B Ordinary Shares or voting
Preference Shares shall be issued without the prior written
consent of the holders of a majority of the then outstanding
Series B Ordinary Shares);
(i) any repurchase by the Company or any of its
subsidiaries of Series B Ordinary Shares; or
(j) any consent or approval of action proposed to
be taken by any of the subsidiaries of the Company if:
(i) such proposed action is of a type substantially the same
as any of the actions described in paragraphs (a) through
and including (i) above and (ii) the articles of association
or equivalent charter documents of such subsidiaries provide
that the adoption of such proposed action requires the
consent or approval, authorization or approval of the
shareholders of such subsidiaries.
Notwithstanding anything to the contrary contained
herein or elsewhere, so long as the foregoing provisions in
paragraphs (a) through (j) above remain in effect, it shall
<PAGE>
23
be a requirement that the Company terminate the Management
Agreement with Sun International Management Ltd. referred to
in paragraph (c) above if and when such Agreement becomes
terminable by the Company in accordance with its terms
unless a majority of the Independent Directors support a
determination by the board to continue such Agreement in
effect.
THE SEAL
69. The seal of the Company shall not be affixed
to any instrument except by the authority of a resolution of
the directors, and in the presence of at least two directors
and of the secretary or such other person as the directors
may appoint for the purpose; and those two directors and
secretary or other person as aforesaid shall sign every
instrument to which the seal of the Company is so affixed in
their presence. The Company is hereby authorized to adopt
and use an official seal in accordance with the provisions
of Section 26 of the Companies Act.
DIVIDENDS AND RESERVE
70. Subject to Article 68, the board may from
time to time declare and pay to the members of the Company
such quarterly dividends as appear to the directors to be
justified by the profits of the Company.
71. No dividend shall be paid otherwise than out
of profits or surplus available for the purpose in
accordance with the Companies Act.
72. The directors may, before recommending any
dividend, set aside out of the profits of the Company such
sums as they think proper as a reserve or reserves which
shall, at the discretion of the directors, be applicable for
meeting contingencies or for equalizing dividends or for any
other purpose to which the profits of the Company may be
properly applied, and pending such application may, at the
like discretion, either be employed in the business of the
Company or be invested in such investments (other than
shares of the Company), as the directors may from time to
time think fit.
73. Where several persons are registered as joint
holders of any share any one of them may give effectual
receipts for any dividend payable on the share.
<PAGE>
24
74. No dividend shall bear interest against the
Company.
ACCOUNTS
75. The directors shall cause true accounts to be
kept:
(a) of the sums of money received and
expended by the Company and the matter
in respect of which such receipt and
expenditure takes place; and
(b) of the assets and liabilities of the
Company.
76. The books of account shall be kept at the
registered office of the Company or at such other place or
places as the directors think fit and shall always be open
to the inspection of the directors.
77. The directors shall from time to time
determine whether and to what extent and at what times and
places and under what conditions or regulations the accounts
and books of the Company or any of them shall be open to the
inspection of members not being directors, and no member
(not being a director) shall have any right of inspecting
any account or book or document of the Company except as
conferred by statute or authorized by the directors or by
the Company in general meeting.
78. Once at least in every year the directors
shall lay before the Company in general meeting a profit and
loss account for the period since the preceding account or
(in the case of the first account) since the incorporation
of the Company, made up to a date not more than six months
before such meeting.
79. (1) A balance-sheet shall be made out in
every year and laid before the Company in general meeting
made up to a date not more than six months before such
meeting.
(2) The balance-sheet shall be accompanied by a
report of the board as to the state of the Company's affairs
and the amount which they recommend to be paid by way of
dividend and the amount, if any, which they propose to carry
to a reserve fund.
<PAGE>
25
80. A copy of the balance-sheet and report shall,
seven days previous to the meeting, be sent to the persons
entitled to receive notices of general meetings in the
manner in which notices are to be given hereunder.
NOTICES
81. (1) A notice may be given by the Company to
any member either personally or by sending it by post to him
to his registered address.
(2) Where a notice is sent by post, service of
the notice shall be deemed to be effected by properly
addressing, pre-paying and posting a letter (by air-mail if
to an address outside the country from which it is sent)
containing the notice and, unless the contrary is proved, to
have been effected three days after posting (or seven days
if sent to an address outside the country from which it is
sent).
82. A notice may be given by the Company to the
joint holders of a share by giving the notice to the joint
holder named first in the register in respect of the share.
83. A notice may be given by the Company to the
persons entitled to a share in consequence of the death or
bankruptcy of a member by sending it through the post in a
pre-paid letter addressed to them by name or by the title of
representatives of the deceased, or trustees of the
bankrupt, or by any like description, at the address, if
any, supplied for the purpose by the persons claiming to be
so entitled, or (until such an address has been so supplied)
by giving the notice in any manner in which the same might
have been given if the death or bankruptcy has not occurred.
84. Notice of every general meeting shall be
given in some manner hereinbefore authorized to the members
of the Company, including any person entitled to a share in
consequence of the death or bankruptcy of a member, who, but
for his death or bankruptcy, would be entitled to receive
notice of the meeting and to every director. No other
persons shall be entitled to receive notices of general
meetings.
INDEMNITY
85. The Company shall, subject to the provisions
of Article 89, indemnify to the fullest extent permitted by
<PAGE>
26
the Companies Act any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether
external or internal to the Company by reason of the fact
that he is or was a director or officer of the Company, or
is or was serving at the request of the Company as a
director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him
in connection with such suit, action or proceeding if he
acted in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of
the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his
conduct was unlawful.
86. Subject to Article 89, expenses incurred by a
director or officer in defending a civil or criminal action,
suit or proceeding shall be paid by the Company in advance
of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall
ultimately be determined that he is not entitled under
Article 86 to be indemnified by the Company in respect of
such expenses.
87. The board shall from time to time cause the
Company to purchase and maintain insurance from reputable
insurance carriers on behalf of any person who is or was a
director or officer of the Company, or is or was serving at
the request of the Company as a director or officer of
another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of
his status as such with reasonable limits and subject to
reasonable and customary deductibles, for so long as such
insurance is available from such carriers.
88. The Company's indemnification under
Article 86 of any person who is or was a director or officer
of the Company, or is or was serving, at the request of the
Company as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, shall
be reduced by amounts such person receives as
indemnification (i) under any policy of insurance purchased
and maintained on his behalf by the Company, (ii) from such
<PAGE>
27
other corporation, partnership, joint venture, trust or
other enterprise, or (ii) under any other applicable
indemnification provision.
89. (a) It shall be a condition of the Company's
obligation to indemnify or advance expenses under
Articles 85 and 86 that the person asserting, or proposing
to assert, the right to be indemnified, promptly after
receipt of notice of commencement of any action, suit or
proceeding in respect of which a claim for indemnification
is or is to be made against the Company notify the Company
of the commencement of such action, suit or proceeding,
including therewith a copy of all papers served and the name
of counsel retained or to be retained by such person in
connection with such action, suit or proceeding, and
thereafter to keep the Company timely and fully apprised of
all developments and proceedings in connection with such
action, suit or proceeding or as the Company shall request;
and the fees and expenses of any counsel retained by a
person asserting, or proposing to assert, the right to be
indemnified under Article 85 shall be at the expense of such
person unless the counsel retained shall have been approved
by the Company in writing, which approval shall not be
unreasonably withheld.
(b) If a claim for indemnification or advancement
of expenses under Articles 85 and 86 is not paid in full by
the Company within forty five (45) days after a written
claim therefor has been received by the Company, the
claimant may at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be
entitled to be paid also the expenses of prosecuting such
claim.
90. To the fullest extent permitted by the
Companies Act as it exists on the date hereof or as it may
hereafter be amended, no director or officer of the Company
shall be liable to the Company or its members for monetary
or other damages for breach of fiduciary duty as a director
or officer.
91. The provisions of Articles 85 to 90 shall
continue as to, and for the benefit of, a person who has
ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a
person.
<PAGE>
28
92. No amendment to or repeal of the provisions
of Articles 85 to 91 shall apply to or have any effect on
the eligibility for, or entitlement to, indemnification,
advancement of expenses and the other rights provided by, or
granted pursuant to, Articles 85 to 91 for or with respect
to any acts or omissions of any director or officer
occurring prior to any such amendment or repeal.
<PAGE>
EXHIBIT B
- -----------------------------------------------------------
- -----------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
among
SUN INTERNATIONAL HOTELS LIMITED,
FIDELITY MANAGEMENT & RESEARCH COMPANY
and
TCW SPECIAL CREDITS
Dated as of , 199[3]
- -----------------------------------------------------------
- -----------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. SECURITIES SUBJECT TO THIS
AGREEMENT; REPRESENTATIONS AND
COVENANTS OF FIDELITY AND TCW WITH
RESPECT TO THE REGISTRABLE
SECURITIES . . . . . . . . . . . . . . . . . 1
SECTION 2. PIGGYBACK REGISTRATION AND DEMAND
REGISTRATION . . . . . . . . . . . . . . . . 2
(a) Piggback Registration . . . . . . . . . 2
(b) Demand Registration Rights . . . . . . 3
SECTION 3. HOLDBACK AGREEMENT . . . . . . . . . . . . . 5
(a) Restrictions on Public Sale by
Holders of Registrable
Securities . . . . . . . . . . . . . . 5
(b) Restrictions on Public Sale by
the Company . . . . . . . . . . . . . . 5
SECTION 4. REGISTRATION PROCEDURES . . . . . . . . . . 6
SECTION 5. REGISTRATION EXPENSES . . . . . . . . . . . 9
SECTION 6. INDEMNIFICATION CONTRIBUTION . . . . . . . . 10
(a) Indemnification by the
Company . . . . . . . . . . . . . . . . 10
(b) Indemnification by Holders of
Registrable Securities . . . . . . . . 11
(c) Conduct of Indemnification
Proceedings . . . . . . . . . . . . . . 11
(d) Contribution . . . . . . . . . . . . . 12
SECTION 7. PARTICIATION IN UNDERWRITTEN
REGISTRATIONS . . . . . . . . . . . . . . . 13
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . 13
(a) Remedies . . . . . . . . . . . . . . . 13
<PAGE>
(b) Notices . . . . . . . . . . . . . . . . 14
(c) Successors and Assigns . . . . . . . . 15
(d) Counterparts . . . . . . . . . . . . . 15
(e) Headings . . . . . . . . . . . . . . . 15
(f) Governing Law . . . . . . . . . . . . . 15
(g) Severability . . . . . . . . . . . . . 15
(h) Entire Agreement . . . . . . . . . . . 15
<PAGE>
This REGISTRATION RIGHTS AGREEMENT (this
"Agreement") is made and entered into as of
, 199[3], among SUN INTERNATIONAL
HOTELS LIMITED, a Bahamian domestic
corporation (the "Company"), FIDELITY
MANAGEMENT & RESEARCH COMPANY, a
Massachusetts corporation, on behalf of
various funds that it manages which own
Series A Ordinary Shares ("Shares") of the
Company ("Fidelity") and TCW SPECIAL CREDITS,
a California general partnership, on behalf
of various funds and accounts which own
Shares of the Company ("TCW").
The parties hereby agree as follows:
SECTION 1. SECURITIES SUBJECT TO THIS AGREEMENT;
REPRESENTATIONS AND COVENANTS OF FIDELITY AND TCW WITH
RESPECT TO THE REGISTRABLE SECURITIES. (a) The term
"Registrable Securities" means the Shares of the Company
received by Fidelity and TCW on the date hereof (and any
securities from time to time received from the Company in
exchange therefor or as a result of dividends, splits, or
similar actions with respect to Registrable Securities).
Any Registrable Securities which are Transferred (as defined
below) by a holder of Registrable Securities, other than
Registrable Securities that are Transferred among holders of
Registrable Securities, shall cease to be Registrable
Securities (even if they are later reacquired by a holder of
Registrable Securities (other than Fidelity or TCW)) unless
such Transfer occurs in a single transaction Transferring to
a single buyer not less than 10% of the Shares of the
Company issued on the date hereof. In addition, Shares of
the Company from time to time acquired by Fidelity or TCW
after the date hereof (other than shares issued in
connection with dividends, splits or similar actions which,
by virtue of the first sentence of this paragraph will
continue to be Registrable Securities) (the "After-Acquired
Shares") shall become and thereafter shall be deemed to be
Registrable Securities; PROVIDED, HOWEVER, that such After-
Acquired Shares shall cease to be Registrable Securities if
Transferred, no matter what the circumstances, unless such
Transfer is to Fidelity or TCW. The term "Ordinary Shares"
means all Shares of the Company and Series B Ordinary Shares
of the Company.
(b) Each of Fidelity and TCW hereby represents
and warrants that it presently intends to hold its
<PAGE>
2
Registrable Securities for investment purposes only and not
currently with a view to the distribution of such securities
in a transaction requiring registration under the Securities
Acts (as hereinafter defined), provided that decisions as to
the disposition of its Registrable Securities shall at all
times be within its exclusive control.
(c) Each holder from time to time of Registrable
Securities covenants and agrees that it will not, directly
or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of (collectively
"Transfer") any of its Registrable Securities except in
compliance with or pursuant to an exemption under the
Securities Act of 1933, as amended, all applicable state
securities laws and all rules and regulations promulgated
thereunder (collectively, the "Securities Acts").
SECTION 2. PIGGYBACK REGISTRATION AND DEMAND
REGISTRATION. (a) PIGGYBACK REGISTRATION. If at any time
the Company proposes to file a registration statement under
the Securities Act of 1933 with respect to any Shares of the
Company (other than registration statements filed in
connection with mergers, acquisitions, dividend reinvestment
plans, stock option or other employee benefit plans,
exchange offers or offerings of securities solely to the
Company's existing stockholders), then the Company shall in
each case give written notice of such proposed filing to
Fidelity and TCW, and any other holders of Registrable
Securities known to the Company, at least 20 days before the
anticipated filing date, and such notice shall offer holders
of Registrable Securities the opportunity to register such
number of shares of Registrable Securities as each such
holder may request. The Company shall use its best efforts
to cause the managing underwriter or underwriters of any
proposed underwritten offering of Shares of the Company to
permit the holders of Registrable Securities to include some
or all of their shares in the registration for such offering
on the same terms and conditions as the shares to be
registered by the Company to be included therein, provided
that the Company shall have received a written request from
such holders of Registrable Securities not less than 10 days
before the anticipated filing date specifying the number of
Shares of the Company they wish to include in such offering.
Notwithstanding the foregoing, if the managing underwriter
or underwriters of such offering delivers a written opinion
to the holders of Registrable Securities that the total
amount of securities which they intend to include in such
offering would adversely affect the success of such
<PAGE>
3
offering, then the amount of securities to be offered for
the accounts of holders of Registrable Securities shall be
(i) reduced (pro rata among such holders (to the extent they
each shall have requested, in accordance with the foregoing,
inclusion in such offering) on the basis of the relative
number of shares of Registrable Securities so requested by
them to be included) to the extent necessary to reduce the
total amount of Shares of the Company to be included in such
offering to the amount recommended by such managing
underwriter or (ii) excluded in their entirety if so
recommended by such managing underwriter. In connection
with a piggyback registration, the Company will pay all
Registration Expenses (as defined in Section 5 hereof).
(b) DEMAND REGISTRATION RIGHTS. (i) RIGHT TO
DEMAND. At any time after December 31, 1994, the holders of
the Registrable Securities holding Registrable Securities
constituting not less than 7.5% of the then outstanding
Ordinary Shares may make written requests to the Company
(each, a "Demand") for registration with the SEC in
accordance with the applicable provisions of the Securities
Acts of all or part of their Registrable Securities (a
"Demand Registration"); PROVIDED, HOWEVER, that Registrable
Securities constituting at least 10% of the then outstanding
Ordinary Shares, or such lesser number of Registrable
Securities (but not less than 5% of the then outstanding
Ordinary Shares) with a market value in excess of
$15,000,000 must be included in the Demand Registration; and
PROVIDED FURTHER, HOWEVER, that such Demand Registration
shall be made only in connection with a widely distributed
underwritten public offering of the Registrable Securities
included in the Demand Registration, through a co-manager
(if so selected by the holders) and underwriters selected by
such holders of Registrable Securities and all reasonably
acceptable to the Company (with the lead underwriter being
selected by the Company). The lead underwriter selected by
the Company shall agree to use its best efforts to cause the
underwriting group to take all customary actions to
effectively market the Registrable Securities included in
the Demand Registration, including without limitation
organizing and participating in "road shows" and other
presentations for potential purchasers. The Company also
agrees to participate in "road shows" and to take an active
role in effectively marketing the Registrable Securities.
Any Demand made by the holders of the Registrable Securities
pursuant to this Section 2(b)(i) shall specify the aggregate
amount of the Registrable Securities to be registered.
<PAGE>
4
(ii) EFFECTIVE REGISTRATION. The Company agrees
to use its best efforts to file as soon as reasonably
practicable after such Demand, the Demand Registration and
agrees to use its best efforts to have such Demand
Registration declared effective as soon as reasonably
practicable after such filing.
The Company further agrees, if necessary, to
supplement or amend any Demand Registration, as required by
the registration form used, by the instructions applicable
to such registration form or by the relevant provisions of
the Securities Acts, and the Company agrees to furnish to
the holders of the Registrable Securities copies of any such
supplement or amendment prior to its being used and/or filed
with the SEC. The Company agrees to pay all Registration
Expenses (as hereinafter defined) in connection with each
Demand Registration, whether or not it becomes effective.
(iii) NUMBER OF DEMAND REGISTRATIONS. The
holders of the Registrable Securities together shall be
entitled to two Demand Registrations in total (if the
conditions specified in Section 2(b)(i) are satisfied). The
Company shall not be deemed to have effected a Demand
Registration unless and until such Demand Registration is
declared effective; PROVIDED, HOWEVER, that if a Demand
Registration does not become effective after the Company has
substantially prepared and has filed, or is in a position to
file, a registration statement with respect thereto because
of the refusal to proceed by the holders of the Registrable
Securities, then such Demand Registration shall be deemed to
have been effected by the Company unless the Company is
reimbursed in full for all its actual, out-of-pocket costs
incurred in connection with the Demand and the Company's
response thereto.
(iv) DELAY OF REGISTRATION. The Company may post-
pone, for a single period not to exceed three months, the
filing or the effectiveness of a registration statement for
a Demand Registration if the Company determines in good
faith that such Demand Registration might reasonably be
expected to have a material adverse effect on any proposal
or plan by the Company or any of its Subsidiaries to engage
in any acquisition of assets or any merger, consolidation,
tender offer or similar transaction; PROVIDED, HOWEVER, that
in such event the holders of Registrable Securities request-
ing such Demand Registration will be entitled to withdraw
such request and, if such request is withdrawn, such Demand
<PAGE>
5
Registration will not constitute a Demand Registration here-
under.
(v) SELECTION OF COUNSEL. The holders of the
Registrable Securities to be included in any Demand
Registration shall select one counsel reasonably acceptable
to the Company to represent their interests in connection
with such offering. The expenses of such counsel to the
holders shall be borne by the Company.
SECTION 3. HOLDBACK AGREEMENT. (a) RESTRICTIONS
ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES. To the
extent not inconsistent with applicable law and to the
extent requested in good faith and in writing by the
underwriters as being reasonably necessary to complete the
proposed sale of securities by the Company, each holder of
Registrable Securities agrees not to effect any public sale
or distribution, or any private placement or other sales, of
its Registrable Securities or any other Shares of the
Company or securities convertible into or exchangeable or
exercisable for Shares of the Company, including a sale not
required to be registered under the Securities Acts or
pursuant to Rule 144 or any other exemption under the
Securities Acts, during the five Business Days prior to, and
during the 60-day period beginning on, the date on which a
registration statement filed by the Company for the
registration of securities owned by, or then being issued
by, the Company is first declared effective (except as part
of such registration) and agrees to deliver from time to
time a separate written undertaking to the Company and the
underwriters, if applicable, with respect to the foregoing
upon request.
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY.
The Company agrees not to effect any public sale or
distribution, or any private placement or other sales, of
any Ordinary Shares of the Company, or any securities
convertible into or exchangeable or exercisable for such
securities, during the five Business Days prior to, and
during the 60-day period beginning on, the date on which the
registration statement for a Demand Registration is first
declared effective (except as part of such registration or
pursuant to any merger, acquisition, dividend reinvestment
plan or stock option or other employee benefit plan) and
agrees to deliver from time to time a separate written
undertaking to the holders of Registrable Securities
included in the registration statement and the underwriters
with respect to the foregoing upon request.
<PAGE>
6
SECTION 4. REGISTRATION PROCEDURES. Whenever the
holders of the Registrable Securities have requested that
Registrable Securities be registered pursuant to
Section 2(b) of this Agreement, the Company will use its
best efforts to effect the registration of such Registrable
Securities in accordance with the intended method of
disposition requested as quickly as practicable and, in
connection with any such request, the Company will as
expeditiously as possible:
(a) prepare and file with the SEC a registration
statement which includes such Registrable Securities
and use its best efforts to cause such registration
statement to become effective;
(b) prepare and file with the SEC such amendments
and posteffective amendments to the registration state-
ment as may be necessary to keep the registration
statement effective for at least 90 days (or such
shorter period which will terminate when all Regis-
trable Securities covered by such registration state-
ment have been sold) and comply with the provisions of
the Securities Acts applicable to it with respect to
the disposition of all Shares of the Company covered by
such registration statement during such period;
(c) furnish to any seller of Registrable
Securities without charge, at least one signed copy of
the registration statement and any posteffective
amendment thereto, as soon as such documents become
available to the Company, and such number of conformed
copies thereof and such number of copies of the
prospectus (including any preliminary prospectus) and
any amendments or supplements thereto, and any
documents incorporated by reference therein, as such
seller may reasonably request as soon as such documents
become available to the Company in order to facilitate
the disposition of the Registrable Securities being
sold by such seller (it being understood that the
Company consents to the use of the prospectus and any
amendment or supplement thereto by each seller of such
Registrable Securities in connection with the offering
and sale of the Registrable Securities covered by the
prospectus or any amendment or supplement thereto);
(d) on or prior to the date on which the registra-
tion statement is declared effective, or thereafter, if
necessary, use its best efforts to register or qualify
<PAGE>
7
the Registrable Securities under such other securities
or blue sky laws of such jurisdictions as the sellers
reasonably request and do any and all other acts and
things which may be reasonably necessary or advisable
to enable each seller to consummate the disposition in
such jurisdictions of such Registrable Securities owned
by such seller; PROVIDED, HOWEVER, that the Company
shall not be required to (i) qualify generally to do
business in any jurisdiction where it would not other-
wise be required to qualify but for this paragraph,
(ii) subject themselves to general taxation in any such
jurisdiction or (iii) consent to general service of
process in such jurisdiction for purposes of actions
arising other than out of such registration statement;
(e) use their best efforts to cause the
Registrable Securities covered by such registration
statement to be registered with or approved by such
other governmental agencies or authorities as may be
necessary by virtue of the business and operations of
the Company to enable the sellers to consummate the
disposition of such Registrable Securities;
(f) notify each seller of Registrable Securities
at any time while the registration statement is
required to be effective under paragraph (b) above of
the happening of any event which results in the
prospectus included in such registration statement
containing an untrue statement of a material fact or
omitting to state any material fact required to be
stated therein or necessary to make the statements
therein not misleading, and the Company will prepare a
supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not
contain an 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;
(g) enter into customary agreements and make such
representations and warranties to the underwriters and
sellers of Registrable Securities as in form, substance
and scope are customarily made by issuers to
underwriters in primary underwritten offerings and take
such other actions as are reasonably required in order
to expedite or facilitate the disposition of such
Registrable Securities;
<PAGE>
8
(h) make available for inspection during regular
business hours by any seller of Registrable Securities
and any attorney, accountant or other agent retained by
any such seller and the underwriters and their
attorneys and agents (collectively, the "Inspectors"),
all financial and other records, corporate documents,
books and records, questionnaires, agreements,
properties of the Company and other information
(collectively, the "Records"), as shall be reasonably
requested to enable them to exercise "due diligence,"
and cause the Company's officers, directors and
employees to supply all information reasonably
requested by any such Inspector in connection with the
registration statement. Sellers of Registrable
Securities hereunder agree that Records and other
information which the Company determines in good faith
to be confidential, and of which determination the
Inspectors and sellers are so notified, shall not be
disclosed by the Inspectors or sellers unless (i) the
disclosure of such Records is necessary to avoid or
correct a misstatement or omission in the registration
statement or (ii) the release of such Records is
required in any seller's reasonable judgment to assert
a "due diligence" defense to any claim that a seller
knew or should have known of a misstatement or omission
in the registration statement (whether or not such
claim has been asserted in a court of law) or
(iii) pursuant to a subpoena, court order or regulatory
or agency request;
(i) use its best efforts to obtain an opinion or
opinions from counsel for the Company, and an auditor's
"comfort" letter from the independent auditors of the
Company, in customary form;
(j) otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC, and
make available to their security holders, as soon as
reasonably practicable, earnings statements which need
not be audited, covering a period of twelve months,
beginning within three months after the effective date
of the registration statement, which earnings
statements shall satisfy the provisions of
Section 11(a) of the Securities Act of 1933;
(k) notify each seller of Registrable Securities
of any stop order or other suspension of effectiveness
of the registration statement;
<PAGE>
9
(l) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of
the registration statement at the earliest possible
moment;
(m) use its best efforts to cause the Registrable
Securities to be listed on NASDAQ or any other national
securities exchange on which a listing for Shares of
the Company is maintained;
(n) cooperate with the holders of Registrable
Securities being registered and their counsel in
connection with any filings required to be made with
the National Association of Securities Dealers, Inc.
(the "NASD"); and
(o) cooperate with the sellers of Registrable
Securities to facilitate the timely preparation and
delivery of certificates representing securities to be
sold under the registration statement (which
certificates shall be in DTC-eligible form) and enable
such securities to be in such denominations and
registered in such names as such sellers may request.
The Company may require each seller of Registrable
Securities as to which any registration is being effected to
furnish to the Company information regarding the
distribution of such securities and such other information
relating to the seller and its ownership of Registrable
Securities as the Company may from time to time reasonably
request for inclusion in the registration statement.
Each holder of Registrable Securities agrees that,
upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 4(f) hereof,
such holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such
holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4(f) hereof and,
if so directed by the Company, such holder will deliver to
the Company (at the expense of the Company), all copies,
other than permanent file copies then in such holder's
possession of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
SECTION 5. REGISTRATION EXPENSES. All expenses
incident to the Company's performance of or compliance with
<PAGE>
10
Section 2 of this Agreement including, without limitation,
all registration and filing fees, all fees and expenses
associated with filings required to be made with the NASD as
may be required by the rules and regulations of the NASD,
fees and expenses of compliance with state securities or
blue sky laws (including fees and disbursements of counsel
in connection with blue sky qualifications of the
Registrable Securities), messenger and delivery expenses,
internal expenses (including, without limitation, all
salaries and expenses of their officers and employees
performing legal or accounting duties), printing costs, fees
and expenses of counsel for the Company and its independent
certified public accountants (including the expenses of any
special audit required by or incident to such performance),
securities acts liability insurance (if the Company elects
to obtain such insurance), fees and expenses of counsel for
the selling shareholders under Section 2(b)(v) above and the
fees and expenses of any special experts retained by the
Company in connection with such registration (all such
expenses being herein called "Registration Expenses") shall
be borne by the Company; PROVIDED, HOWEVER, that in no event
shall Registration Expenses include any underwriting
discounts, commissions or fees attributable to the sale of
the Registrable Securities.
SECTION 6. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the full extent permitted by law, each holder
of Registrable Securities, its officers, directors,
partners, employees and agents and each person or entity
that controls such holder (within the meaning of the
Securities Act of 1993), and any investment advisor thereof
or agent therefor against all losses, claims, damages,
liabilities and expenses (including reasonable costs of
investigation and legal expenses) arising out of or based
upon any untrue or alleged untrue statement of a material
fact contained in any registration statement or prospectus
or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein (in the case of a prospectus, in
light of the circumstances under which they are made) not
misleading, except insofar as the same arise out of or are
based upon any information with respect to such holder
furnished in writing to the Company by such holder. The
Company will also indemnify any selling brokers, dealer
managers and similar securities industry professionals
participating in the distribution and their officers and
directors and each person who controls such persons or
<PAGE>
11
entities (within the meaning of the Securities Act of 1933)
to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE
SECURITIES. In connection with any registration statement
in which a holder of Registrable Securities is
participating, each such holder will furnish to the Company,
in writing, such information and affidavits with respect to
such holder as the Company reasonably requests for use in
connection with such registration statement or any
prospectus included therein and agrees to indemnify, to the
extent permitted by law, the Company, its directors,
officers, employees and agents and each person or entity
that controls the Company (within the meaning of the
Securities Act of 1933), and any investment advisor thereof
or agent therefor against any losses, claims, damages,
liabilities and expenses (including reasonable costs of
investigation and legal expenses) arising out of or based
upon any untrue or alleged untrue statement of a material
fact contained in the registration statement or prospectus
or any omission or alleged omission to state therein a
material fact required to be stated or necessary to make the
statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such
untrue statement or omission is contained in or should have
been contained in any information or affidavit with respect
to such holder so furnished in writing by such holder
expressly for inclusion in such registration statement.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any
person or entity entitled to indemnification hereunder
agrees to give prompt written notice to the indemnifying
party after the receipt by such person or entity of any
written notice of the commencement of any action, suit or
proceeding against such person or entity or investigation
thereof for which such person or entity will claim
indemnification or contribution pursuant to this Agreement
and, unless in the reasonable judgment of such indemnified
party a conflict of interest exists between such indemnified
party and the indemnifying party with respect to such claim,
permit the indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to such
indemnified party. If the indemnifying party is not
entitled to, or elects not to, assume the defense of a
claim, it will not be obligated to pay the fees and expenses
of more than one lead counsel with respect to such claim,
<PAGE>
12
(plus local counsel fees, if required) unless in the
reasonable judgment of counsel to such indemnified party a
conflict of interest exists between such indemnified party
and any other of such indemnified parties with respect to
such claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional
counsel or counsels. The indemnifying party will not be
subject to any liability for any settlement made without its
consent, which consent shall not be unreasonably withheld.
(d) CONTRIBUTION. If the indemnification
provided for in this Section 6 from the indemnifying party
is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses
referred to therein by reason other than that set forth in
the exception at the end of the first sentence of
Section 6(a) hereof, then the 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 or expenses in
such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in
connection with the actions or inactions which resulted in
such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other
things, whether any action in question, including any untrue
or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made
by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable
by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in
Section 6(c), any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just
and equitable if contribution pursuant to this paragraph
were determined by pro rata allocation or by any other
method of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraph.
<PAGE>
13
If indemnification is available under this
Section 6, the indemnifying parties shall indemnify each
indemnified party to the full extent provided in
Sections 6(a) and (b) without regard to the relative fault
of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 6.
In the event that any provision of an
indemnification clause in an underwriting agreement executed
by or on behalf of a holder of Registrable Securities
differs from a provision in this Section 6, such provision
in the underwriting agreement shall determine such holder's
rights in respect thereof.
SECTION 7. PARTICIPATION IN UNDERWRITTEN
REGISTRATIONS. No holder of Registrable Securities and no
person or entity retained by or affiliated with any such
holder (each, a "Participant") may participate in any
registration hereunder unless such Participant (a) agrees to
sell its securities (if any) on the basis provided in any
underwriting arrangements approved by the Company in
accordance with the terms of this Agreement, (b) completes
and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents
reasonably required by the Company or under the terms of
such underwriting arrangements and (c) agrees to pay such
Participant's pro rata portion of all underwriting
discounts, commissions and fees (to the extent applicable).
SECTION 8. MISCELLANEOUS. (a) REMEDIES. Each
party hereto, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this
Agreement. Each party agrees that monetary damages would
not be adequate compensation for any loss incurred by reason
of a breach of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
<PAGE>
14
(b) NOTICES. All notices and other
communications provided for or permitted hereunder shall be
made by telecopy (followed by registered first-class mail or
overnight courier delivery of a hard-copy), by overnight
courier or by hand-delivery:
(i) if to the Company, at:
c/o Sun International Management
(U.K.) Limited
Gravel Hill, Badgemore House
Henley-on-Thames
Oxfordshire RG9 4NR
United Kingdom
Attention: Mr. Howard B. Kerzner
Telecopy: 011 44 491 576 526
With a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: James M. Edwards, Esq.
Telecopy: (212) 474-3700
(ii) if to Fidelity, at:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Judy Mencher, Esq.
Telecopy: (617) 570-7688
With a copy to:
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Robert M. Gervis, Esq.
Telecopy: (212) 310-8007; and
(iii) if to TCW, at
865 South Figueroa Street
Los Angeles, California 90017
Attention: Mr. Bruce A. Karsh
Telecopy: (213) 244-0549
<PAGE>
15
With a copy to:
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Robert M. Gervis, Esq.
Telecopy: (212) 310-8007
(c) SUCCESSORS AND ASSIGNS. This Agreement shall
inure to the benefit of and be binding upon the successors
and assigns of each of the parties hereto; PROVIDED,
HOWEVER, that the rights provided to the holders of
Registrable Securities in Section 2 of this Agreement shall
be exercisable only by holders of Registrable Securities as
determined in accordance with Section 1 of this Agreement
and shall terminate on the date that they shall cease to own
in aggregate Registrable Securities constituting at least 5%
of the then outstanding Ordinary Shares.
(d) COUNTERPARTS. This Agreement 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.
(e) HEADINGS. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(f) GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be
performed wholly within the State.
(g) SEVERABILITY. In the event that any one or
more of the provisions contained herein, or the application
thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every
other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby.
(h) ENTIRE AGREEMENT. This Agreement is intended
by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other
<PAGE>
16
than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
SUN INTERNATIONAL HOTELS
LIMITED,
by
__________________________
Name:
Title:
FIDELITY MANAGEMENT & RESEARCH
COMPANY,
on behalf of various funds
that it manages which own
Shares of the Company,
by
__________________________
Name:
Title:
TCW SPECIAL CREDITS,
on behalf of various funds
and accounts which own
Shares of the Company,
by TCW ASSET MANAGEMENT CO.,
its Managing Partner,
by
_______________________
Name:
Title:
by
_______________________
Name:
Title:
<PAGE>
EXHIBIT C
MANAGEMENT AGREEMENT
--------------------
This Agreement, dated this ___ day of October 1993 between:
SUN INTERNATIONAL HOTELS LIMITED (hereinafter called "Owner"), a company
incorporated under the laws of the Commonwealth of The Bahamas and having its
Registered Office in the City of Nassau in the Island of New Providence, one
of the Islands in the said Commonwealth
and
SUN INTERNATIONAL MANAGEMENT LIMITED (hereinafter called "Manager"), a
company incorporated under the laws of the British Virgin Islands and having
its Registered Office in Road Town, Tortola, British Virgin Islands
TABLE OF CONTENTS
-----------------
ARTICLE PAGE
- ------- ----
1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 3
2 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . 7
3 Term of Agreement. . . . . . . . . . . . . . . . . . . . . . 8
4 Project management . . . . . . . . . . . . . . . . . . . . . 9
4.1 Periodic development projects . . . . . . . . . . . . . 9
4.2 Manager's project management services . . . . . . . . . 10
4.3 Manager's fee for project management. . . . . . . . . . 12
5 Manager's management of Owner's businesses . . . . . . . . . 14
6 Entrenched provisions. . . . . . . . . . . . . . . . . . . . 18
<PAGE>
2
ARTICLE PAGE
- ------- ----
7 Management fee and reimbursables . . . . . . . . . . . . . . 20
7.1 Basic fee . . . . . . . . . . . . . . . . . . . . . . . 20
7.2 Incentive fee . . . . . . . . . . . . . . . . . . . . . 21
7.3 Reimbursement of costs and expenses . . . . . . . . . . 22
7.4 Payments. . . . . . . . . . . . . . . . . . . . . . . . 24
8 Insurance to be maintained by Owner. . . . . . . . . . . . . 24
9 Damage and destruction . . . . . . . . . . . . . . . . . . . 26
10 Alterations and improvements . . . . . . . . . . . . . . . . 26
11 Trade name . . . . . . . . . . . . . . . . . . . . . . . . . 27
12 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 28
13 Indemnification. . . . . . . . . . . . . . . . . . . . . . . 29
14 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . 31
15 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 31
16 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . 36
17 Suspensive conditions. . . . . . . . . . . . . . . . . . . . 36
18 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 37
18.1 Interest. . . . . . . . . . . . . . . . . . . . . . . . 37
18.2 Funding of Owner accounts . . . . . . . . . . . . . . . 38
18.3 Manager's right to request instructions . . . . . . . . 38
18.4 No third party beneficiary. . . . . . . . . . . . . . . 39
18.5 Independent contractor. . . . . . . . . . . . . . . . . 39
18.6 Restrictions as to employees. . . . . . . . . . . . . . 40
18.7 Conflicts . . . . . . . . . . . . . . . . . . . . . . . 40
18.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . 42
18.9 Applicable law. . . . . . . . . . . . . . . . . . . . . 42
18.10 Sole record . . . . . . . . . . . . . . . . . . . . . . 43
18.11 Indulgence - no waiver. . . . . . . . . . . . . . . . . 43
18.12 Severability. . . . . . . . . . . . . . . . . . . . . . 43
18.13 Interpretation. . . . . . . . . . . . . . . . . . . . . 43
<PAGE>
3
Recitals
- --------
Whereas Owner, through a number of subsidiaries, will upon the completion of
certain previously announced transactions conduct a range of businesses in
the leisure, resort and related industries on Paradise Island in the
Commonwealth of The Bahamas and in the State of Florida in the United States
of America, as more fully described in Article 1;
Whereas Owner intends to operate the businesses referred to above and to
upgrade and refurbish existing facilities forming part of such businesses and
to add new facilities to some or all of such businesses by way of periodic
development projects and to develop new businesses;
Whereas Manager has the expertise and is willing to manage the operations of
the businesses referred to above and to perform project management services
for the periodic upgrading and refurbishment of and additions to the
facilities of such businesses and for new businesses;
Whereas Owner and Manager wish to enter into an agreement for such operating
management and project management services;
Now therefore the parties hereto covenant and agree as hereinafter set out.
1 DEFINITIONS
Unless inconsistent with the context, the following terms shall have the
meanings assigned to them hereunder, and substantive provisions herein
included shall form part of this Agreement. When used herein, the words
"include", "includes" and "including" shall be deemed to be followed by
the words "without limitation", whether or not they are in fact followed
by such words -
<PAGE>
4
1.1 "RIB" - Resorts International (Bahamas) 1984 Limited;
1.2 "the Owner Group" - Owner and its subsidiaries, including RIB and
RIB's subsidiaries, as reflected on the Schedule of Proposed
Corporate Structure appended hereto as Annexure "A" and all other
subsidiaries of Owner which may from time to time be incorporated,
acquired or otherwise added to the Owner Group;
1.3 Owner's "businesses" for purposes of this agreement - the conduct
from time to time by Owner, through members of the Owner Group,
through the Manager or otherwise, of any businesses, including
those which are described more fully below or in the Schedule
appended hereto as Annexure "B" -
(a) "the resorts", being, as the context requires, each of or the
collectivity of resorts presently known as Paradise Island
Resort & Casino (including the casino thereat), Ocean Club
Golf & Tennis Resort, Paradise Island Beach Resort as well as
the Paradise Island Golf Club, together with all ancilliary
and other facilities to and of these resorts and golf club,
both existing and to be added thereto or to any other business
conducted by any member of the Owner Group anywhere on the
"resort property", being the entire property on Paradise
Island to which one or more of the members of the Owner Group
holds valid and lawful title or a valid leasehold interest;
(b) "PIA", being Paradise Island Airlines (or its successors),
including the administration and operation of this airline by
means of its owned and leased aircraft from time to time and
the
<PAGE>
5
maintaining of aircraft hangarage facilities at Fort
Lauderdale in the State of Florida;
(c) International Suppliers, Inc. (or its successors), which
provides centralized purchasing services for the Owner Group
from the aforesaid aircraft hangarage facilities at Fort
Lauderdale;
(d) Paradise Island International Airport, including a runway,
seaplane ramp and terminal building;
(e) Resorts Representation International, Inc. (or its
successors), which renders reservation services to PIA, the
resorts and other hotels not affiliated to the Owner Group;
(f) Paradise Island Vacations, Inc. (or its successors), being a
wholesale tour company which markets and sells holiday
packages to a range of destinations, including the resorts;
(g) a utility company on Paradise Island, which supplies potable
water and treated water to the resorts and other inhabitants
of Paradise Island;
(h) other properties including apartments for employee housing,
two warehouses, undeveloped and partially developed land on
various islands in the Commonwealth of The Bahamas and a
headquarters building in North Miami in the State of Florida
accommodating a variety of administrative and related
functions pertaining to the Owner Group;
<PAGE>
6
(i) all other businesses of members of the Owner Group conducted
as at the date of signature of this agreement as well as such
other businesses as may be commenced and conducted by any
member of the Owner Group during the term of this Agreement.
Without limitation to the generality of the aforegoing, the
provisions of this Agreement shall also apply to the
establishment and operation of any business which a member of
the Owner Group may conduct on Athol Island or any other
island in the Commonwealth of The Bahamas, at any time during
the term of this Agreement;
1.4 "casino" - the existing casino which forms part of Paradise Island
Resort & Casino, as well as any future casino business to be
conducted which is duly established, licensed and operated in
accordance with the rules and regulations of any regulatory
authority, including the rules and regulations prescribed by the
provisions of the Lotteries and Gaming Act of the Commonwealth of
The Bahamas or any statutory modification or re-enactment thereof
and of any regulations made thereunder;
1.5 "GAAP" - United States generally accepted accounting principles. In
the case of the calculation of "gross revenues", the United States
generally accepted accounting principles applied (where more than
one accounting treatment is acceptable) shall include the
principles set forth in the AICPA Accounting and Auditing Guide for
Casinos;
1.6 "gross revenues" - the aggregate gross revenues of the Owner Group
from the conduct of Owner's businesses, computed in accordance with
GAAP;
<PAGE>
7
1.7 "gross operating profit" - the aggregate net income of the Owner
Group from the conduct of Owner's businesses, computed in
accordance with GAAP, after adding back all interest, finance
charges (or the financing component of capitalized lease expenses),
taxes (other than casino fees and casino taxes), amortization,
depreciation and other non-cash charges or expenses, as well as the
incentive fee to be paid to Manager pursuant to Article 7.2, in
each case to the extent deducted when determining net income for
such period, but excluding any extraordinary or abnormal profit and
loss items for such period;
1.8 "financial year" - each of Owner's financial years, which shall be
each year reckoned from each 1 January to 31 December;
1.9 "commencement date" of this agreement - the date on which the
suspensive conditions set forth in Article 17.1 shall be satisfied.
2 APPOINTMENT
2.1 Owner appoints and engages Manager, which accepts such appointment
and engagement, to serve Owner as its exclusive agent in the
performance of the management, direction, control and general
conduct of Owner's businesses and in the performance of the
management of the periodic refurbishment and upgrading of and the
additions to the properties, facilities and amenities relating to
any of Owner's businesses from time to time, subject to the terms
and conditions herein contained.
2.2 Owner recognizes that Manager is part of an international
organization and that the services to be performed by Manager
hereunder may be performed by
<PAGE>
8
Manager at such locations as manager may reasonably determine,
which need not be in the Commonwealth of The Bahamas or in the
State of Florida.
3 TERM OF AGREEMENT
3.1 This agreement shall commence on the commencement date defined in
Article 1.9.
3.2 This agreement shall initially endure for ten (10) years, reckoned
from the commencement date.
3.3 Manager shall have the right to extend the term of this Agreement
on two occasions for successive periods of ten (10) years each,
provided that -
(a) Manager is not in default pursuant to Article 15.1(a) below at
the time that such renewal is to commence;
(b) Manager is not in default pursuant to Article 15.1 below at
the time that such renewal is to commence and while Owner, as
a result of any applicable law, rule or regulation, is unable
to terminate this Agreement;
(c) the term shall have been extended for all prior renewal
periods (if any); and
(d) Manager shall have given Owner no less than twelve (12)
months' prior written notice of its election to exercise its
right to renew the term of this Agreement.
<PAGE>
9
4 PROJECT MANAGEMENT
4.1 PERIODIC DEVELOPMENT PROJECTS
(a) Owner shall from time to time, of its own volition or in
response to recommendations by Manager, but in any event
subject to the prior written approval of Owner's board of
directors, decide upon development projects to be undertaken,
at the cost of Owner for its own benefit or for the benefit of
the member concerned of the Owner Group, for the
refurbishment, upgrading, expansion and/or additions to the
facilities and/or amenities of identified aspects of Owner's
businesses from time to time. Such development projects shall
be undertaken substantially in accordance with the plans,
specifications, budgets and timetables therefor to be prepared
by Owner's architects and other professional consultants, and
in conformity with all applicable laws, ordinances and
governmental regulations.
(b) Owner shall engage and retain at its expense, or procure that
the relevant member of the Owner Group engages and retains at
that member's expense, subject to prior agreement with
Manager, such architects, contractors and such engineers,
designers, decorators, landscapers, environmental
conservationists and other specialists and professional
consultants as Owner and Manager may consider necessary or
desirable in regard to the development project in question.
(c) Owner shall bear and pay, or procure that the relevant member
of the Owner Group bears and pays, the costs of all materials,
equipment
<PAGE>
10
machinery, furniture, furnishings, fixtures, fittings, decor
and other facilities or items and anything else required for
the development project in question, as may be recommended by
Manager.
4.2 MANAGER'S PROJECT MANAGEMENT SERVICES
(a) Manager shall, as the exclusive agent for Owner for such
purposes, perform the project management services which are
appropriate according to the nature of each development
project.
(b) During the course of any development project, Manager shall
procure the rendering of such project management services as
it may consider appropriate or relevant for the development
project in question, which may, for example, comprise some of
or any combination of the following -
(i) the development of schematic plans, review of final sets
of architectural plans and specifications;
(ii) assistance with and advice regarding interior design,
including the theme treatment and functional layout of
facilities, advice regarding layout plans, elevations,
color schemes, and specifications for carpeting,
furniture, fabrics, decor and suchlike;
(iii) assistance with and advice regarding the theme treatment
and functional layout of casinos and other gaming areas,
equipment,
<PAGE>
11
layout of equipment, lighting, surveillance and various
cash facilities;
(iv) assistance with and advice regarding recommended
standards for water treatment, heating, ventilation, air
conditioning, plumbing and drainage and sewage disposal,
electrical power supplies and distribution, elevators and
escalators and telephone and public address systems;
(v) assistance with and advice regarding recommended lighting
requirements and lighting plans and specifications for
the business in question;
(vi) the approval of all material contracts and sub-contracts
to be entered into and the approval of all progress
payments pursuant thereto;
(vii) on-site inspection and supervision of work in progress;
(viii) assistance with and advice regarding the approval and
hiring of non-Bahamian employees of contractors and sub-
contractors who perform work on a development project in
The Bahamas;
(ix) assistance with and advice regarding the obtaining of
relevant governmental approvals.
<PAGE>
12
4.3 MANAGER'S FEE FOR PROJECT MANAGEMENT
(a) As consideration for the performance of the project management
services to be rendered and/or procured by Manager pursuant to
the terms of Article 4.2, Owner shall pay to Manager a project
management fee equal to two-and-a-half percent (2.5%) of the
aggregate cost to Owner and/or the relevant member of the
Owner Group, of the development, establishment, upgrading,
refurbishment, augmentation, addition to and generally
bringing into operation as contemplated by the terms of
Articles 4.1 and 4.2, of each and every development project
undertaken by Owner and/or a member of the Owner Group,
including, without limiting the generality of the aforegoing,
the costs of all fees charged by architects, contractors and
other professional consultants and specialists, pre-opening
expenses (being all staff costs and running expenses of, and
marketing, advertising and launch costs attributable to the
aspect of the Owner's business which is the subject of the
development project in question, until the opening or
commissioning or the general bringing into operation thereof),
and the cost of all furnishings, equipment, machinery,
fixtures, fittings and anything else contemplated in Articles
4.1 and 4.2.
(b) The project management fee for each development project
referred to in Article 4.3(a) above shall be paid to Manager
in United States Dollars, free of bank commission or other
deductions, other than deductions in respect of withholding or
income taxes, at such place(s) as Manager may designate from
time to time -
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13
(i) as to thirty percent (30%) thereof, upon the commencement
of work on site in respect of each development project;
(ii) as to forty percent (40%) thereof, mid-way through the
scheduled program of each development project; and
(iii) as to the remaining thirty percent (30%) thereof, upon
beneficial occupation by the relevant member of the Owner
Group of the development in question.
(c) Until the final amount of the cost of each development project
will have been determined, all payments to be made in terms of
this Article 4.3 shall be based on the latest estimate of that
cost then available to the parties, and, where that estimate
changes from time to time, the next succeeding payment to be
made in terms of this Article 4.3 shall include any adjustment
necessary to account for that change.
(d) In addition to the project management fee referred to in
Article 4.3(a) above, Owner shall pay all reasonable
travelling and reasonable out-of-pocket expenses of Manager
which are directly attributable to the performance of
Manager's duties in terms of Article 4.2. These expenses shall
be paid by Owner to Manager within thirty (30) days of the
periodic rendition of an account therefor by Manager, duly
supported by vouchers and other relevant back-up
documentation.
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14
5 MANAGER'S MANAGEMENT OF OWNER'S BUSINESS
5.1 Manager shall, subject to the terms hereof (including Article 6.2),
define, alter and vary from time to time the policies and
procedures to be observed in the conduct of Owner's businesses,
which shall encompass all administrative, accounting, budgeting,
marketing, personnel, operational and other practices and
procedures to be observed and applied in relation to the operation
of each of Owner's businesses.
5.2 Subject only to the provisions of Article 5.1 and any express
limitation or qualification referred to in Article 6, Manager as
exclusive agent for Owner for such purposes shall provide the
management, administration, control and conduct of each of Owner's
businesses and to that end Manager shall utilise its resources and
skills and is hereby authorised and empowered to supervise,
monitor, approve or otherwise oversee, or to procure the
supervision, monitoring or approval, as the case may be, of the
following -
(a) the selection and appointment of a chief executive officer for
one or more of the resorts, other senior executives, general
managers, other managers and heads of departments of one or
more of the resorts and of the other businesses of owner, all
of whom shall be employed on a full-time basis by and for the
account of Owner, as may be considered necessary from time to
time;
(b) the determination of the terms of service and the remuneration
payable to all members of personnel of Owner's businesses,
including all perquisites of employment;
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15
(c) to the extent that Owner controls the conduct of such
negotiations, the conduct of negotiations with trade unions
with which any of Owner's businesses have an association and,
with the prior approval of Owner, the entering into of
agreements with such trade unions;
(d) the conduct of the centralized purchasing of necessary
provisions and supplies for the resorts and other members of
the Owner Group;
(e) the retention and periodic renewal, as applicable, of
authorities and licences required in connection with the
conduct of Owner's businesses;
(f) the administration of such functions as are usually carried
out by managers, secretaries and accountants of a business
enterprise similar to that which is conducted by Owner's
businesses;
(g) the procurement of furniture, fixtures, equipment and
operating supplies, and of such services and other merchandise
as may be required for the proper operation and maintenance of
the business of the resorts and of the other members of the
Owner Group;
(h) the improvement, extension and development of Owner's
businesses;
(i) the completion and submission of returns and the compliance
with other formalities required by any applicable laws, rules
or regulations pertaining to gaming tax, real property taxes,
business license fees and, if applicable in The Bahamas in the
future, income tax legislation, and any other
<PAGE>
16
legislation applicable to Owner and the Owner Group;
(j) assistance with the taking out and maintenance of all
insurances to be obtained and maintained by Owner pursuant to
the terms of Article 8 and authorised in terms of Article
6.2(f), and the rendering of advice to the board of directors
of Owner with reference to the terms, cost and availability of
such insurance and the selection of an insurance consultant or
expert if requested by the board of directors of Owner;
(k) the planning and execution of all major advertising and
promotional campaigns for Owner's businesses;
(l) the establishment and obtaining of prescribed approvals of
casino operating procedures, as well as the determination of
the type and number of casino games, the layout of the
facilities for those games, the type and mix of slot machines
for casinos, and the types and mix of progressive jackpots to
be available on slot machines in any casino;
(m) the determination and establishment of tariffs, prices and
rates for the facilities to be offered by the various elements
of Owner's businesses;
(n) the establishment and maintenance of accounting and other
appropriate managerial systems for the control and
administration of existing, new or augmented elements of
Owner's businesses; and
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17
(o) generally, the doing or procurement of whatever else may be
necessary to carry out Manager's mandate as described in this
Agreement.
5.3 Manager shall furthermore supervise and monitor or procure the
supervision and monitoring of the maintenance of standard,
planning, budgeting, accounting and reporting systems for Owner's
businesses, and the proper and efficient operation of all such
systems, in order that -
(a) proper books of account and records are kept as required by
law and good management accounting and secretarial practices;
(b) a preliminary operating plan and budget for each of Owner's
businesses for each of Owner's financial years shall be
prepared and submitted to the board of directors of Owner not
later than thirty (30) days before the commencement of each
financial year;
(c) quarterly unaudited financial statements in respect of Owner's
businesses shall be prepared and circulated to the board of
directors of Owner not later than six (6) weeks after the end
of the quarter to which they relate;
(d) Owner's annual audited financial statements are prepared in
accordance with GAAP and completed and submitted to the board
of directors of Owner for approval not later than ninety (90)
days after the end of each of its financial years;
(e) all books of account and other records shall be available for
inspection by or on behalf of any of Owner's directors.
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18
5.4 Manager shall cause or procure that all plant, equipment and other
fixed assets of the Owner Group be maintained at the sole cost of
Owner in good order and repair, subject to and as augmented by the
terms of Article 10, and shall cause or procure that such repairs,
refurbishments, maintenance or renewals thereof are undertaken as
may be required in order that the same shall remain fully
operational and in compliance with the standards observed by
Manager in the conduct of Owner's businesses according to first
class standards.
5.5 Manager shall from time to time procure recommendations and
proposals (including price quotations) at the expense of Owner, to
the extent available in the marketplace, from insurance companies
and brokers for the development and maintenance of an insurance
package for Owner consistent with the terms of Article 8, which
recommendations and proposals shall be submitted from time to time
to the board of directors of Owner for consideration and
implementation in accordance with Article 8.
6 ENTRENCHED PROVISIONS
6.1 Notwithstanding anything to the contrary contained in this
Agreement, Manager shall not administer or procure the
administration of any affairs of any member of the Owner Group which
are by the laws of the Commonwealth of The Bahamas or the articles
of association of any member of the Owner Group specifically
designated to be the sole prerogative of Owner's board of directors
(including, without limitation, those matters requiring the
separate approval of the Independent Directors, as defined in
Owner's articles of association, pursuant to article 68 thereof but
only for so long as such matters
<PAGE>
19
require such approval under the terms of that article) and, without
limiting the generality thereof, Manager shall not, on behalf of or
as agent for any member of the Owner Group, engage in, agree to
perform or undertake any of the acts, procedures or matters
referred to in Article 6.2, except under the approval of, and in
terms of any such approval by, Owner's board of directors
including, as and to the extent applicable, the separate approval
of the Independent Directors as referred to above.
6.2 The acts, procedures and matters referred to in Article 6.1 are the
following -
(a) the establishment and opening of new lines of business for any
member of the Owner Group;
(b) the purchase or sale or hiring or letting of immovable
property which is material in relation to the affairs of any
of Owner's businesses;
(c) the incurring of borrowings not provided for in any budget
approved by the board of directors of Owner for the time being
in force;
(d) the issue and entering into of guarantees or suretyships of
whatsoever nature, and the acceptance of any accommodation
bills of exchange, except in the ordinary course of Manager's
mandate to procure the management of Owner's businesses;
(e) the pledging, mortgaging, hypothecating or encumbering of any
material assets of any member of the Owner Group;
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20
(f) the approval of type(s) and manner of insurance to be entered
into by Owner and/or members of the Owner Group pursuant to
Article 8.
7 MANAGEMENT FEE AND REIMBURSABLES
Owner shall pay to Manager, as remuneration for the operating management
services rendered under this Agreement, the amounts set out in this
Article 7 in respect to each of Owner's financial years during the term
of this Agreement, or proportionately in respect of a fraction of such a
financial year.
7.1 BASIC FEE
(a) Owner shall pay to Manager a basic fee equal to three percent
(3%) of the gross revenues; PROVIDED, HOWEVER, that for so
long as an entity other than Manager shall be responsible for
the operation and management of PIA (if at all), the term
"gross revenues" shall not include revenues arising out of or
associated with the operation(s) of PIA.
(b) The basic fee shall be calculated by reference to the annual
audited financial statements of Owner, but shall be paid at
quarterly intervals within forty five (45) days after the end
of the quarter in respect of which the same is payable. The
payment in respect of the final quarter shall be made within
fourteen (14) days of the completion, signature and
certification of Owner's annual financial statements for that
financial year. Each payment to be made in respect of the
first three quarters shall be computed on a cumulative basis
by reference to the quarterly management accounts for the
preceding quarter, and on
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21
completion, signature and certification of Owner's annual
financial statements for that financial year the basic fee for
the whole of that year shall be computed and -
(i) the amount by which the basic fee so computed exceeds the
three quarterly payments on account thereof in terms of
the aforegoing shall be paid by Owner to Manager; or
(ii) the amount by which the basic fee so computed falls short
of the three quarterly payments on account thereof in
terms of the aforegoing shall be paid by Manager to
Owner.
7.2 INCENTIVE FEE
(a) Owner shall pay to Manager, in addition to the basic fee, an
incentive fee equal to ten percent (10%) of the gross
operating profit; PROVIDED, HOWEVER, that for so long as an
entity other than Manager shall be responsible for the
operation and management of PIA (if at all), the term "gross
operating profit" shall not include profits arising out of or
associated with the operation(s) of PIA.
(b) The incentive fee shall be calculated by reference to the
annual audited financial statements of Owner, but shall be
paid at quarterly intervals, within forty five (45) days after
the end of the quarter in respect of which the same is
payable. The payment in respect of the final quarter shall be
made within fourteen (14) days of the completion, signature
and
<PAGE>
22
certification of Owner's annual financial statements for that
financial year. Each such payment at the end of the first
three quarters shall be computed on a cumulative basis by
reference to the quarterly management accounts for the
preceding quarter, and on completion, signature and
certification of Owner's annual financial statements for that
financial year the incentive fee for the whole of that year
shall be computed and -
(i) the amount by which the incentive fee so computed exceeds
the three quarterly payments on account thereof in terms
of the aforegoing shall be paid by Owner to Manager; or
(ii) the amount by which the incentive fee so computed falls
short of the three quarterly payments on account thereof
in terms of the aforegoing shall be paid by Manager to
Owner.
7.3 REIMBURSEMENT OF COSTS AND EXPENSES
Owner shall bear and accordingly reimburse Manager, by the due date
of an invoice or within thirty (30) days of receiving Manager's
invoice and relevant supporting documentation, if no due date is
specified, for all reasonable costs and expenses incurred by
Manager for Owner's account under the provisions of this Agreement.
For the avoidance of doubt, the parties hereby agree that it is
their intention that Owner will not be liable under this Article
7.3 to reimburse Manager for general overheads of Manager or for
employee costs of Manager which are attributable to the general
supervisory and other functions of
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23
Manager enumerated under Article 4 or Article 5. By way of example,
the costs and expenses to be reimbursed under this Article 7.3
shall include, but not be limited, to the following -
(a) the salaries and wages and other payroll costs and moving and
related expenses, without any profit or premium, of employees
of Manager attributable to any periods during which they are
seconded to the employment of any of Owner's businesses;
(b) reasonable travel and reasonable out-of-pocket expenses
directly attributable to the carrying out by Manager of its
management services in terms of this agreement and incurred
by, among others, Manager's management executives, food and
beverage executives, gaming executives, design and
construction executives and other specialist executive
personnel; and
(c) the costs, or a fair and reasonable apportionment of the
costs, or a fair and reasonable contribution to the costs, of
international sales offices, central reservations offices,
public relations, international marketing and advertising
effected or utilised for the benefit of any of Owner's
businesses, but only to the extent that the member in question
of the Owner Group does not itself have such resources and
facilities. Manager shall provide Owner with a schedule
setting forth in reasonable detail the basis upon which costs
at any time exceeding Five Hundred U. S. Dollars (US$500)
claimed under this Article 7.3(c) have been apportioned.
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24
7.4 PAYMENTS
All payments by Owner to Manager in terms of this Article 7 shall
be made in United States Dollars, free of bank commission or other
deductions, other than deductions in respect of withholding or
income taxes, and be remitted to such place(s) as Manager may
designate from time to time.
8 INSURANCE TO BE MAINTAINED BY OWNER
8.1 Owner shall at its expense at all times during the period of any
development project, procure and maintain, as may be applicable
under the development project in question, adequate third party
liability and property insurance protecting both Manager and Owner
and/or the member concerned of the Owner Group against loss or
damage arising in connection with the preparation, construction,
refurbishment, upgrading, furnishing and equipping of any of
Owner's businesses, including that of contractors, sub-contractors
and suchlike in the performance of all construction and related
agreements entered into in respect of the development project in
question.
8.2 Owner shall furthermore at its expense at all times during the term
of this Agreement maintain adequate insurance to cover the full
replacement cost of the fixed assets of each of Owner's businesses
(subject to reasonable deductible amounts) against loss or damage
to such fixed assets from (to the extent available on terms and
conditions commensurate with and reasonable in light of the nature
of the risk) fire, explosion, aircraft, water apparatus, flood,
earthquake, boiler and machinery breakdown and such other perils
considered necessary or practical by Owner in fully protecting such
fixed assets, as well as the following
<PAGE>
25
insurances, if available on terms and conditions commensurate with
and reasonable in light of the nature of the risk -
(a) third party liability, elevator liability insurance and such
other insurance against theft of or damage to guests' or
patrons' or customers' property in such amounts as Owner shall
deem necessary;
(b) workmen's compensation, employer's liability or such other
insurance as may be applicable at Bahamian law or the law of
the State of Florida or which Owner shall deem advisable;
(c) such other insurance as Owner shall deem necessary in the
protection of other assets, business interruption or other
liabilities wherever asserted, determined or incurred, arising
from the operation of the Owner's businesses.
8.3 All insurances referred to in Articles 8.1 and 8.2 shall note the
interest of Manager as an "additional insured" and shall contain
both severability of interests and cross liability clauses and a
waiver of the insurers' rights of subrogation in favour of Manager
and Owner.
8.4 Owner shall be responsible in all respects for the adequacy of the
insurance selected and obtained and compliance with this Article 8,
notwithstanding any advice or recommendations received from or
through Manager with respect to such insurances. Owner acknowledges
that Manager's expertise does not extend to insurance matters and
that Owner is responsible for all decisions taken in the area of
insurance, with the
<PAGE>
26
advice and guidance of independent insurance consultants or
experts, if Owner deems third party assistance to be advisable.
9 DAMAGE AND DESTRUCTION
If any aspect of the infrastructure of any of Owner's businesses or any
portion thereof shall be damaged or destroyed at any time or times
during the term of this Agreement by fire or any casualty risk or
otherwise, Owner, if it elects to repair, rebuild or replace the same,
shall, at its own cost and expense and with due diligence, repair,
rebuild or replace the same so that after such repairing, rebuilding or
replacing, the facilities in question shall be substantially the same as
prior to such damage or destruction.
10 ALTERATIONS AND IMPROVEMENTS
10.1 Manager shall have the right to procure that, from time to time,
such renewals, replacements, alterations, additions or improvements
are effected to the resorts or to any of the other of Owner's
businesses, which are customarily made in the operation of first
class international resorts or a first class operation of any of
the other of Owner's businesses. The costs of such customary
renewals, replacements, alterations, additions or improvements
shall be charged directly to current expenses or shall be
capitalized in the books of account of the relevant member of the
Owner Group, in accordance with GAAP.
10.2 If renewals, replacements, alterations, additions or improvements
as referred to in Article 10.1 will involve or result in a
fundamental change of the business concerned, or would in
accordance with the terms of Article 10.1 be capitalized, Manager
will
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27
submit or procure the submission of a budget and plan for the
proposed renewals, replacements, alterations, additions or
improvements to Owner for Owner's prior approval as regards
the budget cost in question and such approval shall not
unreasonably be withheld; provided that Owner shall reply to the
submission within thirty (30) days of its receipt and, if not
forthcoming, such consent shall, unless the matters which are the
subject of the submission would then require the separate approval
of the Independent Directors, as defined in Owner's articles of
association, pursuant to article 68 thereof, be presumed.
11 TRADE NAME
11.1 The parties acknowledge that any one or more of the resorts and any
of the other businesses of Owner may in due course be marketed and
operated under the "Sun International" name and banner, and that
the name "Sun International" is or will be the exclusive property
of Manager and/or any member of its group of companies worldwide.
Upon the expiry or earlier termination of this Agreement for any
reason, Owner shall as promptly as practicable change its corporate
name or trade name so as to exclude, and generally cease using, the
"Sun International" name or any other trade name or intellectual
property developed, licensed or owned by Manager.
11.2 No right or remedy of Owner for any default of Manager nor any
provision of this Agreement shall confer upon Owner or any
transferee, assignee or successor of Owner, or any person claiming
by or through Owner, the right to use the name "Sun International"
either independently or in conjunction with any other word(s) in
the use or operation of any of Owner's businesses.
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28
12 ASSIGNMENT
12.1 Manager shall be entitled at any time, without the consent of Owner
(or if such consent is an inalienable right under any provision of
applicable law, then Owner shall grant such consent) -
(a) to cede, assign and delegate its rights and obligations under
this Agreement to any company which controls, is controlled by
or is under common control with Manager and which will agree
in writing to be bound to the provisions of this Agreement;
and/or
(b) to assign its right, conditionally or otherwise, to receive
payments hereunder.
12.2 Except as set forth in Article 12.1, Manager shall not cede, assign
or delegate its rights or obligations under this Agreement without
the prior written consent of Owner's board of directors (and, so
long as such assignment would require such approval under the terms
of article 68 of Owner's articles of association, the separate
approval of the Independent Directors as provided for therein),
which consent shall not unreasonably be withheld and any such
cession, assignment, delegation or other transfer made in violation
of this Article 12.2 shall be void and of no further force or
effect.
12.3 Owner shall not cede, assign or delegate its rights or obligations
under this Agreement without the prior written consent of Manager,
which consent shall not unreasonably be withheld and any such
cession, assignment, delegation or other transfer made in violation
of this Article 12.3 shall be void and of no further force or
effect.
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29
12.4 The terms and conditions of this Agreement shall be binding upon
and enure to the benefit of the third party(ies) to which either
Manager or Owner may validly cede, assign and delegate their
respective rights and obligations in terms of Articles 12.1, 12.2
and 12.3.
13 INDEMNIFICATION
13.1 Owner shall indemnify, save, and defend, at Owner's sole cost and
expense, and hold harmless, Manager and its officers, directors,
agents, employees, representatives, shareholders and affiliates
(collectively - "Owner Indemnitees"), from and against the full
amount of any and all Section 13.1 Losses, excluding Losses to the
extent caused by an Owner Indemnitee's wilful, wanton or criminal
misconduct, gross negligence or fraud, but including Section 13.1
Losses arising out of the negligence or strict liability of any
Owner Indemnitee. The term "Section 13.1 Losses" shall mean any and
all liabilities, claims, suits, administrative proceedings, losses,
damages or costs of any nature whatsoever, which may be asserted
against or incurred by an Owner Indemnitee arising from, or
relating to the performance of any act or the failure to perform
any act pursuant to or arising from or in connection with this
Agreement and shall include reasonable expenses of defense
including, without limitation, reasonable attorneys' fees;
PROVIDED, HOWEVER, that "Section 13.1 Losses" shall not include
consequential losses or liabilities.
13.2 Manager shall indemnify, save and defend, at Manager's sole cost
and expense, and hold harmless, Owner, the members of the Owner
Group and their respective officers, directors, agents, employees,
representatives, shareholders and affiliates
<PAGE>
30
(collectively - "Manager Indemnitees"), from and against all Section
13.2 Losses to the extent caused by an Owner Indemnitee's breach of
this Agreement or wilful, wanton or criminal misconduct, gross
negligence or fraud. The term "Section 13.2 Losses" shall mean any
and all liabilities, claims, suits, administrative proceedings,
losses, damages or costs of any nature whatsoever, which may be
asserted against or incurred by a Manager Indemnitee arising from,
or relating to the performance of any act or the failure to perform
any act pursuant to or arising from or in connection with this
Agreement and shall include reasonable expenses of defense
including, without limitation, reasonable attorneys' fees;
PROVIDED, HOWEVER, that "Section 13.2 Losses" shall not include
consequential losses or liabilities. Save as provided above in this
Article 13.2, Manager shall have no liability hereunder to Owner
for damages or other amounts in connection with this Agreement.
13.3 Except as expressly provided in this Agreement, neither party makes
any warranties or guarantees to the other, either express or
implied, with respect to the subject matter of this Agreement, and
both parties disclaim and waive any implied warranties or
warranties imposed by law.
13.4 The parties agree that the waivers and disclaimers of liability,
indemnities, releases from liability, and limitations on liability
expressed in this Article 13 shall survive the expiry or earlier
termination for any reason of this Agreement and shall apply
whether in contract, equity, tort or otherwise, even in the event
of the fault, negligence, including sole negligence, strict
liability, or breach of Manager or an Owner Indemnitee or a Manager
Indemnitee.
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31
14 ARBITRATION
All disputes related to or arising from this Agreement shall be finally
settled under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce by one or more arbitrators appointed
in accordance with the said rules. English law shall be applied. The
place of arbitration shall be London, England and the language used
shall be English. Any award rendered by the arbitrator or arbitrators
shall be final and binding in any court of competent jurisdiction and
application may be made to such court for a judicial acceptance of the
award and an order of enforcement, as the case may be.
15 TERMINATION
15.1 Notwithstanding anything to the contrary herein contained, Owner
may terminate this Agreement if -
(a) for a period of thirty (30) days (or such longer period as may
be reasonable, having regard to the nature of the default and
the prevailing circumstances but not in any event to exceed
sixty (60) days) after written notice has been served on it
and without reasonable cause, Manager neglects, omits, refuses
or fails to discharge or diligently take action to discharge
any of its material obligations hereunder, whether through the
operation of law or otherwise, provided that this right of
termination shall not apply or be available if such failure to
discharge such obligations is cured prior to termination or if
such right of termination is not exercised within ninety (90)
days after it first becomes available; or
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32
(b) prior to the fifth anniversary of the commencement date, an
"unapproved change in control" of Manager shall have occurred,
provided that this right of termination shall only be
available for and shall expire ninety (90) days after the date
on which such change in control is deemed to have occurred (or
the date on which termination first becomes available if later
than the date of such event). For purposes of this paragraph,
a "change of control" of Manager shall be deemed to have
occurred if Manager is no longer (i) owned 50.1% or more by
Sun International Investments Limited and (ii) under the
control, directly or indirectly, of any one or more of the
shareholders of Sun International Investments Limited on the
date of the fulfilment of the conditions set out in Article
17.1 (being World Leisure Group Limited, Royale Resorts
Holdings Limited and Caledonia Investments plc), their
respective affiliates or any group acting in concert with one
or more of such shareholders or their affiliates. "Control" in
such circumstances means the effective power to direct or
cause the direction of the management, policies or operations
of the Manager, whether through the ownership of voting
securities, by contract or otherwise and, without limiting the
generality of the foregoing, shall be deemed to be possessed
and exercised for purposes of this Agreement by any person,
entity or group holding 50% or more of the voting securities
or interests of the entity in question or 50% or more in value
of the equity securities or interests of the entity in
question. "Acting in concert" in such circumstances has the
meaning generally applied in cases where the City Code on
Takeovers and Mergers is applicable in the United Kingdom or
<PAGE>
33
the Securities and Exchange Act of 1934 is applicable in the
United States. A "change of control" is "unapproved" for
purposes of this paragraph if the board of directors of Owner
does not approve such change in control prior to the date on
which such change in control is deemed to have occurred (which
approval requirement for the board of directors of Owner shall
be deemed to include a separate approval requirement for the
Independent Directors (as defined) if and for so long as such
separate approval is required under the terms of article 68 of
Owner's articles of association), such approval not to be
unreasonably withheld at all times after the third anniversary
of the commencement date; or
(c) any person employed by or retained and under the control of
Manager shall be convicted of a felony in connection with the
performance of duties for the benefit of Owner required to be
performed by Manager hereunder and Manager shall not have used
its best efforts to dismiss such person or take other
appropriate disciplinary action (subject to applicable laws
and any advice of counsel taken) within thirty (30) days
thereafter (such period to be extended to the extent necessary
or appropriate if the requirement for the taking of
appropriate disciplinary action by Manager is suspended
pursuant to the proviso above by reason of the application of
applicable laws or pursuant to any advice of counsel taken),
provided that this right of termination shall only be
available for and shall expire ninety (90) days after the date
on which the thirty (30) day period referred to above has
finished running (or the date on which termination first
becomes available if later than the date of such event); or
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34
(d) any of the shares in the capital of Owner constituting the
Pledged Collateral under the non-recourse guarantee and share
pledge agreement dated on or before the commencement date
between Sun International Investments Limited and the
collateral agent named therein ("the Collateral Agent") shall
have been foreclosed upon in accordance with the terms of such
agreement, provided that this right of termination shall only
be available for and shall expire ninety (90) days after the
date of any such foreclosure (or the date on which termination
first becomes available if later than the date of such event).
15.2 Notwithstanding anything to the contrary herein contained, Manager
may terminate this Agreement if -
(a) for a period of thirty (30) days (or such longer period as may
be reasonable, having regard to the nature of the default and
the prevailing circumstances but not in any event to exceed
sixty (60) days) after written notice has been served on it
and without reasonable cause, Owner neglects, omits, refuses
or fails to discharge or diligently take action to discharge
any of its material obligations hereunder, whether through the
operation of law or otherwise, provided that this right of
termination shall not apply or be available if such failure to
discharge such obligations is cured prior to termination, or
if such right of termination is not exercised within ninety
(90) days after if first becomes available; or
(b) any of the shares in the capital of Owner constituting the
Pledged Collateral under the non-recourse guarantee and share
pledge agreement
<PAGE>
35
dated on or before the commencement date between Sun
International Investments Limited and the Collateral Agent
shall have been foreclosed upon in accordance with the terms
of such agreement, provided that this right of termination
shall only be available for and shall expire ninety (90) days
after the date of any such foreclosure (or the date on which
termination first becomes available if later than the date of
such event); or
(c) a material portion of Owner's businesses is sold, transferred,
damaged, destroyed or otherwise disposed of (and, in the case
of damage or destruction, not repaired, rebuilt or replaced in
accordance with Article 9.1 within one hundred and twenty
(120) days after the date of the event giving rise to such
damage or destruction (or such longer period of time as shall
be reasonable to permit such repair, rebuilding or replacement
that was promptly undertaken to be completed)).
15.3 The rights granted in Articles 15.1 and 15.2 shall be in addition
to any and all rights and remedies for breach of contract granted
by the laws as designated by Article 18.9, subject, however, to the
provisions of Article 13; PROVIDED, HOWEVER, that in the event of a
breach of this Agreement by Owner or Manager, the parties hereby
waive any and all claims either may have for consequential losses
or damages resulting from such breach.
15.4 Notwithstanding the aforegoing, neither party shall be deemed to be
in default under this Agreement if a bona fide dispute with respect
to any of the aforegoing events of default has arisen between the
parties and such dispute has been submitted to arbitration.
<PAGE>
36
15.5 Except in the case of a termination by Manager pursuant to Article
15.2(a), if this Agreement is terminated pursuant to Articles 15.1
or 15.2, Owner shall have the right to elect, by written notice
delivered to Manager within three (3) business days after the date
on which Manager first gives notice of its election to terminate
this Agreement, to continue this Agreement in force for a
transitional period reasonably sufficient to allow Owner to retain
an alternative manager; and Owner and Manager shall agree on
reasonable compensation for Manager for such transitional period.
16 FORCE MAJEURE
If by reason of war, terrorism, explosion, bombing, revolution, riots,
civil commotion, strikes, lockout, inability to obtain labor or
materials, fire, flood, storm, earthquake, hurricanes, tornado, drought
or other acts or elements, accident, government restrictions or
appropriation or other causes, whether like or unlike the aforegoing,
beyond the reasonable control of either party hereto, such party is
unable to perform in whole or in part its obligations under this
Agreement, then such party shall be relieved of those obligations to the
extent it is so unable to perform and such inability to perform so
caused shall not make such party liable to the other.
17 SUSPENSIVE CONDITIONS
17.1 The coming into force of this Agreement shall be subject to the
fulfilment of the conditions that -
(a) Owner successfully closes the transaction in terms of which it
will acquire RIB and certain other assets according to the
terms of the
<PAGE>
37
relevant acquisition agreement(s) (the "Purchase Agreement");
and
(b) Sun International Investments Limited, incorporated in the
British Virgin Islands, successfully acquires no less than a
sixty percent (60%) shareholding in Owner, according to the
terms of the underlying agreement(s).
17.2 Should either of the conditions in Article 17.1 not be fulfilled on
or before the earlier of (i) the Closing Date (as defined in the
Purchase Agreement) or (ii) the termination of the Purchase
Agreement in accordance with its terms, then, notwithstanding the
terms of Article 16 -
(a) this agreement shall be capable of cancellation by either
party on written notice to the other party and thereafter be
of no further force or effect; and
(b) neither party shall have any claim against the other arising
from such cancellation of this Agreement.
18 MISCELLANEOUS
18.1 INTEREST
Owner shall be liable for and shall pay interest to Manager on all
overdue payments to Manager in terms of this Agreement, including
late payments arising from the terms of Articles 15.4 or 16, or for
any other reason whatsoever, unless, at the time the relevant
payment was due, Sun International Investments Limited owned shares
in Owner carrying a majority of the votes exercisable at general
meetings of Owner and Owner had
<PAGE>
38
sufficient funds to make such payment and, after making such
payment, Owner would not be in breach of any applicable law or any
provision of its articles of associations or the terms of any
agreements to which it is a party. Such interest shall be
calculated at the ruling interest rate on overdraft loans from time
to time of Manager's bankers in The Bahamas or in London and in the
event of varying interest rates applying, the ruling interest rate
from time to time on overdraft loans of Manager's bankers in London
shall be utilised for purposes of the interest calculation in
question. Such interest rate shall be conclusively determined by a
certificate of any manager (whose appointment it shall not be
necessary to prove) of the aforesaid bankers in question. Owner
shall furthermore be liable for and shall pay all legal costs,
including collection costs and commissions, incurred by Manager in
enforcing its rights hereunder.
18.2 FUNDING OF OWNER ACCOUNTS
Notwithstanding anything to the contrary in this Agreement
contained, Manager shall not be obligated to perform its duties and
shall be excused from its obligations and responsibilities
hereunder to the extent that funds to be provided by Owner are not
available to allow Manager to perform such duties pursuant to the
provisions of this Agreement.
18.3 MANAGER'S RIGHT TO REQUEST INSTRUCTIONS
At any time, Manager may, if it reasonably deems it to be necessary
or appropriate, request written instructions from Owner within a
reasonable period prior to the necessity for taking action with
respect to any matter contemplated by this Agreement, and may
<PAGE>
39
defer action thereon pending receipt of such written instructions.
Owner shall promptly respond to any such request for written
instructions, after consulting with its board of directors,
including the Independent Directors thereof so long as Article 68
of Owner's articles of association is in effect, in cases where
such consultation is appropriate. Actions taken by Manager, its
officers, employees and representatives in accordance with the
written instructions of Owner, or failures to act by such persons
pending the receipt of such written instructions, shall be deemed
to be proper conduct within the scope of Manager's authority under
this Agreement.
18.4 NO THIRD PARTY BENEFICIARY
This Agreement is for the benefit of, and may be enforced only by,
Owner and Manager and their respective permitted assignees, and any
other parties indemnified under the provisions of Article 13
hereof, and is not for the benefit of, and may not be enforced by,
any other third party.
18.5 INDEPENDENT CONTRACTOR
Manager shall be an independent contractor with respect to the
performance of its duties hereunder. Neither Manager nor its
employees or other agents employed in the performance of such
duties shall be deemed to be agents, partners, joint venturers,
representatives or employees of Owner, except to the extent of the
agency expressly created under this Agreement.
<PAGE>
40
18.6 RESTRICTIONS AS TO EMPLOYEES
Upon the expiry or earlier termination for any reason of this
Agreement, Owner shall not employ or seek to hire any employee of
Manager, without first obtaining the consent of Manager, and
Manager shall not employ or seek to hire any employee of Owner
(other than employees seconded or transferred to Owner from the
international organization which is comprised of Manager and its
affiliates) without first obtaining the consent of Owner, for a
period of two (2) years following such expiry or earlier
termination of this Agreement.
18.7 CONFLICTS
(a) Except as set forth in paragraph (b) below, nothing contained
in this Agreement shall be construed so as to restrict or
prevent, in any manner, Manager from engaging in any other
businesses or investments during the term of this Agreement,
including, without limitation, any similar or competitive
casino or resort operations to those of Owner, anywhere in the
world. Owner acknowledges that Manager and/or its affiliates
operate and/or manage other casinos and resorts presently and
may in the future operate and/or manage additional casinos and
resorts in different areas of the world, including, without
limitation, the Caribbean or elsewhere in North America and
that marketing efforts may cross over into the same markets
and with respect to the same potential customer base. Manager,
in the course of performing its functions under this
Agreement, may refer customers of any of Owner's businesses
and other parties to other facilities operated and/or
<PAGE>
41
managed by affiliates of Manager to utilize gaming,
entertainment, leisure and other amenities, without payment of
any fees to Owner. Owner consents to such activities and
agrees that such activities will not constitute a conflict of
interest.
(b) Notwithstanding paragraph (a) above, Manager agrees that at
all times from the commencement date through the fifth
anniversary of the commencement date, neither it, Sun
International Investments Limited, World Leisure Group nor any
other entity controlled, directly or indirectly, by or under
common control with World Leisure Group will -
(i) own or manage a casino on Paradise Island, Athol Island
or New Providence Island in The Bahamas which does not
constitute part of Owner's business;
(ii) invest more than $90 000 000 (U.S.) in any hotel or
casino operation located wholly in The Bahamas which does
not constitute part of Owner's business (it being agreed
and understood that except as set forth in clause (iii)
below, investments in hotel or casino operations outside
The Bahamas or partly inside and partly outside The
Bahamas are not restricted); or
(iii) invest in any hotel or casino operation, which does not
constitute part of Owner's business, from which more than
a third of the gross revenues to be derived from such
operation during the first year is expected to come from
The Bahamas if the amount
<PAGE>
42
invested by them in such hotel or casino operation that
is reasonably allocable (based on expected gross
revenues) to the hotels and casinos in The Bahamas
exceeds $90 000 000 (U.S.).
In addition to the restriction set forth in clauses (ii) and (iii)
of this paragraph (b), it is agreed that prior to the third
anniversary of the commencement date the ceiling on investment for
purposes of clauses (ii) and (iii) above shall be $45 000 000 (U.S.)
rather than $90 000 000 (U.S.).
18.8 NOTICES
All notices, requests, approvals, demands and other communications
by either party to the other pursuant to this Agreement shall be in
writing and be deemed to have been duly given and to be effective
five (5) business days after being mailed by registered/certified
pre-paid airmail, or on the first business day after the delivery
thereof or the transmission thereof by facsimile, to either party
at its address set out on the first page hereof or to such other
address as the parties may designate from time to time by similar
notice.
18.9 APPLICABLE LAW
This Agreement shall be construed, interpreted and applied in
accordance with, and then governed by, English law.
<PAGE>
43
18.10 SOLE RECORD
This document constitutes the sole record of the Agreement between
the parties concerning the subject matter thereof. No addition or
variation to, or agreed cancellation of this Agreement shall be of
any force or effect unless in writing and signed by the parties.
18.11 INDULGENCE - NO WAIVER
No indulgence by either party ("the grantor") to the other ("the
grantee") shall constitute a waiver by the grantor, except in the
instance and to the extent given, nor preclude the grantor from
exercising any rights against the grantee arising before or after
the grant of such indulgence.
18.12 SEVERABILITY
Any provision of this Agreement which may for any reason be held to
be unlawful or invalid shall be severable from the remaining
provisions of this agreement, which shall remain of full force and
effect.
18.13 INTERPRETATION
The Table of Contents and captions to the Articles shall not be
used in the interpretation of this Agreement. Unless the context
indicates a contrary intention, an expression which denotes any
gender shall include the other genders, a natural person shall
include an artificial person and vice versa and the singular shall
include the plural and vice versa.
Signatures overleaf ..../
<PAGE>
44
SIGNED AT_______________________ ON _________________________________1993
Witnesses for : SUN INTERNATIONAL HOTELS LIMITED
1 ______________________________
2 ______________________________ _____________________________________
who warrants the authority hereto
SIGNED AT_______________________ ON _________________________________1993
Witnesses for : SUN INTERNATIONAL MANAGEMENT
LIMITED
1 ______________________________
2 ______________________________ _____________________________________
who warrants the authority hereto
<PAGE>
EXHIBIT D
NON-RECOURSE GUARANTEE AND SHARE PLEDGE AGREEMENT
NON-RECOURSE GUARANTEE AND SHARE PLEDGE
AGREEMENT (the "AGREEMENT") dated as of
, 199[3] between SUN INTERNATIONAL
INVESTMENTS LIMITED, a British Virgin Islands
corporation, (the "PLEDGOR") and
[ ], a [ ]
corporation, as Collateral Agent for and
representative of (in such capacity herein
called the "COLLATERAL AGENT") the holders
from time to time (the "SECURED PARTIES") of
the Series A Ordinary Shares of Sun
International Hotels Limited and each of
their respective successors and assigns.
Except as otherwise defined herein, terms
used in this Agreement and defined in the
Articles of Association of Sun International
Hotels Limited in force at the date hereof
(the "ARTICLES OF ASSOCIATION") shall have
the meanings assigned to them in the Articles
of Association.
WHEREAS, the Pledgor and the Secured Parties are
at the date hereof the registered and/or beneficial owners
of the whole of the issued share capital of Sun
International Hotels Limited. Pursuant to Articles 19 and
21 of the Articles of Association, the Secured Parties have
certain put rights against Sun International Hotels Limited
in respect of the Series A Ordinary Shares owned by them
(the "SERIES A PUT"); and
WHEREAS, in connection with its investment in Sun
International Hotels Limited and for consideration, the
receipt and sufficiency of which is hereby acknowledged, the
Pledgor desires to guarantee (on a non-recourse basis) the
obligations of Sun International Hotels Limited under the
Series A Put (the "GUARANTEED OBLIGATIONS") and to grant to
the Collateral Agent as security therefor, an interest in
the Pledged Collateral (as defined below) on the terms set
forth herein.
<PAGE>
2
NOW THEREFORE, the parties hereto agree as
follows:
1. NON-RECOURSE GUARANTEE. (a) The Pledgor
hereby guarantees the due and punctual payment when and as
due of the Guaranteed Obligations provided that the sole
remedy of the Collateral Agent and of the Secured Parties in
respect of the guarantee and all other provisions (including
without limitation all representations, warranties and
covenants of Pledgor) contained herein shall be to enforce
the security interest granted hereunder and that, save to
the extent set forth in this proviso, the Pledgor shall have
no liability or obligation in respect of the guarantee, the
Guaranteed Obligations or any other provisions whether
express or implied, contained herein or otherwise relating
directly or indirectly to the subject matter of this
Agreement.
(b) In the event and to the extent that Sun
International Hotels Limited is prohibited, pursuant to
Section 44(2) or any other provision of the Companies Act,
from making payment of the Purchase Price in respect of any
Tendered Shares, the Pledgor promptly shall purchase all
remaining Tendered Shares not paid for by Sun International
Hotels Limited on the Purchase Date by reason of such
prohibition. Such purchase shall be made by way of payment
on the Purchase Date to the Distribution Agent of the
Purchase Price for the remaining Tendered Shares; PROVIDED,
HOWEVER, that in the event that all such Tendered Shares are
not purchased by the Pledgor, neither the Collateral Agent
nor the Secured Parties shall have any rights to enforce
such purchase obligation, sue for damages or pursue any
other remedy against the Pledgor in respect of such purchase
obligation (it being agreed and understood that the sole
consequence of any failure by the Pledgor to purchase the
remaining Tendered Shares is as set forth in the next
sentence of this paragraph). If and to the extent the
Pledgor fails to purchase all remaining Tendered Shares,
there shall be deemed an immediate default in payment by Sun
International Hotels Limited of Guaranteed Obligations in an
amount equal to the aggregate Purchase Price of the Tendered
Shares not so purchased. The Collateral Agent and the
Secured Parties shall have all the rights set forth herein
in respect of such deemed default that they would have in
the case of a normal default in payment of Guaranteed
Obligations hereunder, including without limitation the
remedies in Section 8, and all such rights shall be subject
to the same limitations set forth herein with respect to
<PAGE>
3
rights of the Collateral Agent and the Secured Parties upon
default, including without limitation those set forth in
paragraph (a) above and those set forth in Section 26.
2. SECURITY INTEREST. The Pledgor hereby grants
to the Collateral Agent for the benefit of the Secured
Parties a valid, perfected first-priority security interest
in all of the Pledgor's right, title and interest in (i) the
Series B Ordinary Shares of Sun International Hotels Limited
details of which are set forth on Schedule I hereto and
certificates representing the same (the "OWNED SHARES"),
(ii) all additional Series B Ordinary Shares or other
securities of Sun International Hotels Limited, from time to
time acquired by the Pledgor pursuant to Article 18 of the
Articles of Association in respect of the Owned Shares and
certificates representing the same and (iii) subject to
Section 6 of this Agreement, all dividends or other proceeds
(whether in cash or otherwise) from time to time received,
receivable or otherwise distributed in respect of such Owned
Shares and such additional shares (all such Owned Shares and
additional shares being the "PLEDGED SHARES" and together
with such dividends and proceeds being the "PLEDGED
COLLATERAL"), as security for the prompt payment and
performance when due of the Guaranteed Obligations.
3. [Intentionally omitted. Old Section 3 and
related provisions to be reintroduced and negotiated if the
circumstances that made their omission possible change].
4. DELIVERY OF CERTIFICATES. All certificates
representing or evidencing Pledged Shares, immediately upon
delivery thereof to the Pledgor, shall be delivered to and
held by the Collateral Agent pursuant to this Agreement and
shall be in suitable form for transfer, and shall be
accompanied by duly executed instruments of transfer or
assignments in blank.
5. REPRESENTATIONS AND WARRANTIES. The Pledgor
hereby represents and warrants to the Collateral Agent for
the benefit of the Secured Parties (without recourse except
to the extent expressly provided for by way of enforcement
of the security interest granted hereunder as set forth in
Section 1 of this Agreement) as follows:
(a) the Pledgor is the registered and beneficial
owner of the Pledged Collateral free and clear of any
lien, encumbrance or security interest except for the
security interest created by this Agreement;
<PAGE>
4
(b) the Pledgor has full corporate power and
authority and legal right to execute, deliver and
perform this Agreement and to own and to grant a
security interest in the Pledged Collateral pursuant to
this Agreement;
(c) no consent of any other party and no consent,
authorization, approval, or other action by, and no
notice to or filing with any other person is required
for the grant by the Pledgor of a security interest in
the Pledged Collateral pursuant to this Agreement or
for the execution, delivery or performance of this
Agreement by the Pledgor;
(d) all of the Pledged Shares have been duly
authorized and validly issued and are fully paid and
non-assessable;
(e) the grant by the Pledgor of a security
interest in the Pledged Shares as specified in this
Agreement creates a valid, perfected first-priority
security interest;
(f) this Agreement has been duly authorized,
executed and delivered by Pledgor and constitutes a
legal, valid and binding obligation of Pledgor
enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy,
insolvency, or other similar laws affecting the rights
of creditors generally or by the application of general
equity principles; and
(g) neither the pledge of the Pledged Collateral
pursuant to this Agreement, the execution, delivery or
performance of this Agreement by Pledgor nor the
exercise by the Collateral Agent of the voting,
foreclosure or other rights provided for in this
Agreement which become available to the Collateral
Agent following the occurrence and during the
continuance of a breach of this Agreement (i) conflict
with or result in a breach under the charter documents
or any material contractual undertaking of Pledgor or
(ii) conflict with or result in a violation of any of
the laws of the jurisdiction of incorporation of
Pledgor that are applicable to Pledgor.
<PAGE>
5
The representations and warranties set forth in
this Section 5 shall survive the execution and delivery of
this Agreement.
6. VOTING RIGHTS; DIVIDENDS; ETC. Unless Sun
International Hotels Limited is in breach of payment in
respect of the Guaranteed Obligations and such breach is
continuing, the Pledgor shall be entitled, free and clear of
the security interest granted by this Agreement, (i) to
exercise any and all voting and consensual or other rights
pertaining to the Pledged Collateral, (ii) to receive and
retain, and to utilize any and all dividends and other
proceeds (other than dividends in additional securities of
Sun International Hotels Limited, which shall constitute a
portion of the Pledged Shares) from time to time received,
receivable or otherwise distributed in respect of the
Pledged Collateral and (iii) to receive all notices and
other documents and, except as otherwise expressly provided
in this Agreement, enjoy all other rights attaching to or
arising in connection with the Pledged Collateral. For
purposes of this Agreement, a breach in payment by Sun
International Hotels Limited in respect of the Guaranteed
Obligations shall be deemed to include the failure of Sun
International Hotels Limited to honor the Series A Put on
the fifth anniversary of the Closing Date (the "Purchase
Date") by reason of it never having sent the Company Notice
to holders of the Series A Ordinary Shares prior to the
Purchase Date.
7. COVENANTS. The Pledgor covenants and agrees
(without recourse except to the extent expressly provided
for by way of enforcement of the security interest granted
hereunder as set forth in Section 1 of this Agreement) that
during the currency of this Agreement:
(a) Pledgor will not (i) create or permit to
exist any lien, encumbrance or security interest upon
or with respect to the Pledged Collateral, except for
the security interest created by this Agreement or
(ii) transfer or purport to transfer any of its right,
title and interest in the Pledged Collateral unless the
transferee has first delivered to the Collateral Agent
an undertaking in a form reasonably satisfactory to it
agreeing to be bound by this Agreement as if it were
the Pledgor named herein.
(b) Pledgor will, at its expense, promptly
execute, acknowledge and deliver all such instruments
<PAGE>
6
and take all such action as the Collateral Agent from
time to time may request in order to ensure to the
Collateral Agent the benefits of the liens in and to
the Pledged Collateral intended to be created by this
Agreement, including the filing of any necessary
Uniform Commercial Code financing statements, to the
extent, if any, applicable, which may be filed by the
Collateral Agent with or without the signature of
Pledgor, and Pledgor will cooperate with the Collateral
Agent, at Pledgor's expense, in obtaining all necessary
approvals and making all necessary filings under
federal or state law in connection with such liens or
any sale or transfer of the Pledged Collateral.
(c) Pledgor has and will defend the title to the
Pledged Collateral and the liens of the Collateral
Agent thereon against the claim of any third party and
will maintain and preserve such liens until the
Guaranteed Obligations have been paid in full or the
Collateral Agent shall have enforced its remedies under
Section 8 of this Agreement.
(d) Pledgor will, upon obtaining any additional
shares of capital stock of Sun International Hotels
Limited in the circumstances specified in Section 2(ii)
of this Agreement, promptly (and in any event within
three (3) Business Days) deliver to the Collateral
Agent a Pledge Amendment, duly executed by Pledgor (a
"Pledge Amendment"), in respect of the additional
Pledged Shares which are to be pledged pursuant to this
Agreement. Pledgor hereby authorizes the Collateral
Agent to attach each Pledge Amendment to this Agreement
and agrees that all Pledged Shares listed on any Pledge
Amendment delivered to the Collateral Agent shall for
all purposes hereunder be considered Pledged
Collateral.
(e) All certificates representing Pledged Shares
shall bear the following legend:
"The shares represented by this certificate
have been pledged pursuant to that certain Non-
Recourse Guarantee and Share Pledge Agreement,
dated _______, 1994, made by Sun International
Investments Limited for the benefit of certain
Secured Parties identified therein (the "Pledge
Agreement") and may not be sold, hypothecated,
<PAGE>
7
assigned or transferred except in accordance with
the terms of such Pledge Agreement."
(f) To the extent Pledgor has the authority or
right to prevent such action, it will not allow Sun
International Hotels Limited to issue new Series B
Ordinary Shares except in accordance with Article 68 of
the Articles of Association.
8. REMEDIES UPON DEFAULT; PROCEEDS GUARANTEED.
If Sun International Hotels Limited is in breach of payment
in respect of the Guaranteed Obligations and such breach is
continuing:
(a) the directors of Sun International Hotels
Limited nominated by the Pledgor or any transferee of
Pledged Shares (other than the Collateral Agent and/or
the Secured Parties) pursuant to Article 49 of the
Articles of Association shall cease to be entitled to
vote at meetings of the board or committees thereof
although they shall be entitled to notice of such
meetings and to attend and speak thereat for so long as
they continue to serve as directors;
(b) all rights of the Pledgor to exercise voting,
consensual and other rights pertaining to the Pledged
Collateral shall cease and such rights shall be vested
in the Collateral Agent which shall have the sole right
to exercise such rights on behalf of the Secured
Parties;
(c) all rights of the Pledgor to receive the
dividends and other proceeds which it would otherwise
be entitled to receive and retain and to enjoy all
other rights attaching to or arising in connection with
the Pledged Collateral shall cease and all such rights
shall thereupon become vested in the Collateral Agent
who shall have the sole right to receive and hold such
dividends and proceeds and to enjoy such other rights
on behalf of the Secured Parties;
(d) the Collateral Agent may from time to time
exercise in respect of the Pledged Collateral the
rights and remedies available to it under law, and may
in its sole discretion sell the Pledged Collateral or
any part thereof in one or more parcels at public or
private sale for cash or otherwise at such prices as
the Collateral Agent, having been so advised by an
<PAGE>
8
international investment bank of good standing, may in
its reasonable opinion deem commercially reasonable
and, notwithstanding any other provision of this
Agreement, the Collateral Agent may bid for and
purchase all or any part of the Pledged Collateral at
any sale thereof by offsetting against the purchase
price the amount of its claim in respect of the
Guaranteed Obligations, without accountability to
Pledgor (except to the extent of surplus money received
as provided in Article Third of Section 8(e) hereof).
Pledgor hereby waives, to the extent permitted by
applicable law, notice and judicial hearing in
connection with the Collateral Agent's sale and
disposition of the Pledged Collateral, including
without limitation, any and all prior notice and
hearing for any prejudgment remedy or remedies and any
such right which Pledgor would otherwise have under the
United States Constitution or any applicable federal or
state statute; and
(e) any cash held by the Collateral Agent as
Pledged Collateral, and all cash proceeds received by
the Collateral Agent, (all such cash being "PROCEEDS")
in respect of the sale of, collection from, or other
realization upon all or any part of the Pledged
Collateral shall be allocated and paid promptly and
from time to time by the Collateral Agent:
FIRST, to the payment of the reasonable costs
and expenses of such sale, collection or other
realization;
SECOND, subject to Section 9, to the payment
of the Guaranteed Obligations then due so that
each Secured Party shall receive an amount equal
to the product of (i) the total amount available
for payment under this clause second and (ii) a
fraction, the numerator of which is the total
amount of Guaranteed Obligations then due to such
Secured Party and the denominator of which is the
total amount of all such Guaranteed Obligations;
and
THIRD, to whosoever may be lawfully entitled
to receive the same, any surplus then remaining
from such Proceeds.
<PAGE>
9
(f) If, at any time when the Collateral Agent in
its sole discretion determines, following the
occurrence and during the continuance of a breach of
the Guaranteed Obligations, that, in connection with
any actual or contemplated exercise of its rights (when
permitted under this Section 8) to sell the whole or
any part of the Pledged Collateral hereunder, it is
necessary or advisable to effect a public registration
of all or part of the Pledged Collateral pursuant to
the Securities Act of 1933, as amended (or any similar
statute then in effect) (the "Act"), Pledgor shall, in
any expeditious manner, and to the extent Pledgor has
authority or the right to, cause Sun International
Hotels Limited to and if Pledgor cannot cause Sun
International Hotels Limited to, then Pledgor must
cooperate with Sun International Hotels Limited to:
(i) Prepare and file with the Securities and
Exchange Commission (the "Commission") a
registration statement with respect to the Pledged
Collateral and use its best efforts to cause such
registration statement to become and remain
effective.
(ii) Prepare and file with the commission
such amendments and supplements to such
registration statement and the prospectus used in
connection therewith as may be necessary to keep
such registration statement effective and to
comply with the provisions of the Act with respect
to the sale or other disposition of the Pledged
Collateral covered by such registration statement
whenever the Collateral Agent shall desire to sell
or otherwise dispose of the Pledged Collateral.
(iii) Furnish to the Collateral Agent such
numbers of copies of a prospectus and a
preliminary prospectus, in conformity with the
requirements of the Act, and such other documents
as the Collateral Agent may request in order to
facilitate the public sale or other disposition of
the Pledged Collateral by the Collateral Agent.
(iv) Use its best efforts to register or
qualify the Pledged Collateral covered by such
registration statement under such other securities
or blue sky laws of such jurisdictions within the
United States and Puerto Rico as the Collateral
<PAGE>
10
Agent shall request, and do such other reasonable
acts and things as may be required of it to enable
the Collateral Agent to consummate the public sale
or other disposition in such jurisdictions of the
Pledged Collateral by the Collateral Agent.
(v) Furnish, at the request of the
Collateral Agent, on the date that the Pledged
Collateral is delivered to the underwriters for
sale pursuant to such registration or, if the
security is not being sold through underwriters,
on the date that the registration statement with
respect to such Pledged Collateral becomes
effective, (A) an opinion, dated such date, of the
independent counsel representing such registrant
for the purposes of such registration, addressed
to the underwriters, if any, and to the Collateral
Agent, in customary form and covering matters of
the type customarily covered in such legal
opinions; and (B) a comfort letter, dated such
date, from the independent certified public
accountants of such registrant, addressed to the
underwriters, if any, and to the Collateral Agent,
in a customary form and covering matters of the
type customarily covered by such comfort letters
and as the underwriters or the Collateral Agent
shall reasonably request. The opinion of counsel
referred to above shall additionally cover such
other legal matters with respect to the
registration in respect of which such opinion is
being given as the Collateral Agent may reasonably
request. The letter referred to above from the
independent certified public accountants shall
additionally cover such other financial matters
(including information as to the period ending not
more than five (5) Business Days prior to the date
of such letter) with respect to the registration
in respect of which such letter is being given as
the Collateral Agent may reasonably request.
(vi) Otherwise use its best efforts to
comply with all applicable rules and regulations
of the Commission, and make available to its
security holders, as soon as reasonably
practicable, but not later than 18 months after
the effective date of the registration statement,
an earnings statement covering the period of at
least 12 months beginning with the first full
<PAGE>
11
month after the effective date of such
registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of
the Act.
(vii) Use its best efforts to cause the
Pledged Shares covered by such registration
statement to be registered with or approved by
such other governmental agencies or authorities as
may be necessary by virtue of the business and
operations of Sun International Hotels Limited to
enable the Collateral Agent to consummate the
disposition of such Pledged Shares.
(viii) Notify the Collateral Agent at any
time while the registration statement is required
to be effective hereunder of the happening of any
event which results in the prospectus included in
such registration statement containing an untrue
statement of a material fact or omitting to state
any material fact required to be stated therein or
necessary to make the statements therein not
misleading, and prepare a supplement or amendment
to such prospectus so that, as thereafter
delivered to the purchasers of such Pledged
Shares, such prospectus will not contain an 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.
(ix) Enter into customary agreements and make
such representations and warranties to the
underwriters and the Collateral Agent as in form,
substance and scope are customarily made by
issuers to underwriters in primary underwritten
offerings and take such other actions as are
reasonably required in order to expedite or
facilitate the disposition of such Pledged Shares.
(x) Make available for inspection during
regular business hours by the Collateral Agent and
any attorney, accountant or other agent retained
by the Collateral Agent and the underwriters and
their attorneys and agents (collectively, the
"Inspectors"), all financial and other records,
corporate documents, books and records,
questionnaires, agreements, properties of Sun
<PAGE>
12
International Hotels Limited and other information
(collectively, the "Records"), as shall be
reasonably requested to enable them to exercise
"due diligence," and cause the Company's officers,
directors and employees to supply all information
reasonably requested by any such Inspector in
connection with the registration statement.
(xi) Notify the Collateral Agent of any stop
order or other suspension of effectiveness of the
registration statement.
(xii) Make every reasonable effort to obtain
the withdrawal of any order suspending the
effectiveness of the registration statement at the
earliest possible moment.
(xiii) Use its best efforts to cause the
Pledged Shares to be listed on NASDAQ or any other
national securities exchange on which a listing
for shares of capital stock of Sun International
Hotels Limited is maintained.
(xiv) Cooperate with the Collateral Agent and
its counsel in connection with any filings
required to be made with the National Association
of Securities Dealers, Inc. (the "NASD").
(xv) Cooperate with the Collateral Agent to
facilitate the timely preparation and delivery of
certificates representing securities to be sold
under the registration statement (which
certificates shall be in DTC-eligible form) and
enable such securities to be in such denominations
and registered in such names as the Collateral
Agent may request.
(g) If, at any time when the Collateral Agent
shall determine to exercise its right to sell the whole
or any part of the Pledged Collateral hereunder, such
Pledged Collateral or the part thereof to be sold shall
not, for any reason whatsoever, be effectively
registered under the Act, the Collateral Agent may, in
its discretion (subject only to applicable requirements
of law), sell such Pledged Collateral or part thereof
by private sale in such manner and under such
circumstances as the Collateral Agent may deem
necessary or advisable, but subject to the other
<PAGE>
13
requirements of this Section 8, and shall not be
required to effect such registration or to cause the
same to be effected. Without limiting the generality
of the foregoing, in any such event the Collateral
Agent in its discretion (a) may, in accordance with
applicable securities laws, proceed to make such
private sale notwithstanding that a registration
statement for the purpose of registering such Pledged
Collateral or part thereof could be or shall have been
filed under said Act (or similar statute), (b) may
approach and negotiate with a single possible purchaser
to effect such sale, and (c) may restrict such sale to
a purchaser who will represent and agree that such
purchaser is purchasing for its own account, for
investment and not with a view to the distribution or
sale of such Pledged Collateral or part thereof. In
addition to a private sale as provided above in this
Section 8, if any of the Pledged Collateral shall not
be freely distributable to the public without
registration under the Act (or similar statute) at the
time of any proposed sale pursuant to this Section 8,
then the Collateral Agent shall not be required to
effect such registration or cause the same to be
effected but, in its discretion (subject only to
applicable requirements of law), may require that any
sale hereunder (including a sale at auction) be
conducted subject to restrictions (i) as to the
financial sophistication and ability of any person
permitted to bid or purchase at any such sale, (ii) as
to the content of legends to be placed upon any
certificates representing the Pledged Collateral sold
in such sale, including restrictions on future transfer
thereof, (iii) as to the representations required to be
made by each person bidding or purchasing at such sale
relating to that person's access to financial
information about Sun International Hotels Limited and
such person's intentions as to the holding of the
Pledged Collateral so sold for investment, for its own
account, and not with a view to the distribution
thereof, and (iv) as to such other matters as the
Collateral Agent may, in its discretion, deem necessary
or appropriate in order that such sale (notwithstanding
any failure so to register) may be effected in
compliance with the Bankruptcy Code and other laws
affecting the enforcement of creditors' rights and the
Act and all applicable state securities laws.
<PAGE>
14
(h) Pledgor acknowledges that notwithstanding the
legal availability of a private sale or a sale subject
to the restrictions described above in paragraph (g),
the Collateral Agent may, in its discretion, elect to
register any or all the Pledged Collateral under the
Act (and any applicable state securities law) in
accordance with its rights hereunder. Pledgor,
however, recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the
Pledged Collateral and may be compelled to resort to
one or more private sales thereof. Pledgor also
acknowledges that any such private sale may result in
prices and other terms less favorable to the seller
than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in
a commercially reasonable manner. The Collateral Agent
shall be under no obligation to delay a sale of any of
the Pledged Collateral for the period of time necessary
to permit the registrant to register such securities
for public sale under the Act, or under applicable
state securities laws, even if Pledgor would agree to
do so.
(i) Pledgor agrees that following the occurrence
and during the continuance of a breach in payment in
respect of the Guaranteed Obligations or hereunder it
will not at any time plead, claim or take the benefit
of any appraisal, valuation, stay, extension,
moratorium or redemption law now or hereafter in force
in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any
part of the Pledged Collateral or the possession
thereof by any purchaser at any sale hereunder, and
Pledgor waives the benefit of all such laws to the
extent it lawfully may do so. Pledgor agrees that it
will not interfere with any right, power and remedy of
the Collateral Agent provided for in this Agreement or
now or hereafter existing at law or in equity or by
statute or otherwise, or the exercise or beginning of
the exercise by the Collateral Agent of any one or more
of such rights, powers or remedies. No failure or
delay on the part of the Collateral Agent to exercise
any such right, power or remedy and no notice or demand
which may be given to or made upon Pledgor by the
Collateral Agent with respect to any such remedies
shall operate as a waiver thereof, or limit or impair
the Collateral Agent's right to take any action or to
<PAGE>
15
exercise any power or remedy hereunder, without notice
or demand, or prejudice its rights as against Pledgor
in any respect.
(j) Pledgor further agrees that a breach of any
of the covenants contained in this Section 8 will cause
irreparable injury to the Collateral Agent, that the
Collateral Agent has no adequate remedy at law in
respect of such breach and, as a consequence, agrees
that each and every covenant contained in this
Section 8 shall be specifically enforceable against
Pledgor, and Pledgor hereby waives and agrees not to
assert any defenses against an action for specific
performance of such covenants except for a defense that
the Guaranteed Obligations are not then due and payable
in accordance with the Articles of Association or a
defense that payment in respect thereof has already
been made.
9. TRANSFERS UPON PAYMENT. No Proceeds shall be
paid to any Secured Party pursuant to clause Second of
Section 8(e) unless the Secured Party has delivered to Sun
International Hotels Limited a duly executed and valid
instrument of transfer in favor of Sun International Hotels
Limited in respect of the Series A Ordinary Shares held by
that Secured Party. Any Secured Party that complies with
the Articles of Association, Sun International Hotels
Limited's instructions sent to each Secured Party in
connection with the exercise of the Series A Put and any
provisions of law applicable directly or indirectly to such
exercise (including the rules or regulations of any
securities exchange or quotation system on which Sun
International Hotels Limited's shares are listed or quoted)
shall be deemed to have satisfied the requirements of the
preceding sentence. Immediately following the payment to
any Secured Party of Proceeds pursuant to clause Second of
Section 8(e), Sun International Hotels Limited shall
register the transfer to Sun International Hotels Limited of
that number of the Series A Ordinary Shares held by each
such Secured Party that equals the number resulting from
dividing the amount of Proceeds actually paid to the
relevant Secured Party by the Purchase Price (as defined in
the Articles of Association). Each Secured Party shall
receive a new certificate representing the number of shares
of Series A Ordinary Shares (which may include fractional
shares if necessary) not paid for pursuant to Section 8(e),
if any, and in such case Pledgor's subrogation and other
rights against Sun International Hotels Limited shall be
<PAGE>
16
limited to the amount of Proceeds actually paid to the
Secured Parties.
10. FURTHER ASSURANCES. The Pledgor agrees that
at any time and from time to time, at the expense of the
Pledgor, the Pledgor will promptly execute and deliver all
further instruments and documents, and take all further
action, that may be necessary or that the Collateral Agent
may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby
or to enable the Collateral Agent to exercise and enforce
its rights and remedies hereunder with respect to any
Pledged Collateral.
11. NO RELEASE. Subject to Section 1 of this
Agreement, nothing set forth in this Agreement shall relieve
the Pledgor from the performance of any term, covenant,
condition or agreement on the part of the Pledgor to be
performed or observed under or in respect of any of the
Pledged Collateral or impose any obligation on the
Collateral Agent or any Secured Party to perform or observe
any such term, covenant, condition or agreement.
12. CERTAIN WAIVERS. Pledgor hereby waives
notice of acceptance of this Agreement, and also
presentment, demand, protest and notice of dishonor of any
and all of the Guaranteed Obligations, and promptness in
commencing suit against any party hereto or liable hereon,
and in giving any notice to or of making any claim or demand
hereunder upon Pledgor. No act or omission of any kind on
the Collateral Agent's part shall in any event affect or
impair this Agreement.
13. REINSTATEMENT. This Agreement shall remain
in full force and effect and continue to be effective should
any petition be filed by or against Pledgor for liquidation
or reorganization, should Pledgor become insolvent or make
an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant
part of Pledgor's assets, and shall continue to be effective
or be reinstated, as the case may be, if at any time payment
and performance of the Guaranteed Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned
by any obligee of the Guaranteed Obligations, whether as a
"voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not
been made. In the event that any payment, or any part
<PAGE>
17
thereof, is rescinded, reduced, restored or returned, the
Guaranteed Obligations shall be reinstated and deemed
reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
14. TERMINATION. Subject to Section 13 of this
Agreement, when all Guaranteed Obligations have been paid in
full, this Agreement and the non-recourse guarantee and
security interest granted hereunder shall, without further
action, automatically terminate and the Collateral Agent and
the Secured Parties shall from time to time deliver to the
Pledgor such releases in respect of the Pledged Collateral
as it may reasonably request.
15. COLLATERAL AGENT APPOINTED ATTORNEY. The
Pledgor hereby appoints the Collateral Agent its attorney
and, in the case of the rights specified in Section 6 and in
Section 8(b), its proxy, with full authority in the place
and stead of the Pledgor and in the name of the Pledgor or
otherwise, from time to time in the Collateral Agent's
discretion to take any action and to execute any instrument
which the Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Agreement subject to the
rights of the Pledgor hereunder. The appointment effected
hereby is coupled with an interest and is irrevocable by the
Pledgor.
16. COLLATERAL AGENT MAY PERFORM. If the Pledgor
fails to perform any agreement contained herein within such
reasonable period as may be specified in a written request
to do so from the Collateral Agent, the Collateral Agent may
itself perform, or cause performance of, such agreement. No
delay on the Collateral Agent's part in exercising any power
or right hereunder, and no notice or demand which may be
given to or made upon Pledgor by the Collateral Agent with
respect to any power or right hereunder, shall constitute a
waiver thereof, or limit or impair the Collateral Agent's
right to take any action or to exercise any power or right
hereunder, without notice or demand, or prejudice the
Collateral Agent's rights as against Pledgor in any respect.
17. EXPENSES. The Pledgor hereby agrees upon
demand to pay to the Collateral Agent the amount of any and
all reasonable expenses including, without limitation, the
reasonable fees and expenses of its counsel and of any
experts and agents, which the Collateral Agent may
reasonably incur in connection with the administration of
this Agreement except where such expenses result solely from
<PAGE>
18
the gross negligence or wilful misconduct of the Collateral
Agent.
18. AMENDMENTS. This Agreement may not be
amended, modified or waived except with the written consent
of the Pledgor and the Collateral Agent. The approval of
holders holding not less than a majority of the outstanding
Series A Ordinary Shares shall be required for any amendment
to this Agreement that would result in a material reduction
in (i) the Pledged Collateral being subject to the lien
granted herein in favor of the Collateral Agent or (ii) the
Secured Parties' rights in and to the Pledged Collateral
pledged hereunder.
19. NOTICES. All notices, requests, claims,
demands and other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been
duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified
mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such
other address for a party as shall be specified by like
notice):
if to Pledgor:
c/o Sun International Management
(U.K.) Limited
Gravel Hill, Badgemore House
Henley-on-Thames
Oxfordshire RG9 4NR
United Kingdom
Attention: Mr. Howard B. Kerzner
Telecopy: 011 44 491 576 526
with a copy to:
James M. Edwards, Esq.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Telecopy: (212) 474-3700
<PAGE>
19
if to the Collateral Agent:
[ ]
[ ]
[ ]
Attention: [ ]
Telecopy: [ ]
with copies to:
[ ]
[ ]
[ ]
Attention: [ ]
Telecopy: [ ]
Robert M. Gervis, Esq.
Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10153
Telecopy: (212) 310-8007
20. GOVERNING LAW. This Agreement shall be
governed by, and construed in accordance with the laws of
the State of New York.
21. SUBMISSION TO JURISDICTION. (a) Any legal
action or proceeding with respect to this Agreement may be
brought in the United States District Court for the Southern
District of New York (or, if such court does not have
jurisdiction, the courts of the State of New York sitting in
the Borough of Manhattan), and, by execution and delivery of
this Agreement, the Pledgor hereby accepts for itself and in
respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The Pledgor hereby
irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which it may now or
hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions and consents to
the granting of such legal or equitable relief as is deemed
appropriate by the court.
(b) The Pledgor irrevocably consents to the
service of process of any of the aforesaid courts in any
such action or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, to the
Pledgor at its address provided herein or to the Pledgor at
<PAGE>
20
the address of its duly-appointed domestic agent for service
of process, such service to become effective 30 days after
such mailing.
(c) The Pledgor hereby irrevocably appoints and
designates as its lawful agent and attorney for receipt and
service of process in any action arising or taken hereunder
by the Collateral Agent the law firm of Cravath, Swaine &
Moore, 825 Eighth Avenue, New York, New York 10019
(Attn: James M. Edwards, Esq.).
22. SEVERABILITY OF PROVISIONS. Any provision of
this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision
in any other jurisdiction.
23. HEADINGS. Section headings used in this
Agreement are for convenience of reference only and shall
not affect the construction of this Agreement.
24. EXECUTION IN COUNTERPARTS. This Agreement
may be executed in any number of counterparts, each of which
counterparts, when so executed and delivered, shall be
deemed to be an original and all of which counterparts,
taken together, shall constitute one and the same Agreement.
25. LIMITATION ON COLLATERAL AGENT'S LIABILITY.
Neither the Collateral Agent nor any of its respective
officers, directors, employees, agents or counsel shall be
liable for any action lawfully taken or omitted to be taken
by it or them hereunder or in connection herewith, except
for its or their own gross negligence or wilful misconduct.
26. LIMITATION ON PLEDGOR'S LIABILITY.
Notwithstanding anything to the contrary contained herein
and without limiting the generality of Section 1 of this
Agreement, Pledgor shall not have any liability whatsoever
under the guarantee contained herein, in respect of any
breach or non-performance by Sun International Hotels
Limited of its obligations in respect of the Series A Put or
in respect of any breach or non-performance of any
representation, warranty, covenant, agreement, obligation or
otherwise of Pledgor under this Agreement, except and only
to the extent of the proceeds realized by the Collateral
Agent and the Secured Parties following the enforcement of
<PAGE>
21
the security interest in the Pledged Collateral pursuant
Section 8 of this Agreement.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered by
their representatives hereunto duly authorized as of the
date first above written.
SUN INTERNATIONAL INVESTMENTS
LIMITED
by
________________________
Name:
Title:
[Collateral Agent]
by
_______________________
Name:
Title:
<PAGE>
Schedule I to the
Share Pledge Agreement
THE OWNED SHARES
Series Share
Share of Certificate Number of
Issuer Shares No(s) Shares
- ------ ----- ----------- ---------
[ ] [ ]
Sun International Series B
Hotels Limited Ordinary
Shares
<PAGE>
EXHIBIT E
The Bank of Nova Scotia
P.O. Box N-7518
Nassau, Bahamas
A.C. Allen
Vice President
Bahamas
August 13, 1993
Sun International Hotels Limited
c/o Lazard, Freres and Company
One Rockefeller Plaza
New York, N.Y. 10020
Attn: Mr. Sol Kerzner
- ----------------------
Dear Sirs:
Re: Sun International/Acquisition of Paradise
Island Operations of Resorts International
------------------------------------------
We refer to the Lazard, Freres and Company Financing Package
of July 2, 1993 and our ongoing discussions on the related
US$75 million capital expenditure facility. The Bank of
Nova Scotia is pleased to advise we are prepared to attempt
on a best efforts basis to arrange this US$75 million
loan on your behalf. We are also pleased to confirm our
commitment to a US$30 million participation (or such lesser
amount that may be needed to complete the transaction and
with the right to sell down both at our option and subject
to a minimum participation of US$15,000,000) in this loan as
Lead/Agent Bank on the terms and conditions outlined in the
attached Term Sheet. Please note this offer is subject to
formal agreement setting out fully the terms and conditions
of the proposed loan in accordance with (inter alia) the
attached term sheet.
Our Arrangement Fee on this transaction will be US$100,000
plus 1% of any commitment obtained outside the existing
Banks looking at the transaction (listing attached). Please
note the latter 1% fee would only be payable if we are
required to go to Banks other than those listed to raise the
full $75 million. We also record our discussions on the
1.25% Facility Fee and confirm our agreement that a 1% fee
will be offered to the other lenders in the transaction with
the balance to be retained by ourselves.
<PAGE>
We also confirm our other arrangements for our roles as
Lead/Agent Bank, specifically:
- - All Bank accounts for the Borrower and all of its
subsidiaries or affiliates located in the Bahamas (including
VISA, Mastercard, American Express and other credit cards
sales slips) are to be maintained with the Bank of Nova
Scotia.
- - The Borrower or any of its subsidiaries or affiliates
are not to enter into any leases or agreements with banks
(other than The Bank of Nova Scotia) for the operation of
bank branches or automatic banking machines (ABM's) on
Paradise Island, Bahamas without giving The Bank of Nova
Scotia right of first refusal for establishing such
facilities.
Should you wish us to pursue the above course of action on
your behalf, we ask that you provide your authorization by
signing the enclosed copy of this letter and returning it to
the attention of the undersigned together with a cheque for
half of the Arrangement Fee by August 27, 1993.
We look forward to hearing from you in due course and
working towards completion of this transaction.
The offer herein contained is subject to formal contract
which we would use our best efforts to complete with you by
September 30, 1993.
Very truly yours,
/s/
A.C. Allen
for Vice President, Bahamas
Acknowledged and accepted this day of August, 1993.
<PAGE>
Sun International Paradise Island Acquisition - Proposed
Participant Banks
Royal Bank
Credit Suisse
Nedbank
Barclays Bank
ING Bank
ABSA Bank
CIBC
Royal Bank of Scotland
UBS
Swiss Bank
Henry Ansbacher
<PAGE>
BORROWER: Resorts International (Bahamas) 1984
Limited, an existing Bahamian
corporation established as a holding
company for the Bahamian operations of
Resorts International.
AGENT BANK: The Bank of Nova Scotia (the "Agent").
LENDERS: A group of banks acceptable to the Agent
and the Borrower. Agent's portion of
loan US$30,000,000 or such lesser amount
to a minimum of US$15,000,000 that may
be needed to complete the transaction.
LOAN AMOUNT: US$75,000,000 (the "Loan").
USE OF PROCEEDS: To assist with the financing of a
$100,000,000 renovation, reconstruction
and expansion program to be undertaken
as part of the acquisition of a 60%
interest in the Bahamian operations of
Resorts International. Program to
commence in 1994 and is expected to be
completed in 1995.
LOAN AVAILMENT: Two year draw down period subject to
completion of Conditions Precedent and
required Security as outlined below.
With the exception of the final
availment drawings are to be in amounts
of not less than $US1,000,000.
INTEREST RATE: 30, 60, 90 or 180 day LIBOR plus 2.5%
per annum or the Agent's New York Prime
as established from time to time plus
2.5% per annum. Interest rate periods
on LIBOR loans and LIBOR/Prime Interest
basis to be at the Borrower's option.
Interest to be paid on LIBOR rollover
dates or quarterly, whichever is
earlier.
FEES: Facility Fee:1.25% flat.
Standby Fee: .5% per annum from closing
on the undrawn portion of
the Loan.
Agent Fees: .125% on draws and
US$50,000 per annum
thereafter.
REPAYMENT: Two year draw down period with payments
to commence 30 months from closing. 10
consecutive semi-annual payments to be
made as follows:
<PAGE>
Years 1,2 None scheduled.
Years 3,4 US$4,687,500 semi-annually.
Years 5,6,7 US$9,375,000 semi-annually.
Prepayments in multiples of US$1,000,000
are allowed on any LIBOR funding
rollover date without penalty, and at
any other time subject to any costs
incurred by the Lenders in so doing.
SECURITY:
1. Formal Loan Agreement collateralized by a
Debenture incorporating a first mortgage over all
freehold and leasehold property and a first charge
over all other assets of the Borrower and its
direct and indirect Bahamian and US subsidiaries
with cross guarantees and collateralization as
necessary to capture all assets.
2. The Agent agrees to subrogate up to US$3,000,000
of its security interest in Current Assets (as
defined under generally accepted accounting
principles excluding cash and any real property
but including Accounts Receivable and Inventory)
so as to allow the Borrower to arrange a working
capital facility if necessary. In addition, the
Agent agrees providers of interest rate swaps or
other interest rate hedging instruments specific
to the Loan and acceptable to the Agent will have
the right to be secured pari passu with the Agent.
The above are subject to the Agent having a right
of first refusal on the working capital facility
and any swap/hedging mechanisms.
3. Guarantee in form and substance acceptable to the
Agent in the amount of US$75,000,000 from Sun
International Hotels Limited (the Borrower's
immediate parent company) supported by a pledge of
100% of the Borrower's shares.
TERMS AND CONDITIONS:
CONDITIONS PRECEDENT:
1. The loan will not be disbursed until the Sun Group
completes their purchase of a 60% interest in the
Paradise Island operations of Resorts
International at an approximate cost of
US$75,000,000 (cash transaction, final amount
subject to confirmation and acceptance by the
Agent).
<PAGE>
2. Acquisition structure and all supporting
agreements including Shareholders' Agreement (re:
the above purchase) and all Management Agreements
for the construction and operation of the Paradise
Island properties are to be reviewed by and be
acceptable to the Agent.
3. Financial position of the Borrower and its'
affiliates to be certified by independent auditors
and to be consistent with the pro-forma Balance
Sheet provided to the Agent.
4. All required Government permits, Central Bank and
Planning Board approvals are to be in place.
5. Construction contract(s) in form and substance
acceptable to the Agent to be obtained from
recognized contractor(s) acceptable to the Agent.
Such contracts are to be on a fixed price basis to
the extent feasible.
6. An architectural or quantity surveyor firm
approved by the Agent is to be retained to
supervise construction and provide construction
draw certifications and reports to the Agent.
Costs for the Borrower.
7. The contractors are to provide a final detailed
construction budget for this project in a format
acceptable to the Agent, along with the
architect's opinion that the construction can be
completed within the estimated costs and the time
projected by the contractors.
9. The contractor(s) is to obtain a Performance Bond
in an amount reasonably acceptable to the Agent
with an insurance company acceptable to the Agent.
10. Shareholder's cash equity (US$25,000,000) for the
construction is to be injected up-front and prior
to any disbursement under the Loan (subject to
certification acceptable to the Agent).
GENERAL CONDITIONS DURING AND AFTER AVAILMENT:
1. All drawdowns for construction advances will only
be made against architect's certificates and/or
invoices (in the case of soft costs) in a form
acceptable to the Agent and a budget analysis must
be provided for each advance with the architect's
opinion on the adequacy of the budget and time
remaining for completion.
<PAGE>
2. All mortgage and other legal documentation is to
be prepared by the Agent's lawyers and legal costs
and out-of-pocket expenses will be for the account
of the Borrower and will be charged to the
Borrower's account on receipt.
3. Change orders resulting in net increases in costs
over amounts provided in the construction budget
in excess of $US300,000 individually or
US$3,000,000 collectively will require the
approval of the Agent. This condition to be
acknowledged and accepted by the contractor(s) in
writing.
4. Any cost overruns in construction, new equipment
purchases or other aspects of the project are to
be covered by the Borrower or from the resources
of Sun International Hotels Limited (to be covered
by formal Letter of Undertaking).
5. Non construction Management fees in excess of
actual cash costs (estimated at US$4-5,000,000 per
annum) to be subordinated to Debt Service on the
Loan.
6. Capital Expenditures in excess of US$5,000,000 per
annum in 1994 and 1995 and US$12,000,000
thereafter shall require the written approval of
the Agent (exclusive of the US$100,000,000 program
under this Loan).
7. Further encumbrances other than those noted above
(Security #2) over any assets of the Borrower and
its parent and the subsidiaries of either of them
will require the prior written consent of the
Agent.
8. Sales of assets outside the ordinary course of
business in excess of US$500,000 individually or
in excess of US$2,000,000 per annum will require
the prior written consent of the Agent.
9. Changes in ownership of the Borrower and its
subsidiaries and changes in controlling ownership
of Sun International Hotels Limited will require
the prior written consent of the Agent.
10. All Perils and Public Liability insurance coverage
at levels acceptable to the Agent is to be
maintained and the Agent is to be noted as loss
payee on behalf of the Lenders.
11. Cash Flow Coverage is to be maintained at a level
of at least 2.0:1 in 1995, 2.5:1 in 1996 and 3.0:1
thereafter (annual testing).
Cash Flow Coverage is to be defined as the ratio
of earnings before interest depreciation and taxes
less Agent approved Capital Expenditures to total
net interest expense.
<PAGE>
12. Tangible Net Worth of the Borrower as evidenced by
its audited consolidated financial statements to
be not less than US$100,000,000 in years 1 and 2
and not less than US$150,000,000 thereafter
(amounts subject to confirmation upon completion
of Arthur Anderson review).
13. Reporting requirements:
Monthly - Architect's job
certifications/Progress Reports
during construction period.
- Interim in-house financial
statements including cash flow
report and comparison to Budget.
Annually - Audited financial statements within
120 days of year-end.
- Annual budgets as required to be
provided under the Management
Agreement.
14. A Loan Agreement is to be established and agreed
between the parties which incorporates the above
conditions together with standard Representations
and Warranties and Events of Default (including,
but not limited to non payment of sums due,
material breach of terms and bankruptcy/insolvency
of the Borrower or its subsidiaries) subject to
reasonable cure periods, and other conditions
required by the Agent for a Loan of this nature.
The detailed provisions of the Loan Agreement will
incorporate reasonableness and materiality into
the obligations of the parties and the other
provisions included in the Agreement.
15. Governing law is to be that of the Commonwealth of
the Bahamas.
<PAGE>
EXHIBIT F
[Letterhead of Ernst & Young]
[ ], 1993
Paradise Island
---------------
Dear Sirs,
We have performed the procedures requested by you,
as described below, with respect to the Purchase Agreement
(the "Purchase Agreement") dated August [ ], 1993,
among Resorts International, Inc. ("RII") a Delaware
corporation and Sun International Hotels Limited ("Sun") a
Bahamian corporation. The Purchase Agreement provides for
the Stock Acquisition and the Asset Acquisition (in each
case as defined in the Purchase Agreement and, together, the
"Acquisitions"). This letter is solely to assist Sun with
the proposed Acquisition and is not to be used for any other
purpose. The procedures that we performed, and our findings
are summarized as follows:
1. We are independent certified public
accountants with respect to (RII and the RII Paradise
Subsidiaries) under the standards of the American Institute
of Certified Public Accountants (Code of Professional Ethics
Rule 101 and related interpretations).
2. We have audited the combined statements of
operations in respect of the Paradise Island Business for
the three fiscal years ending December 31, 1992, and the
combined balance sheets in respect of the Paradise Island
Business as of December 31, 1990, December 31, 1991 and
December 31, 1992. These financial statements and our
report with respect thereto dated [ ] are
included as Exhibit A to this letter. We have not audited
any financial statements as of any date or for any period
subsequent to December 31, 1992. Therefore, save as set
forth in this letter, we are unable to and do not express
any opinion on any unaudited interim financial statements as
of any date or for any period subsequent to December 31,
1992.
3. For the purposes of this letter we have read
the 1993 minutes of meetings of the shareholders and the
boards of directors of RII and each of the RII Paradise
Subsidiaries as set forth in the minute books of those
<PAGE>
companies as at the date hereof, officials of RII and of the
RII Paradise Subsidiaries having advised us that the minutes
of all such meetings through that data were set forth
therein. In addition, with respect to the six month period
ended June 30, 1993, we have:
(a) read the unaudited combined statement of
operations in respect of the Paradise Island Business
for the fiscal quarters ending March 31, 1993 and June
30, 1993 and the unaudited combined balance sheets in
respect of the Paradise Island Business as of March 31,
1993 and June 30, 1993. These financial statements are
included as Exhibit B to this letter; and
(b) made inquiries of certain officials of RII
and the RII Paradise Subsidiaries who have
responsibility for financial and accounting matters
regarding whether the unaudited financial statements
referred to in paragraph (a) have been prepared on a
basis consistent with that of the audited financial
statements referred to in paragraph 2.
4. With respect to the monthly periods ended
July 31, August 31 and September 30, 1993 we have:
(a) read the unaudited combined statement of
operations in respect of the Paradise Island Business
for each of the calendar months ending July 31, August
31, and September 30, 1993 and the unaudited balance
sheets in respect of the Paradise Island Business as of
July 31, August 31 and September 30, 1993. These
financial statements are included as Exhibit C to this
letter; and
(b) made inquiries of certain officials of RII
and the RII Paradise Subsidiaries who have
responsibility for financial and accounting matters
regarding whether the unaudited financial statements
referred to in paragraph (a) have been prepared on a
basis consistent with that of the audited financial
statements referred to in paragraph 2.
5. Nothing came in our attention as a result of
the foregoing procedures in paragraphs 3 or 4 above that
caused us to believe that:
(a) the unaudited combined financial statements
referred to in Paragraphs 3(a) and 4(a) are not in
<PAGE>
conformity with GAAP applied on a consistent basis
throughout the period covered or were not prepared on a
basis consistent with that of the audited financial
statements referred to in paragraph 2 [except
for ]; or
(b) at each of June 30, July 31, August 31 and
September 30, 1993 (i) there was any decrease in net
current assets or in fixed assets other than normal
depreciation or increases in long-term liabilities or
contingencies as compared with amounts shown in the
December 31, 1992 audited balance sheet or (ii) there
were any decreases, as compared with the corresponding
period in the preceding year, in the amount of
operating revenues or income [except for ].
6. Officials of RII and RII paradise
Subsidiaries have advised us that no financial statements as
of any date or for any period subsequent to [September 30,]
1993, are available; accordingly, the procedures carried out
by us with respect to changes in financial statement items
after [September 30,] 1993, have, of necessity, been even
more limited than those with respect to the periods ending
[September 30,] 1993. We have made inquiries of certain
officials of RII and the RII Paradise Subsidiaries who have
responsibility for financial and accounting matters
regarding whether:
(a) there was any decrease as at [ ], 1993,
in net current assets or in fixed assets other than
normal depreciation or increases in long-term
liabilities or contingencies as compared with amounts
shown on the [September 30,] 1993, unaudited combined
balance sheet;
(b) for the period from [September 30,] 1993 to
[ ], 1993, there were any decreases, as
compared with the corresponding period in the preceding
year, in the amount of operating revenues or income; or
(c) there were any liabilities or obligations
incurred since [September 30,] 1993, other than
liabilities and obligations incurred in the ordinary
course of business consistent with past practice, not
shown or adequately provided for in the [September 30,]
1993 unaudited combined balance sheet.
7. On the basis of the procedures referred to in
paragraph 6 and our reading of the minutes as described in
<PAGE>
paragraph 3, nothing came to our attention that caused us to
believe that there was any such change or decrease, or any
such liabilities or obligations, as is mentioned in
paragraph 6 except for [ ].
Very truly yours,
Sun International Hotels Limited
[ ]
<PAGE>
EXHIBIT G
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of December __, 1993,
by and among Resorts International, Inc., a Delaware
corporation ("RII"), Sun International Hotels Limited, a
Bahamian domestic corporation ("Buyer") and ________________
(the "Escrow Agent"). Capitalized terms used herein and not
defined are used as defined in the Purchase Agreement
referred to below.
W I T N E S E T H:
- - - - - - - - -
WHEREAS, RII and Buyer have entered into a
Purchase Agreement, dated as of the date hereof (the
"Purchase Agreement"), whereby Buyer will acquire the Shares
and certain Buyer Subsidiaries will acquire the RII Paradise
Assets pursuant to the terms of the Purchase Agreement;
WHEREAS, the Buyer has agreed to secure Buyer's
obligations under the Purchase Agreement by the delivery
into escrow of Buyer's Escrowed Property, as described
below;
WHEREAS, RII has agreed to secure its obligations
to pay Buyer Expense Reimbursement to Buyer as provided in
the Purchase Agreement by the delivery into escrow of RII's
Escrowed Property, as described below; and
WHEREAS, the Escrow Agent is willing to serve as
escrow agent and hold the Escrowed Property (as hereinafter
defined) in accordance with the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing
and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Buyer hereby agrees to transfer to the Escrow
Agent on December 1, 1993 cash or immediately available
funds in the amount of Five Million Dollars (US $5,000,000)
("Buyer's Escrowed Property"), and RII hereby agrees to
transfer to the Escrow Agent on December 1, 1993 cash or
immediately available funds in the amount of Four Million
Dollars (US $4,000,000) ("RII's Escrowed Property", and
together with Buyer's Escrowed Property, the "Escrowed
Property"), unless the Purchase Agreement shall have been
terminated by Buyer or RII at or prior to 11:59 p.m. on
November 30, 1993. The Escrow Agent shall not be liable or
<PAGE>
responsible for the collection of the proceeds of any check
payable or endorsed to the Escrow Agent hereunder.
2. The Escrow Agent shall deposit the Escrowed
Property in direct obligations of, or obligations guaranteed
by, the United States of America, or certificates of deposit
or interest bearing accounts of any bank or trust company,
incorporated under the laws of the United States of America
or any state, which has combined capital and surplus of not
less than $100,000,000, all as selected by the Escrow Agent
in its sole discretion. Any interest earned on the Escrowed
Property shall be apportioned among the Buyer's Escrowed
Property and RII's Escrowed Property in proportion to their
percentage of the Escrowed Property, and such interest shall
be deemed to be included in the definition of each of
Buyer's Escrowed Property and RII's Escrowed Property,
respectively.
3. Buyer hereby grants to RII a security
interest in the Buyer's Escrowed Property to secure the full
and prompt payment and performance, when due, of Buyer's
obligations under the Purchase Agreement up to and including
the Closing, including without limitation, Buyer's
obligation to pay, when due, the Aggregate Purchase Price.
4. RII hereby grants to Buyer a security
interest in RII's Escrowed Property to secure the full and
prompt payment, when due, of RII's obligation to pay to
Buyer any Buyer Expense Reimbursement which Buyer shall be
entitled to receive under the Purchase Agreement.
5. (a) The Escrow Agent shall hold the Escrowed
Property and shall only release the Escrowed Property as
follows:
(i) promptly upon receipt of, and in
accordance with, written instructions signed
by both Buyer and RII; or
(ii) promptly upon receipt of, and in
accordance with, an order or judgment (which
shall not have been stayed) of a court of
competent jurisdiction directing the Escrow
Agent as to the disposition of the Escrowed
Property.
(b) It is understood that Buyer's Escrowed
Property merely secures the performance and payment of the
<PAGE>
obligations of Buyer that are described above, that RII's
Escrowed Property merely secures the performance and payment
of the obligations of RII that are described above and that
this Agreement in no way prejudices or alters any party's
rights or remedies against any other party for breaches of
such obligations.
(c) RII agrees that any funds released to it
under or upon the termination of this Escrow Agreement,
regardless of whether such funds represent a payment out of
Buyer's Escrowed Property or a return of any portion of
RII's Escrowed Property, shall (i) be included in the
calculation of "Excess Cash," as such term is defined in the
Reorganization Plan (as defined in the Purchase Agreement),
and (ii) used solely and exclusively for distribution to the
holders of RII's Senior Secured Redeemable Notes, Series A
and Series B pursuant to the Reorganization Plan.
6. The Escrow Agent shall be entitled to rely
upon, and shall be fully protected from all liability, loss,
cost, damage or expense in acting or omitting to act
pursuant to, any instruction, order, judgment,
certification, affidavit, demand, notice, opinion,
instrument or other writing delivered to it hereunder
without being required to determine the authenticity of such
document, the correctness of any fact stated therein, the
propriety of the service thereof or the capacity, identity
or authority of any party purporting to sign or deliver such
document unless grossly negligent.
7. The duties of the Escrow Agent are only as
herein specifically provided, and are purely ministerial in
nature. The Escrow Agent shall neither be responsible for,
or under, nor chargeable with knowledge of, the terms and
conditions of any other agreement, instrument or document in
connection herewith, including, without limitation, the
Purchase Agreement, and shall be required to act in respect
of the Escrowed Property only as provided in this Agreement.
This Agreement sets forth all the obligations of the Escrow
Agent with respect to any and all matters pertinent to the
escrow contemplated hereunder and no additional obligations
of the Escrow Agent shall be implied from the terms of this
Agreement or any other agreement. The Escrow Agent shall
incur no liability in connection with the discharge of its
obligations under this Agreement or otherwise in connection
therewith, except such liability as may arise from the gross
negligence or willful misconduct of the Escrow Agent.
<PAGE>
8. The Escrow Agent may consult with counsel of
its choice and shall not be liable for any action taken or
omitted to be taken by the Escrow Agent in good faith in
accordance with the advice of such counsel.
9. The Escrow Agent shall not be bound by any
modification, cancellation or rescission of this Agreement
unless in writing and signed by the Escrow Agent.
10. The Escrow Agent shall have no tax reporting
duties with respect to the Escrowed Property or income
thereon, such duties being the responsibility of the party
or parties which receive, or have the right to receive, any
taxable income hereunder. Buyer, in all events, will
receive all income from the Buyer's Escrowed Property for
all tax purposes, be the tax owner of the Buyer's Escrowed
Property for all tax purposes, and shall pay all tax on the
income thereon; and RII, in all events, will receive all
income from RII's Escrowed Property for all tax purposes, be
the tax owner of RII's Escrowed Property for all tax
purposes, and shall pay all tax on the income thereon.
Notwithstanding the foregoing, the Escrow Agent has the
authority to comply with the provisions of Section 468B(g)
of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder. Such authority shall
include, without limitation, (a) the filing of tax returns
(including information returns) with respect to the Escrowed
Property or income thereon, (b) the payment of any tax,
interest or penalties imposed thereon, (c) the withholding
of any amounts which are required to be withheld and (d) the
payment over of such withheld amounts to the appropriate
taxing authority. The parties to this Agreement, other than
the Escrow Agent, shall provide the Escrow Agent with all
information necessary to enable the Escrow Agent to comply
with the foregoing. The Escrow Agent may withdraw from the
Escrowed Property amounts necessary to pay all applicable
income or withholding taxes (together with any and all
interest and penalties thereon) that are required to be
paid.
11. The Escrow Agent is acting only as a
stakeholder with respect to the Escrowed Property. If any
dispute arises as to whether the Escrow Agent is obligated
to deliver all or any portion of the Escrowed Property or as
to whom all or any portion of the Escrowed Property is to be
delivered or the amount thereof, the Escrow Agent shall not
be required to make any delivery, but in such event the
Escrow Agent may hold the Escrowed Property (or the disputed
<PAGE>
portion thereof) until receipt by the Escrow Agent of
instructions in writing, signed by all parties which have,
or claim to have, an interest in the Escrowed Property,
directing the disposition of the Escrowed Property (or the
disputed portion thereof), or in the absence of such
authorization, the Escrow Agent may hold the Escrowed
Property (or the disputed portion thereof) until receipt of
a certified copy of a final judgment of a court of competent
jurisdiction providing for the disposition of such Escrowed
Property. The Escrow Agent may require, as a condition to
the disposition of the Escrowed Property (or the disputed
portion thereof) pursuant to written instructions,
indemnification and/or opinions of counsel, in form and
substance satisfactory to the Escrow Agent, from each party
providing such instructions. If such written instructions,
indemnification and opinions are not received, or
proceedings for such determination are not commenced, within
thirty (30) days after receipt by the Escrow Agent of notice
of any such dispute and diligently continued, or if the
Escrow Agent is uncertain as to which party or parties are
entitled to all or any portion of the Escrowed Property, the
Escrow Agent may either (a) hold the Escrowed Property (or
the disputed portion thereof) until receipt of (i) such
written instructions and indemnification or (ii) a certified
copy of a final judgment of a court of competent
jurisdiction providing for the disposition of the Escrowed
Property (or the disputed portion thereof), or (b) deposit
the Escrowed Property (or the disputed portion thereof) in
the registry of a court of competent jurisdiction; provided,
however, that notwithstanding the foregoing, the Escrow
Agent may, but shall not be required to, institute legal
proceedings of any kind.
12. Buyer and RII jointly and severally agree to
reimburse the Escrow Agent on demand for, and to indemnify
and hold the Escrow Agent harmless against and with respect
to, any and all losses, liabilities, damages, or expenses
(including, without limitation, reasonable attorneys' fees
and expenses) that the Escrow Agent may suffer or incur in
connection with the entering into of this Agreement and
performance of its obligations under this Agreement or
otherwise in connection herewith, except to the extent any
such loss, liability, damage or expense arises from the
gross negligence or willful misconduct of the Escrow Agent.
Without in any way limiting the foregoing, the Escrow Agent
shall be reimbursed for the cost of all reasonable legal
fees and costs incurred by it in acting as the Escrow Agent
hereunder. The Escrow Agent shall have the right at any
<PAGE>
time and from time to time to charge, and reimburse itself
from, the Escrowed Property for all amounts to which it is
entitled pursuant this Agreement, such charges to be made
pro rata between the Buyer's Escrowed Property and RII's
Escrowed Property in accordance with the amounts thereof as
of the date hereof.
13. The Escrow Agent and any successor escrow
agent may at any time resign as such by delivering the
Escrowed Property to either (a) any successor escrow agent
designated by Buyer and RII in writing, or (b) any court
having competent jurisdiction. Upon its resignation and
delivery of the Escrowed Property as set forth in this
paragraph, the Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with
the escrow contemplated by this Agreement.
14. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their respective
successors and assigns. Nothing in this Agreement, express
or implied, shall give to anyone, other than the parties
hereto and their respective permitted successors and
assigns, any benefit, or any legal or equitable right,
remedy or claim, under or in respect of this Agreement or
the escrow contemplated hereby.
15. Any notice authorized or required to be given
to a party hereto pursuant to this Agreement shall be deemed
to have been given when hand-delivered, sent by telefax or
established overnight courier (including but not limited to
DHL or Federal Express), or when mailed by United States
certified or registered mail, postage prepaid, return
receipt requested, to the address set forth under such
party's name on the signature page of this Agreement. Any
party may change such address by giving notice thereof in
writing to the other parties hereto in the same manner as
set forth above.
16. (a) Any legal action or proceeding with
respect to this Agreement or any document related thereto
may be brought in the United States District Court for the
Southern District of New York (or, if such court does not
have jurisdiction, the courts of the State of New York
sitting in the Borough of Manhattan), and, by execution and
delivery of this Agreement, each of the parties hereby
accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid
courts. Each of the parties hereby irrevocably waives any
<PAGE>
objection, including, without limitation, any objection to
the laying of venue or based on the grounds of FORUM NON
CONVENIENS, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective
jurisdictions and consents to the granting of such legal or
equitable relief as is deemed appropriate by the court.
(b) Each of the parties irrevocably consents
to the service of process of any of the aforesaid courts in
any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to
the address provided herein or in the Purchase Agreement or,
in the case of Buyer, to the address of its duly-appointed
domestic agent for service and receipt of process, such
service to become effective upon receipt.
(c) Buyer hereby irrevocably appoints and
designates as its lawful agent and attorney for receipt and
service of process in any action arising or taken hereunder
by the Escrow Agent or RII the law firm of Cravath, Swaine &
Moore, 825 Eighth Avenue, New York, New York 10019.
(d) This Agreement shall be governed by and
construed in accordance with the internal laws of the State
of New York, without giving effect to the conflicts of laws
provisions thereof.
17. TO THE FULL EXTENT PERMITTED BY LAW, EACH OF
THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE ESCROW AGENT
ENTERING INTO THIS AGREEMENT.
18. This Agreement may be executed in any number
of separate counterparts, each of which shall, collectively
and separately, constitute one agreement.
19. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter,
singular or plural, as the identity of the parties hereto
taken within context may require.
20. The rights of the Escrow Agent contained in
this Agreement, including without limitation the right to
<PAGE>
indemnification, shall survive the resignation of the Escrow
Agent and the termination of the escrow contemplated
hereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the day and year
first written above.
RESORTS INTERNATIONAL, INC.
By:___________________________________
Name:
Title:
1133 Boardwalk
Atlantic City, N.J. 08401
Attn: Christopher D. Whitney, Esq.
SUN INTERNATIONAL HOTELS LIMITED
By:___________________________________
Name:
Title:
c/o Cravath, Swaine & Moore
825 Eighth Avenue
New York, N.Y. 10019
Attn: James M. Edwards, Esq.
[NAME OF ESCROW AGENT]
By:___________________________________
Name:
Title:
[address to be supplied]
<PAGE>
EXHIBIT H
GUARANTY
GUARANTY, dated October __, 1993, made by SUN
INTERNATIONAL INVESTMENTS LIMITED, a British Virgin Islands
company (the "Guarantor), in favor of the Guarantied Party
referred to below.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Sun International Hotels Limited, a
Bahamian domestic company (the "Buyer"), has entered into a
Purchase Agreement, dated as of October __, 1993, with
Resorts International, Inc. ("Seller") (said Agreement, as
it may be amended or otherwise modified from time to time,
being the "Purchase Agreement", and capitalized terms not
defined herein but defined therein being used herein as
therein defined); and
WHEREAS, the Guarantor owns beneficially and of
record 100% of the capital stock of the Buyer; and
WHEREAS, it is a condition precedent under the
Purchase Agreement to the obligations of Seller under the
Purchase Agreement that the Guarantor shall have executed
and delivered this Guaranty; and
WHEREAS, the Seller is herein referred to from
time to time as the "Guarantied Party";
NOW, THEREFORE, in consideration of the premises
and to induce the Seller to enter into the Purchase
Agreement, the Guarantor hereby agrees as follows:
SECTION 1. GUARANTY. The Guarantor hereby
unconditionally and irrevocably guarantees the full and
prompt performance or payment when due of the obligations of
Buyer under the Purchase Agreement (the "Obligations"),
whether now or hereafter existing or arising, and any and
all expenses (including, without limitation, counsel fees
and expenses) incurred by the Guarantied Party in enforcing
any rights under this Guaranty. This Guaranty is an
absolute guaranty of payment and performance and not a
guaranty of collection.
SECTION 2. GUARANTY ABSOLUTE. The Guarantor
guaranties that the Obligations will be performed or paid
strictly in accordance with the terms of the Purchase
<PAGE>
Agreement and the other documents contemplated thereby,
regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or
the rights of the Guarantied Party with respect thereto.
The liability of the Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any
provision of the Purchase Agreement or any other agreement
or instrument relating to the Purchase Agreement, or
avoidance or subordination of any of the Obligations;
(ii) any change in the time, manner or place of
payment of, or in any other term of, or any increase in the
amount of, all or any of the Obligations, or any other
amendment or waiver of any term of, or any consent to
departure from any requirement of, the Purchase Agreement or
any other document contemplated thereby;
(iii) any release or amendment or waiver of any
term of any other guaranty of, or any consent to departure
from any requirement of any other guaranty of, all or any of
the Obligations;
(iv) the absence of any attempt to collect any
Obligations due from the Buyer or from any other guarantor
or any other action to enforce the same or the election of
any remedy by the Guarantied Party;
(v) any waiver, consent, extension, forbearance
or granting of any indulgence by the Guarantied Party with
respect to any provision of the Purchase Agreement or any
document contemplated thereby;
(vi) the commencement by the Guarantied Party or
Buyer of any case or proceeding in bankruptcy;
(vii) the election by the Guarantied Party in any
proceeding under chapter 11 of the Bankruptcy Code of the
application of section 1111(b)(2) of the Bankruptcy Code or
similar rules, provisions or laws of any foreign
jurisdiction;
(viii) any borrowing or grant of a security
interest by the Buyer, as debtor-in-possession, under
section 364 of the Bankruptcy Code or similar rules,
provisions or laws of any foreign jurisdiction;
G-2
<PAGE>
(ix) the disallowance of all or any portion of
the claims of the Guarantied Party for payment of any of the
Obligations, under section 502 of the Bankruptcy Code or
similar rules, provisions or laws of any foreign
jurisdiction; or
(x) any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a
purchaser of stock or assets or a guarantor.
SECTION 3. WAIVER. (a) The Guarantor hereby
(i) waives (A) promptness, diligence, presentment, notice of
acceptance and any and all other notices with respect to any
of the Obligations or this Guaranty, (B) any requirement
that the Guarantied Party protect, secure, perfect or insure
any security interest in or other lien on any property
subject thereto or exhaust any right or take any action
against the Buyer or any other person, (C) the filing of any
claim with a court in the event of receivership or
bankruptcy of the Buyer, including, without limitation, any
such similar claim filed in any foreign jurisdiction, (D)
protest or notice with respect to nonpayment of all or any
of the Obligations, (E) the benefit of any statute of
limitation, (F) all demands whatsoever (and any requirement
that same be made on the Buyer as a condition precedent to
the Guarantor's obligations hereunder); and (ii) covenants
and agrees that this Guaranty will not be discharged except
by complete performance of the Obligations and any other
obligations of the Guarantor contained herein.
(b) If, in the exercise of any of its rights and
remedies, the Guarantied Party shall forfeit any of its
rights or remedies, including, without limitation, its right
to enter a deficiency judgment against the Buyer or any
other person, whether because of any applicable law
pertaining to "election of remedies" or the like, the
Guarantor hereby consents to such action by the Guarantied
Party and waives any claim based upon such action. Any
election of remedies which results in the denial or
impairment of the right of the Guarantied Party to seek a
deficiency judgment against the Buyer shall not impair the
obligation of the Guarantor to pay the full amount of the
Obligations or any other obligation of the Guarantor
contained herein.
(c) The Guarantor agrees that notwithstanding the
foregoing and without limiting the generality of the
foregoing if, after the occurrence of any event giving rise
G-3
<PAGE>
to a claim by Seller against Buyer under the Purchase
Agreement, the Guarantied Party is prevented by applicable
law from exercising its rights to enforce or exercise any
right or remedy with respect to the Obligations, the
Guarantor agrees to pay to Seller, upon demand therefor, the
amount that would otherwise have been due and payable had
such rights and remedies been permitted to be exercised by
the Guarantied Party.
(d) The Guarantor consents and agrees that the
Guarantied Party shall be under no obligation to marshall
any assets in favor of the Guarantor or otherwise in
connection with obtaining payment of any or all of the
Obligations from any person or source.
SECTION 4. NO SUBROGATION, ETC. The Guarantor
waives and relinquishes any and all rights which it may
acquire by way of subrogation, contribution or reimbursement
by reason of this Guaranty or by any payment made hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The
Guarantor hereby represents and warrants to the Guarantied
Party as follows:
(a) The Guarantor is a company duly organized,
validly existing and in good standing under the laws of the
British Virgin Islands.
(b) The execution, delivery and performance by
the Guarantor of this Guaranty:
(i) are within its corporate powers;
(ii) have been duly authorized by all necessary
corporate action, including, without limitation, the
consent of shareholders where required; and
(iii) do not and will not (A) contravene its
articles of association or other comparable governing
documents, (B) violate any other applicable laws or
other legal requirements, or any order or decree of any
Governmental Authority or arbitrator, (C) conflict with
or result in the breach of, or constitute a default
under, or result in or permit the termination or
acceleration of, any of its obligations under any
contracts, (D) result in the creation or imposition of
any lien upon any of its property or (E) require the
consent, authorization by, or approval of, or notice
G-4
<PAGE>
to, or filing or registration with, any Governmental
Authority or any other person.
(c) This Guaranty has been duly executed and
delivered by the Guarantor and is the legal, valid and
binding obligation of the Guarantor enforceable against it
in accordance with its terms.
(d) There are no pending or, to the knowledge of
the Guarantor, threatened actions, investigations or
proceedings affecting the Guarantor or any of its
subsidiaries before any Governmental Authority or arbitrator
other than those that in the aggregate, if adversely
determined, would have no material adverse effect on the
business, operations, properties, condition (financial or
otherwise), assets or liabilities of Guarantor (a "Material
Adverse Effect"). The performance by the Guarantor under
this Guaranty is not restrained or enjoined (either
temporarily, preliminarily or permanently) and no conditions
have been imposed, or have been threatened to be imposed, by
any Governmental Authority or arbitrator that in the
aggregate would have a Material Adverse Effect or a material
adverse effect on the Guarantor's ability to timely perform
its obligations hereunder.
SECTION 6. AMENDMENTS, ETC. No amendment or
waiver of any provision of this Guaranty nor consent to any
departure by the Guarantor herefrom shall in any event be
effective unless the same shall be in writing, approved by
Fidelity Management & Research Co. (on behalf of various
funds managed by it) and TCW Special Credits (on behalf of
various funds and accounts managed by it) and signed by the
Seller, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose
for which given.
SECTION 7. ADDRESSES FOR NOTICES. All notices
and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopy or cable
communication) and mailed, telegraphed, telexed, telecopied,
cabled or delivered by hand, if to the Guarantor, addressed
to it at the address of such Guarantor specified on the
signature pages hereof or at the address of its agent for
receipt and service of process set forth in Section 12
hereof (in either case with a copy to Sun International
Investments Limited, Gravel Hill, Badgemore House, Henley-
on-Thames, Oxfordshire RG9 4NR, United Kingdom), if to the
Guarantied Party, addressed to it at the address of the
G-5
<PAGE>
Guarantied Party specified in the Purchase Agreement, or, as
to each party, at such other address as shall be designated
by such party in a written notice to each other party
complying as to delivery with the terms of this Section.
All such notices and other communications shall, when
mailed, telegraphed, telexed, telecopied, cabled or
delivered, be effective when received or when delivered by
hand to the addressee or its agent, as the case may be.
SECTION 8. NO WAIVER; REMEDIES. (a) No failure
on the part of the Guarantied Party to exercise, and no
delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any
remedies provided by law or the Purchase Agreement.
(b) Failure by the Guarantied Party at any time
or times hereafter to require strict performance by the
Buyer, the Guarantor or any other person of any of the
provisions, warranties, terms or conditions contained in the
Purchase Agreement or any other document contemplated
thereby now or at any time or times hereafter executed by
the Buyer, the Guarantor or such other Person and delivered
to the Guarantied Party shall not waive, affect or diminish
any right of the Guarantied Party at any time or times
hereafter to demand strict performance thereof, and such
right shall not be deemed to have been modified or waived by
any course of conduct or knowledge of the Guarantied Party
or any agent, officer, employee of the Guarantied Party.
(c) No waiver by the Guarantied Party of any
default shall operate as a waiver of any other default or
the same default on a future occasion, and no action by the
Guarantied Party permitted hereunder shall in any way affect
or impair any of the rights of the Guarantied Party or the
obligations of the Guarantor under this Guaranty or under
the Purchase Agreement or any other document contemplated
thereby. Any determination by a court of competent
jurisdiction of the amount constituting any of the
Obligations shall be conclusive and binding on the Guarantor
irrespective of whether the Guarantor was a party to the
suit or action in which such determination was made;
PROVIDED, HOWEVER, that if the Buyer timely shall have
appealed any such determination and shall have obtained a
stay of execution pending such appeal, then such
determination shall not be binding on the Guarantor during
G-6
<PAGE>
the pendency of such appeal (but shall become binding upon
the Guarantor upon the final resolution of such appeal).
SECTION 9. CONTINUING GUARANTY. This Guaranty is
a continuing guaranty and shall (i) remain in full force and
effect until indefeasible performance or payment in full of
the Obligations and all other amounts payable under this
Guaranty, (ii) be binding upon the Guarantor, its successors
and permitted assigns, and (iii) inure to the benefit of and
be enforceable by the Guarantied Party and its successors,
transferees, and assigns.
SECTION 10. REINSTATEMENT; TERMINATION.
(a) This Guaranty shall remain in full force and
effect and continue to be effective should any petition be
filed by or against Buyer for liquidation or reorganization,
should Buyer become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of Buyer's assets,
and shall, to the fullest extent permitted by law, continue
to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations or such part thereof,
whether as a "voidable preference", "fraudulent transfer",
or otherwise, all as though such payment or performance had
not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the
Obligations shall, to the fullest extent permitted by law,
be reinstated and deemed reduced only by such amount paid
and not so rescinded, reduced, restored or returned.
(b) Subject to paragraph (a) above, this Guaranty
shall terminate, and all representations, warranties,
covenants, undertakings, agreements and obligations of
Guarantor hereunder shall be deemed satisfied in full, at
the time when Buyer shall have performed (or Seller shall
have waived performance of) all of Buyer's material
obligations under the Purchase Agreement to be performed by
Buyer on or before the Closing Date, including but not
limited to the delivery of the Aggregate Purchase Price to
Seller and the due, valid and proper execution by Buyer of
all agreements contemplated by the Purchase Agreement to
which Buyer is a party.
G-7
<PAGE>
SECTION 11. GOVERNING LAW. This guaranty shall
be governed by, and construed and interpreted in accordance
with, the internal law of the State of New York, without
giving effect to the conflicts of law provisions thereof.
Wherever possible, each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Guaranty
shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity and without invalidating the
remaining provisions of this Guaranty.
SECTION 12. SUBMISSION TO JURISDICTION; JURY
TRIAL. (a) Any legal action or proceeding with respect to
this Guaranty or any document related thereto may be brought
in the United States District Court for the Southern
District of New York (or, if such court does not have
jurisdiction, the courts of the State of New York sitting in
the Borough of Manhattan), and, by execution and delivery of
this Guaranty, the Guarantor hereby accepts for itself and
in respect of its property, generally and unconditionally,
the jurisdiction of the aforesaid courts. The Guarantor
hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which it may now or
hereafter have to the bringing of any such action or
proceeding in such respective jurisdictions and consents to
the granting of such legal or equitable relief as is deemed
appropriate by the court.
(b) The Guarantor irrevocably consents to the
service of process of any of the aforesaid courts in any
such action or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, to the
Guarantor at its address provided herein or to the Guarantor
at the address of its duly-appointed domestic agent for
service of process, such service to become effective 30 days
after such mailing.
(c) Nothing contained in this Section 12 shall
affect the right of the Guarantied Party to serve process in
any other manner permitted by law or commence legal
proceedings or otherwise proceed against the Guarantor or
any of the Guarantor's property in any other jurisdiction.
(d) The Guarantor waives any right it may have to
trial by jury in respect of any litigation based on, arising
out of, under or in connection with this Guaranty or any
G-8
<PAGE>
other document executed in connection with the transactions
contemplated hereby, or any course of conduct, course of
dealing, verbal or written statement or other action of the
Guarantied Party.
(e) The Guarantor hereby irrevocably appoints and
designates as its lawful agent and attorney for receipt and
service of process in any action arising or taken hereunder
by the Guarantied Party the law firm of Cravath, Swaine &
Moore, 825 Eighth Avenue, New York, New York 10019 (Attn:
James M. Edwards, Esq.).
SECTION 13. TITLES. The Section titles contained
in this Guaranty are and shall be without substantive
meaning or content of any kind whatsoever and are not a part
of this Guaranty.
SECTION 14. ASSIGNMENT. This Guaranty and the
Guarantor's obligations hereunder may not be assigned by the
Guarantor to any person without the prior written consent of
the Guarantied Party, and any such purported assignment
without such consent shall be null and void and of no force
or effect.
SECTION 15. EXECUTION IN COUNTERPARTS. This
Guaranty may be executed in any number of counterparts and
by different 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 Guaranty.
SECTION 16. MISCELLANEOUS. All references herein
to the Buyer or to the Guarantor shall include their
respective successors and permitted assigns, including,
without limitation, a receiver, trustee or debtor-in-
possession of or for the Buyer or the Guarantor. All
references to the singular shall be deemed to include the
plural where the context so requires.
G-9
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this
Guaranty to be duly executed and delivered by its duly
authorized officer on the date first above written.
SUN INTERNATIONAL INVESTMENTS LIMITED
By:_________________________
Title:
Sun International Investments Limited
c/o Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Acknowledged:
RESORTS INTERNATIONAL, INC.
By:_________________________
Title:
G-10
<PAGE>
Exhibit I
EXECUTION COPY
STOCK SUBSCRIPTION AGREEMENT dated as of
October 11, 1993, between SUN INTERNATIONAL
INVESTMENTS (U.K.) LIMITED, a British Virgin
Islands company (the "Subscriber"), and SUN
INTERNATIONAL HOTELS LIMITED, a Bahamian
corporation (the "Corporation").
1. Subject to the condition that the
Corporation's obligation to consummate the transactions
contemplated by the Purchase Agreement dated as of
October 11, 1993, between the Corporation and Resorts
International, Inc. (the "Purchase Agreement") has become
unconditional and the Closing thereunder is to proceed, and
in consideration of the payment to the Corporation on or
before the Closing Date (as defined in the Purchase
Agreement) of $90,000,000, the Subscriber subscribes for and
offers to purchase, and the Corporation hereby accepts such
offer and agrees to issue to the Subscriber, such number of
the Corporation's Series B Ordinary Shares, of $0.01 each,
so that immediately after giving effect to the Closing such
number Series B Ordinary Shares shall constitute 60% of the
Corporation's outstanding capital stock.
2. The Corporation represents and warrants that
such shares when issued, will be validly issued, fully paid
and nonassessable.
3. The Corporation agrees to reimburse Parent for
certain fees and expenses as set forth in Section 5.08 of
the Purchase Agreement.
4. The Corporation agrees that if, in accordance
with the terms of the Purchase Agreement or the Escrow
Agreement (as defined in the Purchase Agreement), Buyer is
to give written instructions with respect to the release of
Buyer's Escrowed Property (as defined in the Escrow
Agreement), then such instructions will provide that such
distributions will be made directly to the holders of the
Escrow Loan Notes (as defined in the Parent Subscription
<PAGE>
Agreement, which in turn is defined in the Purchase
Agreement).
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date hereof.
SUN INTERNATIONAL HOTELS
LIMITED,
by:
__________________________
Name:
Title:
SUN INTERNATIONAL INVESTMENTS
(U.K.) LIMITED,
by:
__________________________
Name:
Title:
<PAGE>
SCHEDULES FOR
PURCHASE AGREEMENT
between
RESORTS INTERNATIONAL, INC.
and
SUN INTERNATIONAL HOTELS LIMITED
Dated as of October 11, 1993
Unless otherwise defined in the Schedules all capitalized terms
used herein shall have the meanings ascribed to them in the Purchase
Agreement.
Matters reflected in these Schedules are not necessarily limited to
matters required by the Purchase Agreement to be reflected in the Schedules.
Such additional matters are set forth for informational purposes and do not
necessarily include other matters of a similar nature.
The annexes hereto form an integral part of this Schedule and are
incorporated by reference for all purposes as if set forth fully herein.
Nothing in these Schedules is intended to broaden the scope of any
representation or warranty of RII contained in the Purchase Agreement or to
create any covenant on the part of RII.
The Company is sometimes referred to in these Schedules as "RIB".
<PAGE>
Schedule 2.04
ALLOCATION OF AGGREGATE PURCHASE PRICE
<TABLE>
<CAPTION>
PROPERTY PURCHASE PRICE
-------- --------------
($000)
<S> <C>
Shares of the Company $120,000
RII Real Estate Assets and
RII Paradise Assets
(exclusive of any cash and
working capital included
therein) $ 5,000
-------
$125,000
</TABLE>
<PAGE>
Schedule 3.01
ASSUMED LIABILITIES
The designated Buyer Subsidiaries, as of the Closing Date, shall
assume severally from: (A) RII all liabilities and obligations relating to the
RII Real Estate Assets; and (B) the RII Paradise Subsidiaries all liabilities
and obligations of such RII Paradise Subsidiaries to the extent relating to the
conduct of the Paradise Island Business or use of the Paradise Island Assets,
including without limitation those liabilities and obligations which are (i)
properly included in the June 30 Balance Sheet (but specifically excluding all
Indebtedness and amounts due to Affiliates of RII) (ii) incurred in the usual,
regular and ordinary course of the Paradise Island Business since the June 30
Balance Sheet, except to the extent such liabilities or obligations were
incurred after the date of the Purchase Agreement and in breach of Section 6.01
thereof, (iii) related to Material Contracts of such RII Paradise Subsidiaries
set forth on Schedule 4.17 and such other Contracts of such RII Paradise
Subsidiaries that relate primarily to the Paradise Island Business, were
entered into the ordinary course of business and do not appear on Schedule
4.17 because they are too small to qualify as a Material Contract
(specifically excluding, however, liabilities relating to Non-Assignable
Contracts for which consents to assignment thereof to the designated
Buyer Subsidiaries have not been obtained as of the Closing Date),
(iv) related to the Hangar Lease as provided in Section 2.07
of the Purchase Agreement and (v) with respect to Taxes, only those Taxes
which are incurred or accrued after the Closing Date ("Assumed Taxes") and not
any Taxes based on or measured by net income, receipts or revenues.
Notwithstanding anything to contrary in this Schedule 3.01, neither Buyer nor
any Buyer Subsidiary is assuming any liability or obligation related to any
Benefit Plans (as defined in Section 4.12).
<PAGE>
Schedule 4.01
QUALIFICATIONS
I. Neither the Company, any Subsidiary of the Company, nor any RII
Paradise Subsidiary has any existing foreign qualifications.
II. Resorts International (Bahamas) 1984 Limited was incorporated in The
Bahamas. The Company's Subsidiaries were incorporated in The Bahamas:
1. Bahamas Developers Limited ("BDL")
2. Island Hotel Company Limited ("IHC")
3. Paradise Beach Inn, Limited ("PBI")
4. Paradise Enterprises Limited ("PEL")
5. Paradise Island Bridge Management Company Limited ("PIBM")
6. Paradise Island Limited ("PIL")
7. Paradise Security Services Limited ("PSSL")
8. Paradise Club Limited ("PCL")
III. The RII Paradise Subsidiaries were incorporated in the State of Florida:
1. ANTL, Inc. ("ANTL")
2. International Suppliers, Inc. ("ISI")
3. Paradise Island Airlines, Inc. ("PIA")
4. Resorts International Disbursement, Inc. ("RIDI")
5. Resorts Representation International, Inc. ("RRII")
6. Paradise Island Vacations, Inc. ("PIVI")
<PAGE>
Schedule 4.04
CAPITAL STOCK OF THE
COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
I. Percentage of
Outstanding
Name of Subsidiary of the Address where Stock Held By
Company Incorporated the Company
---------------------------------------------------------------------------
<S> <C> <C>
Bahamas Developers Limited Bahamas 100%
---------------------------------------------------------------------------
Island Hotel Company Limited Bahamas 100%
---------------------------------------------------------------------------
Paradise Beach Inn, Limited Bahamas (1)
---------------------------------------------------------------------------
Paradise Enterprises Limited Bahamas 100%
---------------------------------------------------------------------------
Paradise Island Bridge
Management Company Limited Bahamas 100%
---------------------------------------------------------------------------
Paradise Island Limited Bahamas 100%
---------------------------------------------------------------------------
Paradise Security Services Limited Bahamas 100%
---------------------------------------------------------------------------
Paradise Club Limited Bahamas 100%
---------------------------------------------------------------------------
<FN>
(1) 100% owned by Paradise Island Limited
</TABLE>
II. ENCUMBRANCES, ETC.
Collateral for the Old Series Notes includes 66% of the outstanding
voting stock and 100% of the outstanding non-voting stock of RIB.
Reference is made to the agreements and instruments listed under
paragraph IX of Schedule 4.17 and said paragraph IX hereby is
incorporated by reference in this Schedule 4.04.
<PAGE>
III. HCB RIGHT OF FIRST REFUSAL
Reference is made to the agreements and instruments listed under
paragraph III of Schedule 4.17 and said paragraph III hereby is
incorporated by reference in this Schedule 4.04.
IV. INVESTMENTS
Paradise Island Limited owns a 15% equity interest in High Point
Development Company Limited. Reference is made to the agreements and
instruments listed under paragraph VII of Schedule 4.17 and said
paragraph VII hereby is incorporated by reference in this Schedule
4.04.
<PAGE>
Schedule 4.05
PARADISE ISLAND FINANCIAL STATEMENTS
Combined financial statements of Resorts International (Bahamas) 1984
Limited, consolidated with its subsidiaries; Resorts International
Disbursement, Inc.; Paradise Island Vacations, Inc.; Resorts
Representation International, Inc.; International Suppliers,
Inc.; Paradise Island Airlines, Inc. and ANTL, Inc. (the "PIRI Group").
A. Audited combined balance sheets, at December 1991 and 1992; and the
unaudited combined balance sheet at June 30, 1993. See S-4
B. Audited combined statements of operations, cash flows, and statements of
changes in shareholder's equity for the periods January 1, 1990, through
August 31, 1990, and September 1, 1990, through December 31, 1990, the
years ended December 31, 1991, and 1992; and the unaudited combined
statements of operations for the half ended June 30, 1993. See S-4
<PAGE>
Schedule 4.06(a)
INDEBTEDNESS TO BE DISCHARGED
I. LETTERS OF CREDIT As of July 31, 1993
A. PIA-LOC #004/70045 for Paradise Island Airlines-
US Treasury Bills at BNS for Dash 7 lease. $ 498,663
B. PIA-LOC's for leases at MIA (#10192), WPB
(#10253), ORL (#10275) Airports and Airlines
Reporting Corporation (#10278) and Ages-Aircraft
(#10309):
a. Miami $120,000
b. WPBeach $ 50,000
c. Orlando $ 4,500
d. ARC $106,000
e. AGES $250,000 530,500
--------
C. RIDI-LOC (#10229) for Paradise Island Vacations. 70,000
D.
BANK AMOUNT EXPIRATION IN FAVOR OF
1. BNS $498,663 08-19-93 Concord Asset Management, Inc.
2a. CNB $120,000 03-03-94 Metropolitan Dade County Aviation
2b. CNB $ 50,000 12-15-93 Palm Beach County Dept. of Airports
2c. CNB $ 4,500 11-01-93 Greater Orlando Aviation Authority
2d. CNB $106,000 11-08-93 Airlines Reporting Corporation
2e. CNB $250,000 12-10-93 Ages-Aircraft Sales & Leasing
3. CNB $ 13,626 12-07-93 Northwestern National Insurance Co.
4. Bank of New York monthly Certificate of Deposit.
5. CNB $ 70,000 09-09-93 Airlines Reporting Corporation
6. Summit Trust Daily Repurchase Agreements.
7. Chemical Bank GE Capital Corp. Commercial Paper.
II. INTERCOMPANY INDEBTEDNESS
GRI will assume the obligation of RIB to repay the inter-company debt owed
by RIB to RIH in the amount of $50,000,000 plus any accrued interest thereon
and the inter-company debt owed by RIB to RII in the amount of $9,101,000.
<PAGE>
Schedule 4.06(b)
INDEBTEDNESS TO STAY WITH THE COMPANY OR TO BE
ASSUMED BY THE BUYER SUBSIDIARIES
I. Servisystems Capitalized Lease: Balance as of June 30, 1993
equaled $331,000, with a final payment date of November 15, 1995.
<PAGE>
Schedule 4.07
REAL PROPERTY
I. THE COMPANY
The Company, through its Subsidiaries, owns the properties described
in the annex to this Schedule 4.07.
Real property encumbrances with respect to these properties include
the following items:
A. Indenture of Mortgage dated November 14, 1988 between PBIL and
the Company.
B. Indenture of Mortgage dated as of November 14, 1988 between PIL
and the Company.
C. Indenture of Mortgage dated as of November 14, 1988 between IHCL
and the Company.
D. RIB Collateral Assignment Agreement between RIH, RIB, and PIL,
IHCL, PBIL and MHTC.
E. Casino leased from RIB to HCB under Lease Agreement dated
May 23, 1978.
F. Landing Rights Agreement for Paradise Island airstrip between
PIL and [Chalks] dated December 31, 1990.
G. Lease Agreement dated August 31, 1990 between Island Ranger
Helitours Limited and PIL for use of Old Chalk's ramp.
H. Lease between PIL and Shell Bahamas Limited dated December 5,
1989 for Paradise Island Shell gas station.
<PAGE>
II. RII
A. RII owns the property located at 915 N.E. 125th Street, North Miami,
Florida.
B. RII leases the 5th floor of the Concord Centre Building located at
2875 N.E. 191st Street, North Miami, Florida under Lease Agreement,
dated March 1, 1993, with Concord Centre, Ltd. Assignment of the
lease needs consent of the landlord.
C. RII leases part of the property located at 901 N.E. 125th Street,
North Miami, Florida under Lease Agreement, dated June 1, 1983, and
amendment thereof, dated June 22, 1992, with 901 Building.
Assignment of the lease needs consent of the landlord.
III. PIA
PIA leases the following properties:
A. Fort Lauderdale Airport Terminal Counter and Gate Space under Lease
Agreement, dated February 25, 1993, with Broward County, Florida.
Assignment of the lease needs consent of the landlord.
B. Land situated at Fort Lauderdale-Hollywood International Airport
under Lease Agreement, dated May 31, 1993, with Broward County,
Florida. Assignment of the lease needs consent of the landlord.
C. Month to month lease agreement number x-178 between Dade County,
Florida, and PIA, for baggage and terminal space at Miami
International Airport. No assignment or subleases allowed.
D. Lease agreement dated October 1, 1990 between USAir, Inc. and PIA
for ground handling agreement at West Palm Beach Airport, West Palm
Beach Florida. No assignment by either party without written
consent of either party.
<PAGE>
IV. VARIOUS INTERCOMPANY LEASES
A. One year renewable lease for office and warehouse facility located at
1550 S.W. 43rd Street, Fort Lauderdale under Lease Agreement dated
December 20, 1991 between PIA as Lessor and ISI as Lessee. Lessee
shall not sublet or assign without the written consent or the Lessor,
not to be unreasonably withheld.
B. Airport facility ("Airport") located on the southeast corner of
Paradise Island and related office space and counterspace in the the
Airport, under Lease Agreement dated December 20, 1991, expiration
2003 between PIL as Lessor and PIA as Lessee. Lease may not be
assigned without written consent of Lessor.
V. MISCELLANEOUS
A. Reference is made to the agreements and instruments listed in
Schedule 4.17 and said Schedule 4.17 is hereby incorporated by
reference in this Schedule 4.07
<PAGE>
ANNEX TO SCHEDULE 4.07
Annex A to this Schedule includes a map of Paradise Island and a map
of Andros Island showing the location of the plots described herein. A
copy of the maps may be viewed at the offices of Resorts International
(Bahamas) 1984 Limited, in Nassau, The Bahamas.
[MAP]
<PAGE>
SCHEDULE OF NON-OPERATING LAND OWNED ON P.I. @ 12/31/92
<TABLE>
<CAPTION>
Parcel Description Acres Book Basis
- -------- --------------------------------------- ------- ------------
<C> <S> <C> <C>
West of Paradise Lake and Canal:
6 Beach land east of H.I. 13.00 1,916,000
Saratoga Area and Inside Land:
7 Parcels F-H-I-J 9.81 1,086,000
9 Interior land 45.21 2,500,000
9ABC Optioned to Club Land*or 2.48 462,000
15A North of shipyard 0.92 149,000
Harbor Frontage:
12 West of Chalk's airdock 8.00 1,163,000
14 Industrial land 4.61 595,000
Oceanfront - East of Paradise Lake:
19 Hartford Beach 23.43 10,710,000
Center Island:
30 Shopping center area 7.60 1,896,397
27 Future hotel site 3.68 1,337,000
34 Inland land 6/93 conveyed 1.5
($300,000) to High Point 20.41 2,295,000
36 Inland land 16.87 1,248,000
East of Lot 8:
53 Cabbage and Lucayan beaches 19.19 3,988,000
54 Arawak beach 41.17 3,422,000
------- ------------
PIL "Admin" land acct - Non Op 216.38 33,067,397 (4)
======= ============
Harbor Frontage - P.I. Colony:
39 Block 1, Lot 6 0.81
45A Block 6, Lot 5 0.52
------- ------------
Total P.I. Colony - Non Op 1.33 196,214 (5)
======= ============
TOTAL NON-OP ACRES OWNED ON P.I. (FROM ABOVE) 217.71 33,263,611 (3)
TOTAL OPERAT ACRES OWNED ON P.I. (FROM RIGHT) 344.69 45,608,000
------- ------------
TOTAL ACREAGE OWNED PARADISE ISLAND 562.40 78,871,611
======= ============
________________________________________________________________________________
RECONCILE TO TOTAL LAND - RIB GROUP:
TOTAL ACREAGE OWNED ON P.I. FROM ABOVE 78,871,611
PIL - FREEPORT 1,000 (3)
PIL - SAN ANDROS 100,000 (3)
BDL 1,275,883
------------
TOTAL LAND OWNED BY RIB GROUP PER 10-K F/A @ 12/31/92 80,248,494 (1)
============
TOTAL ORIGINAL ACREAGE PER MAP: (LAND OWNED BY COMPANY) 722.31
DEEMED CONVEYED THROUGH 6/30/93 -159.91
------------
TOTAL ACREAGE OWNED PARADISE ISLAND @ 6/30/93 562.40
============
</TABLE>
<PAGE>
SCHEDULE OF OPERATING LAND OWNED ON P.I. @ 12/31/92
<TABLE>
<CAPTION>
Parcel Description Acres Book Basis
- -------- --------------------------------------- ------- ------------
<C> <S> <C> <C>
West of Paradise Lake and Canal:
3 Parking lot 1.05 263,000
Saratoga Area and Inside Land:
8 Casurina apartments 1.20 180,000
28 Norton house 0.65 130,000
Harbor Frontage:
11 Paradise landing 0.50 100,000
13 Chalk airdock 2.65 464,000
15 Shipyard 1.93 270,000
16 Warehouse and maintenance 4.15 726,000
Oceanfront - East of Paradise Lake:
17 North of Britannia Beach 10.72 5,360,000
20 Ocean Club 10.67 5,869,000
20A Ocean beach house 2.40 1,320,000
38A Utility area 2.52 1,134,000
Center Island:
23 Martinique, Boathouse, parking 2.27 1,022,000
24 Casino 3.97 1,787,000
26 Casino parking 2.95 959,000
32 Electric substation 0.17 0
36A Villa, tennis, versalles 11.13 2,226,000
37-38 Utility area 20.15 2,519,000
Harbor Frontage
29 Bridge end site 0.92 0
43 Cloister 1.34 469,000
51 Block 5 Back lot 0.63 221,000
East of Lot 8:
52 Golf course 137.53 4,814,000
55-56-57 Airport 63.00 6,300,000
Paradise Island Colony:
42 Myers house 0.65 195,000
------- ------------
(3)
TOTAL PIL OPERATING LAND 283.15 36,328,000 &(4)
======= ============
Paradise Paradise Beach Inn
1-4-5 TOTAL PBI OPERATING LAND 9.69 2,665,000 (2)
======= ============
18 Paradise Towers 8.72 4,360,000
22 Britannia Towers 5.01 2,255,000
------- ------------
TOTAL IHC OPERATING LAND 13.73 6,615,000 (2)
======= ============
ROADS & LAKES* 38.12
======= ============
TOTAL OPERATING ACRES OWNED ON P.I. 344.69 45,608,000
======= ============
<FN>
*DGB'S MAP SHOWS ORIGINAL TOTAL ROADS/LAKES ACREAGE OWNED TO BE 68.18. IT IS
ASSUMED THAT SOME OF THESE ACRES ARE INCLUDED IN AMERICAN APPRAISAL'S BREAKDOWN
BY PARCELS OF THE OPERATING ACRES OWNED ON P.I.-BECAUSE WE KNOW THAT TOTAL ORIG.
ACRES OWNED IS 722.31 (PER THE MAP) AND 158.41 ACRES HAVE BEEN SOLD THRU 12/92,
LEAVING 563.90 ACRES STILL OWNED. THUS, ONLY 38.12 ACRES ARE NOT ACCOUNTED FOR
IN AMERICAN APPRAISAL'S REPORT (REMAINING ROADS/LAKES).
(1) TIES TO TOTAL LAND OWNED BY RIB GROUP PER 10-K F/A @ 12/31/92.
(2) TIES TO TOTAL LAND OWNED BY PBI AND IHC PER 10-K F/A @ 12/31/92.
(3) SUM OF THESE TIE TO TOTAL LAND OWNED BY PIL PER 10-K F/A @ 12/31/92.
PIL OPERAT ON P.I. 36,328,000
PIL NON-OP ON P.I. 33,263,611
PIL FREEPORT 1,000
PIL SAN ANDROS 100,000
-----------
69,692,611
===========
(4) SUM OF THESE TIE TO TOTAL PIL "ADMINISTRATIVE" LAND ACCT. @ 12/31/92.
PIL OPERAT ON P.I. 36,328,000
PIL NON-OP ON P.I.
OTH THAN COLONY 33,067,397
-----------
69,395,397
===========
(5) TIES TO SUM OF ACCTS 115-810 AND 115-812 ON PIL, PI COLONY ACCOUNTS
@ 12/31/92.
</TABLE>
<PAGE>
PLAN
SHOWING
FOUR TRACTS OF LAND,
Totalling 1,010(plus/minus) Acres [MAP]
SITUATE
" SAN ANDROS "
IN THE ISLAND OF
North Andros - Bahamas
<PAGE>
Schedule 4.08
EXCEPTION TO TITLE OF PERSONAL PROPERTY
I. Lease of a De Havilland DHC-6-300 aircraft, Serial Number 454, under
Lease Agreement dated April 16, 1993 with The Ages Group, A Limited
Partnership, provides that lessee shall not assign, delegate, transfer,
mortgage or novate any of its rights or obligations under this Lease
Agreement. Written consent of the lessor is required for subleasing. No
assignment permitted.
II. Lease of a De Havilland DHC-7-102 aircraft, Serial Number 69, under
Lease Agreement dated April 16, 1993 with The Ages Group, A Limited
Partnership, provides that lessee shall not assign, delegate, transfer,
mortgage or novate any of its rights or obligations under this Lease
Agreement. Written consent of the lessor is required for subleasing. No
assignment permitted.
III. Lease of a De Havilland DHC-7-102 aircraft, Serial Number 058, under
Lease Agreement dated November 19, 1992 with Ages-Aircraft Sales &
Leasing, A Limited Partnership, provides that lessee shall not assign,
delegate, transfer, mortgage or novate any of its rights or obligations
under this Lease Agreement. Written consent of the lessor is required
for subleasing. No assignment permitted.
IV. Lease of a De Havilland DHC-7 aircraft, Serial Number 103, under Lease
Agreement dated February 10, 1989 with Aviation Enterprises 1987, Inc. and
Avinves Leasing Corp. provides that lessee shall not assign this Lease
Agreement. Written consent of the lessor is required for subleasing (not
to be unreasonably withheld). No assignment permitted.
V. Lease of a De Havilland DHC-7 aircraft, Serial Number 80, under Lease
Agreement dated January 17, 1989 with Aviation Enterprises 1987, Inc. and
Avinves Leasing Corp. provides that lessee shall not assign this Lease
Agreement. Written consent of the lessor is required for subleasing (not
to be unreasonably withheld). No assignment permitted.
<PAGE>
Schedule 4.09
INTELLECTUAL PROPERTY
TRADEMARKS AND REGISTRATIONS
- ----------------------------------------------------------------------
Chick Charnie I
Chick Charnie II
Chick Charnie III
Chick Charnie IV
Super Vacations
The Little Island With Everything
Paradise Island Express
Club Paradise
<PAGE>
Schedule 4.10
LITIGATION
I. Gustavo Ruiz has brought a personal injury claim against Stephen Cross,
Dennis Cross, RII, RIH, the Company, PIL and PBI for injuries arising from
a boating accident which allegedly occurred on May 6, 1992. The writ of
summons was amended on October 30, 1992.
II. Hans Peter Kugler, Erika Kugler and Paradise Harbour Ltd. have brought a
suit against PIA to enjoin certain flights into and out of Paradise
Island International Airport on nuisance grounds.
III. The Bahamas Hotel Catering and Allied Workers Union has filed
arbitration claims against all members of the Bahamas Hotel Employers'
Association, which includes the Company, for refusing to implement wage
and pension contribution increases agreed to in a collective bargaining
agreement. On March 19, 1993, the Minister of Labour referred the dispute
to arbitrators. The Company has not accrued any liability for the unpaid
wage and pension contribution increases.
IV. On September 10, 1993 Club Land'Or, (Nassau) Limited ("Club Land'Or")
threatened to bring suit against PIL for damages arising over the alleged
closure of the Paradise Lake and Canal, for which Club Land'Or claims a
right to use under a 1977 conveyance.
<PAGE>
Schedule 4.11
<TABLE>
<CAPTION>
INSURANCE
Policy Estimated
Term Annual
Master Policies Limits Insured Insurer Deductible Expiration Premium
- --------------- ------ ------- ------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
General Liability $ 2,000,000 Atlantic City, Planet $200,000 One Year $270,000
Planet Ins. Co. Miami Insurance Self-Insured 5/1/94
NGA1497084 Subsidiaries, Company Retention
5/1/93 - 5/1/94 PIA
Business Auto $ 2,000,000 Atlantic City, Planet $200,000 One Year $ 17,000
Planet Ins. Co. Miami Insurance 5/1/94
NKA1497083 Subsidiaries, Company
5/1/93 - 5/1/94 PIA
General Liability $ 2,000,000 Bahamas and Reliance $403,000 One Year $109,500
Reliance Inc. Co. Bahamas Insurance Self-Insured 5/1/94
NGB0103290 Subsidiaries Company Retention
5/1/93 - 5/1/94 Employee
Benefits
Liability
deductible
Business Auto $ 2,000,000 Bahamas and Reliance $200,000 One Year Included
Reliance Ins. Co. Bahamas Insurance Self-Insured 5/1/94 in GL
NKA0101194 Subsidiaries Company Retention Pricing
5/1/93 - 5/1/94
Umbrella Liability $10,000,000 Atlantic City, General Star $10,000 One Year $245,000
General Star Ins. Co. Miami National 5/1/94
NUG303110-B Subsidiaries, Insurance
5/1/93 - 5/1/94 PIA Company
Bahamas and
Bahamas
Subsidiaries
Umbrella Liability $ 5,000,000 Atlantic City, Fidelity & One Year $36,750
Fidelity & Casualty Co. Miami Casualty 5/1/94
CXU001517 Subsidiaries, Insurance
5/1/93 - 5/1/94 PIA Company
Bahamas and
Bahamas
Subsidiaries
Umbrella Liability $ 5,000,000 Atlantic City, Planet One Year $36,750
Planet Ins. Co. Miami Insurance 5/1/94
NEA1499597 Subsidiaries, Company
5/1/93 - 5/1/94 PIA
Bahamas and
Bahamas
Subsidiaries
</TABLE>
<PAGE>
Schedule 4.11
(continued)
<TABLE>
<CAPTION>
Policy Estimated
Term Annual
Master Policies Limits Insured Insurer Deductible Expiration Premium
- --------------- ------ ------- ------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Umbrella Liability $ 13,000,000 Atlantic City, International One Year $ 36,750
International Ins. Co. Miami Insurance 5/1/94
5312064708 Subsidiaries, Company
5/1/93 - 5/1/94 PIA
Bahamas and
Bahamas
Subsidiaries
Umbrella Liability Home $ 13,000,000 Atlantic City, Home One Year $53,060
Ins. Co. Miami Insurance 5/1/94 $176.69
HXL1642545 Subsidiaries, Company NJ
5/1/93 - 5/1/94 PIA
P.L.I.G.A
Surcharge
Bahamas and
Bahamas
Subsidiaries
Umbrella Liability $ 12,000,000 Atlantic City, Transamerica One Year $48,488
Transamerica Inc. Co. Miami Insurance 5/1/94
XLX9190206 Subsidiaries, Company
5/1/93 - 5/1/94 PIA
Bahamas and
Bahamas
Subsidiaries
Umbrella Liability $ 50,000,000 Atlantic City, X. L. One Year $275,000
X. L. Ins. Co. Miami Insurance 5/1/94
XLUMB-00376 Subsidiaries, Company
5/1/93 - 5/1/94 PIA
Bahamas and
Bahamas
Subsidiaries
Umbrella Liability $100,000,000 Atlantic City, A. C. E. One Year $235,000
A.C.E. Ins. Co. Miami Insurance 5/1/94
RTA-5147 Subsidiaries, Company
5/1/93 - 5/1/94 PIA
Bahamas and
Bahamas
Subsidiaries
Crime Reliance Ins. Co. $ 5,000,000 Atlantic City, Reliance $205,000 One Year $100,000
NFA149710100 Miami Insurance Employee 5/22/94
Subsidiaries, Company dishonesty,
PIA Credit Card
Forgery, Safe
Bahamas Deposit Legal
and Bahamas Liability,
Subsidiaries etc.
Worker's Compensation Statutory Atlantic City, Liberty One Year $187,291
& Employer's Liability Miami Mutual 5/1/94
Liberty Mutual Subsidiaries, Insurance
Insurance Co. PIA Company
WC1351234457013
5/1/93 - 5/1/94
</TABLE>
2
<PAGE>
Schedule 4.11
(continued)
<TABLE>
<CAPTION>
Policy Estimated
Term Annual
Master Policies Limits Insured Insurer Deductible Expiration Premium
- --------------- ------ ------- ------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Workers' Compensation Statutory Bahamas and Reliance None One Year $25,000
Reliance Ins. Co. State of NJ Bahamas Insurance 5/1/94
NWA0103289 Benefits Subsidiaries Company
5/1/93 - 5/1/94 (Non-Bahamian
Performers
Only)
Special Contingency $ 10,000,000 Atlantic City, Federal One Year $10,750
Federal Ins. Co. Miami Insurance 1/2/94
80817818-D Subsidiaries, Company
1/2/93 - 1/2/94 PIA
Bahamas and
Bahamas
Subsidiaries
Excess Special $ 10,000,000 Atlantic City, Reliance One Year $4,250
Contingency Reliance Miami Insurance 1/2/94
Ins. Co. Subsidiaries, Company
NFK2040298 PIA
1/2/93 - 1/2/94
Bahamas and
Bahamas
Subsidiaries
Property Industrial $441,885,000 Atlantic City, Industrial One Year $422,884
Risk Insurers Miami Risk 3/31/94
31-3-57262 Subsidiaries, Insurers
3/31/93 - 3/31/94 PIA
Property (DIC) $ 5,000,000 Atlantic City, Home One Year $17,500
Home Ins. Co. Miami Insurance 3/31/94
SPXF820354 Subsidiaries, Co.
3/31/93 - 3/31/94 PIA
Property (DIC) $ 10,000,000 Atlantic City, Agricultural One Year $32,500
Agricultural Ins. Co. Miami Insurance 3/31/94 for
CPP7947445 Subsidiaries, Co. CPP
3/31/93 - 3/31/94 PIA 7947445
1MF011683
and CIM3787
Property (DIC) $ 2,500,000 Atlantic City, Mt. Hawley
Mt. Hawley Ins. Co. Miami Insurance Co.
1MF011683 Subsidiaries,
3/31/93 - 3/31/94 PIA
Property (DIC) $ 2,500,000 Atlantic City, Homestead
Homestead Ins. Co. Miami Insurance Co.
CIM3787 Subsidiaries,
3/31/93 - 3/31/94 PIA
</TABLE>
3
<PAGE>
Schedule 4.11
(continued)
<TABLE>
<CAPTION>
Policy Estimated
Term Annual
Master Policies Limits Insured Insurer Deductible Expiration Premium
- --------------- ------ ------- ------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Property Industrial $ 125,000,000 Bahamas and Industrial $50,000 per One Year $420,000
Risk Insurers Issued Bahamas Risk occurrence 3/31/94
by Hartford Fire Subsidiaries Insurers
93 UEH JM6275 Issued by $500,000 per
3/31/93 - 3/31/94 Hartford wind and Hail
Fire
$200,000 per
occurrence
flood
$250,000 per
occurrence
earthquake
24 hr.
Waiting
Period for
Power
interruption
$5,000 per
Conveyance
Property in
Transit
Boiler & Machinery $ 50,000,000 Bahamas and Travelers 350,000 each One Year $8,780
Travelers Ins. Co. Bahamas Insurance- loss 24 hrs 11/1/93
M5J-660-183K431A-TIL-92 Subsidiaries Company for B1 $ EE
11/1/92 - 11/1/93
Paradise Island Bridge $ 5,000,000 Bahamas Lloyds of 3 days One Year $54,000
Lloyds of London Bahamas London Average Daily 6/11/94
757/PJ920138 Subsidiaries loan
6/11/93 - 6/11/94
Aviation Hull: 10 Miami,PIA National 1% aircraft One Year $623,141
National Union Fire $ CGL:$200 Mil Bahamas and Union Fire vallue, 11/16/93 (net)
Through AIG, Inc. Bahamas Insurance of subject to
AV3224015 Subsidiaries Pittsburgh, $100,000 min
11/16/93 - 11/16/94 PA except total
loss
Ocean Cargo & War Risk $ 1,000,000 Miami, Fireman's Countinous $12,750
Fireman's Fund Subsidiaries, Fund until (marine)
OP-17742 PIA, Bahamas cancelled $1,312.50
Continuousand Bahamas by either (war)
Anniversary Date: Subsidiaries party
February 1 giving
other 30
days
written
notice
Business Pleasure Atlantic City, Hartford Three $25,366
Travel Hartford Miami Years Annual
ETB 101345 Subsidiaries Install-
1/1/93 - 1/1/96 PIA, Bahamas and Attach: ments
Bahamas 1/1/93 including
Subsidiaries War Risk
Minimum an
Expires: Terrorism
1/1/96
</TABLE>
4
<PAGE>
Schedule 4.11
(continued)
<TABLE>
<CAPTION>
Policy
Term
Master Policies Limits Insured Insurer Deductible Expiration Rate
- --------------- ------ ------- ------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Life Insurance Policy Two or three RII John Alden n/a 1/1/95 .22/$1,000
L0001574 times salary, Life coverage
of $1 million/
covered person
Accidental Death & same as life RII American n/a 1/1/94 .03/$1,000
Dismemberment Policy insurance International coverage
BSC9017594 Group
Long Term Disability 60% of salary RII Principal n/a 10/1/94 .32/$100 of
Policy GLT68129 to a maximum Mutual Life coverage
of $5,000/mo. Insurance payroll
per covered Company
person
Short Term Disability $272/wk. per RII Metropolitan n/a one year .61/$10 of
Policy 29941 covered person Life 8/1/94 benefit
Insurance
Company
Health Insurance Varies - RII self-insured varied n/a
generally
"reasonable
and customary"
fees; lifetime
maximum of $1
million
Executive Health Policy $25,000/family RII Lincoln n/a cost plus
G4000002417 per year National Life 15% plus
Insurance employer
Company fee and
quarterly
participant
premium
Life Insurance two or three Resorts Colina n/a 09/01/92- .32/$1,000
Policy 59BH0175 times salary International 93 coverage
or $10,000 (Bahamas) 1984, (renewal (Colina's
depending on LTD,(RIB) terms for renewal
employment 1993-994 rate for
classification have not 1993-1994
with a been is
maximum of formally .36/$1,000)
$500,000/cover finalized)
ed person
Accidental Death & same as life RIB American n/a 09/01/93- .03/$1,000
Dismemberment Policy insurance International 94 coverage
BSC9017249 Group
Long Term Disability 60% of salary RIB Colina n/a 09/01/93- 1.20/$100
Policy 59BH0175 to maximum of 94 of covered
$6,000/mo. per payroll
covered person
</TABLE>
5
<PAGE>
Schedule 4.11
(continued)
<TABLE>
<CAPTION>
Policy
Term
Master Policies Limits Insured Insurer Deductible Expiration Rate
- --------------- ------ ------- ------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Health Insurance varies, with a RIB Colina varies 09/01/93- $58.09/
lifetime 94 single
maximum of $152.38/
$1 million family
Executive Health Policy $15,000/family RIB Colina n/a cost plus
59BH0175 per year 5%
</TABLE>
6
<PAGE>
Schedule 4.12
UNITED STATES BENEFIT PLANS
I. RETIREMENT SAVINGS PLAN
Eligible employees of RIH, RII, PIA and RRII may participate in the
Resorts. Retirement Savings Plan, administered through Metropolitan Life
Insurance Company, New York, NY. Employees of these four corporations may
join the Savings Plan after one year of service and reaching age 21. The
Savings Plan is a defined contribution individual account plan and
employees may elect to contribute from their before-tax earnings (pursuant
to Rule 401(k)) or after-tax earnings, up to 14% of their pay. In 1992,
the Plan will not consider pay above $228,860. 401(k) contributions in
1992 cannot exceed $8,728. Employers will match employees' contributions
at the rate of 50 cents per dollar saved, up to 4% of employee pay.
Employees eligible for participation in the Savings Plan are automatically
considered participants of the Plan's profit sharing feature. The
employers have discretion over their profit sharing contribution from year
to year. A determination letter was received from the IRS on March 15,
1988 for the Resorts International Hotel Inc. Thrift Savings and Incentive
Plan, which was amended and restated as the Resorts Retirement Savings
Plan. A new determination letter will be sought prior to the expiration of
the remedial amendment period. The Savings Plan and the Profit Sharing
Plan are not insured by the Pension Benefit Guaranty Corporation.
Some of the 401(k) assets were invested with Mutual Benefit Life Insurance
Company. As of September 30, 1993, $29,637.01 of these assets were frozen
and may not be available for transfer under Section 6.09(b) of the
Purchase Agreement.
II. HEALTH INSURANCE PLAN
RII sponsors and administers a self-funded group health insurance plan
(the "Health Plan") for their eligible employees and dependents of such
employees. Subsidiaries covered under this Health Plan include RRII, ISI
and PIA. Medical benefits offered include up to 100% coverage of hospital
expenses, physician
7
<PAGE>
Schedule 4.12
(continued)
visits, surgery and obstetrical care, diagnostic x-rays and lab tests,
chiropractic care and maternity expenses. The Health Plan also offers
vision and dental benefits. The services offered are provided by a
Preferred Provider Organization, which is a network of participating
physicians and hospitals. All regular full-time employees of RII who are
in active service are eligible for coverage. Employees who have lost their
eligibility due to reduced work hours or termination of employment, except
for gross misconduct, may be entitled to have their coverage extended for
18 months, and in certain instances, up to 36 months, under COBRA. RII
reserves the right to terminate, suspend, withdraw, or amend the Health
Plan in whole or in part at any time without the consent of any person,
with adequate notice being provided to all covered employees.
III. LIFE INSURANCE PLAN
RII offers, through John Alden Life, life insurance to and pays the
required premiums for their eligible active employees. The subsidiaries
covered under the policy include RIH, PIA, RRII and ISI. Employees may be
entitled to insurance of two or three times their salary, to the maximum
$1 million. Certain proof of health may be required for higher coverage
levels. Coverage stops after an employee ceases active work for RII,
retires, or otherwise loses eligibility. Employees can, however, convert
this insurance to a new individual life insurance policy. Employees may
assign their ownership of the insurance, provided that the new owner is
not RII, the policyholder.
IV. LONG TERM DISABILITY INSURANCE PLAN
RII sponsors and administers a long term disability insurance plan (the
"Disability Plan") for the benefit of eligible employees (active,
full-time employees). Subsidiaries covered under the Disability Plan
include PIA, RRII & ISI. Coverage ceases when the Disability Plan
terminates or when the employee ceases to be eligible. Benefits payable
under the Disability Plan are calculated as a function of employee
earnings. RII pays the full costs of the Disability Plan.
V. SHORT TERM DISABILITY PLAN
RII offers short term disability for the benefit of eligible employees
insured through Metropolitan Life
8
<PAGE>
Insurance Company. The weekly benefit is 66-2/3% of basic weekly salary up
to a maximum benefit of $272.00. The maximum benefit period is 26 weeks.
Subsidiaries covered under the plan include PIA, RRII and ISI.
VI. ACCIDENTAL DEATH AND DISMEMBERMENT
RII offers AD&D for the benefit of eligible employees with coverage of
two or three times salary (depending upon employment classification) to a
maximum of $1 million. Subsidiaries covered under the plan include PIA,
RRII and ISI.
VII. EXECUTIVE HEALTH
RII offers Executive Health to eligible participants through participation
in the Medical Reimbursement Plan Trust underwritten by Lincoln National
Life Insurance Company. Reference is made to Schedule 4.11 for detailed
information regarding insurance and said Schedule 4.11 is incorporated by
reference in this Schedule 4.12.
VIII. RIH PENSION PLANS
RIH contributes to five pension plans on behalf of participating unionized
Atlantic City employees of RIH. These plans are as follows:
1. Hotel Employees and Restaurant Employees International Union
Pension Plan
2. Local 68 I.U.O.E. Pension Fund
3. IBPAT Pension Fund
4. N.J. Carpenters Pension Plan
5. American Federation of Musicians and Employees Pension Fund
IX. PERFORMANCE BONUS PLAN
There is a performance bonus plan (Plan) for all eligible corporate
employees of RII, the Atlantic City casino/hotel employees (RIH), the Paradise
Island operations which includes IHC, PBI, PEL, PIBM, PIL, PSSL, PCL, ISI, RRII,
9
<PAGE>
and PIVI (collectively the "PI Group"), and the airline operations (PIA).
Although the plan varies in certain details among the various operations, the
basic structure of the Plan is uniform.
Each employee is assigned a salary grade. The salary grade is
dependent upon the work being performed, the job's authority and
responsibility, and the compensation being paid. The higher the
responsibility, the higher the salary grade.
Bonus points, representing that portion of budgeted annual Earnings
Before Depreciation Interest and Taxes ("EBDIT") which is achieved for the year
are scaled to an individual's level of responsibility within the Company.
The individual's Pool is then sub-divided between quantitative and
qualitative goals. Equaling the budgeted EBDIT achieves the quantitative goal
and could result in as much as 75% of the individual's Pool being earned. The
qualitative goals are more judgmental and will vary depending on the operation.
If qualitative goals are met the individuals can earn the remaining 25% of his
Pool. The breakdown of total bonus between achieving quantitative and
qualitative goals is 75% and 25% respectively except for RII's employees where
the breakdown is 65% and 35%.
X. STOCK OPTION PLAN
On September 17, 1990, the Resorts International, Inc. Senior
Management Stock Option Plan (the "1990 Stock Option Plan") was implemented.
The 1990 Stock Option Plan authorizes the grant of stock options to eligible
members of management. The number of shares which may be granted under the 1990
Stock Option Plan may not exceed ten percent (10%) of the shares of Common
Stock Outstanding, as defined in the 1990 Stock Option Plan, subject to
adjustment. Pursuant to the 1990 Stock Option Plan, options to purchase up to
five percent (5%) of the shares of Common Stock Outstanding may be granted to
Mr. Hanlon; the remaining options may be granted to other eligible employees
at the discretion of a committee appointed by the Board of Directors of RII.
10
<PAGE>
XI. PIA MANAGEMENT INCENTIVE PLAN
This bonus plan is based on a bonus equal to a percentage of monthly
salary with the percentages determined from monthly performance
criteria. If the performance goals are not met, the bonus percentage is
adjusted to reflect the level of performance achieved. If the goals are
met, the maximum monthly bonus is paid.
XII. PIRC 1993 BONUS PLAN
Attached as Exhibit I to this Schedule 4.12 are the schedules detailing
the 1993 bonus plan for Paradise Island Resorts Casino, which includes
IHC, PBI, PEL, and PIL (collectively "PIRC") , RRII, PIV and ISI. This
bonus plan is based on a salary percentage as a function of achieved
EBDIT. The list of employees eligible for the bonus plan are divided
into three categories with a different salary percentage for each
category. Exhibit I is a summary, by category, of the bonus plan, and
details the eligible employees and their potential bonuses.
XIII. SEVERANCE BENEFITS
Reference is made to Schedule 6.09(a), paragraph I and said schedule
6.09(a) is hereby incorporated by reference in this Schedule 4.12.
11
<PAGE>
MERV GRIFFIN'S PARADISE ISLAND
RESORT AND CASINO EXHIBIT I TO
1993 BONUS SCHEDULE SCHEDULE 4.12
SUMMARY
<TABLE>
<CAPTION>
LIST #1
TARGET EBDIT % OF % SALARY
(000'S) EBDIT BONUS COST % EBDIT
- -------------------------------------------------------------------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
$12,000 91% 2% $5,200 0.0%
13,171 100% 5% 13,000 0.1%
14,488 110% 10% 26,000 0.2%
15,937 120% 15% 39,000 0.2%
17,531 130% 20% 52,000 0.3%
19,284 140% 25% 65,000 0.3%
21,212 150% 30% 78,000 0.4%
<CAPTION>
LIST #2
TARGET EBDIT % OF % SALARY
(000'S) EBDIT BONUS COST % EBDIT
- -------------------------------------------------------------------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
$12,000 91% 2% $27,440 0.2%
13,171 100% 4% 54,881 0.4%
14,488 110% 6% 82,321 0.6%
15,937 120% 8% 109,762 0.7%
17,531 130% 10% 137,202 0.8%
19,284 140% 12% 164,643 0.9%
21,212 150% 14% 187,883 0.9%
<CAPTION>
LIST #3
TARGET EBDIT % OF % SALARY
(000'S) EBDIT BONUS COST % EBDIT
- -------------------------------------------------------------------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
$12,000 91% 2% $48,030 0.4%
13,171 100% 3% 72,046 0.5%
14,488 110% 4% 96,061 0.7%
15,937 120% 5% 120,076 0.8%
17,531 130% 6% 144,091 0.8%
19,284 140% 7% 168,106 0.9%
21,212 150% 8% 192,121 0.9%
____________________________________________________________________________________________________________________
<CAPTION>
TOTAL
TARGET EBDIT % OF
(000'S) EBDIT COST % EBDIT
- -------------------------------------------------------------------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
$12,000 91% $80,671 0.7%
13,171 100% 139,927 1.1%
14,488 110% 204,382 1.4%
15,937 120% 268,838 1.7%
17,531 130% 333,293 1.9%
19,284 140% 397,749 2.1%
21,212 150% 458,005 2.2%
____________________________________________________________________________________________________________________
</TABLE>
<PAGE>
MERV GRIFFIN'S PARADISE ISLAND
RESORT AND CASINO
1993 BONUS SCHEDULE
<TABLE>
<CAPTION>
LIST #1
EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT
NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140%
- ------------ ------------ ------------- ----------- --------- --------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GARRINGTON,
J BARRIE SR VP ADMIN 30 110,000 2,200 5,500 11,000 16,500 22,000 27,500
WILLIAMS,
MICHAEL J SR VP OPER 33 150,000 3,000 7,500 15,000 22,500 30,000 37,500
------------- ----------- --------- --------- --------- ----------- ----------- -----------
260,000 $ 5,200 $ 13,000 $ 26,000 $ 39,000 $ 52,000 $ 65,000
-----------
SALARY NORM
LIST #1 130,000 2,600 6,500 13,000 19,500 26,000 32,500
# OF PEOPLE 2 2 2 2 2 2
--------- --------- --------- ----------- ----------- -----------
TOTAL 5,200 13,000 26,000 39,000 52,000 65,000
<CAPTION>
EBDIT
NAME 150%
- ------------ -----------
<S> <C>
GARRINGTON,
J BARRIE 33,000
WILLIAMS,
MICHAEL J 45,000
-----------
$ 78,000
39,000
2
-----------
78,000
</TABLE>
<TABLE>
<CAPTION>
LIST #2
EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT
NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140%
- ------------ ------------ ------------- ----------- --------- --------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALBURY, GENE VP OF FI-
NANCE 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200
CAREY, KAREN VP--HR 26 70,000 1,400 2,800 4,200 5,600 7,000 8,400
CAREY, NEV- VP UTIL-
ILLE ITIES 26 65,000 1,300 2,600 3,900 5,200 6,500 7,800
CLARK,
DENISE VP CAS MKT 30 105,000 2,100 4,200 6,300 8,400 10,500 12,600
CROCKET, DON SR VP CAS
OPER 30 105,000 2,100 4,200 6,300 8,400 10,500 12,600
GREEN, JAY VP SALES &
MKT 117,800 2,356 4,712 7,068 9,424 11,780 14,136
HENDERSON, ASST CASINO
RICHARD MGR 23 65,000 1,300 2,600 3,900 5,200 6,500 7,800
HERCULES, DIR CAS
LINCOLN ADMIN 26 73,500 1,470 2,940 4,410 5,880 7,350 8,820
HIGOS, FRED DIR OF GOLF 22 52,500 1,050 2,100 3,150 4,200 5,250 6,300
LAURENO,
LORI VP--RRU/ PIV 24 85,000 1,700 3,400 5,100 6,800 8,500 10,200
MIRAMONTES, VP--FACILI-
CELSO TIES PIRC 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200
MUNROE, KEN- ASST CASINO
DAL MGR 26 65,000 1,300 2,600 3,900 5,200 6,500 7,800
OLIN, STAN DIR
PURCHASING 24 61,524 1,230 2,461 3,691 4,922 6,152 7,383
PRUDDEN,
DOUG GM PARA PARA 26 60,000 1,200 2,400 3,600 4,800 6,000 7,200
RATZEL, BILL VP HOT OP &
MG DIR 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200
SASTRE, VP AND MG
GABRIEL DIR 30 100,000 2,000 4,000 6,000 8,000 10,000 12,000
SAWYER, DIR OPER
DOUGLAS ANAL 26 67,500 1,350 2,700 4,050 5,400 6,750 8,100
THOMPSON, DIR OF
PAUL SECURITY 23 55,000 1,100 2,200 3,300 4,400 5,500 6,600
WEBB, BRIAN GM OCEAN
CLUB 23 54,200 1,084 2,168 3,252 4,336 5,420 6,504
----------- --------- --------- --------- ----------- ----------- -----------
1,372,024 $ 27,400 $ 54,000 $ 82,321 $ 109,762 $ 137,282 $ 164,643
<CAPTION>
EBDIT
NAME 150%
- ------------ -----------
<S> <C>
ALBURY, GENE 11,900
CAREY, KAREN 9,800
CAREY, NEV-
ILLE 9,100
CLARK,
DENISE 14,700
CROCKET, DON 14,700
GREEN, JAY 16,492
HENDERSON,
RICHARD 9,100
HERCULES,
LINCOLN 10,290
HIGOS, FRED 7,350
LAURENO,
LORI 11,900
MIRAMONTES,
CELSO 11,900
MUNROE, KEN-
DAL 9,100
OLIN, STAN 8,613
PRUDDEN, DOUG 8,400
RATZEL, BILL 11,900
SASTRE,
GABRIEL 9,800
SAWYER,
DOUGLAS 9,450
THOMPSON,
PAUL 7,700
WEBB, BRIAN 7,588
-----------
$ 187,889
</TABLE>
<PAGE>
MERV GRIFFIN'S PARADISE ISLAND
RESORT AND CASINO
1993 BONUS SCHEDULE
<TABLE>
<CAPTION>
LIST #3
EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT
NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% 150%
- ------------ ------------ ---------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADDERLEY, DIR SALES
NED 19 35,000 700 1,050 1,400 1,750 2,100 2,450 2,800
ALBURY, DIR EMP
CHARLES RELATIONS 21 41,980 900 1,349 1,799 2,249 2,699 3,149 3,598
ANDERSON, SHOW MGR
JEREMY 22 50,440 1,009 1,513 2,018 2,522 3,026 3,531 4,035
ATKINSON, CAS SHIFT
ALEX MGR 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397
BARTLETT, SR INTRNL
ROMA AUDITOR 19 28,000 560 840 1,120 1,400 1,680 1,960 2,240
BENSON, DEP DIR
HERMAN ENG 23 54,080 1,082 1,622 2,163 2,704 3,245 3,786 4,326
BETHEL, DIR F & B
STEPHEN 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744
BOWE, FRONT
STUART OFFICE
MGR 19 35,048 701 1,051 1,402 1,752 2,103 2,453 2,804
BURROWS, DIR CAS
OSCAR SURV 23 57,000 1,140 1,710 2,280 2,850 3,420 3,990 4,560
CAMBRIDGE, EXEC ASST
ERNEST MGR--OC 22 53,976 1,080 1,619 2,159 2,699 3,239 3,778 4,318
CAREW, PROJECT
DENIS MGR 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744
CAREY, MGR RDS &
ANTHONY LDSCPING 19 33,800 676 1,014 1,352 1,690 2,028 2,366 2,704
CHEA, EXEC SOUS
CHRIS- CHEF
TOPHER 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744
COLEBROOKE, DIR OF
CHARLES RES-
TAURANTS 19 36,400 728 1,092 1,456 1,820 2,184 2,548 2,912
COOPER, DIR--CAGE
EUGENE OPS 22 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200
CULMER, ASST FIN
ANGELA CONTR I 21 48,500 970 1,455 1,940 2,425 2,910 3,395 3,880
DAVIS, SR OPER
FRANK ANAL 20 41,900 838 1,257 1,676 2,095 2,514 2,933 3,352
ENEAS, DIR PUB
SANDRA REL 20 41,976 840 1,259 1,679 2,099 2,519 2,938 3,358
FERGUSON, DIR TRAIN-
DEBORAH ING 20 40,300 806 1,209 1,612 2,015 2,418 2,821 3,224
FLAUM, CAS COL-
MICHAEL LECTIONS 20 40,155 803 1,205 1,606 2,008 2,409 2,881 3,212
HACKETT, CAS SHIFT
JANICE MGR 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397
HAMILTON, DIR HSEKP-
DONNA ING 19 35,048 701 1,051 1,402 1,752 2,103 2,453 2,804
HAVEN, DIR CASINO
CARL CREDIT 26 83,300 1,666 2,499 3,332 4,165 4,998 5,831 6,664
HEPBURN, DIR BARS
JERRY 19 34,684 694 1,041 1,387 1,734 2,081 2,428 2,775
HUTCH- MGR PIA
INSON, AIR
OLIVER 19 39,120 782 1,174 1,565 1,956 2,347 2,738 3,880
JENOURE, ASST FIN
BRENDA CONTR II 20 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600
</TABLE>
<PAGE>
MERV GRIFFIN'S PARADISE ISLAND
RESORT AND CASINO
1993 BONUS SCHEDULE
<TABLE>
<CAPTION>
LIST #3
EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT
NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% 150%
- ------------ ------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LUNN, ASST FIN
LIONEL CONTR III 21 48,000 960 1,440 1,920 2,400 2,880 3,360 3,840
MARCHE, SR EXEC
KEVIN HOST 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397
MATSAS, CASINO
HARRY SHIFT MGR 23 60,000 1,200 1,800 2,400 3,000 3,600 4,200 4,800
MAURA, ASST MGR
PETER PAR PAR 19 25,694 514 771 1,028 1,285 1,542 1,799 2,056
MAYHOOK, CASINO
PETER SHFT MGR 23 59,800 1,196 1,794 2,392 2,990 3,588 4,186 4,784
McDONALD, DIR AC-
RONN TIVITIES 25 67,600 1,352 2,028 2,704 3,380 4,056 4,732 5,408
MICKLEWHYTE, CAS CON-
DAVID TROLLER 23 53,000 1,060 1,590 2,120 2,650 3,180 3,710 4,240
O'BRIAN, ASST
NEIL MANAGER 17 28,600 572 858 1,144 1,430 1,716 2,002 2,288
OUTIEN, DIR IND
PETER RELA-
TIONS 22 50,570 1,011 1,517 2,023 2,529 3,034 3,540 4,046
PARKER,
CLEOMI RISK MGMT 19 36,381 728 1,091 1,455 1,819 2,183 2,547 2,910
REINOSO, PIL DIR--
FRAN- ENG
CISCO 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397
SANDS, DIR CONV
CLINT SRVCS 19 35,360 707 1,061 1,414 1,768 2,122 2,475 2,829
SCHMIDT, EXEC CHEF
HELMUT 23 64,000 1,280 1,920 2,560 3,200 3,840 4,480 5,120
SPYCHALLA, CAS AN-
DINO ALYST 23 55,000 1,100 1,650 2,200 2,750 3,300 3,850 4,400
STRACHAN, SUPPORT
DION SERV MGR 19 35,000 700 1,050 1,400 1,750 2,100 2,450 2,800
SYMONETTE, DIR--
LINDA RECRUITING 20 40,300 806 1,209 1,612 2,015 2,418 2,821 3,224
UMBRIA, DIRECTOR
STEVE MIS 23 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200
BALFOUR, DIR CAS
ANTHONY CREDIT 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200
CHOMINSKI, DIR TRAVEL
RICK IND 55,000 1,100 1,650 2,200 2,750 3,300 3,850 4,400
DEL POZO, CASINO MKT
BOB REP 80,000 1,600 2,400 3,200 4,000 4,800 5,600 6,400
FEICK, DIR OPS
JOSEPHINE RRI/PIV 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600
SAUSSIER, DIR CAS
BOB COLLEC-
TIONS 42,000 840 1,260 1,680 2,100 2,520 2,940 3,360
SOLOV, CASINO MKT
STEVE REP 78,750 1,575 2,363 3,150 3,938 4,725 5,513 6,300
ZAPPATER- EXEC DIR
RA, NORMA MKTG 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600
---------- --------- --------- --------- --------- --------- --------- ---------
$2,401,518 $ 48,030 $ 72,046 $ 96,061 $ 120,076 $ 144,091 $ 168,106 $ 192,121
----------
SALARY
NORM LIST
#3 45,518 910 1,821 2,731 3,641 4,552 5,462 6,371
# OF
PEOPLE 50 50 50 50 50 50 50
--------- --------- --------- --------- --------- --------- ---------
TOTAL 45,518 91,036 136,554 152,072 227,590 273,108 318,626
</TABLE>
<PAGE>
Schedule 4.12A
THE BAHAMAS BENEFIT PLANS
I. PENSION AND WELFARE FUNDS
A. The Bahamas Hotel Industry Management Pension Plan effective January
1, 1980 as amended by resolutions from time to time was created in
response to the collective bargaining agreement (the "Collective
Bargaining Agreement") between the Bahamas Hotel Catering and Allied
Workers Union (the "Union") and the Bahamas Hotel Employers'
Association (the "BHEA"), of which the Company is a member. New
employees become eligible to participate in the Pension Plan
retroactively to the January 1 or July 1 that immediately precedes
the completion of 20 weeks of work with a participating employer. The
regular retirement age is 65, with at least 10 Pension Credits
(earned based on weeks worked), and the regular pension benefit is
0.009 of Final Average Salary (average of 6 highest consecutive
years of earnings out of the last ten years during which pension
credits were earned) times Pension Credits earned (up to 25) and
divided by 12. The Early Retirement Date is Age 55, with at least 15
Pension Credits.
B. The Bahamas Hotel and Allied Industries Pension Fund (the "Pension
Fund") effective January 1, 1980 was created pursuant to the
Collective Bargaining Agreement.
New employees become eligible to participate in the Pension Fund
retroactively to the January 1 or July 1 that immediately precedes
the completion of 10 weeks of work with a participating employer.
Participants are eligible for a regular pension at age 65, with at
least 10 Pension Credits (earned based on weeks worked).
C. HEALTH AND WELFARE FUND
This fund is a sub-fund of the Pension Fund. Contributions to the
Health and Welfare Fund are made pursuant to Section 35 of the
contract negotiated between the Bahamas Hotel Employers Association
and the Bahamas Hotel Catering and
<PAGE>
Allied Workers Union and dated January, 1990 (and the Addendum
thereto dated January 1992). Contributions to this fund are
currently at one and a half percent of wages of eligible employees.
There is currently no plan of benefits for this fund, and benefits
are not being regularly paid out.
D. MUSICIANS PENSION FUND
This pension fund was established pursuant to the Collective
Bargaining Agreement between the BHEA and the Bahamas Musicians' and
Entertainers' Union (the "Musicians Union") dated December 1987
("1987 Agreement"). The Agreement and Declaration of Trust for this
fund was entered into on February 14, 1988. The trustees of this
fund have not yet established a plan of benefits, and benefits are
not being regularly paid out. The money is accumulating in trust, and
contributions are made into this trust fund on behalf of eligible
participants pursuant to Section Twenty-Two of the 1987 Agreement.
The 1987 Agreement, which expired in December of 1990, has been
extended in writing numerous times, and is currently extended under
oral agreement between the Musicians Union president and the BHEA
(although there is no written extension as of yet). Under the 1987
Agreement (and extensions thereof), three percent of salary is
contributed on behalf of eligible employees to this fund.
E. EMPLOYEE ASSISTANCE FUND
The Bahamas Hotel Catering and Allied Workers Union Employees'
Assistance Fund is contributed to in accordance with Section 39 of
the January 1990 Agreement Between Bahamas Hotel Employers'
Association and Bahamas Hotel Catering and Allied Workers Union.
According to the terms of such agreement, this fund is controlled
and administered by a Board of Trustees and employer contributions
are paid to this fund through the Union.
II. WELFARE BENEFITS
1. Employers and employees in The Bahamas are required to register with
the National Insurance Board (the "NIB"). Employers must withhold a
percentage of
<PAGE>
their employees' weekly wages and contribute a percentage of such
wages. Benefits provided by the NIB include funeral benefits,
maternity benefits, retirement benefits, invalidity benefits,
sickness benefits, survivor's benefits, death benefits, disability
benefits and industrial injury benefits.
2. A Group Insurance Program for the permanent active non-union
non-executive employees of the Company and its Subsidiaries is
offered through Colina Insurance Company. Reference is made to
Schedule 4.11 and said Schedule 4.11 hereby is incorporated by
reference in this Schedule 4.12A.
A. LIFE INSURANCE COVERAGE FOR
NON-EXECUTIVE, NON-UNION EMPLOYEES
Effective November 1, 1990
Coverage $10,000
Reduction 50% at age 65
Termination At age 70 or upon
retirement, whichever
occurs first.
B. COMPREHENSIVE MEDICAL BENEFIT FOR EMPLOYEES AND QUALIFIED
DEPENDENT(S)
Effective August 1, 1990
Lifetime Maximum $1,000,000.00
Lifetime Maximum $25,000.00
Mental or Nervous
Disorders
Calendar Year Deductible $250.00 Individual
$750.00 Family
Termination At age 70 or upon
retirement, whichever
occurs first.
<PAGE>
3. Group Insurance Program for Permanent Active
Executives, through Colina Insurance Company
A. LIFE INSURANCE COVERAGE FOR EXECUTIVES
Effective November 1, 1990
Coverage Two times annual
salary to a maximum of
$500,000.00
Reduction 50% at age 65
Termination At age 70 or upon
retirement, whichever
occurs first.
B. LONG-TERM DISABILITY COVERAGE FOR EXECUTIVES
Benefit 60% of basic salary to
maximum of $6,000.00
per month, with a
minimum of $50.00 per
month.
Termination Age 65 or upon
retirement, whichever
occurs first.
C. COMPREHENSIVE MEDICAL BENEFITS FOR
EXECUTIVES
Effective August 1, 1990
Lifetime Maximum $1,000,000.00
Lifetime Maximum $25,000.00
Mental or Nervous
Disorders
Calendar Year Deductible $250.00 Individual
$750.00 Family
Reduction 50% at age 65.
Termination At age 70 or upon
retirement, whichever
occurs first.
<PAGE>
4. Group Insurance Program for the Company's Permanent Active
Senior Executives, through Colina Insurance Company
A. BASIC LIFE INSURANCE FOR SENIOR EXECUTIVES
Effective November 1, 1990
Amount Three times annual
salary to limit of
$500,000
Reduction Reduced by 50% at age
65
Termination Terminates at earlier
of age 70 or
retirement
B. LONG-TERM DISABILITY BENEFITS FOR SENIOR EXECUTIVES
Benefit 60% of basic salary to
maximum of $6,000.00
per month, with a
minimum of $50.00 per
month.
Elimination Period Sickness - 90 days
Accident - 90 days
Termination Age 65 or upon
retirement, whichever
occurs first.
C. COMPREHENSIVE MEDICAL BENEFITS FOR SENIOR
EXECUTIVES AND QUALIFIED DEPENDENTS
Effective August 1, 1990
Lifetime Maximum $1,000,000.00
Lifetime Maximum
Mental or Nervous
Disorders $25,000.00
Calendar Year Deductible $250.00 Individual
$750.00 Family
<PAGE>
Termination At age 70 or upon
retirement, whichever
occurs first.
D. MEDICAL REIMBURSEMENT PLAN FOR SENIOR EXECUTIVES
Provides supplemental medical benefits to eligible Senior
Executives. The Medical Executive Reimbursement Plan reimburses
out-of-pocket expenses such as dental, visitations, deductibles
and coinsurance not payable by the regular plan up to $15,000
per family per year.
III. INDIVIDUAL EMPLOYMENT AGREEMENTS
Some recently hired non-union employees have signed individual
employment agreements which provide for redundancy termination
payments. These payments are made in accordance with the following
formula: 1 week salary for each of the 1st-10th year of employment,
1.5 weeks salary for each of the 11th-15th year of employment and 2
weeks salary for each year from the 16th year of employment. These
contracts may also provide for a "duty meal" as a fringe benefit.
IV. PIRC 1993 BONUS PLAN
Attached as Exhibit I to this Schedule 4.12A are the schedules
detailing the 1993 bonus plan for PIRC, RRII, PIV and ISI. This bonus
plan is based on a salary percentage as a function of EBDIT. The list
of employees eligible for the bonus plan are divided into three
categories with a different salary percentage for each category.
Exhibit I is a summary, by category, of the bonus plan, and details
the eligible employees and their potential bonuses.
<PAGE>
MERV GRIFFIN'S PARADISE ISLAND
RESORT AND CASINO EXHIBIT I TO
1993 BONUS SCHEDULE SCHEDULE 4.12A
SUMMARY
<TABLE>
<CAPTION>
LIST #1
TARGET EBDIT % OF % SALARY
(000'S) EBDIT BONUS COST % EBDIT
- -------------------------------------------------------------------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
$12,000 91% 2% $5,200 0.0%
13,171 100% 5% 13,000 0.1%
14,488 110% 10% 26,000 0.2%
15,937 120% 15% 39,000 0.2%
17,531 130% 20% 52,000 0.3%
19,284 140% 25% 65,000 0.3%
21,212 150% 30% 78,000 0.4%
<CAPTION>
LIST #2
TARGET EBDIT % OF % SALARY
(000'S) EBDIT BONUS COST % EBDIT
- -------------------------------------------------------------------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
$12,000 91% 2% $27,440 0.2%
13,171 100% 4% 54,881 0.4%
14,488 110% 6% 82,321 0.6%
15,937 120% 8% 109,762 0.7%
17,531 130% 10% 137,202 0.8%
19,284 140% 12% 164,643 0.9%
21,212 150% 14% 187,883 0.9%
<CAPTION>
LIST #3
TARGET EBDIT % OF % SALARY
(000'S) EBDIT BONUS COST % EBDIT
- -------------------------------------------------------------------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
$12,000 91% 2% $48,030 0.4%
13,171 100% 3% 72,046 0.5%
14,488 110% 4% 96,061 0.7%
15,937 120% 5% 120,076 0.8%
17,531 130% 6% 144,091 0.8%
19,284 140% 7% 168,106 0.9%
21,212 150% 8% 192,121 0.9%
____________________________________________________________________________________________________________________
<CAPTION>
TOTAL
TARGET EBDIT % OF
(000'S) EBDIT COST % EBDIT
- -------------------------------------------------------------------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
$12,000 91% $80,671 0.7%
13,171 100% 139,927 1.1%
14,488 110% 204,382 1.4%
15,937 120% 268,838 1.7%
17,531 130% 333,293 1.9%
19,284 140% 397,749 2.1%
21,212 150% 458,005 2.2%
____________________________________________________________________________________________________________________
</TABLE>
<PAGE>
MERV GRIFFIN'S PARADISE ISLAND
RESORT AND CASINO
1993 BONUS SCHEDULE
<TABLE>
<CAPTION>
LIST #1
EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT
NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140%
- ------------ ------------ ------------- ----------- --------- --------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GARRINGTON,
J BARRIE SR VP ADMIN 30 110,000 2,200 5,500 11,000 16,500 22,000 27,500
WILLIAMS,
MICHAEL J SR VP OPER 33 150,000 3,000 7,500 15,000 22,500 30,000 37,500
------------- ----------- --------- --------- --------- ----------- ----------- -----------
260,000 $ 5,200 $ 13,000 $ 26,000 $ 39,000 $ 52,000 $ 65,000
-----------
SALARY NORM
LIST #1 130,000 2,600 6,500 13,000 19,500 26,000 32,500
# OF PEOPLE 2 2 2 2 2 2
--------- --------- --------- ----------- ----------- -----------
TOTAL 5,200 13,000 26,000 39,000 52,000 65,000
<CAPTION>
EBDIT
NAME 150%
- ------------ -----------
<S> <C>
GARRINGTON,
J BARRIE 33,000
WILLIAMS,
MICHAEL J 45,000
-----------
$ 78,000
39,000
2
-----------
78,000
</TABLE>
<TABLE>
<CAPTION>
LIST #2
EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT
NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140%
- ------------ ------------ ------------- ----------- --------- --------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALBURY, GENE VP OF FI-
NANCE 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200
CAREY, KAREN VP--HR 26 70,000 1,400 2,800 4,200 5,600 7,000 8,400
CAREY, NEV- VP UTIL-
ILLE ITIES 26 65,000 1,300 2,600 3,900 5,200 6,500 7,800
CLARK,
DENISE VP CAS MKT 30 105,000 2,100 4,200 6,300 8,400 10,500 12,600
CROCKET, DON SR VP CAS
OPER 30 105,000 2,100 4,200 6,300 8,400 10,500 12,600
GREEN, JAY VP SALES &
MKT 117,800 2,356 4,712 7,068 9,424 11,780 14,136
HENDERSON, ASST CASINO
RICHARD MGR 23 65,000 1,300 2,600 3,900 5,200 6,500 7,800
HERCULES, DIR CAS
LINCOLN ADMIN 26 73,500 1,470 2,940 4,410 5,880 7,350 8,820
HIGOS, FRED DIR OF GOLF 22 52,500 1,050 2,100 3,150 4,200 5,250 6,300
LAURENO,
LORI VP--RRU/ PIV 24 85,000 1,700 3,400 5,100 6,800 8,500 10,200
MIRAMONTES, VP--FACILI-
CELSO TIES PIRC 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200
MUNROE, KEN- ASST CASINO
DAL MGR 26 65,000 1,300 2,600 3,900 5,200 6,500 7,800
OLIN, STAN DIR
PURCHASING 24 61,524 1,230 2,461 3,691 4,922 6,152 7,383
PRUDDEN,
DOUG GM PARA PARA 26 60,000 1,200 2,400 3,600 4,800 6,000 7,200
RATZEL, BILL VP HOT OP &
MG DIR 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200
SASTRE, VP AND MG
GABRIEL DIR 30 100,000 2,000 4,000 6,000 8,000 10,000 12,000
SAWYER, DIR OPER
DOUGLAS ANAL 26 67,500 1,350 2,700 4,050 5,400 6,750 8,100
THOMPSON, DIR OF
PAUL SECURITY 23 55,000 1,100 2,200 3,300 4,400 5,500 6,600
WEBB, BRIAN GM OCEAN
CLUB 23 54,200 1,084 2,168 3,252 4,336 5,420 6,504
----------- --------- --------- --------- ----------- ----------- -----------
1,372,024 $ 27,400 $ 54,000 $ 82,321 $ 109,762 $ 137,282 $ 164,643
<CAPTION>
EBDIT
NAME 150%
- ------------ -----------
<S> <C>
ALBURY, GENE 11,900
CAREY, KAREN 9,800
CAREY, NEV-
ILLE 9,100
CLARK,
DENISE 14,700
CROCKET, DON 14,700
GREEN, JAY 16,492
HENDERSON,
RICHARD 9,100
HERCULES,
LINCOLN 10,290
HIGOS, FRED 7,350
LAURENO,
LORI 11,900
MIRAMONTES,
CELSO 11,900
MUNROE, KEN-
DAL 9,100
OLIN, STAN 8,613
PRUDDEN, DOUG 8,400
RATZEL, BILL 11,900
SASTRE,
GABRIEL 9,800
SAWYER,
DOUGLAS 9,450
THOMPSON,
PAUL 7,700
WEBB, BRIAN 7,588
-----------
$ 187,889
</TABLE>
<PAGE>
MERV GRIFFIN'S PARADISE ISLAND
RESORT AND CASINO
1993 BONUS SCHEDULE
<TABLE>
<CAPTION>
LIST #3
EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT
NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% 150%
- ------------ ------------ ---------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADDERLEY, DIR SALES
NED 19 35,000 700 1,050 1,400 1,750 2,100 2,450 2,800
ALBURY, DIR EMP
CHARLES RELATIONS 21 41,980 900 1,349 1,799 2,249 2,699 3,149 3,598
ANDERSON, SHOW MGR
JEREMY 22 50,440 1,009 1,513 2,018 2,522 3,026 3,531 4,035
ATKINSON, CAS SHIFT
ALEX MGR 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397
BARTLETT, SR INTRNL
ROMA AUDITOR 19 28,000 560 840 1,120 1,400 1,680 1,960 2,240
BENSON, DEP DIR
HERMAN ENG 23 54,080 1,082 1,622 2,163 2,704 3,245 3,786 4,326
BETHEL, DIR F & B
STEPHEN 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744
BOWE, FRONT
STUART OFFICE
MGR 19 35,048 701 1,051 1,402 1,752 2,103 2,453 2,804
BURROWS, DIR CAS
OSCAR SURV 23 57,000 1,140 1,710 2,280 2,850 3,420 3,990 4,560
CAMBRIDGE, EXEC ASST
ERNEST MGR--OC 22 53,976 1,080 1,619 2,159 2,699 3,239 3,778 4,318
CAREW, PROJECT
DENIS MGR 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744
CAREY, MGR RDS &
ANTHONY LDSCPING 19 33,800 676 1,014 1,352 1,690 2,028 2,366 2,704
CHEA, EXEC SOUS
CHRIS- CHEF
TOPHER 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744
COLEBROOKE, DIR OF
CHARLES RES-
TAURANTS 19 36,400 728 1,092 1,456 1,820 2,184 2,548 2,912
COOPER, DIR--CAGE
EUGENE OPS 22 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200
CULMER, ASST FIN
ANGELA CONTR I 21 48,500 970 1,455 1,940 2,425 2,910 3,395 3,880
DAVIS, SR OPER
FRANK ANAL 20 41,900 838 1,257 1,676 2,095 2,514 2,933 3,352
ENEAS, DIR PUB
SANDRA REL 20 41,976 840 1,259 1,679 2,099 2,519 2,938 3,358
FERGUSON, DIR TRAIN-
DEBORAH ING 20 40,300 806 1,209 1,612 2,015 2,418 2,821 3,224
FLAUM, CAS COL-
MICHAEL LECTIONS 20 40,155 803 1,205 1,606 2,008 2,409 2,881 3,212
HACKETT, CAS SHIFT
JANICE MGR 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397
HAMILTON, DIR HSEKP-
DONNA ING 19 35,048 701 1,051 1,402 1,752 2,103 2,453 2,804
HAVEN, DIR CASINO
CARL CREDIT 26 83,300 1,666 2,499 3,332 4,165 4,998 5,831 6,664
HEPBURN, DIR BARS
JERRY 19 34,684 694 1,041 1,387 1,734 2,081 2,428 2,775
HUTCH- MGR PIA
INSON, AIR
OLIVER 19 39,120 782 1,174 1,565 1,956 2,347 2,738 3,880
JENOURE, ASST FIN
BRENDA CONTR II 20 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600
</TABLE>
<PAGE>
MERV GRIFFIN'S PARADISE ISLAND
RESORT AND CASINO
1993 BONUS SCHEDULE
<TABLE>
<CAPTION>
LIST #3
EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT
NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% 150%
- ------------ ------------ ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LUNN, ASST FIN
LIONEL CONTR III 21 48,000 960 1,440 1,920 2,400 2,880 3,360 3,840
MARCHE, SR EXEC
KEVIN HOST 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397
MATSAS, CASINO
HARRY SHIFT MGR 23 60,000 1,200 1,800 2,400 3,000 3,600 4,200 4,800
MAURA, ASST MGR
PETER PAR PAR 19 25,694 514 771 1,028 1,285 1,542 1,799 2,056
MAYHOOK, CASINO
PETER SHFT MGR 23 59,800 1,196 1,794 2,392 2,990 3,588 4,186 4,784
McDONALD, DIR AC-
RONN TIVITIES 25 67,600 1,352 2,028 2,704 3,380 4,056 4,732 5,408
MICKLEWHYTE, CAS CON-
DAVID TROLLER 23 53,000 1,060 1,590 2,120 2,650 3,180 3,710 4,240
O'BRIAN, ASST
NEIL MANAGER 17 28,600 572 858 1,144 1,430 1,716 2,002 2,288
OUTIEN, DIR IND
PETER RELA-
TIONS 22 50,570 1,011 1,517 2,023 2,529 3,034 3,540 4,046
PARKER,
CLEOMI RISK MGMT 19 36,381 728 1,091 1,455 1,819 2,183 2,547 2,910
REINOSO, PIL DIR--
FRAN- ENG
CISCO 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397
SANDS, DIR CONV
CLINT SRVCS 19 35,360 707 1,061 1,414 1,768 2,122 2,475 2,829
SCHMIDT, EXEC CHEF
HELMUT 23 64,000 1,280 1,920 2,560 3,200 3,840 4,480 5,120
SPYCHALLA, CAS AN-
DINO ALYST 23 55,000 1,100 1,650 2,200 2,750 3,300 3,850 4,400
STRACHAN, SUPPORT
DION SERV MGR 19 35,000 700 1,050 1,400 1,750 2,100 2,450 2,800
SYMONETTE, DIR--
LINDA RECRUITING 20 40,300 806 1,209 1,612 2,015 2,418 2,821 3,224
UMBRIA, DIRECTOR
STEVE MIS 23 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200
BALFOUR, DIR CAS
ANTHONY CREDIT 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200
CHOMINSKI, DIR TRAVEL
RICK IND 55,000 1,100 1,650 2,200 2,750 3,300 3,850 4,400
DEL POZO, CASINO MKT
BOB REP 80,000 1,600 2,400 3,200 4,000 4,800 5,600 6,400
FEICK, DIR OPS
JOSEPHINE RRI/PIV 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600
SAUSSIER, DIR CAS
BOB COLLEC-
TIONS 42,000 840 1,260 1,680 2,100 2,520 2,940 3,360
SOLOV, CASINO MKT
STEVE REP 78,750 1,575 2,363 3,150 3,938 4,725 5,513 6,300
ZAPPATER- EXEC DIR
RA, NORMA MKTG 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600
---------- --------- --------- --------- --------- --------- --------- ---------
$2,401,518 $ 48,030 $ 72,046 $ 96,061 $ 120,076 $ 144,091 $ 168,106 $ 192,121
----------
SALARY
NORM LIST
#3 45,518 910 1,821 2,731 3,641 4,552 5,462 6,371
# OF
PEOPLE 50 50 50 50 50 50 50
--------- --------- --------- --------- --------- --------- ---------
TOTAL 45,518 91,036 136,554 152,072 227,590 273,108 318,626
</TABLE>
<PAGE>
Schedule 4.14
ENVIRONMENTAL MATTERS
I. Paradise Island Utilities, a division of PIL, operates a wastewater
treatment plant in connection with the Bahamian facilities. Effluent
from this plant is used for irrigation.
II. IHC operates an air conditioning process in connection with the
Bahamian facilities. This process discharges cooling water into a
lagoon.
III. Miami matters. See attachment.
<PAGE>
Schedule 4.14
Attachment
MERV GRIFFIN'S
PARADISE ISLAND AIRLINES, INC.
1550 S.W. 43RD STREET, P.O. BOX 350510, FORT LAUDERDALE, FLORIDA 33315
TELEPHONE: (305) 359-8043
UNDERGROUND FUEL STORAGE TANKS
IN FT. LAUDERDALE
1550 S.W. 43RD ST.
<TABLE>
<CAPTION>
QTY CAPACITY STATUS
<S> <C> <C>
3 ea 12,000 gal tanks never used
1 ea 1,000 gal waste oil tank being used
1 ea engine oil tank not in use
</TABLE>
<PAGE>
Schedule 4.16(a)
AGREEMENTS AFFECTING THE SHARES
I. HCB: RIGHT OF FIRST REFUSAL
Reference is made to the agreements and instruments listed in
Schedule 4.04 and said Schedule 4.04 is hereby incorporated by reference in
this Schedule 4.16.
II. ENCUMBRANCES, ETC.
Reference is made to the agreements and instruments listed in
Schedule 4.04 and said Schedule 4.04 is hereby incorporated by reference in
this Schedule 4.16.
<PAGE>
Schedule 4.16(b)
SHARED CONTRACTS
Reference is made to the agreements and instruments listed in
Schedules 4.11 and 4.12 and said Schedules 4.11 and 4.12 are hereby
incorporated by reference in this Schedule 4.16(b).
<PAGE>
Schedule 4.17
MATERIAL CONTRACTS
I. Leases - Real Property
A. Paradise Island Airlines Fort Lauderdale Airport Ground Lease
dated May 31, 1983. Assignment requires written consent by
landlord, not to be unreasonably withheld.
B. Paradise Island Airlines Fort Lauderdale Airport Terminal
Counter & Gate Space Lease dated February 25, 1983. Assignment
of the lease needs consent of landlord.
C. Month to month lease agreement number x-178 between Dade County,
Florida, and PIA, for baggage and terminal space at Miami
International Airport. No assignment or subleases allowed.
D. Lease agreement dated October 1, 1990 between USAir, Inc. and
PIA for ground handling agreement at West Palm Beach Airport,
West Palm Beach Florida. No assignment by either party without
written consent of other party.
E. RII leases the 5th floor of the Concord Centre Building located
at 2875 N.E. 191st Street, North Miami, Florida under Lease
Agreement, dated March 1, 1993, with Concord Centre, Ltd.
Assignment of the lease needs consent of the landlord.
F. Lease for 901 N.E. 125th Street, North Miami, Florida under
Lease Agreement dated June 1, 1983, and amendment thereof dated
June 22, 1992. Assignment of the lease needs consent of
landlord.
G. Reference is made to the agreements and instruments listed in
Schedule 4.07 and said Schedule 4.07 is hereby incorporated by
reference in this Schedule 4.17.
<PAGE>
Schedule 4.17
II. LEASES - AIRCRAFT
<TABLE>
<CAPTION>
AIRCRAFT LESSOR EXPIRES
- -------- ------ -------
<S> <C> <C>
780MG Concord Jan 19, 1994
703MG Concord May 27, 1994
158CL AGES Group Dec 11, 1994
169AG AGES Group April 21, 1995
454AG AGES Group April 21, 1994
765MG ANTL ----
</TABLE>
Reference is made to the agreements and instruments listed in
Schedule 4.08 and said Schedule 4.08 is hereby incorporated by reference in
this Schedule 4.17.
III. CONTRACTS WITH THE HOTEL CORPORATION OF THE BAHAMAS ("HCB")
A. Agreement dated December 21, 1989 between RII and HCB regarding Right
of First Refusal with respect to sale of RII's Paradise Island
operations. The lease is silent as to assigment.
B. Supplementary Agreement dated January 8, 1990 between RIB, RII, GRI
and HCB regarding confirmation of HCB's Right of First Refusal with
respect to sale of RII's Paradise Island operations. The lease is
silent as to assigment.
C. Casino Operating (Management) Agreement dated May 23, 1978 between
PEL and HCB, as amended by Letter of Agreement dated July 2, 1985
from HCB to RIB. Operator may not assign lease.
D. Lease of Paradise Island Casino and fixtures dated May 23, 1978 by
Paradise Realty Limited to HCB, as renewed by Letter dated October
20, 1988. No assignment or sublease without permission of the
landlord.
IV. MERV GRIFFIN
A. License and Services Agreement dated September 17, 1992 between RII,
RIH and The Griffin Group relating to grant of use of Merv Griffin's
name and likeness in connection with promotion of RII's hotels and
casinos. Upon sale of a property, RII and RIH must stop using the
name and likeness in connection with such sold property within 60
days after sale or 120 days if RII and/or RIH has operating
agreement with the buyer; The Griffin
2
<PAGE>
Schedule 4.17
Group has the option to obtain royalties from buyer for continued use of
the name and likeness.
V. AGENTS AND PROMOTERS
A. Letter of Understanding between PEL and Min Der, as independent
contractor dated March 18, 1993. Can be terminated by either party
within 6 months with a written notice.
B. Letter of Understanding between PEL and Bob Pellegrini, as
independent contractor dated October 19, 1992. Can be terminated by
either party within 90 days with a written notice.
VI. ADVERTISING CONTRACTS
A. Authorization Contract between RIB & Broadcast Barter Bureau dated
June 4, 1992. Credits offered in exchange for media are good from
June 4, 1992 to June 4, 1994. Silent as to assignment.
B. Agreement between RIB & Broadcast Marketing Corp. dated January 29,
1993. Credits offered in exchange for media are good from January 31,
1993 to January 31, 1995. Agreement requires RIB to get its purchaser
to acknowledge and agree to honor credits. Silent as to assignment.
C. Letter Agreement between RIB & Liberty Travel/Gogo Tours dated
December 16, 1992 relating to cooperative advertising in 1993. Silent
as to assignment.
D. Commitment Letter to NY Times dated April 4, 1993 regarding 52 weeks
of advertising for Resorts International (Bahamas). Silent as to
assignment.
VII. HIGH POINT DEVELOPMENT COMPANY LIMITED ("HP")
A. Amenities Agreement between PIL, RIB, IHCL and HP dated April 19,
1990 relating to granting guests of the new hotel privileges to
amenities of Paradise Island Resorts & Casino.
B. Shareholders Agreement between PIL and Roy Speer, Leroy Bowe, Berlin
Wilbert Key, William F. Naughton and Earle Anthony Roberts dated
April 19, 1990 relating to ownership of HP.
3
<PAGE>
Schedule 4.17
VIII. EMPLOYEE MATTERS
A. Metlife Savings Plan Program Policy (US employees). Contract is
non-assignable.
B. Agreement between Bahamas Hotel Employers' Association and
Bahamas Hotel Catering and Allied Workers Union ("Industrial
Agreement") dated January 7, 1990, as amended by Addendum dated
January 7, 1992. To become an obligation of the Buyer.
C. Bahamas Hotel Industry Management Pension Plan and Participation
Agreements.
D. Bahamas Hotel & Allied Industries Pension Plan and Participation
Agreements.
E. Agreement between The Bahamas Hotel Employers' Association and
Bahamas Musicians' and Entertainers' Union dated December 1,
1987, amended and renewed by oral agreement between Michael
Richley and Duke Hanna. Contract non-assignable.
F. Bahamas Musician's Entertainers Pension Fund.
G. Reference is made to the agreements and instruments listed in
Schedules 4.11 and 4.12 and said Schedules 4.11 and 4.12 are
hereby incorporated by reference in this Schedule 4.17.
H. Individual Employee Contracts with some Company employees.
4
<PAGE>
Schedule 4.17
IX. 1990 REORGANIZATION
A. Indenture for Senior Secured Redeemable Series Note dated September
14, 1990 between RII and Manufacturers Hanover Trust Company
("MHTC"), as Trustee, together with the Series A Notes and Series B
Notes issued thereunder.
B. Mortgage & Security Agreement with Assignment of Rents dated
September 14, 1990 among RII, NPC, EZC and MHTC.
C. Assignment of Leases & Rents dated September 14, 1990 among RII, NPC,
EZC and MHTC.
D. RII Pledge Agreement dated September 14, 1990 between RII and MHTC.
E. Mortgage and Security Agreement with Assignment of Rents dated
September 14, 1990 between RIH & MHTC.
F. Assignment of Leases and Rents dated September 14, 1990 between RIH
and MHTC.
G. RIH Security Agreement dated September 14, 1990 between RIH & MHTC.
H. Trademark Security Agreement dated September 14, 1990 between RIH and
MHTC.
I. RIH Pledge Agreement dated September 14, 1990 between RIH & MHTC.
J. RIB Collateral Assignment Agreement dated September 14, 1990 among
RIH, RIB, PIL, IHCL, PBIL, and MHTC.
K. RIH Notes Pledge Agreement dated September 14, 1990 among GRI, RIH
and MHTC.
L. RIB Stock Pledge Agreement dated September 14, 1990 between GRI and
MHTC.
M. Indenture for Showboat Notes (First Mortgage Non-Recourse
Pass-Through Note) dated September 14, 1990 between RII and the Bank
of New York ("BONY") as Trustee.
N. $50,000,000 Promissory Note dated November 14, 1988 by RIB to RIH,
assigned by RIH to BONY as Trustee of Showboat Notes.
5
<PAGE>
Schedule 4.17
O. Agreement of Guarantee dated November 14, 1988 made by IHCL to
RIH relating to the $50,000,000 Promissory Note, assigned to
BONY.
P. Agreement of Guarantee dated November 14, 1988 made by PBIL to
RIH relating to the $50,000,000 Promissory Note, assigned to
BONY.
Q. Agreement of Guarantee dated November 14, 1988 made by PIL to
RIH relating to the $50,000,000 Promissory Note, assigned to
BONY.
X. MISCELLANEOUS
A. Paradise Island Limited -
One year renewable lease for office and warehouse facility
located at 1550 S.W. 43rd Street, Fort Lauderdale under Lease
Agreement dated December 20, 1991 between PIA as Lessor and ISI
as Lessee. Lessee shall not sublet or assign without the written
consent or the Lessor, not to be unreasonably withheld.
B. ISI -
Airport facility ("Airport") located on the southeast corner of
Paradise Island and related office space and counterspace in the
the Airport, under Lease Agreement dated December 20, 1991,
expiration 2003 between PIL as Lessor and PIA as Lessee. Lease
may not be assigned without written consent of Lessor.
C. Insurance Policies -
Reference is made to the agreements and instruments listed in
Schedules 4.11 and 4.12 and said Schedules 4.11 and 4.12 are
hereby incorporated by reference in this Schedule 4.17.
D. Non-exclusive License and Equipment Agreement dated August 4,
1993 between Progressive Games Inc. for four (4) "Carribean
Stud" poker tables.
6
<PAGE>
Schedule 4.17
E. Agreements -
EXPIRES
-------
1. EDS Reservations Computer Equipment and Software. Jun. 1998
2. UNC - Airwork - Aircraft Engine overhauls.
Fixed labor costs. Assures discounts. Feb. 1995
3. Club Med - Contract to provide charters to
San Salvador. Total value to P.I.A. $487,000 Apr. 1994
4. US Army - Verbal agreement to provide army
pilots training. Approximate value to PIA
of $100,000 Dec. 1993
5. AGES - Written agreement to finish overhaul
of DHC-7 S/N 71. Man hours charged to AGES
to be applied to lease at $5,000/month.
Date for completion is approximately 1/1/94.
F. Purchase Orders
1. TCAS with Bendix and Goodyear for aircraft 780MG which will be
recovered as per lease. Our total liability is approximately
$50,000.
G. Engine Overhauls
Pratt & Whitney $160,000
Pratt & Whitney 225,000
H. Engine Repair
UNC $112,000
UNC 50,000 Hot section
I. AT&T Network Services (Inbound Long Distance Term Discount Plan):
Effective Date: February 8, 1993
Term: 24 months
7
<PAGE>
Schedule 4.17
$20,000 per month*
*if cancelled after 1 year, the cancellation fee is 35% of the
balance.
J. Worldspan (Airline Computer System):
Effective Date: July 14, 1993
Term: 60 months
Commitment: $8,495 per month*
*Much of this expense is offset by booking credits
K.
<TABLE>
<CAPTION>
NAME/ APPROXIMATE
VENDOR DESCRIPTION TERMINATION DATE ANNUAL COST
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wang Hardware/software maintenance Renewable Annually $100,000
AT&T Bahamas Watts Line (Stateside Renewable Annually $135,000
Charge) (January 4, 1994)
AT&T MEGACOM Long Distance Service Renewable Annually Approximately
(All South Florida Locations) (February 1994) $120,000 per
annum min.
AT&T 800 Service - RRII/RIB S & M Expires-February 1995 $240,000 per
annum min.
MCI Nassau-Florida Data Lines for Indefinite $132,000
Reservations/Casino CMS/Hrgas
</TABLE>
L.
<TABLE>
<CAPTION>
OUTSTANDING APPROXIMATE
ITEMS COMPANY AMOUNT COMPLETION DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Bath Towels Edward Don & Co. $98,090 Feb. '94
Hand Towels Edward Don & Co. 18,846 Feb. '94
Bath Mats Edward Don & Co. 11,075 Feb. '94
Wash Cloths Edward Don & Co. 4,940 Dec. '93
Room Soaps Guest Supply 24,988 Feb. '94
Room Amenities Guest Supply 31,024 Feb. '94
Plastic Bunzl USA 73,671 Jun '94
Glasses
Paper Napkins Flamingo Paper 87,860 Jun '94
Playing Cards G. Matteson 75,256 Feb. '94
</TABLE>
8
<PAGE>
Schedule 4.18
INVENTORY
None
<PAGE>
Schedule 4.19
RECEIVABLES/PAYABLES
None
<PAGE>
Schedule 4.20
EMPLOYEES CLAIMS
I. The Bahamas Hotel Catering and Allied Workers Union (the "Union") has
filed arbitration claims against all members of the Bahamas Hotel
Employers'Association (the "BHEA"), which includes the Company, for
refusing to implement wage and pension contribution increases agreed
to in the collective bargaining agreement between the Union and the
BHEA dated as of January 7, 1990, and amended by the Addendum dated as
of January 7, 1992. On March 19, 1993, the Minister of Labour
referred the dispute to arbitrators. The Company has not accrued any
liability for the unpaid wage and pension contribution increases.
II. The following employment related claims have been filed:
<TABLE>
<CAPTION>
Plaintiff Defendant(s) Claim Dated Filed
- --------- ------------ ----- -----------
<S> <C> <C> <C>
John Rahming RIB Wrongful dismissal 12/3/91
Glen Wells PIL Injuries caused by 7/27/83
fellow employees
Harvey DonCooke RIB Wrongful dismissal 3/18/92
William Armstrong RIB Wrongful dismissal 7/24/92
Donald Carroll RIB Wrongful dismissal 8/7/92
Bahamas Hotel Catering Paradise-Paradise Wrongful dismissal 2/17/89
& Allied Workers Union
on behalf of Michael Forbes
Bahamas Hotel Paradise Resort & Casino Wrongful dismissal 4/29/89
Managerial Association
(Mr. Herbert Wemyss)
Lewis Farrington Britannia Towers Wrongful dismissal 6/15/89
Telvern Dean RIB Wrongful dismissal 3/6/90
Lillian Fawkes RIB Wrongful dismissal 8/2/90
Neacker C. Knowles Brittania Towers Hotel Wrongful dismissal 10/17/90
Kenneth Knowles RIB Wrongful dismissal 7/1/91
Brenville Ferguson RIB Wrongful dismissal 9/13/91
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Claudius Rolle RIB Wrongful dismissal 5/14/91
Roosevelt Adderley RIB Wrongful dismissal 5/14/91
Nevelon McKenzie RIB Wrongful dismissal 5/14/91
Lawrence Ferguson RIB Wrongful dismissal 5/14/91
Terrance Hutner RIB Wrongful dismissal 2/8/92
Andrew Forbes RIB Wrongful dismissal 1/7/92
Keith Cornell RIB Wrongful dismissal 10/7/92
Kevin Adderley RIB Wrongful dismissal 10/7/92
Roy Rodgers RIB Wrongful Dismissal 6/93
Donnie Johnson RIB Wrongful Dismissal 6/93
Kenva Hunter RIB Wrongful dismissal Not filed-
demand letter
received
7/8/92
</TABLE>
III. Reference is made to Schedule 4.12(A)I.D. and said Paragraph I.D. is
hereby incorporated by reference in this Schedule 4.20.
IV. Reference is made to Schedule 4.10 and said Schedule 4.10 is hereby
incorporated by reference in this Schedule 4.20.
<PAGE>
Schedule 4.21
TAX MATTERS
None
<PAGE>
Schedule 4.22
RII BROKERS
None
<PAGE>
Schedule 4.23
AFFILIATE TRANSACTIONS
The PIRI Group recorded the following income and expense from RII and
other affiliates:
<TABLE>
<CAPTION>
1990
------------------------------------
Through From
August 31 September 1 1991 1992
--------- ----------- ---- ----
(In Thousands of Dollars)
<S> <C> <C> <C> <C>
Income - RIH - Charter flights $ 151
===
Expenses:
RII - Parent services fee . . $ 3,560 $ 1,587 $ 5,126 $ 5,284
- Building rental . . . . 29 15 44 44
RIH - Interest expense. . . . 4,500 2,250 6,750 6,750
------- ------- ------- -------
$ 8,089 $ 3,852 $ 11,920 $ 12,078
===== ===== ====== ======
</TABLE>
For periods through August 31, 1990, RII charged the PIRI Group
for services provided based on an allocation of corporate overhead costs
incurred by RII. Effective with the reorganization, RII began charging the
PIRI Group a fee of three (3) percent of certain gross revenues for such
services. Also, recapitalization costs reflected on the Combined Statements of
Operations include charges of $11,366,000 for 1990 and $1,099,000 for 1992
representing the PIRI Group's allocated portion (approximately one-third) of
RII's consolidated recapitalization costs.
In addition to the above, charges for insurance cost are
allocated to the PIRI Group based on relative amounts of operating revenue,
payroll, property value, or other appropriate measures.
Cash advances are periodically made between RII and the PIRI
group and related payments thereto as needed.
As used herein, "RIH" means Resorts International Hotel, Inc., a
New Jersey corporation.
<PAGE>
Schedule 5.05
BUYERS BROKERS
Lazard Freres & Co.
<PAGE>
Schedule 5.08
PARENT EXPENSES
(i) costs, fees and expenses of Parent's legal counsel,
accountants and public relations advisors and the costs of preparing public
relations videos, in each case incurred in respect of the operations of Buyer,
the drafting of Buyer's organizational documents and discussions and
negotiations with the Government and agencies of the Commonwealth of The
Bahamas and the negotiation and preparation of the Purchase Agreement and
related documents, (ii) the fees and expenses of Applied Technology
Management, incurred in respect of the environmental study commissioned in
respect of the Paradise Island Business, (iii) the architectural fees and
expenses of Wimberly, Allison, Tong & Goo and engineering fees incurred in
connection with the transactions contemplated by the Purchase Agreement and
related documents and (iv) all travel costs incurred by Parent and its
Affiliates and any expenses, including, without limitation, travel expenses,
for which Parent or its Affiliates may have agreed to reimburse Lazard Freres
& Co. or any of their other respective advisors in connection with the
transactions contemplated by the Purchase Agreement and related documents.
PARENT EXPENSES NOT SUBJECT TO $2 MILLION CAP
(i) The architectural fees and expenses of Wimberly, Allison,
Tong & Goo and engineering fees incurred in connection with the transactions
contemplated by the Purchase Agreement and related documents.
(ii) Commitment Fees, Parent's legal fees and expenses and legal
fees and expenses of any Bank's counsel payable by Parent relating to the Bank
Financing.
(iii) All reasonable fees and Expenses (including fees and
expenses of counsel) relating to the Buyer Registration Statement and Buyer
Prospectus.
PARENT EXPENSES SUBJECT TO $2 MILLION CAP
(i) All reasonable costs, fees and expenses of Parent's legal
counsel, accountants and public relations advisors and the costs of preparing
public relations videos, in each case incurred in respect of the operations of
Buyer,
<PAGE>
the drafting of Buyer's organizational documents and discussions and
negotiations with the Government and agencies of the Commonwealth of The
Bahamas and the negotiation and preparation of the Purchase Agreement and
related documents (specifically excluding, however, any legal expenses,
incurred as a result of negotiations with TCW and Fidelity).
(ii) All reasonable fees and expenses of Applied Technology
Management, incurred in respect of the environmental study commissioned in
respect of the Paradise Island Business.
(iii) All reasonable travel costs incurred by Parent and its
Affiliates and any expenses, including, without limitation, travel expenses,
for which Parent or its Affiliates may have agreed to reimburse Lazard Freres
& Co. or any of their other respective advisors in connection with the
transactions contemplated by the Purchase Agreement and related documents.
The parties agree that the allocation of legal fees to Buyer with
respect to the negotiation and drafting of this Agreement and other related
agreements shall be subject to the reasonable approval of the independent
directors of Buyer.
<PAGE>
<TABLE>
<CAPTION>
Certain RII Employees Schedule 6.09
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE
1
US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE
10/03/93
ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE
09/28/93
PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL
18:47
- ----------------------------------------------------------------------------------------------------------------------------------
- -
HIRE TERM ANNUAL
LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC.
US$ MIAMI
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADAMS VALERIE V. ###-##-#### 02/19/92 12.0 PIV ACCOUNTING ACCOUNTING DATA ENTRY 001 00 US A
ALAIMO VINCENT J. ###-##-#### 10/07/92 17.7 CREDIT CREDIT GROUP COLL. CORD. 001 00 US A
ALLEN PATRICIA A. ###-##-#### 01/08/92 2.1 MIAMI G&A MIAMI G&A STOCKROOM 001 00 US T
ALONZO MARIA LUISA ###-##-#### 09/14/89 13.9 PAYABLES CHALKS/ISI CLERKS 001 00 US A
ALVAREZ DORIS ###-##-#### 08/22/88 26.0 PIV ACCOUNTING ACCOUNTING SR. ACCOUNTANT 001 00 US A
BABURAM ANNA E. ###-##-#### 05/03/88 29.0 PIV ACCOUNTING ACCOUNTING SR. ACCOUNTANT 001 00 US A
BARRIERE RAQUEL ###-##-#### 06/22/92 13.4 PIV ACCOUNTING ACCOUNTING ACCOUNTING CLERK 001 00 US A
BEROLO CLARA ###-##-#### 01/27/75 20.9 M.I.S DATA PROCESSING DATA ENTRY 001 00 US A
BINDER WARREN E. ###-##-#### 06/01/92 10.0 MARKETING MARKETING MIA DIR. MRKTG. SERV. 001 00 US A
BOHANA JESSE ###-##-#### 11/20/89 47.3 TAX TAX DIRECTOR OF TAXES 001 00 US A
CEDENO GILDA GARDENIA ###-##-#### 05/08/84 19.8 PAYABLES PAYABLES ASST SUPERVISOR 001 00 US A
CHARRY YILMA E. ###-##-#### 09/12/77 21.8 PAYABLES CHALKS/ISI ASST SUPERVISOR 001 00 US A
CLARKE RITA B. ###-##-#### 07/30/76 26.0 CREDIT CREDIT ASST MANAGER 001 00 US A
COHEN ELAYNE H. ###-##-#### 09/30/91 17.1 CREDIT CREDIT SR. COLL. CLERK 001 00 US A
COLON RALPH ###-##-#### 09/20/91 18.1 PIV/ISI ACCTG ACCOUNTING JR. ACCOUNTANT 001 00 US A
CONTRERAS CARMEN ###-##-#### 12/15/80 16.0 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US A
CONTRERAS CONCEPCION ###-##-#### 06/25/90 10.4 M.I.S. DATA PROCESSING P.T. DATA ENTRY 001 00 US X
DEBROSSE VIRGIL A. ###-##-#### 11/20/89 16.0 ACCOUNTING ACCOUNTING ACCOUNTING CLERK 001 00 US A
DIAZ SYLVIA ###-##-#### 01/16/87 13.4 PAYABLES PAYABLES CLERKS 001 00 US A
FARRINGTON ROBERT B. ###-##-#### 09/20/82 20.6 M.I.S. MICROFILM MICROFILM SUPERV 001 00 US A
FERNANDEZ JUTTA E. ###-##-#### 02/01/82 35.4 CREDIT CREDIT MANAGER 001 00 US A
GITTINGS PEARL ###-##-#### 11/07/77 17.2 PAYABLES PAYABLES CLERKS 001 00 US A
HAWK BELINDA FAYE ###-##-#### 09/07/84 20.9 MIAMI G&A MIAMI G&A PAYROLL 001 00 US A
HOBOY ROBBIN L. ###-##-#### 08/08/88 15.0 PAYABLES PAYABLES CLERKS 001 00 US A
HURTT JAMES H. ###-##-#### 10/24/89 33.0 TREASURER DEPT. TREASURER DEPT. ASST TO TREASURER 001 00 US A
INSUA DEANNA M. ###-##-#### 08/29/88 15.0 MIAMI G&A MIAMI G&A PHONE OPERATOR 001 00 US A
JAMES E. CURTIS ###-##-#### 06/26/89 15.6 M.I.S. DATA PROCESSING COMPUTER OPERATOR 001 00 US A
JESTER SANDRA L. ###-##-#### 01/30/78 49.7 M.I.S. DATA PROCESSING SR SYSTEM ANALYST 001 00 US A
JOHNS SANDRA S. ###-##-#### 09/29/80 70.0 CORPORATE CORPORATE DIR FIN REPORTING 001 00 US A
JOHNSON ALICE A. ###-##-#### 09/26/88 14.4 PAYABLES PAYABLES CLERKS 001 00 US A
JULIOUS SHEROL C. ###-##-#### 08/01/85 15.8 CREDIT CREDIT LEAD D/E BILLING 001 00 US A
KERTESZ IRENE W. ###-##-#### 02/20/90 15.3 CREDIT CREDIT COLLECTION CLERK 001 00 US A
LATHER TERRY L. ###-##-#### 03/14/88 17.7 ACCOUNTING ACCOUNTING ACCOUNTING CLERK 001 00 US A
LAZZARI JOHN S. ###-##-#### 02/24/87 23.5 FINANCIAL & TAX FINANCIAL & TAX ACCOUNTANT 001 00 US A
LEMONS JAMIE MICHELE ###-##-#### 06/01/87 15.5 CREDIT CREDIT D/E BILLING 001 00 US A
LEWIS DEIDRA ###-##-#### 10/06/92 9.9 M.I.S. MICROFILM MICROFILM CLERKS 001 00 US A
LEWIS KENT 000-00-0001 03/06/78 62.0 PIV ACCOUNTING ACCOUNTING MANAGER 001 00 US A
LONG CYNTHIA F. ###-##-#### 10/14/76 29.5 PAYABLES PAYABLES SUPERVISOR 001 00 US A
LORENCES LAURA ###-##-#### 05/07/90 25.0 PIV ACCTG ACCOUNTING STAFF ACCOUNTANT 001 00 US A
MALAVE CLOTILDA ###-##-#### 01/29/90 15.5 CREDIT CREDIT COLLECTION CLERK 001 00 US A
MARCELIN GHISLAINE ###-##-#### 01/15/90 15.5 CREDIT CREDIT D/E BILLING 001 00 US A
MARCINIAK JENNIFER A. ###-##-#### 04/12/91 22.7 TREASURER DEPT. TREASURER DEPT. SECRETARY 001 00 US A
MARRIOTT C. INES ###-##-#### 04/01/93 14.0 CREDIT CREDIT COLLECTION CLERK 001 00 US A
MARTINEZ MICHELE STROUD ###-##-#### 12/10/84 31.0 ACCOUNTING ACCOUNTING SUPERVISOR 001 00 US A
METELLUS NIVA ###-##-#### 09/18/91 11.3 CREDIT CREDIT A/R CLERK 001 00 US A
MYERS MARY C. ###-##-#### 03/24/78 29.0 MIAMI G&A MIAMI G&A OFFICE MANAGER 001 00 US A
NELSON ROBIN BRITT ###-##-#### 01/22/80 25.4 TREASURER DEPT. TREASURER DEPT. SECRETARY 001 00 US A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE
2
US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE
10/03/93
NELSON ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE
09/28/93
PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL
18:47
- ----------------------------------------------------------------------------------------------------------------------------------
- -
HIRE TERM ANNUAL
LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC.
US$ MIAMI
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NICHOLSON HAZEL G. ###-##-#### 02/03/92 20.0 PIV/RIB ACCTG ACCOUNTING SEC/ADMIN ASST 001 00 US A
NICOLOSI PETER V. ###-##-#### 10/29/90 25.0 M.I.S. DATA PROCESSING COMPUTER OPERATOR 001 00 US T
OLIVEIRA HAYDEE ###-##-#### 02/11/85 23.7 PAYABLES CHALKS/ISI ASST SUPERVISOR 001 00 US A
ORR BELINDA T. ###-##-#### 06/11/90 10.9 M.I.S. MICROFILM ASST. SUPERVISOR 001 00 US A
OWEN AUDREY M. ###-##-#### 02/02/87 24.7 M.I.S. DATA PROCESSING ADMIN ASST 001 00 US A
PATINO MONICA M. ###-##-#### 10/12/92 20.8 PIV/ISI ACCTG ACCOUNTING JR. ACCOUNTANT 001 00 US A
PEIRCE JOHN C ###-##-#### 03/17/75 70.0 CORPORATE M.I.S. DIRECTOR D.P. 001 00 US A
PEREZ OSCAR L. ###-##-#### 04/23/90 15.0 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US T
PEREZ RUBY ###-##-#### 06/01/90 14.8 PAYABLES PAYABLES CLERKS 001 00 US A
PORETSKY MARTIN ###-##-#### 06/29/87 20.3 MIAMI G&A MIAMI G&A STOCKROOM SUPER. 001 00 US A
RAMOS ROBIN CALAMITA ###-##-#### 10/13/83 30.0 FINANCIAL & TAX FINANCIAL & TAX SENIOR ACCOUNTANT 001 00 US A
RICH ELIZABETH ###-##-#### 12/12/88 16.2 PAYABLES PAYABLES CLERKS 001 00 US A
RIOS WILBERTO ###-##-#### 08/30/93 10.9 MIAMI G&A MIAMI G&A STOCKROOM 001 00 US A
ROBERTSON ANNE K. ###-##-#### 09/04/90 52.5 FINANCIAL FINANCIAL MGR FIN REPORTING 001 00 US A
RODRIGUEZ MARY ###-##-#### 01/18/75 20.6 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US A
RODRIGUEZ MIREYA A. ###-##-#### 04/01/91 9.2 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US T
ROLLE DARLENE F. ###-##-#### 10/03/91 18.0 ACCOUNTING ACCOUNTING ACCOUNTING CLERK 001 00 US A
RYAN MICHAEL J. ###-##-#### 08/07/89 20.6 ACCOUNTING ACCOUNTING JR. ACCOUNTANT 001 00 US A
SANTIAGO RAMON L. ###-##-#### 04/19/93 13.5 PAYABLES CHALKS/ISI CLERKS 001 00 US A
SAULOG SHARLENE E. ###-##-#### 01/13/86 13.4 PIV ACCOUNTING ACCOUNTING ACCOUNTING CLERK 001 00 US A
SAXNER EILEEN M. ###-##-#### 01/19/81 29.4 CORPORATE CORPORATE SECRETARY 001 00 US A
SHELTON JAMES E ###-##-#### 06/05/75 30.9 M.I.S. DATA PROCESSING COMPUTER OPERATOR 001 00 US A
SPIVAK MELISSA A. ###-##-#### 09/04/90 14.7 PAYABLES PAYABLES CLERKS 001 00 US A
STUKEL JAN M. ###-##-#### 12/14/87 15.4 PAYABLES CHALKS/ISI CLERKS 001 00 US A
SZESZKOWSKI HELEN A. ###-##-#### 03/14/88 16.5 MIAMI G&A MIAMI G&A CLERICAL 001 00 US A
TAPOGNA JANET M. ###-##-#### 02/01/89 16.6 PAYABLES PAYABLES CLERKS 001 00 US T
TAYLOR KAREN A. ###-##-#### 03/23/93 9.9 MIAMI G&A MIAMI G&A CLERICAL 001 00 US X
TAYLOR KIMBERLY A. ###-##-#### 09/28/89 13.0 PAYABLES PAYABLES CLERKS 001 00 US A
TORRES IDA L. ###-##-#### 09/06/88 15.2 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US A
TURNER PATRICK W.G. ###-##-#### 08/21/91 11.2 MIAMI G&A MIAMI G&A STOCKROOM 001 00 US A
VELEZ JUANA A. ###-##-#### 06/01/76 19.6 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US A
VERNON ASLEY M. ###-##-#### 01/30/89 13.9 CREDIT CREDIT COLLECTION CLERK 001 00 US A
WOODARD, JR. RAY D. ###-##-#### 07/28/86 33.2 M.I.S. DATA PROCESSING PROGRAMMER 001 00 US A
WOOGIN SHAWNE D. ###-##-#### 09/04/90 34.0 TAX TAX SR TAX ACCOUNTANT 001 00 US A
YASSES BRIAN S. ###-##-#### 07/05/88 23.2 ACCOUNTING ACCOUNTING STAFF ACCOUNTANT 001 00 US A
COMPANY TOTAL 82
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L (BAHAMAS) LIMITED
US$ MIAMI
APONTE ODALYS ###-##-#### 06/19/89 18.0 MARKETING MARKETING T.I.S. ADMIN ASST 004 00 US A
BUSBY ROBYN M. ###-##-#### 04/07/87 26.0 MARKETING MARKETING MARKETING MGR. 004 00 US A
BYRNES TERRY S. ###-##-#### 03/24/92 35.0 SALES MIAMI SALES MIAMI NAT'L SALES MGR 004 00 US A
CANALES ANNETTE JO ###-##-#### 07/21/92 17.5 MARKETING MARKETING MIAMI ADMIN. ASST. 004 00 US A
CHOMINSKI RICHARD J. ###-##-#### 08/04/89 55.0 MARKETING MARKETING EX DIR TRAVEL IND 004 00 US A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE
3
US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE
10/03/93
CHOMINSKI ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE
09/28/93
PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL
18:47
- ----------------------------------------------------------------------------------------------------------------------------------
- -
HIRE TERM ANNUAL
LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L (BAHAMAS) LIMITED
US$ MIAMI
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COHEN DAVID S. ###-##-#### 07/31/89 32.0 MARKETING MARKETING MIAMI SALES MANAGER 004 00 US A
COLLINS DANIEL J. ###-##-#### 07/31/91 26.8 SALES MIAMI SALES MIAMI GRP. SALES REP. 004 00 US A
DELAWDER LOUISE MARIE ###-##-#### 02/28/83 26.8 SALES MIAMI SALES MIAMI SALES MGR PIRAC 004 00 US A
DRAHL KIMBERLY A. ###-##-#### 03/23/87 30.0 PITDA PITDA MARKETING MGR. 004 00 US A
GARCIA SHERRY L. ###-##-#### 06/20/88 22.0 MARKETING MARKETING T.I.S. ADMIN ASST 004 00 US A
GILES ILITA L. ###-##-#### 09/15/92 20.0 SALES MIAMI SALES MIAMI EX. SECT. OFF./MGR 004 00 US T
GREENSTEIN JAY S. ###-##-#### 10/15/80 117.8 SALES MIAMI SALES MIAMI VICE PRESIDENT 004 00 US A
LEWIS CLAUDIA ###-##-#### 01/06/92 15.0 SALES MIAMI SALES MIAMI SALES SECRETARY 004 00 US A
LUNAN DONNAMARIE N. ###-##-#### 03/12/91 15.5 SALES MIAMI SALES MIAMI SALES SECRETARY 004 00 US A
NEWMAN CYNTHIA A. ###-##-#### 10/19/92 12.0 SALES MIAMI SALES MIAMI FILE COORDINATOR 004 00 US A
PORTER CYNTHIA R. ###-##-#### 05/27/93 16.6 MARKETING MARKETING TEMP FRIEND.FEST. 004 00 US T
RODRIGUEZ ELBA ###-##-#### 12/03/84 18.9 SALES MIAMI SALES MIAMI WORD PROCESSOR 004 00 US A
SAMUELS JENNIFER A. ###-##-#### 08/10/90 15.5 SALES MIAMI SALES MIAMI SALES SECRETARY 004 00 US A
STATHIS SHARON MCCABE ###-##-#### 03/06/89 32.4 MARKETING MARKETING MIAMI SALES MANAGER 004 00 US A
STERRETT MARY ANN ###-##-#### 05/20/85 46.6 SALES MIAMI SALES MIAMI DIR AGENCE GROUP 004 00 US A
WILLIAMS NANCY J. ###-##-#### 06/01/93 31.5 MARKETING MARKETING MIAMI SALES MANAGER 004 00 US A
ZAPPATERRA NORMA ###-##-#### 01/02/85 45.0 MARKETING MARKETING DIR MRKTG SERV 004 00 US A
COMPANY TOTAL 22
- ----------------------------------------------------------------------------------------------------------------------------------
- -
BAHAMAS DEVELOPERS LTD.
US$ REGULAR
GABLER, JR RUDOLPH 000-03-8414 39.0 BDL BDL BDL 006 00 US A
COMPANY TOTAL 1
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS REPRESENTATION INT'L INC.
US$ MIAMI
ARANHA JEANNE M. ###-##-#### 04/19/88 30.9 PIVI MANAGEMENT ADMIN ASSISTANT 046 00 US A
BABBS CHRISTINA D. ###-##-#### 01/25/93 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
BANEGAS BONNIE R. ###-##-#### 07/26/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
BARNES WAYNE B. ###-##-#### 07/29/91 13.9 RRII HRGAS TAGGER 046 00 US A
BARRIERE RAYSA ###-##-#### 07/26/93 11.4 RRII RES. SERVICES DOCUMENT CLERK/FT 046 00 US A
BENENSON ELIANE ###-##-#### 09/03/91 15.0 RRII GROUP SALES GROUP SALES SEC. 046 00 US A
BIDWELL BRESSIA K. ###-##-#### 11/02/87 23.7 RRII RES. SERVICES RES. SERVICES SUPR 046 00 US A
BOYD RACQUEL N. ###-##-#### 03/29/91 13.9 RRII RESERVATION RES. AGENT/FT 046 00 US A
BROWN SHARON P. ###-##-#### 12/28/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
BURROUGHS CHRISTOPHER J. ###-##-#### 08/04/93 12.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X
CASTRO EPIGMENIA ###-##-#### 01/13/92 13.5 RRII RES. SERVICES DOCUMENT CLERK/FT 046 00 US A
CESAROTTI MARIANNE L. ###-##-#### 04/29/91 25.8 PIVI MANAGEMENT PERSONNEL MGR. 046 00 US A
CHOISEUL PAUL I. ###-##-#### 06/14/93 27.0 RRII ADMINISTRATION AUTO/TELECOM. MGR 046 00 US A
CLARKE ROSANNA C. ###-##-#### 11/27/89 15.6 RRII RESERVATION LEAD AGENT 046 00 US A
CRISTOBAL MARIA T. ###-##-#### 01/13/92 20.0 RRII/PIV ADMINISTRATION TEC. ASST DIR OPS 046 00 US T
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE
4
US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE
10/03/93
CRISTOBAL ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE
09/28/93
PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL
18:48
- ----------------------------------------------------------------------------------------------------------------------------------
- -
HIRE TERM ANNUAL
LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS REPRESENTATION INT'L INC.
US$ MIAMI
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
D'ASCOLI ANTHONY F. ###-##-#### 09/03/92 17.7 RRII RESERVATION SPEC. SERV. AGENT 046 00 US A
DAVIS CYNTHIA D. ###-##-#### 12/07/87 14.7 RRII RESERVATION RES. AGENT/FT 046 00 US A
DEBROSSE CHERYL A. ###-##-#### 06/30/87 16.1 RRII RES. SERVICES LEAD QUAL. CONT 046 00 US A
DETORO MAURICIO J. ###-##-#### 01/22/90 13.9 RRII RESERVATION RES. AGENT/FT 046 00 US A
DIONNE KAREN E. ###-##-#### 01/13/92 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US T
FEICK JOSEPHINE M. ###-##-#### 07/08/85 45.0 PIVI MANAGEMENT DIR OF OPERATIONS 046 00 US A
FELICIANO CARMEN M. ###-##-#### 02/10/93 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
FITZGERALD JOANNE A. ###-##-#### 06/13/88 13.9 RRII HRGAS DATA ENTRY CL/FT 046 00 US A
FLETCHER MAREEN C. ###-##-#### 01/13/92 16.6 RRII RES. SERVICES LEAD TICKET AGENT 046 00 US A
FLYNN CLAUDIA A. ###-##-#### 03/07/91 13.9 RRII RES. SERVICES TICKET AGENT 046 00 US A
FRAZIER MICHELE J. ###-##-#### 05/14/92 13.0 RRII RES. SERVICES FILE CLERK/FT 046 00 US A
GALARDE MARIAMAR ###-##-#### 07/20/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
GITTENS-
NEWTON DEANNE C. ###-##-#### 01/13/92 13.5 RRII HRGAS DATA ENTRY CL/PT 046 00 US X
GOFF ALEXIS ###-##-#### 10/14/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
GOFF SARAH E. ###-##-#### 06/18/93 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X
GONZALEZ MARINA E. ###-##-#### 05/10/93 18.7 RRII ADMINISTRATION SECT TO VP 046 00 US A
GRAHAM CHERYL V. ###-##-#### 06/07/93 11.4 RRII RESERVATION RES. AGENT/FT 046 00 US A
GRAY SANDRA A. ###-##-#### 05/11/92 25.0 RRII ADMINISTRATION CUSTOMER SERV SUP 046 00 US A
GRIFFIN PAMELA L. ###-##-#### 10/14/92 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X
HALL-ZENNY INGRID ###-##-#### 05/25/92 30.0 RRII HRGAS RESERVATION MGR 046 00 US A
HARDRICT LOYDI MOISE ###-##-#### 07/20/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
HERNANDEZ ADRIANA ###-##-#### 07/05/93 13.0 RRII RES. SERVICES DOCUMENT CLERK/FT 046 00 US A
HERNANDEZ EVELYN ###-##-#### 04/06/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
HERNANDEZ IVAN O. ###-##-#### 09/16/91 18.2 RRII RES. SERVICES BILLING PR0. CLERK 046 00 US A
JACKSON ADRIENNE E. ###-##-#### 10/14/91 13.5 RRII HRGAS DATA ENTRY CL/PT 046 00 US X
JACKSON VALERIE R. ###-##-#### 07/27/93 16.6 RRII ADMINISTRATION CUST SERV REP. 046 00 US A
JEFFERSON DEBRA A.C. ###-##-#### 11/18/91 15.6 RRII RES. SERVICES PYMT. OP LEAD 046 00 US A
JOHNSON TARA L. ###-##-#### 09/03/91 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
JUSTIZ MARTA C. ###-##-#### 07/29/91 13.9 RRII HRGAS DATA ENTRY CL/FT 046 00 US A
LAURENO LORI J. ###-##-#### 04/15/85 85.0 RRII/PIV MANAGEMENT VICE PRESIDENT 046 00 US A
LAURENO LYNNE T. ###-##-#### 02/28/85 30.9 RRII GROUP SALES GROUP SALES SUPER 046 00 US A
LAZZARI CATHLEEN A. ###-##-#### 08/12/92 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US I
LEHMAN JOEL M. ###-##-#### 08/04/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
LOPEZ ALEXANDRA ###-##-#### 06/07/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
MILENSKY MARLA S. ###-##-#### 06/10/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US I
MONTAG KATHLEEN ###-##-#### 10/19/92 27.0 PIVI/RRII SALES SALES MANAGER 046 00 US A
MORALES DARLENE ###-##-#### 04/14/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
MORIS ANDRES A. ###-##-#### 11/11/86 23.7 RRII RESERVATION RESERVATION SUPER 046 00 US A
NACCARATO DOMENICK ###-##-#### 12/07/92 15.6 RRII RESERVATION RES. AGENT/FT 046 00 US A
PALENSCAR MICHELE M. ###-##-#### 01/13/92 32.0 PIV MANAGEMENT FIN. ANALYST 046 00 US A
PATINO MARIA C. ###-##-#### 03/23/91 13.9 RRII HRGAS DATA ENTRY CL/PT 046 00 US X
PEREZ ESTHER ###-##-#### 10/25/88 13.5 RRII RES. SERVICES DOCUMENT CLERK/FT 046 00 US A
PEREZ NELSON A. ###-##-#### 08/04/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
PETERSON CAROL M. ###-##-#### 12/30/91 13.5 RRII HRGAS DATA ENTRY CL/FT 046 00 US A
PINDER TERESA M. ###-##-#### 05/03/93 13.5 RRII HRGAS DATA ENTRY CL/FT 046 00 US A
PRICNE DAWN M. ###-##-#### 09/14/93 12.5 RRII RES. SERVICES DOCUMENT CLERK/PT 046 00 US X
PULIDO SUSAN ###-##-#### 04/14/93 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE
5
US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE
10/03/93
PULIDO ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE
09/28/93
PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL
18:48
- ----------------------------------------------------------------------------------------------------------------------------------
- -
HIRE TERM ANNUAL
LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC.
US$ MIAMI
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
QUINTERO LISSETTE ###-##-#### 04/06/93 13.5 RRII RES. SERVICES PYMT OP CLERK 046 00 US A
RIVET KATHY ###-##-#### 10/23/85 23.7 RRII RESERVATION TRAIN INSTRUCTOR 046 00 US A
RODRIGUEZ ANA I. ###-##-#### 08/20/90 15.6 RRII RESERVATION LEAD AGENT 046 00 US A
RODRIGUEZ PAMELA F. ###-##-#### 08/17/90 15.6 RRII ADMINISTRATION SECT TO DIR OPS 046 00 US A
ROWE CHARLES A. ###-##-#### 12/28/92 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X
SCHECTMAN NINA ###-##-#### 07/18/88 26.8 RRII SALES INSIDE SALES MGR. 046 00 US A
SCOTT MICHAEL D. ###-##-#### 09/07/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
SCOTT RICK ###-##-#### 07/01/91 23.0 RRII MARKETING SEN. MRKTG. COORD. 046 00 US A
TEWES REBECCA J. ###-##-#### 05/09/88 29.8 RRII MARKETING MKTG. SERV. SUPER. 046 00 US A
THOMAS JOANNE M. ###-##-#### 06/07/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
TITUS BOAKYE ANGELLA J. ###-##-#### 11/19/90 20.1 RRII GROUP SALES GROUP SALES REP. 046 00 US A
VELARDO SONIA A. ###-##-#### 02/01/93 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
VEZINA SANDRA L. ###-##-#### 11/11/92 29.0 PIVI/RRII SALES SALES MANAGER 046 00 US A
WALKER TANYA M. ###-##-#### 01/06/92 13.5 RRII HRGAS DATA ENTRY CL/PT 046 00 US X
WALL KRISTA A. ###-##-#### 12/28/92 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X
WHITEHURST SUSAN G. ###-##-#### 11/11/86 16.3 RRII RESERVATION RES. AGENT/FT 046 00 US A
WILBANKS TRACEY A. ###-##-#### 04/14/93 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
WOODALL LARRY J. ###-##-#### 09/07/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A
ZASTROW REBECCA ###-##-#### 06/01/87 14.0 RRII RES. SERVICES DOCUMENT CLERK/PT 046 00 US X
ZEBEGRET LOIS ###-##-#### 02/17/87 18.7 RRII RESERVATION TRAVEL AGENT 046 00 US A
COMPANY TOTAL 82
- ----------------------------------------------------------------------------------------------------------------------------------
- -
INTERNATIONAL SUPPLIERS, INC.
US$ MIAMI
BERNARD MARSHALL J. ###-##-#### 06/15/92 38.0 PURCHASING PURCHASING FOOD/BEV. BUYER 049 00 US A
CASSITTY CECILIA A. ###-##-#### 09/18/89 13.7 PURCHASING PURCHASING OFF. FILE CLERK 049 00 US A
CERIO-
KNOPMAN MEGHAN ###-##-#### 01/25/93 13.0 PURCHASING PURCHASING WH FILE CLERK 049 00 US A
FORT FAYELENA D. ###-##-#### 06/29/92 14.6 PURCHASING PURCHASING DATA ENTRY 049 00 US A
GOLAUB WELTON D. ###-##-#### 07/16/91 24.0 PURCHASING PURCHASING ASST. BUYER 049 00 US A
HOOK JAMES L. ###-##-#### 03/02/87 17.6 PURCHASING PURCHASING WAREHOUSE LABORER 049 00 US A
LOVEJOY ELLEN S. ###-##-#### 08/06/92 13.0 PURCHASING PURCHASING WH FILE CLERK 049 00 US A
LOWE II WILLIAM C. ###-##-#### 02/23/87 17.5 PURCHASING PURCHASING WAREHOUSE LABORER 049 00 US A
OLIN STANLEY L. ###-##-#### 01/11/88 61.5 PURCHASING PURCHASING DIR. PURCHASING 049 00 US A
ROBINSON MARSHA ###-##-#### 09/26/89 32.4 PURCHASING PURCHASING ASST. DIR. PURCH. 049 00 US A
ROSSEAU PHILIP E. ###-##-#### 02/11/85 54.3 PURCHASING PURCHASING SENIOR BUYER 049 00 US A
SILVERMAN LOIS ANN ###-##-#### 11/09/81 24.8 PURCHASING PURCHASING PURCHASING AGENT 049 00 US A
WEBB BRENDA L. ###-##-#### 09/22/87 25.8 PURCHASING PURCHASING WAREHOUSE MANAGER 049 00 US A
COMPANY TOTAL 13 4,309.1
- ----------------------------------------------------------------------------------------------------------------------------------
- -
ALL COMPANIES 200
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE
6
US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE
10/03/93
WEBB ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE
09/28/93
PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL
18:48
- ----------------------------------------------------------------------------------------------------------------------------------
- -
HIRE TERM ANNUAL
LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL
- ----------------------------------------------------------------------------------------------------------------------------------
- -
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REPORT: 038 FORMAT: SA VERSION: U SEQUENCE: C FREQUENCY:
SELECTION AND MERGE PARAMETERS FOR 07-PR-001-00 PRMASTER-035
RECORDS FOUND MEETING SELECTION CRITERIA 2.990 23.2%
RECORDS REJECTED 9.881 76.8%
TOTAL NUMBER OF RECORDS 12.871 100.0%
COMPANY NE 015 END AND
COMPANY NE 021 AND
CLIENT NE 02 END AND
TERMDATE EQ O END AND
DIV NE 2200 AND
EMPNO NE 202325386 END END
RECORDS PROCESSED 200
LASER COPY DISTRIBUTE TO JCP Peirce, John C.
DEPARTMENT Data Processing
LOCATION Miami-1st floor
COMMENT 1 035 ACTIVE NON CORPORATE EMPLOYEES
FOR DGB Bowden, David G.
DEPARTMENT Financial
LOCATION Miami-3rd floor
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE
1
US$ MIAMI RESORTS INTERNATIONAL INC. LAS 0 SUN PE
10/03/93
ALL US EMPLOYEES BY CO (SALARY) PRT 1 WED
09/29/93
PR-4388-07-001-00 038-SA-U-C- ACTIVE EMPLS-PIA (021-00 & 021-04) RPT P PRCALL
16:04
- ----------------------------------------------------------------------------------------------------------------------------------
- -
HIRE TERM ANNUAL
LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL
- ----------------------------------------------------------------------------------------------------------------------------------
- -
PARADISE ISLAND AIRLINES, INC.
US$ SOUTHERN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AARON TERRANCE D. ###-##-#### 12/10/90 27.0 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
AMITY SALLY JANE ###-##-#### 09/17/84 13.9 ADMINISTRATION GENERAL LEDGER OFFICE 021 00 US A
ANDERSON LAWRENCE J. ###-##-#### 04/01/91 12.1 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
ARANHA NORMAN P. ###-##-#### 08/04/83 26.7 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
AVERY DAVID M. ###-##-#### 04/08/91 28.1 REPAIR STATION PAYROLL SUPERVISOR 021 00 US A
BAILEY BONNIE S. ###-##-#### 11/27/89 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
BAUMILLER TROY M. ###-##-#### 05/15/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
BEARD JILL A. ###-##-#### 12/03/91 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
BODEN NIALL J. ###-##-#### 03/15/93 13.0 FLIGHT GENERAL LEDGER DHC6 - 1ST OFF 021 00 US A
BOLLOTTA JR. FRANK ###-##-#### 10/02/89 12.9 FLL AIRPORT STATION TICKETING 021 00 US A
BORAH CALVA D. ###-##-#### 07/31/85 13.9 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A
BOUTILLETTE JUDY L. ###-##-#### 02/13/93 18.7 MAINTENANCE GENERAL LEDGER ADMINISTRATION 021 00 US A
BROOKS CHARLAMAE V. ###-##-#### 12/03/91 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
BROOKS PAULA-ANN L. ###-##-#### 12/03/91 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
BUSING BINA M. ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
CAIN RONALD J. ###-##-#### 06/30/86 22.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
CAIN THOMAS N. ###-##-#### 06/07/91 24.6 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
CAIRO BELKYS ###-##-#### 02/16/93 30.0 ADMINISTRATION GENERAL LEDGER HUMAN RESOURCES 021 00 US A
CALABRESE JOANN T. ###-##-#### 03/06/89 12.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
CAMPBELL ARTHUR ###-##-#### 01/23/88 24.2 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
CAMPBELL WAYNE A. ###-##-#### 08/05/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US T
CARDEMAS ARMANDO ###-##-#### 08/31/92 75.0 ADMINISTRATION GENERAL LEDGER V.P. MAINT/FLIGHT 021 00 US A
CARRINGTON GAYLE ###-##-#### 04/08/91 26.7 REPAIR STATION PAYROLL MECHANICS 021 00 US A
CERNY KENNETH D. ###-##-#### 07/16/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
CHAMBERS DONNA M. ###-##-#### 08/12/92 12.5 MIAMI AIRPORT STATION TICKETING 021 00 US A
CHEEMPARAYIL JOSEPH JAMES C ###-##-#### 12/10/92 12.5 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A
CLABORN JOHN S. ###-##-#### 09/20/90 13.5 FLL AIRPORT STATION TICKETING 021 00 US A
CONSTANTINE ANNETTE J. ###-##-#### 03/06/89 18.6 ADMINISTRATION GENERAL LEDGER OFFICE 021 00 US A
COOK TIMOTHY F. ###-##-#### 01/31/87 27.5 FLIGHT GENERAL LEDGER ADMIN & GENERAL 021 00 US A
COX CHARLES R. ###-##-#### 09/11/84 26.2 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A
CRIGLER JOHN M. ###-##-#### 05/05/93 12.5 FLL AIRPORT STATION TICKETING 021 00 US X
CUBERO JOHN A. ###-##-#### 10/16/89 18.5 FLIGHT GENERAL LEDGER ADMIN & GENERAL 021 00 US A
DAY DONALD ###-##-#### 08/22/78 23.6 REPAIR STATION PAYROLL STORES 021 00 US A
DELACRUZ RAMON A. ###-##-#### 06/01/93 10.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A
DIAZ JUAN F. ###-##-#### 03/28/90 13.4 MAINTENANCE GENERAL LEDGER GROUND SUPPORT 021 00 US A
DISCENZA JOHN M. ###-##-#### 02/10/85 21.0 FLL AIRPORT LINE SERVICE RAMP+SECUR. SPEC. 021 00 US A
ESPOSITO PETER A. ###-##-#### 04/16/90 22.7 ADMINISTRATION GENERAL LEDGER TRAINERS 021 00 US A
FAGAN KAREN M. ###-##-#### 08/11/93 10.9 FLL AIRPORT STATION TICKETING 021 00 US X
FALCONER PABLO ###-##-#### 08/11/93 9.9 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US A
FISHER JOHN ###-##-#### 04/15/87 16.3 MAINTENANCE GENERAL LEDGER GROUND SUPPORT 021 00 US A
FLAHERTY COLLEEN M. ###-##-#### 02/06/89 12.6 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
FRANKLIN CARSON ###-##-#### 12/11/84 14.4 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
FRASER WILLIAM J. ###-##-#### 12/04/91 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
FRAWLEY KIM E. ###-##-#### 02/16/93 28.0 MIAMI AIPRORT PAYROLL STATION MANAGER 021 00 US A
GALLARDO IVAN Y. ###-##-#### 10/25/82 15.0 SUPERVISORY SUPERVISORY SUPERVISOR 021 00 US A
MAINT MAINT
GARNER ANGELA M. ###-##-#### 04/06/92 12.5 FLL AIRPORT STATION TICKETING 021 00 US A
GILES BRENDA A. ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE
2
US$ MIAMI RESORTS INTERNATIONAL INC. LAS 0 SUN PE
10/03/93
GILES ALL US EMPLOYEES BY CO (SALARY) PRT 1 WED
09/29/93
PR-4388-07-001-00 038-SA-U-C- ACTIVE EMPLS-PIA (021-00 & 021-04) RPT P PRCALL
16:04
- ----------------------------------------------------------------------------------------------------------------------------------
- -
HIRE TERM ANNUAL
LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL
- ----------------------------------------------------------------------------------------------------------------------------------
- -
PARADISE ISLAND AIRLINES, INC.
US$ SOUTHERN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GOFFI SUSANA ###-##-#### 10/01/90 21.5 MARKETING GENERAL LEDGER MARKETING 021 00 US A
GOMEZ-
SANCHEZ DAISY I. ###-##-#### 04/16/90 20.0 ADMINISTRATION GENERAL LEDGER HUMAN RESOURCES 021 00 US A
GONZALEZ JOSE ANTONIO ###-##-#### 05/14/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
GONZALEZ LIZETT ###-##-#### 02/03/92 12.5 MIAMI AIRPORT STATION TICKETING 021 00 US A
GREENAWALT DAN A. ###-##-#### 12/16/91 20.8 REPAIR STATION PAYROLL MECHANICS 021 00 US I
GROVE GARY F. ###-##-#### 09/29/86 21.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
GUTHRIDGE JOHN G. ###-##-#### 04/01/91 21.8 FLIGHT GENERAL LEDGER DHC6 - CAPTAIN 021 00 US A
GUZMAN CARLOS G. ###-##-#### 06/21/84 23.2 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
HAIGHT MATTHEW D. ###-##-#### 12/26/88 20.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
HAMPEL MICHAEL L. ###-##-#### 04/01/91 12.1 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
HARDENBURG LOUISE C. ###-##-#### 05/24/93 12.5 FLL AIRPORT STATION TICKETING 021 00 US X
HAVERTY RITA M. ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
HENRY JASPER ###-##-#### 01/22/86 21.4 REPAIR STATION PAYROLL STORES 021 00 US A
HEREDIA RAQUEL ###-##-#### 04/25/85 12.1 ADMINISTRATION GENERAL LEDGER OFFICE 021 00 US A
HERNANDEZ GEORGE LUIS ###-##-#### 12/12/90 11.2 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A
HERNANDEZ LUCIANA ###-##-#### 11/11/84 15.6 MIAMI AIRPORT STATION TICKETING 021 00 US A
HICKS ROBERTA A. ###-##-#### 03/19/93 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
HODGE GLENNIS V. ###-##-#### 12/11/91 10.9 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US X
HOWELL, JR. WILLIAM S. ###-##-#### 10/07/85 22.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
ITURRIA DIMITRI ###-##-#### 10/31/88 22.2 FLIGHT GENERAL LEDGER ADMIN & GENERAL 021 00 US A
JACOBS BRIAN A. ###-##-#### 09/05/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
JAUREGUI LUIS ROBERTO ###-##-#### 07/01/84 25.5 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
JOHNSON CYNTHIA ANN ###-##-#### 12/05/88 15.1 MIAMI AIRPORT STATION TICKETING 021 00 US A
JOHNSON JAMES F. ###-##-#### 04/28/93 12.5 MIAMI AIRPORT STATION TICKETING 021 00 US A
JOSEPH AMY RENEE ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
JULIAN PHILIP H. ###-##-#### 01/12/87 20.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
JUSTIZ WENDY B ###-##-#### 11/19/83 21.4 ADMINISTRATION GENERAL LEDGER TRAINERS 021 00 US A
KALIS KAREN S. ###-##-#### 05/18/92 18.0 FLIGHT GENERAL LEDGER ADMIN & GENERAL 021 00 US A
KALLMAN KATHERINE A. ###-##-#### 07/27/92 16.6 ADMINISTRATION GENERAL LEDGER BAG CLAIMS ADMIN 021 00 US A
KAMMERER DANIEL ###-##-#### 04/25/88 20.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
KASER THOMAS ###-##-#### 02/08/93 24.0 FLIGHT GENERAL LEDGER ADMIN & GENERAL 021 00 US A
KELLEY CHARLES D. ###-##-#### 03/23/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
KHAN AHMOOD A. ###-##-#### 03/04/93 26.0 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
KNAPP EDWARD D. ###-##-#### 05/10/93 55.0 A/G ADMIN A/G ADMIN A/G ADMIN 021 00 US A
LAFOSSE LUIS E. ###-##-#### 03/06/89 12.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
LAPORTE DOMINIQUE M. ###-##-#### 10/02/92 14.6 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US A
LOEWINGER CRAIG B. ###-##-#### 04/01/91 12.1 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
LUFT SHAWN D. ###-##-#### 07/08/93 13.5 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A
LUKA CHANDY ###-##-#### 10/10/77 40.0 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A
MADDEN CHARLES ###-##-#### 02/18/86 26.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
MALARSKI SHARON W. ###-##-#### 07/17/89 16.1 FLL AIRPORT STATION TICKETING 021 00 US A
MARCUS DEBORAH ILENE ###-##-#### 01/12/87 22.5 MAINTENANCE GENERAL LEDGER ADMINISTRATION 021 00 US X
MARRERO RAFAEL A. ###-##-#### 09/05/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
MARSH MEGAN H. ###-##-#### 07/06/93 16.6 ADMINISTRATION GENERAL LEDGER OFFICE 021 00 US A
MARTIN II LARRY J. ###-##-#### 02/11/93 52.0 MAINTENANCE GENERAL LEDGER ADMINISTRATION 021 00 US A
MAYNARD MICHAEL A. ###-##-#### 02/21/90 15.6 REPAIR STATION PAYROLL STORES 021 00 US A
MOONEY STEVEN G ###-##-#### 08/16/93 9.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US X
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE
3
US$ MIAMI RESORTS INTERNATIONAL INC. LAS 0 SUN PE
10/03/93
MOONEY ALL US EMPLOYEES BY CO (SALARY) PRT 1 WED
09/29/93
PR-4388-07-001-00 038-SA-U-C- ACTIVE EMPLS-PIA (021-00 & 021-04) RPT P PRCALL
16:04
- ----------------------------------------------------------------------------------------------------------------------------------
- -
HIRE TERM ANNUAL
LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL
- ----------------------------------------------------------------------------------------------------------------------------------
- -
PARADISE ISLAND AIRLINES, INC.
US$ SOUTHERN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MOORE JOY B ###-##-#### 05/01/91 17.7 ADMINISTRATION GENERAL LEDGER OFFICE 021 00 US T
MUNOZ RUBEN 000-00-0049 11/08/74 26.2 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
MUNROE TROY M. ###-##-#### 02/06/86 24.6 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
NEASMAN JANETTE M. ###-##-#### 06/01/92 13.3 MIAMI AIRPORT STATION TICKETING 021 00 US A
NEMEROFF GARY M. ###-##-#### 01/07/93 10.9 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US A
NUNN GREGORY WM. ###-##-#### 11/11/91 23.9 REPAIR STATION PAYROLL MECHANICS 021 00 US A
O'BRIEN MELISSA V. ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US I
OATES KENNETH W. ###-##-#### 04/03/89 21.2 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A
OSHINSKI LORI L. ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
PANZARELLA PHILIP J. ###-##-#### 09/05/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
PASCUAL OSWALD A. ###-##-#### 12/07/92 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
PECORA LISA A. ###-##-#### 03/19/93 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
PENNERMAN REGINALD A. ###-##-#### 06/02/93 10.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A
PHAIR RAYMOND ###-##-#### 03/12/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
PINHEIRO VICTOR ###-##-#### 06/03/85 26.0 REPAIR STATION PAYROLL STORES 021 00 US A
PLUMMER CHRISTOPHER L. ###-##-#### 12/04/91 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
PLUMMER GABRIEL S. ###-##-#### 07/10/89 12.3 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
POE ANN ###-##-#### 04/01/91 12.1 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
POSTELL CARLO ###-##-#### 07/14/86 40.0 MAINTENANCE GENERAL LEDGER ADMINISTRATION 021 00 US A
PRESBURG JOHN W. ###-##-#### 07/02/90 110.0 ADMINISTRATION GENERAL LEDGER EXEC. V.P./C.E.O. 021 00 US A
PROPHETE GARY ###-##-#### 08/30/90 11.2 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A
RAMKISSOON CHRISTOPHER R. ###-##-#### 04/20/92 10.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A
REYES JAVIER J. ###-##-#### 03/24/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
RHODD ALWYN K. ###-##-#### 04/08/91 11.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
RIBOTT ANGEL H. ###-##-#### 12/18/90 12.3 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
RIESDORPH HUGH H. ###-##-#### 10/13/80 24.2 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
RODRIGUEZ GUSTAVO A. ###-##-#### 03/19/93 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
RONGA MARK A. ###-##-#### 06/13/91 24.7 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
SATKOWSKI DAVID J. ###-##-#### 04/17/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
SCHACHLEITER JOHN W. ###-##-#### 03/06/89 46.8 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
SCHAEFFER KENNETH BRYAN ###-##-#### 03/19/93 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
SERGE R. ALEXANDER ###-##-#### 04/25/88 20.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
SERRA KENNETH M. ###-##-#### 08/31/87 25.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
SHAVER WENDY A. ###-##-#### 02/10/86 30.1 MECHANIC ICP EARNINGS MECHANIC 021 00 US A
SILVERMAN LAWRENCE A. ###-##-#### 11/20/92 10.9 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US A
SMITH MICHAEL LLOYD ###-##-#### 11/15/82 27.3 MAINTENANCE GENERAL LEDGER GROUND SUPPORT 021 00 US A
SPURRIER WADE ###-##-#### 12/04/91 11.7 FLIGHT GENERAL LEDGER DASH 7 -1ST OFF 021 00 US A
STEVENS KAREN E. ###-##-#### 02/06/89 12.6 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
STRAVINO KAREN ###-##-#### 02/06/89 13.4 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US X
SUTTON WALTER S. ###-##-#### 11/25/91 23.9 REPAIR STATION PAYROLL MECHANICS 021 00 US A
TACIE ROSEMARY LYNNE ###-##-#### 02/06/89 13.1 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
THURUTHUMALILMATHEW M. ###-##-#### 12/18/92 12.5 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A
TORRES ANTONIO F. ###-##-#### 01/30/93 10.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A
TRIBOLETTI DANIEL ###-##-#### 05/22/89 12.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
VASQUEZ HENRY ###-##-#### 12/04/91 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A
VERMEULEN SALLY G. ###-##-#### 09/17/90 11.5 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
VICTORIA CARLOS H. ###-##-#### 01/02/89 16.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- -
RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE
4
US$ MIAMI RESORTS INTERNATIONAL INC. LAS 0 SUN PE
10/03/93
VICTORIA ALL US EMPLOYEES BY CO (SALARY) PRT 1 WED
09/29/93
PR-4388-07-001-00 038-SA-U-C- ACTIVE EMPLS-PIA (021-00 & 021-04) RPT P PRCALL
16:04
- ----------------------------------------------------------------------------------------------------------------------------------
- -
HIRE TERM ANNUAL
LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL
- ----------------------------------------------------------------------------------------------------------------------------------
- -
PARADISE ISLAND AIRLINES, INC.
US$ SOUTHERN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VIEIRA DENNIS P. ###-##-#### 10/28/91 25.0 REPAIR STATION PAYROLL MECHANICS 021 00 US A
WAGAN BRENDICIA ###-##-#### 07/03/89 13.5 MIAMI AIRPORT STATION TICKETING 021 00 US A
WALKUP JOYCE N. ###-##-#### 06/06/89 13.5 FLL AIRPORT STATION TICKETING 021 00 US A
WEBB DEBBIE M. ###-##-#### 06/12/89 65.0 ADMINISTRATION GENERAL LEDGER V.P. ADMIN/SALES 021 00 US A
WENDL DANIEL J. ###-##-#### 12/26/88 20.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
WESTON SUSAN C. ###-##-#### 05/15/89 12.3 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
WHALEN BARBARA ###-##-#### 09/17/90 11.5 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
WHEATLE GERVAISE M. ###-##-#### 04/08/93 12.5 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A
WHITEHEAD YVONNE J. ###-##-#### 03/09/89 16.3 FLL AIRPORT STATION TICKETING 021 00 US A
WILEY ROBERT G. ###-##-#### 05/30/85 23.6 MECHANIC ICP EARNINGS MECHANIC 021 00 US I
WOIDA JAMES F. ###-##-#### 09/29/86 21.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A
WRZOSEK PETER J. ###-##-#### 08/21/92 10.9 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US A
COMPANY TOTAL 153
- ----------------------------------------------------------------------------------------------------------------------------------
- -
PARADISE ISLAND AIRLINES, INC.
US$ ACCOUNTING PERSONNEL
ADAMS ALICE L. ###-##-#### 03/02/92 17.7 AIRLINE ACCT. ACCOUNTING INTER. ACCOUNTANT 021 00 US A
ALLEN PATRICIA A. ###-##-#### 01/08/92 16.1 AIRLINE ACCT. ACCOUNTING ADMIN. ASST. 021 00 US A
COCCARO SHARON RENEE ###-##-#### 05/19/91 15.7 AIRLINE ACCT. ACCOUNTING ACCOUNTING CLERK 021 00 US A
FARRINGTON AMY L. ###-##-#### 09/02/86 27.8 AIRLINE ACCT. ACCOUNTING SR. ACCOUNTANT 021 00 US T
HALL KATHLEEN A. ###-##-#### 01/19/87 18.0 AIRLINE ACCT. ACCOUNTING ACCOUNTANT 021 00 US A
KIRBY DEBORAH L. ###-##-#### 11/18/80 50.0 AIRLINE ACCT. ACCOUNTING MANAGER 021 00 US A
LEZAMA SANDRA HELENA ###-##-#### 04/08/91 24.0 AIRLINE ACCT. ACCOUNTING ACCOUNTING CLERK 021 00 US I
MCLEAN RICHARD ###-##-#### 05/12/92 18.7 AIRLINE ACCT. ACCOUNTING ACCOUNTING CLERK 021 00 US A
MCRAE PATRICIA P. ###-##-#### 03/03/86 19.3 AIRLINE ACCT. ACCOUNTING STAFF ACCOUNTANT 021 00 US A
PEREZ OSCAR L. ###-##-#### 04/23/90 15.0 AIRLINE ACCT. ACCOUNTING ACCOUNTING CLERK 021 00 US A
SERRA LEISY ###-##-#### 10/10/88 13.4 AIRLINE ACCT. ACCOUNTING CLERK 021 00 US A
WAGNER, JR. G. LEE ###-##-#### 10/04/90 21.6 AIRLINE ACCT. ACCOUNTING STAFF ACCOUNTANT 021 00 US A
WILKS BARBARA E. ###-##-#### 08/05/91 24.7 AIRLINE ACCT. ACCOUNTING INTER. ACCOUNTANT 021 00 US A
WILLIAMS JEAN D. ###-##-#### 03/21/88 20.1 AIRLINE ACCT. ACCOUNTING AGENCY ACCOUNTANT 021 00 US A
WILLIAMS WINSTON V. ###-##-#### 09/06/93 24.0 AIRLINE ACCT. ACCOUNTING STAFF ACCOUNTANT 021 00 US A
WRIGHT GLORIA C. ###-##-#### 07/17/89 15.7 AIRLINE ACCT. ACCOUNTING ACCOUNTING CLERK 021 00 US A
COMPANY TOTAL 16
3,308.0
- ----------------------------------------------------------------------------------------------------------------------------------
- -
ALL COMPANIES 169
</TABLE>
<PAGE>
Schedule 6.09(a)
PARADISE EMPLOYEES
I. SEVERANCE BENEFITS
Non-management employees receive 1 week salary for each year of
service.
Directors and officers receive 2 weeks salary for each year of
service.
II. PARADISE EMPLOYEES
Reference is made to the agreements and instruments listed in
Schedule 6.09 and said Schedule 6.09 is hereby incorporated by reference in
this Schedule 6.09(a).
<PAGE>
Schedule 6.09(c)
LIST OF OFFICERS & DIRECTORS
<TABLE>
<CAPTION>
OFFICE DIRECTOR DIRECTOR DIRECTOR PRESIDENT SR. VICE VICE VICE TREASURER SECRETARY ASST.
PRESIDENT PRESIDENT PRESIDENT SECRETARY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RIB V-Wallace Farrington Hudson V-Wallace Williams Kearney O'Donnell Bowden Friedman
Farrington Farrington
Whitney Whitney
McKoy McKoy
IHC Williams Whitney Farrington Williams Farrington Ratzel O'Donnell Bowden Friedman
Kearney Farrington
[Sastre]
(Food & Bev)
PEL McKoy Whitney Farrington Crocket Kearney O'Donnell Bowden Friedman
Wyre Farrington
Casino
Marketing)
PIL V-Wallace Whitney Farrington V-Wallace Farrington Carey O'Donnell Bowden Friedman
(Utilities) Farrington
Williams
Kearney
PBIL V-Wallace Kearney Farrington V-Wallace Farrington Kearney O'Donnell Bowden Friedman
Williams Farrington
BDL Whitney Farrington Farrington Kearney O'Donnell Bowden Friedman
Farrington
PCL Whitney Williams Farrington Williams Farrington O'Donnell Bowden Friedman
Farrington
PIBMCL Williams Whitney Farrington Farrington O'Donnell Bowden Friedman
Farrington
PSSL V-Wallace Thompson Farrington V-Wallace Farrington Thompson Albury Parker Farrington
</TABLE>
<PAGE>
Schedule 10.01(n)
MATERIAL CONTRACT CONSENTS
1. Paradise Island Airlines Ft. Lauderdale Airport Terminal Counter and Gate
Space Lease.
2. Paradise Island Airlines Ft. Lauderdale Ground Lease (Hangar).
3. Miami Airport Lease (baggage and ticket counter space).
4. West Palm Beach Airport Ground Handling Agreement with US Air.
<PAGE>
=================================================================
STANDBY DISTRIBUTION AGREEMENT
between
RESORTS INTERNATIONAL, INC.
and
P. I. RESORTS LIMITED
-----------------------------------------
Dated as of October __, 1993
------------------------------------------
Purchase of Stock of Resorts International (Bahamas)
1984 Limited, and certain assets of
RII Paradise Subsidiaries
=================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I
Definitions . . . . . . . . . . . . . . . . 2
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . 2
ARTICLE II Purchase and Sale of the Shares
and the RII Paradise Assets . . . . . . . . 3
SECTION 2.01. Transfer of the Shares . . . . . . . . . . 3
SECTION 2.02. Purchase and Sale of the Shares, the
RII Real Estate Assets and the RII
Paradise Assets . . . . . . . . . . . . . . 3
SECTION 2.03. Delivery of Certificates and Other
Instruments of Transfer . . . . . . . . . . 3
SECTION 2.04. Purchase Price . . . . . . . . . . . . . . 4
SECTION 2.05. Preparation of the Closing Date Balance
Sheet and Operations Statement;
Adjustments . . . . . . . . . . . . . . . . 4
SECTION 2.06. Closing . . . . . . . . . . . . . . . . . . 6
SECTION 2.07. Third-Party Consents . . . . . . . . . . . 6
SECTION 2.08. Further Assurances . . . . . . . . . . . . 7
SECTION 2.09. Power of Attorney, etc . . . . . . . . . . 8
ARTICLE III Assumption of Certain Liabilities . . . . . 9
SECTION 3.01. Assumed Liabilities . . . . . . . . . . . . 9
SECTION 3.02. Liabilities Not Assumed . . . . . . . . . . 9
SECTION 3.03. No Successor . . . . . . . . . . . . . . . 10
SECTION 3.04. Indemnification . . . . . . . . . . . . . . 10
ARTICLE IV Representations and Warranties of RII . . . 11
SECTION 4.01. Incorporation of Representations
and Warranties. . . . . . . . . . . . . . 11
SECTION 4.02. Organization and Good Standing of
Buyer . . . . . . . . . . . . . . . . . . . 12
SECTION 4.03. Authorization of Buyer . . . . . . . . . . 12
SECTION 4.04. Buyer: No Conflict; Required
Filings and Consents . . . . . . . . . . . 12
SECTION 4.05. Buyer Shares . . . . . . . . . . . . . . . 13
ARTICLE V Additional Agreements . . . . . . . . . . . 14
<PAGE>
SECTION 5.01. Conduct of Paradise Island Business
Pending the Closing . . . . . . . . . . . . 14
SECTION 5.02. Securities Laws . . . . . . . . . . . . . . 14
SECTION 5.03. Documents and Motions to be Filed by
RII and GRI . . . . . . . . . . . . . . . . 15
SECTION 5.04. Reorganization Proceedings . . . . . . . . 15
SECTION 5.05. Access to Information. . . . . . . . . . 16
SECTION 5.06. Notification of Certain Matters . . . . . . 16
SECTION 5.07. Further Action; Reasonable Efforts . . . . 17
SECTION 5.08. Employee Benefit Matters . . . . . . . . . 17
SECTION 5.09. Bulk Transfer Laws . . . . . . . . . . . . 19
SECTION 5.10. Intercompany Accounts, Contracts
Guaranties and Indebtedness . . . . . . . . 19
SECTION 5.11. Reorganization Plan Solicitation
Documents . . . . . . . . . . . . . . . . . 20
SECTION 5.12. Reorganization Proceedings . . . . . . . . 20
SECTION 5.13. Airline Governmental Consents . . . . . . . 21
SECTION 5.14. Comfort Letter . . . . . . . . . . . . . . 22
SECTION 5.15. Attorneys Fees . . . . . . . . . . . . . . 22
SECTION 5.16. Transfer Taxes . . . . . . . . . . . . . . 22
SECTION 5.17. Actions on Behalf of Buyer; Knowledge
of Buyer . . . . . . . . . . . . . . . . . 22
SECTION 5.18. Articles of Association . . . . . . . . . . 23
SECTION 5.19. Representations and Warranties . . . . . . 23
SECTION 5.20. Operation of Buyer and Buyer
Subsidiaries . . . . . . . . . . . . . . . 23
SECTION 5.21. Insurance Proceeds . . . . . . . . . . . . 23
SECTION 5.22. Acquisition Proposals . . . . . . . . . . . 24
ARTICLE VI Conditions to the Closing . . . . . . . . 24
SECTION 6.01. Conditions to Obligations of Buyer . . . . 24
SECTION 6.02. Conditions to Obligations of RII . . . . . 27
ARTICLE VII Survival and Indemnification . . . . . . . 27
SECTION 7.01. Survival of Representations . . . . . . . . 27
SECTION 7.02. Indemnification by RII . . . . . . . . . . 28
SECTION 7.03. Notice, etc. . . . . . . . . . . . . . . . 28
SECTION 7.04. Reimbursement of Costs . . . . . . . . . . 29
SECTION 7.05. Time Limitations . . . . . . . . . . . . . 29
SECTION 7.06. Sole and Exclusive Remedy . . . . . . . . . 29
ARTICLE VIII Termination, Amendment And Waiver . . . . . 30
SECTION 8.01. Termination . . . . . . . . . . . . . . . . 30
SECTION 8.02. Rights of Termination . . . . . . . . . . . 31
<PAGE>
SECTION 8.03. Effect of Termination . . . . . . . . . . 31
SECTION 8.04. Waiver . . . . . . . . . . . . . . . . . . 31
SECTION 8.05. Amendments . . . . . . . . . . . . . . . . 32
ARTICLE IX General Provisions . . . . . . . . . . . . 32
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . 32
SECTION 9.02. Entire Agreement; Assignment . . . . . . . 33
SECTION 9.03. Parties in Interest . . . . . . . . . . . . 34
SECTION 9.04. GOVERNING LAW . . . . . . . . . . . . . . . 34
SECTION 9.05. Headings . . . . . . . . . . . . . . . . . 34
SECTION 9.06. Counterparts . . . . . . . . . . . . . . . 34
SECTION 9.07. Specific Performance . . . . . . . . . . . 34
SECTION 9.08. JURISDICTION . . . . . . . . . . . . . . . 34
SECTION 9.09. Knowledge or Consents . . . . . . . . . . . 35
SECTION 9.10. Rights of Fidelity and TCW . . . . . . . . 35
EXHIBITS
Exhibit A Comfort Letter
Exhibit B Articles of Association of Buyer
Exhibit C Form of Opinion of Gibson, Dunn &
Crutcher
Exhibit D Management Agreement
<PAGE>
STANDBY DISTRIBUTION AGREEMENT
STANDBY DISTRIBUTION AGREEMENT dated as of
October __, 1993 (this "Agreement"), between RESORTS
INTERNATIONAL, INC., a Delaware corporation ("RII"),
and P.I. RESORTS LIMITED, a Bahamian corporation
("Buyer").
WHEREAS, RII has entered into that certain Purchase
Agreement, dated as of October __, 1993 (the "Sun Purchase
Agreement"), by and between RII and Sun International Hotels
Limited ("SIHL") providing for the sale of the Shares to SIHL on
the terms and conditions set forth therein;
WHEREAS, in connection with the proposed sale of the
Shares to SIHL, the Sun Purchase Agreement further contemplates
that SIHL will cause certain subsidiaries thereof to acquire the
RII Real Estate Assets from RII and the RII Paradise Assets from
the RII Paradise Subsidiaries on the terms and conditions set
forth therein;
WHEREAS, Buyer is, as of the date hereof, a wholly-
owned subsidiary of RII;
WHEREAS, if and only if the transactions contemplated
by the Sun Purchase Agreement are not consummated in accordance
with the terms thereof and the Sun Purchase Agreement is
terminated in accordance with the terms thereof, Buyer desires to
acquire the Shares from RII, and RII desires to sell the Shares
to Buyer on the terms and conditions set forth herein (such
purchase, the "Stock Acquisition");
WHEREAS, in connection with the Stock Acquisition,
Buyer desires to cause the Buyer Subsidiaries to acquire the RII
Real Estate Assets from RII and the RII Paradise Assets from the
RII Paradise Subsidiaries, and RII desires to sell the RII Real
Estate Assets and to cause the RII Paradise Subsidiaries to sell
the RII Paradise Assets to the Buyer Subsidiaries on the terms
and conditions set forth herein (such purchase, the "Asset
Acquisition");
WHEREAS, in connection with the Stock Acquisition and
the Asset Acquisition (collectively, the "Acquisitions"), RII and
GRI will file the Reorganization Plan with the Bankruptcy Court,
providing, INTER ALIA, under
<PAGE>
certain terms and conditions to be set forth in the Reorganization Plan
(including the condition that the Sun Purchase Agreement shall have
terminated in accordance with the terms thereof), for the (i) sale of
the Shares to Buyer, (ii) sale of the RII Paradise Assets and the RII
Real Estate Assets to the Buyer Subsidiaries, (iii) distribution
to holders of the Old Series Notes (as defined in the
Reorganization Plan) of RII of the Buyer Shares and (iv) the
other distributions to holders of the Old Series Notes of RII to
be made pursuant to the Reorganization Plan;
WHEREAS, the respective Boards of Directors of each of
RII and Buyer deem it advisable and in the best interests of such
corporations that, if the Sun Purchase Agreement terminates in
accordance with its terms, the Stock Acquisition and Asset
Acquisition occur upon the terms and subject to the conditions
set forth herein and in the Reorganization Plan;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants, agreements, representations and warranties
herein contained, and subject to the conditions hereinafter set
forth, and for the purpose of prescribing the terms and
conditions of the Stock Acquisition and Asset Acquisition, if the
Sun Purchase Agreement terminates in accordance with its terms,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used but
not defined herein shall have the meanings ascribed to those
terms in Appendix A to the Sun Purchase Agreement or elsewhere in
the Sun Purchase Agreement, except that (a) all references to
"Buyer" therein and herein shall be deemed to refer to Paradise
Island Resorts Limited, (b) all references therein and herein to
"Buyer Subsidiaries" shall be deemed to refer to direct or
indirect wholly-owned Subsidiaries of Paradise Island Resorts
Limited to be formed to buy the RII Paradise Assets from the RII
Paradise Subsidiaries and the RII Real Estate Assets from RII,
(c) all references herein to the "Closing" shall be deemed to
refer to the closing of the Acquisitions under this Agreement and
(d) as otherwise expressly required by the context hereof.
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ARTICLE II
PURCHASE AND SALE OF THE SHARES
AND THE RII PARADISE ASSETS
SECTION 2.01. TRANSFER OF THE SHARES. Prior to
Closing, RII may, with the consent of Fidelity and TCW, cause GRI
to transfer the Shares to RII in a transaction reasonably
acceptable to Fidelity and TCW and their counsel.
SECTION 2.02. PURCHASE AND SALE OF THE SHARES, THE RII
REAL ESTATE ASSETS AND THE RII PARADISE ASSETS. On the terms and
subject to the conditions of this Agreement, on the Closing Date
(a) RII agrees to sell, transfer and deliver, or cause GRI to
sell, transfer and deliver, to Buyer, and Buyer agrees to
purchase and accept from RII or GRI, as applicable, the Shares,
free and clear of all Encumbrances, other than those Encumbrances
arising from acts of Buyer or its Affiliates from and after (but
not prior to) the Closing and (b) RII shall, and shall cause each
RII Paradise Subsidiary to, sell, convey, assign, transfer and
deliver to a Buyer Subsidiary designated by Buyer, and Buyer
shall cause each such Buyer Subsidiary to purchase and accept
from RII and each such RII Paradise Subsidiary, all right, title
and interest of RII in the RII Real Estate Assets and all right,
title and interest of each such RII Paradise Subsidiary in the
RII Paradise Assets, free and clear of all Encumbrances except
Permitted Encumbrances and those Encumbrances arising from acts
of Buyer or its Affiliates from and after (but not prior to) the
Closing.
SECTION 2.03. DELIVERY OF CERTIFICATES AND OTHER
INSTRUMENTS OF TRANSFER. On the Closing Date (a) RII or GRI, as
applicable, shall deliver to Buyer certificates representing the
Shares together with stock powers executed in blank and (b) RII
shall, and shall cause the RII Paradise Subsidiaries to, deliver
to the Buyer Subsidiaries such specific assignments, bills of
sale (to be in a form reasonably satisfactory to Fidelity, TCW
and RII), endorsements, deeds and other good and sufficient
instruments of conveyance and transfer, in form and substance
reasonably satisfactory to Fidelity and TCW and their counsel, as
shall be effective to vest in the Buyer Subsidiaries title to all
the RII Paradise Assets and the RII Real Estate Assets. All
right, title and interest of RII in the RII Real Estate Assets
and of the RII Paradise
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Subsidiaries in the RII Paradise Assets shall pass and delivery of
the RII Real Estate Assets and the RII Paradise Assets shall take
place in such location or locations as Fidelity, TCW and RII shall
determine.
SECTION 2.04. PURCHASE PRICE. As consideration for
the transfer of the Shares, the RII Real Estate Assets and the
RII Paradise Assets (the "Purchase Price"), Buyer shall cause on
the Closing Date (a) the 5,000,000 Ordinary Shares, par value
$.01 per share, of Buyer (the "Buyer Shares") to be delivered, on
behalf of RII and the RII Paradise Subsidiaries, to the
Disbursing Agent designated pursuant to the Reorganization Plan
or pursuant to an order of the Bankruptcy Court for purposes of
making distributions thereunder to the holders of the Old Series
Notes of RII and (b) the Buyer Subsidiaries to assume the Assumed
Liabilities in accordance with Article III hereof. The Purchase
Price shall be allocated as set forth on Schedule 2.04 to the Sun
Purchase Agreement.
SECTION 2.05. PREPARATION OF THE CLOSING DATE BALANCE
SHEET AND OPERATIONS STATEMENT; ADJUSTMENTS.
(a) Within 45 days after the Closing Date, RII shall cause to be
prepared, in accordance with the books and records of account of
the Paradise Island Business and a physical inventory, and shall
deliver, an audited balance sheet for the Paradise Island
Business as of the Closing Date (the "Preliminary Closing Date
Balance Sheet") and an audited statement of operations for the
Paradise Island Business for the period beginning at 12:01 a.m.
on January 1, 1994, and ending at the close of business on the
Closing Date (the "Preliminary Closing Date Operations
Statement"), accompanied by an opinion of Ernst & Young thereon
to the effect that such balance sheet and statement of operations
present fairly in all material respects the financial position
and results of operation of the Paradise Island Business at such
date and for such period in conformity with GAAP and the
preparation of the June 30 Balance Sheet and the statement of
operations for the six months ending June 30, 1993.
Representatives of Buyer's auditors, which will be a nationally-
recognized firm of independent accountants, shall be entitled to
review the scope of the audit in advance thereof as well as the
work of Ernst & Young as it progresses and all drafts of the
Preliminary Closing Date Balance Sheet and the Preliminary
Closing Date Operations Statement. Within 10 days after the
delivery to Buyer of the Preliminary Closing Date Balance Sheet
and the Preliminary Closing Date Operations Statement, Buyer
shall
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notify RII if it disagrees in any respect with such
Preliminary Closing Date Balance Sheet or Preliminary Closing
Date Operations Statement. If Buyer does disagree, Buyer and RII
shall promptly attempt to settle such disagreement. If Buyer and
RII are unable to resolve such disagreement within 7 days after
such notice, such disagreement shall be referred to the
Accounting Arbitrator for a determination, which shall be final
and binding on the parties hereto for all purposes of this
Agreement. The fees of the Accounting Arbitrator shall be
allocated between Buyer and RII by the Accounting Arbitrator
based on its good faith view as to which party's positions were
more reasonable. The Preliminary Closing Date Balance Sheet and
Preliminary Closing Date Operations Statement as agreed to by the
parties or as adjusted pursuant to the determination of the
Accounting Arbitrator are herein referred to as the "Closing Date
Balance Sheet" and the "Closing Date Operations Statement".
Buyer and RII agree that if prior to 35 days after the Closing
Date there has not been a resolution of the dispute (the "Union
Contract Dispute") between the Company and the Bahamas Hotel
Catering and Allied Workers Union (the "Union") with respect to
amounts claimed by the Union to be owed by the Company through
December 31, 1993, under the collective bargaining agreement
dated as of January 7, 1990, between the Bahamas Hotel Employers
Association and the Union, then RII and Buyer shall agree as to
the amount they believe it would reasonably take to settle the
Union Contract Dispute (the "Union Contract Dispute Amount"). If
Buyer and Seller are unable to agree on the Union Contract
Dispute Amount by the fortieth day after the Closing Date, then
the Union Contract Arbitrator shall determine such amount prior
to the sixtieth day after the Closing Date, and such
determination shall be final and binding on the parties hereto.
The Union Contract Dispute Amount, as agreed to by the parties or
determined by the Union Contract Arbitrator, shall appear on the
Preliminary Closing Date Balance Sheet and the Closing Date
Balance Sheet as a Current Liability. Prior to the Closing Date,
RII shall, as between the parties, control the resolution of the
Union Contract Dispute; PROVIDED, HOWEVER, RII shall consult with
Fidelity and TCW with respect thereto and allow a representative
of Fidelity or TCW to be present when reasonable in all material
negotiations in connection therewith.
(b) Within three Business Days after the Closing Date,
Buyer and RII shall jointly prepare a cash statement setting
forth the amount of Adjusted Cash of the Paradise
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Island Business as of the Closing Date. If the Adjusted Cash of
the Paradise Island Business shown on such cash statement shall be
less than the Target Adjusted Cash, on the fourth Business Day after the
Closing Date RII shall pay to Buyer the difference in immediately
available funds.
(c) If the Adjusted Working Capital of the Paradise
Island Business plus any Adjusted Cash in excess of $5 million
shown on the Closing Date Balance Sheet shall be greater than the
Target Adjusted Working Capital plus the EBITDA Adjustment, on
the Adjustment Date (as defined below) Buyer shall pay to RII the
difference in immediately available funds, together with interest
on such amount at the Applicable Rate from and including the
Closing Date to but excluding the Adjustment Date. If the
Adjusted Working Capital of the Paradise Island Business plus any
Adjusted Cash in excess of $5 million shown on the Closing Date
Balance Sheet shall be less than the Targeted Adjusted Working
Capital plus the EBITDA Adjustment, on the Adjustment Date RII
shall pay to Buyer the difference in immediately available funds,
together with interest on such amount at the Applicable Rate from
and including the Closing Date to but excluding the Adjustment
Date. For purposes of the foregoing, "Adjustment Date" shall
mean (i) if Buyer does not disagree in any respect with the
Preliminary Closing Date Balance Sheet, the 10th day following
Buyer's receipt of the Preliminary Closing Date Balance Sheet or
(ii) if Buyer shall disagree in any respect with the Preliminary
Closing Date Balance Sheet, the third Business Day following
either the resolution of such disagreement by the parties or a
final determination by the Accounting Arbitrator in accordance
with Section 2.05(a).
SECTION 2.06. CLOSING. The Closing of the
transactions contemplated by this Agreement shall take place at
the offices of Gibson Dunn & Crutcher, 200 Park Avenue, New York,
New York, on a date to be agreed upon by RII, Fidelity and TCW,
as promptly as practicable following the satisfaction or waiver
of all of the conditions set forth in Article VI hereof, but in
no event later than 10 Business Days thereafter.
SECTION 2.07. THIRD-PARTY CONSENTS. To the extent
that any Contract relating to the RII Paradise Assets to be
assumed by a Buyer Subsidiary for which assignment to such Buyer
Subsidiary is provided for herein is not assignable without the
consent of another party (a "Non-Assignable Contract"), this
Agreement shall not constitute an assignment or an
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attempted assignment thereof if such assignment or attempted assignment
would constitute a breach thereof. RII and Buyer agree to use
their best efforts (without the payment of money) to obtain the
consent of such other party to the assignment of any such
Contract to the relevant Buyer Subsidiary in all cases in which
such consent is or may be required for such assignment. If any
such consent shall not be obtained, RII agrees to cooperate with
Buyer in any reasonable arrangement (at the cost and for the
account of such Buyer Subsidiary) designed to provide for the
relevant Buyer Subsidiary the benefits intended to be assigned to
such Buyer Subsidiary under the relevant Contract, including
enforcement of any and all rights of the relevant RII Paradise
Subsidiary against the other party thereto arising out of the
breach or cancellation thereof by such other party or otherwise.
If and to the extent that such arrangement cannot be made, except
as provided in the next sentence, neither Buyer nor any Buyer
Subsidiary shall have any obligation with respect to any such
Contract. If PIA is unable to assign to a designated Buyer
Subsidiary the Ft. Lauderdale Ground Space Lease (Hangar) with
Broward County, Florida (the "Hangar Lease"), or is otherwise
unable to arrange for such designated Buyer Subsidiary to obtain
the benefits of the Hangar Lease, then (i) PIA shall use its
reasonable best efforts to sub-lease the Hangar Lease and (ii)
Buyer and PIA shall each be responsible for 50% of the
obligations of lessee under the Hangar Lease and shall each be
entitled to receive 50% of the proceeds relating to any sublease
of the Hangar Lease.
SECTION 2.08. FURTHER ASSURANCES. From and after the
Closing, upon request of Buyer, RII shall, and shall cause any of
its Affiliates formerly owning an interest in the Paradise Island
Assets to, execute, acknowledge and deliver all such further
acts, assurances, deeds, assignments, transfers, conveyances and
other instruments and papers as may be reasonably required to
sell, assign, transfer, convey and deliver (at Buyer's expense,
unless otherwise provided in this Agreement) to and vest in
Buyer, the Company or its Subsidiaries or the Buyer Subsidiaries,
as the case may be, and more fully protect their respective
right, title and interest in and employment of, the Shares and
all the Paradise Island Assets and the RII Real Estate Assets and
as otherwise may be appropriate to carry out the transactions
contemplated in this Agreement.
(b) From and after the Closing, upon request of RII,
Buyer shall, and shall cause any of the Buyer
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Subsidiaries or any Subsidiaries of Buyer to, execute, acknowledge
and deliver all such further acts, assurance, assumptions and other
instruments and papers as may be reasonably required (i) in respect
of the assumption by the Buyer Subsidiaries of the Assumed Liabilities,
and (ii) as otherwise may be appropriate to carry out the
transactions contemplated in this Agreement.
SECTION 2.09. POWER OF ATTORNEY, ETC. (a) Effective
on the Closing Date, RII shall cause each RII Paradise Subsidiary
to constitute and appoint, and will cause any Affiliate owning an
interest in any RII Paradise Assets to constitute and appoint,
the applicable Buyer Subsidiary designated by Buyer and its
successors, legal representatives and assigns, the true and
lawful attorneys of such RII Paradise Subsidiary and such
Affiliates, with full power of substitution, in the name of such
RII Paradise Subsidiary and such Affiliates, but on behalf of and
for the benefit of such Buyer Subsidiary and its successors,
legal representatives and assigns, and at the expense of such
Buyer Subsidiary: (i) to demand and receive from time to time
any and all of the RII Paradise Assets and to make endorsements
and give receipts and releases for and in respect of the same and
any part thereof; (ii) to institute, prosecute, compromise and
settle any and all proceedings at law, in equity or otherwise
that any Buyer Subsidiary and its successors, legal
representatives or assigns may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to
the RII Paradise Assets; (iii) to defend or compromise any or all
actions, suits or proceedings in respect of any of the RII
Paradise Assets; and (iv) to do all such acts and things in
relation to the matters set forth in the preceding clauses (i)
through (iii) as each such Buyer Subsidiary and its successors,
legal representatives or assigns shall deem desirable. RII
hereby agrees that the appointment to be hereby made and the
powers to be hereby granted are coupled with an interest and are
and shall be irrevocable by it in any manner or for any reason.
RII shall cause each RII Paradise Subsidiary to deliver to the
applicable Buyer Subsidiary designated by Buyer at Closing an
acknowledged power of attorney to the foregoing effect executed
by each such RII Paradise Subsidiary and any Affiliate selling
any of the Paradise Island Assets. Buyer agrees to indemnify and
hold RII and its Affiliates harmless from and against any Losses
resulting from Buyer's improper use of the power of attorney
described in this Section 2.09(a).
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(b) Effective upon the Closing Date Buyer and the
Buyer Subsidiaries shall have the right to receive and open all
mail, packages and other communications which relate to the
Paradise Island Business addressed to any of the RII Paradise
Subsidiaries. RII agrees promptly to deliver to Buyer and the
Buyer Subsidiaries any mail, packages or other communications
received directly or indirectly by RII or any of its Affiliates
that relate to the Paradise Island Business. Buyer and the Buyer
Subsidiaries shall have the right and authority to collect, for
its own account, all receivables and other items which shall be
transferred or are intended to be transferred to Buyer and the
Buyer Subsidiaries as provided in this Agreement, and to endorse
with the name of RII or any of its Affiliates any checks or
drafts received on account of any such receivables or other
items, and RII shall promptly transfer or deliver, or cause its
Affiliates to transfer or deliver, to Buyer and the Buyer
Subsidiaries any cash or other property received directly or
indirectly by RII or any of its Affiliates in respect of such
receivables or other items including any amounts payable as
interest. Buyer and the Buyer Subsidiaries shall promptly
deliver to RII packages and other communications received by them
which relate to RII or any of its Affiliates but do not relate to
the Paradise Island Business.
ARTICLE III
ASSUMPTION OF CERTAIN LIABILITIES
SECTION 3.01. ASSUMED LIABILITIES. Buyer shall cause
designated Buyer Subsidiaries to severally assume on the Closing
Date the Assumed Liabilities, and shall cause each designated
Buyer Subsidiary to execute an Assumption Agreement relating to
the Assumed Liabilities assumed by such designated Buyer
Subsidiary. On the Closing Date, Buyer shall assume the
obligations of RII under Sections 7.02(a)(vi) and (vii) of the
Sun Purchase Agreement.
SECTION 3.02. LIABILITIES NOT ASSUMED. Except for the
Assumed Liabilities and as provided in Section 3.04 and the last
sentence of Section 3.01, neither Buyer nor any Buyer Subsidiary,
pursuant to this Agreement or the Assumption Agreements or
otherwise, assumes, agrees to perform, pay, discharge or
indemnify RII or any of its Affiliates against, or otherwise
agrees to have any responsibility for, any liabilities or
obligations of RII,
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GRI or any RII Paradise Subsidiary, fixed, contingent or otherwise,
known or unknown, relating to or arising out of the RII Paradise Assets,
whether arising prior to, on or after the Closing.
SECTION 3.03. NO SUCCESSOR. It is expressly
understood that the parties intend that neither the Buyer nor any
Buyer Subsidiary shall be considered a successor to any RII
Paradise Subsidiary and that neither Buyer nor any Buyer
Subsidiary shall have any liability except as otherwise provided
in this Agreement or the Assumption Agreements. Without limiting
the generality of the foregoing, neither Buyer nor any Buyer
Subsidiary, pursuant to this Agreement, the Assumption Agreements
or otherwise, assumes (a) any liability for or obligation with
respect to (i) any Indebtedness of RII or its Affiliates or (ii)
any Taxes relating to RII or its Affiliates (except Assumed
Taxes), (b) any liabilities or obligations owed to RII or any of
its Affiliates (except for liabilities owed to RII or any of its
Affiliates under this Agreement or any agreements, certificates
or other instruments delivered by Buyer or the Buyer Subsidiaries
pursuant to this Agreement), and (c) any liabilities that do not
constitute Assumed Liabilities.
SECTION 3.04. INDEMNIFICATION. (a) From and after
the Closing Date, RII and the RII Paradise Subsidiaries shall
indemnify Buyer, the Buyer Subsidiaries and their respective
Affiliates (each a "Buyer Indemnified Party") against, and hold
them harmless from, any Losses with respect to the ownership, use
or operation of the RII Paradise Assets prior to the Closing Date
(other than the Assumed Liabilities), which any Buyer Indemnified
Party may be requested to pay, perform or discharge at any time.
No Buyer Indemnified Party shall be entitled to indemnification
under this Section 3.04(a) until the date on which the aggregate
amount of the claims made by Buyer Indemnified Parties is at
least equal to $25,000, at which time claims may be asserted by
any Buyer Indemnified Party against the indemnifying parties
regardless of amount.
(b) From and after the Closing Date, Buyer and the
Buyer Subsidiaries shall indemnify RII, the RII Paradise
Subsidiaries and their respective Affiliates (each an "RII
Indemnified Party") against, and hold them harmless from, any
Losses with respect to (i) the Assumed Liabilities, (ii) the
ownership, use or operation of the RII Paradise Assets on or
after the Closing Date, (iii) any liability or
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obligation of the Company or any of its Subsidiaries (fixed, contingent
or otherwise, known or unknown (except to the extent such liability
or obligation was incurred after the date of this Agreement and
in breach of Section 5.01)), which any RII Indemnified Party
may be requested to pay, perform or discharge at any time and
(iv) the obligations assumed by Buyer as contemplated by the last
sentence of Section 3.01 hereof to pay any Buyer Expense
Reimbursement to SIHL under the Sun Purchase Agreement. No RII
Indemnified Party shall be entitled to indemnification under this
Section 3.04(b) until the date on which the aggregate amount of
the claims made by RII Indemnified Parties is at least equal to
$25,000, at which time claims may be asserted by any RII
Indemnified Party against the indemnifying parties regardless of
the amount.
(c) The provisions of Sections 7.03 and 7.04 shall
apply to any indemnification under this Section 3.04.
(d) The indemnification obligations of the applicable
parties under this Section 3.04 shall constitute the sole and
exclusive remedies of the applicable Buyer Indemnified Parties
and RII Indemnified Parties, as the case may be, with respect to
the matters described in this Section 3.04.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RII
RII represents and warrants to Buyer as follows:
SECTION 4.01. INCORPORATION OF REPRESENTATIONS AND
WARRANTIES. Each of the representations and warranties made by
RII to SIHL in Sections 4.01, 4.02, 4.03, 4.04, 4.13, 4.16 and
4.22 of the Sun Purchase Agreement (but not any other
representations or warranties contained in Article IV thereof) is
hereby made by RII in favor of Buyer for all purposes as if such
representations and warranties were fully set forth herein;
PROVIDED, HOWEVER, that any such representation or warranty
relating to the delivery of documents, information schedules or
other materials to Buyer shall not be deemed to be satisfied
hereunder unless and until RII shall have delivered such
documents, information schedules or other materials to Fidelity
and TCW; and PROVIDED, FURTHER, that for purposes of this
Agreement clause (iii) of Section 4.03(b) of the Sun Purchase
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Agreement shall be deemed to have been stricken in its entirety
and replaced by the following: "(iii) consents and approvals
required to be obtained by Buyer or RII from the government of
the Commonwealth of The Bahamas in order to effectuate the
transactions contemplated hereby, to operate the Paradise Island
Business or to permit the public trading of the Buyer Shares when
they are distributed in accordance with the Reorganization Plan,
including without limitation any approvals for exchange controls
required to be received from the Exchange Control Department of
the Central Bank of The Bahamas (the "Bahamas Exchange Control
Approval")".
SECTION 4.02. ORGANIZATION AND GOOD STANDING OF BUYER.
Buyer is, and each of the Buyer Subsidiaries will be at Closing,
a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of the Bahamas.
SECTION 4.03. AUTHORIZATION OF BUYER. Buyer has all
necessary corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by Buyer and the
purchase of the Shares by Buyer have been, and the purchase of
the RII Paradise Assets by the Buyer Subsidiaries will be at
Closing, duly and validly authorized by all necessary corporate
action on the part of Buyer and the Buyer Subsidiaries and no
other corporate proceedings or shareholder actions on the part of
Buyer or the Buyer Subsidiaries are or will be necessary to
authorize this Agreement or to purchase the Shares and the RII
Paradise Assets. This Agreement has been duly and validly
executed and delivered by Buyer and, assuming the due
authorization, execution and delivery by RII, constitutes the
legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms (subject as to enforcement to
applicable bankruptcy, reorganization, insolvency, fraudulent
transfer and moratorium and similar laws from time to time in
effect affecting creditors' rights generally and to legal and
equitable limitations on availability of specific performance and
other equitable remedies).
SECTION 4.04. BUYER: NO CONFLICT; REQUIRED FILINGS
AND CONSENTS. (a) The execution and delivery of this Agreement
by Buyer does not (and in the case of the Buyer Subsidiaries will
not at Closing), and the performance of this Agreement by Buyer
and each Buyer Subsidiary will not, (i) conflict with or violate
the memorandum of association or articles of association or
equivalent
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organizational documents of Buyer or any Buyer Subsidiary, (ii)
conflict with or violate any law, rule, regulation, order, judgment
or decree applicable to Buyer or any Buyer Subsidiary or by which
any of them or their properties is bound or affected or (iii) result
in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any
of the property or assets of Buyer or any Buyer Subsidiary pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which
Buyer or any Buyer Subsidiary is a party or by which any of them
or their properties is bound or affected, except, in the case of
this clause (iii) and clause (ii) above, for any such breaches,
defaults or other occurrences which would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by
Buyer does not, and the performance of this Agreement by Buyer
will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority
except for (i) the Confirmation Order, (ii) required filings
under the HSR Act, (iii) the Airline Governmental Consents, (iv)
the Governmental Consents and (v) where failure to obtain such
consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially delay
consummation of the transactions contemplated hereby, or
otherwise prevent Buyer from performing its obligations under
this Agreement.
SECTION 4.05. BUYER SHARES. The authorized capital
stock of Buyer consists of 25,000,000 Ordinary Shares, $.01 par
value per share, of which two shares are duly authorized and
validly issued and outstanding, fully paid and non-assessable
(the "Founder's Shares") and 10,000,000 Preference Shares, $.01
par value per share, of which no shares are issued and
outstanding. As of the date hereof, RII is the registered holder
of one of the Founder's Shares. RII is the sole beneficial owner
of both of the Founder's Shares. The Buyer Shares upon issuance
and delivery in accordance with the terms of this Agreement will
be duly authorized, validly issued and outstanding, fully paid
and non-assessable. The Founder's Share has not been, and the
Buyer Shares will not be, issued in violation of,
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and are not subject to, any preemptive or subscription rights. Except
as set forth above, there are no shares of capital stock or other equity
securities of Buyer outstanding. Except for the agreements and
instruments described in Schedule 4.16(a) of the Sun Purchase
Agreement, there are no outstanding warrants, options,
agreements, convertible or exchangeable securities or other
commitments (other than this Agreement) pursuant to which RII or
any of its Affiliates is or may become obligated to issue, sell,
purchase, return or redeem any shares of capital stock or other
securities of Buyer or any Subsidiary of Buyer, and there are not
any equity securities of Buyer or any Subsidiary of Buyer
reserved for issuance for any purpose (other than the Buyer
Shares). Prior to the Closing, RII will have caused Buyer to
form, under the laws of the Commonwealth of The Bahamas, the
Buyer Subsidiaries, and there will be one Buyer Subsidiary to
purchase the assets of each RII Paradise Subsidiary hereunder.
At the Closing, Buyer directly will have good and valid title to
all of the outstanding shares of capital stock of each Subsidiary
of Buyer, free and clear of Encumbrances, and all such shares
will be duly authorized and validly issued and outstanding, fully
paid and non-assessable. Buyer does not directly or indirectly
own any capital stock of or other equity interests in any
corporation, partnership or other entity other than the Buyer
Subsidiaries.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. CONDUCT OF PARADISE ISLAND BUSINESS
PENDING THE CLOSING. Each of the covenants and agreements made
by RII to SIHL in Section 6.01 of the Sun Purchase Agreement is
hereby made by RII in favor of Buyer for all purposes as if such
covenants and agreements were fully set forth herein; PROVIDED,
HOWEVER, that any consents required to be obtained from Buyer
thereunder shall not be deemed to have been granted unless and
until Fidelity and TCW shall have consented thereto in writing.
SECTION 5.02. SECURITIES LAWS. Each of RII and Buyer
shall make all filings under the Securities Act and the Exchange
Act necessitated by the provisions of this Agreement. RII shall
cause the Buyer Shares to be registered under the Exchange Act
and listed on the American
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Stock Exchange or authorized for quotation on the NASDAQ National
Market System.
SECTION 5.03. DOCUMENTS AND MOTIONS TO BE FILED BY RII
AND GRI. (a) Promptly upon completion of the Reorganization
Plan Solicitation and in no event later than February 15, 1994,
RII and GRI shall commence the Bankruptcy Cases. Notwithstanding
anything to the contrary, RII and GRI shall not be under any
obligation to commence the Bankruptcy Cases unless and until RII
and GRI shall have received in the Reorganization Plan
Solicitation the requisite number of acceptances from impaired
creditors and the requisite number of consents to terminate the
Old Security Documents (as defined in the Reorganization Plan).
(b) Promptly upon the commencement of the Bankruptcy
Cases, and in no event later than five Business Days thereafter,
RII and GRI shall (i) file the Disclosure Statement and the
Reorganization Plan and the certification of votes for acceptance
or rejection of the Reorganization Plan with the Bankruptcy Court
and (ii) seek from the Bankruptcy Court and take all steps
necessary to obtain a hearing at the earliest practicable date
for approval of the Disclosure Statement and confirmation of the
Reorganization Plan.
(c) RII shall use its reasonable best efforts to file
the Registration Statement with the SEC as soon as possible.
SECTION 5.04. REORGANIZATION PROCEEDINGS. (i) RII
shall, and shall cause GRI to, seek confirmation of the
Reorganization Plan by the Bankruptcy Court using the acceptances
of the Reorganization Plan received by RII and GRI pursuant to
the Reorganization Plan Solicitation, (ii) RII shall, and shall
cause GRI to, comply in all material respects with the Bankruptcy
Code and all other laws, rules, regulations, decrees and orders
promulgated thereunder in connection with obtaining confirmation
of the Reorganization Plan, (iii) RII shall, and shall cause GRI
to, use its best efforts to obtain, and shall, and shall cause
GRI to, refrain from knowingly taking any action that would be
likely to prevent, materially impede or result in the revocation
of, (A) the entry by the Bankruptcy Court of the Confirmation
Order and (B) the vesting upon the date on which the
Reorganization Plan shall become effective of (y) the property of
each of RII and GRI in the reorganized entities and (z) the
property dealt with by the
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Reorganization Plan in the recipients thereof under the Reorganization
Plan, in each case free and clear of all claims and interests of
creditors and equity securityholders except as provided in and in
accordance with the Reorganization Plan and (iv) RII shall not, and
shall cause GRI not to, consent to any amendment or supplement to, or
modification of, the Reorganization Plan or the Disclosure Statement
that purports to change in any material respect the terms or
conditions of the transactions contemplated by this Agreement
without the prior written consent of Fidelity and TCW.
SECTION 5.05. ACCESS TO INFORMATION. From the date
hereof to the Closing Date, RII shall, and shall cause its
Affiliates, officers, directors, employees, auditors and other
agents to, (i) afford the officers, employees, auditors and other
agents of Fidelity and TCW reasonable access at all reasonable
times to its officers, employees, agents, properties, offices,
plants and other facilities and to all books and records, and
shall furnish Fidelity and TCW with all financial, operating and
other data and information with respect to the Paradise Island
Business as Fidelity and TCW, through their officers, employees
or agents, may reasonably request and (ii) furnish, and cause the
officers and employees of RII and its Affiliates to furnish, to
Fidelity and TCW and their authorized representatives such
additional financial and operating data and other information
regarding the Paradise Island Assets and the Paradise Island
Business as Fidelity or TCW shall from time to time reasonably
request including, without limitation, all monthly or other
interim financial and operating reports relating to the Paradise
Island Business prepared by or for officers of RII and its
Affiliates. Without limiting the foregoing, RII agrees to
provide representatives of Fidelity and TCW with offices in
Paradise Island and Miami and such representatives shall be given
adequate prior notice (if time permits) of and allowed to attend
all material meetings of RII and its Subsidiaries relating to the
Paradise Island Business. Notwithstanding the foregoing, RII
shall not be obligated to provide Fidelity or TCW or any of their
authorized representatives with any material confidential
information or any material nonpublic information unless Fidelity
and TCW shall have entered into reasonable confidentiality
arrangements with respect to such confidential or nonpublic
information, subject to reasonable and customary exceptions.
SECTION 5.06. NOTIFICATION OF CERTAIN MATTERS. RII
shall give prompt notice to Fidelity and TCW of (i) the
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occurrence or non-occurrence of any event the occurrence or non-
occurrence of which would be likely to cause a representation or
warranty contained in this Agreement to be untrue or inaccurate
in any material respect and (ii) any failure of RII or Buyer to
comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it
hereunder; PROVIDED, HOWEVER, that the delivery of any notice
pursuant to this Section 5.06 shall not limit, increase or
otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 5.07. FURTHER ACTION; REASONABLE EFFORTS. Upon
the terms and subject to the conditions hereof, each of RII and
Buyer shall use all reasonable best efforts (without undue
expense) to take or cause to be taken all appropriate action and
to do or cause to be done all things reasonably necessary, proper
or advisable under applicable laws and regulations to consummate
and make effective the transactions contemplated hereby and by
the Reorganization Plan, including, without limitation, using all
reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to Material Contracts as are
necessary for the consummation of the transactions contemplated
hereby and by the Reorganization Plan and to fulfill the
conditions to the Closing.
SECTION 5.08. EMPLOYEE BENEFIT MATTERS. (a) As of
the Closing Date, Buyer shall cause the Buyer Subsidiaries to
offer employment to each person employed by the RII Paradise
Subsidiaries whose primary functions relate to the operation of
the Paradise Island Business and each person set forth on
Schedule 6.09 to the Sun Purchase Agreement (a "Paradise
Employee"), except that Buyer may designate in writing within 60
days from the date of this Agreement up to 40 Paradise Employees
to whom it does not wish to offer employment (the "Excluded
Employees"). Schedule 6.09(a) to the Sun Purchase Agreement
generally describes severance benefits for Paradise Island
Employees and sets forth a list of each Paradise Employee and the
salary as of the date hereof and the employment commencement date
of each such Paradise Employee. The Buyer Subsidiaries shall not
be required to offer employment to any Excluded Employee and RII
hereby agrees that all obligations, including obligations under
any Benefit Plan or similar employee benefits, to such Excluded
Employees shall remain the responsibility solely of RII. RII
shall cooperate with
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and assist Buyer in any reasonable manner in hiring Paradise Employees
(other than any Excluded Employee). Buyer agrees that, for a period of
one year from the Closing Date, Buyer will not, without the written
consent of RII, employ any Excluded Employees, as consultants or
otherwise. Any Paradise Employee who becomes an employee of Buyer or
the Buyer Subsidiaries shall be referred to herein as a "Continuing
Employee".
(b) Buyer shall have no obligation to maintain or
assume obligations under any Benefit Plan, or to provide any
employee benefits, other than the obligations contained in this
subsection. Within 90 days from the date of this Agreement,
Buyer shall determine whether it shall offer Continuing Employees
a 401(k) plan. If Buyer determines to offer Continuing Employees
a 401(k) plan, then on or prior to the Closing, Buyer shall
sponsor, or cause one or more of its Affiliates to sponsor, a
plan (the "Successor Plan") that is qualified under Section 401
of the Code, under which there is established a trust (the
"Successor Trust") that is exempt under Section 501 of the Code,
to which the following transfers shall be made. As promptly as
practical after the Closing Date, RII shall take all actions
necessary to transfer to the Successor Trust the account balances
in the Resorts Retirement Savings Plan (the "Savings Plan") of
all Continuing Employees. Such transfers shall be made solely in
cash or, where applicable, in cash plus any loan from an account
to a Continuing Employee that satisfies the requirements of ERISA
and the Code. The transfer of the account balances referred to
above shall take place upon receipt by RII of either (x) a copy
of a favorable determination letter or letters from the IRS that
the Successor Plan is qualified under Section 401 of the Code and
the Successor Trust is exempt from taxation under Section 501 of
the Code or (y) an opinion of counsel to Buyer, on which RII is
entitled to rely and which is reasonably satisfactory to RII,
that the Successor Plan is qualified under Section 401 of the
Code and the Successor Trust is exempt from taxation under
Section 501 of the Code.
(c) Schedule 6.09(c) to the Sun Purchase Agreement
sets forth a list of the officers and directors of the Company or
any of its Subsidiaries who are not directly involved in the
business and operations of the Company and its Subsidiaries. On
the Closing Date, RII shall cause to be delivered to Buyer duly
signed (i) resignations (with respect to their entire association
with or employment by the Company or any of its Subsidiaries)
effective as of the
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Closing Date of all such officers and directors and (ii) releases of
such officers and directors releasing the Company and its Subsidiaries
of all obligations and liabilities relating to such resignations.
(d) RII and Buyer agree to cooperate in making all
appropriate filings and taking all appropriate actions required
to implement this Section 5.08.
SECTION 5.09. BULK TRANSFER LAWS. RII shall cause
each RII Paradise Subsidiary to comply in all material respects
with the provisions of any so-called Bulk Transfer Law of all
states of the United States in which any of the RII Paradise
Assets subject to any such Bulk Transfer Law are located in
connection with the sale of the RII Subsidiary Assets to the
Buyer Subsidiaries. RII represents and warrants to Buyer that
the list of creditors to be provided by RII pursuant to such Bulk
Transfer Laws will, to RII's knowledge, contain the names and
business addresses of all creditors of the RII Paradise
Subsidiaries, with the amounts of credit listed when known, and
also the names of all persons who are known to RII to assert
claims against any RII Paradise Subsidiary even though such
claims are disputed, and that such list will be true, correct and
complete in all material respects and will comply in all material
respects with such Bulk Transfer Laws. As promptly as
practicable after the Closing, RII shall pay and discharge when
known all amounts so listed (other than Assumed Liabilities and
claims disputed in good faith).
SECTION 5.10. INTERCOMPANY ACCOUNTS, CONTRACTS
GUARANTIES AND INDEBTEDNESS. On or prior to the Closing Date,
the net amount of all Indebtedness between RII and any of its
Affiliates (other than the Company and any Subsidiary of the
Company), on the one hand, and the Company and any Subsidiary of
the Company, on the other hand, shall be cancelled or contributed
to the capital of the relevant entity. On or prior to the
Closing Date, RII shall cause the Company and each Subsidiary of
the Company not to have any Indebtedness, except for Indebtedness
disclosed on Schedule 4.06(b) to the Sun Purchase Agreement. On
or prior to the Closing Date, RII shall terminate or cause to be
terminated all Contracts between and among RII and its Affiliates
and any of the Company, the Subsidiaries of
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the Company and the RII Paradise Subsidiaries (to the extent such
Contracts relate to the Paradise Island Business), and shall cancel
or cause to be cancelled all guarantees and security interests given
by the Company, the Subsidiaries of the Company or the RII Paradise
Subsidiaries on behalf of RII or any of its Affiliates. On or
prior to the Closing Date, RII shall cancel or cause to be
cancelled (a) all liens held by RII or any of its Affiliates on
any of the Paradise Island Assets and (b) all liens held by the
Company or any of its Subsidiaries on any of the assets of RII or
any of its Affiliates (other than the Paradise Island Assets) and
(c) all liens on any of the Paradise Island Assets relating to
Indebtedness, except any such liens disclosed on Schedule 4.06(b)
to the Sun Purchase Agreement.
SECTION 5.11. REORGANIZATION PLAN SOLICITATION
DOCUMENTS. RII shall use its reasonable best efforts to prepare
each of the Registration Statement and the Disclosure Statement
so that they shall not (i) at the time the Disclosure Statement
is first mailed, (ii) at the time the Registration Statement
becomes effective, (iii) on the date of the Bankruptcy Court's
hearing with respect to the Disclosure Statement, (iv) on the
date of the confirmation of the Reorganization Plan by the
Bankruptcy Court or (v) at the Closing, contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, RII makes no such covenant with
respect to any information included in the Registration Statement
or the Disclosure Statement that was supplied in writing to RII
by Fidelity or TCW (or any representative of Fidelity or TCW)
specifically for use therein. If, at any time prior to the
Closing Date, any event relating to RII or any of its Affiliates,
officers or directors should be discovered by RII or any of its
Affiliates which is required by the Bankruptcy Court to be set
forth in a supplement to the Disclosure Statement, RII will
prepare, file with (and, if required, use its best efforts to
have approved by) the SEC and the Bankruptcy Court and dissemi-
nate any such supplements. RII shall use its reasonable best
efforts to ensure that the Registration Statement and the
Disclosure Statement did, or shall, as the case may be, comply as
to form in all material respects with the requirements of the
Securities Act, the Exchange Act and the Bankruptcy Code and all
other laws, rules, regulations, decrees and orders promulgated
thereunder.
SECTION 5.12. REORGANIZATION PROCEEDINGS. Neither RII
nor GRI will knowingly take any action, or fail to take any
action, which could reasonably be expected to prevent, materially
impede or result in the revocation of
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the confirmation of the Reorganization Plan (as provided in Section
1144 of the Bankruptcy Code).
SECTION 5.13. AIRLINE GOVERNMENTAL CONSENTS. In the
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event the Airline Governmental Consents are not obtained before
the Closing Date, RII and Buyer agree that until the earlier of
the date such Airline Governmental Consents are obtained and one
year after the Closing Date, RII and Buyer will enter into a
service agreement pursuant to which RII or a Subsidiary of RII
will, through PIA, operate scheduled air service equivalent to
that currently operated by PIA, such scheduled air service to be
operated for the account of Buyer. Such service agreement will
be mutually agreed upon by RII and Buyer and shall generally
provide that Buyer will receive all revenues generated by PIA in
its provision of that scheduled air service operated for the
account of the Buyer. Such service agreement shall further
provide that Buyer will be responsible for all expenses related
to such scheduled air service. RII will be responsible for
procuring all other services for the airline, including flight
crews, maintenance and catering services, and will receive a
commercially reasonable fee for its participation in such
arrangement. In addition, Buyer would indemnify RII and its
Subsidiaries against any losses and liabilities arising from its
participation in such lease arrangement other than losses or
liabilities arising from the gross negligence or willful
misconduct of the indemnified party. This Agreement may not be
terminated and, assuming RII has otherwise used its reasonable
best efforts (without the payment of money) to assist Buyer in
obtaining the Airline Governmental Consents, a breach of this
Agreement shall not be deemed to have occurred as a result of a
failure to obtain the Airline Governmental Consents or because
RII is prohibited by any governmental agency from complying with
this Section 5.13. This Agreement may not be terminated nor
shall a condition to Closing fail to be satisfied as a result of
RII and Buyer failing to enter into the service agreement
referred to above; PROVIDED, HOWEVER, that if RII and Buyer shall
fail to enter into the service agreement referred to above,
Fidelity and TCW shall be entitled, in their discretion, (a) to
cause RII to sell all or substantially all of the assets of PIA
or all of the issued and outstanding capital stock of PIA to a
third party purchaser designated by Fidelity and TCW on terms
negotiated by Fidelity and TCW and reasonably acceptable to RII
(in lieu of selling such assets to a Buyer Subsidiary), and, as
determined by Fidelity and TCW, to pay, or direct the payment of,
the purchase price payable in connection with
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any such sale either to Buyer or to the Disbursing Agent designated
pursuant to the Reorganization Plan or pursuant to an order of the
Bankruptcy Court for purposes of making distributions thereunder to the
holders of Old Series Notes of RII or (b) to make alternative
arrangements, reasonably acceptable to RII, pursuant to which a
third party manager shall enter into a service agreement with RII
and Buyer and shall operate scheduled air service, through PIA,
for the account of Buyer until the earlier of the date the
Airline Governmental Consents are obtained and one year after the
Closing Date, and to cause RII to execute such documents or take
such actions as may be reasonably required to effectuate such
alternative arrangements (provided that either of such
alternative arrangements shall not result in any out-of-pocket
costs or expenses, other than DE MINIMIS costs or expenses, that
would not have been incurred hereunder), to RII or any of its
Affiliates after the Closing Date).
SECTION 5.14. COMFORT LETTER. RII shall cause Ernst &
Young to deliver to Buyer a comfort letter dated a date not more
than five Business Days before November 30, 1993, which Comfort
Letter shall be in the form of Exhibit A.
SECTION 5.15. ATTORNEYS FEES. In any action by any
party to enforce the terms of this Agreement, the prevailing
party shall be entitled to receive reimbursement of all of its
reasonable attorneys fees and expenses incurred in such action.
SECTION 5.16. TRANSFER TAXES. Any sales, transfer
(including any real property transfer) and other Taxes (excluding
gross or net income taxes), including without limitation any
documentary stamp tax, and any filing, recording or other fees
applicable to the conveyance and transfer pursuant to the
provisions of this Agreement of the Shares, the RII Real Estate
Assets and the Paradise Island Assets (collectively, the
"Transfer Taxes"), shall be borne and paid by RII. The
provisions of this Section shall survive the Closing of this
Agreement.
SECTION 5.17. ACTIONS ON BEHALF OF BUYER; KNOWLEDGE OF
BUYER. RII shall not cause Buyer to take any actions in respect
of any amendments to or waivers or actions under this Agreement
except as are agreed to or directed by Fidelity and TCW, and
Fidelity and TCW may, in their reasonable judgment, cause Buyer
to take any actions
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that Buyer may take under this Agreement; PROVIDED, HOWEVER,
that Fidelity and TCW shall not act so as to prevent Buyer from
performing any of its affirmative obligations, agreements or
covenants hereunder. No knowledge of any facts shall be imputed
to the Buyer under this Agreement unless such facts are known to
Fidelity and TCW.
SECTION 5.18. ARTICLES OF ASSOCIATION. The Articles
of Association of Buyer are attached hereto as Exhibit B, and RII
shall cause such Articles to remain in full force and effect and
not to be amended prior to or on the Closing unless consent
thereto shall be granted by Fidelity and TCW.
SECTION 5.19. REPRESENTATIONS AND WARRANTIES. If any
representation or warranty contained in Article IV shall be, or
shall become, inaccurate or shall be breached by RII at any time
prior to Closing, RII will, promptly upon discovering such
inaccuracy or breach, (i) notify Fidelity and TCW and (ii) use
its best efforts to cure such breach or inaccuracy as soon as is
reasonably practicable and prior to the Closing.
SECTION 5.20. OPERATION OF BUYER AND BUYER
SUBSIDIARIES. RII agrees that, since their respective inceptions
and as of the Closing Date, (a) neither Buyer nor any of the
Buyer Subsidiaries shall have engaged in any activity or business
other than those relating to the implementation of this Agreement
and preparation relating thereto, in each case as shall have been
agreed to in writing by Fidelity and TCW, and (b) neither Buyer
nor any of the Buyer Subsidiaries shall have Indebtedness.
SECTION 5.21. INSURANCE PROCEEDS. If any of the
Paradise Island Assets are destroyed or damaged or taken in
condemnation, the insurance proceeds or condemnation award with
respect thereto shall be a Paradise Island Asset. At the
Closing, RII shall pay to Buyer any such insurance proceeds or
condemnation awards received by RII on or prior to the Closing
and shall assign to or assert for the benefit of Buyer all of its
rights against any insurance companies, governmental entities and
others with respect to such damage, destruction or condemnation.
If and to the extent that there is available insurance under
policies maintained by RII or its Subsidiaries in respect of any
Assumed Liability, except for any such insurance proceeds with
respect to which the insured is directly or indirectly self-
insured or has agreed to indemnify the insurer, RII shall
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cause such insurance to be applied toward the payment of such Assumed
Liability.
SECTION 5.22. ACQUISITION PROPOSALS. Neither RII nor
any of its Affiliates shall propose or support before the
Bankruptcy Court any proposal for the sale or disposition of the
Paradise Island Business, other than the Acquisitions or as
contemplated by the Sun Purchase Agreement, without the prior
written consent of Fidelity and TCW.
ARTICLE VI
CONDITIONS TO THE CLOSING
SECTION 6.01. CONDITIONS TO OBLIGATIONS OF BUYER. The
obligations of Buyer to effect the Closing shall be subject to
the prior fulfillment of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; AGREEMENTS AND
COVENANTS. (i) Each of the representations and warranties of RII
contained in Section 4.02, 4.03, 4.04 and 4.05 hereof and each of
the representations and warranties incorporated from the Sun
Purchase Agreement pursuant to Section 4.01 qualified as to
materiality shall be true and correct in all respects and those
not so qualified shall be true and correct in all material res-
pects, in each case when made and as of the Closing Date, (ii)
RII shall not have failed to comply with the covenants in
Sections 5.01 and 5.09, where such failures in the aggregate
would have a Material Adverse Effect, (iii) RII shall have
complied in all respects with the covenants contained in Sections
5.10 and 5.20, (iv) except for the covenants contained in
Sections 5.03, 5.04, 5.11 and 5.12, each of the other agreements
and covenants contained in this Agreement and in any certificate
or agreement by RII delivered pursuant hereto to be performed or
complied with by RII, at or before Closing, shall have been duly
performed or complied with in all material respects, PROVIDED,
HOWEVER, that a breach of Section 5.06 would not constitute a
failure of a condition hereunder, if the representation, warranty
or covenant in question would not have resulted in a failure of a
condition hereunder, and (v) Buyer shall have received a
certificate of RII, signed by a Vice President thereof as to the
fulfillment of the conditions set forth in the foregoing clauses
(i), (ii), (iii) and (iv).
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(b) SUN PURCHASE AGREEMENT. The Sun Purchase
Agreement shall have been terminated in accordance with its
terms.
(c) HSR ACT. Any waiting period (and any extension
thereof) applicable to the consummation of the transactions
contemplated hereby under the HSR Act shall have expired or been
terminated.
(d) CONFIRMATION OF THE REORGANIZATION PLAN AND ENTRY
OF THE CONFIRMATION ORDER; CONSUMMATION OF THE REORGANIZATION
PLAN. The Confirmation Order shall have been entered by the
Bankruptcy Court and the Effective Date (as defined in the
Reorganization Plan) shall have occurred, or there shall be no
unsatisfied conditions to the occurrence of the Effective Date
other than the Closing, and such Confirmation Order shall be in
full force and effect and shall not then be stayed.
(e) GOVERNMENTAL CONSENTS. All Governmental Consents
shall have been received on or prior to the Closing Date.
(f) NO INJUNCTIONS. There shall not be in effect any
injunction or restraining order issued by a court of competent
jurisdiction against the consummation of the sale and purchase of
the Shares, the RII Real Estate Assets and the RII Paradise
Assets pursuant to this Agreement.
(g) BANKRUPTCY; INSOLVENCY; ETC. No proceeding shall
have been instituted or consented to by or against any of the
Company, any of its Subsidiaries or any RII Paradise Subsidiary
seeking to adjudicate any of them a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of any of their
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of any
order for relief or the appointment of a receiver, trustee,
custodian or other similar official for any of them or any
substantial part of any of their property, and such proceeding
shall not have been dismissed or terminated within 60 days of the
commencement thereof.
(h) OPINIONS. Buyer shall have received an opinion of
Gibson, Dunn & Crutcher, counsel to RII, in form and content
reasonably acceptable to Fidelity and TCW, as to matters set
forth on Exhibit C hereto and opinions of
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Florida counsel reasonably acceptable to Buyer and Harry B. Sands
& Co. in form and content reasonably acceptable to Fidelity and TCW.
(i) RESIGNATIONS. Buyer shall have received
resignations and releases of all officers and directors of the
Company and its Subsidiaries who are not directly involved in the
business and operations of the Company and its Subsidiaries in
accordance with Section 5.08(c).
(j) SECURITY DOCUMENTS. The agreements listed in
Schedule 4.16 to the Sun Purchase Agreement shall not be in full
force and effect.
(k) MANAGEMENT AGREEMENT. At the election of Buyer,
RII and Buyer shall have entered into a Management Agreement in
substantially the form attached hereto as Exhibit D, and all
conditions under the Management Agreement shall have been
satisfied by RII or waived by Buyer.
(l) REGISTRATION RIGHTS AGREEMENT. RII and Buyer
shall have taken such action, including granting such
registration rights, as may be necessary to ensure that all
shares of the capital stock of Buyer issued upon consummation of
the transactions contemplated hereby may be re-sold publicly,
without restriction under the Securities Act by the recipients
thereof following the disbursement of such shares by the
Disbursing Agent as contemplated by Section 2.04.
(m) SUN SECURITY INTEREST. RII shall have caused
Buyer to have granted a security interest to Sun International
Investments Limited as contemplated by Section 7.02(b) of the Sun
Purchase Agreement (the "Permitted Sun Lien"), and RII shall have
caused Buyer to assume its obligations to pay the Buyer Expense
Reimbursement to SIHL pursuant to Sections 7.02(a)(vi) and (vii)
of the Sun Purchase Agreement.
(n) ADDITIONAL TIME. If Fidelity and TCW reasonably
shall have determined that it is necessary and appropriate for
the time of the Closing to be extended (including without
limitation to allow time for the completion of their due
diligence investigation of the Paradise Island Business) beyond
the date when the other conditions set forth in this Section 6.01
have been satisfied, a reasonable period of additional time (not
to
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exceed 30 days) shall have elapsed from the date when such
other conditions were satisfied.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF RII. The
obligations of RII to effect the Closing shall be subject to the
prior fulfillment of each of the following conditions:
(a) HSR ACT. Any waiting period (and any extension
thereof) applicable to the consummation of the transactions
contemplated hereby under the HSR Act shall have expired or been
terminated.
(B) CONFIRMATION OF THE REORGANIZATION PLAN AND ENTRY
OF THE CONFIRMATION ORDER; CONSUMMATION OF THE REORGANIZATION
PLAN. The Confirmation Order shall have been entered by the
Bankruptcy Court and the Effective Date (as defined in the
Reorganization Plan) shall have occurred, or there shall be no
unsatisfied conditions to the occurrence of the Effective Date
other than the Closing, and such Confirmation Order shall be in
full force and effect and shall not then been stayed.
(c) CONSENTS. All Governmental Consents shall have
been received on or prior to the Closing Date.
(d) NO INJUNCTIONS. There shall not be in effect any
injunction or restraining order issued by a court of competent
jurisdiction against the consummation of the sale and purchase of
the Shares, the RII Real Estate Assets and the RII Paradise
Assets pursuant to this Agreement.
(e) SUN PURCHASE AGREEMENT. The Sun Purchase
Agreement shall have been terminated in accordance with its
terms.
(f) SECURITY DOCUMENTS. The agreements listed in
Schedule 4.16 to the Sun Purchase Agreement shall not be in full
force and effect.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
SECTION 7.01. SURVIVAL OF REPRESENTATIONS. The
representations and warranties of RII set forth in Sections
4.02, 4.03, 4.04 and 4.05 hereof and the representations and
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warranties incorporated from Sections 4.01, 4.02, 4.03(a), 4.04,
4.16(a) and 4.22 of the Sun Purchase Agreement (the "Surviving
Representations") and the covenants and agreements contained in
this Agreement (except the covenants contained in Sections 5.11
and 5.12 which shall not survive the Closing), and the covenants
and agreements contained in any agreements, certificates or other
instruments delivered pursuant to this Agreement, shall survive
the Closing and shall remain in full force and effect, regardless
of any investigation made by or on behalf of any party, but
subject to all limitations and other provisions contained in this
Agreement or any agreements, certificates or other instruments
delivered pursuant to this Agreement. All representations and
warranties set forth herein and in any agreements, certificates
or other instruments delivered pursuant hereto (other than the
Surviving Representations) shall not survive the Closing and
shall not remain in full force and effect; PROVIDED, HOWEVER,
that no representation or warranty shall be deemed not to have
survived the Closing if any breach or inaccuracy thereof was
knowingly or fraudulently concealed by RII or any of its
Subsidiaries prior to the Closing and such breach or inaccuracy
was not actually known to TCW and Fidelity prior to the Closing.
SECTION 7.02. INDEMNIFICATION BY RII. Subject to the
other provisions of this Article VII, RII hereby agrees to
indemnify and hold Buyer and its Affiliates harmless from and
against any and all claims, damages, liabilities, liens, losses
or other obligations whatsoever, together with reasonable costs
and expenses, including reasonable fees and disbursements of
counsel and expenses of investigation (collectively, "Losses"),
arising out of, based upon or caused by the inaccuracy of any
representation or the breach of any warranty of RII contained in
the Surviving Representations.
SECTION 7.03. NOTICE, ETC. Each indemnified party
agrees to give the indemnifying party prompt written notice of
any action, claim, demand, discovery of fact, proceeding or suit
(collectively, "Claims") for which such indemnified party intends
to assert a right to indemnification under this Agreement;
PROVIDED, HOWEVER, that failure to give such notification shall
not affect the indemnified party's entitlement to indemnification
hereunder except to the extent that the indemnifying party shall
have been actually prejudiced as a result of such failure. The
indemnifying party shall have the sole right to defend, settle or
otherwise dispose of any Claim, on such terms as
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the indemnifying party, in its sole discretion, shall deem appropriate;
PROVIDED, HOWEVER, that (i) the indemnified party may participate in the
defense of any claim pursuant to which the indemnified party
could become subject to injunctive or other equitable relief or
the business of the indemnified party could be materially and
adversely affected in any manner (such participation in the
defense of any claim to be at the indemnified party's expense
unless the use of separate counsel arises by reason of a material
conflict of interest between the indemnifying party and the
indemnified party in connection with the defense of such claim)
and (ii) the indemnifying party shall obtain the written consent
of the indemnified party, which shall not be unreasonably
withheld or delayed, prior to ceasing to defend, settling or
otherwise disposing of any such Claim, or taking any course of
action or omitting to take a permitted course of action with
respect thereto, if as a result thereof the indemnified party
would become subject to injunctive or other equitable relief.
SECTION 7.04. REIMBURSEMENT OF COSTS. The costs and
expenses, including reasonable fees and disbursements of counsel
and expenses of investigation, incurred by any indemnified party
in connection with any claim for which the indemnified party is
entitled to indemnification hereunder shall be reimbursed on a
quarterly basis by the indemnifying party.
SECTION 7.05. TIME LIMITATIONS. Notwithstanding
anything to the contrary contained herein, each party's
obligation to indemnify or otherwise hold harmless the other
party and its Affiliates for any Loss arising out of, based upon
or caused by the inaccuracy or breach of any Surviving
Representation shall, terminate at 11:59 p.m. New York City time,
on the later of March 31, 1995 or the first anniversary of the
Closing Date; PROVIDED, HOWEVER, that claims pending on, or
asserted prior to such date may continue to be asserted and shall
be indemnified against.
SECTION 7.06. SOLE AND EXCLUSIVE REMEDY. The
indemnification obligations of the applicable parties under
Section 7.02 hereof shall constitute the sole and exclusive
remedies of the indemnified party with respect to the matters
described in Section 7.02.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be
terminated at any time prior to the Closing Date, notwithstanding
the fact that votes may have been received pursuant to the
Reorganization Plan Solicitation:
(a) by mutual written consent of RII and Buyer at any
time prior to entry the Confirmation Order;
(b) in the event that a proposal for the sale of the
Paradise Island Business by RII or GRI, other than the
Acquisitions or the transactions contemplated by the Sun Purchase
Agreement, is approved by the Bankruptcy Court this Agreement
will automatically be deemed terminated without the necessity of
providing written notice notwithstanding any provision to the
contrary herein;
(c) by Buyer, if a Material Adverse Effect occurs as a
result of any fire, flood, hurricane, accident, explosion or
other calamity or casualty or any strike, labor disturbance,
riot, act of God or public enemy, or the institution of
condemnation proceedings affecting any material portion of the
Real Property or Improvements (a "Force Majeure Event"),
PROVIDED, HOWEVER, that Buyer shall not have the right to
terminate this Agreement in the event that the loss caused by the
Force Majeure Event (including the present value of lost profits)
is less than $20 million and there is adequate insurance to cover
such loss;
(d) by Buyer, if Buyer reasonably determines that RII
will not be able to deliver good title free and clear of
encumbrances other than Permitted Encumbrances and the Permitted
Sun Lien, to a material portion of the Paradise Island Business
or the Shares by September 30, 1994;
(e) by Buyer, if as a result of a breach of RII of its
covenant to operate the Paradise Island Business in the ordinary
course contained in Section 5.01, a Material Adverse Effect has
occurred;
(f) by Buyer, if the Sun Purchase Agreement shall have
been terminated by SIHL, after November 30, 1993, pursuant to
Section 6.14(b)(iii) thereof on account of any matter arising or
occurring on or before November 30, 1993 (x) which was known by
RII or any of its Affiliates or which
30
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would have been known by RII or any of its Affiliates had they not
been grossly negligent or (y) which was fraudulently or knowingly
concealed from SIHL by RII or any of its Affiliates;
(g) by Buyer, if in Fidelity's and TCW's reasonable
judgment (based on the advice of legal counsel), the consummation
of the transactions contemplated hereby could be expected to
result in the incurrence of any personal liabilities by the
holders of Buyer's capital stock by virtue of their status as
shareholders (and expressly not including any losses resulting
solely from a decline in the economic value of such capital
stock); PROVIDED, HOWEVER, that in the event of a good faith
dispute concerning whether Buyer is entitled to terminate the
Agreement under this subparagraph (g), the matter shall be
submitted to a court of competent jurisdiction for resolution,
and the determination of such court shall be final and binding
upon the parties;
(h) by Buyer, if RII or any of its Affiliates shall
have breached the covenant set forth in Section 5.22 hereof; or
(i) in the event that the sale of the Paradise Island
Business by RII and the RII Paradise Subsidiaries to SIHL is
consummated pursuant to the Sun Purchase Agreement, this
Agreement will automatically be deemed terminated without the
necessity of providing written notice notwithstanding any
provision to the contrary herein.
SECTION 8.02. RIGHTS OF TERMINATION. The right of
termination hereunder may be exercised by Buyer or RII, as the
case may be, only by giving written notice, signed on behalf of
such party to the other party. A right of termination may be
exercised on Buyer's behalf only by Fidelity and TCW.
SECTION 8.03. EFFECT OF TERMINATION. In the event of
the termination of this Agreement pursuant to Section 8.01, this
Agreement shall forthwith become void and have no effect, but no
such termination shall prejudice any party's rights and remedies
against the other for breaches of obligations under this
Agreement.
SECTION 8.04. WAIVER. Subject to Section 5.17, at any
time prior to the Closing Date, any party hereto may (a) extend
the time for the performance of any of the obligations or other
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acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument
in writing signed by the party to be bound thereby. The failure
of any party to assert any of its rights hereunder shall not
constitute a waiver of any such rights. The rights of Buyer
hereunder may be exercised on its behalf only by Fidelity and
TCW.
SECTION 8.05. AMENDMENTS. The parties hereto may, by
written agreement signed by such parties, modify any of the
covenants or agreements or extend the time for any performance of
any of the obligations contained in this Agreement or any
document delivered pursuant to this Agreement. No such written
agreement shall be signed on behalf of Buyer or shall be valid
without the written consent thereto of Fidelity and TCW.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NOTICES. All notices, requests, claims,
demands and other communications hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by cable, telecopy, telegram
or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
if to Buyer:
Paradise Island Resorts Limited
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, NJ 08401
Attention: Christopher D. Whitney, Esq.
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with a copies to:
Fidelity Management and Research Company
82 Devonshire Street
Boston, MA 02109
Attention: Judy Mencher, Esq.
Trust Company of the West
865 South Figueora Street
Suite 1800
Los Angeles, CA 90017
Attention: Bruce Karsh
Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10153
Attention: Bruce R. Zirinsky, Esq.
if to RII:
Resorts International, Inc.
1133 Boardwalk
Atlantic City, NJ 08401
Attention: Christopher D. Whitney, Esq.
with a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attention: Steven R. Finley, Esq.
SECTION 9.02. ENTIRE AGREEMENT; ASSIGNMENT. This
Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the
parties with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise,
except that Buyer may assign all or any of its rights and
obligations hereunder to any wholly owned Subsidiary of Buyer
upon the execution of a written instrument whereby such assignee
agrees to assume all of the assignor's obligations hereunder and
be bound by all the terms and conditions of this Agreement;
PROVIDED, that no such assignment shall relieve the assigning
party of its
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obligations hereunder if such assignee does not perform such obligations.
SECTION 9.03. PARTIES IN INTEREST. This Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and, except to the extent that consent or approval
of Fidelity and TCW may be required hereunder (E.G., Sections
5.17, 8.02, 8.04 and 8.05 hereof), nothing in this Agreement,
express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 9.04. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
SECTION 9.05. HEADINGS. The descriptive headings
contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.06. COUNTERPARTS. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.07. SPECIFIC PERFORMANCE. The parties
hereto agree that irreparable damage would occur in the event any
of the provisions of this Agreement were not to be performed in
accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition
to any other remedy at law or equity.
SECTION 9.08. JURISDICTION. THE PARTIES HEREBY WAIVE
ANY OBJECTION THEY MAY HAVE TO PERSONAL JURISDICTION AND VENUE IN
THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND, WHERE NO DIVERSITY OR OTHER SUBJECT MATTER JURISDICTION
EXISTS IN SUCH U.S. DISTRICT COURT, THE PARTIES WAIVE SUCH
OBJECTIONS IN ANY COURT OF THE STATE OF NEW YORK LOCATED IN THE
COUNTY OF NEW YORK, AS TO LITIGATION RELATING TO THIS AGREEMENT.
BUYER HEREBY IRREVOCABLY APPOINTS AND DESIGNATES AS ITS LAWFUL
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AGENT AND ATTORNEY FOR RECEIPT AND SERVICE OF PROCESS IN ANY
ACTION ARISING OR TAKEN HEREUNDER BY RII THE PRENTICE-HALL
CORPORATION SYSTEM, INC., 15 COLUMBUS CIRCLE, NEW YORK, NEW YORK
10023.
SECTION 9.09. KNOWLEDGE OR CONSENTS. For the purpose
of this Agreement (including the Schedules hereto), unless the
context otherwise expressly requires, whenever a document or
matter is subject to the "approval", "consent", "satisfaction" or
"acceptance" (including any variation of such terms) of any party
to this Agreement or Fidelity or TCW, such person, shall not
unreasonably withhold or delay its approval, consent,
satisfaction or acceptance of such document or matter; PROVIDED,
HOWEVER, that the foregoing is without prejudice to RII's right
to seek approval, consent, satisfaction or acceptance of any
documents or matters from the Bankruptcy Court (in Fidelity's and
TCW's stead) upon a showing by RII, and a finding by the
Bankruptcy Court, that any consent, approval, satisfaction or
acceptance is being unreasonably withheld by Fidelity or TCW.
For the purpose of this Agreement (including the Schedules
hereto) and subject to Section 5.17 hereof, unless the context
otherwise expressly requires, "knowledge" with respect to any
person (other than an individual) shall mean the knowledge of an
executive officer, director, partner, executor or trustee of such
person.
SECTION 9.10. RIGHTS OF FIDELITY AND TCW. If, and
only if, at any time prior to the Closing Date, Fidelity and TCW
shall cease to beneficially own an aggregate of at least twenty
percent (20%) of the aggregate principal amount of the
outstanding Old Series Notes, then all the rights of consent,
approval, acceptance or direction granted to Fidelity and TCW
hereunder shall thereupon cease to exist; PROVIDED, HOWEVER, that
nothing in this Section 9.10 shall limit or otherwise prejudice
in any manner any rights which Fidelity and TCW may have under
the Bankruptcy Code and the Bankruptcy Rules. In addition, if
either of Fidelity or TCW shall cease to beneficially own any Old
Series Notes whatsoever (but the other retains an aggregate of at
least twenty percent (20%) of the aggregate principal amount of
the outstanding Old Series Notes), then the rights described
above shall be extinguished solely as to the person ceasing to
own any such Old Series Notes, without prejudice to the rights of
the other hereunder.
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IN WITNESS WHEREOF, Buyer and RII have caused this
Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
RESORTS INTERNATIONAL, INC.
By: /s/ Christopher D. Whitney
____________________________
Name: Christopher D. Whitney
Title: Executive Vice President,
Chief of Staff
P.I. RESORTS LIMITED
By: /s/ Christopher D. Whitney
____________________________
Name: Christopher D. Whitney
Title: President
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EXHIBIT A
COMFORT LETTER
<PAGE>
EXHIBIT A
[Letterhead of Ernst & Young]
[ ], 1993
Paradise Island
---------------
Dear Sirs,
We have performed the procedures requested by you,
as described below, with respect to the Purchase Agreement
(the "Purchase Agreement") dated August [ ], 1993,
among Resorts International, Inc. ("RII") a Delaware
corporation and Sun International Hotels Limited ("Sun") a
Bahamian corporation. The Purchase Agreement provides for
the Stock Acquisition and the Asset Acquisition (in each
case as defined in the Purchase Agreement and, together, the
"Acquisitions"). This letter is solely to assist Sun with
the proposed Acquisition and is not to be used for any other
purpose. The procedures that we performed, and our findings
are summarized as follows:
1. We are independent certified public
accountants with respect to (RII and the RII Paradise
Subsidiaries) under the standards of the American Institute
of Certified Public Accountants (Code of Professional Ethics
Rule 101 and related interpretations).
2. We have audited the combined statements of
operations in respect of the Paradise Island Business for
the three fiscal years ending December 31, 1992, and the
combined balance sheets in respect of the Paradise Island
Business as of December 31, 1990, December 31, 1991 and
December 31, 1992. These financial statements and our
report with respect thereto dated [ ] are
included as Exhibit A to this letter. We have not audited
any financial statements as of any date or for any period
subsequent to December 31, 1992. Therefore, save as set
forth in this letter, we are unable to and do not express
any opinion on any unaudited interim financial statements as
of any date or for any period subsequent to December 31,
1992.
3. For the purposes of this letter we have read
the 1993 minutes of meetings of the shareholders and the
boards of directors of RII and each of the RII Paradise
Subsidiaries as set forth in the minute books of those
<PAGE>
companies as at the date hereof, officials of RII and of the
RII Paradise Subsidiaries having advised us that the minutes
of all such meetings through that data were set forth
therein. In addition, with respect to the six month period
ended June 30, 1993, we have:
(a) read the unaudited combined statement of
operations in respect of the Paradise Island Business
for the fiscal quarters ending March 31, 1993 and June
30, 1993 and the unaudited combined balance sheets in
respect of the Paradise Island Business as of March 31,
1993 and June 30, 1993. These financial statements are
included as Exhibit B to this letter; and
(b) made inquiries of certain officials of RII
and the RII Paradise Subsidiaries who have
responsibility for financial and accounting matters
regarding whether the unaudited financial statements
referred to in paragraph (a) have been prepared on a
basis consistent with that of the audited financial
statements referred to in paragraph 2.
4. With respect to the monthly periods ended
July 31, August 31 and September 30, 1993 we have:
(a) read the unaudited combined statement of
operations in respect of the Paradise Island Business
for each of the calendar months ending July 31, August
31, and September 30, 1993 and the unaudited balance
sheets in respect of the Paradise Island Business as of
July 31, August 31 and September 30, 1993. These
financial statements are included as Exhibit C to this
letter; and
(b) made inquiries of certain officials of RII
and the RII Paradise Subsidiaries who have
responsibility for financial and accounting matters
regarding whether the unaudited financial statements
referred to in paragraph (a) have been prepared on a
basis consistent with that of the audited financial
statements referred to in paragraph 2.
5. Nothing came in our attention as a result of
the foregoing procedures in paragraphs 3 or 4 above that
caused us to believe that:
(a) the unaudited combined financial statements
referred to in Paragraphs 3(a) and 4(a) are not in
<PAGE>
conformity with GAAP applied on a consistent basis
throughout the period covered or were not prepared on a
basis consistent with that of the audited financial
statements referred to in paragraph 2 [except
for ]; or
(b) at each of June 30, July 31, August 31 and
September 30, 1993 (i) there was any decrease in net
current assets or in fixed assets other than normal
depreciation or increases in long-term liabilities or
contingencies as compared with amounts shown in the
December 31, 1992 audited balance sheet or (ii) there
were any decreases, as compared with the corresponding
period in the preceding year, in the amount of
operating revenues or income [except for ].
6. Officials of RII and RII paradise
Subsidiaries have advised us that no financial statements as
of any date or for any period subsequent to [September 30,]
1993, are available; accordingly, the procedures carried out
by us with respect to changes in financial statement items
after [September 30,] 1993, have, of necessity, been even
more limited than those with respect to the periods ending
[September 30,] 1993. We have made inquiries of certain
officials of RII and the RII Paradise Subsidiaries who have
responsibility for financial and accounting matters
regarding whether:
(a) there was any decrease as at [ ], 1993,
in net current assets or in fixed assets other than
normal depreciation or increases in long-term
liabilities or contingencies as compared with amounts
shown on the [September 30,] 1993, unaudited combined
balance sheet;
(b) for the period from [September 30,] 1993 to
[ ], 1993, there were any decreases, as
compared with the corresponding period in the preceding
year, in the amount of operating revenues or income; or
(c) there were any liabilities or obligations
incurred since [September 30,] 1993, other than
liabilities and obligations incurred in the ordinary
course of business consistent with past practice, not
shown or adequately provided for in the [September 30,]
1993 unaudited combined balance sheet.
7. On the basis of the procedures referred to in
paragraph 6 and our reading of the minutes as described in
<PAGE>
paragraph 3, nothing came to our attention that caused us to
believe that there was any such change or decrease, or any
such liabilities or obligations, as is mentioned in
paragraph 6 except for [ ].
Very truly yours,
Sun International Hotels Limited
[ ]
<PAGE>
EXHIBIT B
ARTICLES OF ASSOCIATION OF BUYER
<PAGE>
P.I. RESORTS LIMITED
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
(ADOPTED ON 15TH, DECEMBER 1993)
PRELIMINARY AND CONSTRUCTION
1. The Articles contained in the First Schedule to
the Companies Act shall not apply to the Company.
2. (1) In these Articles, except where the subject
or context otherwise requires:
"Articles" means the articles of association of the
Company on the date hereof as the same may be amended from
time to time;
the "board" means the directors or any of them acting
as the board of directors of the Company;
"Closing Date" shall mean the date the Company acquires
the Paradise Island assets of Resorts International Inc.;
"Commonwealth" means the Commonwealth of The Bahamas;
"Companies Act" means the Companies Act 1992 including
any modification or re-enactment thereof for the time being
in force;
"Company" means P. I. Resorts Limited, the company to
which these Articles apply;
"director" means a director of the Company;
"dollar" or "$" means the lawful currency of the United
States of America;
"holder" means, in relation to any shares, the member
whose name is entered in the register of members as the
holder of such shares;
"Ordinary Shares" means the Ordinary Shares of $0.01
each of the Company having the rights set forth in these
Articles;
<PAGE>
"Preference Shares" means the Preference Shares of
$0.01 each of the Company having the rights set forth in
these Articles;
"secretary" means the secretary of the Company and
includes a joint, assistant, deputy or temporary secretary
and any other person appointed to perform the duties of the
secretary; and
"shares" means shares in the Company including the
Ordinary Shares and the Preference Shares.
(2) Save as aforesaid or as otherwise defined herein
any words or expressions defined in the Companies Act (but
excluding any modification thereof not in force at the date of
adoption of these Articles) shall, if not inconsistent with the
subject or the context, bear the same meaning in these Articles.
(3) For the purposes of these Articles, references to
writing include references to any visible substitute for writing
and to anything partly in one form and partly in another form;
words denoting the singular number include the plural number and
vice versa; words denoting the masculine gender include the
feminine gender and vice versa; and references to persons include
references to bodies corporate.
3. In addition to the registered office of the
Company in the Commonwealth, which shall be at such place as the
directors shall from time to time appoint, the Company may have
an office for the transaction of business at any other place, and
meetings of the Company or of the directors may be held either
within or without the Commonwealth at such place as the directors
may determine.
SHARES
4. The authorized share capital of the Company at the
date of adoption of these Articles is $350,000 divided into
35,000,000 Ordinary Shares of $0.01 each and 10,000,000
Preference Shares of $0.01 each, having the rights set forth in
these Articles. The Preference Shares may be issued by the
Directors from time to time in one or more Series having such
rights as the board may by resolution determine. All the shares
of the Company shall be in registered form, shall be fully paid
for at the time of issuance and shall be nonassessable.
2
<PAGE>
5. Without prejudice to any special rights previously
conferred on the holders of existing shares in the Company, any
shares in the Company may be issued with such preferred, deferred
or other special rights or such restrictions, whether in regard
to dividend, voting, return of share capital or otherwise, as the
board may from time to time by resolution determine. Preference
Shares may be voting, non-voting or voting only for specific
purposes or in specific circumstances; PROVIDED, HOWEVER that the
Company shall be prohibited from issuing any non-voting
Preference Shares which are not entitled to at least one vote per
share in the specific case where an event of default in the
payment of dividends has occurred with respect to such shares.
6. Where at any time the share capital is divided
into different classes or series of shares, the rights attached
to any class or series (unless otherwise provided by the terms of
issue of the shares of the class or series) may only be varied
or abrogated with the sanction of a resolution of the board and
either (i) the consent in writing of the holders of a majority in
nominal value of the issued shares of the class or series or (ii)
the sanction of a resolution of members holding shares of that
class or series passed at a separate general meeting of the
holders of the shares of that class or series.
CERTIFICATES
7. Every person whose name is entered as a member in
the register of members shall, without payment, be entitled to a
certificate under the common seal of the Company specifying the
share or shares held by him and the amount paid up thereon,
provided that in respect of a share or shares held jointly by
several persons the Company shall not be bound to issue more than
one certificate, and delivery of a certificate for a share to one
of several joint holders shall be sufficient delivery to all.
8. A share certificate defaced, lost or destroyed may
be renewed or replaced on payment of such fee, if any, as may be
prescribed, and on such terms, if any, as to evidence and
indemnity as the directors think fit.
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<PAGE>
PURCHASE OF SHARES
9. Subject to and in accordance with the provisions
of the Companies Act and without prejudice to any relevant
special rights attached to any class or series of shares, the
Company may, with the agreement of the holders of the relevant
shares, purchase any of its own shares of any class or series
(including redeemable shares) at any price (whether at par or
above or below par), and any shares to be so purchased may be
selected by the Company in any manner whatsoever.
TRANSFER AND TRANSMISSION OF SHARES
10. Subject to Article 11, the instrument of transfer
of any share in the Company shall be executed by the transferor
(or its duly authorized agent), and the transferor shall be
deemed to remain the holder of the share until the name of the
transferee is entered in the register of members in respect
thereof.
11. Shares in the Company shall be transferred in any
usual or common form. The transfer agent for the Company or the
Company's board may determine if a form of transfer is usual or
common in the case of any question or dispute concerning a
transfer.
12. The board may:
(a) decline to register a transfer of shares
unless the instrument of transfer is
accompanied by the certificate or
certificates of the shares to which it
relates, and such other evidence as the board
may reasonably require to show the right of
the transferor to make the transfer; and
(b) suspend the registration of transfers during
the fourteen days immediately preceding the
ordinary general meeting in each year.
13. The executors or administrators of a deceased sole
holder of a share shall be the only persons recognized by the
Company as having any title to the share. In the case of a share
registered in the names of two or more holders, the survivors or
the executors or administrators of
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<PAGE>
the deceased survivor shall be the only persons recognized by the
Company as having any title to the share.
14. Any person becoming entitled to a share in
consequence of the death or bankruptcy of a member shall, upon
such evidence being produced as may from time to time be required
by the board, have the right, either to be registered as a member
in respect of the share or, instead of being registered himself,
to make such transfer of the share as the deceased or bankrupt
person could have made; but the directors shall, in either case,
have the same right to decline or suspend registration as they
would have had in the case of a transfer of the share by the
deceased or bankrupt person before the death or bankruptcy.
15. A person becoming entitled to a share by reason of
the death or bankruptcy of the holder shall be entitled to the
same dividends and other advantages to which he would be entitled
if he were the registered holder of the share, except that he
shall not, before being registered as a member in respect of the
share, be entitled in respect of it to exercise any right
conferred by membership in relation to meetings of the Company.
ALTERATION OF CAPITAL
16. The Company may, by a resolution of the holders of
Ordinary Shares, increase the share capital by such sum to be
divided into shares of such amount as the resolution shall
prescribe.
17. The Company may, by resolution of the board (and
the holders of the Ordinary Shares, if and to the extent required
by the Companies Act):
(a) consolidate and divide its share capital into
shares of larger amount than its existing
shares;
(b) subdivide its existing shares, or any of them
or divide the whole or any part of its share
capital into shares of smaller amount than is
fixed by the Articles; or
(c) reduce its share capital in any manner and
with and subject to any incident authorized
and consent required by law.
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GENERAL MEETINGS
18. The statutory general meeting of the Company shall
be held within the period required by Section 70 of the Companies
Act.
19. (1) A general meeting shall be held once in every
year at such time (not being more than fifteen months after the
holding of the last preceding general meeting) and at such place
as may be prescribed by the board.
(2) In default of a general meeting so held, a general
meeting shall be held in the month next following and may be
convened by any two or more members holding Ordinary Shares
carrying at least one-tenth of the votes of all members entitled
to vote at general meetings, in the same manner as nearly as
possible as that in which meetings are to be convened by the
directors and any such meetings shall be held at such place as the
members convening the meeting may designate in the notice
thereof.
20. The above-mentioned general meetings shall be
called annual general meetings; all other general meetings shall
be called extraordinary.
21. The board may, whenever it thinks fit, convene an
extraordinary general meeting, and extraordinary general meetings
shall also be convened by the board on the requisition, in
accordance with Section 71 of the Companies Act, of members of
the Company holding not less than one-tenth of the paid-up
capital of the Company, or, in default, may be convened by such
requisitionists, as provided by Section 71(3) of the Companies
Act.
PROCEEDINGS AT GENERAL MEETINGS
22. (1) Thirty-days' notice at the least (exclusive
of the day on which the notice is served or deemed to be served,
but inclusive of the day for which notice is given) specifying
the place, the day and the hour of meeting and, in case of
special business, the general nature of that business, shall be
given in the manner hereinafter mentioned, or in such other
manner, if any, as may be prescribed by the Company in general
meeting, to such persons as are under the Articles entitled to
receive such notices from the Company.
6
<PAGE>
(2) Every notice convening a general meeting shall
include a statement having reasonable prominence that a member
entitled to attend and vote is entitled to appoint a proxy to
attend and vote instead of him, and that a proxy need not also be
a member.
23. All business shall be deemed special that is
transacted at an extraordinary meeting, as shall all that is
transacted at an ordinary meeting with the exception of
(i) sanctioning a dividend, (ii) the consideration of the
accounts, balance-sheets and the ordinary report of the directors
and auditors, (iii) election of directors and other officers in
the place of those retiring by rotation and (iv) the fixing of
the remuneration of the auditors.
24. No business shall be transacted by any general
meeting unless a quorum of members is present at the time when
the meeting proceeds to business; save as herein otherwise
provided, members present in person or by proxy holding at least
a majority of the then outstanding of Ordinary Shares shall be a
quorum.
25. Where within half an hour from the time appointed
for the meeting a quorum is not present, the meeting, if convened
upon the requisition of members, shall be dissolved; in any other
case it shall stand adjourned to the same day in the next week,
at the same time and place and where at the adjourned meeting a
quorum is not present within half an hour from the time appointed
for the meeting, the members present shall be a quorum.
26. The chairman, if any, of the board shall preside
as chairman at every general meeting of the Company.
27. Where there is no such chairman or at any meeting
he is not present within fifteen minutes after the time appointed
for holding the meeting or at which he is unwilling to act as
chairman, the directors in office prior to such meeting who are
present shall choose someone of their number to be chairman.
28. (1) The chairman may, with the consent of any
meeting at which a quorum is present (and shall if so directed by
the meeting), adjourn the meeting from time to time and from
place to place, but no business shall be transacted at any
adjourned meeting other than the business left unfinished at the
meeting from which the adjournment takes place.
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<PAGE>
(2) When a meeting is adjourned for ten days or more,
notice of the adjourned meeting shall be given as in the case of
any original meeting.
(3) Save as aforesaid, it shall not be necessary to
give any notice of an adjournment or of the business to be
transacted at an adjourned meeting.
29. At any general meeting a resolution put to the
vote of the meeting shall be decided on a voice call or show of
hands, unless a poll is (before or on the declaration of the
result of the show of hands) demanded by at least two members
present in person or by proxy holding Ordinary Shares carrying at
least one-tenth of the votes of all members entitled to vote at
the meeting or by the chairman and unless a poll is so demanded,
a declaration by the chairman that a resolution has, on a voice
call or show of hands, been carried or carried unanimously or by
a particular majority or lost, and an entry to that effect in the
book of the proceedings of the Company, shall be conclusive
evidence of the fact, without proof of the number or proportion
of the votes recorded in favor of or against that resolution.
30. If a poll is duly demanded it shall be taken in
such manner as the chairman directs, and the results of the poll
shall be deemed to be the resolution of the meeting at which the
poll is demanded.
31. The demand for a poll may, before the poll is
taken, be withdrawn but only with the consent of the chairman and
a demand so withdrawn shall not be taken to have invalidated the
result of the voice call or show of hands taking place before the
demand was made.
VOTES OF MEMBERS
32. Every member shall have one vote for each Ordinary
Share of which he is the holder. Voting rights of Preference
Shares (if any) shall be as specified in accordance with Article
5.
33. In the case of joint holders of the vote of the
senior who tenders a vote, whether in person or by proxy, shall
be accepted to the exclusion of the votes of the other joint
holders; and for this purpose seniority shall be determined by
the order in which the names stand in the register of members.
8
<PAGE>
34. A member of unsound mind, or in respect of whom an
order has been made by any court having jurisdiction with respect
to persons of unsound mind, may vote, whether on a voice call,
show of hands or on a poll, by his committee or other person in
the nature of a committee appointed by that court.
PROXIES
35. (1) The instrument appointing a proxy shall be in
writing under the hand of the appointer or his attorney duly
authorized in writing or, if the appointer is a corporation,
either under the common seal or under the hand of an officer or
attorney so authorized.
(2) An instrument appointing a proxy may be in the
following form or in any other form which the board may approve:
"I of
being a member of P. I. Resorts Limited,
hereby appoint of
as my proxy to vote for
me and on my behalf at the general meeting of the
Company to be held on the day of and at
any adjournment thereof."
36. The instrument appointing a proxy and the power of
attorney or other authority, if any, under which it is signed or
a certified copy of that power or authority shall be deposited at
the registered office of the Company not less than forty-eight
hours before the holding of the meeting at which the person named
in the instrument proposes to vote, or shall be delivered to the
Company at such meeting, and in default the instrument of proxy
shall not be treated as valid.
37. A vote given in accordance with the terms of an
instrument of proxy shall be valid notwithstanding the previous
death or insanity of the principal or revocation of the
instrument of proxy, or the authority under which the instrument
of proxy was executed, or transfer of the shares in respect of
which the vote is given, provided no transfer shall have been received
at the registered office of the Company before the meeting or
adjourned meeting at which the instrument or proxy is used.
9
<PAGE>
CORPORATE REPRESENTATIVES
38. Any body corporate which is a member of the
Company may by resolution of its directors or other governing
body or by authority to be given under seal or under the hand of
an officer duly authorized by it authorize such person as it
thinks fit to act as its representative at any meeting of the
Company or at any separate meeting of the holders of any class or
series of shares and such authority may be general or in respect
of specific meetings. A person so authorized shall be entitled
to exercise the same power on behalf of the grantor of the
authority as the grantor could exercise if it were an individual
member of the Company and the grantor shall for the purposes of
these Articles be deemed to be present in person at any such
meeting if a person so authorized is present at it.
CLASS MEETINGS
SERIES MEETINGS
39. All provisions of these Articles relating to
general meetings of the Company shall apply mutatis mutandis to
every separate meeting of the holders of any class or series of
shares in the capital of the Company.
DIRECTORS
40. Unless otherwise determined by a resolution of the
members, the number of the directors shall be five.
41. The directors shall be appointed and may be
removed in accordance with the Companies Act.
42. It shall be presumed that it is in the best
interests of the Company to allow directors to participate in
meetings of the board or of committees thereof by telephonic
communication and otherwise as set forth in Article 56 and,
accordingly, it shall be a term of appointment of each director
that he irrevocable consents to the holding of such meetings in
the manner set forth in Article 56.
43. The directors of the Company holding office
immediately following the Closing Date shall hold office until
the date of the annual general meeting to be held in 1997. At
the annual general meeting held in 1997 and at each subsequent
annual general meeting, directors shall be appointed by
resolution of the holders of Ordinary Shares in
10
<PAGE>
accordance with these Articles (including provisions as to nomination)
and any director so appointed (and any director appointed to fill a
vacancy in the directors prior to the next annual general
meeting) shall hold office until the date of the next annual
general meeting of the Company, or if later the date his
successor shall be duly elected and qualified.
EXECUTIVE DIRECTORS
44. The board may appoint one or more of its body to
be the holder of any one or more executive office (except that of
auditor) under the Company and may enter into an agreement or
arrangement with any director for his employment by the Company
or for the provision by him of any services outside the scope of
the ordinary duties of a director. Any such appointment,
agreement or arrangement may be made upon such terms, including
terms as to remuneration, as the board determines, and any
remuneration which is so determined may be in addition to or in
lieu of any ordinary remuneration as a director. The board may
revoke or vary any such appointment but without prejudice to any
rights or claims which the person whose appointment is revoked or
varied may have against the Company by reason thereof.
45. Any appointment of a director to an executive
office shall terminate if he ceases to be a director but without
prejudice to any rights or claims which he may have against the
Company by reason of the termination of such appointment. A
director appointed to an executive office shall not ipso facto
cease to be a director if his appointment to such executive
officer terminates.
46. The emoluments of any director holding executive
office for his services as such shall be determined by the board,
and may be of any description, and (without limiting the
generality of the foregoing) may include admission to or
continuance of membership of any scheme (including any share
acquisition scheme) or fund instituted or established or financed
or contributed to by the Company for the provision of pensions,
life assurance or other benefits for employees or their
dependents, or the payment of a pension or other benefits to him
or his dependents on or after retirement or death, apart from
membership of any such scheme or fund.
11
<PAGE>
POWERS AND DUTIES OF THE BOARD
47. The business of the Company shall be managed by
the board, which may exercise all such powers of the Company as
are not by the Companies Act or by these Articles, required to be
exercised by the Company in general meeting, subject nevertheless
to these Articles (including in particular Article 68 for so long
as it is in effect) and to the Companies Act.
PROCEEDINGS OF DIRECTORS
48. (1) The directors may meet together for the
dispatch of business, adjourn and otherwise regulate their
meetings, as they think fit.
(2) Questions arising at any meeting shall be decided
by a majority of votes.
(3) A director may, and the secretary on the
requisition of a director shall, at any time summon a meeting of
the directors. Directors shall be given reasonable notice
(which, except in the case of emergencies shall be not less than
three business days) of the time and place appointed for such
meeting of the directors, which notice may be waived by any or
all directors at any time before or after such meeting.
49. The quorum necessary for the transaction of the
business of the directors may be fixed by the directors and
unless so fixed shall be three.
50. The continuing directors may act notwithstanding
any vacancy in their body, but, if and so long as their number is
reduced below the number fixed by or pursuant to the Articles as
the necessary quorum of directors, the continuing directors may
act for the purpose of summoning a general meeting of the
Company, but for no other purpose.
51. The directors may elect a chairman of their
meetings and determine the period for which he is to hold office;
but if no such chairman is elected or if at any meeting the
chairman is not present within five minutes after the time
appointed for holding the same, the directors present may choose
one of their number to be chairman of the meeting.
12
<PAGE>
52. The directors may delegate any of their powers to
committees consisting of such members of the Company or members
of their body as they think fit; any committee so formed shall in
the exercise of the powers so delegated conform to any
regulations that may be imposed on them by the directors.
53. A committee may elect a chairman of their
meetings; if no such chairman is elected or if at any meeting the
chairman is not present within five minutes after the time
appointed for holding the same, the members present may choose
one of their number to be chairman of the meeting.
54. (1) A committee shall meet and adjourn as
determined by the board and otherwise as they think proper.
(2) Questions arising at any meeting shall be
determined by a majority of votes of the members present.
55. A resolution in writing signed by a simple
majority of the directors entitled to vote on that resolution at
a meeting of the board or of the members of an existing committee
of the board with authority to consider and act on the matter
(not being less than the number of directors required to form a
quorum of the board) shall be as valid and effectual as if it had
been passed at a meeting of the board or (as the case may be) a
committee of the board duly convened and held and for this
purpose a resolution may consist of several documents to the same
effect, each signed by one or more directors.
56. A meeting of the board or of a committee of the
board may, if all the directors consent, consist of a conference
between directors who are not all in one place, but of whom each
is able (directly or by telephonic communication) to speak to
each of the others, and to be heard and recognized by each of the
others. A director taking part in such a conference shall be
deemed to be present in person at the meeting and shall be
entitled to vote or be counted in a quorum accordingly. Such a
meeting shall be deemed to take place where the largest group of
those participating in the conference is assembled, or, if there
is no such group, where the chairman of the meeting then is. The
word meeting in these Articles shall be construed accordingly.
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<PAGE>
57. The board shall cause minutes to be made in books
provided for the purpose:
(a) of all appointments of officers made by the
board;
(b) of the names of the directors or members
present at each meeting of the directors and
of any committee of the directors; and
(c) of all resolutions and proceedings at all
meetings of the Company and of the board or
committees of the board.
POWERS OF ATTORNEY
58. The board may from time to time and at any time by
power of attorney appoint any company, firm or person or body of
persons, whether nominated directly or indirectly by the board,
to be the attorney or attorneys of the Company for such purposes
and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the board under these Articles)
and for such period and subject to such conditions as they may
think fit, and any such powers of attorney may contain such
provisions for the protection and convenience of persons dealing
with any such attorney as the board may think fit and may also
authorize any such attorney to delegate all or any of the powers,
authorities and discretions vested in him.
THE SEAL
59. The seal of the Company shall not be affixed to
any instrument except by the authority of a resolution of the
directors, and in the presence of at least two directors and of
the secretary or such other person as the directors may appoint
for the purpose; and those two directors and secretary or other
person as aforesaid shall sign every instrument to which the seal
of the Company is so affixed in their presence. The Company is
hereby authorized to adopt and use an official seal in accordance
with the provisions of Section 26 of the Companies Act.
14
<PAGE>
DIVIDENDS AND RESERVE
60. The board may from time to time declare and pay to
the members of the Company such quarterly dividends as appear to
the directors to be justified by the profits of the Company.
61. No dividend shall be paid otherwise than out of
profits or surplus available for the purpose in accordance with
the Companies Act.
62. The directors may, before recommending any
dividend, set aside out of the profits of the Company such sums
as they think proper as a reserve or reserves which shall, at the
discretion of the directors, be applicable for meeting
contingencies or for equalizing dividends or for any other
purpose to which the profits of the Company may be properly
applied, and pending such application may, at the like
discretion, either be employed in the business of the Company or
be invested in such investments (other than shares of the
Company), as the directors may from time to time think fit.
63. Where several persons are registered as joint
holders of any share any one of them may give effectual receipts
for any dividend payable on the share.
64. No dividend shall bear interest against the
Company.
ACCOUNTS
65. The directors shall cause true accounts to be
kept:
(a) of the sums of money received and expended by
the Company and the matter in respect of
which such receipt and expenditure takes
place; and
(b) of the assets and liabilities of the Company.
66. The books of account shall be kept at the
registered office of the Company or at such other place or places
as the directors think fit and shall always be open to the
inspection of the directors.
15
<PAGE>
67. The directors shall from time to time determine
whether and to what extent and at what time and places and under
what conditions or regulation the accounts and books of the
Company or any of them shall be open to the inspection of members
not being directors, and no member (not being a director) shall
have any right of inspecting any account or book or document of
the Company except as conferred by statute or authorized by the
directors or by the Company in general meeting.
68. Once at least in every year the directors shall
lay before the Company in general meeting a profit and loss
account for the period since the preceding account or (in the
case of the first account) since the incorporation of the
Company, made up to a date not more than six months before such
meeting.
69. (1) A balance-sheet shall be made out in every
year and laid before the Company in general meeting made up to a
date not more than six months before such meeting.
(2) The balance-sheet shall be accompanied by a report
of the board as to the state of the Company's affairs and the
amount which they recommend to be paid by way of dividend and the
amount, if any, which they propose to carry to a reserve fund.
70. A copy of the balance-sheet and report shall,
seven days previous to the meeting, be sent to the persons
entitled to receive notices of general meetings in the manner in
which notices are to be given hereunder.
NOTICES
71. (1) A notice may be given by the Company to any
member either personally or by sending it by post to him to his
registered address.
(2) Where a notice is sent by post, service of the
notice shall be deemed to be effected by properly addressing,
pre-paying and posting a letter (by air-mail if to an address
outside the country from which it is sent) containing the notice
and, unless the contrary is proved, to have been effected three
days after posting (or seven days if sent to an address outside
the country from which it is sent).
16
<PAGE>
72. A notice may be given by the Company to the joint
holders of a share by giving the notice to the joint holder named
first in the register in respect of the share.
73. A notice may be given by the Company to the
persons entitled to a share in consequence of the death or
bankruptcy of a member by sending it through the post in a pre-
paid letter addressed to them by name or by the title of
representatives of the deceased, or trustees of the bankrupt, or
by any like description, at the address, if any, supplied for the
purpose by the persons claiming to be so entitled, or (until such
an address has been so supplied) by giving the notice in any
manner in which the same might have been given if the death or
bankruptcy has not occurred.
74. Notice of every general meeting shall be given in
some manner hereinbefore authorized to the members of the
Company, including any person entitled to a share in consequence
of the death or bankruptcy of a member, who, but for his death or
bankruptcy, would be entitled to receive notice of the meeting
and to very director. No other persons shall be entitled to
receive notice of general meetings.
INDEMNITY
75. The Company shall, subject to the provisions of
Article 79, indemnity to the fullest extent permitted by the
Companies Act any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative and whether external or internal to the Company by
reason of the fact that he is or was a director or officer of the
Company, or is or was serving at the request of the Company as a
director or officer of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
suit, action or proceeding if he acted in good faith and in a
manner which he reasonably believed to be in, or not opposed to,
the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful.
76. Subject to Article 79, expenses incurred by a
director or officer in defending a civil or criminal action,
17
<PAGE>
suit or proceeding shall be paid by the Company in advance of the
final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to
repay such amount if it shall ultimately be determined that he is
not entitled under Article 75 to be indemnified by the Company in
respect of such expenses.
77. The board shall from time to time cause the
Company to purchase and maintain insurance from reputable
insurance carriers on behalf of any person who is or was a
director or officer of the Company, or is or was serving at the
request of the Company as a director or officer of another
corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such with reasonable limits and subject to reasonable
and customary deductibles, for so long as such insurance is
available from such carriers.
78. The Company's indemnification under Article 76 of
any person who is or was serving, at the request of the Company
as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, shall be reduced by
amounts such person receives as indemnification (i) under any
policy of insurance purchased and maintained on his behalf by
the Company, (ii) from such other corporation, partnership,
joint venture, trust or other enterprise, or (iii) under any
other applicable indemnification provision.
79. (a) It shall be a condition of the Company's
obligation to indemnify or advance expenses under Articles 75 and
76 that the person asserting, or proposing to assert, the right
to be indemnified, promptly after receipt of notice of
commencement of any action, suit or proceeding in respect of
which a claim for indemnification is or is to be made against the
Company notify the Company of the commencement of such action,
suit or proceeding, including therewith a copy of all papers
served and the name of counsel retained or to be retained by such
person in connection with such action, suit or proceeding, and
thereafter to keep the Company timely and fully apprised of all
developments and proceedings in connection with such action, suit
or proceeding or as the Company shall request; and the fees and
expenses of any counsel retained by a person asserting, or
proposing to assert, the right to be indemnified under
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<PAGE>
Article 75 shall be at the expense of such person unless the counsel
retained shall have been approved by the Company in writing,
which approval shall not be unreasonably withheld.
(b) If a claim for indemnification and advancement of
expenses under Articles 75 and 76 is not paid in full by the
Company within forty five (45) days after a written claim
therefor has been received by the Company, the claimant may at
any time thereafter bring suit against the Company to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expenses
of prosecuting such claim.
80. To the fullest extent permitted by the Companies
Act as it exists on the date hereof or as it may hereafter be
amended, no director or officer of the Company shall be liable to
the Company or its members for monetary or other damages for
breach of fiduciary duty as a director or officer.
81. The provisions of Articles 75 to 80 shall continue
as to, and for the benefit of, a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
82. No amendment to or repeal of the provisions of
Articles 75 to 80 shall apply to or have any effect on the
eligibility for, or entitlement to, indemnification, advancement
of expenses and the other rights provided by, or granted pursuant
to, Articles 75 to 80 for or with respect to any acts or omissions
of any director or officer occurring prior to any such amendment or
repeal.
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EXHIBIT C
SUBORDINATION PROVISIONS
<PAGE>
EXHIBIT C
All opinions set forth below shall be delivered in
customary form and in reliance, where customary, on typical
certificates and certified copies of documents:
(i) RII is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware; (ii) RII has all necessary corporate power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder; (iii) the execution and delivery of
this Agreement by RII, and the sale of the Shares and the RII
Real Estate Assets by RII, have been duly and validly authorized
by all necessary corporate action on the part of RII, and no
other corporate proceedings or shareholder actions on the part of
RII are necessary to authorize this Agreement and the sale of the
Shares and the RII Real Estate Assets; (iv) this Agreement has
been duly and validly executed and delivered by RII, and this
Agreement constitutes the legal, valid and binding obligation of
RII, enforceable against RII in accordance with its terms
(subject as to enforcement to applicable bankruptcy,
reorganization, insolvency, fraudulent transfer and moratorium
and similar laws from time to time in effect affecting creditors'
rights generally and to legal and equitable limitations on
availability of specific performance and other equitable
remedies); (v) the execution and delivery of this Agreement by
RII does not, and the performance of this Agreement by RII will
not, (A) conflict with or violate the certificate of
incorporation or bylaws of RII, (B) to the actual knowledge of
such counsel, conflict with or violate any law, rule, regulation,
order judgment or decree applicable to RII; (vi) assuming that
Buyer has purchased the Shares for value in good faith and
without notice of any adverse claim, good and valid title to the
Shares will pass to Buyer, free and clear of any adverse claim;
and (vii) as of the Closing Date, the order of the Bankruptcy
Court confirming the sale of the Shares by RII to Buyer has been
duly entered, is in full force and effect and has not been
stayed.
[Subject to changes to reflect GRI as the transferor of the
Shares, if applicable]
<PAGE>
EXHIBIT D
MANAGEMENT AGREEMENT
<PAGE>
INTERIM MANAGEMENT AGREEMENT
INTERIM MANAGEMENT AGREEMENT, dated as of this _____
day of ______, 199_, by and between P.I. Resorts Limited, a
Bahamas corporation ("OWNER"), and Resorts International, Inc., a
Delaware corporation ("MANAGER").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Owner owns and operates, directly and through
subsidiaries, certain businesses in the leisure, resort and
related industries on Paradise Island in The Bahamas and in the
State of Florida, as more particularly described on EXHIBIT "A"
attached hereto and made a part hereof (collectively, the
"BUSINESSES"); and
WHEREAS, Owner desires to engage and employ Manager to
perform, and Manager desires to perform (or cause to be
performed), certain management services respecting the operation
of the Businesses (collectively, the "SERVICES"); and
WHEREAS, the parties hereto are entering into this
Agreement in accordance with the Plan of Reorganization (the
"PLAN") confirmed by the bankruptcy court for the District of New
Jersey in the bankruptcy case styled In re: RESORTS
INTERNATIONAL, INC. and GRIFFIN RESORTS, INC., (Case Nos.
___________ and _________; Jointly Administered Under Case No.
_______________________________.
<PAGE>
NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained herein, and other good and
valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. MANAGEMENT. Owner hereby engages and employs
Manager to act as its exclusive agent to oversee the day-to-day
management of the business and affairs of the Businesses and to
provide the Services detailed in paragraph 2(c) hereof in
connection with the Businesses, and Manager hereby accepts such
engagement and employment, on and subject to the terms and
conditions hereinafter set forth.
2. RESPONSIBILITIES OF THE PARTIES.
(a) STANDARDS. With respect to the operation of the
Businesses, Manager shall manage and maintain the Businesses in a
manner reasonably consistent with the standards and procedures
exercised by other first class operators of businesses comparable
(in terms of type, class and quality) to the Businesses, in the
same or similar competitive markets as the Businesses. For
purposes hereof such management standard is hereinafter referred
to as the "MANAGEMENT STANDARD".
(b) NO INTERFERENCE. Owner hereby agrees that, except
to the extent otherwise provided in this Agreement,
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Manager shall have exclusive control of and responsibility for the
operation of the Businesses during the Term (as hereinafter defined).
Manager agrees that, in connection with its performance hereunder,
Manager shall not knowingly take any action which would cause
Owner to violate any material term of any of the loan indentures
described in SCHEDULE "1" attached hereto (collectively, the
"INDENTURES"; and the trustees thereunder, together with their
successors in trust and assigns, the "TRUSTEES"). Manager
further agrees that no action which Owner or any of the Trustees
shall take under and in accordance with the provisions of the
Indentures or the Security Instruments (as defined in the
Indentures, and as such agreements are in effect on the date
hereof) shall constitute a breach by Owner of this Agreement,
notwithstanding that the same may constitute an interference with
or disturbance of management within the contemplation of these
provisions; provided, however, that if and to the extent that
such action by Owner or the Trustees shall constitute an
interference with or disturbance of management within the
contemplation of these provisions, then Manager shall be relieved
of such management obligation hereunder so interfered with or
disturbed.
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(c) SERVICES. Manager covenants and agrees to
perform, or cause to be performed, consistent with the Management
Standard, the following Services in connection with the
Businesses:
(i) PERMITS. Manager, on behalf of and with the
cooperation of Owner, shall oversee the obtaining of and
maintenance of all necessary licenses, findings of suitability,
approvals and permits required by any law, rule or regulation of
any applicable national, state or local authorities having
jurisdiction over the Businesses (the "APPLICABLE GOVERNMENTAL
AUTHORITIES"), as may be required for the operation of the hotel
and casino Businesses as hotel and casino businesses including,
without limitation, gaming, liquor, bar, restaurant, sign and
hotel licenses and any permits required in connection with any
refurbishing or expansion of such Businesses, and for the
operation of the airline and other Businesses to permit the same
to be operated in a manner similar to their current operation.
Manager shall comply with the rules, regulations and orders of
the Applicable Governmental Authorities and with any conditions
set out in any such licenses and permits issued by any such
authorities and, with the cooperation of Owner, shall provide any
information, report or access to records
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reasonably required by the Applicable Governmental Authorities.
(ii) PERSONNEL. Except as otherwise expressly
provided herein, all personnel employed at the Businesses shall
be employees of Owner. Manager shall hire, terminate, advance,
demote, supervise, direct the work of and determine the
compensation and other benefits (except for the establishment of
any new employee pension and profit-sharing plans, which shall be
proposed by Manager and shall be subject to the approval of the
Board of Directors of Owner, not to be unreasonably withheld or
delayed, it being understood that any employee pension and
profit-sharing plans in existence as of the date hereof have been
approved by the Board of Directors of Owner) of all personnel
working at the Businesses, in all events consistent with the then
current Annual Budget (hereinafter defined); PROVIDED, HOWEVER,
that Manager will not enter into any employment contracts with
any employees for a period that exceeds the Initial Term (as
hereinafter defined) or the then current Term of this Agreement,
as the case may be, or any material employee contracts or benefit
arrangements (I.E., any such contract or arrangement involving an
annual compensation (including salary and bonuses) of more than
$125,000), unless first approved by
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the Board of Directors of Owner. Manager agrees that employees'
wages, benefits and conditions of employment (inclusive of any
discretionary employee bonuses granted from time to time by Manager)
shall be granted by Manager consistent with the Management Standard
and the then current Annual Budget. The parties hereto agree that
all wages, bonuses, compensation and benefits (including, without
limitation, severance and termination pay) of personnel at the
Businesses, and state and federal withholding, social security
and similar employee related taxes, are the exclusive obligation
of Owner and that Manager shall furnish to Owner such information
as shall be required by Owner in order for Owner to satisfy such
obligation.
Manager shall be responsible for the training of all
personnel and shall cooperate with all personnel in their efforts
to obtain and maintain key employee, casino employee or casino
hotel employee licenses issued by the Applicable Governmental
Authorities, if such are required, and Manager will hire only
persons with valid employee licenses, if under the rules and
regulations of the Applicable Governmental Authorities, such
employee licenses are a condition of employment.
The employees necessary to discharge Manager's
obligations and responsibilities hereunder (I.E. those
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providing management related services) shall be employees of Manager
(or its affiliates) ("MANAGER EMPLOYEES") and shall be hired, paid
and discharged by Manager in its reasonable discretion; provided,
however, that if Owner (exercising reasonable judgment, in good
faith) shall request Manager to terminate the management
responsibilities of any Manager Employee in respect of the
Businesses, then Manager shall effect such termination. Manager,
in its sole discretion, shall determine, consistent with the
Management Standard and the then current Annual Budget, the
number of Manager Employees necessary to discharge Manager's
obligations and responsibilities hereunder. The salaries and
other compensation arrangements of Manager Employees shall be the
responsibility of Manager and, except to the extent provided in
paragraph 7(a) below, Manager shall not have any right of
reimbursement from Owner in respect thereof.
(iii) SALES AND PROMOTIONS. Manager shall
formulate, coordinate and implement promotion, marketing and
sales programs, and shall cause the Businesses to participate in
promotional, marketing and sales campaigns and, as appropriate,
activities involving complimentary rooms and food and beverages
to bona fide travel agents, tourist officials and airlines
representatives, and to all other individuals and entities
whatsoever which, in
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Manager's reasonable discretion consistent with the Management Standard,
is deemed to be beneficial to the Businesses.
Credit facilities shall be granted by Manager in its
reasonable discretion and in accordance with the Management
Standard and the then current Annual Budget; provided, however,
that except for extending credit for the purchase of goods,
services, gaming or entertainment in the ordinary course of the
Businesses, and except as otherwise required or permitted herein,
Manager shall not be authorized to make any loans or extensions
of credit for or on behalf of Owner without the prior approval of
the Board of Directors of Owner.
(iv) BOOKS AND RECORDS. Consistent with the
Management Standard, Manager shall maintain, or cause to be
maintained, a complete accounting system for and on behalf of
Owner in connection with its management of the Businesses. The
books and records shall be kept in accordance with generally
accepted accounting principles consistently applied and in
accordance with the uniform system of accounts for hotels and
casinos and otherwise consistent with the system of accounts
required by GAAP for the applicable Business. Such books and
records shall be kept on the basis of a [________] fiscal year.
Books and
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<PAGE>
accounts shall be maintained at the Businesses or at the principal
office of Manager with a duplicate copy thereof at the respective
principal office of each of the Businesses. Owner shall have the
right and privilege of examining and copying said books and records,
including all daily reports prepared by Manager for internal use at
the Businesses, at reasonable times during regular business hours.
Manager shall comply with all requirements with respect to internal
controls and accounting and shall prepare and provide all required
reports under the rules and regulations of the Applicable Governmental
Authorities.
(v) AUDITS AND AUDITORS. Manager shall cooperate
with and assist Owner's auditors in connection with the audit of
the Businesses to be performed by such auditors as at the end of
each fiscal year of Owner occurring after the date hereof and at
least three (3) copies thereof shall be furnished to each party
as soon as available to permit Owner to meet any public reporting
requirements as may be applicable to it, and in no event later
than 90 days following the end of such fiscal year of Owner. Any
change in public auditors during the Term of this Agreement shall
be subject to the prior written approval of Owner.
9
<PAGE>
(vi) INTERIM STATEMENTS. On or before the 30th
day of each month, Manager shall furnish to Owner an operating
statement for the preceding calendar month for each of the
Businesses, detailing the gross revenues received from all
sources, opening and closing balances in each of the Management
Accounts (as hereinafter defined) (including account designation
and name of and location of depositaries), guest room occupancy
percentages, average room rates, and expenses incurred, including
estimated compensation and other amounts, if any, that may be due
or payable to Manager and including a report and computation of
sums due and payable to Owner. The gross revenue detail shall
include specific details concerning on all gaming revenues
(including total drop). Adjustments predicated on the annual
audited statements for the Businesses shall be made during the
first month following completion of the annual audit.
(vii) BANK ACCOUNTS.
(A) MANAGEMENT ACCOUNTS. Consistent with the
Management Standard, Manager shall establish such operating
accounts as Manager deems necessary or appropriate for the
operation of the Businesses. Manager, in the future, may
establish additional operating accounts with, or change existing
operating accounts to, one or more banks,
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<PAGE>
savings and loans, or money market mutual funds as it may designate.
Such accounts shall be styled "____________ -[type of account]" (e.g.
operations, payroll, etc.), and all such accounts shall provide
that Manager's designees shall be the only parties authorized to
draw upon such accounts (the "MANAGEMENT ACCOUNTS"). Manager
agrees that it will not use any Management Accounts as
compensating balances related to the extension of credit to
Manager or grant any right of set-off or bankers' lien on any
such accounts in respect of any amounts owed by Manager to such
depositaries. Manager shall seek to obtain reasonable rates of
interest for the Management Accounts, with due regard to the
financial stability of and services offered by the depositaries
with which such accounts are kept; provided, however, that,
Manager shall not be responsible for the amount, if any, of such
interest or the solvency of such depositories. All depositories
shall be subject to Owner's prior approval. The parties agree
that all funds held from time to time in the Management Accounts
are solely the property of Owner, and upon the expiration or
termination of this Agreement for any reason, Manager shall cease
to have authority, and shall cease, to withdraw funds from any of
the Management Accounts and, upon notice to the institution(s)
maintaining the Management Accounts (1)
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<PAGE>
Manager's designees shall be removed as signatories to the
Management Accounts, and (2) Owner's designees shall become
the sole signatories to the Management Accounts. Manager,
when such Management Accounts first are established, shall
use reasonable efforts to obtain the written confirmation of
the institution maintaining such accounts that the procedure
set forth in the previous sentence is agreed to, and shall be
implemented, by such institution, and in the absence of such
confirmation shall obtain Owner's written authorization to
maintain accounts with such institution. It is understood and
agreed that Manager may maintain petty cash funds at the Businesses
and make payments therefrom as the same are customarily made in
the hotel and casino business.
Following the furnishing to Owner of interim statements
pursuant to subparagraph 2(c)(vi) hereof, from time to time
Manager shall direct, and Owner may direct, that sums be
transferred from the Management Accounts to such accounts as may
be established by Owner (and with respect to which Manager shall
not have access) to the extent that such funds are in excess of
amounts that Manager, consistent with the Management Standard, or
Owner, deems reasonably necessary for the operation of the Businesses.
12
<PAGE>
(B) OPERATING CAPITAL. If Owner fails or delays
in furnishing funds to cover operating deficits, Owner shall
indemnify and hold harmless Manager with respect to claims of
third parties which may arise out of or relate to, directly or
indirectly, the Businesses and such failure or delay in funding
such deficits.
(viii) TAXES AND INSURANCE. Throughout the Term,
Owner shall furnish Manager with copies of all tax statements and
insurance policies and all financing documents (including notes
and mortgages) relating to the Businesses. Manager shall assist
Owner's accountants in the preparation of all federal and state
income and sales tax returns of Owner to the extent such returns
relate to the Businesses and in connection with any inquiries or
audits by Applicable Governmental Authorities. Manager will also
assist Owner in procuring and maintaining liability, property and
such other insurance in at least such amounts and covering such
risks as is currently maintained with respect to the Businesses
and in such additional amounts and covering such additional
risks, if any, as Manager or Owner reasonably determines is
necessary in connection with the operation of the Businesses,
with responsible and reputable insurance companies or
associations. All such insurance policies shall name Manager as
an additional insured and all
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<PAGE>
insurers thereon shall be required to issue to Manager and Owner
a certificate of insurance providing that such insurer shall deliver
to Manager and Owner reasonable prior notice of termination of any
such policy or the coverage provided thereby and, if and to the extent
the same shall be available without adversely affecting Owner's coverage
and without additional premiums or charges, waiving the rights of
such insurer, if any, of subrogation against Manager and Owner.
Without in any way diminishing Owner's responsibility hereunder,
Manager is hereby authorized and directed to pay from the
Management Accounts all taxes and fees including, without
limitation, withholding taxes and insurance premiums, and all
other items of expense relating to the ownership or operation of
the Businesses.
(ix) CONCESSIONS. Manager shall consummate, if in
Manager's reasonable discretion it deems the same to be in the
best interest of the Businesses, in the name of and for the
benefit of Owner, reasonable arms-length arrangements and leases
with concessionaires, licensees, tenants and other intended users
of any facilities related to the Businesses; provided, however,
that no concession, license or tenancy shall be granted for a
period beyond the Initial Term or the then current Term. Copies
of all such
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arrangements shall be furnished to Owner upon Owner's
request therefor.
(x) ANNUAL BUDGET. Manager shall be obligated to
furnish Owner for Owner's approval, an annual budget (the "ANNUAL
BUDGET"), at least thirty (30) days prior to the end of each
fiscal year of Owner. Each Annual Budget shall detail all costs,
expenses and reserves reasonably anticipated by Manager or
contemplated in this Agreement, for the next succeeding fiscal
year. Manager, without the prior approval of Owner, shall not
incur expenditures in excess of or other than those provided in
the Annual Budget as approved by Owner. The Annual Budget may be
amended from time to time with Owner's approval, which approval
may be granted or withheld by Owner in Owner's sole discretion.
If Owner shall not have approved an Annual Budget for a new
fiscal year, then the last approved Annual Budget shall be deemed
to be approved as the then current Annual Budget until expressly
superseded.
(xi) EXPENSES. All costs, expenses, funding or
operating deficits and working capital, taxes, insurance premiums
and other obligations and liabilities of Owner hereunder
("OWNER'S FINANCIAL OBLIGATIONS") shall be the sole and exclusive
financial responsibility and obligation of Owner, except for
those instances herein where it is
15
<PAGE>
expressly and specifically stated that such item shall be the
responsibility of Manager. It is understood that statements
herein indicating that Manager shall furnish, provide or otherwise
supply, present or contribute items or Services hereunder shall
not be interpreted or construed to mean that Manager is liable
or responsible to fund or pay for such items or services, except
in those instances mentioned above. Except for petty cash funds
which Manager maintains at the Businesses and except as may be
disbursed to Owner pursuant to subparagraph 2(c)(vii)(A) hereof,
all funds derived from the ownership and operation of the Businesses
shall be deposited and held in the Management Accounts until disbursed
to pay and discharge Owner's Financial Obligations as set forth below,
subject to the laws, rules and regulations of the Applicable
Governmental Authorities:
(A) With respect to Owner's Financial
Obligations, the same shall be funded and/or paid for as
follows: (1) first, from monies which may be available in
Management Accounts (subject to the provisions of
subparagraph 2(c)(vii)(A) hereof) maintained for the
respective Business giving rise to such Owner's Financial
Obligation; (2) second, if such Management Accounts do not
contain monies sufficient
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<PAGE>
to fund and/or pay such Owner's Financial Obligations, and
other Management Accounts have funds which exceed the requirements
of the Businesses for which such accounts are maintained, then
from such other Management Accounts, and (3) third, if Management
Accounts do not contain monies sufficient to fund and/or pay
Owner's Financial Obligations, then Owner shall be obligated to
fund and pay such deficits within thirty (30) days after written
request therefor by Manager or if Owner fails or delays in
furnishing funds to cover such deficits as aforesaid (by
unreasonable failure to approve or delay in approving
budgets in a timely manner or otherwise), (x) Owner shall
indemnify and hold harmless Manager with respect to any
liability to third parties however arising which may arise
out of or relate to, directly or indirectly, such failure or
delay in funding such deficits, and (y) Manager shall have
the option (but not the obligation) to terminate this
Agreement in accordance with subparagraph 8(b)(iii) hereof.
(B) It is understood and agreed that Manager
shall have no obligation or duty to fund and/or pay for any
of Owner's Financial Obligations from its own funds except
in those instances herein where it is
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expressly and specifically stated that such item shall be the
obligation of Manager.
(xii) MATERIAL AGREEMENTS. Manager, as exclusive
agent for Owner, is authorized to make and enter into any
agreements (including, without limitation, agreement with
Manager's affiliates, provided such agreements are upon "market"
terms no more onerous to Owner or favorable to such affiliates
than would be the case if Owner contracted with third parties
regarding the same) as are, in Manager's reasonable discretion,
necessary or desirable for the operation, supply and maintenance
of the Businesses, as required by this Agreement. Manager shall
be required to obtain the reasonable approval of the Board of
Directors of Owner before entering into any agreement not
contemplated by the approved Annual Budget involving (a) any
material structural repair or rehabilitation of the Businesses in
excess of $100,000; (b) any fundamental change in the character
of the Businesses; or (c) any other agreement (other than
employment contracts or benefit arrangements, the approval of
which shall be governed by the provisions of subparagraph
2(c)(ii)(A) hereof) involving the payment of more than $100,000
over the term thereof. Manager shall not enter into any
agreement involving the incurrence of debt obligations on behalf
of Owner or with
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respect to the operations of the Businesses, in excess of $100,000 in
any single case or in excess of $500,000 in the aggregate, over any
amounts therefor set forth in the approved Annual Budget, without
obtaining the prior approval of the Board of Directors of Owner.
(xiii) FUTURE CONSTRUCTION AND CAPITAL EXPENDITURES
BUDGET. Construction plans and specifications for the
refurbishment and modernization of the Businesses and the capital
expenditures budget for the cost thereof shall be prepared by or
at the direction of Manager and shall be submitted to the Board
of Directors of Owner for its approval. All additions and/or
material modifications to the Businesses subsequent to the date
hereof will be constructed by a general contractor with
hotel/casino construction experience chosen by Manager, subject
to the Owner's prior approval, to perform under Manager's
supervision and control. Unless expressly waived by Owner in
writing, Manager shall require that said general contractor post
completion, performance and payment bonds prior to the
commencement of any such construction. Owner shall pay all costs
associated with improvements, refurbishments, additions and
material modifications to the Businesses undertaken and completed
in accordance with the then current Annual Budget or any
supplemental budget
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therefor and title with respect thereto shall be in the name of Owner.
Proposals in connection with any other capital
expenditures to be incurred in connection with the operation of
the Businesses that are in excess of 2% in any single case or in
excess of 5% in the aggregate over any amounts therefor set forth
in the approved Annual Budget shall be submitted to the Board of
Directors of Owner for its approval.
(xiv) CAPITAL REPLACEMENT AND ADDITIONS. Owner and
Manager recognize the necessity of a program of replacement of
tangible personal property (other than construction materials
which shall be subject to subparagraph 2(c)(xiii) hereof) and the
need to cause the Businesses to continue to be furnished and
maintained in accordance with the standards described herein.
All costs of purchases of tangible personal property pursuant to
this paragraph 2(c)(xiv) shall be in accordance with the then
current Annual Budget or any supplemental budget therefor
approved by Owner and shall be paid by Owner within 30 days of
receipt of an invoice therefor from Manager, with title thereto
being taken in the name of Owner. Such purchases are subject to
Owner's prior approval to the extent that any single purchase
exceeds the line item therefor in the Annual
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Budget by more than $10,000 or by more than $100,000 in the aggregate
for all such purchases.
(xv) LEGAL MATTERS. Manager shall coordinate and
manage all legal matters and licensing activities with respect to
the Businesses, including, without limitation, the preparation of
required filings and reports to the Applicable Governmental
Authorities, including the Securities and Exchange Commission,
and Owner's stockholders and bondholders, which filings and
reports shall be submitted to Owner for review and approval prior
to filing or distribution. In connection with such legal
matters, Manager, as exclusive agent for and on behalf of Owner,
shall have the right to engage such legal counsel as it
determines, in its reasonable discretion, is necessary. Manager
shall obtain the reasonable approval of the Board of Directors of
Owner prior to the settlement of any material claim, action or
proceeding with respect to any of the Businesses or prior to
taking significant action in connection with any material
litigation matter (I.E., any settlement or litigation matter
involving a payment in excess of $100,000 net of insurance
proceeds in respect of such matter or which would substantially
affect the operations or assets of the Businesses).
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(xvi) ADDITIONAL CONSENTS AND APPROVALS. In acting
hereunder in all matters relative to this Agreement, and in
approving or consenting to any matter hereunder not otherwise
specifically provided for, Owner and Manager shall each act in
good faith and in a commercially reasonable manner.
3. INTELLECTUAL PROPERTY.
(a) ACKNOWLEDGMENTS. Manager (i) acknowledges Owner's
exclusive right, title and interest in and to the trademarks,
tradenames and service marks presently utilized, and hereafter
developed and utilized, in connection with the Businesses
(collectively, the "MARKS"); and (ii) agrees not to do knowingly
any act that will impair or affect the strength of the Marks, the
continuity of the registration of the Marks, Owner's ownership of
the Marks or the goodwill associated with the Marks. Manager
agrees to render whatever reasonable assistance Owner may
require, at the expense of Owner, in the procurement and
maintenance of registrations of the Marks in the United States
Patent and Trademark Office and in other jurisdictions.
(b) QUALITY OF SERVICES.
(i) Manager agrees that the services and goods
provided in connection with the Marks shall be consistent with
the Management Standard.
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(ii) Manager agrees that it will permit Owner
and/or its designated representatives reasonable access to the
Businesses, at the expense of Owner, to enable Owner to determine
whether the services and goods offered by Manager in connection
with the Marks conform to the Management Standard and this
Agreement.
(c) MARKING.
(i) Manager shall apply the appropriate legend or
registration symbol, as instructed by Owner in writing,
indicating the status of each of the Marks in connection with all
signs, tags, labels, containers, packaging, advertising,
promotional and display materials containing or referred to the
Marks.
(ii) Manager agrees to submit to Owner repre-
sentative samples of new advertising and promotional materials
and signage bearing the Marks at least fifteen (15) days before
their first publication or display. Owner shall be deemed to
have no objection to the material submitted if such objections
are not communicated to Manager in writing within ten (10)
business days after receipt of such material.
(d) INFRINGEMENT.
(i) If Manager receives information to the effect
that any third party is using the Marks, or any
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similar trademark, in connection with the operation of casinos,
hotels or other businesses similar to the Businesses, it shall
provide Owner with prompt written notice of such fact.
(ii) In the event of any infringement of the
Marks, Manager shall render all reasonable assistance to Owner,
at Owner's expense, and will join as a co-party with Owner at
Owner's reasonable request and expense in the event that Owner
desires to protect or proceed against such infringement.
However, Manager shall not incur any expense in connection with
any such proceedings without Owner's express written permission.
Any recovery in connection with such a proceeding shall be for
the sole benefit of Owner.
(e) ENFORCEMENT. The failure or delay of Owner in any
one or more instances to enforce one or more of the terms and
conditions of this Article 3, or to exercise any right or
privilege under this Article 3 or the waiver of any breach of the
terms and conditions contained in this Article 3, shall not be
construed thereafter as a waiver of any such terms, conditions,
rights or privileges and the same and all other terms,
conditions, rights or privileges under this Article 3 shall
continue and remain in full force and effect as though no such
failure or delay had occurred.
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(f) SOFTWARE. Manager acknowledges Owner's exclusive
right, title and interest in and to the proprietary (I.E. non
third party owned) software presently utilized, and hereafter
developed and utilized, in connection with the Businesses
(collectively, the "SOFTWARE"). Owner hereby grants to Manager a
non-exclusive license (the "SOFTWARE LICENSE") to use, exclusively
in connection with the operation of the Businesses and the
activities at any or all of the Businesses, the software listed
on SCHEDULE "2" hereto (the "SOFTWARE", which Manager hereby
warrants to be all of the software currently being used in
connection with, and which is material to the operation of, the
Businesses as currently being operated. No right is hereby
granted, and Manager specifically disclaims, any right to
decompile, disassemble, reverse engineer, copy (except for backup
purposes), transfer or sublicense (collectively, the "DISALLOWED
USES") the Software. Upon the occurrence of a Disallowed Use,
Owner shall provide Manager with notice thereof in writing and,
if such Disallowed Use is not cured within ten (10) days after
such notice, Owner shall have the right to terminate the Software
License immediately. If Manager determines that modifications or
changes to the Software are necessary or desirable, Manager shall
advise Owner in writing with
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respect thereto. Any such modifications or changes shall be subject
to Owner's prior approval, which approval shall not be unreasonably
withheld or delayed beyond thirty (30) days after its submission to
Owner. Such modifications or changes shall be made by Manager, within a
reasonable period of time, and Owner shall retain all right,
title and interest thereto. Owner makes no warranty of
merchantability or fitness for a particular purpose or for any
purpose as to the Software.
4. REPRESENTATIONS AND WARRANTIES OF MANAGER. Manager
represents and warrants to Owner as follows:
(a) ORGANIZATION. Manager is a corporation duly
organized, validly existing and in good standing under the law of
the State of Delaware, and has the full corporate power and authority to
enter into and perform its obligations under this Agreement.
(b) AUTHORIZATION OF AGREEMENT. The execution,
delivery and performance of this Agreement has been duly
authorized and approved by all necessary corporate action on the
part of Manager, and this Agreement has been duly executed and
delivered by Manager and constitutes the legal, valid and binding
obligation of Manager, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance,
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reorganization, moratorium and similar laws affecting creditors' rights
and remedies generally and subject, as to enforceability, to general
principles of equity. The execution, delivery and performance of this
Agreement by Manager does not and will not conflict with any law, rule or
regulation of the Applicable Governmental Authorities.
(c) LITIGATION. There are no judicial or admin
istrative actions, proceedings or investigations pending or, to
the best of Manager's knowledge, threatened against Manager that
question the validity of this Agreement or any action taken or to
be taken by Manager in connection with this Agreement and that,
if adversely determined, would have a material adverse effect
upon Manager's ability to perform its obligations under this
Agreement.
(d) CONSENTS AND APPROVALS. No authorization,
consent, approval, license, finding of suitability, exemption
from or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, including, without limitation, the
Applicable Governmental Authorities, is or will be necessary as a
condition to the valid execution, delivery or performance by
Manager of this Agreement, other than such authorizations,
consents, approvals, licenses, findings of suitability,
exemptions, filings or
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<PAGE>
registrations as have been obtained and are in full force and effect.
5. REPRESENTATIONS AND WARRANTIES OF OWNER. Owner
represents and warrants to Manager as follows:
(a) OWNER'S ORGANIZATION. Owner is a corporation duly
organized, validly existing and in good standing under the laws of
The Bahamas and has the full corporate power and authority to enter
into and perform its obligations under this Agreement.
(b) AUTHORIZATION OF AGREEMENT. The execution,
delivery and performance of this Agreement has been duly
authorized and approved by all necessary corporate action on the
part of Owner, and this Agreement has been duly executed and
delivered by Owner and constitutes the legal, valid and binding
obligation of Owner, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity.
The execution, delivery and performance of this Agreement by
Owner does not and will not conflict with any law, rule or
regulation of the Applicable Governmental Authorities.
28
<PAGE>
(c) CONSENTS AND APPROVALS. No authorization,
consent, approval, license, finding of suitability, exemption
from or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, including, without limitation, the
Applicable Governmental Authorities, is or will be necessary as a
condition to the valid execution, delivery or performance by
Owner of this Agreement, other than such authorizations,
consents, approvals, licenses, findings of suitability,
exemptions, filings or registrations as have been obtained and
are in full force and effect.
6. NO JOINT VENTURE. It is expressly understood and
agreed that Manager is being employed by Owner as an independent
contractor to provide, or cause to be provided, supervisory
management and consulting services in respect of the Businesses
and not as a partner or joint venturer of Owner. All purchases
and acquisitions of every kind and character by Manager on behalf
of Owner shall be property of Owner and all debts and liabilities
incurred by Manager within the scope of the authority granted and
permitted hereunder in the course of its management and operation
of the Businesses shall be debts and liabilities of Owner only,
and Manager shall not be liable therefor for its own
29
<PAGE>
account, except as specifically stated to the contrary herein.
7. COMPENSATION.
(a) During the Initial Term, as compensation for the
Services to be rendered by Manager hereunder, Owner shall pay to
Manager an annual fee (the "MANAGEMENT FEE") equal to the sum of
(x) 3% of the gross revenue from the Business for such period
(the "PERCENTAGE FEE"), plus (y) Manager's reasonable costs
incurred during such period in connection with the rendering of
the Management Services (including out of pocket costs and
employee wages and benefits) ("COSTS"). For purposes of this
Section 7, the term "gross revenue" shall mean the aggregate
gross revenues of Owner from the conduct of the Business,
computed in accordance with United States generally accepted
accounting principles consistently applied, including those set
forth in the AICPA Accounting and Auditing Guide for Casinos.
(b) Commencing on the first anniversary of the date
hereof, if Manager shall continue to provide the Management
Services beyond the Initial Term, then Owner shall pay to Manager
a management fee for such services (the "ANNUAL FEE") shall be an
amount equal to (x) 3% of gross revenue from the Businesses (the
"ANNUAL PERCENTAGE FEE") for such period, plus (y) Costs for such
period.
30
<PAGE>
(c) The Percentage Fee and the Annual Percentage Fee
shall be payable in twelve equal monthly installments in arrears
on the last business day of each calendar month during the
balance of the term hereof, based upon an estimate utilizing
gross revenue for the Initial Term, with an appropriate adjustment
made within 90 days after the expiration of the then
current annual period. Costs shall be reimbursed monthly.
8. TERM AND TERMINATION EVENTS.
(a) The initial term of this Agreement (the "INITIAL
TERM"), shall commence on the date hereof (the "COMMENCEMENT
DATE"), and shall terminate on the day immediately preceding the
first (1st) anniversary of the Commencement Date. Thereafter,
this Agreement shall be automatically renewed from year-to-year
unless notice of intent not to renew is delivered by either party
to this Agreement to the other party at least six (6) months
prior to the expiration of the Initial Term or any subsequent
term (the Initial Period, and each one year period thereafter, as
the case may be, being referred to as the then current "TERM").
(b) This Agreement may be terminated under any of the
following circumstances (a "TERMINATION"):
31
<PAGE>
(i) at any time upon the mutual written consent of
Owner and Manager;
(ii) automatically, as to any of the Businesses
upon a sale of such Business;
(iii) by Manager ninety (90) days after the
delivery of a notice by Manager to Owner and the Trustees
following a breach by Owner of a material term hereof and Owner's
failure to cure such breach within such 90 day period; provided,
however, that Manager shall not have the right to terminate this
Agreement if such breach is the direct result of a wrongful act
or failure to act by Manager or any of its affiliates; or
(iv) by Owner immediately after the delivery of a
notice of Termination by Owner to Manager in the event that Owner
reasonably determines that there is cause for such termination,
which, for purposes hereof, shall include a determination that
Manager, in the exercise of its duties hereunder and pursuant to
the terms hereof, committed fraud or finds that Manager has com-
mitted willful misconduct or gross negligence;
(v) by Owner, upon thirty (30) days prior written
notice to Manager, for any reason whatsoever;
(vi) Notwithstanding anything to the contrary
contained in this paragraph 8(b), the Trustees may
32
<PAGE>
assign Owner's rights and obligations under this Agreement in respect
of any of the Businesses, to a purchaser of such Business following the
occurrence of an Event of Default under any of the Indentures in
accordance with the terms of the Security Instruments, subject to
the prior written consent of Manager, which consent shall not be
unreasonably withheld or delayed, in which case this Agreement
shall not terminate but shall continue in full force and effect
in all respects.
(c) If Manager continues to perform the Services
pursuant to this Agreement during any period following the
delivery of a termination notice as provided in this paragraph
8(b) and prior to the actual Termination hereof, Manager shall
continue to earn the compensation called for in this Agreement
during such period. In no event shall Owner, the Trustees, the
holders of the Notes or their successors or assigns be liable to
Manager or for any amounts owed by or damages recoverable against
Owner hereunder and Manager's recourse for the same shall be
limited solely to a recovery from and against the assets of Owner
comprising the Businesses.
(d) Upon a Termination of this Agreement, the parties
hereto shall account to each other with respect to all
uncompleted business and Manager shall promptly deliver
33
<PAGE>
to Owner any books, records, instruments or other documentation relating
to the Businesses and Owner in Manager's possession or under
Manager's control. The provisions of Articles 3, 7, 12 and 13
hereof shall survive the Termination of this Agreement.
9. TERMINATION FEE. In the event that this Agreement
is terminated pursuant to paragraph 8(b) hereof, a termination
fee (the "TERMINATION FEE") shall be payable by Owner to Manager
as follows:
(a) TERMINATION BY MUTUAL CONSENT OR FOR MISCONDUCT.
In the event that this Agreement is terminated in accordance with
subparagraphs 8(b)(i) or 8(b)(iv) hereof, no Termination Fee
shall be payable by Owner to Manager.
(b) TERMINATION UPON A SALE OF THE BUSINESSES. In the
event that this Agreement is terminated upon a sale of any of the
Businesses, other than a foreclosure sale following an Event of
Default under any of the Indentures, a Termination Fee equal to
(x) $1,000,000 plus (y) Costs theretofore incurred and remaining
unreimbursed, shall be payable by Owner to Manager immediately
upon such Termination.
(c) TERMINATION UPON A BREACH BY OWNER OR AT OWNER'S
DISCRETION WITHOUT CAUSE. In the event this Agreement is
terminated in accordance with subparagraphs
34
<PAGE>
8(b)(iii) or 8(b)(v) hereof, a Termination Fee equal to (x) $1,000,000
plus (y) Costs theretofore incurred and remaining unreimbursed, shall
be payable by Owner to Manager immediately upon such Termination,
subject to the condition that if this Agreement is terminated in
accordance with subparagraph 8(b)(iii) hereof, at the request of the
Trustees, Manager shall continue to perform its obligations
hereunder for a period of up to one hundred fifty (150) days
following such Termination provided Owner continues to pay to
Manager the monthly installments of the Percentage Fee or the
Annual Percentage Fee and reimburse Costs on a timely basis.
10. COOPERATION UPON TERMINATION. Upon the non
-renewal or termination of this Agreement, Manager shall cause
its affiliates to release and waive all rights, claims, interests
and relationships they may have pursuant to any contract,
principle or partnership law or otherwise, to control, retain, or
discharge any matter of management with respect to the
Businesses, or any other benefit thereunder or in connection
therewith. Manager shall peacefully vacate and surrender possession
to Owner, and shall fully cooperate in the prompt and efficient transfer
of the management of the Businesses from Manager to Owner or a person or
entity acceptable to Owner. In connection with
35
<PAGE>
the foregoing, Manager shall act in good faith to avoid any breach
or disruption of any contract involving the Businesses or the lapse
of any insurance policy covering or pertaining to the Businesses.
11. TRANSFER OF PERMITS AND GOVERNMENTAL LICENSES UPON
TERMINATION. To the extent permissible under applicable law,
upon termination or expiration of this Agreement, Manager shall
cooperate in the transfer of any and all permits, licenses or
similar authorizations issued by any governmental body relating
to the operation or management of any or all of the Businesses to
the new manager.
12. EXCULPATION AND INDEMNIFICATION.
(a) (i) Manager, its affiliates and each of their
respective officers, partners, directors, employees and agents
shall indemnify and hold harmless Owner and any person who has
acquired an interest in Owner, against and from all claims,
demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, losses sustained or liabilities
incurred, including monetary damages, as a result of (x) the
willful misconduct or gross negligence of Manager, its affiliates
and their respective officers, partners, directors, employees or
agents, or (y) a
36
<PAGE>
breach by Manager of or default by Manager under this Agreement.
(ii) In the event that any legal proceedings
shall be instituted or any claim or demand shall be asserted by
any person in respect of which payment may be sought by Owner
under the provisions of this paragraph 12(a), Owner promptly
shall cause written notice of the assertion of any such
proceeding or claim of which it has actual knowledge to be
forwarded to Manager. Upon receipt of such notice, Manager shall
have the right, at its option and at its own expense, to be
represented by counsel of its choice, and to participate in any
such proceeding with counsel of its choice; PROVIDED, HOWEVER,
that no settlement shall be made without prior written consent of
the Owner. The indemnitee and Owner agree to cooperate fully
with each other in connection with the defense, negotiation or
settlement of any such legal proceeding, claim or demand.
(b) (i) Subject to the provisions of subparagraph
12(b)(ii) hereof, Owner shall indemnify and hold harmless
Manager, its affiliates and any of their respective officers,
partners, directors, employees and agents, from and against any
and all losses, claims, damages, liabilities, expenses (including
reasonable legal fees and expenses), judgments, fines, set-
tlements and other
37
<PAGE>
amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, in
which any of them may be involved, or threatened to be involved,
as a party or otherwise, which relates to, or arises out of (x)
the willful misconduct or gross negligence of Owner, its employees
or representatives, (y) a breach by Owner of or default by Owner
under this Agreement, or (z) the performance of any duties and services
for or on behalf of Owner pursuant to the terms of this Agreement,
regardless of whether the such indemnitee continues to be Manager, an
affiliate thereof or an officer, partner, director, employee or agent of
Manager or its affiliates at the time any such liability or
expense is paid or incurred, and regardless of whether the
liability or expense accrued at or relates to, in whole or in
part, any time before, on or after the date hereof.
(ii) An indemnitee shall not be entitled to
indemnification under this paragraph 12(b) with respect to any
claim, issue or matter in respect of which it has committed
fraud, willful breach of this Agreement, gross negligence or willful or
wanton misconduct.
(iii) In the event that any legal proceedings shall
be instituted or any claim or demand shall be asserted by any
person in respect of which payment may be sought by
38
<PAGE>
an indemnitee under the provisions of this paragraph 12(b), the
indemnitee promptly shall cause written notice of the assertion
of any such proceeding or claim of which it has actual knowledge to be
forwarded to Owner. Upon receipt of such notice, Owner shall
have the right, at its option and at its own expense, to be
represented by counsel of its choice, which must be reasonably
satisfactory to the indemnitee, and to defend against, negotiate,
settle or otherwise deal with any proceeding, claim or demand
which relates to any loss, liability, damage or deficiency
indemnified against hereunder; PROVIDED, HOWEVER, that no
settlement shall be made without prior written consent of the
indemnitee, not to be unreasonably withheld, conditioned or
delayed; and PROVIDED FURTHER, that the indemnitee may
participate in any such proceeding with counsel of its choice and
at its expense. The indemnitee and Owner agree to cooperate
fully with each other in connection with the defense, negotiation
or settlement of any such legal proceeding, claim or demand.
(iv) The indemnification provided by this
paragraph 12(b) shall be in addition to any other rights to which
an indemnitee may be entitled under any agreement, bylaw or vote
of the Board of Directors of Owner or as a matter of law or
otherwise, both as to action in the
39
<PAGE>
indemnitee's capacity as Manager, an affiliate thereof or an officer,
partner, director, employee or agent of Manager or its affiliates
and as to action in any other capacity, shall continue as to an
indemnitee who has ceased to serve in such capacity and shall inure
to the benefit of the heirs, successors, assigns and administrators of
an indemnitee.
(v) The provisions of this Article 12 shall
survive the termination of this Agreement.
13. GOVERNMENTAL LAWS. Notwithstanding anything to
the contrary contained in this Agreement, this Agreement shall be
deemed to include all provisions required by the casino and
gaming authorities of The Commonwealth of The Bahamas and the
regulations promulgated thereunder (the "ACT"), and shall be
conditioned upon the approval of the Applicable Governmental
Authorities. To the extent that any term or provision contained
in this Agreement shall be inconsistent with the Act, the
provisions of the Act shall govern. All provisions of the Act,
to the extent required by law to be included in this Agreement,
are incorporated herein by reference as if fully restated in this
Agreement.
14. NOTICES. All notices, demands, approvals,
requests or other communications which may be or are required to
be given, served or sent by any party to the other parties, shall
be in writing and shall be delivered
40
<PAGE>
personally or by certified mail, return receipt requested, to the
other party's address as follows:
if to Owner to:
c/o __________________________
______________________________
______________________________
Attention: __________________
if to Manager to:
______________________________
______________________________
______________________________
Attention: __________________
Any party may change the name and/or address by written
notice given in each instance to the other parties. Notices shall
be deemed given when delivered personally, or, if sent by
certified mail, the earlier of (a) three (3) business days after
mailing or (b) when received.
15. SEVERABILITY. If any term or provision of this
Agreement or the application thereof to any person or
circumstance shall be invalid or unenforceable, to any extent,
the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be
valid and be enforced to the fullest extent permitted by law.
41
<PAGE>
16. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with the laws of the State of New York
without regard to its conflict of laws provisions.
17. ASSIGNMENT. This Agreement and/or right to
receive payments hereunder shall not be assigned by Owner or
Manager without the prior written approval of the other in each
instance; PROVIDED, HOWEVER, that Owner may assign its rights
under this Agreement to a purchaser of the Businesses and the
Trustees may assign the Owner's rights under this Agreement to a
purchaser of the Businesses in a foreclosure sale following an
Event of Default under any of the Indentures as provided in the
Security Instruments.
18. SUCCESSORS AND ASSIGNS. Subject to the provisions
of Section 17 hereof, all of the covenants, conditions and
obligations contained in this Agreement shall be binding upon and
inure to the benefit of the respective successors and permitted
assigns of Owner and Manager to the same extent as if each such
successor and permitted assign were in each case named as a party
to this Agreement.
19. ENTIRE AGREEMENT; AMENDMENT. This Agreement
constitutes the sole understanding of the parties with respect to
the matters provided for herein and supersedes any previous
agreements and understandings between the parties
42
<PAGE>
with respect to the subject matter hereof. No amendment, modification
or alteration of the terms or provisions of this Agreement shall be
binding unless the same shall be in writing and duly executed by
the parties hereto.
20. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be
deemed to be an original and all of which shall constitute the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Management Agreement to be duly executed by an authorized
representative thereof, all as of the day and year first above
written.
P.I. RESORTS LIMITED
By: _____________________
Name:
Title:
RESORTS INTERNATIONAL, INC.
By: _____________________
Name:
Title:
43
<PAGE>
EXHIBIT "A"
For purposes hereof the "Businesses" shall mean all of the
operations and properties conducted and owned by RII and its
affiliates relating primarily to Paradise Island, the Bahamas,
including, without limitation, the Paradise Island Resort &
Casino, Ocean Club Golf & Tennis Resort, Paradise Beach Resort,
Paradise Island Airlines, a short take-off and landing airport
facility at the southeast corner of Paradise Island and
approximately 219 acres of undeveloped land on Paradise Island
(including approximately 120 acres of waterfront property) not
used in the operation of the resorts on Paradise Island,
approximately 1675 acres of undeveloped and partially developed
land on Grand Bahama Island, approximately 561 acres on Andros
Island and other similarly related assets not currently used
actively in the Paradise Island operations.
44
<PAGE>
SCHEDULE "1"
INDENTURES
----------
45
<PAGE>
[GD&C Draft -- 12/30/93]
[NA932010.156]
--------------------------------------------
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
Issuer,
RESORTS INTERNATIONAL HOTEL, INC.,
Guarantor,
and
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
Trustee,
--------------------------------------------
I N D E N T U R E
Dated as of [ ], 1994
--------------------------------------------
11% MORTGAGE NOTES DUE 2003
--------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
Section of Trust Indenture Act of 1939 Section of Indenture
- -------------------------------------- --------------------
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . .8.08; 8.09
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .8.09
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . .8.14(b)
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.08
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.01; 9.02(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(c)
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(b)
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . .1.06
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . .1.06
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . .9.04(c); 12.07(i)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.06
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.14
316(a)(l)(A) . . . . . . . . . . . . . . . . . . . . . . . .7.12(b)
(a)(l)(B) . . . . . . . . . . . . . . . . . . . . . . . .7.13
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.08
317(a)(l). . . . . . . . . . . . . . . . . . . . . . . . . .7.03
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .7.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .12.03
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.07
- -------------------------
Note: This Cross-Reference Table shall not be deemed, for any
purpose, to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . 16
Section 1.03. Notices, etc., to Trustee, RIH, the Company, Casino
Control Commission and Director of Gaming
Enforcement.. . . . . . . . . . . . . . . . . . . . 18
Section 1.04. Notices to Noteholders; Waiver. . . . . . . . . . . 19
Section 1.05. Form and Contents of Documents Delivered to
Trustee.. . . . . . . . . . . . . . . . . . . . . . 20
Section 1.06. Compliance Certificates and Opinions. . . . . . . . 21
Section 1.07. Conflict with Trust Indenture Act.. . . . . . . . . 21
Section 1.08. Effect of Headings and Table of Contents. . . . . . 22
Section 1.09. Successors and Assigns. . . . . . . . . . . . . . . 22
Section 1.10. Separability Clause.. . . . . . . . . . . . . . . . 22
Section 1.11. Benefits of Indenture.. . . . . . . . . . . . . . . 22
Section 1.12. Governing Law.. . . . . . . . . . . . . . . . . . . 22
Section 1.13. Casino Control Act. . . . . . . . . . . . . . . . . 22
Section 1.14. General Application.. . . . . . . . . . . . . . . . 22
(i)
<PAGE>
Page
----
ARTICLE TWO
NOTE FORM
Section 2.01. Form Generally. . . . . . . . . . . . . . . . . . . 23
Section 2.02. Form of Notes.. . . . . . . . . . . . . . . . . . . 24
Section 2.03. Form of Trustee's Certificate of Authentication.. . 28
Section 2.04. Form of the Guaranty. . . . . . . . . . . . . . . . 29
ARTICLE THREE
THE NOTES
Section 3.01. General Title.. . . . . . . . . . . . . . . . . . . 29
Section 3.02. Form and Denominations. . . . . . . . . . . . . . . 30
Section 3.03. Execution, Authentication, Delivery and
Dating. . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.04. Temporary Notes.. . . . . . . . . . . . . . . . . . 30
Section 3.05. Registration, Transfer and Exchange.. . . . . . . . 31
Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes.. . . . 32
Section 3.07. Payment of Interest on Notes; Interest Rights
Preserved.. . . . . . . . . . . . . . . . . . . . . 33
Section 3.08. Persons Deemed Owners.. . . . . . . . . . . . . . . 34
Section 3.09. Cancellation. . . . . . . . . . . . . . . . . . . . 34
Section 3.10. Term and Form.. . . . . . . . . . . . . . . . . . . 35
Section 3.11. Exchangeability.. . . . . . . . . . . . . . . . . . 35
Section 3.12. Redemption. . . . . . . . . . . . . . . . . . . . . 35
Section 3.13. Authentication and Delivery of Original
Issue.. . . . . . . . . . . . . . . . . . . . . . . 36
(ii)
<PAGE>
Page
----
ARTICLE FOUR
GUARANTY
Section 4.01. Guaranty. . . . . . . . . . . . . . . . . . . . . . 36
Section 4.02. Execution and Delivery of Guaranty. . . . . . . . . 37
Section 4.03 Mortgage Securing Guaranty. . . . . . . . . . . . . 38
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. Payment of Indebtedness; Satisfaction and
Discharge of Indenture. . . . . . . . . . . . . . . 39
Section 5.02. Application of Deposited Money. . . . . . . . . . . 40
Section 5.03. Repayment to the Company. . . . . . . . . . . . . . 40
ARTICLE SIX
SECURITY
Section 6.01. Assignment Agreement. . . . . . . . . . . . . . . . 41
Section 6.02. Recording, Etc. . . . . . . . . . . . . . . . . . . 42
Section 6.03. Custody of Mortgage Documents.. . . . . . . . . . . 43
Section 6.04. Suits to Protect the Trust Estate and
Mortgage Documents. . . . . . . . . . . . . . . . . 44
ARTICLE SEVEN
REMEDIES
Section 7.01. Events of Default.. . . . . . . . . . . . . . . . . 44
Section 7.02. Acceleration of Maturity; Rescission and
Annulment.. . . . . . . . . . . . . . . . . . . . . 48
Section 7.03. Covenant to Pay Trustee Amounts Due on Notes
and Right of Trustee to Judgment. . . . . . . . . . 49
Section 7.04. Trustee May File Proofs of Claim. . . . . . . . . . 50
Section 7.05. Trustee May Enforce Claims Without Possession
of Notes. . . . . . . . . . . . . . . . . . . . . . 51
(iii)
<PAGE>
Page
----
Section 7.06. Application of Money Collected. . . . . . . . . . . 51
Section 7.07. Limitation on Suits.. . . . . . . . . . . . . . . . 52
Section 7.08. Unconditional Right of Noteholders to Receive
Principal and Interest. . . . . . . . . . . . . . . 53
Section 7.09. Restoration of Rights and Remedies. . . . . . . . . 53
Section 7.10. Rights and Remedies Cumulative. . . . . . . . . . . 53
Section 7.11. Delay or Omission Not Waiver. . . . . . . . . . . . 54
Section 7.12. Other Rights. . . . . . . . . . . . . . . . . . . . 54
Section 7.13. Waiver of Past Defaults.. . . . . . . . . . . . . . 54
Section 7.14. Undertaking for Costs.. . . . . . . . . . . . . . . 55
Section 7.15. Enforcement.. . . . . . . . . . . . . . . . . . . . 55
Section 7.16. Management of Casino-Hotel. . . . . . . . . . . . . 56
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. Certain Duties and Responsibilities. . . . . . . 56
Section 8.02. Notice of Defaults.. . . . . . . . . . . . . . . 58
Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . 58
Section 8.04. Not Responsible for Recitals or Issuance of
Notes or Application of Proceeds.. . . . . . . . 60
Section 8.05. May Hold Notes.. . . . . . . . . . . . . . . . . 60
Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . 60
Section 8.07. Compensation and Reimbursement.. . . . . . . . . 60
Section 8.08. Disqualification; Conflicting Interests. . . . . 61
Section 8.09. Corporate Trustee Required; Eligibility. . . . . 61
(iv)
<PAGE>
Page
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Section 8.10. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . 62
Section 8.11. Acceptance of Appointment by Successor.. . . . . 64
Section 8.12. Merger, Conversion, Consolidation or
Succession to Business.. . . . . . . . . . . . . 64
Section 8.13. Preferential Collection of Claims Against
Company. . . . . . . . . . . . . . . . . . . . . 64
Section 8.14. Co-trustees and Separate Trustees. . . . . . . . 65
Section 8.15. Appointment of Authenticating Agent. . . . . . . 66
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 9.01. Company to Furnish Trustee Semi-Annual Lists
of Noteholders.. . . . . . . . . . . . . . . . . 67
Section 9.02. Preservation of Information; Communications
to Noteholders.. . . . . . . . . . . . . . . . . 68
Section 9.03. Reports by Trustee.. . . . . . . . . . . . . . . 68
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 10.01. Consolidation, Merger, Conveyance or Transfer
Only on Certain Terms. . . . . . . . . . . . . . 70
Section 10.02. Successor Entity Substituted.. . . . . . . . . . 72
Section 10.03. Successor Management of Casino-Hotel.. . . . . . 73
Section 10.04. Limitation on Sales of Trust Estate. . . . . . . 73
Section 10.05 RIH Sale . . . . . . . . . . . . . . . . . . . . 73
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. Without Consent of Noteholders.. . . . . . . . . 73
Section 11.02. With Consent of Noteholders. . . . . . . . . . . 74
(v)
<PAGE>
Page
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Section 11.03. Execution of Amendments and Supplements. . . . . 76
Section 11.04. Effect of Amendment or Supplement. . . . . . . . 76
Section 11.05. Conformity with Trust Indenture Act. . . . . . . 76
Section 11.06. Reference in Notes to Amendment or Supplement. . 76
ARTICLE TWELVE
COVENANTS
Section 12.01. Payment of Principal and Interest. . . . . . . . 77
Section 12.02. Maintenance of Office or Agency. . . . . . . . . 77
Section 12.03. Money for Security Payments to Be Held in Trust. 78
Section 12.04. Corporate Existence. . . . . . . . . . . . . . . 79
Section 12.05. To Keep Books; Inspection by Trustee.. . . . . . 80
Section 12.06. Reports and Compliance Certificates. . . . . . . 80
Section 12.07. Limitations and Dividends and Restricted
Payments.. . . . . . . . . . . . . . . . . . . . 82
Section 12.08. Limitations on Additional Indebtedness and
Issuance of Notes. . . . . . . . . . . . . . . . 83
Section 12.09. Limitations on Repayment of Subordinated
Indebtedness.. . . . . . . . . . . . . . . . . . 84
Section 12.10. Limitation on Certain Transactions.. . . . . . . 85
Section 12.11. Restriction of Activities. . . . . . . . . . . . 85
Section 12.12. Limitation on Subsidiaries Consolidated Group. . 86
Section 12.13. Limitations on Liens.. . . . . . . . . . . . . . 86
Section 12.14. Compliance with Laws.. . . . . . . . . . . . . . 87
Section 12.15. Payment of Taxes and Other Claims. . . . . . . . 87
Section 12.16. Maintenance of Properties. . . . . . . . . . . . 87
(vi)
<PAGE>
Page
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Section 12.17. Insurance. . . . . . . . . . . . . . . . . . . . 88
Section 12.18. Waiver of Stay, Extension or Usury Laws. . . . . 88
Section 12.19. Appointment to Fill a Vacancy in Office of
Trustee. . . . . . . . . . . . . . . . . . . . . 89
Section 12.20. Validity of Liens. . . . . . . . . . . . . . . . 89
Section 12.21. Transactions with Stockholders and Affiliates. . 89
ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. General Applicability of Article.. . . . . . . . 90
Section 13.02. Election to Redeem; Notice to Trustee. . . . . . 90
Section 13.03. Selection by Trustee of Notes to Be Redeemed.. . 90
Section 13.04. Notice of Redemption.. . . . . . . . . . . . . . 90
Section 13.05. Deposit of Redemption Price. . . . . . . . . . . 91
Section 13.06. Notes Payable on Redemption Date.. . . . . . . . 91
Section 13.07. Notes Redeemed in Part.. . . . . . . . . . . . . 92
Section 13.08. Redemption Pursuant to Casino Control Act. . . . 92
ARTICLE FOURTEEN
DEFEASANCE
Section 14.01. Discharge of the Indenture and Defeasance of
the Securities.. . . . . . . . . . . . . . . . . 93
Section 14.02. Application of Deposited Money.. . . . . . . . . 94
Section 14.03. Repayment to the Company.. . . . . . . . . . . . 94
(vii)
<PAGE>
TABLE OF EXHIBITS
-----------------
Exhibits Document
-------- --------
Exhibit A RIH Promissory Note
Exhibit B Assignment Agreement from Resorts
International Hotel Financing, Inc.
Exhibit C Subordination Provisions
Exhibit D Mortgage securing RIH Promissory Note
between Resorts International Hotel, Inc. and
Resorts International Hotel Financing, Inc.
Exhibit E Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
Exhibit F Mortgage securing Guaranty of Mortgage
Notes between Resorts International Hotel,
Inc. and State Street Bank and Trust Company
of Connecticut, National Association, as Trustee
Exhibit G Intercreditor Agreement Terms
<PAGE>
INDENTURE
THIS INDENTURE dated as of [ ], 1994, among
Resorts International Hotel Financing, Inc., a Delaware corporation (the
"Company"), Resorts International Hotel, Inc., a New Jersey corporation ("RIH"),
and State Street Bank and Trust Company of Connecticut, National Association, a
national banking association, as trustee (together with its successors as such
trustee, the "Trustee").
PRELIMINARY STATEMENT
The capitalized terms used in this Indenture which are not otherwise
defined herein have the meanings set forth in Article I.
The Company has duly authorized the creation, execution and
delivery of its 11% Mortgage Notes due 2003 (the "Notes"), issuable in
accordance with the terms hereof, and RIH has duly authorized the guaranty of
the Company's obligations under this Indenture, and, to secure the Notes and to
provide therefor, each of the Company and RIH has duly authorized the execution
and delivery of this Indenture.
All things have been done which are necessary to make the Notes,
when executed by the Company and authenticated and delivered by the
Trustee hereunder and duly issued by the Company, the valid obligations of the
Company, and to constitute this Indenture a valid agreement of the Company and
RIH, in accordance with the terms of the Notes and this Indenture.
THEREFORE, for and in consideration of the premises and the
purchase or acceptance of the Notes by the Holders thereof, RIH and the Company
do hereby covenant and agree to and with the Trustee, for the Ratable Benefit of
all Holders of the Notes thereto appertaining, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
<PAGE>
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as
well as the singular;
(b) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein,
have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have
the meanings assigned to them, and all computations herein
provided for shall be made, in accordance with GAAP consistently
applied; and
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision.
"ACCOUNTANT" means a Person engaged in the practice of accounting
who (except as otherwise expressly provided in this Indenture) may
be employed by or affiliated with the Company or RIH.
"ACT" when used with respect to any Noteholder or Noteholders has
the meaning stated in Section 1.02(a).
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, and, with respect to any specified natural
Person, any other Person having a relationship by blood, marriage or adoption
not more remote than first cousin with such specified Person. For purposes of
this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be
required under the TIA, the term "Affiliate" shall not include, with respect to
the Company or RIH, any of Fidelity Management & Research Company,
TCW Special Credits or funds or accounts managed or advised by either of them.
"AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured
by an After-Acquired Fee Mortgage.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section
2.07 of the Mortgage.
"ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of
the date hereof, providing
<PAGE>
for the assignment of the RIH Promissory Note
and other Mortgage Documents to the Trustee by the Company, and acknowledgment
thereof by RIH, a copy of which is attached hereto as Exhibit B.
"ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and
Rents dated as of the date hereof, from RIH to the Company securing the RIH
Promissory Note, a copy of which is attached hereto as Exhibit E.
"AUTHENTICATING AGENT" means any Person named as Authenticating
Agent for the Notes in accordance with the provisions of this Indenture until a
successor Authenticating Agent becomes such pursuant thereto, and thereafter
Authenticating Agent shall mean such successor.
"AUTHORIZED SIGNATURE" means the signatures of the chairman of the
board, the president or a Vice President and of the treasurer, an assistant
treasurer, the controller, an assistant controller, the secretary or an
assistant secretary of the Company or RIH, as the case may be.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person,
any lease of any property (whether real, personal or mixed) by such
Person as lessee which, in conformity with GAAP consistently applied, is
accounted for as a capitalized lease on the balance sheet of such Person.
"CASE" means, collectively, the bankruptcy cases involving RII and
GRI in the United States Bankruptcy Court for the District of Delaware.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture,
fixtures and equipment at any time contained therein.
"CASINO CONTROL ACT" means the New Jersey Casino Control Act and
the regulations promulgated thereunder, as amended.
"CASINO CONTROL COMMISSION" means the New Jersey Casino Control
Commission, as from time to time constituted, or if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties theretofore assigned to it, then the body performing such duties at such
time.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01.
3
<PAGE>
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or
if at any time after the execution of this instrument such Commission is not
existing and performing the duties theretofore assigned to it under the TIA,
then the body performing such duties at such time.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor entity shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter, except to the extent otherwise contemplated by Section 10.02,
"Company" shall mean such successor entity exclusively.
"COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean,
respectively, a written consent, order or request signed with an
Authorized Signature and delivered to the Trustee.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, an amount equal to the sum of (i) the consolidated net
income (or loss) of such Person for such period determined in accordance with
GAAP consistently applied, excluding interest income, interest expense and gains
or losses from extraordinary or nonrecurring items, plus (ii) all amounts
deducted in computing such consolidated net income (or loss) in respect of
depreciation and amortization, plus (iii) non-cash charges arising from the
reduction of CRDA Deposits to market value, minus (iv) taxes based upon or
measured by income which are payable in cash, minus (v) CRDA Deposits.
"CONSOLIDATED INTEREST CHARGES" means, with respect to any Person
for any period, the consolidated interest expense (not including
the non-cash amortization of discount on the original issuance of (a) the RIH
Promissory Note, (b) any intercompany indebtedness of RIH issued in
connection with Indebtedness represented by the Junior Mortgage Facility and (c)
any intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Working Capital Facility), whether payable in cash or in-kind
(and with respect to RIH, including, without limitation, the interest
paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii)
any intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Junior Mortgage Facility and (iii) any intercompany
indebtedness of RIH issued in connection with Indebtedness represented by the
Working Capital Facility), without deduction for interest income (other than
cash interest income received from RII in payment of its interest cost
on any Working Capital Facility), in each case for such Person and
4
<PAGE>
its consolidated Subsidiaries for such period determined in
accordance with GAAP consistently applied.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH
and its consolidated Subsidiaries for the immediately preceding four consecutive
fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated
Subsidiaries for such period.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, an amount equal to consolidated net income (or loss) of such Person for
such period determined in accordance with GAAP consistently applied, minus (a)
federal and state taxes based upon or measured by income which are payable in
cash, plus (b) non-cash charges arising from federal and state taxes based upon
or measured by income.
"CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the
Casino Reinvestment Development Authority in an amount equal to
1.25% of RIH's gross revenue in order to satisfy its investment
obligation pursuant to the Casino Control Act, and (b) the amounts
invested in qualified investments in lieu of any of the quarterly
deposits (or portion thereof) referred to in clause (a) above.
"CRDA DISPUTE" means the dispute existing on the date hereof
between RIH and the New Jersey Casino Reinvestment Development
Authority regarding CRDA Deposits and New Jersey Casino
Reinvestment Authority Notes, which dispute involves an amount
of approximately $30,000,000.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both,
would become an Event of Default.
"DEFAULTED INTEREST" has the meaning stated in Section 3.07.
"EFFECTIVE DATE" means the date on which the prepackaged plan of
reorganization of RII and GRI becomes effective.
"EVENT OF DEFAULT" has the meaning stated in Section 7.01. An
Event of Default shall "exist" if an Event of Default shall have
occurred and be continuing.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
5
<PAGE>
"FAIR MARKET VALUE" of any Notes means (a) the average of the
closing sales price of the Notes for the 30 trading days immediately prior to
the date of determination of such value on the largest national securities
exchange on which such Notes shall have traded on such trading days, or (b) if
no such sales of such Notes occurred during such 30-day period or if the Notes
are not so listed but are traded in the over-the-counter market with
quotations available in the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the average of the means between the "bid" and
"asked" prices on such national securities exchange or as quoted on NASDAQ, as
the case may be, during such 30-day period, or (c) if the Notes are not traded
on a national securities exchange or quoted on NASDAQ, the fair market
value of such Notes as of the date of determination as determined
by agreement of two nationally recognized Independent investment banking firms,
one to be chosen by the Company and the other by the Holder of the Notes being
valued, with the costs of each such firm being the responsibility of the Person
selecting such firm. If such firms cannot agree upon such fair market value,
such firms shall select a third nationally recognized Independent investment
banking firm, which shall determine such fair market value, the costs of such
third firm being shared equally by the Company and such Holder.
"F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01
of the Mortgage.
"GAAP" means United States generally accepted accounting
principles.
"GRI" means GGRI, Inc., a Delaware corporation.
"GROUND LEASES" has the meaning stated in Granting Clause Second of
the Mortgage.
"GUARANTY" means the guaranty contained in Article Four.
"GUARANTY MORTGAGE" means the Mortgage securing Guaranty of
Mortgage Notes dated as of the date hereof, between RIH, as
mortgagor, and the Trustee, as mortgagee, securing the Guaranty,
a copy of which is attached hereto as Exhibit F.
"HOTEL" means that portion of the Casino-Hotel not included within
the Casino.
"INDEBTEDNESS" means, as applied to any Person, without
duplication, any indebtedness, exclusive of deferred taxes,
(a) in respect of borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to a portoin
thereof); (b) evidenced by bonds,
6
<PAGE>
notes, debentures or similar instruments or letters of credit; (c) representing
the balance deferred and unpaid of the purchase price of any property, if and to
the extent such indebtedness would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP (but excluding trade accounts
payable arising in the ordinary course of business that are not overdue by more
than 90 days or are being contested by such Person in good faith); (d) any
Capitalized Lease Obligations (other than, with respect to RIH or the
Company, the Ground Leases) of such Person; and (e) Indebtedness of
others guaranteed by such Person, including, without limitation, every
obligation of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness, (ii) to purchase property, securities or services for the purpose
of assuring the holder of such Indebtedness of the payment of such Indebtedness,
or (iii) to maintain working capital, equity capital or other financial
sta tement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; PROVIDED,
HOWEVER, that the guaranty by any Person shall not include endorsements by such
Person for collection or deposit, in either case in the ordinary course of
business. The term "INDEBTEDNESS" does not include: (1) any of the types of
indebtedness described in clauses (a) through (e) above (inclusive) owed by the
Company to RIH or any of their Subsidiaries, by RIH to the Company or any of
their Subsidiaries or by any such Subsidiary to RIH, the Company or
any other such Subsidiary (including, without limitation, the RIH Promissory
Note and the RIH Junior Promissory Note); (2) the Guaranty, the
Junior Guaranty and the Working Capital Facility Guaranty; (3) matters relating
to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes
or the CRDA Deposits; and (4) any payments made by the Company or RIH under
the RII Management Agreement, the RII Tax Sharing Agreement or the Services
Agreement.
"INDENTURE" means this instrument as originally executed or as it
may from time to time be supplemented, modified or amended by one or more
indentures or other instruments supplemental hereto entered into pursuant to the
applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Company or
in any other obligor upon the Notes or in any Affiliate of the Company or of
such other obligor and (c) is not connected with the Company or such other
obligor or any Affiliate of the Company or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or person
7
<PAGE>
performing similar functions. Whenever it is herein provided
that any Independent Person's opinion or certificate shall
be furnished to the Trustee, such Person shall be appointed
by a Company Order, and such opinion or certificate shall state
that the signer has read this definition and that the signer is
Independent within the meaning hereof. A Person who is performing
or who has performed services as an independent contractor to any
specified Person shall not be considered not Independent merely by
reason of the fact that such Person is or has performed such
services.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated
as of the date hereof, among the Trustee, the trustee under the
Junior Mortgage Note Indenture and such other parties that may
from time to time become a party thereto, which shall incorporate
the terms set forth in Exhibit G.
"INTEREST PAYMENT DATE" means the date on which an installment of
interest on the Notes is due and payable.
"JUNIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of
Leases and Rents dated as of the date hereof, from RIH to the
Company securing the RIH Junior Promissory Note.
"JUNIOR GUARANTY" means any guaranty of the Junior Mortgage
Facility by RIH, including, without limitation, the guaranty of
the Junior Mortgage Notes due 2004 by RIH contained in Article Four
of the Junior Mortgage Note Indenture.
"JUNIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty
of Junior Mortgage Notes dated as of the date hereof, between RIH,
as mortgagor, and U.S. Trust Company, N.A., as mortgagee, securing the Junior
Guaranty.
"JUNIOR MORTGAGE" means the Mortgage securing the RIH Junior
Promissory Note dated as of the date hereof, between the Company,
as successor mortgagee, and RIH, as mortgagor.
"JUNIOR MORTGAGE DOCUMENTS" means (a) the Junior Mortgage, the
Junior Guaranty Mortgage, the RIH Junior Promissory Note, the
Junior Assignment of Leases and Rents and any other security
document to which either RIH or the Company is a party relating to
the Junior Mortgage Notes, which is executed and delivered pursuant
to or in connection with the Junior Mortgage, the Junior Guaranty
Mortgage or the Junior Assignment Agreement, and (b) any mortgage,
deed of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of operating assets
8
<PAGE>
and any other security document to which either RIH or the
Company is a party relating to the Junior Mortgage Facility.
"JUNIOR MORTGAGE FACILITY" means the Junior Mortgage Notes and any
secured or unsecured facility or facilities entered into by RIH or
the Company providing for the making of loans to RIH or the Company
on a revolving or term basis, or the issuance of notes, debentures
or bonds by RIH or the Company, as such agreement, indenture or
instrument may be amended, supplemented or modified from time to
time, or any refinancing thereof, in an aggregate principal amount
up to $35,000,000 plus additional notes, debentures or bonds issued
in payment of interest accrued on outstanding notes, debentures or
bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if any, securing the Junior
Mortgage Facility shall be PARI PASSU with the lien of the Junior
Mortgage and the Junior Guaranty Mortgage. The term "JUNIOR
MORTGAGE FACILITY" does not include the Junior Guaranty.
"JUNIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of
the date hereof, among the Company, RIH and U.S. Trust Company of
California, N.A., as trustee, pursuant to which the
Junior Mortgage Notes were issued, as originally executed or as it
may from time to time be supplemented, modified or amended by one
or more indentures or other instruments supplemental thereto
entered pursuant to the applicable provisions thereof.
"JUNIOR MORTGAGE NOTES" means the 11.375% Junior Mortgage Notes due
2004 of the Company issued pursuant to the Junior Mortgage Note
Indenture, including, without limitation, any Additional Notes (as
defined in the Junior Mortgage Note Indenture).
"LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the
Mortgage.
"MATURITY" when used with respect to any Note means the date on
which the principal (or any portion thereof) of such Note becomes
due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration or call for
redemption or otherwise.
"MORTGAGE" means the Mortgage securing the RIH Promissory
Note dated as of the date hereof, between the Company, as successor
mortgagee, and RIH, as mortgagor.
"MORTGAGE DEBT" means, at any point in time, the RIH
Promissory Note, the RIH Junior Promissory Note and any
9
<PAGE>
secured Indebtedness outstanding under any Working Capital Facility.
"MORTGAGE DOCUMENTS" means the Mortgage, the Guaranty Mortgage, the
RIH Promissory Note, the Assignment of Leases and Rents and
any other security document to which either RIH or the Company is a
party relating to the Notes, which is executed and delivered pursuant to or in
connection with the Mortgage, the Guaranty Mortgage or the Assignment Agreement.
"NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a).
"NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall
mean bonds issued by the Casino Reinvestment Development Authority,
a public authority created under the Casino Control Act.
"NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in
connection with the acquisition, purchase, improvement or
development of property or assets (other than the Trust Estate)
used by the Company, RIH or any Subsidiary of RIH or the Company to
engage in the casino business, the hotel business or related or
ancillary business or purpose and which is secured only by such
assets and without recourse to RIH, the Company or any Subsidiary
of RIH or the Company or the Trust Estate for such indebtedness.
"NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is
registered in the Note Register.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
stated in Section 3.05.
"NOTES" has the meaning stated in the Preliminary Statement of this
instrument and more particularly includes any Note authenticated
and delivered hereunder. The term "Notes" does not include the
Guaranty.
"OFFICER" of the Company or RIH means any Person authorized to
execute an Authorized Signature.
"OFFICERS' CERTIFICATE" delivered by the Company or RIH means a
certificate signed with an Authorized Signature and delivered to
the Trustee. Whenever this Indenture requires that an Officers'
Certificate be signed also by an Accountant or other expert, such
Accountant or other expert may (except as otherwise expressly
provided in this Indenture) be in the general employ of the
Company or RIH.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in
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this Indenture) be an employee of the Company or RIH. Unless otherwise
specifically provided in this Indenture, such counsel may rely as to any
statement of facts not personally known to such counsel and relating to
such opinion on an Officers' Certificate, to the extent not rejected by
the Trustee and its counsel (which rejection shall not be unreasonably
given).
"OUTSTANDING" when used with respect to Notes means, as of the date
of determination, all Notes theretofore authenticated and delivered
under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(b) Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the
Trustee or any Paying Agent in trust for the Holders of such
Notes;
(c) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered under this Indenture;
and
(d) Notes alleged to have been destroyed, lost or stolen
which have been paid as provided in Section 3.06;
PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of Notes Outstanding have given any
request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor
upon the Notes or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding. In
determining whether the Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent
or waiver, only Notes which the Trustee actually knows to be so
owned shall be so disregarded.
"OUTSTANDING AMOUNT" of any Indebtedness at any time means the
principal amount outstanding of such Indebtedness at such time.
"PAYING AGENT" means any Person now or hereafter authorized by the
Company to pay the principal of or interest on any Notes on behalf
of the Company.
"PERMITS" has the meaning stated in Section 1.01 of the Mortgage.
"PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
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"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or any other entity or government or any agency or
political subdivision thereof.
"PLACE OF PAYMENT" when used with respect to the Notes means a city
or any political subdivision thereof in which the Company is by
this Indenture required to maintain an office or agency for the
payment of the principal of or interest on the Notes.
"PLAN" means the Plan of Reorganization of RII and GRI dated
[ ], 1994.
"PREDECESSOR NOTES" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for purposes of this
definition, any Note authenticated and delivered under Section 3.06
in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the lost, destroyed or stolen Note.
"PREMISES" has the meaning stated in Granting Clause Third of the
Mortgage.
"RATABLE BENEFIT" means, for any class or classes of Indebtedness
at any time, in proportion to the total Outstanding Amount of such
class or classes held by each holder thereof at such time.
"REDEMPTION DATE" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to this
Indenture.
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"REDEMPTION PRICE" when used with respect to any Note to be
redeemed means the price at which it is to be redeemed pursuant
to this Indenture. It does not include installments of interest
due on or before the Redemption Date.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Notes means the date specified in the
provisions of this Indenture.
"RESPONSIBLE OFFICER" means any Vice President, any Assistant
Vice President or any other officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"RESTRICTED PAYMENT" means (a) any declaration or payment of any
dividend or the making of any distribution to holders of capital
stock of RIH or the Company or any Subsidiary of RIH or the Company
in respect of such capital stock (other than to RIH or the Company
or a direct or indirect wholly owned Subsidiary of RIH or the
Company), (b) any purchase, redemption or other acquisition or
retirement for value of any capital stock (or warrants, rights or
options to acquire any capital stock or Indebtedness convertible
into or exchangeable for any capital stock) of RIH or the Company
or any Subsidiary of RIH or the Company (other than purchases,
redemptions, acquisitions or retirement solely from RIH or the
Company or a direct or indirect wholly owned Subsidiary of RIH or
the Company); PROVIDED, HOWEVER, that any such purchase, redemption
or other acquisition or retirement that is required by the Casino
Control Commission or under the Casino Control Act shall not
constitute a Restricted Payment. The term "Restricted Payment"
also shall not include any loan or advance to RII of all or any
portion of the proceeds of the Indebtedness represented by the
Working Capital Facility.
"RIH" means the person named as "RIH" in the first paragraph of
this instrument until a successor entity shall have become such
pursuant to the applicable provisions of the Indenture, and
thereafter, except to the extent otherwise
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contemplated by Section 10.02, "RIH" shall mean such successor entity
exclusively.
"RIH JUNIOR PROMISSORY NOTE" means, collectively, the secured
junior promissory note, dated the date hereof, made by RIH in the
principal amount of $35,000,000, plus any additional junior
promissory notes, issued in connection with the payment of
interest accrued on outstanding Junior Mortgage Notes, payable to
the order of the Company, a copy of which is attached to the Junior
Mortgage Note Indenture as Exhibit A.
"RIH SALE" means (a) a consolidation, combination or merger
involving RIH and any other Person, (b) a sale, assignment, conveyance
or transfer or RIH's interest in the Trust Estate, substantially as an
entirety, to any other Person or group of Persons in one transaction or a
series of related transactions, or (c) any transaction as a result of
which RIH ceases to be a direct or indirect wholly owned Subsidiary of
RII; provided, however, that nay of the transactions described in clauses
(a), (b), and (c) above shall not constitute an RIH Sale if the other
party or parties to the transaction consists of only one or more of the
following Persons: the Company provided, further, however, that
notwithstanding any other provision of this definition, if the primary
effect of any of the aforesaid transactions is the redemption of the Notes,
then such transaction shall not be considered to be a RIH Sale.
"RIH PROMISSORY NOTE" means the secured promissory
note, amended and restated as of the date hereof, made by RIH in the principal
amount of $125,000,000 payable to the order of the Company, a copy of which
is attached hereto as Exhibit A.
"RIHF SENIOR FACILITY" means the senior secured note facility
contemplated by the purchase agreement dated as of the date
hereof, among the Company, RIH, RII and funds managed by Fidelity
Management and Research Company, which allows the Company to borrow
up to $20,000,000 in aggregate principal amount through the
issuance of RIHF Senior Facility Notes. The term "RIHF SENIOR
FACILITY" does not include the Working Capital Facility Guaranty.
"RIHF SENIOR FACILITY NOTES" means, collectively, the notes
executed and delivered by the Company under the RIHF Senior
Facility.
"RII" means Resorts International, Inc., a Delaware corporation.
"RII MANAGEMENT CONTRACT" means the Management Contract dated as of
the date hereof, between RII and RIH
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pursuant to which RII provides certain management services to RIH for an
annual fee of 3% of the gross revenues of RIH.
"RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated
as of the date hereof between RII and RIH pursuant to which (i) RIH
will not make any payments to RII or any other Affiliate in respect
of taxes, other than to reimburse RII for any cash payments
actually made by RII in respect of any federal, state or local
income or alternative minimum taxes arising from the earnings or
operations of RIH; PROVIDED, HOWEVER, that RIH shall not be
required to reimburse RII for cash payments in respect of
federal, state or local income or alternative minimum taxes that
would not have been owed but for the reduction, if any, of the
amount of the consolidated net operating loss carryforwards or
consolidated current losses of the affiliated group of which RII
is a common parent which resulted from the inclusion in the
consolidated return filed for such group for any taxable year
ending after the Effective Date of the income of any entity other
than RIH, other than income directly attributable to the
consummation of the Plan, including but not limited to the
transfer of the stock of RIB (as defined in the Plan) and the
assets of the U.S. Paradise Island Subsidiaries (as defined in the
Plan), and (ii) RIH will be entitled to any refund (plus the
interest thereon) of any taxes for which RIH is required to
reimburse RII.
"SERVICES AGREEMENT" means the Services Agreement dated as of
September 17, 1992, between RII, RIH and The Griffin Group, Inc.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on
Notes means a date fixed by the Trustee pursuant to Section 3.07.
"STATED MATURITY" when used with respect to any Note means the date
specified in such Note as the fixed date on which the principal of
such Note is due and payable.
"SUBSIDIARY" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly,
by such Person or one or more Subsidiaries of such Person.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of
1939, as amended.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this
Indenture, and thereafter Trustee shall mean such successor
Trustee.
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"TRUST ESTATE" has the meaning stated in the Granting Clauses to
the Mortgage.
"U.S. GOVERNMENT OBLIGATIONS" has the meaning stated in Section
14.01.
"U.S. LEGAL TENDER" means such coin or currency of the United
States of America as at the time of payment shall be legal tender
for the payment of public and private debts, PROVIDED that for
purposes of Article Fourteen, U.S. Legal Tender includes wire
transfer payable in U.S. Legal Tender.
"VICE PRESIDENT" when used with respect to the Company, RIH or the
Trustee means any vice president, whether or not designated by a
number or a word added to the title.
"WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the
RIHF Senior Facility Notes issued thereunder) and any other secured
or unsecured facility or facilities entered into by RIH and/or the
Company providing for the making of working capital loans to RIH or
the Company (with RII [and GRI] as a guarantor[s] thereunder) on a revolving
or term basis, or the issuance of notes, debentures or bonds
by RIH, the Company or RII, as such agreement may be amended,
supplemented or modified from time to time, or any refinancing
thereof, in an aggregate principal amount up to $20,000,000;
PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if any, securing the Working
Capital Facility may be senior to the lien of the Mortgage, the
Guaranty Mortgage, the Junior Mortgage and the Junior Guaranty
Mortgage. The term "WORKING CAPITAL FACILITY" does not include
the Working Capital Facility Guaranty.
"WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage,
deed of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of operating
assets and any other security document to which either RIH or the
Company is a party relating to the Working Capital Facility.
"WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the
Working Capital Facility by RIH, including, without limitation,
the guaranty of the RIHF Senior Facility Notes.
Section 1.02. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Noteholders may be embodied
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in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Noteholders signing such instrument
or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Company
and (subject to Section 8.01(c)) in favor of the Trustee, if made in
the manner provided in this Section 1.02.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness
of such execution or by the certificate of any notary public or
other officer authorized by law to take acknowledgments of deeds,
certifying that the individual
signing such instrument or writing acknowledged to him the execution
thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or
partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The fact and date of execution of any such instrument or
writing and the authority of any Person executing the same may also
be proved in any other manner which the Trustee deems sufficient; and
the Trustee may in any instance require further proof with respect
to any of the matters referred to in this Section 1.02.
(d) The ownership of Notes shall be proved by the Note Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind
every future Holder of the same Note and the Holder of every Note
issued upon the transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Note.
(f) The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holder of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this
Indenture to be given or taken by holders of Notes. With regard
to any record date set pursuant to this
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Section 1.02(f) the holders of Outstanding Notes on such record date (or their
duly appointed agents), and only such Persons, shall be entitled to give or
take the relevant action, whether or not such Persons remain holders
after such record date.
(g) Until a waiver or consent becomes effective, such waiver or
consent by a Holder is a continuing waiver or consent by the
Holder and every subsequent Holder of a Note or portion of a Note
that evidences the same debt as the consenting Holder's Note, even
if notation of the waiver or consent is not made on any Note.
However, any such Holder or subsequent Holder may, until such
waiver or consent becomes effective, revoke the waiver or consent
as to his Note or portion of his Note. Such revocation shall be
effective only if the Trustee receives the notice of such
revocation before the date on which the waiver or consent has
become effective.
Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH, THE COMPANY, CASINO
CONTROL COMMISSION AND DIRECTOR OF GAMING ENFORCEMENT.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with, the Company,
RIH, the Trustee, the Casino Control Commission or the Director of
the Division of Gaming Enforcement be deemed given when either
(i) delivered by hand or (ii) two days after sending by registered
or certified mail, postage prepaid, in either case, addressed as follows:
To the Company:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
To RIH:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
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To the Trustee:
State Street Bank and Trust Company of Connecticut,
National Association
750 Main Street
Hartford, Connecticut 06103
Attn.: Corporate Trust Department
To Casino Control Commission:
New Jersey Casino Control Commission
Arcade Building
Tennessee Avenue & Boardwalk
Atlantic City, New Jersey 08401
Attn.: Chairman
To Director of Division of Gaming Enforcement:
New Jersey Division of Gaming Enforcement
140 E. Front Street
CN 047
Trenton, New Jersey 08625
Attn.: Director
(b) By notice to the Company, RIH, the Trustee, Casino Control
Commission and/or Director of the Division of Gaming Enforcement, given
as provided above, any party may designate additional or substitute
addresses for such notices, which, notwithstanding Section 1.03(a),
shall be deemed given when received.
Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER.
Where this Indenture provides for notice to Noteholders of any
event, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder of such Notes, at the address of
such Holder as it appears in the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for
the provision of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular
Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event,
and such waiver shall be the equivalent of such notice. Waivers of
notice by Noteholders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
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In case, by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impracticable to give such
notice by mail, then such notification may be given by any other
method that the Trustee shall consider to be reasonable and shall
be deemed to be a sufficient giving of such notice for every
purpose hereunder.
Section 1.05. FORM AND CONTENTS OF
DOCUMENTS DELIVERED TO TRUSTEE.
Whenever several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other
such Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Company or of RIH
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an Officer
or Officers of the Company or RIH stating that the information with
respect to such factual matters is in the possession of the Company
or RIH, unless such counsel knows that the certificate or opinion
or representations with respect to such matters are erroneous. If
appropriate to the matter being opined upon and to the extent not
prohibited by the TIA, any Opinion of Counsel may be subject to
rights of creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the
Company or RIH shall deliver any document as a condition of the
granting of such application, or as evidence of the Company's or
RIH's compliance with any term hereof, it is intended that the
truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or
report (as the case may be), of the facts and opinions stated in
such document shall in such case be conditions precedent to the
right of the Company or
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RIH to have such application granted or to the sufficiency of such certificate
or report.
Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company or RIH to the
Trustee to take any action under any provision of this Indenture
or any Mortgage Document, the Company or RIH shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture or such Mortgage Document relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any,
have been complied with, except that in the case of any such
application or request as to which the furnishing of such
documents is specifically required by any provision of this
Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture or any Mortgage
Document shall include:
(a) a statement that each individual signing such
certificate or opinion has read such condition or covenant
and the definitions herein relating thereto;
(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 each such
individual, he has made such examination or investigation
as is necessary to enable him to express an informed opinion
as to whether or not such condition or covenant has been
complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied
with.
Section 1.07. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof or of the Mortgage Documents or the
Assignment Agreement limits, qualifies or conflicts with another
provision hereof or of the Mortgage Documents or the Assignment
Agreement which is required to be included herein or therein by
any of the provisions of the TIA, such required provision shall
control.
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Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and in the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 1.09. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company or
RIH shall, subject to Section 10.02, bind its successors and
assigns, whether so expressed or not.
Section 1.10. SEPARABILITY CLAUSE.
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 1.11. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person other than the parties hereto and their
successors hereunder, any separate trustee or co-trustee appointed
under Section 8.14 and the Holders of Notes, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.12. GOVERNING LAW.
This Indenture and each Note shall be deemed to be a contract under
the laws of the State of New York and shall be construed in
accordance with and governed by the internal laws of the State of
New York.
Section 1.13. CASINO CONTROL ACT.
Each of the provisions of this Indenture is subject to and shall be
enforced in compliance with the provisions of the Casino Control
Act, unless such provisions are in conflict with the TIA, in which
case the TIA shall control.
Section 1.14. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject
in each instance to the giving of any notice and the expiration of
any grace period provided for in Section 7.01 as a condition to
such Default becoming an Event of Default, unless the TIA requires
otherwise, in which case the TIA shall control.
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(b) For the purposes of this Indenture, it is understood that an
event which does not materially diminish the value of the
Trustee's interest in the Trust Estate shall not be deemed an
impairment of security, as that phrase is used in this Indenture.
(c) This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company, other than the Mortgage and
the Guaranty Mortgage. Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.
(d) In the event of a conflict between any provision of this
Indenture and any provision of a Mortgage Document, the provision
of this Indenture shall prevail.
ARTICLE TWO
NOTE FORM
Section 2.01. FORM GENERALLY.
The Notes and the Trustee's certificate of authentication shall be
substantially in the forms set forth in this Article Two, with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and
may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange, or as may,
consistently herewith, be determined by the officers executing
such Notes as evidenced by their execution thereof. Any portion of
the text of any Note may be set forth on the reverse thereof.
The definitive Notes shall be printed, lithographed or engraved or
produced by any combination of these methods or produced in any
other manner permitted by the rules of any securities exchange on
which the Notes may be listed, all as determined by the officers
executing such Notes as evidenced by their execution thereof.
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Section 2.02. FORM OF NOTES.
The form of the Notes shall be substantially as follows:
[Face of Notes]
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
11% MORTGAGE NOTE DUE 2003
No.______________ $________________
Resorts International Hotel Financing, Inc., a Delaware corporation
(hereinafter called the "Company", which term includes any
successor entity under the Indenture referred to on the reverse),
for value received, hereby promises to pay to ______________, or registered
assigns, on September 15, 2003 the sum of __________ Dollars (or so much
thereof as shall not have been paid upon prior redemption) and to
pay interest (computed on the basis of a 360-day year of twelve
30-day months based on the actual number of days elapsed) thereon
from [ ], 1994 [the Effective Date], or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, semi-annually at March 15 and September 15 in each
year (commencing September 15, 1994), at the rate of 11% per annum,
until the principal hereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in said Indenture,
be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the Person
in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on a Special Record Date for
the payment of such defaulted interest to be fixed by the Trustee,
notice thereof being given to Noteholders not less than ten days
prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes of this series may be
listed and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture. The principal of and
interest on this Note shall be payable at the corporate trust
office of the Trustee, as defined on the reverse, or at an office
or agency of the Company in the Borough of Manhattan, City and
State of New York. All such payments shall be made in such coin or
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currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
At the option of the Company, payment of interest may be made by
check mailed to the address of the Person entitled thereto as such
address shall appear on the Note Register.
Unless the certificate of authentication hereon has been executed
by the Trustee or the Authenticating Agent by manual signature,
this Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS
OF THE STATE OF NEW YORK AND SHALL BE CONSTRUE IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Dated: ______________________ By:________________________
Attest:______________________
[Back of Notes]
This Note is one of a duly authorized issue of Notes of the Company
designated as "11% Mortgage Notes due 2003" (the "Notes"),
issued under an Indenture dated as of __________ __, 1994 (the
"Indenture"), among the Company, Resorts International Hotel,
Inc., a New Jersey corporation, as guarantor ("RIH"), and State
Street Bank and Trust Company of Connecticut, National Association,
a national banking association, as Trustee (the "Trustee", which
term includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is
hereby made for a description of the nature and extent of the
security, the respective rights thereunder of the Holders of the
Notes, the Trustee and the Company and the terms upon which the
Notes are, and are to be, authenticated and delivered. Payment of
principal and interest (including interest on overdue principal)
and performance of all obligations under the Indenture is
guaranteed by RIH (the "Guaranty"). The Notes are secured by an assignment
of one or more secured senior promissory notes of RIH, which owns and
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operates the property known as Merv Griffin's
Resorts Casino Hotel, and of a mortgage on the Trust Estate made
by RIH (the "Mortgage"). Additionally, the Guaranty is secured by
a separate direct mortgage of the Trust Estate made by RIH to the
Trustee (the "Guaranty Mortgage"). All terms in this Note defined
in the Indenture shall have the same meaning herein as therein.
The lien of the Mortgage is pari passu with the lien of the
Guaranty Mortgage, junior to the lien securing payment of the
RIHF Senior Facility Notes and any other secured Working Capital
Facility and junior to the lien (if any) securing the Working
Capital Facility Guaranty.
The Notes may be redeemed at the option of the Company, as a whole
or from time to time in part, on or after the fifth anniversary of
the Effective Date on notice as provided in the Indenture, at par
together with interest accrued and unpaid thereon to the date fixed
for redemption. In the event of an RIH Sale, all the Notes shall
be redeemed by the Company, whether such RIH Sale occurs before, on
or after the fifth anniversary of the Effective Date, at par
together with interest, if any, accrued and unpaid thereon to the
Redemption Date; PROVIDED, HOWEVER, that such obligation of the
Company to redeem the Notes in the event of a proposed RIH Sale
shall cease to exist if the Holders of not less than 66-2/3% in
Outstanding Amount of the Outstanding Notes have consented to such
proposed RIH Sale.
Notwithstanding the foregoing, each Holder by accepting a Note
agrees that if the Casino Control Commission does not waive the
qualification requirement as to the Holder (whether the record
owner or beneficial owner) of this Note and requires that the
Holder be qualified under the Casino Control Act, then, in such
event, the Holder must qualify under the Casino Control Act. If
the Holder does not so qualify, the Holder must dispose of its
interest in this Note, within 30 days after the Company's receipt
of notice of such finding, or the Company may repurchase this Note
at the lower of the Holder's original cost and the Fair Market
Value of this Note, plus accrued interest thereon to the date of
such repurchase. Commencing on the date the Casino Control Commission
serves notice upon either RIH or the Company that any Holder is disqualified,
it shall be unlawful for any such disqualified Holder: (i) to receive any
dividends or interest upon this Note; (ii) to exercise, directly or through
any trustee or nominee, any right conferred by this Note;
or (iii) to receive any remuneration in any form from either the Company or
RIH for services rendered or otherwise.
It is provided in the Indenture that Notes of a denomination larger
than $1,000 may be redeemed in part ($1,000 or a multiple thereof)
and that upon any partial
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redemption of any such Note the same shall be surrendered in exchange
for one or more new Notes in authorized form for the unredeemed portion of
principal. Notes (or portions thereof as aforesaid) for whose redemption and
payment provision is made in accordance with the Indenture shall thereupon
cease to be entitled to the lien of the Indenture and the Mortgage
and shall cease to bear interest from and after the date fixed for
redemption.
If an Event of Default shall occur, the principal of the Notes and
all accrued and unpaid interest thereon may
become or be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereto and the modification of the rights and
obligations of the Company and the rights of the Holders of the
Notes under the Indenture at any time by the Company with the
consent of the Holders of a majority or 66-2/3%, as the case may
be, in aggregate Outstanding Amount of the Notes at the time
Outstanding affected by such modification. The Indenture also
contains provisions permitting the Holders of specified percentages
in Outstanding Amount of Notes at the time Outstanding on behalf of
the Holders of all the Notes to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of
any Note issued upon the transfer hereof or in exchange hereof or
in lieu hereof, in respect of anything done or offered to be done
by the Trustee in the Company in reliance thereon, whether or not
notation of such action is made upon this Note.
The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holders of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by the
Indenture to be given or taken by holders of Notes. With regard
to any such record date, the holders of Outstanding Notes on such
record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action,
whether or not such Persons remain holders after such record date.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal
of and interest on this Note at the times, places and rates, and in
the coin or currency, herein prescribed.
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As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable on the Note Register
of the Company, upon surrender of this Note for transfer at the
corporate trust office of the Trustee, or at an office or agency
of the Company in the Borough of Manhattan, City and State of New
York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Note Registrar
duly executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
The Notes are issuable only as registered Notes without coupons in
denominations of $1,000 and integral multiples thereof. As
provided in the Indenture, and subject to certain limitations
therein set forth, Notes are exchangeable for a like aggregate
principal amount of Notes of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any transfer or exchange
hereinbefore referred to, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is
registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or
not this Note be overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary.
Section 2.03. FORM OF TRUSTEE'S
CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, as Trustee
By:__________________________
Authorized Signature
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Section 2.04. FORM OF THE GUARANTY.
The form of the Guaranty of RIH shall be substantially as follows
and shall appear on the reverse of each Note:
GUARANTY OF
RESORTS INTERNATIONAL HOTEL, INC.
For value received, Resorts International Hotel, Inc., a New Jersey
corporation, hereby unconditionally guarantees, as more fully set
forth in Article Four of the Indenture, to the Holder of this Note
the payment of the principal of and interest on this Note in the
amounts and at the time when due and interest on the overdue
principal and interest, if any, of this Note, if lawful, and the
payment or performance of all other obligations of the Company to
the Holder or the Trustee, all in accordance with and subject to
the terms and limitations of this Note and Article Four of the
Indenture, the foregoing Guaranty being a guaranty of payment and
not of collectibility and being absolute and in no way conditional
or contingent. This Guaranty will not become effective until the
Trustee or the Authenticating Agent signs the certificate of
authentication on such Note. As more fully described in the
Indenture, this Guaranty is secured by a mortgage of the Trust
Estate made by RIH to the Trustee.
RESORTS INTERNATIONAL HOTEL, INC.
Dated:__________________________ By:_______________________________
Attest:_________________________
ARTICLE THREE
THE NOTES
Section 3.01. GENERAL TITLE.
The general title of the Notes shall be "11% Mortgage Notes
due 2003".
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Section 3.02. FORM AND DENOMINATIONS.
The form of the Notes shall be as provided by the provisions of
this Indenture.
The Notes shall be issuable only in registered form and in such
denominations as shall be provided in the provisions of this
Indenture. The Notes shall be of the denominations of $1,000 and
any integral multiple thereof.
Section 3.03. EXECUTION, AUTHENTICATION,
DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its
chairman of the board, vice chairman of the board, its president,
or one of its Vice Presidents and attested to by an Officer of the
Company other than an Officer who has executed the Notes. The
signature of any of these Persons on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signatures of
individuals who were at any time Officers of the Company shall
bind the Company, notwithstanding that such individuals or any of
them shall have ceased to be such prior to the authentication and
delivery of such Notes.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication and the Trustee shall
authenticate and deliver such Notes as in this Indenture provided
and not otherwise. All Notes shall be dated the date of their
authentication.
No Note shall be secured by, or be entitled to any lien, right or
benefit under, this Indenture or be valid or obligatory for any
purpose, unless there appears on such Note a certificate of
authentication substantially in the form provided for herein,
executed by the Trustee or the Authenticating Agent by manual
signature, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 3.04. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Request the Trustee shall authenticate
and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any
denomination, substantially of the tenor of the definitive Notes
in lieu of which they are issued, in registered form, without
coupons, with provision for registration as to principal and with such
appropriate insertions, omissions, substitutions and other variations as
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the Officers executing such Notes may determine, as evidenced by their
execution of such Notes.
If temporary Notes are issued, the Company will cause definitive
Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be
exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company in a Place of Payment
therefor, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Company
shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Notes of
authorized denominations. Until so exchanged, temporary
Outstanding Notes shall in all respects be entitled to the
security and benefits of this Indenture.
Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE.
The Company shall cause to be kept at one of the offices or
agencies maintained by the Company as provided in Section 12.02 a
register (herein sometimes referred to as the "Note Register") in
which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Notes and
registration of transfers of Notes entitled to be registered or
transferred as herein provided. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers
of Notes as herein provided.
Upon surrender for transfer of any Note at the office or agency of
the Company in a Place of Payment therefor, the Company shall
execute and, upon request of the Company, the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one
or more new Notes of any authorized denominations and of a like aggregate
principal amount. The Trustee has no obligation to determine that any Note
has been properly transferred and may conclusively rely on instructions
given by the Company pursuant to this Section 3.05.
All Notes surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly canceled by the Trustee and
thereafter disposed of as directed by a Company Request.
All Notes issued upon any transfer or exchange of Notes shall be
the valid obligations of the Company, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as
the Notes surrendered upon such transfer or exchange.
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Every Note presented or surrendered for transfer, exchange or
discharge from registration shall (if so required by the Company
or the Note Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company
and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration, discharge
from registration, transfer or exchange of Notes, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
transfer or exchange of Notes, other than exchanges under
Section 3.04 or 11.06 not involving any transfer.
The Company shall not be required (i) to issue, transfer or exchange
any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of
Notes under Section 13.04 and ending at the close of business on the day of
such mailing, or (ii) to transfer or exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.
Section 3.06. MUTILATED, DESTROYED,
LOST AND STOLEN NOTES.
If (a) any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Note and (b) there is
delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a new Note of like tenor
and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 3.06, the
Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith.
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Every new Note issued pursuant to this Section 3.06 in lieu of any
destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the security and benefits
of this Indenture equally and ratably with all other Notes.
The provisions of this Section 3.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or
stolen Notes.
Section 3.07. PAYMENT OF INTEREST ON
NOTES; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to
the Person in whose name that Note (or one or more Predecessor
Notes) is registered at the close of business on the Regular Record Date
for such interest specified in the provisions of this Indenture.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date ("Defaulted
Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date solely by virtue of such Holder having
been such Holder; and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in subsection
(a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest on the Notes to the Persons in whose names such
Notes (or their respective Predecessor Record Date for the
payment of such Defaulted Interest Notes) are registered
at the close of business on a Special, which shall be fixed in
the following manner. The Company shall notify the Trustee
in writing of the amount of Defaulted Interest proposed to be
paid on each Note and the date of the proposed payment (which
date shall be such as will enable the Trustee to comply with
the next sentence hereof), and at the same time the Company
shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as
provided in this subsection (a) and not to be deemed part of
the Trust Estate. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which
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shall be not more than 15 nor less than ten days prior to the
date of the proposed payment and not less than ten days after
the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor
to be mailed, first-class postage prepaid, to each Holder of
a Note at his address as it appears in the Note Register not
less than ten days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid,
such Defaulted Interest shall be paid to the Persons in whose
names the Notes (or their respective Predecessor Notes) are
registered on such Special Record Date and shall no longer be
payable pursuant to subsection (b) of this Section 3.07.
(b) The Company may make payment of any Defaulted Interest
on the Notes in any other lawful manner not inconsistent with
the requirements of any securities exchange in which the Notes
may be listed and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this subsection (b), such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.07, each Note
delivered under this Indenture upon transfer of or in exchange for
or in lieu of any other Note shall carry all the rights to interest
accrued and unpaid, and to accrue, which were carried by such other
Note.
Section 3.08. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Note is registered
as the owner of such Note for the purpose of receiving payment of
principal of, and interest on, such Note and for all other purposes
whatsoever whether or not such Note be overdue, and, to the extent
permitted by law, neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
Section 3.09. CANCELLATION.
All Notes surrendered for payment, redemption, transfer, exchange
or conversion, if surrendered to the Trustee, shall be promptly
canceled by it, and, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee and, if not already
canceled, shall be promptly canceled by it. The Company shall
deliver to the Trustee for
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cancellation any Notes previously authenticated and delivered hereunder which
the Company may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Note shall be
authenticated in lieu of or in exchange for any Note canceled as
provided in this Section 3.09, except as expressly provided by this
Indenture. All canceled Notes held by the Trustee shall be
disposed of as directed by a Company Request.
Section 3.10. TERM AND FORM.
The Stated Maturity of the Notes shall be September 15, 2003. The
aggregate principal amount of Notes that may be authenticated,
delivered and outstanding is limited to $125,000,000. The Notes
shall bear interest from [ ], 1994 [the Effective Date] or from the
most recent Interest Payment Date to which interest has been paid
or duly provided for, payable semi-annually on March 15 and
September 15 each year, commencing September 15, 1994. The Notes
shall bear interest at the rate of 11% per annum until the
principal thereof shall become due and payable, and at the rate
of 14% per annum on any overdue principal and, to the extent
permitted by law, overdue interest. Interest shall be computed
on the basis of a 360-day year of twelve 30-day months based on the
actual number of days elapsed.
The principal and the Redemption Price of the Notes and interest on
the Notes on each Interest Payment Date shall be payable at a Place
of Payment, and, in addition to any other lawful means of such
payment, may be paid by check payable to the order of the
Noteholder.
The Regular Record Date referred to in Section 3.07 for the payment
of the interest on the Notes payable, and punctually paid or duly
provided for, on any Interest Payment Date shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date.
Section 3.11. EXCHANGEABILITY.
Subject to Section 3.05, all Notes shall be fully interchangeable
with other Notes, and, upon surrender at the office or agency of
the Company in a Place of Payment therefor, all Notes shall be
exchangeable for other Notes of a different authorized
denomination or denominations, as requested by the Holder
surrendering the same. The Company will execute, and the Trustee
shall authenticate and deliver, Notes whenever the same are
required for any such exchange.
Section 3.12. REDEMPTION.
The Company may, at its option, redeem, in accordance with Article
Thirteen, all or from time to time any
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part of the Notes on or after the fifth anniversary of the Effective Date,
at par together, in each case, with interest, if any, accrued and unpaid
thereon to the Redemption Date. In the event of an RIH Sale, all
the Notes shall be redeemed by the Company whether such RIH Sale
occurs before, on or after the fifth anniversary of the Effective
Date, at par together with interest, if any, accrued and unpaid
thereon to the Redemption Date; PROVIDED, HOWEVER, that such
obligation of the Company to redeem the Notes in the event of a
proposed RIH Sale shall cease to exist if the Holders of not less
than 66-2/3% in Outstanding Amount of the Outstanding Notes have
consented to such proposed RIH Sale.
Section 3.13. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE.
Forthwith upon the execution and delivery of this Indenture, Notes
up to an aggregate principal amount of $125,000,000 may be executed
by the Company and delivered to the Trustee for authentication, and shall
thereupon be authenticated and delivered by the Trustee upon Company Order,
without any further action by the Company.
ARTICLE FOUR
GUARANTY
Section 4.01. GUARANTY.
RIH hereby guarantees (such guaranty to be referred to herein as
the "Guaranty") to each Holder 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 hereunder or
thereunder, that: (a) the principal of and interest on the Notes
will be promptly paid in the amounts and at the times when due,
whether at the maturity or Interest Payment Date, by acceleration,
call for redemption or otherwise, and interest on the overdue
principal, if any, of the Notes, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will
be promptly paid in full or performed, all in accordance with the
terms hereof and thereof; and (b) in case of any extension of time
of payment or renewal of any Notes or payment or performance of any
of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension
or renewal, whether at Stated Maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed
for whatever reason, RIH will be obligated to pay the same
immediately. RIH hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or
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this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Notes with respect to any provisions hereof or
thereof, any releases of collateral, any delays in obtaining or realizing upon
or failures to obtain or realize upon collateral, the recovery of
any judgment against the Company, any action to enforce the same or
any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. This Guaranty is a
guaranty of payment and not of collectibility, and is secured by
the Guaranty Mortgage, as described therein. RIH hereby waives
diligence, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Guaranty
will not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture. If any
Noteholder or the Trustee is required by any court or
otherwise to return to either RIH or the Company, or any custodian,
trustee, liquidator or other similar official acting in relation to either
RIH or the Company, any amount paid by either RIH or the Company to
the Trustee or such Noteholder, this Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and
effect. RIH agrees that it shall not be entitled to, and hereby
irrevocably waives, any right of subrogation in relation to the
Company in respect of any obligations guaranteed hereby. RIH
further agrees that, as between RIH, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Section 7.02 for the purposes of this Guaranty, notwithstanding
any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of such
obligations as provided in Section 7.02, such obligations
(whether or not due and payable) shall forthwith become due and
payable by RIH for the purpose of this Guaranty.
Section 4.02. EXECUTION AND DELIVERY OF GUARANTY.
To evidence its Guaranty set forth in Section 4.01, RIH hereby
agrees to execute its Guaranty substantially in the form set forth
in Section 2.04, to be endorsed on each Note authenticated and
delivered by the Trustee and that this Indenture shall be executed
on behalf of RIH by an Authorized Signature.
RIH hereby agrees that its Guaranty set forth in Section 4.01 shall
remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guaranty; PROVIDED,
HOWEVER, that the Trustee or the
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Authenticating Agent has
signed the certificate of authentication on such Note.
If an Officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates a Note on which a
Guaranty is endorsed, the Guaranty shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of RIH.
Section 4.03 MORTGAGE SECURING GUARANTY.
In order to secure the due and punctual payment of all amounts
which may ever become owing under the Guaranty, when and as the
same shall be due and payable, and performance of all other
obligations of RIH to the Holders or the Trustee under the Guaranty,
according to the terms hereof, RIH has mortgaged and
encumbered all of its right, title and interest in and to the Trust
Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has
the full right, power and authority to grant, bargain, sell,
release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm the property constituting the Trust Estate, in the
manner and form done, or intended to be done, in the Guaranty
Mortgage, free and clear of all liens, pledges, charges and
encumbrances, whatsoever, except for the items described in
clauses (a) through (d) (inclusive) of Section 12.13, and (a) will
forever warrant and defend the title to the same against the claims
of all Persons whatsoever in accordance with the terms of the
Guaranty Mortgage, (b) will execute, acknowledge and deliver to
the Trustee such further instruments as the Trustee may require or
request, and (c) will do or cause to be done all such acts and
things as may be reasonably necessary or proper, or as may be
required by the Trustee (other than obtaining a loan title
insurance policy or title policy endorsement pertaining to the
Guaranty Mortgage), to assure and confirm to the Trustee its
interest in the Trust Estate and the right, title and interest in
and to the Guaranty Mortgage, so as to render the same available
for the security and benefit of this Guaranty secured thereby,
according to the intent and purposes herein expressed. The
Guaranty Mortgage creates and vests in the Trustee a direct and
valid lien, which lien is senior to the lien securing payment of
the Junior Mortgage Facility, senior to any lien securing the
Junior Guaranty, PARI PASSU with the lien of the Mortgage, junior
to the lien securing payment of the RIHF Senior Facility Notes and
any other secured Working Capital Facility and junior to any lien
securing the Working Capital Facility Guaranty. To the extent that
any security interest in the Trust Estate or the Guaranty Mortgage
is deemed to be
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granted and to be governed by the Uniform Commercial Code, the Guaranty
Mortgage is deemed to be a security agreement.
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. PAYMENT OF INDEBTEDNESS;
SATISFACTION AND DISCHARGE OF INDENTURE.
Whenever the following conditions exist, namely:
(a) all Notes theretofore authenticated and delivered have been
canceled by the Trustee or delivered to the Trustee for
cancellation, excluding, however,
(1) Notes for the payment of which money has theretofore
been deposited in trust with the Trustee
or a Paying Agent (other than the Company) or segregated and held in
trust by the Company and thereafter repaid to the
Company or discharged from such trust as provided in
Section 12.03,
(2) Notes alleged to have been destroyed, lost or stolen
which have been replaced or paid as provided in
Section 3.06, except for any such Note which, prior to
the satisfaction and discharge of this Indenture, has
been presented to the Trustee with a claim of ownership
and enforceability by the Holder thereof and where
enforceability has not been determined adversely
against such Holder by a court of competent
jurisdiction, and
(3) other than any Notes excluded by clauses (1) and (2) of
this Section 5.01(a), Notes which have become due and
payable, Notes which will become due and payable at
their Stated Maturity within one year and Notes which
have been or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name and at the expense of the Company, provided the
Company, in the case of such Notes, has deposited or
caused to be deposited with the Trustee in trust for the
purpose an amount sufficient to pay and discharge the
entire indebtedness on such Notes for principal and
interest to the date of maturity thereof in the case of
Notes which have become due and payable or to the Stated
Maturity or Redemption Date, as the case may be;
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(b) the Company or RIH has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company or RIH has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each of which shall
state that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with;
then this Indenture and the lien, rights and interests created
hereby shall cease, terminate and become null and void (except as
to any surviving rights of transfer or exchange of Notes herein or
therein provided for and any right to receive payments of principal
and interest as provided in Section 5.01(a)(3)) and the Trustee and
each co-trustee and separate trustee, if any, then acting as such
hereunder shall, at the expense of the Company, execute and deliver
a termination statement prepared by the Company in form reasonably
satisfactory to the Trustee and such instruments of satisfaction and
discharge as may be necessary and pay, assign, transfer and deliver
to the Company or upon Company Order all cash, securities and other personal
property then held by it hereunder, other than pursuant to Section 5.01(a)(3).
In the absence of satisfaction of all of the above conditions, the
payment of all Outstanding Notes shall not render this Indenture
inoperative.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 8.07
shall survive.
Section 5.02. APPLICATION OF DEPOSITED MONEY.
Money deposited with the Trustee pursuant to Section 5.01 shall
constitute a separate trust fund for the benefit of the Persons
entitled thereto. Subject to the provisions of Section 12.03, such
money shall be applied by the Trustee to the payment (either
directly or through any Paying Agent, as the Trustee may
determine) to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the
Trustee.
Section 5.03. REPAYMENT TO THE COMPANY.
The Trustee and any Paying Agent shall promptly pay to the Company
upon request any excess money or securities held by them at any
time. Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust, for the payment of the principal of, or
interest on, any Note and remaining unclaimed for two years
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after such principal or interest has become due and payable shall be paid to
the Company on its request, or (if then held by the Company) shall be dis-
charged from such trust, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with regard to such money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the ex-
pense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each business day and of general
circulation in the City of new York, State of New York, or mailed to each such
Holder, or both, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, as the case may be, any unclaimed balance of such
money then remaining will be paid to the Company.
ARTICLE SIX
SECURITY
Section 6.01. ASSIGNMENT AGREEMENT.
In order to secure the due and punctual payment of the principal of
and interest on the Notes, when and as the same shall be due and
payable, whether at Maturity or at an Interest Payment Date, by
acceleration, call for redemption or otherwise, of the Notes and
performance of all other obligations of the Company to the Holders
or the Trustee under this Indenture, according to the terms hereof,
the Company has made an assignment of all of its right, title and
interest in and to the Mortgage Documents (other than the Guaranty
Mortgage) to the Trustee pursuant to the Assignment Agreement. RIH
has the full right, power and authority to grant, bargain,
sell, release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm the property constituting the Trust Estate, in the
manner and form done, or intended to be done, in the Mortgage
Documents, and the Company has the full right, power and authority
to grant, bargain, sell, release, re-convey, assign, transfer and
confirm, absolutely, all of its right, title and interest in and to
the Mortgage Documents, in each case free and clear of all liens,
pledges, charges and encumbrances, whatsoever, except for the items
described in clauses (a) through (d) (inclusive) of Section 12.13,
and (a) each will forever warrant and defend the title to the same
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against the claims of all persons whatsoever in accordance with the
terms of the Mortgage Documents and the Assignment Agreement,
(b) each will execute, acknowledge and deliver to the Trustee
such further assignments, transfers, assurances or other
instruments as the Trustee may require or request, and (c) each
will do or cause to be done all such acts and things as may be
reasonably necessary or proper, or as may be required by the
Trustee, to assure and confirm to the Trustee its interest in the
Trust Estate and the right, title and interest in and to the
Mortgage Documents, so as to render the same available for the
security and benefit of this Indenture and of the Notes secured
hereby, according to the intent and purposes herein expressed.
The Mortgage Documents (other than the Guaranty Mortgage) and the
Assignment Agreement together create and vest in the Trustee a
direct and valid lien, which is PARI PASSU with the Guaranty
Mortgage, junior to the lien securing payment of the RIHF Senior
Facility Notes and any other secured Working Capital Facility and
junior to any lien securing payment of the Working Capital Facility
Guaranty, on the property constituting the Trust Estate and the
interest in the Mortgage Documents which they purport to create.
To the extent that any security interest in the Trust Estate or the
Mortgage Documents are deemed to be granted and to be governed by
the Uniform Commercial Code, the Mortgage and the Assignment
Agreement are deemed to be security agreements.
Section 6.02. RECORDING, ETC.
The Company will cause, at its own expense, the Assignment
Agreement, the Mortgage Documents, this Indenture and all
amendments or supplements thereto, to be registered, recorded and
filed and/or re-recorded, refiled and renewed in such manner and in
such place or places, if any, as may be required by law in order
fully to preserve and protect the lien of the Mortgage Documents
and the Assignment Agreement on all parts of the Trust Estate and
the Mortgage Documents and the interest in the RIH Promissory Note
and to effectuate and preserve the security of the Noteholders and
all rights of the Trustee.
The Company shall furnish to the Trustee:
(a) promptly after the execution and delivery of this
Indenture or other instrument of further assurance or
amendment, including any supplemental indenture, an Opinion
or Opinions of Counsel either (1) stating that, in the opinion
of such counsel, this Indenture, the Mortgage Documents and
the assignment to the Trustee of the Mortgage Documents
intended to be made by the Assignment Agreement and all
other instruments of further assurance or amendment have been
properly recorded, registered and filed to the extent
necessary to make effective the liens intended to be created by the
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Mortgage Documents and the Assignment Agreement, 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 the Mortgage Documents and the Assignment
Agreement 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 Mortgage
Documents and the Assignment Agreement, or (2) stating that,
in the opinion of such counsel, no such action is necessary
to make such liens and assignments effective; and
(b) within 60 days after June 30 in each year beginning with
the year 1995, an Opinion or Opinions of Counsel, dated as of
such date, either (1) 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 all supplemental indentures, financing
statements, continuation statements or other instruments of
further assurance as is necessary to maintain the liens of the
Mortgage Documents and the assignment of the Mortgage
Documents to the Trustee made by the Assignment Agreement
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 Noteholders
and the Trustee hereunder and under the Mortgage Documents
and the Assignment Agreement, or (2) stating that, in the
opinion of such counsel, no such action is necessary to
maintain such liens and assignments.
The Company and RIH shall cause TIA SECTION 314(d) relating to the release
of property from the liens of the Mortgage to be complied with.
Any certificate or opinion required by TIA SECTION 314(d) may be made by an
Officer of the Company or RIH, unless otherwise required by TIA
SECTION 314(d).
Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS.
The Trustee shall hold in its possession the Mortgage Documents,
except as it from time to time may be required for actions, suits
or proceedings relating to the Mortgage Documents or for the
purpose of enforcing or realizing upon any right or value thereby
represented. The Trustee may, from time to time, in its sole
discretion, for
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the purpose of convenient location of the Mortgage Documents, appoint
one or more agents to hold physical custody, for the account of the Trustee,
of the Mortgage Documents.
Section 6.04. SUITS TO PROTECT THE TRUST
ESTATE AND MORTGAGE DOCUMENTS.
Upon five days' prior written notice to the Company (or such
shorter period or without notice if deemed necessary and
appropriate by the Trustee), the Trustee shall have the power, but
not the obligation to institute and to maintain such suits and proceedings
as it may deem necessary or appropriate to prevent any impairment of the
Trust Estate by any acts which may be unlawful or in violation of
the Mortgage Documents, the Assignment Agreement or this Indenture,
and such suits and proceedings as the Trustee may deem necessary or
appropriate to preserve or protect its interest and the interests
of the Noteholders in the Trust Estate and the Mortgage Documents
and the principal, interest, issues, profits, rents, revenues and
other income arising therefrom (including 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 result in an impairment of security hereunder or be
materially prejudicial to the interests of the Noteholders or of
the Trustee). The Trustee shall also have authority to exercise
any rights or powers conferred on the Trustee as the holder of the
Note.
ARTICLE SEVEN
REMEDIES
Section 7.01. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", whenever used herein, means any one of the
following events (including any applicable notice requirement and
any period of grace as specified in this Section 7.01) (whatever
the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Note
when such interest becomes due and payable and continuance of
such default (the deposit with the Trustee pursuant to Section
3.07 of funds sufficient to make such interest payment in full
being deemed to cure any such
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default for the purposes hereof) for a period of ten days; or
(b) default in the payment of all or any portion of the
principal of any Note at its Maturity; or
(c) default in the performance or breach of any covenant of
the Company or RIH in this Indenture (other than a covenant a
default in the performance or breach of which is elsewhere in
this Section 7.01 specifically dealt with), the Assignment
Agreement or any of the Mortgage Documents and continuance of
such default or breach for a period of 30 days (or such
shorter or longer cure period, if any, as may be specified
in respect of such default or breach in the Assignment
Agreement or the applicable Mortgage Document, as the case
may be), and (other than with respect to Sections 12.07,
12.08, 12.09, 12.10, 12.11, 12.12, 12.13 or 12.21) after
there has been given (i) to the Company by the Trustee or
(ii) to the Company and the Trustee by the Holders of at least
25% in Outstanding Amount of the Outstanding Notes, a written
notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of
Default" hereunder; PROVIDED, HOWEVER, that, if such default
or breach is of a covenant set forth in Section 12.02, 12.04,
12.05, 12.11, 12.13 or 12.21, and if such default or breach is
of such a nature that is curable but is not susceptible of
being cured with due diligence within such 30-day period (or
such shorter or longer cure period) (for reasons other than
lack of funds), then such period shall be extended for such
further period of time
as may reasonably be required to cure such default or breach, so
long as (i) RIH delivers an
Officers' Certificate to the Trustee within such period
stating (A) the applicability of the provisions of this
proviso to such default or breach, (B) the Company's or RIH's
intention to remedy such default or breach with reasonable
diligence and (C) the steps which the Company or RIH has
undertaken to remedy such default or breach, and (ii) RIH
delivers to the Trustee additional Officers' Certificates
every 30 days thereafter updating the information contained
in the certificate described in clause (i) above, in which case
such period shall be extended for such further period of time
as may reasonably be required to cure such default or breach,
provided that the Company or RIH is then proceeding and
thereafter continues to proceed to cure such default or
breach with reasonable diligence; PROVIDED FURTHER, HOWEVER,
that such additional period of time shall not in any case
exceed 60 days; or
(d) a proceeding or case shall be commenced, without the
application or consent of the Company or RIH,
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in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator
or the like of the Company or RIH or of all or any
substantial part of its assets, or (iii) similar relief in
respect of the Company or RIH under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of
60 consecutive days; or
(e) the commencement by the Company or RIH of a voluntary
case under the federal bankruptcy laws or any other
applicable federal or state law, or the consent or
acquiescence by any of them to the filing of any such
petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or
sequestrator (or other similar official) of the Company or
RIH or any substantial part of any of their property, or the
making by any of them of an assignment for the benefit of
creditors, or the taking of action by the Company or RIH in
furtherance of any such action; or
(f) the revocation, suspension or involuntary loss of any
Permit which results in the cessation of a substantial
portion of the operations of the Casino-Hotel for a period
of more than 90 consecutive days; or
(g) (i) a default by the Company, RIH or any of their
Subsidiaries under any Indebtedness (other than the
Indebtedness represented by the Working Capital Facility and
the Junior Mortgage Facility) in an aggregate principal amount
in excess of $5,000,000, which default results in the
acceleration of the maturity of any such Indebtedness under
the evidence of indebtedness, indenture or other instrument
governing such Indebtedness; PROVIDED, HOWEVER, that, if such
default under such evidence of indebtedness, indenture or
other instrument shall be cured by the obligor, or be waived
by the holders of such Indebtedness, in each case as may be
permitted by such evidence of indebtedness, indenture or
other instrument and in each case resulting in rescission of
such acceleration thereunder, then the Event of Default
hereunder by reason of such default shall be deemed likewise
to have been thereupon cured or waived; or (ii) a default by
the Company, RIH or any of their Subsidiaries under any
Indebtedness represented by the Working Capital Facility or
the Junior Mortgage Facility, the effect of which default
(after the expiration of any applicable notice or grace
periods) is to permit the
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holder or holders of any such Indebtedness represented by the Working
Capital Facility or the Junior Mortgage Facility in an aggregate principal
amount in excess of $5,000,000 (or a trustee or agent on behalf of
such holder or holders) to cause the acceleration of the
maturity of such Indebtedness represented by the Working
Capital Facility or the Junior Mortgage Facility under the
evidence of indebtedness, indenture or other instrument
governing such Indebtedness; PROVIDED, HOWEVER, that if such
default under such evidence of indebtedness, indenture or
other instrument shall be cured by the obligor, or be waived
by the holders of such Indebtedness, in each case as may be
permitted by such evidence of indebtedness, indenture or
other instrument (and, if such default resulted in the
acceleration of the maturity of such Indebtedness, such
acceleration shall have been rescinded thereunder) then the
Event of Default hereunder by reason of such default shall be
deemed likewise to have been thereupon cured or waived; or
(iii) the existence of a final judgment of a court of
competent jurisdiction in an amount in excess of $3,000,000
against the Company, RIH or the Trust Estate, which judgment
has not been satisfied or otherwise provided for, for a
period of 30 days (during which execution shall not be
effectively stayed) following the date on which such
judgment becomes a lien against the Trust Estate or any part
thereof (unless the lawsuit in question was commenced without
effective service of process upon either the Company or RIH in
which case such 30-day period shall not commence until the
Company or RIH receives notice of such final judgment); or
(iv) the existence of a final judgment of a court of competent
jurisdiction in an amount in excess of $15,000,000 against the
Company, RIH or the Trust Estate, which judgment has not been
satisfied or otherwise provided for, for a period of 60 days
(during which execution shall not be effectively stayed)
following the date of such final judgment; or (v) the
existence of a final judgment of a court of competent
jurisdiction, regardless of amount, against the Company, RIH
or the Trust Estate, which judgment has not been satisfied or
otherwise provided for, for a period of 60 days (during which
execution shall not be effectively stayed) following the date
of such final judgment, if such judgment, by itself or upon
recordation or other action of the judgment creditor, imposes
or would impose a lien on the Trust Estate or any part thereof
senior to the lien of the Mortgage; or
(h) default in the performance, or breach, of any covenant
of the Company or RIH in Article Ten; or
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(i) the existence of a judgment of a court of competent
jurisdiction in an amount in excess of $3,000,000 against RIH regarding the
CRDA Dispute, which judgment has not been stayed, satisfied or otherwise
provided for, for a period of 30 days (during which execution shall not be
effectively stayed) (unless the lawsuit in question was commenced without
effective service of process upon RIH in which case such 30-day period
shall not commence until RIH receives notice of such final judgment); or
(j) if RII fails to pay or discharge or cause to be paid or
discharged, within 30 days before the same shall become delinquent, all
taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of
Default or Default shall be deemed to exist hereunder with respect to
any tax liability not paid or discharged by RII if and to the extent
that the amount, applicability or validity of such tax liabilities is
being contested in good faith by appropriate proceedings if adequate
reserves therefor have been established in accordance with GAAP; PROVIDED
FURTHER, HOWEVER, that this clause (j) shall not apply to amounts due
with respect to any period during which neither the Company, RIH nor any
of their Subsidiaries is included in RII's consolidated group for federal
income tax purposes.
No action, event, claim, liability or judgment regarding the CRDA
Dispute shall constitute a Default or an Event of Default under this Section
7.01 unless and until a judgment shall have
been entered against RIH which constitutes an Event of Default pursuant
to clause (i) of this Section 7.01.
Section 7.02. ACCELERATION OF MATURITY;
RESCISSION AND ANNULMENT.
If an Event of Default (other than one referred to in clause (d) or
(e) of Section 7.01) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes
Outstanding may declare the Outstanding Amount and all accrued interest of
all the Notes to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee, if given by any Noteholders), and upon any such
declaration such Outstanding Amount shall become immediately due and payable.
If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs,
then the Outstanding Amount of all the Notes shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company.
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At any time after such a declaration of acceleration has been made,
but before any judgment or decree for payment of money due on any
Notes has been obtained by the Trustee as hereinafter provided in
this Article Seven, the Holders of a majority in Outstanding Amount
of the Notes may, by written notice to the Company and the Trustee,
rescind and annul such declaration and its consequences if:
(a) the Company has deposited with the Trustee a sum
sufficient to pay:
(1) all overdue installments of interest on all Notes,
(2) the principal of any Notes which have become due
otherwise than by such declaration of acceleration and
interest thereon at the rate or rates prescribed
therefor in the Notes, and
(3) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel; and
(b) all Events of Default, other than the non-payment of the
Outstanding Amount of Notes which have become due solely by
such declaration of acceleration, have been cured, or have
been waived as provided in Section 7.13.
No such rescission and annulment shall affect any subsequent
default or impair any right consequent thereon.
Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON
NOTES AND RIGHT OF TRUSTEE TO JUDGMENT.
The Company covenants that, if:
(a) default is made in the payment of any interest on any
Note when such interest becomes due and payable, and such
default continues for a period of 10 days (the deposit with the
Trustee during such 10 day period pursuant to Section 3.07 of funds
sufficient to make such interest payment in full being deemed to
cure any such default for the purposes hereof), or
(b) default is made in the payment of the principal of any
Note at its Maturity,
then, upon demand of the Trustee, the Company will pay to the
Trustee for the benefit of the Holders of such Notes, the whole
amount then due and payable on such Notes for principal and
interest, with interest at the rate prescribed therefor in
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the Notes on overdue principal and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel. If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, shall be entitled to sue for and recover judgment
against the Company, RIH and any other obligor on the Notes for the
whole amount so due and unpaid. The Trustee shall be entitled to
institute such suit either before, after or during the pendency of
any proceedings for the enforcement of this Indenture or of the
Mortgage Documents or of the Assignment Agreement, but only after
the occurrence of an Event of Default.
Subject to the Intercreditor Agreement, in the case of a
foreclosure of the Mortgage and a sale of the Trust Estate and
application of the proceeds as provided in Section 7.06, the
Trustee, in its own name and as trustee of an express trust,
shall be entitled to enforce payment of, and to receive, all
amounts then remaining due and unpaid upon the Notes, for the
benefit of the Holders thereof, and shall be entitled to recover
judgment for any portion of the same remaining unpaid, with
interest as aforesaid. No recovery of any such judgment upon any
property of the Company shall affect or impair the security
provided by this Indenture and the Assignment Agreement or the
lien of the Mortgage upon the Trust Estate or any rights, powers or
remedies of the Holders of the Notes.
Section 7.04. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company
or RIH or any other obligor upon the Notes or the property of the Company or
RIH or of such other obligor or their creditors, the Trustee (irrespective of
whether the principal (or any portion thereof) of the Notes shall then be due
and payable, as therein expressed or by declaration or otherwise, and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the
Outstanding Notes and to file such 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
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advances of the Trustee, its agents and counsel) and of the Noteholders
allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding 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 8.07.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Noteholder any
plan of reorganization, arrangement, adjustment or compensation affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
on the claim of any Noteholder in any such proceeding.
Section 7.05. TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture, the Notes,
the Assignment Agreement or the Mortgage Documents may be prosecuted and
enforced by the Trustee without the possession of any of the Notes or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the Ratable Benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
Section 7.06. APPLICATION OF MONEY COLLECTED.
Subject to the Intercreditor Agreement, any money
collected by the Trustee pursuant to this Article Seven or pursuant
to Article Three or Section 5.11 or 5.20 of the Mortgage which is
not required to be paid to the Mortgagor thereunder shall be
applied in the following order, at the date or dates fixed by the
Trustee and upon such date interest shall cease to accrue, and, in
case of the distribution of such money on account of principal upon
presentation of the Notes, and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:
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(a) FIRST: To the payment of all amounts due the
Trustee under Section 8.07;
(b) SECOND: To the payment of the whole amount then
due upon the Outstanding Notes, for principal and interest,
in respect of which or for the benefit of which such money
has been collected, with interest (to the extent that such
interest has been collected by the Trustee or a sum sufficient
therefor has been so collected and payment thereof is legally
enforceable at the respective rate or rates prescribed
therefor in the Notes) on overdue principal; and in case such
proceeds shall be insufficient to pay in full the whole amount
so due and unpaid upon such Notes, then first, payment of
accrued but unpaid interest (with interest thereon as
aforesaid), and second, to outstanding principal, in each
case, ratably according to the aggregate amount so due; and
(c) THIRD: To the payment of the remainder, if any, to the
Company or to whomever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct.
Section 7.07. LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute
any proceeding, judicial or otherwise, under or with respect to
this Indenture, the Assignment Agreement or the Mortgage Documents,
or for the appointment of a receiver or trustee or for any other
remedy hereunder, unless:
(a) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in Outstanding
Amount of the Outstanding Notes shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day
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period by the Holder of a majority in Outstanding Amount of the
Outstanding Notes;
it being understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Indenture, the Assignment
Agreement or the Mortgage Documents, to affect, disturb or
prejudice the right of any other Holders of Notes, or to obtain
or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, the Assignment
Agreement or the Mortgage Documents, except in the manner herein
and therein provided and for the Ratable Benefit of all Notes.
Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS
TO RECEIVE PRINCIPAL AND INTEREST.
Notwithstanding any other provision in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest
on such Note on the Stated Maturity or Interest Payment Dates
expressed in such Note (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any
such payment and such rights shall not be impaired without the
consent of such Holder.
Section 7.09. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Noteholder has instituted any
proceeding to enforce any right or remedy under this Indenture, the
Assignment Agreement or the Mortgage Documents and such proceeding
has been discontinued or abandoned for any reason or has been
determined adversely to the Trustee or to such Noteholder, then and
in every such case the Company, the Trustee and the Noteholders
shall, subject to any determination in such proceeding, be restored
to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
Section 7.10. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to
the Trustee or to the Noteholders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right
or remedy.
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Section 7.11. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of
any Note to exercise any right or remedy accruing upon an Event of
Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Seven or by law to the
Trustee or to the Noteholders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the
Noteholders, as the case may be.
Section 7.12. OTHER RIGHTS.
Subject to Section 8.03(e), the Holders of a majority in
Outstanding Amount of the Outstanding Notes shall have the right, during
the continuance of an Event of Default,
(a) to require the Trustee to proceed to enforce this
Indenture, either by judicial proceedings for the
enforcement of the payment of the Notes by the foreclosure
of the Mortgage and exercise of any remedies under the
Mortgage Documents and the Assignment Agreement and the sale
of the Trust Estate or otherwise or, at the election of the
Trustee, by the exercise of the power of entry and/or sale
conferred by the Mortgage; and
(b) to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee
hereunder, provided that
(1) such direction shall not be in conflict with
any rule of law or this Indenture or any applicable Mortgage
Document or the Assignment Agreement;
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction; and
(3) the Trustee shall not be required to determine if
any action so directed would be unjustly prejudicial to the
Holders not taking part in such direction.
Section 7.13. WAIVER OF PAST DEFAULTS.
Before any judgment or decree for payment of money due
has been obtained by the Trustee as provided in this Article Seven,
the Holders of not less than 66-2/3% in Outstanding Amount of the
Outstanding Notes may, by Act of such Noteholders delivered to the
Trustee and the Company, on
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behalf of the Holders of all the Notes waive any past Default hereunder
and its consequences, except a Default
(a) in the payment of the principal of or interest on
any Note, or
(b) in respect of a covenant or provision hereof which
under Article Eleven cannot be modified or amended without the
consent of the Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other Default or impair any
right subsequent thereon.
Section 7.14. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of
any Note by his acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, the
Assignment Agreement or the Mortgage Documents, or in any suit
against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claim or defense
made by such party litigant; but the provisions of this Section
7.14 shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Noteholders, or group of Noteholders,
holding in the aggregate more than 10% in Outstanding Amount of
the Outstanding Notes, or to any suit instituted by any Noteholder
for the enforcement of the payment of the principal of or interest
on any Note on or after the Stated Maturity expressed in such Note
(or, in the case of redemption, on or after the Redemption Date) or
the relevant Interest Payment Date.
Section 7.15. ENFORCEMENT.
In case an Event of Default shall occur and be
continuing, the Trustee, in it discretion may, subject to the
provisions of Section 7.12, proceed to protect and enforce its
rights and the rights of the Noteholders under this Indenture by
a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement
contained in this Indenture or in aid of the execution of any power
granted in this Indenture or for the enforcement of any other
legal, equitable or other remedy,
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as the Trustee, being advised by counsel, shall deem most effectual to protect
and enforce any of the rights of the Trustee or the Noteholders hereunder.
In case an Event of Default shall occur and be continuing
under the Mortgage, the Trustee, as assignee of the Mortgage
Documents, in its discretion may, subject to the provisions of
Section 7.12, proceed to enforce its rights under the Mortgage
Documents and the Assignment Agreement.
Section 7.16. MANAGEMENT OF CASINO-HOTEL.
Notwithstanding any provision of this Article Seven to
the contrary,
(a) following an Event of Default under the Mortgage and
the taking of possession of the Trust Estate by the Trustee
and/or the appointment of a receiver of the Trust Estate or
any part thereof, the Trustee or any such receiver shall be
authorized, in addition to the rights and power of the Trustee
and such receiver set forth elsewhere in this Indenture, the
Assignment Agreement and the Mortgage Documents, to retain
one or more experienced operators of hotels and/or casinos to
manage and operate the Casino-Hotel on behalf of the Noteholders,
provided that any such operator shall have all necessary legal
qualifications, including all Permits, to manage the
Casino-Hotel; and
(b) no Noteholder shall have any right to take
possession of, operate or manage all or any portion of the
Casino-Hotel, individually or as a member of a group, unless
such Noteholder shall have all necessary legal qualifications,
including all Permits, to do so and shall otherwise be
qualified to be retained to manage the Casino-Hotel under
subsection (a) of this Section 7.16.
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of
Default,
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
Indenture and the Mortgage Documents, and no implied covenants or
obligations shall be read into this Indenture and the Mortgage Documents
against the Trustee; and
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(2) 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 expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture or the
Mortgage Documents; but in the case of any such certificates or
opinions which by any provision hereof or thereof are specifically
required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture and the
Mortgage Documents.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture or the Mortgage Document,
and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
(c) No provision of this Indenture or any Mortgage Document
shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that
(1) this Section 8.01(c) shall not be construed to limit
the effect of Section 8.01(a);
(2) the Trustee shall not be liable for any error of
judgment made in good faith by it, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than
a majority in Outstanding Amount of the Outstanding Notes
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Indenture or any Mortgage Document; and
(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
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(d) Whether or not therein expressly so provided, every
provision of this Indenture and the Mortgage Documents relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section 8.01.
Section 8.02. NOTICE OF DEFAULTS.
Within 45 days after the occurrence of any Default hereunder of which
a Responsible Officer of the Trustee has actual knowledge, the Trustee shall
transmit by mail to all Holders of Notes as their names and addresses appear
in the Note Register, notice of such Default hereunder known to the Trustee,
unless such Default shall have been cured or waived; PROVIDED, HOWEVER, that,
except in the case of a default in the payment of the principal of
or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the best interests of the
Noteholders.
Section 8.03. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 8.01:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, coupon, other
evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel, and the
written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection in respect
of any action taken, suffered or omitted by
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the Trustee 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 or any
of the Mortgage Documents at the request or direction of any of the
Noteholders pursuant to this Indenture, unless such Noteholders shall
have offered to the Trustee reasonable security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) 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, direction, consent, order,
bond, debenture, other evidence of indebtedness or other paper or
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 RIH, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or
by or through agents or attorneys, and the Trustee shall not
be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be deemed to have knowledge
of and shall not be required to take any action with respect
to any Event of Default (other than an Event of Default described
in Section 7.01(a) and (b) or any event which would, with the giving
of notice or the passage of time or both, constitute an Event of Default,
unless the Trustee shall have actual knowledge of such event or shall have
been notified in writing of such event by Noteholders holding in the
aggregate more than 25% in Outstanding Amount of the Outstanding Notes;
(i) subject to Section 8.01(c), the Trustee shall not be
personally liable, in case of entry by it upon the Trust
Estate, for debts contracted or liabilities or damages
incurred in the management or operation of the Trust Estate;
and
(j) in addition to and not in limitation of its other
powers hereunder, the Trustee shall have such power and
authority as may be necessary to enter into and
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accept delivery of any document as may be necessary to effect
on behalf of the Holders of the Notes the subordination of the
indebtedness in respect of the Notes to any secured Working
Capital Facility (in accordance with the provisions of the
Mortgage), and upon written request of the Company, the
Trustee shall enter into such agreements on behalf of the
holders of the Notes.
Section 8.04. NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS.
The recitals contained herein and in the Notes, except
in a certificate of authentication on the Notes, shall be taken as
the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Indenture,
the Notes or the Mortgage Documents. The Trustee shall not be
accountable for the use or application by the Company of Notes or the proceeds
thereof or of any money paid to the Company or by a Company Order under any
provision hereof.
Section 8.05. MAY HOLD NOTES.
The Trustee, any Paying Agent, Note Registrar,
Authenticating Agent or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee
of Notes and, subject to Sections 8.08 and 8.13, if operative, may
otherwise deal with the Company with the same rights it would have
if it were not Trustee, Paying Agent, Note Registrar,
Authenticating Agent or such other agent.
Section 8.06. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law.
The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Company.
Section 8.07. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder and
under the Mortgage Documents (which compensation shall not be
limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(b) except as otherwise expressly provided herein and in
the Mortgage Documents, to reimburse the Trustee
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upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustee's negligence
or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this
Indenture or the trust created hereunder or the performance of its duties
hereunder, including the reasonable costs and expenses of
defending itself against or investigating any claim or liability in con-
nection with the exercise or performance of any of its powers or
duties hereunder (including reasonable attorneys' fees and expenses).
As security for the performance of the obligations of the
Company and RIH under this Section 8.07, the Trustee shall be
secured under this Indenture and the Mortgage Documents by a lien
prior to the Mortgage upon all property and funds held or collected by the
Trustee, and for the payment of such compensation, expenses, reimbursements
and indemnity the Trustee shall have the right to use and apply any money held
by it pursuant hereto.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company and RIH under this Section 8.07 shall survive.
Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS.
This Indenture shall always have a Trustee who satisfies
the requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The
Trustee shall comply with TIA SECTION 310(b) including the second sentence
of TIA SECTION 310(b)(9).
Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which
shall be a corporation organized and doing business under the law
of the United States of America or of any state, authorized under
such laws to exercise corporate trust powers, having (or in the case of a
corporation included in a bank holding company system, the related bank holding
company having) a combined capital and surplus of at least
$100,000,000, subject to supervision or examination by federal or
state authority. In addition, if the Trustee is a
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corporation included in a bank holding company system, the Trustee,
independently of such bank holding company, shall meet the capital requirements
of TIA SECTION 310(a)(2). The Trustee shall comply with 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 certificates of interest or participation in other securities, of the
Company are outstanding, if the requirements for such exclusion set forth in
TIA SECTION 310(b)(1) are met. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of such
supervising or examining authority, then for the purposes of this Section 8.09,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section 8.09, it shall resign
immediately in the manner and with the effect hereinafter specified
in this Article Eight.
Section 8.10. RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article Eight
shall become effective until the acceptance of appointment by the
successor Trustee under Section 8.11.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in Outstanding Amount of the Outstanding
Notes, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 8.08
after written request therefor by the Company or by any
Noteholder who is a bona fide Holder of a Note, or
(2) the Trustee shall cease to be eligible under Section
8.09 and shall fail to resign after written request therefor
by the Company or by any Noteholder who is a bona fide Holder
of a Note, or
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(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, (i) the Company by a Company Order may
remove the Trustee, or (ii) subject to Section 7.14, any Noteholder
who is a bona fide Holder of a Note may, on behalf of himself and
all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
the Trustee for any cause, the Company, by a Company Order, shall
promptly appoint a successor Trustee. In case all or substantially
all of the Trust Estate shall be in the possession of a receiver or
trustee lawfully appointed, such receiver or trustee, by written instrument,
may similarly appoint a successor to fill such vacancy until a new Trustee
shall be so appointed by the Noteholders. If, within one year after such
resignation, removal or incapacity or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in Outstanding Amount of the Outstanding
Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment, become the successor Trustee and supersede the
successor Trustee appointed by the Company or by such receiver or
trustee. If no successor Trustee shall have been so appointed by
the Company or the Noteholders and accepted appointment in the
manner hereinafter provided, subject to Section 7.14, any
Noteholder who is a bona fide Holder of a Note may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give written notice of each
resignation and each removal of the Trustee and each appointment of
a successor Trustee to each Noteholder by mailing such notice by first-class
mail, postage prepaid, to each Noteholder as such Noteholder's name and address
appear in the Note Register; provided, however, that failure of the Company
to give such notice shall not affect the resignation or removal of such
Trustee. Each notice shall include the name of the successor Trustee and the
address of its principal corporate trust office.
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Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall became
effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the estates,
properties, rights, powers, trusts and duties of the retiring
Trustee; but, on request of the Company or the successor Trustee,
such retiring Trustee shall, upon payment of its charges, execute
and deliver an instrument conveying and transferring to such
successor Trustee all the estates, properties, rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder, subject nevertheless to its lien,
if any, provided for in Section 8.07. Upon request of any such
successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such estates,
properties, rights, powers and trusts.
No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article Eight.
Section 8.12. MERGER, CONVERSION, CONSOLIDATION
OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this
Article Eight, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any
Notes shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated
such Notes.
Section 8.13. PREFERENTIAL COLLECTION
OF CLAIMS AGAINST COMPANY.
The Trustee will comply with TIA SECTION 311(a).
A Trustee
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who has resigned or been removed shall be subject to
TIA SECTION 311(a) to the extent indicated.
Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES.
At any time or times, for the purpose of meeting the
legal requirements of the TIA or of any jurisdiction in which any
of the Trust Estate may at the time be located or in which it shall
be necessary or desirable for the Trustee to act, the Company and
the Trustee shall have power to appoint, and, upon the written
request of the Trustee or of the Holders of at least 25% in
Outstanding Amount of the Notes Outstanding, the Company shall for
such purpose join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Trustee either to
act as co-trustee, jointly with the Trustee, of all or any part of
the Mortgage Documents or of the Trust Estate covered by such
Mortgage Documents, or to act as separate trustee of any such
property, in either case with such powers as may be provided in
the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or
power deemed necessary or desirable, subject to the other
provisions of this Section 8.14. If the Company does not join in
such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default has occurred
and is continuing, the Trustee alone shall have power to make such
appointment.
Should any written instrument from the Company be
required by any co-trustee or separate trustee so appointed for
more fully confirming to such co-trustee or separate trustee such
property, title, right or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by the
Company within three business days of such request.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to
the following terms, namely:
(a) the Notes shall be authenticated and delivered, and
all rights, powers, duties and obligations hereunder in
respect of the custody of securities, cash and other personal
property held by, or required to be deposited or pledged with,
the Trustee hereunder, shall be exercised solely, by the
Trustee;
(b) the rights, powers, duties and obligations hereby
conferred or imposed upon the Trustee in respect of any
property covered by such appointment shall be conferred or
imposed upon and exercised or performed by the Trustee or by
the Trustee and such co-trustee or
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separate trustee jointly,
as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that
under any law of any jurisdiction in which any particular act
is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee;
(c) the Trustee, at any time, by an instrument in writing
executed by it may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section
8.14. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided
in this Section 8.14;
(d) the Trustee, or any other such trustee hereunder,
shall not be personally liable by reason of any act or
omission of any co-trustee or separate trustee hereunder, and
no co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the
Trustee, or any other such trustee hereunder;
(e) any Act of Noteholders delivered to the Trustee
shall be deemed to have been delivered to each such co-trustee
and separate trustee; and
(f) any co-trustee or separate trustee appointed
hereunder shall be entitled to compensation and indemnification
from the Company under Section 8.07 hereunder and shall be
entitled to all such other rights and protections afforded
the Trustee hereunder.
Section 8.15 APPOINTMENT OF AUTHENTICATING AGENT.
Upon the request of the Company, the Trustee shall
appoint an Authenticating Agent with power to act on its behalf and
subject to its direction in the authentication and delivery of the
Notes designated for such authentication by the Company and
containing provisions therein for such authentication in connection
with transfers and exchanges under Sections 3.04, 3.05, 3.06 and
13.07, as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by those
Sections to authenticate and deliver such Notes. For all purposes
of this Indenture, the authentication and delivery of Notes by the
Authenticating Agent pursuant to this Section 8.15 shall be
deemed to be the authentication and delivery of Notes "by the
Trustee". Such Authenticating Agent shall at all times be a bank
or trust company having its principal office in the Borough of
Manhattan, City and State of New York, and shall at all times be a
corporation organized and doing business under the laws
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of the
United States or of any State with a combined capital and surplus
of at least $50,000,000 and authorized under such laws to exercise
corporate trust powers and subject to supervision or examination by
federal or state authority. If such corporation publishes reports
of condition at least annually pursuant to law or the requirements
of such authority, then for the purposes of this Section 8.15 the
combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published.
Any corporation into which any Authenticating Agent may
be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or
any corporation succeeding to the corporate trust business of any
Authenticating Agent, shall be the successor of the Authenticating
Agent hereunder, if such successor corporation is otherwise
eligible under this Section 8.15, without the execution or filing
of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and the Company. The
Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such
Authenticating Agent and the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this
Section 8.15, the Trustee shall promptly appoint a successor
Authenticating Agent, and shall give written notice of such
appointment to the Company.
The Company agrees to pay to the Authenticating Agent
from time to time reasonable compensation for its services.
The provisions of Sections 3.10, 8.04 and 8.05 shall be applicable
to any Authenticating Agent.
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS
BY TRUSTEE
Section 9.01. COMPANY TO FURNISH TRUSTEE
SEMI-ANNUAL LISTS OF NOTEHOLDERS.
The Company will furnish or cause to be furnished to the
Trustee semi-annually, not less than 45 days nor more than
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60 days
after each date (month and day) specified as a semi-annual Interest
Payment Date for the Notes (whether or not any Notes are then
Outstanding), and at such other times as the Trustee may request
in writing, within 60 days after receipt by the Company of any such
request, a list in such form as the Trustee may reasonably require
containing all the information in the possession or control of the
Company, or any of its Paying Agents other than the Trustee, as to
the names and addresses of the Holders of Notes, obtained since the
date as of which the next previous list, if any, was furnished,
excluding from any such list the names and addresses received by
the Trustee in its capacity as Note Registrar. Any such list may
be dated as of a date not more than 15 days prior to the time such
information is furnished and need not include information received
after such date.
Section 9.02. PRESERVATION OF INFORMATION;
COMMUNICATIONS TO NOTEHOLDERS.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders of
Notes (1) contained in the most recent list
furnished to the Trustee as provided in Section 9.01, (2) received
by the Trustee in the capacity of Paying Agent (if so acting)
hereunder or (3) received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided
in Section 9.01 upon receipt of a new list so furnished.
(b) Holders may communicate pursuant to TIA SECTION
312(b) with other Holders with respect to their rights under this
Indenture or the Notes. The Company, the Trustee, the Note
Registrar and any other Person shall have the protection of TIA
SECTION 312(c).
(c) Every Holder of Notes, by receiving and holding the
same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any Paying Agent shall be held
accountable by reason of the disclosure of any such information as
to the names and addresses of the Holders of Notes in accordance
with Section 9.02(b), regardless of the source from which
information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request
made under Section 9.02(b).
Section 9.03. REPORTS BY TRUSTEE.
(a) Within 60 days after each May 15 beginning with
May 15, 1995, the Trustee shall transmit to each Noteholder a
report dated as of such May 15 that complies with TIA SECTION
313(a). The Trustee shall also comply with TIA SECTION 313(b)
and SECTION 313(c).
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(b) A copy of each such report shall, at the time of
such transmission to Noteholders, be filed by the Trustee with any
stock exchange on which the Notes are listed and also with the
Commission. The Company will notify the Trustee when the Notes are
listed on any stock exchange.
(c) The Trustee will provide the Casino Control
Commission and the Director of the Division of Gaming Enforcement
of New Jersey with:
(1) copies of all notices, reports and other written
communications which the Trustee gives to Noteholders;
(2) a list of Noteholders promptly after the original
issuance of the Notes and a list of Noteholders annualy on December 1
of each year, or such other time as requested by the Casino Control
Commission or Director of Division of Gaming Enforcement;
(3) notice of any Event of Default under this Indenture or
of any event, occurrence or condition actually known by the
Trustee which, with the giving of notice or lapse of time or
both would constitute an Event of Default under this Indenture
(including the Guaranty),
the RIH Promissory Note or the Mortgage Documents (as
such term is defined in such instruments), any acceleration
of the Indebtedness evidenced or secured hereby or thereby,
the institution of any legal actions or proceedings before any
court or governmental authority in respect of this Indenture
(including the Guaranty) or the Mortgage Documents, the
entering into or taking possession of any property
constituting the Trust Estate and any rescission, annulment
or waiver in respect of an Event of Default under any
instruments described in this clause (3);
(4) notice of the removal or resignation of the Trustee;
(5) notice of any transfer or assignment of rights under
this Indenture (including the Guaranty) (but not in respect
of the Notes) or the Mortgage Documents after a Responsible Officer of
the Trustee becomes aware of the same; and
(6) a copy of any amendment to the Notes, this Indenture
(including the Guaranty) or the Mortgage Documents immediately;
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provided
however, that the Trustee shall not be liable to any Person (other than
the Casino Control Commission and the Director of the Division of Gaming
Enforcement of New Jersey) for any failure to provide any of the above-
mentioned documents to the Casino Control Commission and the Director of
the Division of Gaming Enforcement of New Jersey.
The notice specified in Section 9.03 (c) above shall be in writing and,
except as set forth below, shall be given immediately
after the Trustee has actual knowledge of any circumstances
requiring such notice. In the case of any notice in respect of
any Default or Event of Default under any instrument described in
Section 9.03(c), such notice shall be accompanied by a copy of any
notice from the Holders of Notes, or a representative thereof or
the Trustee, to the defaulting Person and, if accompanied by any
such notice to the defaulting Person, shall be given simultaneously
with the giving of any such notice to the defaulting Person. In
the case of any legal actions or proceedings, such notice shall be
accompanied by a copy of the complaint or other initial pleading or
document.
The Trustee and its Responsible Officers shall cooperate
with the Casino Control Commission and the Director of the Division of Gaming
Enforcement of New Jersey in order to provide such Commission and
Director with information and documentation relevant to compliance
with Section 9.03(c) above and as otherwise required by the Casino
Control Act.
The expiration date of the current gaming Permit held by
RIH is February 26, 1994. Subsequent gaming Permits held by RIH
are scheduled to expire every two years on February 26th, commencing February
26, 1996 unless and until the Trustee is advised otherwise. RIH
will advise the Trustee of any change
in such expiration date within five business days of knowledge thereof.
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE
OR TRANSFER ONLY ON CERTAIN TERMS.
Neither the Company nor RIH shall consolidate, combine or
merge with or into any other Person or permit any other Person to
consolidate, combine or merge with or into the Company or RIH, as
the case may be; and neither the Company with respect to its assets
nor RIH with respect to the Trust
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Estate shall sell, assign, convey
or transfer its interest in such assets or the Trust Estate, as the
case may be, substantially as an entirety (and notwithstanding
anything to the contrary contained herein (including the proviso
at the end of this sentence, but subject to Section 10.05), but subject to the
provisions of the Mortgage regarding dispositions of the Trust Estate, neither
the Company with respect to its assets nor RIH with respect to the
Trust Estate may sell, assign, convey or transfer such assets or
the Trust Estate, as the case may be, other than substantially as
an entirety) to any other Person or group of Persons in one
transaction or a series of related transactions, or permit any
other Person or group of Persons to convey or transfer all or
substantially all of its assets, subject to liabilities other than
DE MINIMIS liabilities, to the Company or RIH; and the Company
and RIH shall not transfer, convey, sell or otherwise dispose of to
any other Person, or issue to any Person, any equity interest in
the Company or RIH, as the case may be (each of the aforesaid
transactions described in this Section 10.01 is referred to herein
as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) the
Company may engage in a Combination Transaction in which the only
other party or parties is RIH or a direct or indirect wholly owned
Subsidiary of the Company or RIH, and (ii) the Company or RIH may
engage in any other Combination Transaction (either independently
or at the same time as other Combination Transactions), subject to
the following with respect to each such Combination Transaction:
(a) the conditions set forth in Section 10.03 are
satisfied;
(b) in the event the Company or RIH shall consolidate,
combine or merge with or into another Person or sell,
assign, convey or transfer its interest in its assets or in
the Trust Estate, as the case may be, substantially as an
entirety (but not less than
substantially as an entirety) to another Person in one
transaction or a series of related transactions, the entity
which is formed by or survives such consolidation, combination
or merger or the Person to which such assets or the Trust
Estate are conveyed or transferred:
(1) shall be organized and existing under the laws
of the United States of America, any state thereof, or
the District of Columbia;
(2) shall expressly assume, by an indenture
supplemental hereto, in form reasonably satisfactory to the
Trustee, executed and delivered to the
Trustee, the performance and observance of every
covenant, obligation and condition of this Indenture
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to be performed or observed by the Company or RIH,
whichever the case may be;
(3) shall expressly assume, by an instrument
executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the due and punctual performance of
every covenant, obligation and condition of the Mortgage
Documents and Assignment Agreement to be performed by
the Company or RIH, whichever the case may be; and
(4) immediately after and giving effect to such
transaction could incur at least $1.00 of additional
Indebtedness under Section 12.08;
(c) immediately after giving effect to such transaction,
no Event of Default, or Default hereunder or under the Mortgage
shall have occurred and be continuing;
(d) such Combination Transaction shall be on such terms
as shall not impair the lien and security and priority hereof
or of the Mortgage Documents or of the Assignment Agreement
and the rights and powers of the Trustee and the Holders of
the Notes hereunder and thereunder; and
(e) the Company or RIH, as the case may be, shall have
delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each of which shall state that such
Combination Transaction and such supplemental indenture
comply with this Article Ten and that all conditions
precedent herein provided for relating to such transaction
have been complied with.
Section 10.02. SUCCESSOR ENTITY SUBSTITUTED.
Upon any consolidation, combination or merger or any
conveyance or transfer of an interest in the assets of the Company
or in the Trust Estate permitted by Section 10.01, the successor
entity formed by such consolidation or into which
the Company or RIH is combined or to which such conveyance or
transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, and shall be bound by every obligation
and liability of, the Company or RIH, whichever
the case may be, under this Indenture with the same effect as if
such successor entity had been named as the Company or RIH herein;
PROVIDED, HOWEVER, that no such consolidation or combination
involving the Company or RIH, unless such transaction is in
compliance with the provisions of this Article Ten, shall have the
effect of releasing the Person named as "the Company" or "RIH", as
the case may be, in the first paragraph of this instrument, or any
successor entity which shall theretofore have become such in the
manner
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prescribed in this Article Ten, from its liability as
obligor and maker on the RIH Promissory Note or any of the
Notes.
Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL.
Neither the Company nor RIH shall engage in any
Combination Transaction unless, immediately following such
Combination Transaction, (a) RIH (or any successor entity) shall
be eligible for and shall meet all relevant Legal Requirements,
including holding all permits, required for the normal operation
of the business of owning and operating the Casino-Hotel, and (b)
RIH (or any successor entity) shall be controlled by a Person that
is, or shall retain to manage the Casino-Hotel one or more Persons
that are, experienced in the operation and management of
casino-hotels.
Section 10.04. LIMITATION ON SALES OF TRUST ESTATE.
Except as otherwise expressly permitted by the Mortgage
and this Indenture, neither the Company nor RIH shall sell, assign,
lease, sublease, hypothecate, pledge, mortgage or otherwise transfer
all or any part of the assets of the Company or the Trust Estate or
any interest therein (including, without limitation, any interest in
the Ground Leases). Without limiting the generality of the
foregoing, RIH shall not separate, or attempt to separate, its
ownership of its interest in the Ground Leases from the ownership
of the buildings constituting the Casino-Hotel or any part thereof.
Section 10.05 RIH SALE.
The foregoing provisions of this Article Ten shall not apply in
connection with an RIH Sale.
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS.
Without the consent of the Holders of any Notes, the
parties hereto may from time to time amend or supplement this
Indenture, the Assignment Agreement, the Notes or the Mortgage
Documents, as long as the form of such amendment or supplement
is satisfactory to the Trustee, for any of the following purposes:
(a) to correct or amplify the description of the Trust
Estate or better to assure, convey and confirm unto the
Trustee the assignment of the Mortgage Documents; or
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(b) to add additional conditions, limitations and
restrictions thereafter to be observed to the conditions,
limitations and restrictions on the authorized amount, terms
of issue, authentication and delivery of Notes as herein set
forth; or
(c) to comply with Article Ten; or
(d) to add to the covenants of the Company for the
benefit of the Holders of all Notes or to surrender any right
or power herein conferred upon the Company; or
(e) to cure any ambiguity, defect or inconsistency in
any of the enumerated documents, provided such action shall not
adversely affect the interests of the Holders of the Notes;
or
(f) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect
the qualification of this Indenture under the TIA or under any
similar federal statute hereafter enacted, and to add to this
Indenture such other provisions as may be expressly permitted
by the TIA, EXCLUDING, HOWEVER, the provisions referred to in
TIA SECTION 316(a)(2) as in effect at the date as of which this
instrument was executed or any corresponding provision in
any similar federal statute hereafter enacted; or
(g) to effectuate any subordination contemplated in
Section 8.03(i); or
(h) to comply with the requirements of the Casino Control Act.
The terms of any such enumerated document entered into
pursuant to this Section 11.01 shall be subject to prior approval of
the Casino Control Commission in consultation with the New Jersey Division
of Gaming Enforcement.
Section 11.02. WITH CONSENT OF NOTEHOLDERS.
With the consent of the Holders of not less than 66-2/3%
in Outstanding Amount of the Notes then Outstanding, by Act of such
Holders delivered to the Company and the Trustee, the parties
hereto may amend or supplement this Indenture, the Mortgage
Documents, the Assignment Agreement or the Notes, provided that the form of
such amendment or supplement is reasonably satisfactory to the Trustee. The
Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding may
waive compliance by the Company or RIH with any provision of this
Indenture, the Mortgage
Documents, the Assignment Agreement or the Notes, except a default
in the payment of principal of or interest on any Note, without
notice to any
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Noteholder. Without the consent of the Holder of each
Outstanding Note affected thereby, an amendment, supplement or
waiver, including a waiver pursuant to Section 7.13, may not:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal
amount thereof or the interest thereon or the amount payable
upon the redemption thereof, or change any Place of Payment
where, or the coin or currency in which, any Note, or the
interest thereon, is payable, or impair the right to
institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date); or
(b) reduce the percentage in Outstanding Amount of the
Outstanding Notes, the consent of whose Holders is required
for any amendment, supplement or waiver; or
(c) modify or alter the provisions of the proviso to the
definition of the term Outstanding; or
(d) modify any of the provisions of this Section or
Section 7.13, except to increase any percentage provided
thereby or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of
the Holder of each Note affected thereby; or
(e) permit the creation of any lien ranking prior to the
lien of the Mortgage (except for such liens expressly
permitted pursuant to Section 12.13).
In determining whether to execute any amendment or
supplement, subject to Sections 11.02(a) through (e), the Trustee
may in its discretion determine whether or not any Notes would be
affected by any such amendment or supplement and any such
determination shall be conclusive upon the Holders of all Notes,
whether theretofore or thereafter authenticated and delivered
hereafter. The Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders
under this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such
Act shall approve the substance thereof.
In connection with any amendment, supplement or waiver
under this Indenture, the Company or RIH may, but shall not be
obligated to, offer to any Holder who consents to such amendment,
supplement or waiver, or to all Holders, at the
discretion of the Company or RIH,consideration for such Holder's
consent to such amendment,supplement or waiver. The terms of any such
enumerated document entered into pursuant to
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this Section 11.02 shall be
subject to the prior approval of the Casino Control Commission in consultation
with the New Jersey Division of Gaming Enforecement.
Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS.
In executing, or accepting the additional trusts created
by, any amendment or supplement permitted by this Article or the
modification thereby of the trusts already created by this
Indenture, the Trustee shall be entitled to receive from the Company, and,
subject to Section 8.01(c), shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such amendment or
supplement is authorized or permitted by this Indenture. The
Trustee may, but shall not, except to the extent required in the
case of a supplemental indenture entered into under Section
11.01(e), be obligated to, enter into any such amendment or
supplement which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT.
Upon the execution of any amendment or supplement under
this Article, every Holder of Notes theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the TIA and Casino Control
Act as then in effect.
Section 11.06. REFERENCE IN NOTES TO
AMENDMENT OR SUPPLEMENT.
In the absence of a direction from the Company,
Notes authenticated and delivered after the execution of
any amendment or supplement pursuant to this Article may, and if
required by the Trustee shall, bear a notation in form approved by
the Trustee as to any matter provided for in such amendment or
supplement. If the Company shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the
Company, to any such amendment or supplement may be prepared and
executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Notes.
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ARTICLE TWELVE
COVENANTS
Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay or cause to be
paid the principal of and interest on each of the Notes at the
place or places, at the respective times and in the manner provided
in the Notes and this Indenture. Each installment of interest on
the Notes may be paid by mailing checks for such interest payable to
or upon the written order of the Holders of Notes entitled thereto,
to such address and in such name as they shall appear on the Note
Register. Any installment of principal and interest shall be
considered paid on the date it is due if the Trustee or Paying
Agent (other than the Company or a Subsidiary of the Company or
any Affiliate thereof) holds on that date money in immediately
available funds designated exclusively for and sufficient to pay
the installment and the Trustee and/or the Paying Agent has not
received instructions from the Company not to make such payment or
is not prohibited from paying such money to the Noteholders
pursuant to the terms of this Indenture.
The Company shall pay interest (including post-petition
interest in any proceeding under any applicable bankruptcy law) to
the extent legally permitted on overdue principal at the rate set
forth in the Notes; and it shall pay interest (including
post-petition interest in any proceeding under any applicable
bankruptcy law) on unpaid interest otherwise payable under the
first clause of this sentence at the same rate to the extent
legally permitted.
Section 12.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain, in the Borough of Manhattan,
the City of New York, State of New York, an office or agency where
Notes may be presented or surrendered for payment, where Notes may
be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Notes
and this Indenture may be served. The Company initially appoints
the Trustee as its agent for presentation or surrender of Notes for
payment or registration, transfer or exchange. The Trustee (or its corporate
parent) will maintain an office in the Borough of Manhattan, the City of New
York, State of New York, for such purposes.
The Company may from time to time designate one or more
other offices or agencies (in or outside the City of New
York, State of New York) where the Notes may be presented or
surrendered for any or all such purposes, and may from time to
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time rescind such designations; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York, State of New York, for such
purposes as stated in this Section 12.02. The Company will give
prompt written notice to the Trustee of any such designation and
any change in the location of any such office or agency.
If at any time the Company shall fail to maintain such
an office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and
demands may be made or served at the principal corporate trust
office of the Trustee, and the Company hereby appoints the Trustee
its agent to receive all such presentations, surrenders, notices
and demands.
Section 12.03. MONEY FOR SECURITY
PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of, or
interest on, any of the Notes, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum, sufficient to pay
the principal or interest so becoming due until such sums shall be
paid or issued to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of such action or
any failure so to act.
The Company will, on or before each due date of the
principal of or interest on, any Notes, deposit with a Paying Agent
a sum in same day funds, sufficient to pay the principal or
interest so becoming due, such sum, as the case may be, to be held
in trust for the benefit of the Persons entitled to such principal
or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of such action or any
failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all sums received by it as such agent for the
payment of the principal of or interest on Notes (whether such
sums have been paid to it by the Company or by any other
obligor on the Notes) in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
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(b) promptly give the Trustee notice of any failure by
the Company (or any other obligor upon the Notes) to make any
payment of the principal of, or interest on, the Notes when
the same shall be due and payable; and
(c) at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent.
Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the
principal of, or interest on, any Note and remaining unclaimed for
two years after such principal or interest has become due and
payable shall be paid to the Company on its request, or (if then
held by the Company) shall be discharged from such trust, unless
otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, and the Holder of such
Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with regard to such money, and all
liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each
business day and of general circulation in the City of New York,
State of New York, or mailed to each such Holder, or both, notice
that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
publication or mailing, as the case may be, any unclaimed balance
of such money then remaining will be paid to the Company.
Section 12.04. CORPORATE EXISTENCE.
Subject to Article Ten, each of the Company and RIH 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
existence of each of its Subsidiaries in accordance with the
respective organizational documents of the Company, RIH and each
such Subsidiary and the rights (charter and statutory), licenses,
permits, approvals and governmental franchises of it and each of
its Subsidiaries necessary to the conduct of its and their
respective businesses, including, without limitation, all
licenses, permits, approvals and franchises necessary to assure
the continued operation of RIH's gaming operations at the
Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly
owned subsidiary of RIH may consolidate with, merge into or
transfer or distribute all or part of its properties and assets
to RIH or the Company or as otherwise provided in Section 10.01.
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Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE.
The Company and RIH will each keep proper books of record
and account, in which full and correct entries shall be made of all
material dealings or transactions of or in relation to the Notes
and the properties, business and affairs of the Company and RIH in
accordance with GAAP. The Company and RIH will at any and all
times, upon the written request of the Trustee and at the expense
of RIH, permit the Trustee by its representatives to inspect the
Casino-Hotel and the books of account, records, reports and other
papers of the Company and RIH, and to make copies and extracts
therefrom, and will afford and procure a reasonable opportunity to
make any such inspection (provided that the Company and RIH shall
have received reasonable advance notice of such inspection and that
any such inspection shall not unreasonably interfere with the
business operations of the Company and RIH). The Company and RIH
will furnish to the Trustee any and all information as the Trustee
may reasonably request with respect to the performance by the
Company and RIH of their covenants in this indenture.
Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES.
(a) RIH shall furnish or cause to be furnished to the
Trustee, within 105 days after each fiscal year of RIH: (i) a copy
of annual audited financial statements of RIH prepared in
conformity with GAAP, accompanied by a report of Ernst & Young or
of another firm of independent certified public accountants of
recognized national standing selected by RIH (the "National
Accountants"), together with a certificate from such National
Accountants stating that their audit examination has included a
review of the terms of this Indenture and that the National
Accountants have not become aware of any Event of Default or that
a Default has occurred and is continuing, and if they have become
aware of any such Event of Default or Default, describing it;
PROVIDED, HOWEVER, that the National Accountants shall not be
liable to any Person for any failure to discover any Event of
Default or Default in connection with such review; and (ii) a copy
of annual unaudited financial statements of RIH, including notes
to such financial statements and corresponding management's
discussion and analysis, in form and substance comparable to that
which would be required to be filed with the Commission in an
Annual Report on Form 10-K under the Exchange Act, prepared in the
same manner as the audited financial statements referred to in
clause (i) of this Section 12.06(a), signed by a proper accounting
officer of RIH. RIH contemporaneously with the furnishing of such
audited financial statements to the Trustee under clause (i) this
Section 12.06(a), RIH shall mail copies of such audited financial
statements to the Holders (which need not include the
certificate referred to in such clause (i)).
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(b) RIH shall furnish or cause to be furnished to the
Trustee, within 60 days after each quarter of each fiscal year of
RIH, except the final quarter of such fiscal year, a copy of
unaudited financial statements of RIH prepared on a consistent
basis with the audited financial statements referred to in clause
(i) of Section 12.06(a), signed by a proper accounting officer of
RIH and consisting of at least a balance sheet as at the close of
such quarter and statements of operations and cash flow for such
quarter and for the period from the beginning of such fiscal year
to the close of such quarter, including notes to such financial
statements and corresponding management's discussion and analysis,
in form and substance comparable to that which would be required to
be filed with the Commission in a Quarterly Report on Form 10-Q
under the Exchange Act. RIH contemporaneously with the furnishing
of such unaudited financial statements to the Trustee under this
Section 12.06(b), RIH shall mail copies of such unaudited financial
statements to the Holders (which need not be signed by a proper
accounting officer of RIH).
(c) RIH shall furnish or cause to be furnished to the
Trustee, contemporaneously with the furnishing of a copy of the
annual financial statements and of the quarterly financial
statements referred to in Section 12.06(a) and Section 12.06(b),
an Officers' Certificate dated the date of such annual financial
statement or such quarterly financial statements to the effect that
no Default or Event of Default has occurred and is continuing, or,
if there is any such Default or Event of Default, describing it and
the steps, if any, being taken to cure it.
(d) RIH shall furnish or cause to be furnished to the
Trustee, copies of each filing and report made by RIH or the Company
with the Commission pursuant to the reporting and filing requirements
of Section 13 or 15(d) of the Exchange Act, within 15 days after RIH
or the Company, as applicable, is required to file the same.
(e) RIH agrees that, if RIH becomes exempt from the
Commission reporting and filing requirements of Section 13 or 15(d)
of the Exchange Act, RIH shall prepare such periodic reports as it
would otherwise have been required to file with the Commission and
(i) at its own expense, cause all such periodic reports to be filed
with the Commission, the Trustee and any exchange upon which the
Notes then are listed, in each case on the date when such periodic
report would have been required to be filed with the Commission
under Section 13 or 15(d) of the Exchange Act, if either of such
provisions were applicable, and (ii) keep copies of such periodic
reports available at its office and promptly provide any Person who so
requests with a copy of any such periodic report, at the Company's
expense.
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(f) Each of the Company and RIH shall comply with the
provisions of SECTION 314(a) of the Trust Indenture Act.
(g) The Company shall deliver to the Trustee, promptly
upon becoming aware of any Default or Event of Default (but in no
event later than five business days thereafter) in the performance
of any covenant or agreement of the Company contained in this
Indenture or any of the Mortgage Documents, an Officers' Certificate
specifying with particularity such event.
Section 12.07. LIMITATIONS AND DIVIDENDS
AND RESTRICTED PAYMENTS.
(a) The Company hereby covenants that, on and after the
date of this Indenture, it will not, directly or indirectly, make,
or permit any Subsidiary of the Company to make, any Restricted
Payment.
(b) RIH hereby covenants that, on or after the date of
this Indenture,it will not, directly or indirectly make, or permit
any Subsidiary of RIH to make, any Restricted Payment; PROVIDED,
HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio,
as certified to the Trustee by an Officers' Certificate, calculated
at the time of the declaration of the dividend or distribution is
equal to or exceeds two, then RIH may declare and pay cash dividends
or make cash distributions in respect of any class of capital stock
of RIH in an amount not to exceed in the aggregate with any other
such cash dividends or distributions declared or made from and after
the date hereof, 50 percent of RIH's Consolidated Net Income from
and after the date hereof; and (ii) if (1) RIH's Consolidated
Interest Coverage Ratio, as certified to the Trustee by an
Officer's Certificate, calculated at the time of the declaration
of the dividend or distribution is equal to or exceeds two, and (2)
RIH has cash in excess of the amount required to pay interest on
the Notes and the Junior Mortgage Notes on the next Interest
Payment Date plus $20,000,000, then RIH may declare and pay cash
dividends or make cash distributions in respect of any class of
capital stock of RIH in an amount not to exceed such excess cash
amount.
(c) The Company and RIH will not, and will not permit
any of their respective Subsidiaries to, create or otherwise cause
or suffer to exist or become effective any encumbrance or
restriction of any kind on the ability of any Subsidiary of RIH or
the Company: (i) to pay dividends or make any other distribution
on the capital stock of such Subsidiary that is owned by RIH, the
Company or a wholly owned
Subsidiary of the Company or RIH, as applicable; (ii) to pay any
Indebtedness owed by such Subsidiary to RIH, the Company or any
wholly owned Subsidiary of the Company or RIH, as
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applicable; (iii)
to make loans or advances to RIH, the Company or any wholly owned
Subsidiary of the Company or RIH, as applicable; or (iv) to
transfer any of its property or assets to the Company, RIH or any
wholly owned Subsidiary of the Company or RIH, as applicable,
except (A) any restrictions existing on or prior to the date
hereof, or in connection with agreements in effect, or entered
into, on the date hereof, or any permitted amendments, renewals,
refundings, refinancings or extensions thereof; PROVIDED, HOWEVER,
that the terms and conditions of any such amendments, renewals,
refundings, refinancings or extensions are no more restrictive with
respect to the matters set forth in clauses (i) through (iv) of
this Section 12.07(c) than the agreements being amended, refunded,
renewed, refinanced or extended; (B) any restrictions or
encumbrances existing or arising pursuant to the terms of
Indebtedness of a Person outstanding at the time such Person
becomes a Subsidiary of the Company or RIH and not incurred in
connection with, or in contemplation of, such Person becoming a
Subsidiary of the Company or RIH or any permitted amendments,
renewals, refinancings or extensions thereof; PROVIDED, HOWEVER,
that the terms and conditions of any such amendments, renewals,
refundings, refinancings or extensions are no more restrictive with
respect to the matters set forth in clauses (i) through (iv) of this
Section 12.07(c) than the agreements being amended, renewed,
refunded, refinanced or extended; (c) encumbrances or restrictions
existing under or by reason of applicable law or regulation
(including, without limitation, the Casino Control Act) or this
Indenture; (d) customary provisions restricting assignment of
contracts or subletting or assignment of any lease governing a
leasehold interest of any Subsidiary of the Company or RIH; or
(e) net worth maintenance requirements imposed by any governmental
authority.
Section 12.08. LIMITATIONS ON ADDITIONAL
INDEBTEDNESS AND ISSUANCE OF NOTES.
(a) The Company and RIH shall not, and shall not permit
any of their respective Subsidiaries to, directly or indirectly,
incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to, including, without limitation,
through any merger or consolidation to which the Company, RIH or
any of their respective Subsidiaries is a party or through any other
acquisition of any such Subsidiary (collectively, "incur"), or
have outstanding, any Indebtedness other than, without duplication,
the following:
(i) the Notes;
(ii) Indebtedness represented by the Junior Mortgage
Facility;
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(iii) Indebtedness represented by the Working Capital
Facility;
(iv) Indebtedness represented by Capitalized Lease
Obligations in an amount not in excess of $5,000,000 in the
aggregate at any time outstanding;
(v) Indebtedness represented by F,F&E Financing
Agreements in an amount not in excess of $10,000,000 in the
aggregate at any time outstanding;
(vi) unsecured Indebtedness in an amount not in excess of
$5,000,000 in the aggregate at any time outstanding that is
subordinated and junior to the Junior Mortgage Notes at least
to the extent set forth in the Subordination Provisions
attached hereto as Exhibit C and which Indebtedness does not
have any requirements for amortization payments, mandatory
redemption or sinking fund payments prior to the stated
maturity of the Junior Mortgage Notes and does not provide
for the payment of interest in cash at any time when the most
recent installment of interest on the Junior Mortgage Notes
was not paid in cash;
(vii) Non-Recourse Indebtedness in an amount not in
excess of $25,000,000 in the aggregate at any time outstanding;
(viii) After-Acquired Fee Mortgage Debt in an amount not
in excess of $3,000,000 in the aggregate at any time
outstanding; and
(ix) Intercompany advances between RIH, the Company or
any of their direct or indirect Subsidiaries on the one hand,
and RII, on the other hand, in an in excess of $1,000,000 in the
aggregate at any time outstanding.
(b) The Company and RIH shall not permit any of their
respective Subsidiaries to issue (other than to the Company, RIH or
a direct or indirect wholly owned Subsidiary of the Company or RIH)
any capital stock which has voting rights or has a preference as to
any distribution over its common stock.
Section 12.09. LIMITATIONS ON REPAYMENT
OF SUBORDINATED INDEBTEDNESS.
Neither the Company nor RIH shall, and neither the
Company nor RIH shall permit any Subsidiary to, directly or
indirectly, purchase, redeem, defease (including, but not
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limited to, in-substance or legal defeasance) or otherwise acquire
or retire for value prior to the stated maturity of, or prior to
any scheduled mandatory redemption or sinking fund payment with
respect to (collectively, to "repay" or a "repayment"), the
principal of any Indebtedness of the Company, RIH or any Subsidiary
of the Company or RIH which is subordinated (whether pursuant to
its terms or by operation of law) in right of payment to the Notes;
PROVIDED, HOWEVER, that this Section 12.09 shall not apply with
respect to the Indebtedness represented by the Junior Mortgage
Facility.
Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS.
Each of the Company and RIH covenants that it will not,
and will not permit any Subsidiary to, repurchase any Notes in the
open market if an Event of Default shall have occurred and shall be
continuing hereunder, under the Junior Mortgage Note Indenture or
under the Senior Facility Note Indenture.
Section 12.11. RESTRICTION OF ACTIVITIES.
(a) RIH shall not, on or after the date of execution of
this Indenture, until the date that is 91 days after the payment in
full by the Company of the principal of (and interest, if any, on)
all Outstanding Notes, engage in any business or investment
activities other than those necessary for, incident to, connected
with or arising out of acquiring, financing, owning and operating
the Casino-Hotel or additional hotels or casinos or related or
ancillary businesses.
(b) Neither the Company nor RIH shall make any loans
to any Affiliate or any other Person other than (i) Indebtedness of
the type described in clause (ix) of Section 12.08(a), and (ii)
loans to RII from the proceeds of the Indebtedness represented by
the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have
the right to make loans to employees of RIH actively involved in
the operation of the Casino-Hotel or to engage in credit
transactions in the operation of the Casino-Hotel, if such loans
or credit transactions are in the ordinary course of business of
operating a casino-hotel.
(c) The Company shall not engage in any business (and
shall not have any Subsidiaries) other than (i) to
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collect principal, interest (and any interest on overdue principal and
interest) and other amounts under any intercompany notes or
guaranties made to the order of or otherwise in favor of the
Company, (ii) to preserve its rights under this Indenture and the
Mortgage Documents and otherwise to comply with its obligations
thereunder and under the Notes, (iii) to do or cause to be done all
things necessary or appropriate to protect the Trust Estate, (iv)
to preserve its rights under the Junior Mortgage Indenture and the
Junior Mortgage Documents and otherwise to comply with its
obligations thereunder and under the Junior Mortgage Notes, (v) to
issue the Indebtedness represented by any other Junior Mortgage
Facility Notes, (vi) to issue Indebtedness represented by the
Working Capital Facility; (vii) to preserve its rights under the
Working Capital Facility and otherwise comply with its obligations
under the Working Capital Facility, (viii) to incur any other
Indebtedness permitted under this Indenture, (ix) to do all such
acts and deeds necessary in connection with the Junior Mortgage
Facility and the documents and instruments relating thereto and in
connection with the Working Capital Facility and the documents and
instruments relating thereto, (x) to declare, issue and pay
dividends on, or make any redemptions or repurchases of, the
Company's capital stock as contemplated by its Certificate of
Incorporation (to the extent permitted hereby) and otherwise to
comply with and perform the provisions of its Certificate of
Incorporation and By-laws, and (xi) to do such further acts and
deeds to effectuate any of the matters listed in the foregoing
clauses of this Section 12.11(c).
Section 12.12. LIMITATION ON SUBSIDIARIES
CONSOLIDATED GROUP.
The Company and RIH shall not have any Subsidiaries
except the Subsidiaries existing on the date of this Indenture and
Subsidiaries acquired by the Company or RIH in transactions not
prohibited by the other provisions of this Indenture which are and
shall at all times be wholly owned (directly or indirectly) by the
Company or RIH.
Section 12.13. LIMITATIONS ON LIENS.
Neither the Company nor RIH will create, incur, suffer to
exist or permit to be created or incurred any mortgage, lien, charge
or encumbrance on or pledge of the Mortgage Documents or any of the
Trust Estate, other than (a) the lien of the Mortgage Documents and
the Assignment Agreement, (b) liens on the Trust Estate in
connection with Indebtedness permitted by clauses (i), (ii), (iii),
(iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on
the Trust Estate, and (d) a notice of intention or building
contract filed by a mechanic, materialman or laborer under the New
Jersey lien law. Without limiting the generality of the
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previous
sentence, but notwithstanding the provisions of such sentence, RIH
shall not be deemed to have breached such provisions by virtue of
the existence of liens for Impositions (as defined in the Mortgage)
or mechanics' liens so long as RIH is in good faith contesting the
validity of such liens in accordance with the provisions of Section
5.09 of the Mortgage.
Section 12.14. COMPLIANCE WITH LAWS.
Each of the Company and RIH shall comply, and shall cause
each of its Subsidiaries to comply, with the Casino Control Act and
all other applicable statutes (including, without limitation, ERISA),
rules, regulations, orders and restrictions of the United States of
America, states and municipalities, and of any governmental
department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing in respect of the
conduct of its business and the ownership of its properties and
assets, including, without limitation, the Trust Estate, except such
as are being contested in good faith by appropriate proceedings in
accordance with the Mortgage Documents (to the extent applicable)
and except for such non-compliances as will not in the aggregate
have a material adverse effect on the business, properties,
operations or financial condition of the Company, RIH or their
respective Subsidiaries.
Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company or RIH shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (a) all
taxes, assessments and governmental charges levied or imposed upon
the Company, RIH or any of their respective Subsidiaries or upon the
Trust Estate or any portion thereof or upon the income, profits or
property of the Company, RIH or any of their respective
Subsidiaries, and (b) all lawful claims for labor, materials and
supplies which, if unpaid, will by law become a Lien upon the Trust
Estate or upon any other property of the Company, RIH or any of
their respective Subsidiaries; PROVIDED, HOWEVER, that the Company
and RIH shall not be required to pay or discharge or cause to be
paid or discharged any such tax, assessments, charge or claim the
amount, applicability or validity of which is being contested in
good faith by appropriate proceedings in accordance with the
Mortgage Documents (to the extent applicable) if adequate
reserves therefor have been established in accordance with GAAP.
Section 12.16. MAINTENANCE OF PROPERTIES.
Each of the Company and RIH shall cause the Trust Estate
and all other properties (other than obsolete
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equipment) owned by or
leased to it or any of its Subsidiaries, and used or useful in the
conduct of its business or the business of the Company, RIH or such
Subsidiary to be maintained and kept in good condition, repair
and working order, except for reasonable wear and use, and will
cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as required by the
Mortgage Documents or, to the extent not governed by the Mortgage
Documents, as in the reasonable judgment of the Board of Directors
of RII may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times.
Section 12.17. INSURANCE.
Each of the Company and RIH shall maintain, and shall
cause each of its Subsidiaries to maintain, with financially sound
and reputable insurers, appropriate insurance on each of their
respective properties and businesses against liabilities,
casualties, risks and contingencies of the type and in amounts
required by the Mortgage Documents or, to the extent not governed
by the Mortgage Documents, as customarily maintained by corporations
and other entities engaged in the same or similar businesses and
similarly situated; PROVIDED, HOWEVER, that any such insurer shall
be qualified to do business in the jurisdiction where the insured
property is located.
Section 12.18. WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each of the Company and RIH covenants (to the extent that
it may lawfully do so) that it will not, and will not cause or permit
any of its Subsidiaries to, at any time insist upon, or plead, or in
any manner whatsoever claim, and will resist any and all efforts to
be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or
forgive the Company or RIH from paying all or any portion of the
principal of, or premium, if any, and interest on the Notes or the
RIH Promissory Note or the Guaranty as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which
may affect the covenants or the performance of this Indenture or
the RIH Promissory Note or the Guaranty; and (to the extent
that it may lawfully do so) the Company and RIH hereby expressly
waive all benefit or advantage of any such law, and covenant that
they will not hinder, delay or impede the execution of any power
granted to the Trustee herein and in the Mortgage Documents, but
will suffer and permit the execution of every such power as though
no such law had been enacted.
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Section 12.19. APPOINTMENT TO FILL A
VACANCY IN OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy
in the office of Trustee, will appoint, in the manner provided in
Section 8.10, a Trustee, so that there shall at all times be a
Trustee hereunder.
Section 12.20. VALIDITY OF LIENS.
Each of the Company and RIH represents and warrants that
it has, and covenants that it shall continue to have, full corporate
power and lawful authority to grant, release, convey, assign,
transfer, mortgage, pledge, hypothecate and otherwise create the
lien on the Trust Estate; and the Company and RIH shall warrant,
preserve and defend the interest of the Trustee in and to the Trust
Estate against the claims of all Persons, except as otherwise
expressly permitted by the Mortgage Documents or this Indenture, and
will take all action necessary to maintain and preserve the lien on
the Trust Estate contemplated therein.
Section 12.21. TRANSACTIONS WITH
STOCKHOLDERS AND AFFILIATES.
Each of the Company and RIH covenants that it shall not,
and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction (including,
without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the
Company or RIH or with any Affiliate of any such holder, unless (a)
such transaction is upon fair and reasonable terms which are no less
favorable to the Company or such Subsidiary, as the case may be,
than would be available in an arm's-length transaction with an
unrelated person and (b) if over $250,000, such transaction is
determined in the good faith judgment of a majority of the members
of the Board of Directors of either (i) RII, so long as RII owns,
directly or indirectly, a majority of the outstanding capital stock
of RIH, directly or indirectly, or (ii) RIH, to be in the best
interests of the Company, RIH or such Subsidiary as applicable;
PROVIDED, HOWEVER, that this provision shall not apply to (A)
any agreements, documents, instruments or transactions entered into
in connection with the RIHF Senior Facility Notes, (B) the Services
Agreement, (C) the RII Management Contract, or (D) the RII Tax
Sharing Agreement.
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ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. GENERAL APPLICABILITY OF ARTICLE.
Notes which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and in accordance
with this Article.
Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes shall be
evidenced by a Company Order. Redemption of any Notes shall not take
place earlier than 15 days after the corporate action taken to
authorize the redemption. In case of any redemption at the election
of the Company of less than all the Outstanding Notes, the Company
shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal
amount of Notes to be redeemed.
Section 13.03. SELECTION BY TRUSTEE
OF NOTES TO BE REDEEMED.
If less than all the Outstanding Notes are to be redeemed,
the particular Notes to be redeemed shall be selected by a random,
automated selection process or pro rata, as deemed appropriate by
the Trustee, not more than 60 days prior to the Redemption Date by
the Trustee from the Outstanding Notes which have not previously
been called for redemption, and such selection method may provide
for the selection for redemption of portions (equal to the greater
of $1,000 and the smallest authorized denomination of the Notes of
such series, or a multiple thereof) of the principal of Notes of a
denomination larger than $1,000.
The Trustee shall promptly notify the Company in writing
of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to
be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Notes shall relate, in the case of any Note redeemed or to be
redeemed only in part, to the portion of the principal of such Note
which has been or is to be redeemed.
Section 13.04. NOTICE OF REDEMPTION.
Notice of redemption shall be given by the Company or, at
the Company's request, by the Trustee in the name and
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at the expense
of the Company by first-class mail, postage prepaid, mailed not
less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Notes of such series to be redeemed, at his
address appearing in the Note Register.
Any notice which is mailed in the manner herein provided
shall be conclusively presumed to have been duly given, whether or
not the Holder receives the notice. In any case, failure to duly
give notice by mail, or any defect in the notice to the Holder of
any Notes designated for redemption in whole or in part, shall not
affect the validity of the proceedings for the redemption of any
other Notes.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the principal amount of Notes to be redeemed, and, if
less than all outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the
respective principal amounts) of the Notes to be redeemed;
(d) that on the Redemption Date, the Redemption Price of
each of the Notes to be redeemed will become due and payable
and that the interest thereon shall cease to accrue from and
after such date; and
(e) the place or places where the Notes to be redeemed are
to be surrendered for payment of the Redemption Price.
Section 13.05. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting
as its own Paying Agent, segregate and hold in trust as provided in
Section 12.03) an amount of money sufficient to pay the Redemption
Price of all the Notes which are to be redeemed on that date. Such
money shall be held in trust for the benefit of the Persons
entitled to such Redemption Price and shall not be deemed to be
part of the Trust Estate.
Section 13.06. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the
Notes so to be redeemed shall, on the Redemption Date, become due
and payable at the Redemption Price therein specified and from and
after such date (unless the Company
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shall default in the payment of
the Redemption Price) such Notes shall cease to bear interest.
Upon surrender of any such Note for redemption in accordance with
said notice, such Note shall be paid by the Company at the
Redemption Price. Installments of interest due on or prior to
the Redemption Date shall be payable to the Holders of the Notes
registered as such on the relevant Record Dates according to the
terms of such Notes and the provisions of Section 3.07.
If any Note called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until
paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Note.
Section 13.07. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly
executed by the Holder thereof or his attorney duly authorized in
writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note, without
service charge, a new Note or Notes of any authorized denomination
or denominations as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.
Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT.
Notwithstanding the provisions of this Article Thirteen,
if the Casino Control Commission does not waive the qualification
requirements as to any Noteholder (whether the record owner or
beneficial owner) and requires that such Noteholder be qualified
under the Casino Control Act, then, in such event, such Noteholder
must qualify under such Act. If a Noteholder does not so qualify,
the Noteholder must dispose of its interest in the Notes, within 30
days after the Company's receipt of notice of such finding, or the
Company may repurchase such Notes at the lower of the Outstanding
Amount and the Fair Market Value of such Notes, plus accrued
interest to the date of such repurchase. Commencing on the date the Casino
Control Commission serves notice upon either RIH or the Company that any Holder
is disqualified, it shall be unlawful for any such disqualified Holder: (i) to
receive any dividends or interest upon this Note; (ii) to exercise, directly
or through any trustee or nominee, any right conferred by this Note; or (iii)
to receive any remuneration in any form from either the Company or RIH for
services rendered or otherwise.
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<PAGE>
ARTICLE FOURTEEN
DEFEASANCE
Section 14.01. DISCHARGE OF THE INDENTURE
AND DEFEASANCE OF THE SECURITIES.
The Company shall be deemed to have paid and discharged
the entire Indebtedness on the Notes and the provisions of this
Indenture (except as to any surviving rights of transfer or exchange
of Notes herein or therein provided for and any right to receive
payments of principal and interest as provided in this Section
14.01), if:
(1) The Company irrevocably deposits in trust with
the Trustee, pursuant to an irrevocable trust and security
agreement in form and substance reasonably satisfactory to the
Trustee, U.S. Legal Tender or direct non-callable obligations
of, or non-callable obligations guaranteed as to timely payment
by, the United States of America for the payment of which
obligation or guarantee the full faith and credit of the United
States of America is pledged ("U.S. Government Obligations")
maturing as to principal and interest in such amounts and at
such times as are sufficient, without consideration of the
reinvestment of such interest and after payment of all Federal,
state and local taxes or other charges or assessments in respect
thereof payable by the Trustee, in the opinion of a nationally
recognized firm of independent public accountants expressed in
a written certification thereof (in form and substance reasonably
satisfactory to the Trustee) delivered to the Trustee, to pay
reasonable compensation to the Trustee under Section 8.07 and
the principal of and interest on the outstanding Notes on the
dates on which any such payments are due and payable in
accordance with the terms of the Indenture and of the Notes;
(2) Such deposits shall not cause the Trustee to
have a conflicting interest as defined in and for purposes of
the TIA;
(3) Such deposit will not result in a Default under
this Indenture;
(4) The Company shall deliver to the Trustee an
Opinion of Counsel, or a private ruling of the Internal
Revenue Service, in form and substance satisfactory to the
Trustee, to the effect that Holders of the Notes will not
recognize income, gain or loss for Federal income tax purposes
as a result of such deposit
and the defeasance contemplated hereby and will be subject to
Federal income tax in the same amounts and in
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<PAGE>
the same manner
and at the same times as would have been the case if such
deposit and defeasance had not occurred;
(5) The deposit shall not result in the Company,
the Trustee or the trust becoming or being deemed to be an
"investment company" under the Investment Company Act of 1940,
as amended;
(6) The Holders shall have a perfected security
interest under applicable law in the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 14.01(1);
and
(7) The Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent specified herein relating to the
defeasance contemplated by this Section 14.01 have been
complied with.
If all or any portion of the Notes are to be redeemed
through such irrevocable trust, the Company must make arrangements
satisfactory to the Trustee, at the time of such deposit, for the
giving of the notice of such redemption or redemptions by the
Trustee in the name and at the expense of the Company.
The Trustee and each co-trustee and separate trustee,
if any, then acting as such hereunder shall, at the expense of the
Company, execute and deliver a termination statement and such
instruments of satisfaction and discharge as may be necessary and
pay, assign, transfer and deliver to the Company or upon Company
Order all cash, securities and other personal property then held
by it hereunder, other than pursuant to this Section 14.01.
Section 14.02. APPLICATION OF DEPOSITED MONEY.
U.S. Legal Tender or U.S. Government Obligations
deposited with the Trustee pursuant to Section 14.01 shall be
applied by the Trustee in accordance with Section 5.02.
Section 14.03. REPAYMENT TO THE 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 in accordance with the provisions of Section 5.03.
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<PAGE>
____________________
This instrument may be executed in any number of
counterparts or with counterpart signatures, each of which as
executed shall be deemed to be an original, but all such
counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed and attested, all as of the day
and year first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest: By:
------------------------- --------------------------
Name:
Title:
RESORTS INTERNATIONAL HOTEL, INC.
Attest: By:
_________________________ __________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, as Trustee
Attest: By:
_________________________ __________________________
Name:
Title:
95
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ___________, 1993, ____________________
personally came before me, and he acknowledged under oath, to my
satisfaction, that: (a) he is the ______________ of Resorts
International Hotel Financing, Inc., the corporation named in this
document; (b) he is the attesting witness to the signing of this
document by the proper corporate officer who is ___________________
of Resorts International Hotel Financing Inc.; (c) this document
was signed and delivered by the corporation as its voluntary act
duly authorized by a proper resolution of its Board of Directors;
(d) he knows the proper seal of the corporation which was affixed to
this document; and (e) he signed this proof to attest to the truth
of these facts.
________________________________
Signed and sworn to
before me on _________, 1993.
_____________________________
Notary Public of the
State of New York
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ___________, 1993, _________________
personally came before me, and this person acknowledged under oath,
to my satisfaction, that: (a) this person is the ________________
of Resorts International Hotel, Inc., the corporation named in this
document; (b) this person is the attesting witness to the signing
of this document by the proper corporate officer who is
______________________, the __________________________ of Resorts
International Hotel, Inc.; (c) this document was signed and
delivered by the corporation by its voluntary act duly authorized
by a proper resolution of its Board of Directors; (d) this person
knows the proper seal of the corporation which was affixed to this
document; and (e) this person signed this proof to attest to the
truth of these facts.
--------------------------------
Signed and sworn to
before me on _________, 1993.
- -----------------------------
Notary Public
[seal]
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ________, 1993, ________________
personally came before me, and this person acknowledged under oath,
to my satisfaction, that: (a) this person is the _________________
of State Street Bank and Trust Company of Connecticut, National
Association, a national banking association named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is __________________,
the __________________________ of State Street Bank and Trust
Company of Connecticut, National Association; (c) this document was
signed and delivered by the corporation by its voluntary act duly
authorized by a proper resolution of its Board of Directors;
(d) this person knows the proper seal of the corporation which
was affixed to this document; and (e) this person signed this proof
to attest to the truth of these facts.
--------------------------------
Signed and sworn to
before me on _________, 1993.
- -----------------------------
Notary Public
<PAGE>
Exhibit A
RIH Promissory Note
<PAGE>
EXHIBIT A
AMENDED AND RESTATED SECURED PROMISSORY NOTE
$125,000,000 [ ], 1994
WHEREAS, in partial repayment of certain inter-
company debt owed by Resorts International Hotel, Inc., a New
Jersey corporation ("RIH"), to Resorts International, Inc., a Delaware
corporation ("RII"), RIH has issued to RII a promissory note
on the date hereof in the principal amount of $125,000,000 (as
the same may be amended or restated from time to time, the
"Note"), which Note is secured by a Mortgage Securing RIH
Promissory Note dated as of the date hereof (the "Mortgage"), by RIH,
as mortgagor which Mortgage encumbers certain real property
owned or leased by RIH together with all buildings and improvements erected
thereon (collectively, the "Property"); and
WHEREAS, RII has transferred the Note and the
Mortgage to RIHF in exchange for 11% Mortgage Notes due
2003 (the "Notes") in an aggregate principal amount of
$125,000,000, which Notes were issued pursuant to that
certain Indenture dated as of even date herewith (the
"Indenture") among RIHF, as issuer, RIH, as guarantor, and
State Street Bank and Trust Company of Connecticut, National
Association, as trustee (the "Trustee"); and
WHEREAS, RIHF has requested RIH to amend and restate
the Note;
NOW, THEREFORE, RIH agrees to amend and restate the
Note as follows:
RIH, for value received hereby promises to pay to
the order of RIHF (RIHF and any subsequent holder of this Note
being herein referred to as the "Payee"), the principal sum of
One Hundred Twenty-Five Million Dollars ($125,000,000), or
such other principal sum as shall be outstanding hereunder, on
September 15, 2003 (the "Maturity Date") in accordance with
the provisions hereof, with interest on such principal sum
from time to time outstanding, computed from [ ], 1994
[the Effective Date], in semi-annual installments of interest
on March 15 and September 15 of each year, commencing
1
<PAGE>
initially on September 15, 1994, at a rate of 11% per annum on
the unpaid balance hereof, until the principal hereof is paid
in full. Payments of principal and interest on this Note
shall be made at [address of the Payee], or
at such other address as the Payee may designate in writing.
Interest will be computed on the basis of a 360-day year of
twelve 30-day months, based on the actual number of days
elapsed. Principal and interest shall be paid in money of the
United States that at the time of payment is legal tender for
public and private debts.
l.(a) This Note shall be prepaid (i) in connection
with, but only to the extent of, any redemption of the
Notes of RIHF issued pursuant to the Indenture (all
prepayments of this Note are hereinafter referred to as
"Prepayments"), and/or (ii) by the surrender to the Trustee of
the principal amount of any Notes purchased or
otherwise acquired by RIH or the Company (as defined in the
Indenture) other than pursuant to the redemption provisions of
the Notes and surrendered to the Trustee for
cancellation in accordance with the provisions of the
Notes or the Indenture (it being expressly understood that the
same Notes shall reduce the principal amount of this
Note only once). Each Prepayment under clause (i) above shall
be made at the time that payment is required or permitted to
be made by the Company to the Trustee under the Indenture in
respect of any redemption of Notes. Each Prepayment
under clause (ii) above shall be deemed to be made at the time
of surrender of such Notes for cancellation. Each
Prepayment of this Note pursuant to clause (i) above shall be
in an amount equal to the aggregate amount paid to holders of
Notes on account of the redemption thereof (other than
interest), together with accrued and unpaid interest on the
amount of the reduction in the principal amount of this Note
as a result of such Prepayment. The principal amount of this
Note shall be reduced as a result of such prepayment in an
amount equal to the aggregate principal amount of the
Notes so redeemed or surrendered.
(b) Except as set forth in Section 1(a), this Note
may not be prepaid in whole or in part.
2. RIH shall pay interest on overdue principal and
prepayment premium at the rate of 14% per annum.
3. This Note is secured by the Mortgage on the
Property.
4. If (i) RIH defaults in the payment of interest
when the same becomes due and payable and the default
continues for a period of ten days following receipt of a
notice from the Payee or the Trustee specifying such default
2
<PAGE>
and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; (ii) RIH defaults in the
payment of the principal or any part thereof when the same
becomes due and payable at Maturity (as defined in the
Mortgage); (iii) there shall occur any other Event of Default
under the Mortgage or any other Note (as defined in the
Mortgage); or (iv) there shall occur any other Event of
Default under the Indenture, then on the happening of any such
event, the Payee may declare the entire Outstanding Amount (as
defined in the Indenture) of this Note and all accrued and
unpaid interest thereon and all sums due under Section 5 of
this Note and the Mortgage (collectively, the "Debt") to
become immediately due and payable.
5. RIH hereby waives presentment and demand for
payment, notice of dishonor, protest and notice of protest of
this Note and agrees to pay all costs of collection when
incurred, including reasonable attorneys' fees, which costs
may be added to the amount due under this Note and be
receivable therewith, and to perform and comply with each of
the terms, covenants and provisions contained in this Note and
the Mortgage on the part of RIH to be observed or performed.
Except as expressly provided herein, no release of any
security for the principal sum due under this Note or
extension of time for payment of this Note, or any installment
hereof, and no alteration, amendment or waiver of any
provision of this Note or the Mortgage shall release,
discharge, modify, change or affect the liability of RIH under
this Note or the Mortgage.
6. RIH covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit
or advantage of, any usury, stay or extension law or any other
law which would prohibit or forgive RIH from paying all or any
portion of the interest on this Note, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect
the covenants or the performance of this Note or the Mortgage;
and RIH (to the extent that it may lawfully do so) 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 Payee, but will
suffer and permit the execution of every such power as though
no such law had been enacted.
7. This Note shall be deemed to be a contract
under the laws of the State of New York and shall be construed
in accordance with and governed by the internal laws of the
State of New York.
8. This Note may not be changed or terminated
orally, but only by an agreement in writing signed by the
3
<PAGE>
party against whom enforcement of such change or termination
is sought.
9. RIH shall not claim any credit or deduction
from the interest or principal due hereunder by reason of
payment of any tax assessed upon the Property.
10. Whenever the provisions of this Note and the
provisions of the Indenture shall be inconsistent, the
provisions of the Indenture shall govern.
11. This Note is subject to and shall be enforced
in compliance with the provisions of the New Jersey Casino
Control Act. This Note shall not be transferred, assigned or amended
without the prior approval of the New Jersey Casino Control Commission.
12. Whenever used herein, the singular number shall
include the plural, the plural the singular, and the words
"Payee" and "RIH" shall include their respective successors
and assigns.
IN WITNESS WHEREOF, RIH has duly executed this Note
as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL, INC.
By: _____________________________
Name:
Title:
4
<PAGE>
STATE OF NEW YORK )
)ss.
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this [ ] day of [ ],
1994, before me, the subscriber, a Notary public of the State
of New York, personally appeared [ ], [ ] of
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation,
and he acknowledged that he signed, sealed and delivered the
same as his voluntary act and deed and the act and deed of
said RESORTS INTERNATIONAL HOTEL, INC., and that he received a
true copy of the within instrument on behalf of said
corporation.
Notary Public of the State of New York
[Seal]
5
<PAGE>
Exhibit B
Assignment Agreement from Resorts
International Hotel Financing, Inc.
<PAGE>
NA932280131 - MORTGAGE ASSIGNMENT
GD&C DRAFT DATED 12/17/93
==============================================================================
ASSIGNMENT OF AGREEMENTS
________________
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignor,
TO
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Assignee
Dated as of _________________, 1994
==============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware
corporation ("ASSIGNOR"), having an address at c/o Resorts
International, Inc., 1133 Boardwalk, Atlantic City, New Jersey
08401, to STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association,
having an address at 750 Main Street, Suite 1114, Hartford, Connecticut
06103, in its capacity as Trustee ("Assignee"), under that certain Indenture
dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and
Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR").
WITNESSETH:
WHEREAS, in partial repayment of certain inter-company debt owed by
Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"),
Mortgagor has issued to RII a secured promissory note on the date hereof in
the principal amount of $125,000,000 (as the same may be amended or
restated from time to time, the "RIH PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Promissory Note of even date
(the "MORTGAGE"), which Mortgage encumbers certain real property owned or
leased by Mortgagor as more specifically described on SCHEDULE 1 hereto
together with all buildings and improvements erected thereon (collectively,
the "PROPERTY"); and
WHEREAS, RII has transferred the RIH Promissory Note and the
Mortgage to Assignor in exchange for 11% Mortgage Notes due 2003 (the "NOTES")
in an aggregate principal amount of $125,000,000, which Notes were issued
pursuant to the Indenture; and
WHEREAS, as further security for the obligations of Mortgagor under
the RIH Promissory Note, Mortgagor has executed and delivered (i) an Assignment
of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor
of Assignor (as assignee of RII) and each dated as of the date hereof
(said Assignments and the Mortgage collectively referred to herein as the
"RIH PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted
<PAGE>
a security interest in specified personal property, assigned certain other
rights and assigned all right, title and interest of Mortgagor in
leases and rents to Assignor, all as security for the performance
and observance of obligations of Mortgagor under the RIH Promissory Note;
and
WHEREAS, the rights and obligations of the Assignee hereunder are
subject to the terms set forth in that certain Intercreditor
Agreement dated as of the date hereof among Assignor, Assignee,
Mortgagor, Fidelity Management and Trust Company, as trustee, and
U.S. Trust Company of California, N.A., as trustee (and
such other parties that may from time to time become a party
thereto); and
WHEREAS, in order to secure payment of the Notes and all other
payments due to the holder(s) from time to time of the Notes
(collectively, the "HOLDERS") or the Trustee under the Indenture,
Assignor has agreed to execute this Assignment and to be bound by
its terms;
NOW, THEREFORE, THIS ASSIGNMENT
FURTHER WITNESSETH:
That Assignor in consideration of the purchase of the Notes by the
Holders, Ten Dollars ($10.00) lawful money of the United States of
America duly paid to Assignor by Assignee at or before the
execution and delivery of these presents and for other good and
valuable consideration, the receipt of which are hereby
acknowledged, does hereby sell, assign and transfer unto
Assignee and unto its successors and to its assigns forever, for
its benefit and for the benefit of the Holders, and does hereby
grant to Assignee a security interest in and to all of Assignor's
estate, right, title and interest in, to and under any and all of
the following described property, rights and interests
(collectively, the "ASSIGNED PROPERTIES"):
GRANTING CLAUSE FIRST
All right, title and interest of Assignor in and to the RIH
Promissory Note, including all renewals, extensions, modifications
and replacements of the same, and without limiting the generality
of the foregoing, the present, continuing and future right to make
claim for, collect or cause to be collected, receive or cause to be
received directly from Mortgagor thereunder, all payments of
principal, interest and other sums of money payable thereunder.
GRANTING CLAUSE SECOND
All right, title and interest of Assignor in and to the RIH
Promissory Note Mortgage Documents, including all extensions,
renewals, modifications, supplements and replacements of the same.
2
<PAGE>
TO HAVE AND TO HOLD all said properties, rights and interests unto
Assignee and its successors and assigns forever.
THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and
covenants with Assignee as follows:
ARTICLE ONE
PARTICULAR COVENANTS OF ASSIGNOR
Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents,
warrants and covenants that it is duly authorized to enter into
this Assignment, and to grant and convey a lien on and security
interest in the Assigned Properties to Assignee in the manner and
to the extent herein set forth and that all action on its part
required for the execution and delivery of this Assignment has
been duly and effectively taken.
Section 1.02. FURTHER ACTION REQUIRED.
(a) Assignor covenants that it will, from time to time, execute and
deliver such further instruments and take such further actions as
may be required to carry out the purposes of this Assignment.
(b) Assignor hereby appoints Assignee as its lawful attorney-in-fact
(such power being coupled with an interest) in the name of Assignor
or Assignee or both to execute any instruments or to take any
actions to enforce all rights, powers and remedies of Assignor
under or pursuant to the Assigned Properties.
(c) Nothing contained herein shall limit the rights of Assignee
contained in the Mortgage or the Indenture.
(d) Until this Assignment is discharged in accordance with Section
5.01 hereof, no amendment, waiver, modification, discharge, release,
enforcement or satisfaction by Assignor of any of the rights or
remedies under the Assigned Properties shall be effective without
the prior consent and approval of Assignee, and Assignor shall have
no power or authority to take any such action without such consent
and approval.
ARTICLE TWO
OBLIGATIONS TO ASSIGNEE
Section 2.01. CONTINUING OBLIGATIONS.
(a) Assignee shall have no obligation, duty or liability with
respect to the Assigned Properties or any of
3
<PAGE>
them (other than those specifically assumed in its capacity as Trustee
pursuant to the Indenture).
(b) Assignor shall at all times remain liable to observe and perform
all of its covenants and obligations, if any, under the Assigned
Properties, and does hereby agree to indemnify and hold harmless
Assignee, its successors and assigns, from any liability, loss,
damage or expense it or they may incur under the Assigned
Properties or by reason of this Assignment.
ARTICLE THREE
PAYMENTS
Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due
and to become due under or pursuant to the Assigned Properties
shall be paid by Mortgagor directly to Assignee at the address set
forth in Section 6.02 hereof. Neither Assignor nor Assignee shall
have the right, without Mortgagor's prior written consent, to
instruct Mortgagor to pay Revenues to Assignor or in any manner or
to any party other than directly to Assignee.
Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins
in the execution of this Assignment to acknowledge (a) the
assignment by Assignor to Assignee of Assignor's right, title and
interest in, to and under the Assigned Properties, (b) Mortgagor's
agreement to make payment of all Revenues under the Assigned
Properties directly to Assignee at the address set forth in this
Assignment, and (c) the right of Assignee to exercise or enforce in
its own name, in the name of Assignor, or both, all of the rights,
powers and remedies of Assignor in, to and under the Assigned
Properties.
Section 3.03. REVENUES. As used herein, the term "REVENUES" shall
mean (a) all amounts paid or payable by Mortgagor under the RIH
Promissory Note or the RIH Promissory Note Mortgage
Documents, and (b) the net proceeds realized upon or as a result of
the enforcement of any mortgage lien or security interest granted
under the Assigned Properties or this Assignment or upon or as a
result of the exercise of any right or remedy under the Assigned
Properties or this Assignment.
Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor
hereby acknowledges, that Mortgagor may rely exclusively on
Assignee's directive that Assignee is entitled to take action
under this Assignment.
4
<PAGE>
ARTICLE FOUR
DEFAULT PROVISIONS AND REMEDIES
Section 4.01. ENFORCEMENT OF REMEDIES.
(a) Upon the occurrence of any default under the
Indenture or the Assigned Properties, or any of them (each, a
"DEFAULT"), not cured within the applicable grace period after the
applicable notice provision, if any, has been satisfied (each
called an "EVENT OF DEFAULT"), Assignee may, at its option, (i)
proceed directly to protect and enforce its rights and the rights
of any Holders under this Assignment or pursuant to the Assigned
Properties, or any one of them, by such suits, actions or special
proceedings in equity or at law, or by proceedings in the office of
any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein, or in
the Assigned Properties, or any of them, or in aid of execution of
any power granted herein or pursuant to the Assigned Properties, or
any one of them, or for the enforcement of any proper legal or
equitable remedy, including, without limitation, foreclosure of
the Mortgage and/or the sale of the collateral or part thereof
secured thereby at such foreclosure sale, subject to statutory and
other legal requirements, as Assignee shall deem most effective to
protect and enforce such rights, and Assignor hereby appoints
Assignee as its lawful attorney-in-fact (such power being coupled
with an interest) in the name of Assignor or Assignee or both to
effectuate such foreclosure and/or sale of such collateral or part
thereof; or (ii) instruct, direct and cause Assignor to effectuate
the foregoing on behalf of and for the benefit of Assignee and the
Holders, it being further understood that Mortgagor joins in the
execution of this Assignment in order to acknowledge its agreement
to promptly and duly execute and deliver any and all documents and
take any and all actions required by Assignee in order to permit
Assignee to foreclose and/or sell such collateral or part thereof,
and obtain the benefits of this Assignment, as aforesaid.
(b) Upon the occurrence of any Event of Default, Assignee shall be
entitled to sue for, enforce payment of and receive any and all
amounts then and at any time remaining due from Assignor or
Mortgagor for principal and interest on the RIH Promissory
Note, or other sums due under the RIH Promissory Note Mortgage
Documents, as the case may be, or otherwise under any of the
provisions of the Assigned Properties, or any of them, with interest
interest on overdue payments of such principal, at the rate set
forth in the RIH Promissory Note, from the date of Default
to the date of such payment, together with any and all fees, costs
and expenses of collection (including reasonable attorneys' fees
and court costs), subject to statutory and other legal
requirements.
5
<PAGE>
(c) Regardless of the occurrence of an Event of Default, upon five
days' written notice to Mortgagor (or such shorter period or
without notice if deemed necessary and appropriate by Assignee),
Assignee may institute and maintain or cause in the name of
Assignor or Assignee or both to be instituted and maintained such
suits and proceedings as it may be advised by its counsel shall be
necessary and appropriate to prevent any impairment of the Assigned
Properties, or any of them, and to protect its interests in the
Assigned Properties, and in the rents, issues, rights, revenues
and other income arising therefrom, including power to institute
and maintain proceedings to restrain the enforcement or compliance
with any 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 the
security hereunder or would be materially prejudicial to the
interests of Assignee.
(d) Nothing contained in this Article Four is intended to grant
Assignee any greater remedies and rights than those allowed to
Assignor in the respective Assigned Properties. In the event of
any conflict between the remedies and rights contained in any of
the Assigned Properties and the remedies and rights contained in
this Article Four, then the remedies and rights set forth in the
applicable Assigned Property shall govern.
ARTICLE FIVE
DISCHARGE OF ASSIGNMENT
Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or
cause to be paid, or there shall otherwise be paid, to Assignee
and/or the Holders' all amounts required to be paid by Assignor
pursuant to the Indenture and the Notes, and the conditions
precedent for the Indenture shall cease, determine and become
null and void in accordance with Section 5.01 of the Indenture,
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statements filed in connection
herewith and execute and deliver to Assignor and to Mortgagor all
such instruments as may be appropriate to evidence such discharge
and satisfaction of said lien or liens, and Assignee shall pay over
or deliver to Assignor all other moneys and securities held by it
pursuant to this Assignment, which are not required for the payment
of (a) principal and redemption price, if applicable, of and
interest on, the Notes, and (b) all other amounts required to be
paid by Assignor pursuant to the Indenture and the Notes.
6
<PAGE>
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the
covenants, stipulations, obligations and agreements contained in
this Assignment shall be binding upon and inure to the benefit of
Assignor, Assignee and Mortgagor (to the extent applicable to
Mortgagor) and their respective successors and assigns.
Section 6.02. NOTICES.
(a) Any request, notice, demand, authorization, direction, request
or other instrument authorized or required by this Assignment to be
given to or filed with Assignor, Assignee or Mortgagor
(collectively, "NOTICES") shall be deemed given when either (i)
delivered by hand or (ii) five days after sending by registered or
certified mail, postage prepaid, in either case addressed as
follows:
If to Assignor, at:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Assignee, at:
State Street Bank and Trust Company of
Connecticut, National Association
750 Main Street
Suite 1114
Hartford, Connecticut 06103
Attention: Corporate Trust Department
If to Mortgagor, at:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to Mortgagor, Assignor and/or Assignee, given as
provided above, any party may designate additional or substitute
addresses for Notices, which shall, notwithstanding Section
6.02(a), be deemed given with received.
Section 6.03. PARTIAL INVALIDITY. In case any one or more of the
provisions of this Assignment shall for any reason be held to be
illegal or invalid, such illegality or
7
<PAGE>
invalidity shall not affect any other provision of this Assignment, but this
Assignment shall be construed and enforced at the time as if such illegal or
invalid provisions had not been contained herein or therein, nor shall such
illegality or invalidity or any application thereof affect any legal and valid
application herein or thereof from time to time.
Section 6.04. APPLICABLE LAW. This Assignment shall be governed
by and construed under the internal laws of the State of New
Jersey, without giving effect to the principles of conflicts of
law.
Section 6.05. NO AMENDMENT. For so long as the Notes shall remain
outstanding, the Assigned Properties may not be modified, amended
or terminated except in accordance with the provisions of the
Indenture or the Assigned Properties.
Section 6.07. CASINO CONTROL ACT. Each of the provisions of this
Assignment is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act. This Agreement shall not
be transferred, assigned or amended without prior approval of the New Jersey
Casino Control Commission.
IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed
this Assignment Agreement as of the date first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest:
_________________________________________ By:_____________________________
President
RESORTS INTERNATIONAL HOTEL, INC.
Attest:
_________________________________________ By:______________________________
President
8
<PAGE>
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION
Attest:
_______________________________________ By:______________________________
Title
9
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel Financing, Inc., the
corporation named in the within instrument; that
__________________ is the Vice President of said Corporation;
that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of
directors of the said corporation; that deponent well knows the
corporate seal of said corporation; and that the seal affixed to
said instrument is the proper corporate seal and was thereto
affixed and said instrument signed and delivered by said Vice
President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
10
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, the corporation named in the within
instrument; that ____________ is the Vice President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
11
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation
named in the within instrument; that ______________ is the Vice
President of said corporation; that the execution, as well as the
making of this instrument, has been duly authorized by a proper
resolution of the board of directors of the said corporation; that
deponent well knows the corporate seal of said corporation; and
that the seal affixed to said instrument is the proper corporate
seal and was thereto affixed and said instrument signed and
delivered by said Vice President as and for the voluntary act and
deed of said corporation. In presence of deponent who thereupon
subscribed his name thereto as attesting witness; and deponent
signed this proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
12
<PAGE>
EXHIBIT C
SUBORDINATION PROVISIONS
A. SUBORDINATION. Anything herein to the contrary
notwithstanding, the Subordinated Debt, including principal,
premium, if any, and interest, shall be subordinate and junior to
the extent set forth in subparagraphs (i) to (v), inclusive, below,
to all Senior Indebtedness.
(i) If the Company (as defined in this Exhibit C)
shall default in the payment of any principal of or interest
on any Senior Indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, then, unless
and until such default shall have been remedied by payment in
full in cash or waived or shall have ceased to exist or all
amounts then due and payable in respect of Senior Indebtedness
shall have been paid in full or provision shall have been made
for such payment in cash, no holder of the Subordinated Debt
shall accept or receive any direct or indirect payment (in
cash, property, by set-off or otherwise) of or on account of
any Subordinated Debt.
(ii) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or
any receivership proceedings in connection therewith, relative
to the Company, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of
the Company, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Indebtedness shall
first be paid in full in cash, or such payment shall have been
provided for in cash, before any payment of or on account of
principal or interest is made by the Company upon the
Subordinated Debt.
(iii) In any of the proceedings referred to in
subparagraph (ii) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable by the
Company in respect of the Subordinated Debt shall be paid or
delivered directly to the holders of Senior Indebtedness (or
to a banking institution selected by the court or Person
making the payment or delivery or designated by any holder of
Senior Indebtedness) for application in payment thereof in
accordance with the priorities then existing among such
holders, unless and
<PAGE>
until all principal of and interest on all Senior Indebtedness
shall have been paid in full in cash or such payment shall
have been provided for; PROVIDED, HOWEVER, that no such
delivery shall be made to holders of Senior Indebtedness of
stock or obligations which are issued pursuant to
reorganization proceedings or dissolution or liquidation
proceedings, or upon any merger, consolidation, sale, lease,
transfer or other disposal not prohibited by the provisions
of the Subordinated Debt, by the Company, as reorganized, or
by the corporation succeeding to the Company or acquiring its
property and assets, if such stock or obligations are
subordinate and junior (whether by law or agreement) at least
to the extent provided in this Section ___ to the payment of
all Senior Indebtedness then outstanding and to the payment
of any stock or obligations which are issued in exchange or
substitution for any Senior Indebtedness then outstanding.
(iv) Upon the occurrence and continuance of any
Default Subordination Event (other than under circumstances
when the terms of subparagraph (ii) above are applicable), no
holder of the Subordinated Debt shall accept or receive any
direct or indirect payment (in cash, property, by set-off or
otherwise) of or on account of any indebtedness in respect of
the Subordinated Debt during the Applicable Stand-Still Period;
PROVIDED, HOWEVER, that in the case of any payment on or in
respect of any Subordinated Debt which would (in the absence
of any such Default Subordination Event) have been due and
payable on any date (a "Scheduled Payment Date") during such
Applicable Stand-Still Period, the provisions of this
subparagraph (iv) shall not prevent such payment (a
"Scheduled Payment") on or after the date (the "Deferred
Maturity Date") immediately following the termination of such
Applicable Stand-Still Period. Notwithstanding the foregoing
provisions of this subparagraph (iv), the failure by the
Company to make a Scheduled Payment on a Scheduled Payment
Date during an Applicable Stand-Still Period shall
nevertheless constitute an Event of Default.
(v) If any payment or distribution of any
character, whether in cash, securities or other property,
shall be received by any holder of Subordinated Debt in
contravention of any of the terms of this Section ___ and
before all the Senior Indebtedness shall have been paid in
full, such payment or distribution shall be received in trust
for the benefit of the holders of the Senior Indebtedness at
the time outstanding in accordance with the priorities then
existing among such holders, and shall forthwith be paid over
or delivered and transferred to the holders of Senior
Indebtedness.
<PAGE>
B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions
of this Section ___ are for the purpose of defining the relative
rights of the holders of Senior Indebtedness on the one hand, and
the holders of the Subordinated Debt on the other hand, against the
Company and its property; and nothing herein shall impair, as
between the Company and the holders of the Subordinated Debt, the
obligation of the Company, which is unconditional and absolute, to
pay to the holders thereof the principal thereof and premium, if
any, and interest thereon in accordance with their terms and the
provisions hereof, nor shall anything herein prevent the holders of
the Subordinated Debt from exercising all remedies otherwise
permitted by applicable law or hereunder upon default hereunder
or under the Subordinated Debt (including, without limitation, the
right to demand payment and sue for performance hereof and of the
Subordinated Debt and to accelerate the maturity thereof as
provided in Section ___), subject to the rights, if any, under
this Section ___ of holders of Senior Indebtedness to receive cash,
property, stock or obligations otherwise payable or deliverable by
the Company to the holders of the Subordinated Debt; PROVIDED,
HOWEVER, that upon the commencement and during the continuance of
an Applicable Stand-Still Period the holders of the Subordinated
Debt, to the extent they are otherwise entitled to do so, will not
accelerate the maturity of the Subordinated Debt or pursue any
other remedy to enforce payment thereof or initiate any bankruptcy
or insolvency proceeding relative to the Company unless and until
the earlier of (i) the end of such Applicable Stand-Still Period and
(ii) the acceleration of the Senior Indebtedness related to such
Applicable Stand-Still Period.
C. SUBROGATION. Upon payment in full of Senior
Indebtedness, the holders of the Subordinated Debt shall be
subrogated to the rights of the holders of the Senior Indebtedness
to receive payments or distributions of assets of the Company made
on Senior Indebtedness until the principal of and premium, if any,
and interest on the Subordinated Debt shall be paid in full, and,
for the purposes of such subrogation, no payments to the holders
of Senior Indebtedness of any cash, property, stock or obligations
to which the holders of the Subordinated Debt would be entitled
except for the provisions of subparagraph (iii) of Section A above
shall, as between the Company, its creditors (other than the
holders of the Senior Indebtedness) and the holders of the
Subordinated Debt, be deemed to be a payment by the Company to or
on account of the Senior Indebtedness.
D. DEFINITIONS.
"COMPANY" means RIH, the Company or any of their respective
subsidiaries, as the case may be.
<PAGE>
"DEFAULT SUBORDINATION EVENT" means the existence of all
of the following: (i) an event of default shall have occurred and
be continuing in respect of the Senior Indebtedness, (ii) the
holders of the Subordinated Debt shall have received a notice from
or on behalf of any holder of Senior Indebtedness specifying that
such event of default has occurred and is continuing and that such
notice constitutes a "Default Subordination Notice", and (iii) no
other Default Subordination Notice shall have been delivered by or
on behalf of any holder of Senior Indebtedness within the 365-day
period immediately preceding the giving of such notice.
The "APPLICABLE STAND-STILL PERIOD" relating to any
Default Subordination Event shall be deemed to continue until the
event of default under the Senior Indebtedness giving rise thereto
shall have been cured (by payment or otherwise) or waived or a
period of 180 days shall have elapsed from the giving of the
Default Subordination Notice relating thereto, in any such case
whichever shall be the shorter period.
"SENIOR INDEBTEDNESS" shall mean and include all
obligations (whether now outstanding or hereafter incurred), for
the payment of which the Company is responsible or liable as
obligor, guarantor or otherwise, including, without limitation,
principal, interest, premium, fees, expenses and indemnities,
whether now owing or hereafter incurred (including any interest
accruing subsequent to the commencement of a proceeding described
in Section 7.04, regardless of whether the claims of holders of
such payment obligations for such interest are allowed in any such
proceeding).
<PAGE>
Exhibit D
Mortgage securing RIH Promissory
Note between Resorts International
Hotel, Inc, and Resorts International
Hotel Financing, Inc.
<PAGE>
NA932010185 - MORTGAGE
SECURING RIH PROMISSORY NOTE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING
RIH PROMISSORY NOTE
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
a Delaware corporation,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING
RIH PROMISSORY NOTE
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having
an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City,
New Jersey 08401 (RIHF, or its successors or assigns which shall than be the
Noteholder (as hereinafter defined), being referred to herein as "Mortgagee").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to (i) the payment of the
principal amount (and premium, if any) of the secured promissory note
by Mortgagor to Mortgagee in the principal amount of $125,000,000 as amended
and restated the date hereof (hereinafter
collectively referred to as the "Note"), in lawful money of the United States,
to be paid in accordance with the provisions thereof (and all renewals,
extensions, and modifications thereof) all of which are hereby made an
integral part hereof as though set forth at length herein; (ii) payment of
interest (including interest on all overdue principal and premium,
if any) becoming due under the provisions of the Note; (iii) payment
by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee
pursuant to any term or provision of this Mortgage; (iv) performance of each
covenant, term, condition and agreement of Mortgagor herein or in the Note
contained; (v) all costs and expenses, including reasonable counsel fees and
expenses as provided in Section 3.07, which may arise in respect of the Note
and this Mortgage or of the obligations secured hereby; and (vi) performance
and observance of all of the provisions herein contained, Mortgagor has
executed and delivered this Mortgage and has bargained, sold, aliened,
mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and
its successors hereunder and assigns forever, all of its right, title and
interest in, to and under any of the following described property:
<PAGE>
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause
as fully as if set forth in this Granting Clause at length.
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the "Ground
Leases") particularly described in Schedule 2, which Schedule is hereby made
a part of, and deemed to be described in, this Granting Clause as fully
as if set forth in this Granting Clause at length, which Ground Leases
cover the real property described in such Schedule 2 (the "Leased Land")
and in and to any and all modifications, extensions andrenewals
of the Ground Leases and all options set forth therein, together with (i) all
credits, deposits, privileges and rights of the Mortgagor as lessee under the
Ground Leases, now or at any time existing, (ii) the leaseholds and the
leasehold estates created by the Ground Leases and (iii) all of the estates,
rights, titles, claims or demands whatsoever of Mortgagor, either in law
or in equity, in possession or in expectancy, of, in and to the Ground
Leases and the Leased Land, together with (x) any and all other, further
or additional title, estates, interests or rights which may at anytime be
acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to
payment in full of all indebtedness secured hereby, acquire fee simple
title or any other greater estate to the Leased Land pursuant to
the Ground Leases, or otherwise, the lien of this Mortgage shall attach,
extend to, cover and be a lien upon such fee simple title or other
greater estate and thereupon the lien of this Mortgage shall be prior
to the lien of any mortgage or deed of trust placed on such acquired
title, estate, interest or right subsequent to the date of this Mortgage
and (y) any right to possession or statutory term of years derived from,
or incident to, the Ground Leases pursuant to Section 365(h) of
the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in
any present or future federal, state, local, foreign or other statute, law,
rule or regulation.
3
<PAGE>
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and
proceeds of the property subjected or required to be subjected to the lien
of this Mortgage, including, without limitation, the property described in
Granting Clauses First, Second, and Sixth (such property is hereinafter
collectively referred to as the "Premises") and all the estate, right,
title and interest of every nature whatsoever of the Mortgagor in and
to the same and every part thereof. The collective metes and bounds
description of the Owned Land and the Leased Land is set forth in
annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the
date of execution of this Mortgage or hereafter entered into by
the Mortgagor, if any, including extensions, renewals or amendments
of all of the same, and the immediate and continuing right as
security in accordance with an Assignment of Leases and Rents of even date
herewith between Mortgagor and Mortgagee, and, after the occurrence of an
Event of Default, to make claim for, collect, receive and receipt for (and to
apply the same as provided herein) any and all rents, income, revenues,
issues, profits, security and other sums of money payable or receivable
thereunder or pursuant thereto, and all proceeds thereof, whether payable
as rent, insurance proceeds, condemnation awards, security or
otherwise and whether payable prior to or subsequent to the maturity date of
the Note, to receive and give notices and consents thereunder, to bring actions
and proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any
Lease, including the commencement, conduct and consummation of any
proceedings at law or in equity as shall be permitted by any provision
of any Lease, and to do any and all things which the Mortgagor
or any lessor is or may become entitled to do under the Leases;
provided, that the assignment made by this granting Clause Fourth
shall not impair or diminish any obligation of the Mortgagor
under the Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of
Granting Clause Third, the Mortgagor's rights, privileges and
franchises in and to the following, to the extent of the
Mortgagor's interest therein and thereto and to the extent assignable
(collectively, "Operating Assets"):
4
<PAGE>
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including
guaranties and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties
and other items of intangible personal property relating to the
ownership or operation of the Casino-Hotel, including, without
limitation, (1) telephone and other communication numbers, (2) all
software licensing agreements as are required to operate computer software
systems at the Casino-Hotel, all transferable proprietary interest in software
required to operate the computer systems at the Casino Hotel and books
and records relating to the software programs, and (3) lessee's
interest under leases of Tangible Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor or
which have been assigned to the Mortgagor, for the design and construction,
and for the equipping and furnishing, of the Casino-Hotel, including
architect's agreements, engineering agreements, construction contracts,
consulting agreements and agreements or purchase orders for all items
of Tangible Personal Property and payment and performance bonds in
favor of the Mortgagor in connection with the Trust Estate (and all
warranties and guaranties thereunder and warranties and guaranties of any
subcontractor and bond issued in connection with the work to be
performed by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances,
fixtures and fittings and other articles of tangible personal property
which are, or are to be located on, or used in connection with the
operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six
5
<PAGE>
wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the
operation thereof;
(iii) all cards, dice, gaming chips and placques, tokens,
chip racks, dealing shoes, dice cups, dice sticks, layouts,
paddles, roulette balls and other consumable supplies and items to be
used in connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether in use or held in reserve storage
for future use, in connection with the operation of the Casino-Hotel,
which are on hand or on order whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind and
nature for use in all of the operating departments of the Casino-Hotel,
or in the improvements now or hereafter located on any of the Owned
Land, including without limitation, accounting supplies, guest
supplies, forms, printing, stationery, food and beverage stock, bar
supplies, laundry supplies and brochures to existing purchase orders;
(vi) all sets and scenery, costumes, props and other items of
tangible personal property on hand or on order for use in the production
of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by
the architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to time;
(h)any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
6
<PAGE>
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high roller"
lists; and
(j) all of the goodwill in connection with the operation of
the Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on which such facilities are shared
are not detrimental to the operations of the Casino-Hotel or the financial
condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel
would not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair
or diminish any obligation of the Mortgagor with respect to the Operating
Assets, nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures
and articles of personal property now or hereafter attached to or contained
in and used in connection with such buildings and improvements, including,
but not limited to, all apparatus, furniture, furnishings, machinery,
motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice
machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces,
coal and oil-burning apparatus, wall cabinets, machinery, generators,
partitions, steam and hot water boilers, lighting and power plants, pipes,
plumbing, radiators, sinks, bath tubs, water closets, gas and electrical
fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum
cleaning systems, office equipment and other furnishings, and all plumbing,
heating, lighting, cooking, laundry, ventilating, incinerating,
air-conditioning and sprinkler equipment or other fire prevention or
extinguishing apparatus and material, and fixtures and appurtenances thereto;
and all renewals or replacements thereof or articles in substitution therefor,
whether or not the same are or shall be attached to the Owned Land, the
Leased Land or to any such buildings and improvements thereon, in any
manner and
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(b) All of the Mortgagor's right, title and interest in
and to (i) the Leased Land, if the Mortgagor acquires the fee simple
title to the Leased Land or any part thereof (subject to the provisions
Section 2.06 hereof), (ii) all air rights and rights to maintain
supporting columns and all rights to construct and maintain bridges,
and to create private rights of way over streets now or hereafter owned or
enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and
(iii) all right, title and interest of Mortgagor as grantee or licensee
in and to the following to the extent necessary for the use and
enjoyment of the Owned Land or the Leased Land: (A) all those plots,
pieces or parcels of land and air rights, more particularly described on
Schedule 5, attached hereto and made a part hereof (the "Bridge Easement
Parcels"), with respect to which Mortgagor has easements, licenses or other
rights of possession or use pursuant to these certain easement and license
agreements more particularly described on Schedule 5 (the "Bridge
Easements"), (B) all those plots, pieces or parcels of land and air
rights, more particularly described on Schedule 6 attached hereto and
made a part hereof (the "Elevator Easement Parcels"), with respect to which
Mortgagor has easements, licenses or other rights of possession or use
pursuant to those certain license agreements more particularly described
on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or
parcel of land and air rights more particularly described on Schedule 7
attached hereto and made a part hereof (the "Turn-Around Easement Parcel")
with respect to which Mortgagor has easements, licenses, or other rights of
possession or use pursuant to that certain easement more particularly
described on Schedule 7 (the "Turn-Around Easement"), (the Bridge
Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement
Parcel are collectively referred to herein as the "Easement Parcels"; and the
Bridge Easements, the Elevator Easements and the Turn-Around Easement
are collectively referred to as the "Easements"), together with all
rights of way, privileges, liberties, tenements, hereditaments and
ppurtenances belonging or in any way appertaining to such estates, it
being the intention hereof that all property, interests, rights and privileges
and franchises pertaining to the Premises (other than Excepted Property) shall
be as fully embraced within and subjected to the lien hereof as if such
property were specifically described herein.
To the extent the grant of a security interest in any portion of the
Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be as well a security agreement under the Uniform Commercial Code for
the purpose of creating hereby a security interest in all of the Mortgagor's
right, title and interest in and to such property, securing the obligations
secured hereby, for the benefit of the Mortgagee.
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TOGETHER with all of the Mortgagor's right, title and interest
in and to all mineral and water rights and any title or reversion, in
and to the beds of the ways, streets, avenues and alleys adjoining the
Premises to the center line thereof and in and to all strips, gaps and gores
adjoining the premises on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to
and singular the tenements, hereditaments, easements, appurtenances,
passages, water courses, riparian rights, other rights, liberties and
privileges thereof or in any way appertaining to the Premises, including
any other claim at law or in equity as well as any after-acquired title,
franchise or license and the reversion and reversions and remainder and
remainders thereof; and
TOGETHER with all awards and other compensation heretofore or
hereafter to be made to the present and all subsequent owners of
the Trust Estate for any taking by eminent domain, either permanent
or temporary, of all or any part of the Trust Estate or any easement or
appurtenances thereof, including severance and consequential damage
and change in grade of streets, all in accordance with and subject to the
provisions of the Superior Instrument Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any
insurance policies described in Section 5.11, and the right to
receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Trust Estate or
otherwise, all in accordance with and subject to the provisions of
Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted
property, rights, title, interest, privileges and franchises, the
Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases,
Operating Assets, Easements, properties, options, credits, deposits,
rights, privileges and franchises of every kind and description, real,
personal or mixed, granted hereby, bargained, sold, aliened, assigned,
transferred, hypothecated, pledged, released, conveyed, mortgaged, or
confirmed as aforesaid, or intended, agreed or covenanted so to
be, together with all the appurtenances thereto appertaining (the Premises,
Leases, Ground Leases, Operating Assets, Easements, properties, options,
credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its
successors and assigns forever.
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SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and,
after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the Mortgagee
and the Noteholder as set forth in that certain Intercreditor Agreement
dated as of the date hereof among RIH, RIHF, Trustee, Fidelity Management and
Trust Company ("Fidelity"), as trustee under that certain note purchase
agreement dated as of the date hereof among Fidelity, RIH and RIHF, and
U.S. Trust of California, N.A.,("U.S. Trust"), as trustee under
that certain indenture dated as of the date hereof among U.S. Trust, RIH
and RIHF (and such other parties that may from time to time become a party
thereto).
BUT IN TRUST, NEVERTHELESS, for the benefit and security of the
Noteholder.
UPON CONDITION that, until the happening of an Event of Default and
subject to the provisions of Article Two, the Mortgagor shall be permitted to
possess and use the Trust Estate, and to receive and use the rents, issues,
profits, revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is
to be held and applied by the Mortgagee, subject to the further covenants,
conditions and trusts hereinafter set forth, and the Mortgagor does hereby
covenant and agree to and with the Mortgagee, for the benefit of the holder
of the Note as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage,
except as otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as
well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided
for shall be made in accordance with generally accepted accounting
principles consistently applied; and
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(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Mortgage as a whole and not
to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in
Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good
standing of the American Institute of Real Estate Appraisers) who is (i) of
recognized standing among appraisers of properties similar to the Casino-Hotel
and (ii) experienced in the appraisals of properties of a similar size and
scope to that of the Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in
Section 1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in
Section 1.01 of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming
and related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture, fixtures and
equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which
results in damage, loss or destruction to any buildings or improvements on the
Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in
Section 10.01 of the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both, would become
an Event of Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds
or a condemnation award is paid to be
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held in trust for restoration pursuant to the provisions of a Ground Lease or
Superior Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event
of Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
(1) subject to the provisions of the Assignment of Leases and
Rents, any cash held by the Mortgagor from rents, issues, profits,
revenues and other proceed of the Trust Estate to the extent that such
cash may be, but has not been, distributed or paid out in accordance with
the Services Agreement or in accordance with the provisions of
Section 12.07 the Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior
Mortgage secured by or imposing a lien on all or a portion of the Trust Estate
on a parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any
Tangible Personal Property and other items constituting Operating Assets, such
as computer software, which are financed, purchased or leased by the
Mortgagor, provided that, except as set forth on Schedule 3, the principal
amount of the indebtedness secured by such lien shall not exceed
eighty-five (85%) percent of the cost to the Mortgagor of such property at the
time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
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"GUARANTY MORTGAGE" means that certain Mortgage Securing Guaranty of
Mortgage Notes dated as of the date hereof from Mortgagor to State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association, which secures the Notes (as defined in the Indenture),
the lien of which shall be PARI PASSU with the lien of this Mortgage.
"HOTEL" means that portion of the Casino-Hotel not included within
the Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11% Mortgage Notes
due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and State Street Bank and Trust Company of Connecticut, National Association,
as trustee, as it may from time to time be supplemented, modified or amended
by one or more trust indentures or other instruments supplemental thereto
entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the
Mortgagor or in any other obligor upon the Note or in any Affiliate of the
Mortgagor or of such other obligor and (c) is not connected with the Mortgagor
or such other obligor or any Affiliate of the Mortgagor or such other obligor
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the
Mortgagee, such opinion or certificate shall state that the signer has read
this definition and that the signer is Independent within the meaning
thereof. A Person who is performing or who has performed services as an
independent contractor to any specified Person shall not be considered not
Independent merely by reason of the fact that such Person is or has performed
such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy
covering or applicable to the Trust Estate or any part thereof, all
requirements of the issuer of any such policy, and all orders, rules,
regulations and other requirements of the National Board of Fire Underwriters
(or any other body exercising similar functions) applicable to or affecting
the Trust Estate or any part thereof or any use or condition of the Trust
Estate or any other part thereof.
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"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects,
any bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected by the
Mortgagor authorized to issue insurance in the State of New Jersey with an
A.M. Best rating as high or higher than the rating of insurance companies
insuring other casino-hotels in Atlantic City, New Jersey.
"LEASE" means each lease or sublease demising all or any portion of
the Owned Land, the Leased Land or the buildings or improvements thereon and
made by the Mortgagor as lessor or sublessor, as the case may be, or any
spaces in any building or buildings which constitute a part of the Trust
Estate, including every agreement relating thereto or entered into in
connection therewith and every guaranty of the performance and observance of
the covenants, conditions and agreements to be performed by the lessee under
any such lease. Notwithstanding the foregoing, the term "Lease" shall
not include any transient room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements (including,
without limitation, the New Jersey Environment Cleanup Responsibility Act and
the New Jersey Spill Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, of governments, federal, state and municipal (including, without
limitation, the New Jersey Department of Environmental Protection, the
Atlantic City Bureau of Investigations, Division of Protection, the Atlantic
City Bureau of Investigations, Division of Gaming Enforcement of the State of
New Jersey, and the Casino Control Commission of the State of New Jersey),
foreseen or unforeseen, ordinary or extraordinary, which now is or at any time
hereafter becomes applicable to the Trust Estate or any part thereof, or any
of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or
gambling facility or any other use or condition of the Trust Estate or any
part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Note means the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at
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the Stated Maturity or by declaration of acceleration or prepayment
or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDER" shall mean the holder or holders of the Note.
"NOTE" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of
the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires
that an Officers' Certificate be signed also by an Architect or an Accountant
or other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Mortgage) be an employee of
the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless
otherwise specifically provided in this Mortgage, such counsel may rely, as
to any state of facts not personally known to such counsel and relating to
such opinions, on an Officers' Certificate to the extent not rejected by the
Trustee and its counsel (which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by
[list title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
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"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material
portion of the Premises whether held by the Mortgagor or any other Person
(which may be temporary or permanent) (including, without limitation, those
required for the use of the Casino-Hotel as a licensed casino facility), in
accordance with all applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet
due and payable or if due and payable are not delinquent to the extent
that any fine, penalty, interest or cost may be added for nonpayment
thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien; and
(9) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or any other entity or government or any agency or political subdivision
thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
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"RESTRICTED ENCUMBRANCES" means Leases permitted by and made
in accordance with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing, Inc., a
Delaware corporation.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"SETTLEMENT COSTS" has the meaning stated in Section 5.20.
"STATED MATURITY" when used with respect to a note means the date
specified in such note as the fixed date on which the principal of such note
is due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms,
conditions and provisions of (i) the Ground Leases with respect to the Leased
Land; and (ii) Superior Mortgages with respect to the portion of the Trust
Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, any Working Capital
Facility Lien and any After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of
the whole or any part of the Premises, by a competent authority, for any
public or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting
Clause Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the
Granting Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of
the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in
Section 5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
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(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent, waiver or other
document provided or permitted by this Mortgage to be made upon, given or
furnished to, or filed with, the Mortgagor or the Mortgagee (collectively,
"Notices") shall be deemed given when either (i) delivered by hand or (ii) two
days after sending by registered or certified mail, postage prepaid, addressed
as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any
party may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO
MORTGAGEE. Whenever
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such
Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such Officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Officer or Officers
of the Mortgagor stating that the information with respect to such factual
matters is in the possession of the Mortgagor, unless such counsel knows that
the certificate or opinion or representations with respect to such matters are
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erroneous. If appropriate to the matter being opined upon and to the extent
not prohibited by the Trust Indenture Act, any Opinion of Counsel may be
subject to rights of creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor
shall deliver any document as a condition of the granting of such application,
or as evidence of the Mortgagor's compliance with any term hereof, it is
intended that the truth and accuracy, at
the time of the granting of such application or at the effective date of such
certificate or report (as the case may be), of the facts and opinions stated
in such document shall in such case be conditions precedent to the right of
the Mortgagor to have such application granted or to the sufficiency of such
certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Mortgagor to the Mortgagee to take any action
under any provision of this Mortgage, the Mortgagor shall furnish to the
Mortgagee an Officers' Certificate stating that all conditions precedent,
if any, provided for in this Mortgage relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Mortgage relating to such particular application or request, no additional
certificate or opinion need be furnished. Every certificate or opinion with
respect to compliance with a condition or covenant provided for in this
Mortgage shall include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he
has made such
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examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such condition or covenant has been
complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each
case named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged,
released nor any of its provisions waived except by agreement in writing
executed by the Mortgagor and the Mortgagee and in accordance with the
provisions of this Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this
Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage,
express or implied, shall give to any Person, other than the parties hereto
and their successors and assigns, any benefit or any legal or equitable right,
remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the
provisions of this Mortgage and the provisions of the Indenture shall be
inconsistent, the provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the
holder of a security interest in this
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Mortgage and the Note by an assignment from Mortgagee to Trustee, except as
otherwise provided in Section 8.01 of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the Mortgagee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Mortgagee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by the Mortgagee hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to exercise any of
the rights or powers vested in it by this Mortgage at the request or
direction of any Noteholder pursuant to the Indenture, unless such holder
shall have offered to the Mortgagee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, or other paper or document but the Mortgagee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Mortgagee shall determine to
make such further inquiry or investigation, it shall be entitled (subject
to the express limitations with respect thereto contained in this Mortgage)
to examine the books, records and premises of the Mortgagor, personally or
by agent or attorney;
(f) the Mortgagee may execute any of the trusts or power hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys, and the Mortgagee shall not be responsible for any
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misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in case of entry
by it upon the Trust Estate, for debts contracted or liabilities or damages
incurred in the management or operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the Mortgagee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of its obligations hereunder, or in the exercise of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Mortgage shall
not be transferred, assigned or amended without prior approval of the New Jersey
Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or
cause to be paid, or there shall otherwise be paid, to the Mortgagee all
amounts required to be paid by the Mortgagor pursuant to the Note, and the
conditions precedent for the Indenture to cease, determine and become null and
void in accordance with Section 5.01 of the Indenture shall have occurred, the
Mortgagee shall promptly cancel and discharge this Mortgage, and execute and
deliver to the Mortgagor all such instruments as may be necessary, required or
appropriate to evidence such discharge and satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject
in each instance to the giving of any notice and the expiration of any grace
period provided for in Section 3.01 as a condition to such Default making it
an Event of Default, unless the Trust Indenture Act requires otherwise, in
which case the Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an
event which does not materially diminish the value of the Mortgagee's interest
in the Trust Estate shall not be deemed an "impairment of security", as that
phrase is used in this Mortgage.
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ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT
RELEASE. So long as there shall have been no acceleration of maturity of the
Note under Section 3.02, the Mortgagor shall be suffered and permitted, with
power freely and without let or hindrance on the part of the Mortgagee, subject
to the provisions of this Mortgage and the Guaranty Mortgage, to possess, use,
manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time
to time, unless an Event of Default shall have occurred and be continuing,
without any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any
question affecting the Mortgagor's right to sell or otherwise dispose of
the same, free from the lien of this Mortgage;
(b)to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and
add to any Tangible Personal Property; provided, however, that no change
shall be made in the location of any such property subject to the lien pf
this Mortgage which would in any respect impair the security of this
Mortgage upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the
right to pay dividends or make cash distributions pursuant to Section 12.07 of
the Indenture) received from the sale or disposition of any Tangible
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Personal Property under Subsection (a) of this Section 2.02, in the business
of operating the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect
to the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible
Personal Property.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any
provisions contained in this Mortgage or the Indenture to the contrary,
including, without limitation, the provisions of Granting Clauses Fifth and
Sixth and of Articles Two and Five hereof, if
the Mortgagor acquires Tangible Personal Property and other items constituting
operating assets, such as computer software subject to any FF&E Financing
Agreement, or becomes the lessee under a lease for any of the same and if the
document evidencing such F&E Financing Agreement prohibits subordinate liens
or the provisions of any such lease prohibits any assignment thereof by the
lessee, and if any such prohibition is customary with respect to similar
transactions of the lender or lessor, as the case may be, then the property so
purchased or the lessee's interest in the lease, as the case may be, shall be
deemed to be Excepted Property. If any such FF&E Financing Agreement permits
subordinate liens then the Mortgagee agrees to execute and deliver to the
Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination
of the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part
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of the Released Fee Land (the land to be so conveyed is hereinafter referred
to as the "Released Land"), free from the lien of the Mortgage, provided that:
(i) the Mortgagor furnishes the Mortgagee with an Officers'
Certificate requesting the release of such property from the Trust Estate
and stating (w) so long as the Released Land is owned or used by an
Affiliate of the Mortgagor, the Released Land shall not be operated in a
manner in competition with the operation of the Casino-Hotel as a casino,
(x) that no permanent structures have been constructed on the Released
Land, (y) that the Mortgagor is not required to hold the Released Land
in, order to maintain all Permits and in order to comply with the
provisions of all material contracts to which the Mortgagor is a party or
by which the Mortgagor is bound and either (A) the Mortgagor has made
adequate provision to maintain all Permits and to comply
with such contractual requirements by: (1) owning and using the balance
of the Trust Estate; (2) acquiring fee title to any real property that
would enable Mortgagor to maintain all Permits and satisfy such
contractual requirements; or (3) acquiring a Qualified Leasehold Interest
in real property that would enable the Mortgagor to maintain such Permits
and satisfy such contractual requirements; or (B) neither the
requirements of such Permits nor such contracts require the Mortgagor to
own the Released Land or use or operate any land in the manner in which
the Released Land is intended to be used; or (C) such requirements have
been waived, and (z) that such conveyance will not materially interfere
with the operation of the Casino-Hotel;
(ii) the Mortgagor delivers to the Mortgagee an Opinion of Counsel
to the effect that the Mortgagor is not required to own and use the
Released Land in order to maintain in good standing all Permits or by the
provisions of any material contract to which the Mortgagor is a party or
by which it is bound to own and use the Released Land;
(iii) the Mortgagor delivers to the Mortgagee, if applicable, an
endorsement to the Original Policy in accordance with Section 2.05(d);
(iv) the Mortgagor delivers to the Mortgagee an executed
counterpart of the instruments of conveyance in recordable form, which
shall contain a covenant prohibiting the use of the Released Land by any
Affiliate of the Mortgagor (A) as a casino or (B) in a manner in
competition with the operation of
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the Casino-Hotel as a casino prior to the latest Stated Maturity Date of
the Note; and
(v) in the case of a conveyance or release described in (A) or (B)
above, if the Released Land is being conveyed to an Affiliate of the
Mortgagor, the cash consideration received by the Mortgagor for the
Released Land shall not be less than the product of the Release Price
multiplied by the area (in square feet) of the Released Land.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective
purchaser to confirm the release of the Released Fee Land, upon receipt
by the Mortgagee of an Officers' Certificate stating that the Mortgagor is
entitled to such release by virtue of the Mortgagor's compliance with this
Section 2.05 (and, if applicable, Section 2.05 of the Guaranty Mortgage),
PROVIDED, that the Mortgagee shall have no liability thereunder
and all costs and expenses (including reasonable attorneys' fees) shall be
paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in
the event the Mortgagor intends to exercise an option to acquire fee title to
Leased Land under the provisions of any Ground Lease, the Mortgagor shall have
the right, unless an Event of Default shall have occurred and be continuing,
to have an Affiliate exercise such options(s) or for the Mortgagor to exercise
such options(s) on behalf of an Affiliate and in connection therewith to cause
fee simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee
with the following:
(i) an Officers' Certificate requesting the release of the Released
Fee Land from the Trust Estate and stating that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain all Permits
and in order to comply with the provisions of all material contracts to
which the Mortgagor is a party or by which the Mortgagor is bound, (B)
such Affiliate has received all Permits necessary to own the Released Fee
Land (including without limitation all approvals required by the Casino
Control Commission of the State of New Jersey), (C) there has been
delivered to the Mortgagor and the Mortgagee a true copy of an instrument
executed by such Affiliate stating that
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(i) such Affiliate may only engage in the activity of owning the
Released Fee Land and (ii) such Affiliate shall not convey the Released
Fee Land to another Affiliate of the Mortgagor, unless such other
Affiliate executes and delivers to the Mortgagor and the Mortgagee, the
instruments that would have been required to be delivered pursuant to
clause (C) if the Mortgagor conveyed the Released Fee Land to such
other Affiliate (provided that this restriction shall only be effective
until such time as this Mortgage shall be satisfied of record) and (D)
the deed conveying the Released Fee Land to such Affiliate shall state
that such conveyance is made subject to the terms, provisions and
conditions of the applicable Ground Lease and that the fee and leasehold
interests in the Released Fee Land shall not merge by reason of the
Mortgagor and/or any Affiliate owning both the leasehold and fee estate
therein, and that such estates shall always remain separate and distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor is
not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to
which the Mortgagor is a party or by which it is bound to own the
Released Fee Land and (B) the instruments described in clause (C) of
subparagraph (i) were duly executed by and are binding upon such
Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory
to Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by
Mortgagee, including, without limitation, (A) a covenant of the landlord not
to terminate the Ground Lease for any reason whatsoever (including without
limitation, due to any default by tenant of its obligations under such Ground
Lease), and (B) an agreement by the landlord not to accept payment of any
fixed or base rent from the tenant (and, if tendered by the Mortgagor, and
agreement to return same to the Mortgagor) or any other charges payable
thereunder at any time that an Event of Default shall have occurred and shall
be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective
purchaser to confirm the
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release of the Released Fee Land, upon receipt by the Mortgagee of an
Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED that
the Mortgagee shall
have no liability thereunder and all costs and expenses (including reasonable
attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i)
if no Event of Default has occurred and is continuing and (ii) if the
Mortgagor shall acquire Released Fee Land, then simultaneously with the
acquisition thereof, the Mortgagor shall have the right to encumber such fee
simple title with a mortgage (such mortgage and any refinancing thereof
permitted by the Indenture is hereinafter referred to as an "After-Acquired
Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be
subordinated to the lien of the After-Acquired Fee Mortgage on the Released
Fee Land (and to the lien of other Superior Mortgages which shall become a
lien thereon in accordance with the terms thereof), provided the following
conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee
Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee
simple title at the time of the acquisition and (B) satisfies the
criteria set forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers
fee simple title to the Leased Land or any part thereof, such
After-Acquired Fee Mortgage contains provisions binding on the holder of
the After-Acquired Fee Mortgage and its successors and assigns confirming
the provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire
Released Fee Land shall be used for purposes of Restoration; and
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(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstandi, the subordination of this Mortgage
to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land
shall not be self-operative but shall be effective only upon the execution and
delivery by the Mortgagee of an instrument in writing effecting such
subordination. The Mortgagee shall deliver such instrument of subordination
on the following conditions: (x) the Mortgagee shall have received an
Officers' Certificate confirming that the conditions of (i)
through (vi) of paragraph (a) have been satisfied, together with a true and
correct copy of the After-Acquired Fee Mortgage and all other instruments
securing the indebtedness evidenced thereby and (y) the instrument of
subordination shall specifically state that this Mortgage is being
subordinated not with respect to the lien of this Mortgage on the Ground Lease
or on the leasehold estate created thereby, but only with respect
to the fee simple title to the Leased Land or applicable part thereof and only
if and to the extent that the After-Acquired Fee Mortgage being subordinated
to is subject and subordinate to the Ground Lease and the leasehold estate
created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever
used herein, means any one of following events (including any applicable
notice requirement and any period of grace as specified in this Section 3.01)
(whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest on the Note when such
interest becomes due and payable and continuance of such default for a
period of 10 days after there has been given a written notice to the
Mortgagor specifying such default and stating that such notice is a
"Notice of Default" hereunder; or
(b) default in the payment of the principal of any Note at its
Maturity; or
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(c) an "Event of Default" as defined in Section 3.01 of the
Guaranty Mortgage shall occur; or
(d) default in the payment of any other sum due under the Note or
this Mortgage and the continuance of such default for a period of 10 days
after there has been given to the Mortgagor a written notice specifying
such default and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(e) default in the performance, or breach, of any covenant of the
Mortgagor in this Mortgage (other than a covenant a default in the
performance or breach of which is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
30 days after there has been given to the Mortgagor a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder, unless
(i) the default or breach is of such a nature that is curable but not
susceptible of being cured with due diligence within such 30-day period
(for reasons other than the lack of funds), (ii) the Mortgagor delivers
an Officers' Certificate to the Mortgagee within such 30-day period
stating (A) the applicability of the provisions of Clause (i) to such
default or breach, (B) the Mortgagor's intention to remedy such default
or breach with reasonable diligence and (C) the steps which the Mortgagor
has undertaken to remedy such default or breach and (iii) the Mortgagor
delivers to the Mortgagee additional Officers' Certificates every 30 days
thereafter updating the information contained in the certificate
described in Clause (ii), in which case such 30 day period shall be
extended for such further period of time as may reasonably be required to
cure the same, provided that the Mortgagor is then proceeding and
thereafter continues to proceed to cure the same with reasonable
diligence; or
(f) an "Event of Default" as defined in Section 7.01 of the
Indenture, shall occur; or
(g) default by the Mortgagor under any of the terms of any Ground
Lease which shall not be fully cured or waived prior to the expiration of
any grace period contained in such Ground Lease, unless prior to the
expiration of such grace period, the Mortgagor gives the Mortgagee an
Officers' Certificate, an Opinion of Counsel and a true copy of the
Injunction referred to below, which Certificate and Opinion state that
(i) a court of competent jurisdiction has issued an injunction (which is
in force and effect and has not been modified or reversed on appeal)
tolling or staying
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the expiration of the grace period set forth in such Ground Lease with
respect to such default, (ii) such injunction specifically provides that
in addition to the tolling or stay describe in (i) above, such tolling or
stay also applies to the Mortgagee for purposes of determining the
duration and expiration of the periods during which the Mortgagee may
exercise its rights under such Ground Lease (including without
limitation, periods to cure lessee defaults and delivering a guarantee
and the period during which the Mortgagee may elect to enter into a new
lease thereunder), (iii) such injunction further provides that the
tolling or stay under (i) and (ii) shall be effective until such time
that the Mortgagee is personally served with notice of the expiration of
such injunction and (iv) the Mortgagee is named as a party in any action
or proceeding involving such injunction and therefore entitled to notice
of any modification or termination thereof; and, if such injunction is
issued, then so long as such injunction remains in force and effect and
the preceding provisions of this Section 3.01(g) have been complied with,
the grace period referred to in the third line of this subparagraph (g)
shall be deemed to mean the grace period after giving effect to any such
tolling or stay in (i) above; or
(h) default by the Mortgagor under any of the terms of any Superior
Mortgage which default results in the acceleration of the maturity of
such Superior Mortgage and which shall not be fully cured or waived prior
to the expiration of any grace period contained in such Superior
Mortgage, unless prior to the expiration of such grace period, the
Mortgagor gives the Mortgagee an Officers' Certificate and an Opinion of
Counsel and a true copy of the injunction referred to below, which
Certificate and Opinion shall state (i) that a court of competent
jurisdiction has issued an injunction (which is in force and effect and
has not been modified or reversed on appeal) tolling or staying the
expiration of the grace period set forth in such Superior Mortgage with
respect to such default and (ii) the Mortgagee is named a party in any
action or proceeding relating to such injunction and therefore is
entitled to notice of any modification or termination thereof; and if
such injunction is issued, then so long as such injunction remains in
force and effect, and the preceding provisions of this Section 3.01(h)
have been complied with, the grace period referred to in the third line
of this subparagraph (h) shall be deemed to mean the grace period after
giving effect to any such tolling or stay; or
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(i) any modification, amendment or supplement of any Ground Lease
without the prior written consent of the Mortgage; or
(j) any modification, amendment or supplement of any Superior
Mortgage without the prior written consent of the Mortgagee, except to the
extent that such modification, amendment or supplement is permitted by
Section 5.22(b)(i) hereof; or
(k) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a
period of 60 days after there has been given a written notice to the
Mortgagor specifying that such notice is a "Notice of Default" hereunder;
or
(l) any representation or warranty of the Mortgagor set forth in
this Mortgage or in any notice, certificate, demand or request delivered
to the Mortgagee pursuant to this Mortgage shall prove to be incorrect as
of the time when made and the facts constituting such incorrectness
impairs the Mortgagee's security and such impairment continues for a
period of 30 days after there has been given to the Mortgagor a written
notice specifying that such notice is a "Notice of Default" hereunder,
unless (i) such impairment is curable, but not susceptible of cure within
such 30-day period (for reasons other than lack of funds), (ii) the
Mortgagor gives an Officers' Certificate to the Mortgagee within such
30-day period stating (A) the applicability of the provisions of (i) to
such impairment, (B) the Mortgagor's intention to remedy the same with
reasonable diligence and (C) the steps which the Mortgagor has undertaken
to remedy such default or breach and (iii) the Mortgagor delivers to the
Mortgagee additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate described in (ii),
in which case such 30-day period shall be extended for such further period
of time as may reasonably be required to cure
the same, provided that the Mortgagor is then proceeding and thereafter
continues to proceed to cure the same with reasonable diligence.
Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and
is continuing, then the Mortgagee may declare the Outstanding Amount of the
Note to be due and payable immediately, by a notice in writing to the
Mortgagor and upon any such declaration such principal shall become
immediately due and payable.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any
moneys received by the Mortgagee pursuant to
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the provisions of this Article Three (including moneys received by the Trustee
after any action or act by the Mortgagee under Section 3.10) shall be applied
by the Mortgagee in accordance with the provisions of Section 7.06 of the
Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this
Mortgage and such proceeding has been discontinued or abandoned for any reason
or has been determined adversely to the Mortgagee, then and in every such case
the Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such
proceeding had been instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission
of the Mortgagee to exercise any right or remedy accruing upon an Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy
given by this Article Three by law to the Mortgagee may be exercised, from
time to time, and as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect the indebtedness secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including
reasonable attorneys' fees and expenses, incurred by the Mortgagee in
connection therewith, together with interest at the rate then payable on the
Note, from the date of payment less the net amount received by the Mortgagee
or the Trustee, as their interests may appear under any title insurance
policy, and, until paid, all such expenses, together with interest as
aforesaid, shall be a lien on the Trust Estate.
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Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time
insist upon, plead, claim or take the benefit or advantage of, any
appraisement, valuation, stay, extension or redemption law now or hereafter in
force, in order to prevent or hinder the enforcement of this Mortgage or the
absolute sale of the Trust Estate, or any part hereof, or the possession
thereof by any purchaser at any sale under this Article Three; and the
Mortgagor, for itself and all who may claim under it, so far as it or they now
or hereafter may lawfully do so, hereby waives the benefit of all such laws.
The Mortgagor, for itself and all who may claim under it, waives, to the extent
that it may lawfully do so, all right to have the property in the Trust Estate
marshalled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate
as an entirety.
If any law in this Section 3.08 referred to and now in force, of
which the Mortgagor or its successor or successors might take advantage
despite this Section 3.08, shall hereafter be repealed or cease to be in
force, such law shall not thereafter be deemed to constitute any part of the
contract herein contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence
of an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate
(and the books and papers of the Mortgagor), and to hold, operate and manage
the Trust Estate (including the making of all needful repairs, and such
alterations, additions and improvements as the Mortgagee shall deem wise) and
to receive the rents, issues, tolls, profits, revenues and other income
thereof, and, after deducting the costs and expenses of entering, taking
possession, holding, operating and managing the Trust Estate, as well as
payments for taxes, insurance and other proper charges upon the Trust Estate
and reasonable compensation to itself, its agents and counsel, to apply the
same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's
rights under this Section 3.09 shall be subject to the provisions of the New
Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon
the Note and under any of the terms of this Mortgage shall have been paid and
all defaults hereunder shall have been made good, the Mortgagee shall
surrender possession to the Mortgagor.
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Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an
Event of Default shall occur and be continuing, the Mortgagee, with or without
entry, in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the
Mortgagee may determine, to the highest bidder at public auction at such
place and at such time (which sale may be adjourned by the Mortgagee from
time to time in its discretion by announcement at the time and place
fixed for such sale, without further notice) and upon such terms as the
Mortgagee may fix and briefly specify in a notice of sale to be published
as required by law; or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in
this Mortgage or in aid of the execution of any power granted in this
Mortgage or for the foreclosure of this Mortgage or for the enforcement
of any other legal, equitable or other remedy, as the Mortgagee, being
advised by counsel, shall deem most effectual to protect and enforce any
of the rights of the Mortgagee; the failure to join tenants shall not be
asserted as a defense to any foreclosure or proceeding to enforce the
rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust
Estate, whether made under the power of sale hereby given or pursuant to
judicial proceedings, to the extent permitted by law:
(a) the principal of and accrued interest on the Note, if not
previously due, shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt
of any required prior approvals of the New Jersey Casino Control
Commission, the Mortgagee may bid for and purchase the property offered
for sale, and upon compliance with the terms of sale may hold, retain and
possess and dispose of such property, without further accountability, and
may, in paying the purchase money therefor, delivery any notes or claims
for interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and
such notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon,
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shall be returned to the holders thereof after being appropriately
stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and instrument of
assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and
lawful attorney of the Mortgagor, in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold; and for that purpose it may execute all
necessary deeds, bills of sale and instruments of assignment and
transfer, and may substitute one or more persons, firms or corporations
with like power, the Mortgagor hereby ratifying and confirming all that
its attorney or such substitute or substitutes shall lawfully do by
virtue hereof; but if so requested by the Mortgagee or by any purchaser,
the Mortgagor shall ratify and confirm any such sale or transfer by
executing and delivering to the Mortgagee or to such purchaser or
purchasers all proper deeds, bills of sale, instruments of assignment and
transfer and releases as may be designated in any such request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of, in and to
the property so sold shall be divested and such sale shall be a perpetual
bar both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor,
its successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such
sale shall be a sufficient discharge to the purchaser or purchasers at
such sale for his or their purchase money and such purchaser or
purchasers and his or their assigns or personal representatives shall
not, after paying such purchase money and receiving such receipt, be
obliged to see to the application of such purchase money, or be in
anywise answerable for any loss, misapplication or non-application
thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default
and commencement of judicial proceedings by the Mortgagee to enforce any right
under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security
for the Note or the solvency of the
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Mortgagor, to the appointment of a receiver of the Trust Estate, and of the
rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER,
that the Mortgagee's rights under this Section 3.12 shall be subject to the
provisions of the New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days'
prior written notice to the Mortgagor (or such shorter period or without
notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee
shall have power to institute and maintain such proceedings as it may deem
necessary and appropriate to prevent any impairment of the Trust Estate by any
acts which may be unlawful or in violation of this Mortgage and to protect its
interests in the Trust Estate and in the rents, issues, profits, revenues and
other income arising therefrom, including power to institute and maintain
proceedings to restrain the enforcement of or compliance with any 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 the security hereunder or be materially prejudicial to the interests of
the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the contrary, following an Event of Default
and the taking of possession of the Trust Estate or any part thereof by the
Mortgagee and/or the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized, in addition
to the rights and powers of the Mortgagee and such receiver set forth
elsewhere in this Mortgage, to retain one or more experienced operators of
hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such
operator shall have all necessary legal qualifications, including all Permits,
to manage the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to
the Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation
or combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the
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successor entity formed by such consolidation or into which the Mortgagor is
combined or to which such conveyance or transfer is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Mortgagor
under this Mortgage with the same effect as if such successor entity had been
named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or
transfer of the Trust Estate substantially as an entirety, unless such
conveyance or transfer is in compliance with the provisions of Article Ten of
the Indenture, shall have the effect of releasing the Person named as "the
Mortgagor" in the first paragraph of this instrument or any successor entity
which shall theretofore have become such in the manner prescribed in such
Article Ten from its liability as obligor or maker of the Note.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as
otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor
shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or
otherwise transfer all or any part of the Trust Estate or any interest therein
(including without limitation any interest in the Ground Leases). Without
limiting the generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground Leases from
its ownership of the buildings constituting the Casino-Hotel or any part
thereof.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Mortgagor will duly and punctually pay the principal of (and premium, if any)
and interest on the Note in accordance with the terms of the Note and this
Mortgage.
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants
and agrees to comply with all of the terms and conditions set forth in any
FF&E Financing Agreements before the expiration of any applicable notice and
cure periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS.
(a) The Mortgagor will not create, incur, suffer or permit to be
created or incurred or to exist any mortgage, lien, charge or encumbrance on
or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances,
(ii) liens on the Trust Estate in connection with indebtedness permitted by
clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture,
and (iii) a building contract or a notice of intention filed by a
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mechanic, materialman or laborer under the New Jersey lien law. Without
limiting the generality of the foregoing sentence but notwithstanding the
provisions of the foregoing sentence, the Mortgagor shall not be deemed to
have breached the provisions of the foregoing sentence by virtue of the
existence of a lien for Impositions or mechanics liens so long as the
Mortgagor is in good faith contesting the validity of the same in accordance
with the provisions of Section 5.09 to the extent that the matters described
in (i) and (ii) do not constitute a default under any Ground Lease or Superior
Mortgage.
(b) Mortgagee acknowledges that, contemporaneously with the
execution and delivery of this Mortgage, it has assigned this Mortgage to the
Trustee and that the Trustee is also the mortgagee under the Guaranty
Mortgage, which Guaranty Mortgage creates a lien upon the same Trust Estate
PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and
agrees that whenever it is provided in the Guaranty Mortgage that the
Mortgagor shall deliver any notice or document, or is require to make any
payment thereunder, the delivery of such notice or document or the making of
such payment pursuant to the terms of the Guaranty Mortgage shall also
constitute the delivery of such notice or document or the making of such
payment in satisfaction of the terms, conditions and provisions of this
Mortgage to the same extent as the same constitutes satisfaction of the terms,
conditions and provisions of the Guaranty Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on behalf of the
Mortgagor, (a) to appear in and defend any action or proceeding brought with
respect to the Trust Estate or any part thereof and (b) upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgage), to commence any action or
proceeding to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The
Mortgagor represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to execute and deliver this Mortgage, and
all corporate action on its part necessary for the valid execution and
delivery of this Mortgage has been duly and effectively taken;
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(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the
Mortgage Documents, any Working Capital Facility Lien and Existing
Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than
the lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has
been given to or by the lessee, (iii) the Mortgagor has delivered true
and correct copies of the Ground Leases and all modifications, amendments
and supplements thereto, and (iv) each of the Ground Leases is in full
force and effect and has not been modified, amended or supplemented,
except as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to
execute this Mortgage and to grant, bargain, sell, alien, convey, assign,
transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as
provided herein (including without limitation with respect to the
Operating Assets and the Ground Leases, without the consent of any third
party, other than governmental authorities but any applicable or
necessary consent or approval of any such governmental authority has been
given or waived at or prior to the execution and delivery of this
Mortgage), and this Mortgage constitutes a valid second mortgage lien and
second priority security interest in the Trust Estate PARI PASSU with the
lien of the Guaranty Mortgage, subject only to Working Capital Facility
Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend (x)
the title to Trust Estate (including without limitation, its leasehold estates
under the lessee's interests in the Ground Leases) (subject to Permitted
Encumbrances) and (y) the priority of the lien of this
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Mortgage (subject to Permitted Encumbrances other than Restricted
Encumbrances), against the claims and demands of all persons whomsoever, at
the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will,
as provided in Section 5.13, from time to time subject its right, title an
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments
of further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded,
registered and filed, and will execute and file such financing statements and
cause to be issued and filed such continuation statements, all in such manner
and in such places as may be required by law or as requested by the
Mortgagee to fully preserve and protect the rights of the Mortgagee as a
secured party under the Uniform Commercial Code to all property comprising the
Trust Estate (to the extent a grant of a security interest therein is governed
by the Uniform Commercial Code) and to perfect, preserve and protect the lien
of this Mortgage as a valid mortgage lien of record and a valid security
interest on the Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all
expenses incident to the execution and delivery of this Mortgage, and any
instrument of further assurance, and all federal, state, county and municipal
stamp taxes and other taxes, duties, mposts, assessments and charges arising
out of or in connection with the execution and delivery of the Note, this
Mortgage, any financing statement or continuation statement with respect to
the personal property constituting part of the Trust Estate or any instrument
of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF
PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS.
The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to contests,
pay or cause to be paid promptly (or when installments of the same shall
become due and payable, if, by law or by agreement or arrangement with the
applicable governmental agency or authority, the same may be paid in
installments) before any fine, penalty, interest or cost may be added for
nonpayment (but no later than when the same are payable by the Mortgagor
dpursuant to any Superior Instrument
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Requirement), all taxes (including, without limitation, real estate taxes,
personal or other property taxes and all sales, value added, use and
similar taxes), assessments (including, without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed
prior to the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
profits or revenue tax upon the income of the Mortgagee, the Trustee or any
Noteholder nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholder nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed n substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Note;
(b) except for such property which the Mortgagor may dispose of or
replace pursuant to Section 2.02, maintain and keep all its properties used
or useful in the conduct of its business (other than obsolete equipment),
including, without limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition, except for
reasonable wear and use, and make or cause to be made all such needful and
proper repairs, renewals and replacements thereto consistent with the
standards of other casino-hotels in Atlantic City, New Jersey;
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(c) occupy and continuously operate the Casino-Hotel and keep the
Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to contests,
the Mortgagor at its sole expense will timely (1) comply with all Legal
Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if the failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the foregoing, the
Mortgagor represents and warrants that at the time of the execution of this
Mortgage, the Mortgagor is in compliance with the requirements of clauses
(1), (2) and (3);
(e) in the event of the passage after the date of this
Mortgage of any law of the State of New Jersey, or any other governmental
entity, changing in any way the laws now in force for the
taxation of mortgages, or debts secured thereby, for state or local
purposes, or the manner of the operation of any such taxes, so as to affect
the interest of the Mortgagee, then and in such event, the Mortgagor shall
bear and pay the full amount of such taxes, provided that if for any reason
payment by the Mortgagor of any such new or additional taxes would be
unlawful or if the payment thereof would constitute usury or render the
indebtedness secured hereby wholly or partially usurious under any of the
terms or provisions of the Note, or this Mortgage, or otherwise, the
Mortgagee may, at the Mortgagee's option, declare the whole sum
secured by this Mortgage, with interest thereon, to be due and payable 90
days after notice of election thereof has been given by the Mortgagee, or
the Mortgagee may, at the Mortgagee's option, pay that amount or portion of
such taxes as renders the loan or
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indebtedness secured hereby unlawful or usurious, in which event the
Mortgagor shall concurrently therewith pay the remaining lawful and
nonusurious portion or balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole
expense, contest by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part
of any Imposition or lien therefor or any Legal Requirement or Insurance
Requirement or the application of
any instrument of record affecting the Trust Estate or any part thereof or any
claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and
may withhold payment of the same pending such proceedings if permitted by law,
or make payment under protest, or defer compliance with any such Legal
Requirement, any such Insurance Requirement or the terms of any such
instrument, and the same shall not be a Default hereunder, provided that
(a) in the case of any Impositions or lien therefor or any claims of
mechanics, materialmen, suppliers or vendors or lien therefor, such
proceedings shall suspend the collection thereof from each of the Mortgagor,
the Mortgagee, the Trustee, the Noteholder and the Trust Estate, (b) neither
the Trust Estate nor any interest therein would be in any danger of being
sold, forfeited, or lost, (c) such action would not result in or constitute a
default under any Ground Lease or Superior Mortgage, (d) in the case of a
Legal Requirement, neither the Noteholder nor the Mortgagee shall be in any
danger of any civil or any criminal liability, and the failure of the
Mortgagor to comply with such Legal Requirement shall not affect the
continuance in good standing of any Permit or result in the suspension,
termination, non-renewal or material adverse modification of any permit, and
(e) in the case of an Insurance Requirement, the failure of the Mortgagor to
comply therewith shall not affect the validity of any insurance required to be
maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the
generality of the first sentence of Section 5.03 and notwithstanding the
provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed,
either by payment, or bonding or otherwise, all claims and demands of
mechanics, materialmen, laborers, and others which, if unpaid, might result
in, or permit the creation of, a lien on the Premises and/or Trust Estate or
any part thereof, or on the revenues, rents, issues, income and profits
arising therefrom and in general will do or cause to be done everything
necessary so that the lien hereof shall be fully preserved, at the cost of the
Mortgagor, without expense to the Mortgagee.
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Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable
properties, in amounts at all times sufficient to prevent the Mortgagor
from becoming a coinsurer within the terms of the applicable policies,
but in any event such insurance shall be maintained in such insurable
amounts not less than the greatest of the following (hereinafter referred
to as the "Insurance Amount"): (i) 100% of the then full insurable value
of such insurable properties, the term "full insurable value" to mean the
actual replacement cost (excluding the costs of foundation, footing,
excavation, paving, landscaping and other similar, non-insurable
improvements) determined from time to time (but not less frequently than
once in any 36 calendar months), by an Architect, contractor, appraiser,
or an Insurer, or (ii) the amount required to be maintained pursuant to the
Superior Instrument Requirements;
(2) war risk insurance as and when such insurance is obtainable
from the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then
be so obtainable;
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the
cost of such insurance, for personal injury and property damage with
respect to any one occurrence, which may be under an umbrella policy.
Anything contained in this clause (3) to the contrary notwithstanding,
the Superior Instrument Requirements with respect to the kinds and amount
of insurance described in this clause (3) shall be satisfied by the
Mortgagor;
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(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already
covered by other policies of insurance maintained by the Mortgagor) on or
about such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that at any time that the Mortgagor is
renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates
determined by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable
size in the boardwalk area of Atlantic City, New Jersey and (ii) required
to be maintained pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1),
(2), (6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, $100,000 with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
$1,000,000, (ii) the Mortgagor shall be permitted to maintain a $200,000 self
insured retention under the general liability policy described in clause (3) and
a deductible with respect to the other insurance policies described in clause
(3) in an amount not to exceed the amount of deductible as is customarily
maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the
Mortgagor shall not reduce its insurance coverage for the matters described in
clause (3) (which for purposes of this paragraph means a reduction in single
limits or an increase in deductible) unless and until the Mortgagor delivers
to the Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained atrates determined
by the Mortgagor to be reasonable for such coverage, (x) the amount of the
proposed reduction, (y)
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the premium for the existing and the proposed reduced coverage, and (z) that
the proposed deductible satisfied the criteria set forth in this clause (iii),
and (iv) the Mortgagor shall be permitted to maintain a deductible with
respect to the insurance policies described in clause (5) in the forms of and
in an amount not to exceed the amount of deductible as is customarily
maintained by casino-hotels of similar size in Atlantic City, New Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant
to Subsection (a) of this Section 5.11 shall, (1) except in the case of
workers' compensation insurance, name as additional insureds the Mortgagee
and, to the extent required by the Superior Instrument Requirements, the
Lessors and the holders of the Superior Mortgages, (2) provide that all
insurance proceeds for losses, except in the case of public liability insurance
and workers' compensation insurance or as otherwise provided in Subsections
(d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or
such other party as is required to receive such proceeds under a Superior
Mortgage, (3) except in the case of workers' compensation,
include effective waivers (whether under the terms of any such
policy or otherwise) by the insurer of all claims for insurance premiums
against all lost payees and named insureds (other than the Mortgagor) and all
rights of subrogation against any named insured, (4) except in the case of
public liability and workers' compensation insurance, provide that any losses
shall be payable notwithstanding (i) any act, failure to act, negligence of,
or violation or breach of warranties, declarations or conditions contained in
such policy by the Mortgagor or the Mortgagee or any other named insured or
loss payee (including, without limitation, with respect to the Released Fee
Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation
or use of the insurable properties for purposes more hazardous than
permitted by the terms of the policy, (iii) any foreclosure or other
proceeding or notice of sale relating to the insurable properties or (iv) any
change in the title to or ownership or possession of the insurable properties,
(5) contain a non-contributory mortgagee clause in favor of the Mortgagee,
and (6) provide that if all or any part of such policy is cancelled,
terminated or expires, the insurer will forthwith give notice thereof to each
named insured an loss payee and that no cancellation, reduction in amount
or material change in coverage thereof shall be effective until at least
30 days after receipt by each named insured and loss payee of written notice
thereof.
(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate
originals of all insurance policies that the Mortgagor is required to maintain
pursuant to this Section 5.11 and (2) within 30 days after each reduction in
insurance required to be maintained by the Mortgagor
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hereunder, an Officers' Certificate setting forth the articulars as to all
such insurance policies and certifying that the same comply with the
requirements of this Section 5.11, that all premiums or installments thereof
then due thereon have been paid and that the same are in full force and
effect. The Mortgagee shall not be responsible for effecting or renewing any
insurance or for the responsibility or solvency of the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x) results in
damage, loss or destruction in an amount in excess of $5,000,000 to any
buildings or improvements on the Premises and/or any Tangible Personal
Property or (y) pursuant to any Superior Instrument Requirement, would require
the deposit of insurance proceeds with the Depositary, or action or proceeding
with respect thereto. Whenever the Superior Instrument Requirements require
or permit the selection of the Depositary by the Mortgagor, the Mortgagor
shall select the Insurance Trustee as the Depositary. Within 30 days after
any Casualty which results in any damage, loss or destruction in an amount
in excess of $10,000,000 to any buildings or improvements of the Premises
and/or any Tangible Personal Property, the Mortgagor shall deliver to the
Mortgagee a certificate of an Architect stating whether, in such Architect's
opinion, applicable Legal Requirements permit the Restoration of such
buildings and improvements for the same uses and to the same size and quality
in all material respects, as existed immediately prior to the Casualty (and if
such certificate states the Legal Requirements do not permit such
Restoration, such certificate shall describe the manner closest approximating
such criteria to which the buildings and improvements could be so restored and
shall be accompanied by a Certificate of Appraised Value dated not more than
10 days prior to delivery setting forth the Appraised Value immediately prior
to the Casualty and the estimated Appraised Value immediately after the
Restoration). If the Mortgagor is required to deliver such Certificates of
Appraised Value and if based on such Certificates of Appraised Value
immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of
(i) 66 2/3% of the Appraised Value immediately after such Restoration or
(ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately
prior to such Casualty divided by the Appraised Value immediately prior to the
Casualty multiplied by the Appraised Value immediately after such Restoration,
then the proceeds of any insurance shall, at the election of Mortgagee,
either be applied to Restoration as set forth in Subsections (e), (h) and (i)
below) or paid and delivered to the Mortgagee to the extent of the then
Outstanding Amount of the Notes and any other interest or other sums due
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hereunder or thereunder to be applied to the satisfaction of the Mortgage to
the extent proceeds are available for such purpose and provided that no
additional sums are due to the Trustee or the Noteholders under the Notes or
the Indenture, the balance of any net insurance proceeds shall be paid to the
Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of
Appraised Values indicates that the Outstanding Amount of First Mortgage Debt
immediately after such Restoration exceeds the greater of the two amounts
determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance
will be made available for Restoration (subject to paragraphs (e), (h) and
(i) below) if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as
additions to capital in an amount equal to the Outstanding Amount of First
Mortgage Debt in excess of the Appraised Value necessary to be paid down so
that the Outstanding Amount of First Mortgage Debt will not exceed either of
the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED
that such commitment may only be released if, upon an Appraisal at any time
following completion of such Restoration, the aggregate Outstanding Amount of
the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value.
(e) Subject to the provisions of Subsection (d) above, in case a
Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of $10,000,000, the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to the
Insurance Trustee (or other Depositary required by the Superior Instrument
Requirements, provided that such Depositary holds such proceeds in trust for
purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable promptness under
the circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair, replacement
or rebuilding of the damage or destruction resulting from the Casualty (all of
which restoration, repair, replacement or rebuilding are referred to as
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the "Restoration") in accordance with the plans and specifications submitted
to the Insurance Trustee, in conformance with all Legal Requirements and
Superior Instrument Requirements, and in accordance with the further
provisions of this Subsection (e), regardless of the extent of any such
Casualty and whether or not net insurance proceeds, if any, shall be available
or, if available, shall be sufficient, for the purpose of the Restoration
(provided, however, that if the Mortgagor does not receive any net insurance
proceeds within 30 days after any Casualty because the adjustment of the loss
has not yet occurred, then the obligation of the Mortgagor to commence such
Restoration shall be deferred until such proceeds are made available to the
Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officer's
Certificate certifying that the Mortgagor is diligently and continuously
adjusting such
loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an
Officers' Certificate within such 30-day period requesting the extension of
such period, estimating the date on which such proceeds will be available and
describing the Mortgagor's efforts to adjust such loss and certifying that
such extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach has
been waived) and (iii) the Mortgagor delivers to the Mortgagee additional
Officers' Certificates every 30 days thereafter updating the information
contained in the certificate described in Clause (ii)). All Restoration
work shall be performed in accordance with the applicable provisions of
Section 5.12 and in conformance with all Superior Instrument Requirements,
Legal Requirements and Insurance Requirements and, prior to commencing any
Restoration, the Mortgagor shall obtain all Permits necessary in connection
therewith, and shall obtain, and keep in full force and effect until the
completion of such Restoration, such additional insurance as the Insurance
Trustee and Superior Instrument Requirements may require. The plans and
specifications for the Restoration shall be accompanied by a certificate of
the Mortgagor and an Opinion of Counsel to the effect that upon the
completion of the Restoration pursuant to the plans and specifications the
Premises, and all buildings and improvements, thereon will comply with all
superior Instrument Requirements, Legal Requirements and Insurance
Requirements. Notwithstanding anything in this Section 5.11 to the contrary,
if such Casualty is in an amount less than $5,000,000, the Mortgagor shall
not be required to perform and complete such Restoration (unless the
performance and completion of the Restoration is necessary in order for the
Mortgagor to be in compliance with any term, provision or condition of
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this Mortgage (other than this Section 5.11(e)) or any Superior Instrument
Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designate by Mortgagor (to the extent the Mortgagor is
permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds) and
shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or
to make payment for, the Restoration, after the Insurance Trustee deducts
therefrom the amount of any reasonable costs and expenses incurred in
connection with the performance of its obligations under this Section 5.11.
The Insurance Trustee shall make such payments not more frequently than once
every 30 days upon the written request of the Mortgagor (unless more frequent
payments are required by Superior Instrument Requirements), by paying to the
Mortgagor or the persons named in the certificate described in Clause (6)
of this Subsection (e) the respective amounts stated in such certificate from
time to time as the Restoration progresses, provided the Mortgagor has complied
with the requirements of this Subsection (e) and such payment is permitted by
an applicable Superior Instrument Requirements. The Mortgagor's written
request shall be accompanied by (i) the certificate described in Clause (6) of
this Subsection (e) and (ii) a title company or official search, or other
evidence reasonably acceptable to the Insurance Trustee, showing that there
have not been filed
with respect to the Premises, any vendor's, contractor's mechanic's, laborer's
or materialman's statutory or similar lien which has not been discharged of
record (or bonded against or secured by other security) or any other
encumbrance irrespective of its priority (other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate, countersigned by the Architect in
charge of the Restoration with respect to the matters described in (i) and (v)
below, (B) be dated not more than 10 days prior to such request and (C) set
forth (in addition to any other requirements contained in any applicable
Superior Instrument Requirements) that:
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(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen, engineers,
architects or other persons who have rendered services or furnished or
contracted to deliver materials for the Restoration therein specified,
and the names and addresses of such persons, a brief description of such
services and materials and the several amounts so paid or due to each of
such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net insurance
proceeds, and that the sum then requested does not exceed the value of
the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in such certificate to be due for services or
materials, and except for amounts in dispute and/or customary retainages,
there is no outstanding indebtedness known to the person signing such
certificate, after due inquiry, which is then due for labor, wages,
materials, supplies or services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if such
estimated cost does exceed such insurance proceeds such certificate shall
state the amount of any such deficiency. If the certificate states that
such deficiency will exist, the Mortgagor shall deliver the amount of such
deficiency in cash or cash equivalent to the Insurance Trustee
simultaneously with the delivery of such certificate, which amount shall
be deemed insurance proceeds for purposes of this Section 5.11(e); and
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(7) If net insurance proceeds shall be insufficient to pay the
entire cost of the Restoration, then, after completion of the
Restoration, the Mortgagor shall pay the deficiency. If all or any
part of the net insurance proceeds are not used for the restoration in
accordance with this Subsection (e) (because such proceeds exceed the
amount required to complete the Restoration), then upon completion of the
Restoration in accordance with this Subsection (e), such amount not so
used, if held by the Insurance Trustee, shall be paid to the Mortgagor
(if permitted by Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is
continuing, all net business interruption insurance proceeds shall be paid to
the Mortgagor, to be segregated from the other funds of Mortgagor and held
in trust by Mortgagor for the following purposes and in the following order of
priority: (i) for the payment of Impositions and amounts due under the Ground
Leases and Superior Mortgages; (ii) for debt service for the estimated period
of Restoration (for purposes of this Section 5.11(f), interest and principal
payments due on any payment date under the Note will deemed to accrue in equal
daily installments beginning the day after the immediately preceding payment
date and ending on such payment date); and (iii) for any expense incurred in
connection with the operation or business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to be
maintained pursuant to this Section 5.11, unless the same are permitted by
Superior Instrument Requirements and the Mortgagee is included therein as
a named insured, with loss payable to the Mortgagee and the Insurance
Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately
notify the Mortgagee whenever any such separate insurance is taken out and
shall promptly deliver to the Mortgagee a duplicate original of the policy of
such insurance, a copy thereof certified by the insurer or a certificate
thereof.
(h) Subject to final adjustment by the insurer, insurance claims
by reason of damage or destruction to any
portion of the Trust Estate may be adjusted by the Mortgagor, but the
Mortgagee shall have the right (but not the obligation) to join the
Mortgagor in adjusting, and approving the adjustment of, any such loss
except in the event of a loss where the amount of insurance reasonably
anticipated to be received with respect to such loss is less than Five
Million Dollars ($5,000,000), and the Mortgagor shall assist the
Mortgagee in any such adjustment at the request of the Mortgagee. If the
Mortgagee at its election as aforesaid joins the Mortgagor in any
adjustment process,
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then the Mortgagee's approval of the adjustment shall not be unreasonably
withheld;
(i) Notwithstanding anything contained herein to the contrary, if an
Event of Default shall have occurred and be continuing, the Mortgagee may, at
its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee
any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the
case may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit
or make any demolition, alteration or improvement of any building included in
the Trust Estate or any new construction on any part of the Trust Estate,
except in conformity with and subject to the limitations hereinafter in this
Section 5.12 set forth.
Unless an Event of Default shall have occurred and be continuing,
the Mortgagor shall have the right at all times to make or permit such
alterations, improvements or new constructions, structural or otherwise
(herein sometimes called collectively "alterations"), of or on the Trust
Estate, to be made in all cases subject to the following conditions:
(a) no alteration shall be undertaken or carried out except in
conformity with all Superior Instrument Requirements, Legal Requirements
and Insurance Requirements;
(b) if the estimated cost of any alteration, together with other
alterations that constitute a single construction plan or project
(whether or not accomplished in several stages or procedures), exceeds
[$5,000,000], the building or buildings, as so improved or altered, upon
completion of the work shall be of a value not less than the value of
such building or buildings immediately prior to the making of such
alterations;
(c) any alteration which is structural in nature or involves an
estimated cost of more than [$5,000,000] shall be conducted under the
supervision of an Architect, and no such alteration shall be undertaken
until 10 days after there shall have been filed with the Mortgagee
detailed plans and specifications and cost estimates therefor, stating
that such plans and specification conform to all, prepared and approved
in writing by such Architect and accompanied by a certificate of such
Architect stating that such plans and specifications conform to all
applicable provisions of this Section 5.12;
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(d) no alteration involving an estimated cost of more than
$5,000,000 shall be undertaken until the Mortgagor has furnished
to the Mortgagee, at the Mortgagor's sole cost and expense, a surety
bond or bonds, covering performance, and labor and material payments with
respect to the work to be so performed, naming the Mortgagee as obligee,
issued by a responsible surety company, authorized to do business in the
state of New Jersey, in a form generally and customarily used by such
surety in an amount equal to the estimated cost of construction of the
work covered by the plans and specifications therefor, guaranteed and
conditioned upon the performance and completion of such construction,
substantially in conformity with the such plans and specifications and
within a reasonable time, subject to delays by fire, strikes, lock-out,
acts of God, inability to obtain labor or materials, governmental
restrictions, enemy action, civil commotion or unavoidable Casualty or
other similar causes beyond the control of the Mortgagor, free and clear
of all liens, claims and liabilities for the cost of such alterations.
In the event such surety bond or bonds shall be unobtainable the
Mortgagor shall deliver to the Mortgagee security by cash, letter of
credit or other guarantee, affording substantially the same
protection as would such bond or bonds;
(e) all work done in connection with any alterations shall be done
promptly and in good and workmanlike manner. The work in connection with
any alteration shall be prosecuted with reasonable dispatch, delays due
to fire, strikes, lockouts, acts of God, inability to obtain labor or
materials, governmental restrictions, enemy action, civil commotion or
unavoidable casualty or similar causes beyond the control of the
Mortgagor excepted;
(f) if the estimated cost of alterations exceed $5,000,000, the
Mortgagor shall have delivered to the Mortgagee (A) prior to the
commencement of such alterations, additions or improvements copies of all
Permits required for the commencement of such work together with a
certificate of the Architect or an Opinion of Counsel to the effect that
all Permits required for the commencement of such alterations have been
obtained; and (B) within a reasonable period of time after the completion
of the alterations, copies of all Permits required in connection with the
completion thereof, together with either an Opinion of Counsel or a
certificate of the Architect that all such Permits have been so obtained
by the Mortgagor and that the Mortgagor has complied with all the
requirements of this Section 5.12;
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(g) no alterations of any kind shall be made to any building which
shall change the use or reduce the size or quality of the building in any
material respect; and
(h) no alterations costing in excess of $5,000,000, together with
other alterations that constitute a single construction plan or project
(whether or not accomplished in several stages or procedures), shall be
made to any building if such alterations are not expected to be completed
at least 120 days prior to the maturity date of the Note (except if such
alterations are required in order to comply with Legal Requirements or
Superior Instrument Requirements).
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d), enter into
any Lease, or renew, modify, extend, terminate, or amend any Lease,
except in the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection
of, any rental payments under any Lease more than one year in advance
of the respective periods in respect of which they are to accrue,
except that, in connection with the execution and delivery of any Lease
or of any amendment to any Lease, rental payments thereunder may be
collected and received in advance in an amount not in excess of three
months' rent and/or a security deposit may be required thereunder in an
amount not exceeding one year's rent;
(c) collaterally assign, transfer or hypothecate (other than
to the Mortgagee hereunder, to the mortgagee under the Guaranty Mortgage
or to the holder of any Working Capital Facility Lien) any rental payment
under any Lease whether then due or to accrue in the future, the interest
of the Mortgagor as landlord under any Lease or the rents, issues or
profits of the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any
Lease unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder
shall be subject and subordinate to the rights of the Mortgagee
under this Mortgage, the mortgagee under the Guaranty Mortgage and
the holders of any Superior Mortgage,
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(2) the Lease may be assigned by the landlord thereunder
to the Mortgagee,
(3) the rights and remedies of the tenant in respect of
any obligations of the landlord thereunder shall be nonrecourse as
to any assets of the landlord other than its equity in the building
in which the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee under any new lease entered
into in the event of a termination of a Ground Lease;
(e) modify any Lease with respect to the matters described in
clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate
of the Mortgagor) for a term of not less than 3 nor more than 10 years, the
Mortgagee shall deliver a non-disturbance and attornment agreement
substantially in the form of Schedule 4 hereto, following receipt of a
certificate of a leasing broker (who is not an Affiliate of the Mortgagor or
the broker involved in such transaction) experienced with respect to leases of
commercial space in the Atlantic City area stating that the rent under the
Lease is not less than fair market rent and that the other terms of the Lease
are fair and reasonable in the commercial leasing market. The Mortgagor
shall, upon demand, reimburse the Mortgagee for any costs and expenses
(including reasonable attorney's fees) incurred by the Mortgagee in
connection with the preparation. review and delivery of such non-disturbance
and attornment agreements.
Promptly after the execution and delivery hereof,
the Mortgagor will cause the lessee under each Lease now in effect and promptly
after each Lease is executed or becomes effective after the date of the
execution and delivery hereof, the Mortgagor will cause the lessee under each
such Lease, to be duly notified in writing (unless the substance and effect of
such notice shall be contained in such Lease) of the subjection of the
owner's interest, as lessor, in and to such Lease to the lien of this
Mortgage and of the name and address of the Mortgagee. Each such notice shall
state that the lease of such lessee is a Lease as herein defined. If a new
Mortgagee is at any time appointed hereunder or the address of the Mortgagee
shall at any time be changed, the Mortgagor will cause each lessee under each
Lease to be promptly notified in writing of the name address of such new
Mortgagee or the new address of the Mortgagee. The Mortgagor will use
reasonable efforts (but shall not be obligated to ncur any expenditure other
than DE MINIMIS
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amounts) to obtain from each lessee under each Lease to whomany notice is sent
pursuant to this paragraph an acknowledgment of receipt of such notice, and
the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of
each such acknowledgment of receipt which it is able to obtain. The Mortgagee
shall not be responsible for securing or causing the Mortgagor to secure any
such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject
to Article Four, the Mortgagor will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence as a
corporation, and its rights (both statutory and under its articles of
incorporation) and franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The
Mortgagor will keep proper books of record and account in accordance with
Section 12.05 of the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Note, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Note.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The
Mortgagor covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law or any
other law which would prohibit or forgive the Mortgagor from paying all or any
portion of the obligations evidenced by the Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may otherwise
affect the covenants or the performance of this Mortgage; and the Mortgagor
(to the extent that it may lawfully do so) 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 Mortgagee, but
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will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN.
(a) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Taking affecting the Trust
Estate. If the Taking (i) is estimated to result in an award of more than
$5,000,000 or (ii) the Taking would interfere with or adversely affect
the operation of the Casino-Hotel in accordance with Legal Requirements then
within 30 days after any such Taking, the Mortgagor shall deliver to the
Mortgagee a certificate of an Architect stating whether, in such Architect's
opinion, applicable Legal Requirements permit the Restoration of any buildings
and improvements for the same uses and the same size and quality in all
material respects as existed immediately prior to the Taking (and if such
certificate states that Legal Requirements do not permit such Restoration,
such certificate shall describe the manner closest approximating such criteria
to which the buildings and improvements could be so restored and shall be
accompanied by a Certificate of Appraised Value dated not more than 10 days
prior to delivery setting forth the Appraised Value immediately prior to the
Taking and the estimated Appraised Value immediately after the permitted
Restoration). If the Mortgagor is required to deliver such Certificates of
Appraised Value and if based on such Certificates of Appraised Value
immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of
(i) 66-2/3% of the Appraised Value immediately after such Restoration or
(ii) the quotient of the Outstanding Amount of the First Mortgage Debt
immediately prior to such Taking divided by the Appraised Value immediately
prior to the Taking multiplied by the Appraised Value immediately after such
Restoration, then the Taking shall be deemed a Taking of "the whole or
substantially all of the Premises." Notwithstanding the foregoing sentence,
if such Certificates of Appraised Value indicate that the Outstanding Amount of
First Mortgage Debt immediately after such Restoration exceeds the greater of
the two amounts determined pursuant to subclauses (i) and (ii) above, the
Taking will not be deemed a Taking of "the whole or substantially all of the
Premises", if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as
additions to capital in an amount equal to the Outstanding Amount of First
Mortgage Debt in excess of the Appraised Value
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necessary to be paid down so that the Outstanding Amount of First Mortgage
Debt will not exceed either of the two amounts determined pursuant to such
clauses (i) and (ii), PROVIDED that such commitment may only be released if,
upon an Appraisal at any time following completion of such Restoration, the
aggregate Outstanding Amount of the First Mortgage Debt does not exceed
66-2/3% of the Appraised Value.
(b) If at any time there shall occur a Taking of less than the whole
or substantially all of the Premises and the award or awards resulting
therefrom payable to the Mortgagor (and not to any Lessor or the holder of any
Superior Mortgage) (after there shall have been first deducted the fees and
expenses incurred in connection with the termination, settlement and
collection of such award or awards, including but not limited to reasonable
counsel fees and expenses, hereinafter referred to as "Settlement Costs")
(i) shall not exceed the sum of $10,000,000 (except to the extent
that the Insurance Trustee or a Depositary is required to hold such amount
pursuant to a Superior Instrument Requirement), the entire amount of such
award shall be paid to the Mortgagor; and (ii) if such award is $10,000,000
or more, the entire amount of such award shall be paid to the Insurance Trustee
(or other Depositary required by a Superior Mortgage, provided that such
Depositary holds such award in trust for purposes of paying the cost of
Restoration). In either event, such awards shall be applied to the cost of
demolition, repair, Restoration and replacement of the Trust Estate to as
nearly practicable to their uses, value and condition immediately prior to the
Taking (except to the extent otherwise provided by Superior Instrument
Requirements). The Mortgagor shall promptly commence and with due diligence
perform that Restoration in accordance with clauses (3), (4) and (7) of
Section 5.11(e) (after substituting the words "Taking" of "Casualty" and
"award" for "not insurance proceeds"), at no cost to the Mortgagee. All claims
or suits arising out of any Taking may be settled by the Mortgagor, except that
the Mortgagee shall have the right (but not the obligation) to participate in
such claim or suit, and not the obligation) to participate in such claim or
suit, and to approve settlement thereof (and notwithstanding anything in the
Ground Leases to the contrary, the Mortgagor shall not agree to any settlement
or compromise of the amount of any such claim or suit), except a claim or suit
where the amount reasonably anticipated to be received by the Mortgagor is
less than $5,000,000. If the Mortgagee at its election as aforesaid joins
such claim or suit, the Mortgagee's approval of such settlement shall not be
unreasonably withheld. The Insurance Trustee shall promptly pay such sums as
are received by it from such Taking from time to time in accordance with the
procedures set forth in clauses (5) and (6) of Section 5.11(e) (after
substituting the words
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"Taking" for "Casualty" and "award" for "net insurance proceeds").
(c) If at any time there shall occur a Taking of the whole or
substantially all of the Premises, then the award payable to the Mortgagor
shall not be applied to Restoration but shall instead be paid and delivered
to the Trustee (subject to the rights of the Lessors under the Superior Leases
and the holders of any Superior Mortgages) to the extent of the then
Outstanding Amount of the Note and any other interest or other sums due
hereunder or thereunder to be applied to the satisfaction of this Mortgage
to the extent proceeds are available for such purpose and provided that no
additional sums are due the Trustee or the Noteholder under the Note or the
Indenture, the balance of any award shall be paid to the Mortgagor.
(d) Notwithstanding anything contained herein to the contrary, if
an Event of Default shall have occurred and is continuing, the Mortgagee may,
at its option, (A) refrain from paying to the Mortgagor or the Insurance
Trustee any award or (B) instruct the Insurance Trustee to pay to the
Mortgagee any award then held by the Insurance Trustee, as the case may be.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause to
be done all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor
shall at all times fully perform and comply with all agreements, covenants,
terms and conditions imposed upon or assumed by it as lessee under each of the
Ground Leases (including without limitation the covenant to pay rent and all
taxes, assessments and other charges mentioned therein) prior to the
expiration of any notice and/or cure period provided in each such Ground
Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of
default by the lessee thereunder, Mortgagee may rely thereon and take any
action the Mortgagee deems necessary in its sole discretion to prevent or to
cure any default by the Mortgagor in the performance of or compliance with any
of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as lessee under each of the Ground Leases, even though the
existence of such default or the nature thereof be questioned or denied by the
Mortgagor or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers'
Certificate, Opinion of Counsel and a copy of the injunction, all as described
in Section 3.01(g), the Mortgagee shall not take any such action unless and
until the Mortgagor and/or the Mortgagee no longer has the benefit
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of any tolling or stay referred to in Section 3.01(g). Without limiting the
generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to
the Mortgagee, and agrees that the Mortgagee shall have, the absolute and
immediate right to enter in and upon the Premises or any part thereof to such
extent and as often as the Mortgagee, in its sole discretion, deems necessary
or desirable for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. Subject to the preceding and
without limiting the Mortgagee's other remedies under this Mortgage, the
Mortgagee may pay and expend such sums of money as the Mortgagee in its sole
discretion deems necessary for any such purpose, and the Mortgagor hereby
agrees to pay to the Mortgagee, immediately and without demand, all such sums
so paid and expended by the Mortgagee, together with interest thereon from the
date of each such payment at the highest rate of interest set forth in the
Note. All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i)it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and that
it will not without the express written consent of the Mortgagee modify,
change, supplement, alter or amend such Ground Leases either orally or in
writing and, as further security for the repayment of the indebtedness
secured hereby and for the performance of the covenants herein and in
such Ground Leases contained, the Mortgagor hereby assigns to the
Mortgagee all of its rights, privileges and prerogatives as lessee under
such Ground Leases to terminate, cancel, modify, change, supplement,
alter or amend such Ground Leases, and any such termination, cancellation,
modification, change, supplement, alteration or amendment of such Ground
Leases without the prior written consent thereto by Mortgagee shall be
void and of no force and effect. Unless (1) an Event of Default has
occurred and is continuing and (2) either (A) there has been an
acceleration of maturity of the Note pursuant to Section 3.02 hereof or
(B) the Mortgagee exercises its rights under Section 3.09 hereof, the
Mortgagee shall have no right to terminate, cancel, modify, change,
supplement, alter or amend the Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of the
Mortgagor's obligations under such Ground Leases, pursuant to such Ground
Leases or otherwise, shall release the Mortgagor from any of its
obligations under this Mortgage,
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including its obligations with respect to the payment of rent as
provided for in such Ground Leases and the performance of all of the
terms, provisions, covenants, conditions and agreements contained in such
Ground Leases, to be kept, performed and complied with by the lessee
therein;
(iii) unless the Mortgagee shall otherwise expressly consent in
writing, the fee title to the Leased Land, the Mortgagor's interest in
the improvements on the Leased Land and the leasehold estates shall not
merge by and shall always remain separate and distinct, notwithstanding
the union of such estates either in the Lessor or in the lessee, or in a
third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in
writing of any request made by the Mortgagor, as lessee under each of the
Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any arbitration
proceedings, as well as all proceedings thereunder. In addition, the
Mortgagor shall promptly deliver to the Mortgagee a copy of the
determination of the arbitrators in each such arbitration proceeding. The
Mortgagee shall have the right to participate in such arbitration
proceedings in association with the Mortgagor or on its own behalf as an
interested party in accordance with the terms of the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such election to
the Lessor or (B) the Mortgagor acquires fee simple title or any other
estate, title or interest in the Leased Land, the Mortgagor shall
promptly notify the Mortgagee of such acquisition and
shall cause to be executed and recorded all such other and further
assurances or other instruments in writing as may be required by law or,
in the opinion of the Mortgagee, be reasonably desirable to carry out the
intent and meaning of clause (x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease by
any Lessor or any
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trustee arising from or in connection with any case, proceeding or other
action commenced or pending by or against any Lessor under the Code or
any comparable provision contained in any present or future federal,
state, local, foreign or other statute, law, rule or regulation, the
Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor
hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights
as lessee under Section 365(h) of the Code or any comparable provision
contained in any present or future federal, state, local, foreign or
other statute, law, rule or regulation ("Comparable Provision") and (B)
covenants that it shall not elect to treat any Ground Lease as terminated
pursuant to Section 365(h) of the Code or any Comparable Provision
without the prior written consent of the Mortgagee and (C) agrees that
any such election by the Mortgagor without such consent shall be null and
void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to the
Mortgagee all of the Mortgagor's claims and rights to the payment of
damages arising from any rejection by Lessor of any Ground lease under
the Code or any Comparable Provision. The Mortgagee shall have the right
to proceed in its own name or in the name of the Mortgagor in respect of
any claim, suit, action or proceeding relating to the rejection of any
Ground Lease, including, without limitation, the right to file and
prosecute, in cooperation with the Mortgagor, any proofs of claim,
complaints, motions, applications notices and other documents, in any
case in respect of Lessor under the Code or any Comparable Provision.
This assignment constitutes a present, irrevocable and unconditional
assignment of the foregoing claims, rights and remedies, and shall
continue in effect until all of the indebtedness and obligations secured
by this Mortgage shall have been satisfied and discharged in full. Any
amounts received by the Mortgagee in damages arising out of the rejection
of any Ground Lease as aforesaid shall be applied first to all reasonable
costs and expenses of the Mortgagee (including, without limitation,
reasonable attorneys' fees) incurred in connection with the exercise of
any of its rights or remedies under this Section 5.21, and thereafter as
provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or all
of the Ground Leases the Mortgagor shall give the Mortgagee not less than
10 days' prior notice of the
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date on which the Mortgagor shall apply to the Bankruptcy Court or
other judicial body with appropriate jurisdiction for authority to
reject the lease. The Mortgagee shall have the right, but not the
obligation, to serve upon the Mortgagor within such 10 day period a
notice stating that (a) the Mortgagee demands that the Mortgagor
assume and assign such Ground Lease(s) to the Mortgagee pursuant to
Section 365 of the Code or any Comparable Provision and (b) the Mortgagee
covenants to cure or provide adequate assurance of prompt cure of all
defaults and provide adequate assurance of future performance under such
Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice
described in the preceding sentence, the Mortgagor shall not seek to
reject such Ground Lease(s) and shall comply with the demand provided for
in clause (a) of the preceding sentence within 30 days after the notice
shall have been given subject to the performance by the Mortgagee of the
covenant provided for in clause (b) of the preceding sentence. Effective
upon the entry of an order for relief in respect of the Mortgagor
under Chapter 7 of the Code or Any Comparable Provision the Mortgagor
hereby assigns and transfers to the Mortgagee a non-exclusive right to
apply to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
(x) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other communications or notices
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Ground Leases and shall promptly notify the Mortgagor of any default
under any Ground lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all of
the rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed net
rent, taxes and assessments, payable under the Ground Leases have been paid to
the extent they were due and payable to the date hereof and that the Mortgagor
has not received notice of its failure to pay any
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other amounts payable under the Ground Leases which have not been cured.
(d) If both the Lessor's and lessee's estates under any of the
Ground Leases or any portion thereof shall at any time become vested in one
owner, this Mortgage and the lien created hereby shall nevertheless not be
merged, extinguished, destroyed or terminated by application of the doctrine of
merger and, in such event, Mortgagee shall continue to have all of the rights
and privileges of the a leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease
shall be terminated prior to the natural expiration of its term due to default
by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee
or its designee shall acquire from the Lessor a new lease of the Leased land
or any portion thereof, the Mortgagor shall have no right, title or interest
in or to such lease or the leasehold estate created thereby, or the options
therein contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as mortgagor under the Superior Mortgages prior
to the expiration of any notice and/or cure period provided in each such
Superior Mortgage. If a notice of default has been given by the holder of any
Superior Mortgage and the maturity of the indebtedness secured by such
Superior Mortgage has been accelerated as a result thereof, the Mortgagee may
rely thereon and take any action the Mortgagee deems necessary in its sole
discretion to prevent or to cure any default by the Mortgagor in the
performance of or compliance with any of the agreements, covenants, terms or
conditions imposed upon or assumed by the Mortgagor as mortgagor under each of
the Superior Mortgages even though the existence of such default or the nature
thereof may be questioned or denied by the Mortgagor or by any party on behalf
of the Mortgagor provided that if the Mortgagor has heretofore taken such
actions as described in Section 3.01(h), the Mortgagee shall not take any such
action unless and until the Mortgagor and/or the Mortgagee no longer has the
benefit of any such tolling or stay referred to in Section 3.01(h). Without
limiting the generality of Section 3.09 hereof, the Mortgagor hereby
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expressly grants to the Mortgagee, and agrees that upon such acceleration the
Mortgagee shall have, the absolute and immediate right to enter in and upon
the Premises or any part thereof to such extent and as often as the Mortgagee,
in its sole discretion, deems necessary for the purpose permitted by the
immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money
as the Mortgagee in its sole discretion deems necessary for any such
purpose and (ii) in its sole discretion prepay any Superior Mortgage, and
the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without
demand, all such sums referred to in (i) and (ii) above so paid and expended
by the Mortgagee, together with interest thereon from the date of each such
payment at the rate of interest set forth in the Note. All sums so paid and
expended by the Mortgagee and the interest thereon shall be added to and be
secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first obtaining the
written consent of the Mortgagee in each instance: (A) modify any of the
terms, covenants or conditions of any Superior Mortgage, and without
limiting the foregoing, the Mortgagor shall not, without satisfying such
conditions, enter into or obtain any agreement whereby the holder of any
Superior Mortgage waives, postpones, extends, reduces or modifies the
payment of the installment of principal or interest or any other item or
amount now required to be paid under the terms of any Superior Mortgage
or modifies any other provision thereof, or (B) acquire or permit or
suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or
any interest therein. Notwithstanding anything in clause (A) to the
contrary, the Mortgagor shall have the right to amend, supplement or
modify any Superior Mortgage, if (x) the then outstanding principal
balance of the indebtedness secured by such Superior Mortgage is not
increased thereby, and (y) in the case of any After-Acquired Fee
Mortgage, such amendment, supplement or agreement does not increase the
property covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each Superior
Mortgage, the note secured thereby and any other instrument evidencing or
securing the indebtedness owing to any holder of any Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an
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estoppel certificate or letter addressed to the Mortgagee from holders of
the Superior Mortgages, such certificate or letter to be in such form as
the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any default
under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions
of the Trust Estate shall be subject and subordinate to any Existing
Encumbrances and any mortgage, assignment, security agreement, financing
statement or other lien securing any Working Capital Facility (the "Working
Capital Facility Lien") encumbering Mortgagor's interest in the affected
portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be self-
operative with respect to Existing Encumbrances and shall be self-operative
with respect to any Working Capital Facility Lien, and no further instrument
shall be required to give effect to such subordination. Mortgagee shall,
however, from time to time, execute instruments in form and substance
reasonably satisfactory to the holder of the Working Capital Facility Lien,
confirming such subordination and agreeing to such other matters reasonably
required by the holder of the Working Capital Facility Lien which do not, in
the aggregate, materially adversely reduce or impair the rights of Trustee
under the Mortgage, and Mortgagor and others may rely conclusively thereon,
provided that Mortgagee shall have no liability thereunder and all costs and
expenses (including reasonable attorneys' fees) shall be paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing
Encumbrances. The provisions of this Section 5.22(d) shall be self-operative,
and no further instrument shall be required to give effect to such
subordination.
Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County, New
Jersey Clerk's Office prior to the recordation of the Guaranty Mortgage, the
lien of this Mortgage ranks PARI PASSU with, and not senior to, the lien
reated by the Guaranty Mortgage.
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ARTICLE SIX
MISCELLANEOUS
Section 6.01. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
Section 6.02. MODIFICATION. This Mortgage is subject to
"modification" within the meaning of N.J.S.A. 46:9-8.1 ET SEQ., and this
Mortgage shall have the benefit of the lien priority provisions of such
statute. Such modification may include, without limitation, a change in the
interest rate, maturity date or other terms and conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY
OF THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to
be duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey
corporation
ATTEST:______________________
By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
ATTEST:______________________
By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
<PAGE>
Exhibit E
Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
<PAGE>
NA932230075 - GUARANTY MORTGAGE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING GUARANTY
OF MORTGAGE NOTES
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING GUARANTY
OF MORTGAGE NOTES
-----------------
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association having an address at 750 Main Street, Suite 1114 Hartford,
Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain
Indenture dated as of even date herewith (the "Indenture") among Mortgagor,
Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of
the payments of principal and interest due on the 11% Mortgage Notes due
2003 in an aggregate principal amount of $125,000,000, issued pursuant to the
provisions of the Indenture (defined therein, and hereinafter collectively
referred to herein, as the "Notes"), in accordance with the terms and conditions
of Article Fourth of the Indenture; and performance and observance of all of the
provisions herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and
confirmed unto Mortgagee and its successors hereunder and assigns forever, all
of its right, title and interest in, to and under any of the following described
property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause as
fully as if set forth in this Granting Clause at length.
<PAGE>
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the "Ground
Leases") particularly described in Schedule 2, which Schedule is hereby made a
part of, and deemed to be described in, this Granting Clause as fully as if set
forth in this Granting Clause at length, which Ground Leases cover the real
property described in Schedule 2 (the "Leased Land") and in and to any and all
modifications, extensions and renewals of the Ground Leases and all options set
forth therein, together with (i) all credits, deposits, privileges and rights of
the Mortgagor as lessee under the Ground Leases, now or at any time existing,
(ii) the leaseholds and the leasehold estates created by the Ground Leases and
(iii) all of the estates, rights, titles, claims or demands whatsoever of
Mortgagor, either in law or in equity, in possession or in expectancy, of, in
and to the Ground Leases and the Leased Land, together with (x) any and all
other, further or additional title, estates, interests or rights which may at
anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or any other
greater estate to the Leased Land pursuant to the Ground Leases, or otherwise,
the lien of this Mortgage shall attach, extend to, cover and be a lien upon such
fee simple title or other greater estate and thereupon the lien of this Mortgage
shall be prior to the lien of any mortgage or deed of trust placed on such
acquired title, estate, interest or right subsequent to the date of this
Mortgage and (y) any right to possession or statutory term of years derived
from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S.
Bankruptcy Code (the "Code") or any comparable provision contained in any
present or future federal, state, local, foreign or other statute, law, rule or
regulation.
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and proceeds
of the property subjected or required to be subjected to the lien of this
Mortgage, including, without limitation, the property described in Granting
Clauses First, Second, and Sixth (such property is hereinafter collectively
referred to as the "Premises") and all the estate, right, title and interest of
every nature whatsoever of the Mortgagor in and to the same and every part
thereof. The collective metes and bounds description of the Owned Land and the
Leased Land is set forth in annexed Schedule 3.
2
<PAGE>
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the date of
execution of this Mortgage or hereafter entered into by the Mortgagor, if any,
including extensions, renewals or amendments of all of the same, and the
immediate and continuing right as security in accordance with an Assignment of
Leases and Rents of even date herewith between Mortgagor and Mortgagee, and,
after the occurrence of an Event of Default, to make claim for, collect, receive
and receipt for (and to apply the same as provided herein) any and all rents,
income, revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof, whether
payable as rent, insurance proceeds, condemnation awards, security or otherwise
and whether payable prior to or subsequent to the maturity date of the Notes, to
receive and give notices and consents thereunder, to bring actions and
proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any Lease,
including the commencement, conduct and consummation of any proceedings at law
or in equity as shall be permitted by any provision of any Lease, and to do any
and all things which the Mortgagor or any lessor is or may become entitled to do
under the Leases; provided, that the assignment made by this granting Clause
Fourth shall not impair or diminish any obligation of the Mortgagor under the
Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting Clause
Third, the Mortgagor's rights, privileges and franchises in and to the
following, to the extent of the Mortgagor's interest therein and thereto and to
the extent assignable (collectively, "Operating Assets"):
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including guaranties
and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties and
other items of
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intangible personal property relating to the ownership or operation of the
Casino-Hotel, including, without limitation, (1) telephone and other
communication numbers, (2) all software licensing agreements as are
required to operate computer software systems at the Casino-Hotel, all
transferable proprietary interest in software required to operate the
computer systems at the Casino Hotel and books and records relating to the
software programs, and (3) lessee's interest under leases of Tangible
Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor
or which have been assigned to the Mortgagor, for the design and
construction, and for the equipping and furnishing, of the Casino-Hotel,
including architect's agreements, engineering agreements, construction
contracts, consulting agreements and agreements or purchase orders for all
items of Tangible Personal Property and payment and performance bonds in
favor of the Mortgagor in connection with the Trust Estate (and all
warranties and guaranties thereunder and warranties and guaranties of any
subcontractor and bond issued in connection with the work to be performed
by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other articles of
tangible personal property which are, or are to be located on, or used
in connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the operation
thereof;
(iii) all cards, dice, gaming chips and placques, tokens,
chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles,
roulette balls and other consumable supplies and items to be used in
connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether
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in use or held in reserve storage for future use, in connection with
the operation of the Casino-Hotel, which are on hand or on order
whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind
and nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on any
of the Owned Land, including without limitation, accounting supplies,
guest supplies, forms, printing, stationery, food and beverage stock,
bar supplies, laundry supplies and brochures to existing purchase
orders;
(vi) all sets and scenery, costumes, props and other items
of tangible personal property on hand or on order for use in the
production of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by
the architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to
time;
(h) any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high roller"
lists; and
(j) all of the goodwill in connection with the operation of the
Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on
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which such facilities are shared are not detrimental to the operations of the
Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular
operation of the Casino-Hotel would not be materially impaired upon the
separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair or
diminish any obligation of the Mortgagor with respect to the Operating Assets,
nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures and
articles of personal property now or hereafter attached to or contained in and
used in connection with such buildings and improvements, including, but not
limited to, all apparatus, furniture, furnishings, machinery, motors, elevators,
fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and hot water
boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath
tubs, water closets, gas and electrical fixtures, awnings, shades, screens,
blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and
other furnishings, and all plumbing, heating, lighting, cooking, laundry,
ventilating, incinerating, air-conditioning and sprinkler equipment or other
fire prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or articles in
substitution therefor, whether or not the same are or shall be attached to the
Owned Land, the Leased Land or to any such buildings and improvements thereon,
in any manner; and
(b) All of the Mortgagor's right, title and interest in and to (i)
the Leased Land, if the Mortgagor acquires the fee simple title to the Leased
Land or any part thereof (subject to the provisions of Section 2.06 hereof),
(ii) all air rights and rights to maintain supporting columns
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and all rights to construct and maintain bridges, and to create private rights
of way over streets now or hereafter owned or enjoyed by the Mortgagor and
appurtenant to the Owned Land or Leased Land, and (iii) all right, title and
interest of Mortgagor as grantee or licensee in and to the following to the
extent necessary for the use and enjoyment of the Owned Land or the Leased Land:
(A) all those plots, pieces or parcels of land and air rights, more particularly
described on Schedule 5, attached hereto and made a part hereof (the "Bridge
Easement Parcels"), with respect to which Mortgagor has easements, licenses or
other rights of possession or use pursuant to these certain easement and license
agreements more particularly described on Schedule 5 (the "Bridge Easements"),
(B) all those plots, pieces or parcels of land and air rights, more particularly
described on Schedule 6 attached hereto and made a part hereof (the "Elevator
Easement Parcels"), with respect to which Mortgagor has easements, licenses or
other rights of possession or use pursuant to those certain license agreements
more particularly described on Schedule 6 (the "Elevator Easements"), and; (C)
all that plot, piece or parcel of land and air rights more particularly
described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around
Easement Parcel") with respect to which Mortgagor has easements, licenses, or
other rights of possession or use pursuant to that certain easement more
particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge
Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement
Parcel are collectively referred to herein as the "Easement Parcels"; and the
Bridge Easements, the Elevator Easements and the Turn-Around Easement are
collectively referred to as the "Easements"), together with all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining to such estates, it being the intention hereof that all
property, interests, rights and privileges and franchises pertaining to the
Premises (other than Excepted Property) shall be as fully embraced within and
subjected to the lien hereof as if such property were specifically described
herein.
To the extent the grant of a security interest in any portion of the
Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be as well a security agreement under the Uniform Commercial Code for
the purpose of creating hereby a security interest in all of the Mortgagor's
right, title and interest in and to such property, securing the obligations
secured hereby, for the benefit of the Mortgagee.
* * *
TOGETHER with all of the Mortgagor's right, title and interest in and
to all mineral and water rights and any title or reversion, in and to the beds
of the ways, streets, avenues and alleys adjoining the Premises to the center
line thereof and in and to all strips, gaps and gores adjoining the premises on
all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to and
singular the tenements, hereditaments, easements, appurtenances, passages, water
courses, riparian rights, other rights, liberties and privileges thereof or in
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any way appertaining to the Premises, including any other claim at law or in
equity as well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore or
hereafter to be made to the present and all subsequent owners of the Trust
Estate for any taking by eminent domain, either permanent or temporary, of all
or any part of the Trust Estate or any easement or appurtenances thereof,
including severance and consequential damage and change in grade of streets, all
in accordance with and subject to the provisions of the Superior Instrument
Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any insurance
policies described in Section 5.11, and the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Trust Estate or otherwise, all in accordance with and subject to
the provisions of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted property,
rights, title, interest, privileges and franchises, the Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating
Assets, Easements, properties, options, credits, deposits, rights, privileges
and franchises of every kind and description, real, personal or mixed, granted
hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or
covenanted so to be, together with all the appurtenances thereto appertaining
(the Premises, Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its successors
and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and,
after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and
the Noteholder as set forth in that certain Intercreditor Agreement dated as of
the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust
Company ("Fidelity"), as trustee under that certain note purchase agreement
dated as of the date hereof among Fidelity, RIH and RIHF, and
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U.S. Trust Company of California, N.A. ("U.S. Trust"), as trustee under that
certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF
(and such other parties that may from time to time become a party thereto).
BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of
the Noteholders without any priority of any of the Notes over any other of the
Notes.
UPON CONDITION that, until the happening of an Event of Default and
subject to the provisions of Article Two, the Mortgagor shall be permitted to
possess and use the Trust Estate, and to receive and use the rents, issues,
profits, revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to
be held and applied by the Mortgagee, subject to the further covenants,
conditions and trusts hereinafter set forth, and the Mortgagor does hereby
covenant and agree to and with the Mortgagee, for the Ratable Benefit of the
Noteholders as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall
be made in accordance with generally accepted accounting principles
consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Mortgage as a whole and not to any particular
Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
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"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section
2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good standing of
the American Institute of Real Estate Appraisers) who is (i) of recognized
standing among appraisers of properties similar to the Casino-Hotel and (ii)
experienced in the appraisals of properties of a similar size and scope to that
of the Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section
1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01
of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture, fixtures and
equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which
results in damage, loss or destruction to any buildings or improvements on the
Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of
the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of Default
or an event which, after notice or lapse of time or both, would become an Event
of Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds
or a condemnation award is paid to be held in trust for restoration pursuant to
the provisions of a Ground Lease or Superior Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event
of Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
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(1) subject to the provisions of the Assignment of Leases and Rents,
any cash held by the Mortgagor from rents, issues, profits, revenues and
other proceeds of the Trust Estate to the extent that such cash may be, but
has not been, distributed or paid out in accordance with the Services
Agreement or in accordance with the provisions of Section 12.07 the
Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior
Mortgage secured by or imposing a lien on all or a portion of the Trust Estate
on a parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any
Tangible Personal Property and other items constituting Operating Assets, such
as computer software, which are financed, purchased or leased by the Mortgagor,
provided that, except as set forth on Schedule 3, the principal amount of the
indebtedness secured by such lien shall not exceed eighty-five (85%) percent of
the cost to the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
"GUARANTY" has the meaning set forth in Article Fourteen of the
Indenture.
"HOTEL" means that portion of the Casino-Hotel not included within the
Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
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"INDENTURE" means that certain Indenture - 11% Mortgage Notes
due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and Mortgagee, as trustee, as it may from time to time be supplemented, modified
or amended by one or more trust indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Mortgagor
or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or
of such other obligor and (c) is not connected with the Mortgagor or such other
obligor or any Affiliate of the Mortgagor or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions. Whenever it is herein provided that any Independent Person's
opinion or certificate shall be furnished to the Mortgagee, such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof. A Person who is performing or
who has performed services as an independent contractor to any specified Person
shall not be considered not Independent merely by reason of the fact that such
Person is or has performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy
covering or applicable to the Trust Estate or any part thereof, all requirements
of the issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Trust Estate or any
part thereof or any use or condition of the Trust Estate or any other part
thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects,
any bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected by the
Mortgagor authorized to issue insurance in the State of New Jersey with an A.M.
Best rating as high or higher than the rating of insurance companies insuring
other casino-hotels in Atlantic City, New Jersey.
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"LEASE" means each lease or sublease demising all or any portion of
the Owned Land, the Leased Land or the buildings or improvements thereon and
made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces
in any building or buildings which constitute a part of the Trust Estate,
including every agreement relating thereto or entered into in connection
therewith and every guaranty of the performance and observance of the covenants,
conditions and agreements to be performed by the lessee under any such lease.
Notwithstanding the foregoing, the term "Lease" shall not include any transient
room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements (including,
without limitation, the New Jersey Environment Cleanup Responsibility Act and
the New Jersey Spill Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, of governments, federal, state and municipal (including, without
limitation, the New Jersey Department of Environmental Protection, the Atlantic
City Bureau of Investigations, Division of Protection, the Atlantic City Bureau
of Investigations, Division of Gaming Enforcement of the State of New Jersey,
and the Casino Control Commission of the State of New Jersey), foreseen or
unforeseen, ordinary or extraordinary, which now is or at any time hereafter
becomes applicable to the Trust Estate or any part thereof, or any of the
adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling
facility or any other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Notes means the date on which
the principal of such Notes becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration or
prepayment or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
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to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDERS" has the meaning set forth in Section 1.01 of the
Indenture.
"NOTE MORTGAGE" means that certain Mortgage Securing RIH
Promissory Note dated as of the date hereof from Mortgagor to RIHF, which
secures the RIH Promissory Note (as defined in the Indenture), the lien
of which shall be PARI PASSU with the lien of this Mortgage.
"NOTES" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of
the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires
that an Officers' Certificate be signed also by an Architect or an Accountant or
other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Mortgage) be an employee of the
Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise
specifically provided in this Mortgage, such counsel may rely, as to any state
of facts not personally known to such counsel and relating to such opinions, on
an Officers' Certificate to the extent not rejected by the Trustee and its
counsel (which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list
title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material portion
of the Premises whether held by the Mortgagor or any other Person
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(which may be temporary or permanent) (including, without limitation, those
required for the use of the Casino-Hotel as a licensed casino facility), in
accordance with all applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet due
and payable or if due and payable are not delinquent to the extent that any
fine, penalty, interest or cost may be added for nonpayment thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien; and
(9) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
any other entity or government or any agency or political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RATABLE BENEFIT" has the meaning stated in Section 1.01 of the
Indenture.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made in
accordance with Section 5.13 of this Mortgage.
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"RIHF" shall mean Resorts International Hotel Financing, Inc., a
Delaware corporation.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"STATED MATURITY" when used with respect to a note means the date
specified in such note as the fixed date on which the principal of such note is
due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms,
conditions and provisions of (i) the Ground Leases with respect to the Leased
Land; and (ii) Superior Mortgages with respect to the portion of the Trust
Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility
Lien and any After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of
the whole or any part of the Premises, by a competent authority, for any public
or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause
Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the Granting
Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of
the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section
5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice (including,
without limitation, a notice of default), consent, waiver or other document
provided or permitted by this Mortgage to be made upon, given or furnished to,
or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be
deemed given when either (i) delivered by hand or
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(ii) two days after sending by registered or certified mail, postage prepaid,
addressed as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
State Street Bank and Trust Company
of Connecticut, National Association
750 Main Street,
Suite 1114
Hartford, Connecticut
Attention: Corporate Trust Department
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any
party may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE.
Whenever several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such Officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Officer or Officers of the Mortgagor stating that
the information with respect to such factual matters is in the possession of the
Mortgagor, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. If appropriate to
the matter being opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of creditors and
the availability of equitable remedies.
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Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor shall
deliver any document as a condition of the granting of such application, or as
evidence of the Mortgagor's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Mortgagor to have such application granted or to
the sufficiency of such certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Mortgagor to the Mortgagee to take any action
under any provision of this Mortgage, the Mortgagor shall furnish to the
Mortgagee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Mortgage relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Mortgage
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Mortgage shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such condition
or covenant has been complied with; and
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(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each case
named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged, released
nor any of its provisions waived except by agreement in writing executed by the
Mortgagor and the Mortgagee and in accordance with the provisions of this
Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this
Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in
the Guaranty, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns, any benefit or any legal or
equitable right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the
provisions of this Mortgage and the provisions of the Indenture shall be
inconsistent, the provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is
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subject to and shall be enforced in compliance with the provisions of the New
Jersey Casino Control Act. This Mortgage shall not be transferred, assigned
or amended without prior approval of the New Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause
to be paid, or there shall otherwise be paid, to the Mortgagee all amounts
required to be paid by the Mortgagor pursuant to the Guaranty, or the Note
Mortgage and the Notes, and the conditions precedent for the Indenture to cease,
determine and become null and void in accordance with Section 5.01 of the
Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge
this Mortgage, and execute and deliver to the Mortgagor all such instruments as
may be necessary, required or appropriate to evidence such discharge and
satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject in
each instance to the giving of any notice and the expiration of any grace period
provided for in Section 3.01 as a condition to such Default making it an Event
of Default, unless the Trust Indenture Act requires otherwise, in which case the
Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an event
which does not materially diminish the value of the Mortgagee's interest in the
Trust Estate shall not be deemed an "impairment of security", as that phrase is
used in this Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE.
So long as there shall have been no demand for payment under the Guaranty
pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and
permitted, with power freely and without let or hindrance on the part of the
Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to
possess, use, manage, operate and enjoy the Trust Estate and every part thereof
and to collect, receive, use, invest and dispose of the rents, issues, tolls,
profits, revenues and other income from the Trust Estate or any part hereof, to
use, consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
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Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to
time, unless an Event of Default shall have occurred and be continuing, without
any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right
to pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to
the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any
provisions contained in this Mortgage or
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the Indenture to the contrary, including, without limitation, the provisions of
Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the
Mortgagor acquires Tangible Personal Property and other items constituting
operating assets, such as computer software subject to any FF&E Financing
Agreement, or becomes the lessee under a lease for any of the same and if the
document evidencing such FF&E Financing Agreement prohibits subordinate liens or
the provisions of any such lease prohibits any assignment thereof by the lessee,
and if any such prohibition is customary with respect to similar transactions of
the lender or lessor, as the case may be, then the property so purchased or the
lessee's interest in the lease, as the case may be, shall be deemed to be
Excepted Property. If any such FF&E Financing Agreement permits subordinate
liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the
Mortgagor's expense, such documents as the holder of such FF&E Financing
Agreement may reasonably request to evidence the subordination of the lien of
this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part of the Released Fee Land (the land to be so conveyed is hereinafter
referred to as the "Released Land"), free from the lien of the Mortgage,
provided that the conditions set forth in Section 2.05(a) of the Note Mortgage
have been satisfied.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.05 and, if
applicable, Section 2.05 of the Note Mortgage, PROVIDED, that the Mortgagee
shall have no liability thereunder and all costs and expenses (including
reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be
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continuing, to have an Affiliate exercise such options(s) or for the Mortgagor
to exercise such options(s) on behalf of an Affiliate and in connection
therewith to cause fee simple title to the Leased Land or any part thereof to be
conveyed to an Affiliate of the Mortgagor (provided that no portion of the
purchase price of the Leased Land or part thereof is paid by Mortgagor), free
from the lien of this Mortgage (the land to be so conveyed is hereinafter
referred to as the "Released Fee Land"), provided that the Mortgagor furnishes
the Mortgagee with the following:
(i) an Officers' Certificate requesting the release of the
Released Fee Land from the Trust Estate and stating that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain all
Permits and in order to comply with the provisions of all material
contracts to which the Mortgagor is a party or by which the Mortgagor is
bound, (B) such Affiliate has received all Permits necessary to own the
Released Fee Land (including without limitation all approvals required by
the Casino Control Commission of the State of New Jersey), (C) there has
been delivered to the Mortgagor and the Mortgagee a true copy of an
instrument executed by such Affiliate stating that (i) such Affiliate may
only engage in the activity of owning the Released Fee Land and (ii) such
Affiliate shall not convey the Released Fee Land to another Affiliate of
the Mortgagor, unless such other Affiliate executes and delivers to the
Mortgagor and the Mortgagee, the instruments that would have been required
to be delivered pursuant to clause (C) if the Mortgagor conveyed the
Released Fee Land to such other Affiliate (provided that this restriction
shall only be effective until such time as this Mortgage shall be satisfied
of record) and (D) the deed conveying the Released Fee Land to such
Affiliate shall state that such conveyance is made subject to the terms,
provisions and conditions of the applicable Ground Lease and that the fee
and leasehold interests in the Released Fee Land shall not merge by reason
of the Mortgagor and/or any Affiliate owning both the leasehold and fee
estate therein, and that such estates shall always remain separate and
distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to which
the Mortgagor is a party or by which it is bound to own the Released Fee
Land and (B) the instruments described in clause (C) of subparagraph (i)
were duly executed by and are binding upon such Affiliate; and
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(iii) an endorsement to the Original Policy, confirming that
no merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, and agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgago's compliance with this Section 2.06, PROVIDED
that the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if
no Event of Default has occurred and is continuing and (ii) if the Mortgagor
shall acquire Released Fee Land, then simultaneously with the acquisition
thereof, the Mortgagor shall have the right to encumber such fee simple title
with a mortgage (such mortgage and any refinancing thereof permitted by the
Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The
lien of this Mortgage on the Released Fee Land shall be subordinated to the lien
of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of
other Superior Mortgages which shall become a lien thereon in accordance with
the terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
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(ii) the indebtedness secured by the After-Acquired Fee Mortgage
(A) does not exceed 75% of the cost to the Mortgagor of such fee simple
title at the time of the acquisition and (B) satisfies the criteria set
forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers
fee simple title to the Leased Land or any part thereof, such
After-Acquired Fee Mortgage contains provisions binding on the holder of
the After-Acquired Fee Mortgage and its successors and assigns confirming
the provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire Released
Fee Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstanding, the subordination of this Mortgage to
any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall
not be self-operative but shall be effective only upon the execution and
delivery by the Mortgagee of an instrument in writing effecting such
subordination. The Mortgagee shall deliver such instrument of subordination on
the following conditions: (x) the Mortgagee shall have received an Officers'
Certificate confirming that the conditions of (i) through (vi) of paragraph (a)
have been satisfied, together with a true and correct copy of the After-Acquired
Fee Mortgage and all other instruments securing the indebtedness evidenced
thereby and (y) the instrument of subordination shall specifically state that
this Mortgage is being subordinated not with respect to the lien of this
Mortgage on the Ground Lease or on the leasehold estate created thereby, but
only with respect to the fee simple title to the Leased Land or applicable part
thereof and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
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ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default by the Mortgagor under the Guaranty and continuance
of such default for a period of 10 days after there has been given a
written notice to the Mortgagor specifying such default and stating that
such notice is a "Notice of Default" hereunder; or
(b) an "Event of Default," as defined in Section 3.01 of the
Note Mortgage, shall occur; or
(c) default in the performance, or breach, of any of the
provisions of Article Four and the continuance of such default or breach
for a period of 60 days after there has been given a written notice to the
Mortgagor specifying that such notice is a "Notice of Default" hereunder;
or
(d) any representation or warranty of the Mortgagor set forth in
this Mortgage shall prove to be incorrect as of the time when made and the
facts constituting such incorrectness impairs the Mortgagee's security and
such impairment continues for a period of 30 days, unless such impairment
is curable, but not susceptible of cure within such 30-day period (for
reasons other than lack of funds), provided that the conditions set forth
in Section 3.01(l) of the Note Mortgage have been satisfied.
Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default
occurs and is continuing, and the Mortgagee has declared the Outstanding Amount
of the Note to be due and payable immediately pursuant to Section 3.02 of the
Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty
to be due and payable immediately.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any
moneys received by the Mortgagee pursuant to the provisions of this Article
Three (including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the
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Mortgagee in accordance with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this Mortgage
and such proceeding has been discontinued or abandoned for any reason or has
been determined adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such proceeding
had been instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect under the Guaranty secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, then, to the extent it has not already done so pursuant to the terms
of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all
expenses, including reasonable attorneys' fees and expenses, incurred by the
Mortgagee in connection therewith, together with interest at the rate then
payable on the Notes, from the date of payment less the net amount received by
the Mortgagee or the Trustee, as their interests may appear under any title
insurance policy, and, until paid, all such expenses, together with interest as
aforesaid, shall be a lien on the Trust Estate.
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Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time insist
upon, plead, claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law now or hereafter in force, in order
to prevent or hinder the enforcement of this Mortgage or the absolute sale of
the Trust Estate, or any part hereof, or the possession thereof by any purchaser
at any sale under this Article Three; and the Mortgagor, for itself and all who
may claim under it, so far as it or they now or hereafter may lawfully do so,
hereby waives the benefit of all such laws. The Mortgagor, for itself and all
who may claim under it, waives, to the extent that it may lawfully do so, all
right to have the property in the Trust Estate marshalled upon any foreclosure
hereof, and agrees that any court having jurisdiction to foreclose this Mortgage
may order the sale of the Trust Estate as an entirety.
If any law in this Section 3.08 referred to and now in force, of which
the Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence
of an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
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Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event
of Default shall occur and be continuing, the Mortgagee, with or without entry,
in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee
may determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Mortgage or in
aid of the execution of any power granted in this Mortgage or for the
foreclosure of this Mortgage or for the enforcement of any other legal,
equitable or other remedy, as the Mortgagee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of the
Mortgagee; the failure to join tenants shall not be asserted as a defense
to any foreclosure or proceeding to enforce the rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust
Estate, whether made under the power of sale hereby given or pursuant to
judicial proceedings, to the extent permitted by law:
(a) all obligations owing under the Guaranty, if not previously
due, shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt of
any required prior approvals of the New Jersey Casino Control Commission,
the Mortgagee may bid for and purchase the property offered for sale, and
upon compliance with the terms of sale may hold, retain and possess and
dispose of such property, without further accountability, and may, in
paying the purchase money therefor, delivery any notes or claims for
interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned to the
holders
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thereof after being appropriately stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and instrument of
assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and
lawful attorney of the Mortgagor, in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold; and for that purpose it may execute all
necessary deeds, bills of sale and instruments of assignment and transfer,
and may substitute one or more persons, firms or corporations with like
power, the Mortgagor hereby ratifying and confirming all that its attorney
or such substitute or substitutes shall lawfully do by virtue hereof; but
if so requested by the Mortgagee or by any purchaser, the Mortgagor shall
ratify and confirm any such sale or transfer by executing and delivering to
the Mortgagee or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment and transfer and releases as may be
designated in any such request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of, in and to the
property so sold shall be divested and such sale shall be a perpetual bar
both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such
sale shall be a sufficient discharge to the purchaser or purchasers at such
sale for his or their purchase money and such purchaser or purchasers and
his or their assigns or personal representatives shall not, after paying
such purchase money and receiving such receipt, be obliged to see to the
application of such purchase money, or be in anywise answerable for any
loss, misapplication or non-application thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default
and commencement of judicial proceedings by the Mortgagee to enforce any right
under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security for
the Guaranty or the solvency of the Mortgagor, to
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the appointment of a receiver of the Trust Estate, and of the rents, issues,
profits, revenues and other income thereof, PROVIDED, HOWEVER, that the
Mortgagee's rights under this Section 3.12 shall be subject to the provisions of
the New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have
power to institute and maintain such proceedings as it may deem necessary and
appropriate to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its interests in the
Trust Estate and in the rents, issues, profits, revenues and other income
arising therefrom, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any 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 the security
hereunder or be materially prejudicial to the interests of the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the contrary, following an Event of Default
and the taking of possession of the Trust Estate or any part thereof by the
Mortgagee and/or the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized, in addition to
the rights and powers of the Mortgagee and such receiver set forth elsewhere in
this Mortgage, to retain one or more experienced operators of hotels and/or
casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have
all necessary legal qualifications, including all Permits, to manage the
Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the
Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation
or combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the successor entity
formed
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by such consolidation or into which the Mortgagor is combined or to which such
conveyance or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Mortgagor under this Mortgage with the
same effect as if such successor entity had been named as the Mortgagor herein;
PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate
substantially as an entirety, unless such conveyance or transfer is in
compliance with the provisions of Article Ten of the Indenture, shall have the
effect of releasing the Person named as "the Mortgagor" in the first paragraph
of this instrument or any successor entity which shall theretofore have become
such in the manner prescribed in such Article Ten from its liability as
guarantor.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as
otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor
shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or
otherwise transfer all or any part of the Trust Estate or any interest therein
(including without limitation any interest in the Ground Leases). Without
limiting the generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground Leases from its
ownership of the buildings constituting the Casino-Hotel or any part thereof.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. [Reserved]
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing Agreements before the expiration of any applicable notice and cure
periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create,
incur, suffer or permit to be created or incurred or to exist any mortgage,
lien, charge or encumbrance on or pledge of any of the Trust Estate, other than
(i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with
indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section
12.08(a) of the Indenture, and (iii) a building contract or a notice of
intention filed by a mechanic, materialman or laborer under the New Jersey lien
law. Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the Mortgagor shall
not be deemed to have breached the provisions of the foregoing sentence by
virtue of the
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existence of a lien for Impositions or mechanics liens so long as the Mortgagor
is in good faith contesting the validity of the same in accordance with the
provisions of Section 5.09 to the extent that the matters described in (i) and
(ii) do not constitute a default under any Ground Lease or Superior Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on behalf of the
Mortgagor, (a) to appear in and defend any action or proceeding brought with
respect to the Trust Estate or any part thereof and (b) upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgage), to commence any action or
proceeding to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor
represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to execute and deliver this Mortgage, and all
corporate action on its part necessary for the valid execution and delivery
of this Mortgage has been duly and effectively taken;
(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the Mortgage
Documents, any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than the
lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has been
given to or by the lessee, (iii) the Mortgagor has delivered true and
correct copies of the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in full
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force and effect and has not been modified, amended or supplemented, except
as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to execute
this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer,
hypothecate, pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the Operating Assets
and the Ground Leases, without the consent of any third party, other than
governmental authorities but any applicable or necessary consent or
approval of any such governmental authority has been given or waived at or
prior to the execution and delivery of this Mortgage), and this Mortgage
constitutes a valid second mortgage lien and second priority security
interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage,
subject only to Working Capital Facility Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend (x) the
title to Trust Estate (including without limitation, its leasehold estates under
the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances)
and (y) the priority of the lien of this Mortgage (subject to Permitted
Encumbrances other than Restricted Encumbrances), against the claims and demands
of all persons whomsoever, at the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as
provided in Section 5.13, from time to time subject its right, title and
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments of
further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, and will execute and file such financing statements and cause to be
issued and filed such continuation statements, all in such manner and in such
places as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party under the
Uniform Commercial Code to all property comprising the Trust Estate (to the
extent a grant of a security interest therein is governed by the Uniform
Commercial Code) and to perfect, preserve and protect the lien
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of this Mortgage as a valid mortgage lien of record and a valid security
interest on the Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all expenses
incident to the execution and delivery of this Mortgage, and any instrument of
further assurance, and all federal, state, county and municipal stamp taxes and
other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Mortgage, any financing
statement or continuation statement with respect to the personal property
constituting part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH
LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to
contests, pay or cause to be paid promptly (or when installments of the
same shall become due and payable, if, by law or by agreement or
arrangement with the applicable governmental agency or authority, the same
may be paid in installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are payable by the
Mortgagor pursuant to any Superior Instrument Requirement), all taxes
(including, without limitation, real estate taxes, personal or other
property taxes and all sales, value added, use and similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
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profits or revenue tax upon the income of the Mortgagee, the Trustee or the
Noteholders nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholders nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed in substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Guaranty;
(b) except for such property which the Mortgagor may dispose of
or replace pursuant to Section 2.02, maintain and keep all its properties
used or useful in the conduct of its business (other than obsolete
equipment), including, without limitation, the Casino-Hotel and all
Tangible Personal Property, in such good repair, working order and
condition, except for reasonable wear and use, and make or cause to be made
all such needful and proper repairs, renewals and replacements thereto
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey;
(c) occupy and continuously operate the Casino-Hotel and keep
the Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to
contests, the Mortgagor at its sole expense will timely (1) comply with all
Legal Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if
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the failure to comply with the same would impair the Mortgagee's security
hereunder. Without limiting the generality of the foregoing, the Mortgagor
represents and warrants that at the time of the execution of this Mortgage,
the Mortgagor is in compliance with the requirements of clauses (1), (2)
and (3);
(e) in the event of the passage after the date of this Mortgage
of any law of the State of New Jersey, or any other governmental entity,
changing in any way the laws now in force for the taxation of mortgages, or
debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of the Mortgagee,
then and in such event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for any reason payment by the Mortgagor of any
such new or additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured hereby wholly or
partially usurious under any of the terms or provisions of the Note, or
this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option,
declare the whole sum secured by this Mortgage, with interest thereon, to
be due and payable 90 days after notice of election thereof has been given
by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that
amount or portion of such taxes as renders the loan or indebtedness secured
hereby unlawful or usurious, in which event the Mortgagor shall
concurrently therewith pay the remaining lawful and nonusurious portion or
balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole
expense, contest by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part
of any Imposition or lien therefor or any Legal Requirement or Insurance
Requirement or the application of any instrument of record affecting the Trust
Estate or any part thereof or any claims of mechanics, materialmen, suppliers,
or vendors or lien therefore, and may withhold payment of the same pending such
proceedings if permitted by law, or make payment under protest, or defer
compliance with any such Legal Requirement, any such Insurance Requirement or
the terms of any such instrument, and the same shall not be a Default hereunder,
provided that (a) in the case of any Impositions or lien therefor or any claims
of mechanics, materialmen, suppliers or vendors or lien therefor, such
proceedings shall suspend the collection thereof from each of the Mortgagor, the
Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the
Trust Estate nor any interest therein would be in any danger of being sold,
forfeited, or lost, (c) such action
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would not result in or constitute a default under any Ground Lease or Superior
Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor
the Mortgagee shall be in any danger of any civil or any criminal liability, and
the failure of the Mortgagor to comply with such Legal Requirement shall not
affect the continuance in good standing of any Permit or result in the
suspension, termination, non-renewal or material adverse modification of any
permit, and (e) in the case of an Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the
generality of the first sentence of Section 5.03 and notwithstanding the
provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed,
either by payment, or bonding or otherwise, all claims and demands of mechanics,
materialmen, laborers, and others which, if unpaid, might result in, or permit
the creation of, a lien on the Premises and/or Trust Estate or any part thereof,
or on the revenues, rents, issues, income and profits arising therefrom and in
general will do or cause to be done everything necessary so that the lien hereof
shall be fully preserved, at the cost of the Mortgagor, without expense to the
Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable properties,
in amounts at all times sufficient to prevent the Mortgagor from becoming a
coinsurer within the terms of the applicable policies, but in any event
such insurance shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the "Insurance
Amount"): (i) 100% of the then full insurable value of such insurable
properties, the term "full insurable value" to mean the actual replacement
cost (excluding the costs of foundation, footing, excavation, paving,
landscaping and other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36 calendar months),
by an Architect, contractor, appraiser, or an Insurer, or
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(ii) the amount required to be maintained pursuant to the Superior
Instrument Requirements;
(2) war risk insurance as and when such insurance is obtainable from
the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then be
so obtainable;
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the cost
of such insurance, for personal injury and property damage with respect to
any one occurrence, which may be under an umbrella policy. Anything
contained in this clause (3) to the contrary notwithstanding, the Superior
Instrument Requirements with respect to the kinds and amount of insurance
described in this clause (3) shall be satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already covered
by other policies of insurance maintained by the Mortgagor) on or about
such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time that the
Mortgagor is renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates determined
by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable size
in the boardwalk area of Atlantic City, New Jersey and
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(ii) required to be maintained pursuant to the Superior Instrument
Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1), (2),
(6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, $100,000 with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
$1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self
insured retention under the general liability policy described in clause (3)
and a deductible with respect to the other insurance policies described in
clause (3) in an amount not to exceed the amount of deductible as is customarily
maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii)
the Mortgagor shall not reduce its insurance coverage for the matters described
in clause (3) (which for purposes of this paragraph means a reduction in single
limits or an increase in deductible) unless and until the Mortgagor delivers to
the Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained at rates determined
by the Mortgagor to be reasonable for such coverage, (x) the amount of the
proposed reduction, (y) the premium for the existing and the proposed reduced
coverage, and (z) that the proposed deductible satisfied the criteria set forth
in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clause (5) in the
forms of and in an amount not to exceed the amount of deductible as is
customarily maintained by casino-hotels of similar size in Atlantic City, New
Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of workers'
compensation insurance, name as additional insureds the Mortgagee, in both its
individual and fiduciary capacities, and, to the extent required by the Superior
Instrument Requirements, the Lessors and the holders of the Superior Mortgages,
(2) provide that all insurance proceeds for losses, except in the case of public
liability insurance and workers' compensation insurance or as otherwise provided
in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the
Mortgagee or such other party as is required to receive such proceeds under a
Superior Mortgage, (3) except in the case of workers' compensation, include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all lost payees and
named insureds (other than the Mortgagor) and all rights of subrogation against
any named insured, (4) except in the case of public liability and
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workers' compensation insurance, provide that any losses shall be payable
notwithstanding (i) any act, failure to act, negligence of, or violation or
breach of warranties, declarations or conditions contained in such policy by the
Mortgagor or the Mortgagee or any other named insured or loss payee (including,
without limitation, with respect to the Released Fee Land, the holders of any
After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable
properties for purposes more hazardous than permitted by the terms of the
policy, (iii) any foreclosure or other proceeding or notice of sale relating to
the insurable properties or (iv) any change in the title to or ownership or
possession of the insurable properties, (5) contain a non-contributory mortgagee
clause in favor of the Mortgagee, and (6) provide that if all or any part of
such policy is cancelled, terminated or expires, the insurer will forthwith give
notice thereof to each named insured an loss payee and that no cancellation,
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by each named insured and loss payee of
written notice thereof.
(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate
originals of all insurance policies that the Mortgagor is required to maintain
pursuant to this Section 5.11 and (2) within 30 days after each reduction in
insurance required to be maintained by the Mortgagor hereunder, an Officers'
Certificate setting forth the particulars as to all such insurance policies and
certifying that the same comply with the requirements of this Section 5.11, that
all premiums or installments thereof then due thereon have been paid and that
the same are in full force and effect. The Mortgagee shall not be responsible
for effecting or renewing any insurance or for the responsibility or solvency of
the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x) results in
damage, loss or destruction in an amount in excess of $5,000,000 to any
buildings or improvements on the Premises and/or any Tangible Personal Property
or (y) pursuant to any Superior Instrument Requirement, would require the
deposit of insurance proceeds with the Depositary, or action or proceeding with
respect thereto. Whenever the Superior Instrument Requirements require or
permit the selection of the Depositary by the Mortgagor, the Mortgagor shall
select the Insurance Trustee as the Depositary. Within 30 days after any
Casualty which results in any damage, loss or destruction in an amount in excess
of $10,000,000 to any buildings or improvements of the Premises and/or any
Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a
certificate of an Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit
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the Restoration of such buildings and improvements for the same uses and to the
same size and quality in all material respects, as existed immediately prior to
the Casualty (and if such certificate states the Legal Requirements do not
permit such Restoration, such certificate shall describe the manner closest
approximating such criteria to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of Appraised Value dated not
more than 10 days prior to delivery setting forth the Appraised Value
immediately prior to the Casualty and the estimated Appraised Value immediately
after the Restoration). If the Mortgagor is required to deliver such
Certificates of Appraised Value and if based on such Certificates of Appraised
Value immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of (i)
66 2/3% of the Appraised Value immediately after such Restoration or (ii) the
quotient of the Outstanding Amount of First Mortgage Debt immediately prior to
such Casualty divided by the Appraised Value immediately prior to the Casualty
multiplied by the Appraised Value immediately after such Restoration, then the
proceeds of any insurance shall, at the election of Mortgagee, either be applied
to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and
delivered to the Mortgagee to the extent of the then Outstanding Amount of the
Note and any other interest or other sums due hereunder or thereunder to be
applied to the satisfaction of the Mortgage to the extent proceeds are available
for such purpose and provided that no additional sums are due to the Trustee or
the Noteholder under the Indenture, the balance of any net insurance proceeds
shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such
Certificates of Appraised Values indicates that the Outstanding Amount of First
Mortgage Debt immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of
insurance will be made available for Restoration (subject to paragraphs, (e),
(h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as additions
to capital in an amount equal to the Outstanding Amount of First Mortgage Debt
in excess of the Appraised Value necessary to be paid down so that the
Outstanding Amount of First Mortgage Debt will not exceed either of the two
amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such
commitment may only be released if, upon an Appraisal at any time following
completion of such Restoration, the aggregate Outstanding Amount of the First
Mortgage Debt does not exceed 66-2/3% of the Appraised Value.
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(e) Subject to the provisions of Subsection (d) above, in case a
Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of $10,000,000, the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to
the Insurance Trustee (or other Depositary required by the Superior
Instrument Requirements, provided that such Depositary holds such proceeds
in trust for purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable promptness under the
circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair,
replacement or rebuilding of the damage or destruction resulting from the
Casualty (all of which restoration, repair, replacement or rebuilding are
referred to as the "Restoration") in accordance with the plans and
specifications submitted to the Insurance Trustee, in conformance with all
Legal Requirements and Superior Instrument Requirements, and in accordance
with the further provisions of this Subsection (e), regardless of the
extent of any such Casualty and whether or not net insurance proceeds, if
any, shall be available or, if available, shall be sufficient, for the
purpose of the Restoration (provided, however, that if the Mortgagor does
not receive any net insurance proceeds within 30 days after any Casualty
because the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration shall be deferred
until such proceeds are made available to the Mortgagor, provided that (i)
Mortgagor delivers to the Mortgagee an Officers' Certificate certifying
that the Mortgagor is diligently and continuously adjusting such loss with
the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers'
Certificate within such 30-day period requesting the extension of such
period, estimating the date on which such proceeds will be available and
describing the Mortgagor's efforts to adjust such loss and certifying that
such extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach
has been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter updating the
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information contained in the certificate described in Clause (ii)). All
Restoration work shall be performed in accordance with the applicable
provisions of Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements and, prior to
commencing any Restoration, the Mortgagor shall obtain all Permits
necessary in connection therewith, and shall obtain, and keep in full force
and effect until the completion of such Restoration, such additional
insurance as the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration shall be
accompanied by a certificate of the Mortgagor and an Opinion of Counsel to
the effect that upon the completion of the Restoration pursuant to the
plans and specifications the Premises, and all buildings and improvements,
thereon will comply with all superior Instrument Requirements, Legal
Requirements and Insurance Requirements. Notwithstanding anything in this
Section 5.11 to the contrary, if such Casualty is in an amount less than
$5,000,000, the Mortgagor shall not be required to perform and complete
such Restoration (unless the performance and completion of the Restoration
is necessary in order for the Mortgagor to be in compliance with any term,
provision or condition of this Mortgage (other than this Section 5.11(e))
or any Superior Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designate by Mortgagor (to the extent the Mortgagor
is permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds)
and shall be paid by the Insurance Trustee in reimburse the Mortgagor for,
or to make payment for, the Restoration, after the Insurance Trustee
deducts therefrom the amount of any reasonable costs and expenses incurred
in connection with the performance of its obligations under this Section
5.11. The Insurance Trustee shall make such payments not more frequently
than once every 30 days upon the written request of the Mortgagor (unless
more frequent payments are required by Superior Instrument Requirements),
by paying to the Mortgagor or the persons named in the certificate
described in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate
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from time to time as the Restoration progresses, provided the Mortgagor has
complied with the requirements of this Subsection (e) and such payment is
permitted by an applicable Superior Instrument Requirements. The
Mortgagor's written request shall be accompanied by (i) the certificate
described in Clause (6) of this Subsection (e) and (ii) a title company or
official search, or other evidence reasonably acceptable to the Insurance
Trustee, showing that there have not been filed with respect to the
Premises, any vendor's, contractor's mechanic's, laborer's or materialman's
statutory or similar lien which has not been discharged of record (or
bonded against or secured by other security) or any other encumbrance
irrespective of its priority (other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate, countersigned by the Architect in
charge of the Restoration with respect to the matters described in (i) and
(v) below, (B) be dated not more than 10 days prior to such request and (C)
set forth (in addition to any other requirements contained in any
applicable Superior Instrument Requirements) that:
(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance
Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered services or
furnished or contracted to deliver materials for the Restoration
therein specified, and the names and addresses of such persons, a
brief description of such services and materials and the several
amounts so paid or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net
insurance proceeds, and that the sum then requested does not exceed
the value of the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in
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such certificate to be due for services or materials, and except for
amounts in dispute and/or customary retainages, there is no
outstanding indebtedness known to the person signing such certificate,
after due inquiry, which is then due for labor, wages, materials,
supplies or services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if
such estimated cost does exceed such insurance proceeds such
certificate shall state the amount of any such deficiency. If the
certificate states that such deficiency will exist, the Mortgagor
shall deliver the amount of such deficiency in cash or cash equivalent
to the Insurance Trustee simultaneously with the delivery of such
certificate, which amount shall be deemed insurance proceeds for
purposes of this Section 5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the entire
cost of the Restoration, then, after completion of the Restoration, the
Mortgagor shall pay the deficiency. If all or any part of the net
insurance proceeds are not used for the restoration in accordance with this
Subsection (e) (because such proceeds exceed the amount required to
complete the Restoration), then upon completion of the Restoration in
accordance with this Subsection (e), such amount not so used, if held by
the Insurance Trustee, shall be paid to the Mortgagor (if permitted by
Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is continuing,
all net business interruption insurance proceeds shall be paid to the Mortgagor,
to be segregated from the other funds of Mortgagor and held in trust by
Mortgagor for the following purposes and in the following order of priority:
(i) for the payment of Impositions and amounts due under the Ground Leases and
Superior Mortgages; (ii) for debt service for the estimated period of
Restoration (for purposes of this Section 5.11(f), interest and principal
payments due on any payment date under the Notes will deemed to accrue in equal
daily installments beginning the day after the immediately preceding payment
date and ending on such payment date); and (iii) for any expense incurred in
connection with the operation or business of the Casino-Hotel.
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(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to be maintained
pursuant to this Section 5.11, unless the same are permitted by Superior
Instrument Requirements and the Mortgagee is included therein as a named
insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant
to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall promptly deliver to
the Mortgagee a duplicate original of the policy of such insurance, a copy
thereof certified by the insurer or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance claims by
reason of damage or destruction to any portion of the Trust Estate may be
adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the
obligation) to join the Mortgagor in adjusting, and approving the adjustment of,
any such loss except in the event of a loss where the amount of insurance
reasonably anticipated to be received with respect to such loss is less than
[Five Million Dollars ($5,000,000)], and the Mortgagor shall assist the
Mortgagee in any such adjustment at the request of the Mortgagee. If the
Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment
process, then the Mortgagee's approval of the
adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary, if an
Event of Default shall have occurred and be continuing, the Mortgagee may, at
its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee
any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case
may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or
make any demolition, alteration or improvement of any building included in the
Trust Estate or any new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in this Section 5.12
set forth.
Unless an Event of Default shall have occurred and be continuing, the
Mortgagor shall have the right at all times to make or permit such alterations,
improvements or new constructions, structural or otherwise (herein sometimes
called collectively "alterations"), of or on the Trust Estate, to be made in all
cases subject to the conditions set forth in Section 5.12 of the Note Mortgage.
Section 5.13. LEASES. The Mortgagor shall not:
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(a) subject to the provisions of Section 5.13(d), enter into any
Lease, or renew, modify, extend, terminate, or amend any Lease, except in
the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection of,
any rental payments under any Lease more than one year in advance of the
respective periods in respect of which they are to accrue, except that, in
connection with the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected and received in
advance in an amount not in excess of three months' rent and/or a security
deposit may be required thereunder in an amount not exceeding one year's
rent;
(c) collaterally assign, transfer or hypothecate (other than to
the Mortgagee hereunder, to the mortgagee under the Note Mortgage or to the
holder of any Working Capital Facility Lien) any rental payment under any
Lease whether then due or to accrue in the future, the interest of the
Mortgagor as landlord under any Lease or the rents, issues or profits of
the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any
Lease unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder
shall be subject and subordinate to the rights of the Mortgagee under
this Mortgage, the mortgagee under the Note Mortgage and the holders
of any Superior Mortgage,
(2) the Lease may be assigned by the landlord thereunder to
the Mortgagee,
(3) the rights and remedies of the tenant in respect of any
obligations of the landlord thereunder shall be nonrecourse as to any
assets of the landlord other than its equity in the building in which
the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee under any new lease entered
into in the event of a termination of a Ground Lease;
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(e) modify any Lease with respect to the matters described in
clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate of
the Mortgagor) for a term of not less than 3 nor more than 10 years, the
Mortgagee shall deliver a non-disturbance and attornment agreement substantially
in the form of Schedule 4 hereto, following receipt of a certificate of a
leasing broker (who is not an Affiliate of the Mortgagor or the broker involved
in such transaction) experienced with respect to leases of commercial space in
the Atlantic City area stating that the rent under the Lease is not less than
fair market rent and that the other terms of the Lease are fair and reasonable
in the commercial leasing market. The Mortgagor shall, upon demand, reimburse
the Mortgagee for any costs and expenses (including reasonable attorney's fees)
incurred by the Mortgagee in connection with the preparation, review and
delivery of such non-disturbance and attornment agreements.
Promptly after the execution and delivery hereof, the Mortgagor will
cause the lessee under each Lease now in effect and promptly after each Lease is
executed or becomes effective after the date of the execution and delivery
hereof, the Mortgagor will cause the lessee under each such Lease, to be duly
notified in writing (unless the substance and effect of such notice shall be
contained in such Lease) of the subjection of the owner's interest, as lessor,
in and to such Lease to the lien of this Mortgage and of the name and address of
the Mortgagee. Each such notice shall state that the lease of such lessee is a
Lease as herein defined. If a new Mortgagee is at any time appointed hereunder
or the address of the Mortgagee shall at any time be changed, the Mortgagor will
cause each lessee under each Lease to be promptly notified in writing of the
name address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur any
expenditure other than DE MINIMIS amounts) to obtain from each lessee under each
Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of
receipt of such notice, and the Mortgagor will promptly deliver to the
Mortgagee, upon request, a copy of each such acknowledgment of receipt which it
is able to obtain. The Mortgagee shall not be responsible for securing or
causing the Mortgagor to secure any such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
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Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to
Article Four, the Mortgagor will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation, and
its rights (both statutory and under its articles of incorporation) and
franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor
will keep proper books of record and account in accordance with Section 12.05 of
the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Notes, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Guaranty.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law or any other law which
would prohibit or forgive the Mortgagor from paying all or any portion of the
obligations under the Guaranty as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect the covenants or
the performance of this Mortgage; and the Mortgagor (to the extent that it may
lawfully do so) 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 Mortgagee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the
provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any
Taking affecting the Trust Estate.
Section 5.21. GROUND LEASES.
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(a) The Mortgagor covenants and agrees that it will do or cause to be
done all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall
at all times fully perform and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all taxes,
assessments and other charges mentioned therein) prior to the expiration of any
notice and/or cure period provided in each such Ground Lease. Upon receipt by
the Mortgagee from a Lessor of any written notice of default by the lessee
thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems
necessary in its sole discretion to prevent or to cure any default by the
Mortgagor in the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the Mortgagor as
lessee under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by the Mortgagor or by any
party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore
delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a
copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall
not take any such action unless and until the Mortgagor and/or the Mortgagee no
longer has the benefit of any tolling or stay referred to in Section 3.01(g).
Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby
expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any part
thereof to such extent and as often as the Mortgagee, in its sole discretion,
deems necessary or desirable for the purpose permitted by the immediately
preceding sentence, subject only to applicable Legal Requirements. Subject to
the preceding and without limiting the Mortgagee's other remedies under this
Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee
in its sole discretion deems necessary for any such purpose, and the Mortgagor
hereby agrees to pay to the Mortgagee, immediately and without demand, all such
sums so paid and expended by the Mortgagee, together with interest thereon from
the date of each such payment at the highest rate of interest set forth in the
Notes. All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and that
it will not without the express written consent of the Mortgagee modify,
change,
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supplement, alter or amend such Ground Leases either orally or in writing
and, as further security for the repayment of the indebtedness secured
hereby and for the performance of the covenants herein and in such Ground
Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its
rights, privileges and prerogatives as lessee under such Ground Leases to
terminate, cancel, modify, change, supplement, alter or amend such Ground
Leases, and any such termination, cancellation, modification, change,
supplement, alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing and
(2) either (A) there has been an acceleration of maturity of the Notes
pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee
exercises its rights under Section 3.09 hereof, the Mortgagee shall have no
right to terminate, cancel, modify, change, supplement, alter or amend the
Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of the
Mortgagor's obligations under such Ground Leases, pursuant to such Ground
Leases or otherwise, shall release the Mortgagor from any of its
obligations under this Mortgage, including its obligations with respect to
the payment of rent as provided for in such Ground Leases and the
performance of all of the terms, provisions, covenants, conditions and
agreements contained in such Ground Leases, to be kept, performed and
complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest in
the improvements on the Leased Land and the leasehold estates shall not
merge by and shall always remain separate and distinct, notwithstanding the
union of such estates either in the Lessor or in the lessee, or in a third
party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in writing
of any request made by the Mortgagor, as lessee under each of the Ground
Leases, or any of the Lessors, for arbitration proceedings pursuant to the
Ground Leases and of the institution of any arbitration proceedings, as
well as all proceedings thereunder. In addition, the Mortgagor shall
promptly deliver to the Mortgagee a copy of the determination of the
arbitrators in each such arbitration proceeding. The Mortgagee shall have
the right to participate in such arbitration proceedings in association
with the Mortgagor
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or on its own behalf as an interested party in accordance with the terms of
the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the Mortgagor
shall deliver a copy of its election to exercise such option within 5 days
after the Mortgagor has delivered notice of such election to the Lessor or
(B) the Mortgagor acquires fee simple title or any other estate, title or
interest in the Leased Land, the Mortgagor shall promptly notify the
Mortgagee of such acquisition and shall cause to be executed and recorded
all such other and further assurances or other instruments in writing as
may be required by law or, in the opinion of the
Mortgagee, be reasonably desirable to carry out the intent and meaning of
clause (x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease by
any Lessor or any trustee arising from or in connection with any case,
proceeding or other action commenced or pending by or against any Lessor
under the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation, the Mortgagor shall give notice thereof to the Mortgagee. The
Mortgagor hereby (A) assigns to the Mortgagee any and all of the
Mortgagor's rights as lessee under Section 365(h) of the Code or any
comparable provision contained in any present or future federal, state,
local, foreign or other statute, law, rule or regulation ("Comparable
Provision") and (B) covenants that it shall not elect to treat any Ground
Lease as terminated pursuant to Section 365(h) of the Code or any
Comparable Provision without the prior written consent of the Mortgagee and
(C) agrees that any such election by the Mortgagor without such consent
shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to the
Mortgagee all of the Mortgagor's claims and rights to the payment of
damages arising from any rejection by Lessor of any Ground lease under the
Code or any Comparable Provision. The Mortgagee shall have the right to
proceed in its own name or in the name of the Mortgagor in respect of any
claim, suit, action or proceeding relating to the rejection of
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any Ground Lease, including, without limitation, the right to file and
prosecute, in cooperation with the Mortgagor, any proofs of claim,
complaints, motions, applications notices and other documents, in any case
in respect of Lessor under the Code or any Comparable Provision. This
assignment constitutes a present, irrevocable and unconditional assignment
of the foregoing claims, rights and remedies, and shall continue in effect
until all of the indebtedness and obligations secured by this Mortgage
shall have been satisfied and discharged in full. Any amounts received by
the Mortgagee in damages arising out of the rejection of any Ground Lease
as aforesaid shall be applied first to all reasonable costs and expenses of
the Mortgagee (including, without limitation, reasonable attorneys' fees)
incurred in connection with the exercise of any of its rights or remedies
under this Section 5.21, and thereafter as provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor, as
lessee under the Ground Leases, shall determine to reject any or all of the
Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days'
prior notice of the date on which the Mortgagor shall apply to the
Bankruptcy Court or other judicial body with appropriate jurisdiction for
authority to reject the lease. The Mortgagee shall have the right, but not
the obligation, to serve upon the Mortgagor within such 10 day period a
notice stating that (a) the Mortgagee demands that the Mortgagor assume and
assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the
Code or any Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s). If
the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a) of the
preceding sentence within 30 days after the notice shall have been given
subject to the performance by the Mortgagee of the covenant provided for in
clause (b) of the preceding sentence. Effective upon the entry of an order
for relief in respect of the Mortgagor under Chapter 7 of the Code or Any
Comparable Provision the Mortgagor hereby assigns and transfers to the
Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other
judicial body with appropriate jurisdiction for an order extending the
period during which the Ground Lease may be rejected or assumed;
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(x) the Mortgagor shall promptly give to the Mortgagee copies of
(A) all notices of default or (B) any other communications or notices with
respect to events which relate to the possible impairment of the security
of this Mortgage, which it shall give or receive under the Ground Leases
and shall promptly notify the Mortgagor of any default under any Ground
lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all of the
rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed net
rent, taxes and assessments, payable under the Ground Leases have been paid to
the extent they were due and payable to the date hereof and that the Mortgagor
has not received notice of its failure to pay any other amounts payable under
the Ground Leases which have not been cured.
(d) If both the Lessor's and lessee's estates under any of the Ground
Leases or any portion thereof shall at any time become vested in one owner, this
Mortgage and the lien created hereby shall nevertheless not be merged,
extinguished, destroyed or terminated by application of the doctrine of merger
and, in such event, Mortgagee shall continue to have all of the rights and
privileges of the a leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease shall
be terminated prior to the natural expiration of its term due to default by the
lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its
designee shall acquire from the Lessor a new lease of the Leased land or any
portion thereof, the Mortgagor shall have no right, title or interest in or to
such lease or the leasehold estate created thereby, or the options therein
contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
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(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to
the expiration of any notice and/or cure period provided in each such Superior
Mortgage. If a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior Mortgage
has been accelerated as a result thereof, the Mortgagee may rely thereon and
take any action the Mortgagee deems necessary in its sole discretion to prevent
or to cure any default by the Mortgagor in the performance of or compliance with
any of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as mortgagor under each of the Superior Mortgages even though the
existence of such default or the nature thereof may be questioned or denied by
the Mortgagor or by any party on behalf of the Mortgagor provided that if the
Mortgagor has heretofore taken such actions as described in Section 3.01(h), the
Mortgagee shall not take any such action unless and until the Mortgagor and/or
the Mortgagee no longer has the benefit of any such tolling or stay referred to
in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the
Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such
acceleration the Mortgagee shall have, the absolute and immediate right to enter
in and upon the Premises or any part thereof to such extent and as often as the
Mortgagee, in its sole discretion, deems necessary for the purpose permitted by
the immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money as the
Mortgagee in its sole discretion deems necessary for any such purpose and (ii)
in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby
agrees to pay to the Mortgagee, immediately and without demand, all such sums
referred to in (i) and (ii) above so paid and expended by the Mortgagee,
together with interest thereon from the date of each such payment at the rate of
interest set forth in the Note. All sums so paid and expended by the Mortgagee
and the interest thereon shall be added to and be secured by the lien of this
Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first satisfying the
conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A)
modify any of the terms, covenants or conditions of any Superior Mortgage,
and without limiting the foregoing, the Mortgagor shall not, without
satisfying such conditions, enter into or obtain any agreement whereby the
holder of any Superior Mortgage waives, postpones, extends, reduces or
modifies the payment of the installment of principal or interest or
56
<PAGE>
any other item or amount now required to be paid under the terms of any
Superior Mortgage or modifies any other provision thereof, or (B) acquire
or permit or suffer any Affiliate of the Mortgagor to acquire any Superior
Mortgage or any interest therein. Notwithstanding anything in clause (A)
to the contrary, the Mortgagor shall have the right to amend, supplement or
modify any Superior Mortgage, if (x) the then outstanding principal balance
of the indebtedness secured by such Superior Mortgage is not increased
thereby, and (y) in the case of any After-Acquired Fee Mortgage, such
amendment, supplement or agreement does not increase the property covered
thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each Superior
Mortgage, the note secured thereby and any other instrument evidencing or
securing the indebtedness owing to any holder of any Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to obtain
an estoppel certificate or letter addressed to the Mortgagee from holders
of the Superior Mortgages, such certificate or letter to be in such form as
the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication with
respect to events which relate to the possible impairment of the security
of this Mortgage, which it shall give or receive under the Superior
Mortgages and shall promptly notify the Mortgagor of any default under any
Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing Encumbrances
and any mortgage, assignment, security agreement, financing statement or other
lien securing any Working Capital Facility (the "Working Capital Facility Lien")
encumbering Mortgagor's interest in the affected portions of the Trust Estate or
any part thereof.
The foregoing provisions of this Section 5.22(c) shall be
self-operative with respect to Existing Encumbrances and shall be self-operative
with respect to any Working Capital Facility Lien, and no further instrument
shall be required to give effect to such subordination. Mortgagee shall,
however, from time to time, execute instruments in form
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and substance reasonably satisfactory to the holder of the Working Capital
Facility Lien, confirming such subordination and agreeing to such other matters
reasonably required by the holder of the Working Capital Facility Lien which do
not, in the aggregate, materially adversely reduce or impair the rights of
Trustee under the Mortgage, and Mortgagor and others may rely conclusively
thereon, provided that Mortgagee shall have no liability thereunder and all
costs and expenses (including reasonable attorneys' fees) shall be paid by
Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing Encumbrances.
The provisions of this Section 5.22(d) shall be self-operative, and no further
instrument shall be required to give effect to such subordination.
Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey
Clerk's Office after the recordation of the Note Mortgage, the lien of this
Mortgage ranks pari passu with, and not junior to, the lien created by the Note
Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges
that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien
upon the Trust Estate which is PARI PASSU with the lien of this Mortgage.
Mortgagee further acknowledges and agrees that whenever it is provided in the
Note Mortgage that the Mortgagor shall deliver any notice or document, or is
required to make any payment thereunder, the delivery of such notice or document
or the making of such payment pursuant to the terms of the Note Mortgage shall
also constitute the delivery of such notice or document or the making of such
payment in satisfaction of the terms, conditions and provisions of this Mortgage
to the same extent as the same constitutes satisfaction of the terms, conditions
and provisions of the Note Mortgage.
Section 6.02. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
Section 6.03. MODIFICATION. This Mortgage is subject to
"modification" within the meaning of N.J.S.A. 46:9-
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8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority
provisions of such statute. Such modification may include, without limitation,
a change in the interest rate, maturity date or other terms and conditions of
this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF
THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be
duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
59
<PAGE>
Exhibit F
Mortgage Securing Guaranty of Mortgage
Notes between Resorts International Hotel,
Inc. and State Street Bank and Trust
Company of Connecticut, National Association
<PAGE>
NA932230075 - GUARANTY MORTGAGE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING GUARANTY
OF MORTGAGE NOTES
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING GUARANTY
OF MORTGAGE NOTES
-----------------
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association having an address at 750 Main Street, Suite 1114 Hartford,
Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain
Indenture dated as of even date herewith (the "Indenture") among Mortgagor,
Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of
the payments of principal and interest due on the 11% Mortgage Notes due
2003 in an aggregate principal amount of $125,000,000, issued pursuant to the
provisions of the Indenture (defined therein, and hereinafter collectively
referred to herein, as the "Notes"), in accordance with the terms and conditions
of Article Fourth of the Indenture; and performance and observance of all of the
provisions herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and
confirmed unto Mortgagee and its successors hereunder and assigns forever, all
of its right, title and interest in, to and under any of the following described
property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause as
fully as if set forth in this Granting Clause at length.
<PAGE>
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the "Ground
Leases") particularly described in Schedule 2, which Schedule is hereby made a
part of, and deemed to be described in, this Granting Clause as fully as if set
forth in this Granting Clause at length, which Ground Leases cover the real
property described in Schedule 2 (the "Leased Land") and in and to any and all
modifications, extensions and renewals of the Ground Leases and all options set
forth therein, together with (i) all credits, deposits, privileges and rights of
the Mortgagor as lessee under the Ground Leases, now or at any time existing,
(ii) the leaseholds and the leasehold estates created by the Ground Leases and
(iii) all of the estates, rights, titles, claims or demands whatsoever of
Mortgagor, either in law or in equity, in possession or in expectancy, of, in
and to the Ground Leases and the Leased Land, together with (x) any and all
other, further or additional title, estates, interests or rights which may at
anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or any other
greater estate to the Leased Land pursuant to the Ground Leases, or otherwise,
the lien of this Mortgage shall attach, extend to, cover and be a lien upon such
fee simple title or other greater estate and thereupon the lien of this Mortgage
shall be prior to the lien of any mortgage or deed of trust placed on such
acquired title, estate, interest or right subsequent to the date of this
Mortgage and (y) any right to possession or statutory term of years derived
from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S.
Bankruptcy Code (the "Code") or any comparable provision contained in any
present or future federal, state, local, foreign or other statute, law, rule or
regulation.
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and proceeds
of the property subjected or required to be subjected to the lien of this
Mortgage, including, without limitation, the property described in Granting
Clauses First, Second, and Sixth (such property is hereinafter collectively
referred to as the "Premises") and all the estate, right, title and interest of
every nature whatsoever of the Mortgagor in and to the same and every part
thereof. The collective metes and bounds description of the Owned Land and the
Leased Land is set forth in annexed Schedule 3.
2
<PAGE>
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the date of
execution of this Mortgage or hereafter entered into by the Mortgagor, if any,
including extensions, renewals or amendments of all of the same, and the
immediate and continuing right as security in accordance with an Assignment of
Leases and Rents of even date herewith between Mortgagor and Mortgagee, and,
after the occurrence of an Event of Default, to make claim for, collect, receive
and receipt for (and to apply the same as provided herein) any and all rents,
income, revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof, whether
payable as rent, insurance proceeds, condemnation awards, security or otherwise
and whether payable prior to or subsequent to the maturity date of the Notes, to
receive and give notices and consents thereunder, to bring actions and
proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any Lease,
including the commencement, conduct and consummation of any proceedings at law
or in equity as shall be permitted by any provision of any Lease, and to do any
and all things which the Mortgagor or any lessor is or may become entitled to do
under the Leases; provided, that the assignment made by this granting Clause
Fourth shall not impair or diminish any obligation of the Mortgagor under the
Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting Clause
Third, the Mortgagor's rights, privileges and franchises in and to the
following, to the extent of the Mortgagor's interest therein and thereto and to
the extent assignable (collectively, "Operating Assets"):
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including guaranties
and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties and
other items of
3
<PAGE>
intangible personal property relating to the ownership or operation of the
Casino-Hotel, including, without limitation, (1) telephone and other
communication numbers, (2) all software licensing agreements as are
required to operate computer software systems at the Casino-Hotel, all
transferable proprietary interest in software required to operate the
computer systems at the Casino Hotel and books and records relating to the
software programs, and (3) lessee's interest under leases of Tangible
Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor
or which have been assigned to the Mortgagor, for the design and
construction, and for the equipping and furnishing, of the Casino-Hotel,
including architect's agreements, engineering agreements, construction
contracts, consulting agreements and agreements or purchase orders for all
items of Tangible Personal Property and payment and performance bonds in
favor of the Mortgagor in connection with the Trust Estate (and all
warranties and guaranties thereunder and warranties and guaranties of any
subcontractor and bond issued in connection with the work to be performed
by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other articles of
tangible personal property which are, or are to be located on, or used
in connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the operation
thereof;
(iii) all cards, dice, gaming chips and placques, tokens,
chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles,
roulette balls and other consumable supplies and items to be used in
connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether
4
<PAGE>
in use or held in reserve storage for future use, in connection with
the operation of the Casino-Hotel, which are on hand or on order
whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind
and nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on any
of the Owned Land, including without limitation, accounting supplies,
guest supplies, forms, printing, stationery, food and beverage stock,
bar supplies, laundry supplies and brochures to existing purchase
orders;
(vi) all sets and scenery, costumes, props and other items
of tangible personal property on hand or on order for use in the
production of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by
the architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to
time;
(h) any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high roller"
lists; and
(j) all of the goodwill in connection with the operation of the
Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on
5
<PAGE>
which such facilities are shared are not detrimental to the operations of the
Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular
operation of the Casino-Hotel would not be materially impaired upon the
separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair or
diminish any obligation of the Mortgagor with respect to the Operating Assets,
nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures and
articles of personal property now or hereafter attached to or contained in and
used in connection with such buildings and improvements, including, but not
limited to, all apparatus, furniture, furnishings, machinery, motors, elevators,
fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and hot water
boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath
tubs, water closets, gas and electrical fixtures, awnings, shades, screens,
blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and
other furnishings, and all plumbing, heating, lighting, cooking, laundry,
ventilating, incinerating, air-conditioning and sprinkler equipment or other
fire prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or articles in
substitution therefor, whether or not the same are or shall be attached to the
Owned Land, the Leased Land or to any such buildings and improvements thereon,
in any manner; and
(b) All of the Mortgagor's right, title and interest in and to (i)
the Leased Land, if the Mortgagor acquires the fee simple title to the Leased
Land or any part thereof (subject to the provisions of Section 2.06 hereof),
(ii) all air rights and rights to maintain supporting columns
6
<PAGE>
and all rights to construct and maintain bridges, and to create private rights
of way over streets now or hereafter owned or enjoyed by the Mortgagor and
appurtenant to the Owned Land or Leased Land, and (iii) all right, title and
interest of Mortgagor as grantee or licensee in and to the following to the
extent necessary for the use and enjoyment of the Owned Land or the Leased Land:
(A) all those plots, pieces or parcels of land and air rights, more particularly
described on Schedule 5, attached hereto and made a part hereof (the "Bridge
Easement Parcels"), with respect to which Mortgagor has easements, licenses or
other rights of possession or use pursuant to these certain easement and license
agreements more particularly described on Schedule 5 (the "Bridge Easements"),
(B) all those plots, pieces or parcels of land and air rights, more particularly
described on Schedule 6 attached hereto and made a part hereof (the "Elevator
Easement Parcels"), with respect to which Mortgagor has easements, licenses or
other rights of possession or use pursuant to those certain license agreements
more particularly described on Schedule 6 (the "Elevator Easements"), and; (C)
all that plot, piece or parcel of land and air rights more particularly
described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around
Easement Parcel") with respect to which Mortgagor has easements, licenses, or
other rights of possession or use pursuant to that certain easement more
particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge
Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement
Parcel are collectively referred to herein as the "Easement Parcels"; and the
Bridge Easements, the Elevator Easements and the Turn-Around Easement are
collectively referred to as the "Easements"), together with all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining to such estates, it being the intention hereof that all
property, interests, rights and privileges and franchises pertaining to the
Premises (other than Excepted Property) shall be as fully embraced within and
subjected to the lien hereof as if such property were specifically described
herein.
To the extent the grant of a security interest in any portion of the
Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be as well a security agreement under the Uniform Commercial Code for
the purpose of creating hereby a security interest in all of the Mortgagor's
right, title and interest in and to such property, securing the obligations
secured hereby, for the benefit of the Mortgagee.
* * *
TOGETHER with all of the Mortgagor's right, title and interest in and
to all mineral and water rights and any title or reversion, in and to the beds
of the ways, streets, avenues and alleys adjoining the Premises to the center
line thereof and in and to all strips, gaps and gores adjoining the premises on
all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to and
singular the tenements, hereditaments, easements, appurtenances, passages, water
courses, riparian rights, other rights, liberties and privileges thereof or in
7
<PAGE>
any way appertaining to the Premises, including any other claim at law or in
equity as well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore or
hereafter to be made to the present and all subsequent owners of the Trust
Estate for any taking by eminent domain, either permanent or temporary, of all
or any part of the Trust Estate or any easement or appurtenances thereof,
including severance and consequential damage and change in grade of streets, all
in accordance with and subject to the provisions of the Superior Instrument
Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any insurance
policies described in Section 5.11, and the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Trust Estate or otherwise, all in accordance with and subject to
the provisions of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted property,
rights, title, interest, privileges and franchises, the Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating
Assets, Easements, properties, options, credits, deposits, rights, privileges
and franchises of every kind and description, real, personal or mixed, granted
hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or
covenanted so to be, together with all the appurtenances thereto appertaining
(the Premises, Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its successors
and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and,
after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and
the Noteholder as set forth in that certain Intercreditor Agreement dated as of
the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust
Company ("Fidelity"), as trustee under that certain note purchase agreement
dated as of the date hereof among Fidelity, RIH and RIHF, and
8
<PAGE>
U.S. Trust Company of California, N.A. ("U.S. Trust"), as trustee under that
certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF
(and such other parties that may from time to time become a party thereto).
BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of
the Noteholders without any priority of any of the Notes over any other of the
Notes.
UPON CONDITION that, until the happening of an Event of Default and
subject to the provisions of Article Two, the Mortgagor shall be permitted to
possess and use the Trust Estate, and to receive and use the rents, issues,
profits, revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to
be held and applied by the Mortgagee, subject to the further covenants,
conditions and trusts hereinafter set forth, and the Mortgagor does hereby
covenant and agree to and with the Mortgagee, for the Ratable Benefit of the
Noteholders as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall
be made in accordance with generally accepted accounting principles
consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Mortgage as a whole and not to any particular
Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
9
<PAGE>
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section
2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good standing of
the American Institute of Real Estate Appraisers) who is (i) of recognized
standing among appraisers of properties similar to the Casino-Hotel and (ii)
experienced in the appraisals of properties of a similar size and scope to that
of the Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section
1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01
of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture, fixtures and
equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which
results in damage, loss or destruction to any buildings or improvements on the
Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of
the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of Default
or an event which, after notice or lapse of time or both, would become an Event
of Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds
or a condemnation award is paid to be held in trust for restoration pursuant to
the provisions of a Ground Lease or Superior Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event
of Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
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(1) subject to the provisions of the Assignment of Leases and Rents,
any cash held by the Mortgagor from rents, issues, profits, revenues and
other proceeds of the Trust Estate to the extent that such cash may be, but
has not been, distributed or paid out in accordance with the Services
Agreement or in accordance with the provisions of Section 12.07 the
Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior
Mortgage secured by or imposing a lien on all or a portion of the Trust Estate
on a parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any
Tangible Personal Property and other items constituting Operating Assets, such
as computer software, which are financed, purchased or leased by the Mortgagor,
provided that, except as set forth on Schedule 3, the principal amount of the
indebtedness secured by such lien shall not exceed eighty-five (85%) percent of
the cost to the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
"GUARANTY" has the meaning set forth in Article Fourteen of the
Indenture.
"HOTEL" means that portion of the Casino-Hotel not included within the
Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
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"INDENTURE" means that certain Indenture - 11% Mortgage Notes
due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and Mortgagee, as trustee, as it may from time to time be supplemented, modified
or amended by one or more trust indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Mortgagor
or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or
of such other obligor and (c) is not connected with the Mortgagor or such other
obligor or any Affiliate of the Mortgagor or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions. Whenever it is herein provided that any Independent Person's
opinion or certificate shall be furnished to the Mortgagee, such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof. A Person who is performing or
who has performed services as an independent contractor to any specified Person
shall not be considered not Independent merely by reason of the fact that such
Person is or has performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy
covering or applicable to the Trust Estate or any part thereof, all requirements
of the issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Trust Estate or any
part thereof or any use or condition of the Trust Estate or any other part
thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects,
any bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected by the
Mortgagor authorized to issue insurance in the State of New Jersey with an A.M.
Best rating as high or higher than the rating of insurance companies insuring
other casino-hotels in Atlantic City, New Jersey.
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"LEASE" means each lease or sublease demising all or any portion of
the Owned Land, the Leased Land or the buildings or improvements thereon and
made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces
in any building or buildings which constitute a part of the Trust Estate,
including every agreement relating thereto or entered into in connection
therewith and every guaranty of the performance and observance of the covenants,
conditions and agreements to be performed by the lessee under any such lease.
Notwithstanding the foregoing, the term "Lease" shall not include any transient
room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements (including,
without limitation, the New Jersey Environment Cleanup Responsibility Act and
the New Jersey Spill Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, of governments, federal, state and municipal (including, without
limitation, the New Jersey Department of Environmental Protection, the Atlantic
City Bureau of Investigations, Division of Protection, the Atlantic City Bureau
of Investigations, Division of Gaming Enforcement of the State of New Jersey,
and the Casino Control Commission of the State of New Jersey), foreseen or
unforeseen, ordinary or extraordinary, which now is or at any time hereafter
becomes applicable to the Trust Estate or any part thereof, or any of the
adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling
facility or any other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Notes means the date on which
the principal of such Notes becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration or
prepayment or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
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to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDERS" has the meaning set forth in Section 1.01 of the
Indenture.
"NOTE MORTGAGE" means that certain Mortgage Securing RIH
Promissory Note dated as of the date hereof from Mortgagor to RIHF, which
secures the RIH Promissory Note (as defined in the Indenture), the lien
of which shall be PARI PASSU with the lien of this Mortgage.
"NOTES" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of
the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires
that an Officers' Certificate be signed also by an Architect or an Accountant or
other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Mortgage) be an employee of the
Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise
specifically provided in this Mortgage, such counsel may rely, as to any state
of facts not personally known to such counsel and relating to such opinions, on
an Officers' Certificate to the extent not rejected by the Trustee and its
counsel (which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list
title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material portion
of the Premises whether held by the Mortgagor or any other Person
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(which may be temporary or permanent) (including, without limitation, those
required for the use of the Casino-Hotel as a licensed casino facility), in
accordance with all applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet due
and payable or if due and payable are not delinquent to the extent that any
fine, penalty, interest or cost may be added for nonpayment thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien; and
(9) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
any other entity or government or any agency or political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RATABLE BENEFIT" has the meaning stated in Section 1.01 of the
Indenture.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made in
accordance with Section 5.13 of this Mortgage.
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"RIHF" shall mean Resorts International Hotel Financing, Inc., a
Delaware corporation.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"STATED MATURITY" when used with respect to a note means the date
specified in such note as the fixed date on which the principal of such note is
due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms,
conditions and provisions of (i) the Ground Leases with respect to the Leased
Land; and (ii) Superior Mortgages with respect to the portion of the Trust
Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility
Lien and any After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of
the whole or any part of the Premises, by a competent authority, for any public
or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause
Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the Granting
Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of
the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section
5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice (including,
without limitation, a notice of default), consent, waiver or other document
provided or permitted by this Mortgage to be made upon, given or furnished to,
or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be
deemed given when either (i) delivered by hand or
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(ii) two days after sending by registered or certified mail, postage prepaid,
addressed as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
State Street Bank and Trust Company
of Connecticut, National Association
750 Main Street,
Suite 1114
Hartford, Connecticut
Attention: Corporate Trust Department
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any
party may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE.
Whenever several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such Officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Officer or Officers of the Mortgagor stating that
the information with respect to such factual matters is in the possession of the
Mortgagor, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. If appropriate to
the matter being opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of creditors and
the availability of equitable remedies.
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Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor shall
deliver any document as a condition of the granting of such application, or as
evidence of the Mortgagor's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Mortgagor to have such application granted or to
the sufficiency of such certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Mortgagor to the Mortgagee to take any action
under any provision of this Mortgage, the Mortgagor shall furnish to the
Mortgagee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Mortgage relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Mortgage
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Mortgage shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such condition
or covenant has been complied with; and
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(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each case
named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged, released
nor any of its provisions waived except by agreement in writing executed by the
Mortgagor and the Mortgagee and in accordance with the provisions of this
Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this
Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in
the Guaranty, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns, any benefit or any legal or
equitable right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the
provisions of this Mortgage and the provisions of the Indenture shall be
inconsistent, the provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is
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subject to and shall be enforced in compliance with the provisions of the New
Jersey Casino Control Act. This Mortgage shall not be transferred, assigned
or amended without prior approval of the New Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause
to be paid, or there shall otherwise be paid, to the Mortgagee all amounts
required to be paid by the Mortgagor pursuant to the Guaranty, or the Note
Mortgage and the Notes, and the conditions precedent for the Indenture to cease,
determine and become null and void in accordance with Section 5.01 of the
Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge
this Mortgage, and execute and deliver to the Mortgagor all such instruments as
may be necessary, required or appropriate to evidence such discharge and
satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject in
each instance to the giving of any notice and the expiration of any grace period
provided for in Section 3.01 as a condition to such Default making it an Event
of Default, unless the Trust Indenture Act requires otherwise, in which case the
Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an event
which does not materially diminish the value of the Mortgagee's interest in the
Trust Estate shall not be deemed an "impairment of security", as that phrase is
used in this Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE.
So long as there shall have been no demand for payment under the Guaranty
pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and
permitted, with power freely and without let or hindrance on the part of the
Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to
possess, use, manage, operate and enjoy the Trust Estate and every part thereof
and to collect, receive, use, invest and dispose of the rents, issues, tolls,
profits, revenues and other income from the Trust Estate or any part hereof, to
use, consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
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Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to
time, unless an Event of Default shall have occurred and be continuing, without
any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right
to pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to
the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any
provisions contained in this Mortgage or
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the Indenture to the contrary, including, without limitation, the provisions of
Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the
Mortgagor acquires Tangible Personal Property and other items constituting
operating assets, such as computer software subject to any FF&E Financing
Agreement, or becomes the lessee under a lease for any of the same and if the
document evidencing such FF&E Financing Agreement prohibits subordinate liens or
the provisions of any such lease prohibits any assignment thereof by the lessee,
and if any such prohibition is customary with respect to similar transactions of
the lender or lessor, as the case may be, then the property so purchased or the
lessee's interest in the lease, as the case may be, shall be deemed to be
Excepted Property. If any such FF&E Financing Agreement permits subordinate
liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the
Mortgagor's expense, such documents as the holder of such FF&E Financing
Agreement may reasonably request to evidence the subordination of the lien of
this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part of the Released Fee Land (the land to be so conveyed is hereinafter
referred to as the "Released Land"), free from the lien of the Mortgage,
provided that the conditions set forth in Section 2.05(a) of the Note Mortgage
have been satisfied.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.05 and, if
applicable, Section 2.05 of the Note Mortgage, PROVIDED, that the Mortgagee
shall have no liability thereunder and all costs and expenses (including
reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be
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continuing, to have an Affiliate exercise such options(s) or for the Mortgagor
to exercise such options(s) on behalf of an Affiliate and in connection
therewith to cause fee simple title to the Leased Land or any part thereof to be
conveyed to an Affiliate of the Mortgagor (provided that no portion of the
purchase price of the Leased Land or part thereof is paid by Mortgagor), free
from the lien of this Mortgage (the land to be so conveyed is hereinafter
referred to as the "Released Fee Land"), provided that the Mortgagor furnishes
the Mortgagee with the following:
(i) an Officers' Certificate requesting the release of the
Released Fee Land from the Trust Estate and stating that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain all
Permits and in order to comply with the provisions of all material
contracts to which the Mortgagor is a party or by which the Mortgagor is
bound, (B) such Affiliate has received all Permits necessary to own the
Released Fee Land (including without limitation all approvals required by
the Casino Control Commission of the State of New Jersey), (C) there has
been delivered to the Mortgagor and the Mortgagee a true copy of an
instrument executed by such Affiliate stating that (i) such Affiliate may
only engage in the activity of owning the Released Fee Land and (ii) such
Affiliate shall not convey the Released Fee Land to another Affiliate of
the Mortgagor, unless such other Affiliate executes and delivers to the
Mortgagor and the Mortgagee, the instruments that would have been required
to be delivered pursuant to clause (C) if the Mortgagor conveyed the
Released Fee Land to such other Affiliate (provided that this restriction
shall only be effective until such time as this Mortgage shall be satisfied
of record) and (D) the deed conveying the Released Fee Land to such
Affiliate shall state that such conveyance is made subject to the terms,
provisions and conditions of the applicable Ground Lease and that the fee
and leasehold interests in the Released Fee Land shall not merge by reason
of the Mortgagor and/or any Affiliate owning both the leasehold and fee
estate therein, and that such estates shall always remain separate and
distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to which
the Mortgagor is a party or by which it is bound to own the Released Fee
Land and (B) the instruments described in clause (C) of subparagraph (i)
were duly executed by and are binding upon such Affiliate; and
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(iii) an endorsement to the Original Policy, confirming that
no merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, and agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgago's compliance with this Section 2.06, PROVIDED
that the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if
no Event of Default has occurred and is continuing and (ii) if the Mortgagor
shall acquire Released Fee Land, then simultaneously with the acquisition
thereof, the Mortgagor shall have the right to encumber such fee simple title
with a mortgage (such mortgage and any refinancing thereof permitted by the
Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The
lien of this Mortgage on the Released Fee Land shall be subordinated to the lien
of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of
other Superior Mortgages which shall become a lien thereon in accordance with
the terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
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(ii) the indebtedness secured by the After-Acquired Fee Mortgage
(A) does not exceed 75% of the cost to the Mortgagor of such fee simple
title at the time of the acquisition and (B) satisfies the criteria set
forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers
fee simple title to the Leased Land or any part thereof, such
After-Acquired Fee Mortgage contains provisions binding on the holder of
the After-Acquired Fee Mortgage and its successors and assigns confirming
the provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire Released
Fee Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstanding, the subordination of this Mortgage to
any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall
not be self-operative but shall be effective only upon the execution and
delivery by the Mortgagee of an instrument in writing effecting such
subordination. The Mortgagee shall deliver such instrument of subordination on
the following conditions: (x) the Mortgagee shall have received an Officers'
Certificate confirming that the conditions of (i) through (vi) of paragraph (a)
have been satisfied, together with a true and correct copy of the After-Acquired
Fee Mortgage and all other instruments securing the indebtedness evidenced
thereby and (y) the instrument of subordination shall specifically state that
this Mortgage is being subordinated not with respect to the lien of this
Mortgage on the Ground Lease or on the leasehold estate created thereby, but
only with respect to the fee simple title to the Leased Land or applicable part
thereof and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
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ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default by the Mortgagor under the Guaranty and continuance
of such default for a period of 10 days after there has been given a
written notice to the Mortgagor specifying such default and stating that
such notice is a "Notice of Default" hereunder; or
(b) an "Event of Default," as defined in Section 3.01 of the
Note Mortgage, shall occur; or
(c) default in the performance, or breach, of any of the
provisions of Article Four and the continuance of such default or breach
for a period of 60 days after there has been given a written notice to the
Mortgagor specifying that such notice is a "Notice of Default" hereunder;
or
(d) any representation or warranty of the Mortgagor set forth in
this Mortgage shall prove to be incorrect as of the time when made and the
facts constituting such incorrectness impairs the Mortgagee's security and
such impairment continues for a period of 30 days, unless such impairment
is curable, but not susceptible of cure within such 30-day period (for
reasons other than lack of funds), provided that the conditions set forth
in Section 3.01(l) of the Note Mortgage have been satisfied.
Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default
occurs and is continuing, and the Mortgagee has declared the Outstanding Amount
of the Note to be due and payable immediately pursuant to Section 3.02 of the
Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty
to be due and payable immediately.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any
moneys received by the Mortgagee pursuant to the provisions of this Article
Three (including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the
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Mortgagee in accordance with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this Mortgage
and such proceeding has been discontinued or abandoned for any reason or has
been determined adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such proceeding
had been instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect under the Guaranty secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, then, to the extent it has not already done so pursuant to the terms
of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all
expenses, including reasonable attorneys' fees and expenses, incurred by the
Mortgagee in connection therewith, together with interest at the rate then
payable on the Notes, from the date of payment less the net amount received by
the Mortgagee or the Trustee, as their interests may appear under any title
insurance policy, and, until paid, all such expenses, together with interest as
aforesaid, shall be a lien on the Trust Estate.
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Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time insist
upon, plead, claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law now or hereafter in force, in order
to prevent or hinder the enforcement of this Mortgage or the absolute sale of
the Trust Estate, or any part hereof, or the possession thereof by any purchaser
at any sale under this Article Three; and the Mortgagor, for itself and all who
may claim under it, so far as it or they now or hereafter may lawfully do so,
hereby waives the benefit of all such laws. The Mortgagor, for itself and all
who may claim under it, waives, to the extent that it may lawfully do so, all
right to have the property in the Trust Estate marshalled upon any foreclosure
hereof, and agrees that any court having jurisdiction to foreclose this Mortgage
may order the sale of the Trust Estate as an entirety.
If any law in this Section 3.08 referred to and now in force, of which
the Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence
of an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
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Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event
of Default shall occur and be continuing, the Mortgagee, with or without entry,
in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee
may determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Mortgage or in
aid of the execution of any power granted in this Mortgage or for the
foreclosure of this Mortgage or for the enforcement of any other legal,
equitable or other remedy, as the Mortgagee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of the
Mortgagee; the failure to join tenants shall not be asserted as a defense
to any foreclosure or proceeding to enforce the rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust
Estate, whether made under the power of sale hereby given or pursuant to
judicial proceedings, to the extent permitted by law:
(a) all obligations owing under the Guaranty, if not previously
due, shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt of
any required prior approvals of the New Jersey Casino Control Commission,
the Mortgagee may bid for and purchase the property offered for sale, and
upon compliance with the terms of sale may hold, retain and possess and
dispose of such property, without further accountability, and may, in
paying the purchase money therefor, delivery any notes or claims for
interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned to the
holders
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thereof after being appropriately stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and instrument of
assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and
lawful attorney of the Mortgagor, in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold; and for that purpose it may execute all
necessary deeds, bills of sale and instruments of assignment and transfer,
and may substitute one or more persons, firms or corporations with like
power, the Mortgagor hereby ratifying and confirming all that its attorney
or such substitute or substitutes shall lawfully do by virtue hereof; but
if so requested by the Mortgagee or by any purchaser, the Mortgagor shall
ratify and confirm any such sale or transfer by executing and delivering to
the Mortgagee or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment and transfer and releases as may be
designated in any such request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of, in and to the
property so sold shall be divested and such sale shall be a perpetual bar
both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such
sale shall be a sufficient discharge to the purchaser or purchasers at such
sale for his or their purchase money and such purchaser or purchasers and
his or their assigns or personal representatives shall not, after paying
such purchase money and receiving such receipt, be obliged to see to the
application of such purchase money, or be in anywise answerable for any
loss, misapplication or non-application thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default
and commencement of judicial proceedings by the Mortgagee to enforce any right
under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security for
the Guaranty or the solvency of the Mortgagor, to
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the appointment of a receiver of the Trust Estate, and of the rents, issues,
profits, revenues and other income thereof, PROVIDED, HOWEVER, that the
Mortgagee's rights under this Section 3.12 shall be subject to the provisions of
the New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have
power to institute and maintain such proceedings as it may deem necessary and
appropriate to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its interests in the
Trust Estate and in the rents, issues, profits, revenues and other income
arising therefrom, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any 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 the security
hereunder or be materially prejudicial to the interests of the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the contrary, following an Event of Default
and the taking of possession of the Trust Estate or any part thereof by the
Mortgagee and/or the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized, in addition to
the rights and powers of the Mortgagee and such receiver set forth elsewhere in
this Mortgage, to retain one or more experienced operators of hotels and/or
casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have
all necessary legal qualifications, including all Permits, to manage the
Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the
Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation
or combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the successor entity
formed
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by such consolidation or into which the Mortgagor is combined or to which such
conveyance or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Mortgagor under this Mortgage with the
same effect as if such successor entity had been named as the Mortgagor herein;
PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate
substantially as an entirety, unless such conveyance or transfer is in
compliance with the provisions of Article Ten of the Indenture, shall have the
effect of releasing the Person named as "the Mortgagor" in the first paragraph
of this instrument or any successor entity which shall theretofore have become
such in the manner prescribed in such Article Ten from its liability as
guarantor.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as
otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor
shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or
otherwise transfer all or any part of the Trust Estate or any interest therein
(including without limitation any interest in the Ground Leases). Without
limiting the generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground Leases from its
ownership of the buildings constituting the Casino-Hotel or any part thereof.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. [Reserved]
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing Agreements before the expiration of any applicable notice and cure
periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create,
incur, suffer or permit to be created or incurred or to exist any mortgage,
lien, charge or encumbrance on or pledge of any of the Trust Estate, other than
(i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with
indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section
12.08(a) of the Indenture, and (iii) a building contract or a notice of
intention filed by a mechanic, materialman or laborer under the New Jersey lien
law. Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the Mortgagor shall
not be deemed to have breached the provisions of the foregoing sentence by
virtue of the
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existence of a lien for Impositions or mechanics liens so long as the Mortgagor
is in good faith contesting the validity of the same in accordance with the
provisions of Section 5.09 to the extent that the matters described in (i) and
(ii) do not constitute a default under any Ground Lease or Superior Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on behalf of the
Mortgagor, (a) to appear in and defend any action or proceeding brought with
respect to the Trust Estate or any part thereof and (b) upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgage), to commence any action or
proceeding to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor
represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to execute and deliver this Mortgage, and all
corporate action on its part necessary for the valid execution and delivery
of this Mortgage has been duly and effectively taken;
(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the Mortgage
Documents, any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than the
lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has been
given to or by the lessee, (iii) the Mortgagor has delivered true and
correct copies of the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in full
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force and effect and has not been modified, amended or supplemented, except
as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to execute
this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer,
hypothecate, pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the Operating Assets
and the Ground Leases, without the consent of any third party, other than
governmental authorities but any applicable or necessary consent or
approval of any such governmental authority has been given or waived at or
prior to the execution and delivery of this Mortgage), and this Mortgage
constitutes a valid second mortgage lien and second priority security
interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage,
subject only to Working Capital Facility Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend (x) the
title to Trust Estate (including without limitation, its leasehold estates under
the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances)
and (y) the priority of the lien of this Mortgage (subject to Permitted
Encumbrances other than Restricted Encumbrances), against the claims and demands
of all persons whomsoever, at the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as
provided in Section 5.13, from time to time subject its right, title and
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments of
further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, and will execute and file such financing statements and cause to be
issued and filed such continuation statements, all in such manner and in such
places as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party under the
Uniform Commercial Code to all property comprising the Trust Estate (to the
extent a grant of a security interest therein is governed by the Uniform
Commercial Code) and to perfect, preserve and protect the lien
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of this Mortgage as a valid mortgage lien of record and a valid security
interest on the Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all expenses
incident to the execution and delivery of this Mortgage, and any instrument of
further assurance, and all federal, state, county and municipal stamp taxes and
other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Mortgage, any financing
statement or continuation statement with respect to the personal property
constituting part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH
LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to
contests, pay or cause to be paid promptly (or when installments of the
same shall become due and payable, if, by law or by agreement or
arrangement with the applicable governmental agency or authority, the same
may be paid in installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are payable by the
Mortgagor pursuant to any Superior Instrument Requirement), all taxes
(including, without limitation, real estate taxes, personal or other
property taxes and all sales, value added, use and similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
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profits or revenue tax upon the income of the Mortgagee, the Trustee or the
Noteholders nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholders nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed in substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Guaranty;
(b) except for such property which the Mortgagor may dispose of
or replace pursuant to Section 2.02, maintain and keep all its properties
used or useful in the conduct of its business (other than obsolete
equipment), including, without limitation, the Casino-Hotel and all
Tangible Personal Property, in such good repair, working order and
condition, except for reasonable wear and use, and make or cause to be made
all such needful and proper repairs, renewals and replacements thereto
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey;
(c) occupy and continuously operate the Casino-Hotel and keep
the Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to
contests, the Mortgagor at its sole expense will timely (1) comply with all
Legal Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if
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the failure to comply with the same would impair the Mortgagee's security
hereunder. Without limiting the generality of the foregoing, the Mortgagor
represents and warrants that at the time of the execution of this Mortgage,
the Mortgagor is in compliance with the requirements of clauses (1), (2)
and (3);
(e) in the event of the passage after the date of this Mortgage
of any law of the State of New Jersey, or any other governmental entity,
changing in any way the laws now in force for the taxation of mortgages, or
debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of the Mortgagee,
then and in such event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for any reason payment by the Mortgagor of any
such new or additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured hereby wholly or
partially usurious under any of the terms or provisions of the Note, or
this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option,
declare the whole sum secured by this Mortgage, with interest thereon, to
be due and payable 90 days after notice of election thereof has been given
by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that
amount or portion of such taxes as renders the loan or indebtedness secured
hereby unlawful or usurious, in which event the Mortgagor shall
concurrently therewith pay the remaining lawful and nonusurious portion or
balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole
expense, contest by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part
of any Imposition or lien therefor or any Legal Requirement or Insurance
Requirement or the application of any instrument of record affecting the Trust
Estate or any part thereof or any claims of mechanics, materialmen, suppliers,
or vendors or lien therefore, and may withhold payment of the same pending such
proceedings if permitted by law, or make payment under protest, or defer
compliance with any such Legal Requirement, any such Insurance Requirement or
the terms of any such instrument, and the same shall not be a Default hereunder,
provided that (a) in the case of any Impositions or lien therefor or any claims
of mechanics, materialmen, suppliers or vendors or lien therefor, such
proceedings shall suspend the collection thereof from each of the Mortgagor, the
Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the
Trust Estate nor any interest therein would be in any danger of being sold,
forfeited, or lost, (c) such action
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would not result in or constitute a default under any Ground Lease or Superior
Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor
the Mortgagee shall be in any danger of any civil or any criminal liability, and
the failure of the Mortgagor to comply with such Legal Requirement shall not
affect the continuance in good standing of any Permit or result in the
suspension, termination, non-renewal or material adverse modification of any
permit, and (e) in the case of an Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the
generality of the first sentence of Section 5.03 and notwithstanding the
provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed,
either by payment, or bonding or otherwise, all claims and demands of mechanics,
materialmen, laborers, and others which, if unpaid, might result in, or permit
the creation of, a lien on the Premises and/or Trust Estate or any part thereof,
or on the revenues, rents, issues, income and profits arising therefrom and in
general will do or cause to be done everything necessary so that the lien hereof
shall be fully preserved, at the cost of the Mortgagor, without expense to the
Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable properties,
in amounts at all times sufficient to prevent the Mortgagor from becoming a
coinsurer within the terms of the applicable policies, but in any event
such insurance shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the "Insurance
Amount"): (i) 100% of the then full insurable value of such insurable
properties, the term "full insurable value" to mean the actual replacement
cost (excluding the costs of foundation, footing, excavation, paving,
landscaping and other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36 calendar months),
by an Architect, contractor, appraiser, or an Insurer, or
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(ii) the amount required to be maintained pursuant to the Superior
Instrument Requirements;
(2) war risk insurance as and when such insurance is obtainable from
the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then be
so obtainable;
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the cost
of such insurance, for personal injury and property damage with respect to
any one occurrence, which may be under an umbrella policy. Anything
contained in this clause (3) to the contrary notwithstanding, the Superior
Instrument Requirements with respect to the kinds and amount of insurance
described in this clause (3) shall be satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already covered
by other policies of insurance maintained by the Mortgagor) on or about
such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time that the
Mortgagor is renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates determined
by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable size
in the boardwalk area of Atlantic City, New Jersey and
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(ii) required to be maintained pursuant to the Superior Instrument
Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1), (2),
(6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, $100,000 with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
$1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self
insured retention under the general liability policy described in clause (3)
and a deductible with respect to the other insurance policies described in
clause (3) in an amount not to exceed the amount of deductible as is customarily
maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii)
the Mortgagor shall not reduce its insurance coverage for the matters described
in clause (3) (which for purposes of this paragraph means a reduction in single
limits or an increase in deductible) unless and until the Mortgagor delivers to
the Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained at rates determined
by the Mortgagor to be reasonable for such coverage, (x) the amount of the
proposed reduction, (y) the premium for the existing and the proposed reduced
coverage, and (z) that the proposed deductible satisfied the criteria set forth
in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clause (5) in the
forms of and in an amount not to exceed the amount of deductible as is
customarily maintained by casino-hotels of similar size in Atlantic City, New
Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of workers'
compensation insurance, name as additional insureds the Mortgagee, in both its
individual and fiduciary capacities, and, to the extent required by the Superior
Instrument Requirements, the Lessors and the holders of the Superior Mortgages,
(2) provide that all insurance proceeds for losses, except in the case of public
liability insurance and workers' compensation insurance or as otherwise provided
in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the
Mortgagee or such other party as is required to receive such proceeds under a
Superior Mortgage, (3) except in the case of workers' compensation, include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all lost payees and
named insureds (other than the Mortgagor) and all rights of subrogation against
any named insured, (4) except in the case of public liability and
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workers' compensation insurance, provide that any losses shall be payable
notwithstanding (i) any act, failure to act, negligence of, or violation or
breach of warranties, declarations or conditions contained in such policy by the
Mortgagor or the Mortgagee or any other named insured or loss payee (including,
without limitation, with respect to the Released Fee Land, the holders of any
After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable
properties for purposes more hazardous than permitted by the terms of the
policy, (iii) any foreclosure or other proceeding or notice of sale relating to
the insurable properties or (iv) any change in the title to or ownership or
possession of the insurable properties, (5) contain a non-contributory mortgagee
clause in favor of the Mortgagee, and (6) provide that if all or any part of
such policy is cancelled, terminated or expires, the insurer will forthwith give
notice thereof to each named insured an loss payee and that no cancellation,
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by each named insured and loss payee of
written notice thereof.
(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate
originals of all insurance policies that the Mortgagor is required to maintain
pursuant to this Section 5.11 and (2) within 30 days after each reduction in
insurance required to be maintained by the Mortgagor hereunder, an Officers'
Certificate setting forth the particulars as to all such insurance policies and
certifying that the same comply with the requirements of this Section 5.11, that
all premiums or installments thereof then due thereon have been paid and that
the same are in full force and effect. The Mortgagee shall not be responsible
for effecting or renewing any insurance or for the responsibility or solvency of
the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x) results in
damage, loss or destruction in an amount in excess of $5,000,000 to any
buildings or improvements on the Premises and/or any Tangible Personal Property
or (y) pursuant to any Superior Instrument Requirement, would require the
deposit of insurance proceeds with the Depositary, or action or proceeding with
respect thereto. Whenever the Superior Instrument Requirements require or
permit the selection of the Depositary by the Mortgagor, the Mortgagor shall
select the Insurance Trustee as the Depositary. Within 30 days after any
Casualty which results in any damage, loss or destruction in an amount in excess
of $10,000,000 to any buildings or improvements of the Premises and/or any
Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a
certificate of an Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit
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the Restoration of such buildings and improvements for the same uses and to the
same size and quality in all material respects, as existed immediately prior to
the Casualty (and if such certificate states the Legal Requirements do not
permit such Restoration, such certificate shall describe the manner closest
approximating such criteria to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of Appraised Value dated not
more than 10 days prior to delivery setting forth the Appraised Value
immediately prior to the Casualty and the estimated Appraised Value immediately
after the Restoration). If the Mortgagor is required to deliver such
Certificates of Appraised Value and if based on such Certificates of Appraised
Value immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of (i)
66 2/3% of the Appraised Value immediately after such Restoration or (ii) the
quotient of the Outstanding Amount of First Mortgage Debt immediately prior to
such Casualty divided by the Appraised Value immediately prior to the Casualty
multiplied by the Appraised Value immediately after such Restoration, then the
proceeds of any insurance shall, at the election of Mortgagee, either be applied
to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and
delivered to the Mortgagee to the extent of the then Outstanding Amount of the
Note and any other interest or other sums due hereunder or thereunder to be
applied to the satisfaction of the Mortgage to the extent proceeds are available
for such purpose and provided that no additional sums are due to the Trustee or
the Noteholder under the Indenture, the balance of any net insurance proceeds
shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such
Certificates of Appraised Values indicates that the Outstanding Amount of First
Mortgage Debt immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of
insurance will be made available for Restoration (subject to paragraphs, (e),
(h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as additions
to capital in an amount equal to the Outstanding Amount of First Mortgage Debt
in excess of the Appraised Value necessary to be paid down so that the
Outstanding Amount of First Mortgage Debt will not exceed either of the two
amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such
commitment may only be released if, upon an Appraisal at any time following
completion of such Restoration, the aggregate Outstanding Amount of the First
Mortgage Debt does not exceed 66-2/3% of the Appraised Value.
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(e) Subject to the provisions of Subsection (d) above, in case a
Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of $10,000,000, the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to
the Insurance Trustee (or other Depositary required by the Superior
Instrument Requirements, provided that such Depositary holds such proceeds
in trust for purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable promptness under the
circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair,
replacement or rebuilding of the damage or destruction resulting from the
Casualty (all of which restoration, repair, replacement or rebuilding are
referred to as the "Restoration") in accordance with the plans and
specifications submitted to the Insurance Trustee, in conformance with all
Legal Requirements and Superior Instrument Requirements, and in accordance
with the further provisions of this Subsection (e), regardless of the
extent of any such Casualty and whether or not net insurance proceeds, if
any, shall be available or, if available, shall be sufficient, for the
purpose of the Restoration (provided, however, that if the Mortgagor does
not receive any net insurance proceeds within 30 days after any Casualty
because the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration shall be deferred
until such proceeds are made available to the Mortgagor, provided that (i)
Mortgagor delivers to the Mortgagee an Officers' Certificate certifying
that the Mortgagor is diligently and continuously adjusting such loss with
the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers'
Certificate within such 30-day period requesting the extension of such
period, estimating the date on which such proceeds will be available and
describing the Mortgagor's efforts to adjust such loss and certifying that
such extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach
has been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter updating the
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information contained in the certificate described in Clause (ii)). All
Restoration work shall be performed in accordance with the applicable
provisions of Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements and, prior to
commencing any Restoration, the Mortgagor shall obtain all Permits
necessary in connection therewith, and shall obtain, and keep in full force
and effect until the completion of such Restoration, such additional
insurance as the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration shall be
accompanied by a certificate of the Mortgagor and an Opinion of Counsel to
the effect that upon the completion of the Restoration pursuant to the
plans and specifications the Premises, and all buildings and improvements,
thereon will comply with all superior Instrument Requirements, Legal
Requirements and Insurance Requirements. Notwithstanding anything in this
Section 5.11 to the contrary, if such Casualty is in an amount less than
$5,000,000, the Mortgagor shall not be required to perform and complete
such Restoration (unless the performance and completion of the Restoration
is necessary in order for the Mortgagor to be in compliance with any term,
provision or condition of this Mortgage (other than this Section 5.11(e))
or any Superior Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designate by Mortgagor (to the extent the Mortgagor
is permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds)
and shall be paid by the Insurance Trustee in reimburse the Mortgagor for,
or to make payment for, the Restoration, after the Insurance Trustee
deducts therefrom the amount of any reasonable costs and expenses incurred
in connection with the performance of its obligations under this Section
5.11. The Insurance Trustee shall make such payments not more frequently
than once every 30 days upon the written request of the Mortgagor (unless
more frequent payments are required by Superior Instrument Requirements),
by paying to the Mortgagor or the persons named in the certificate
described in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate
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from time to time as the Restoration progresses, provided the Mortgagor has
complied with the requirements of this Subsection (e) and such payment is
permitted by an applicable Superior Instrument Requirements. The
Mortgagor's written request shall be accompanied by (i) the certificate
described in Clause (6) of this Subsection (e) and (ii) a title company or
official search, or other evidence reasonably acceptable to the Insurance
Trustee, showing that there have not been filed with respect to the
Premises, any vendor's, contractor's mechanic's, laborer's or materialman's
statutory or similar lien which has not been discharged of record (or
bonded against or secured by other security) or any other encumbrance
irrespective of its priority (other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate, countersigned by the Architect in
charge of the Restoration with respect to the matters described in (i) and
(v) below, (B) be dated not more than 10 days prior to such request and (C)
set forth (in addition to any other requirements contained in any
applicable Superior Instrument Requirements) that:
(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance
Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered services or
furnished or contracted to deliver materials for the Restoration
therein specified, and the names and addresses of such persons, a
brief description of such services and materials and the several
amounts so paid or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net
insurance proceeds, and that the sum then requested does not exceed
the value of the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in
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such certificate to be due for services or materials, and except for
amounts in dispute and/or customary retainages, there is no
outstanding indebtedness known to the person signing such certificate,
after due inquiry, which is then due for labor, wages, materials,
supplies or services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if
such estimated cost does exceed such insurance proceeds such
certificate shall state the amount of any such deficiency. If the
certificate states that such deficiency will exist, the Mortgagor
shall deliver the amount of such deficiency in cash or cash equivalent
to the Insurance Trustee simultaneously with the delivery of such
certificate, which amount shall be deemed insurance proceeds for
purposes of this Section 5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the entire
cost of the Restoration, then, after completion of the Restoration, the
Mortgagor shall pay the deficiency. If all or any part of the net
insurance proceeds are not used for the restoration in accordance with this
Subsection (e) (because such proceeds exceed the amount required to
complete the Restoration), then upon completion of the Restoration in
accordance with this Subsection (e), such amount not so used, if held by
the Insurance Trustee, shall be paid to the Mortgagor (if permitted by
Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is continuing,
all net business interruption insurance proceeds shall be paid to the Mortgagor,
to be segregated from the other funds of Mortgagor and held in trust by
Mortgagor for the following purposes and in the following order of priority:
(i) for the payment of Impositions and amounts due under the Ground Leases and
Superior Mortgages; (ii) for debt service for the estimated period of
Restoration (for purposes of this Section 5.11(f), interest and principal
payments due on any payment date under the Notes will deemed to accrue in equal
daily installments beginning the day after the immediately preceding payment
date and ending on such payment date); and (iii) for any expense incurred in
connection with the operation or business of the Casino-Hotel.
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(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to be maintained
pursuant to this Section 5.11, unless the same are permitted by Superior
Instrument Requirements and the Mortgagee is included therein as a named
insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant
to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall promptly deliver to
the Mortgagee a duplicate original of the policy of such insurance, a copy
thereof certified by the insurer or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance claims by
reason of damage or destruction to any portion of the Trust Estate may be
adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the
obligation) to join the Mortgagor in adjusting, and approving the adjustment of,
any such loss except in the event of a loss where the amount of insurance
reasonably anticipated to be received with respect to such loss is less than
[Five Million Dollars ($5,000,000)], and the Mortgagor shall assist the
Mortgagee in any such adjustment at the request of the Mortgagee. If the
Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment
process, then the Mortgagee's approval of the
adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary, if an
Event of Default shall have occurred and be continuing, the Mortgagee may, at
its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee
any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case
may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or
make any demolition, alteration or improvement of any building included in the
Trust Estate or any new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in this Section 5.12
set forth.
Unless an Event of Default shall have occurred and be continuing, the
Mortgagor shall have the right at all times to make or permit such alterations,
improvements or new constructions, structural or otherwise (herein sometimes
called collectively "alterations"), of or on the Trust Estate, to be made in all
cases subject to the conditions set forth in Section 5.12 of the Note Mortgage.
Section 5.13. LEASES. The Mortgagor shall not:
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(a) subject to the provisions of Section 5.13(d), enter into any
Lease, or renew, modify, extend, terminate, or amend any Lease, except in
the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection of,
any rental payments under any Lease more than one year in advance of the
respective periods in respect of which they are to accrue, except that, in
connection with the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected and received in
advance in an amount not in excess of three months' rent and/or a security
deposit may be required thereunder in an amount not exceeding one year's
rent;
(c) collaterally assign, transfer or hypothecate (other than to
the Mortgagee hereunder, to the mortgagee under the Note Mortgage or to the
holder of any Working Capital Facility Lien) any rental payment under any
Lease whether then due or to accrue in the future, the interest of the
Mortgagor as landlord under any Lease or the rents, issues or profits of
the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any
Lease unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder
shall be subject and subordinate to the rights of the Mortgagee under
this Mortgage, the mortgagee under the Note Mortgage and the holders
of any Superior Mortgage,
(2) the Lease may be assigned by the landlord thereunder to
the Mortgagee,
(3) the rights and remedies of the tenant in respect of any
obligations of the landlord thereunder shall be nonrecourse as to any
assets of the landlord other than its equity in the building in which
the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee under any new lease entered
into in the event of a termination of a Ground Lease;
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(e) modify any Lease with respect to the matters described in
clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate of
the Mortgagor) for a term of not less than 3 nor more than 10 years, the
Mortgagee shall deliver a non-disturbance and attornment agreement substantially
in the form of Schedule 4 hereto, following receipt of a certificate of a
leasing broker (who is not an Affiliate of the Mortgagor or the broker involved
in such transaction) experienced with respect to leases of commercial space in
the Atlantic City area stating that the rent under the Lease is not less than
fair market rent and that the other terms of the Lease are fair and reasonable
in the commercial leasing market. The Mortgagor shall, upon demand, reimburse
the Mortgagee for any costs and expenses (including reasonable attorney's fees)
incurred by the Mortgagee in connection with the preparation, review and
delivery of such non-disturbance and attornment agreements.
Promptly after the execution and delivery hereof, the Mortgagor will
cause the lessee under each Lease now in effect and promptly after each Lease is
executed or becomes effective after the date of the execution and delivery
hereof, the Mortgagor will cause the lessee under each such Lease, to be duly
notified in writing (unless the substance and effect of such notice shall be
contained in such Lease) of the subjection of the owner's interest, as lessor,
in and to such Lease to the lien of this Mortgage and of the name and address of
the Mortgagee. Each such notice shall state that the lease of such lessee is a
Lease as herein defined. If a new Mortgagee is at any time appointed hereunder
or the address of the Mortgagee shall at any time be changed, the Mortgagor will
cause each lessee under each Lease to be promptly notified in writing of the
name address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur any
expenditure other than DE MINIMIS amounts) to obtain from each lessee under each
Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of
receipt of such notice, and the Mortgagor will promptly deliver to the
Mortgagee, upon request, a copy of each such acknowledgment of receipt which it
is able to obtain. The Mortgagee shall not be responsible for securing or
causing the Mortgagor to secure any such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
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Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to
Article Four, the Mortgagor will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation, and
its rights (both statutory and under its articles of incorporation) and
franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor
will keep proper books of record and account in accordance with Section 12.05 of
the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Notes, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Guaranty.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law or any other law which
would prohibit or forgive the Mortgagor from paying all or any portion of the
obligations under the Guaranty as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect the covenants or
the performance of this Mortgage; and the Mortgagor (to the extent that it may
lawfully do so) 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 Mortgagee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the
provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any
Taking affecting the Trust Estate.
Section 5.21. GROUND LEASES.
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(a) The Mortgagor covenants and agrees that it will do or cause to be
done all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall
at all times fully perform and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all taxes,
assessments and other charges mentioned therein) prior to the expiration of any
notice and/or cure period provided in each such Ground Lease. Upon receipt by
the Mortgagee from a Lessor of any written notice of default by the lessee
thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems
necessary in its sole discretion to prevent or to cure any default by the
Mortgagor in the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the Mortgagor as
lessee under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by the Mortgagor or by any
party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore
delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a
copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall
not take any such action unless and until the Mortgagor and/or the Mortgagee no
longer has the benefit of any tolling or stay referred to in Section 3.01(g).
Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby
expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any part
thereof to such extent and as often as the Mortgagee, in its sole discretion,
deems necessary or desirable for the purpose permitted by the immediately
preceding sentence, subject only to applicable Legal Requirements. Subject to
the preceding and without limiting the Mortgagee's other remedies under this
Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee
in its sole discretion deems necessary for any such purpose, and the Mortgagor
hereby agrees to pay to the Mortgagee, immediately and without demand, all such
sums so paid and expended by the Mortgagee, together with interest thereon from
the date of each such payment at the highest rate of interest set forth in the
Notes. All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and that
it will not without the express written consent of the Mortgagee modify,
change,
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supplement, alter or amend such Ground Leases either orally or in writing
and, as further security for the repayment of the indebtedness secured
hereby and for the performance of the covenants herein and in such Ground
Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its
rights, privileges and prerogatives as lessee under such Ground Leases to
terminate, cancel, modify, change, supplement, alter or amend such Ground
Leases, and any such termination, cancellation, modification, change,
supplement, alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing and
(2) either (A) there has been an acceleration of maturity of the Notes
pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee
exercises its rights under Section 3.09 hereof, the Mortgagee shall have no
right to terminate, cancel, modify, change, supplement, alter or amend the
Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of the
Mortgagor's obligations under such Ground Leases, pursuant to such Ground
Leases or otherwise, shall release the Mortgagor from any of its
obligations under this Mortgage, including its obligations with respect to
the payment of rent as provided for in such Ground Leases and the
performance of all of the terms, provisions, covenants, conditions and
agreements contained in such Ground Leases, to be kept, performed and
complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest in
the improvements on the Leased Land and the leasehold estates shall not
merge by and shall always remain separate and distinct, notwithstanding the
union of such estates either in the Lessor or in the lessee, or in a third
party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in writing
of any request made by the Mortgagor, as lessee under each of the Ground
Leases, or any of the Lessors, for arbitration proceedings pursuant to the
Ground Leases and of the institution of any arbitration proceedings, as
well as all proceedings thereunder. In addition, the Mortgagor shall
promptly deliver to the Mortgagee a copy of the determination of the
arbitrators in each such arbitration proceeding. The Mortgagee shall have
the right to participate in such arbitration proceedings in association
with the Mortgagor
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or on its own behalf as an interested party in accordance with the terms of
the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the Mortgagor
shall deliver a copy of its election to exercise such option within 5 days
after the Mortgagor has delivered notice of such election to the Lessor or
(B) the Mortgagor acquires fee simple title or any other estate, title or
interest in the Leased Land, the Mortgagor shall promptly notify the
Mortgagee of such acquisition and shall cause to be executed and recorded
all such other and further assurances or other instruments in writing as
may be required by law or, in the opinion of the
Mortgagee, be reasonably desirable to carry out the intent and meaning of
clause (x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease by
any Lessor or any trustee arising from or in connection with any case,
proceeding or other action commenced or pending by or against any Lessor
under the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation, the Mortgagor shall give notice thereof to the Mortgagee. The
Mortgagor hereby (A) assigns to the Mortgagee any and all of the
Mortgagor's rights as lessee under Section 365(h) of the Code or any
comparable provision contained in any present or future federal, state,
local, foreign or other statute, law, rule or regulation ("Comparable
Provision") and (B) covenants that it shall not elect to treat any Ground
Lease as terminated pursuant to Section 365(h) of the Code or any
Comparable Provision without the prior written consent of the Mortgagee and
(C) agrees that any such election by the Mortgagor without such consent
shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to the
Mortgagee all of the Mortgagor's claims and rights to the payment of
damages arising from any rejection by Lessor of any Ground lease under the
Code or any Comparable Provision. The Mortgagee shall have the right to
proceed in its own name or in the name of the Mortgagor in respect of any
claim, suit, action or proceeding relating to the rejection of
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any Ground Lease, including, without limitation, the right to file and
prosecute, in cooperation with the Mortgagor, any proofs of claim,
complaints, motions, applications notices and other documents, in any case
in respect of Lessor under the Code or any Comparable Provision. This
assignment constitutes a present, irrevocable and unconditional assignment
of the foregoing claims, rights and remedies, and shall continue in effect
until all of the indebtedness and obligations secured by this Mortgage
shall have been satisfied and discharged in full. Any amounts received by
the Mortgagee in damages arising out of the rejection of any Ground Lease
as aforesaid shall be applied first to all reasonable costs and expenses of
the Mortgagee (including, without limitation, reasonable attorneys' fees)
incurred in connection with the exercise of any of its rights or remedies
under this Section 5.21, and thereafter as provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor, as
lessee under the Ground Leases, shall determine to reject any or all of the
Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days'
prior notice of the date on which the Mortgagor shall apply to the
Bankruptcy Court or other judicial body with appropriate jurisdiction for
authority to reject the lease. The Mortgagee shall have the right, but not
the obligation, to serve upon the Mortgagor within such 10 day period a
notice stating that (a) the Mortgagee demands that the Mortgagor assume and
assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the
Code or any Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s). If
the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a) of the
preceding sentence within 30 days after the notice shall have been given
subject to the performance by the Mortgagee of the covenant provided for in
clause (b) of the preceding sentence. Effective upon the entry of an order
for relief in respect of the Mortgagor under Chapter 7 of the Code or Any
Comparable Provision the Mortgagor hereby assigns and transfers to the
Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other
judicial body with appropriate jurisdiction for an order extending the
period during which the Ground Lease may be rejected or assumed;
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(x) the Mortgagor shall promptly give to the Mortgagee copies of
(A) all notices of default or (B) any other communications or notices with
respect to events which relate to the possible impairment of the security
of this Mortgage, which it shall give or receive under the Ground Leases
and shall promptly notify the Mortgagor of any default under any Ground
lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all of the
rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed net
rent, taxes and assessments, payable under the Ground Leases have been paid to
the extent they were due and payable to the date hereof and that the Mortgagor
has not received notice of its failure to pay any other amounts payable under
the Ground Leases which have not been cured.
(d) If both the Lessor's and lessee's estates under any of the Ground
Leases or any portion thereof shall at any time become vested in one owner, this
Mortgage and the lien created hereby shall nevertheless not be merged,
extinguished, destroyed or terminated by application of the doctrine of merger
and, in such event, Mortgagee shall continue to have all of the rights and
privileges of the a leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease shall
be terminated prior to the natural expiration of its term due to default by the
lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its
designee shall acquire from the Lessor a new lease of the Leased land or any
portion thereof, the Mortgagor shall have no right, title or interest in or to
such lease or the leasehold estate created thereby, or the options therein
contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
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(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to
the expiration of any notice and/or cure period provided in each such Superior
Mortgage. If a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior Mortgage
has been accelerated as a result thereof, the Mortgagee may rely thereon and
take any action the Mortgagee deems necessary in its sole discretion to prevent
or to cure any default by the Mortgagor in the performance of or compliance with
any of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as mortgagor under each of the Superior Mortgages even though the
existence of such default or the nature thereof may be questioned or denied by
the Mortgagor or by any party on behalf of the Mortgagor provided that if the
Mortgagor has heretofore taken such actions as described in Section 3.01(h), the
Mortgagee shall not take any such action unless and until the Mortgagor and/or
the Mortgagee no longer has the benefit of any such tolling or stay referred to
in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the
Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such
acceleration the Mortgagee shall have, the absolute and immediate right to enter
in and upon the Premises or any part thereof to such extent and as often as the
Mortgagee, in its sole discretion, deems necessary for the purpose permitted by
the immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money as the
Mortgagee in its sole discretion deems necessary for any such purpose and (ii)
in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby
agrees to pay to the Mortgagee, immediately and without demand, all such sums
referred to in (i) and (ii) above so paid and expended by the Mortgagee,
together with interest thereon from the date of each such payment at the rate of
interest set forth in the Note. All sums so paid and expended by the Mortgagee
and the interest thereon shall be added to and be secured by the lien of this
Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first satisfying the
conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A)
modify any of the terms, covenants or conditions of any Superior Mortgage,
and without limiting the foregoing, the Mortgagor shall not, without
satisfying such conditions, enter into or obtain any agreement whereby the
holder of any Superior Mortgage waives, postpones, extends, reduces or
modifies the payment of the installment of principal or interest or
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<PAGE>
any other item or amount now required to be paid under the terms of any
Superior Mortgage or modifies any other provision thereof, or (B) acquire
or permit or suffer any Affiliate of the Mortgagor to acquire any Superior
Mortgage or any interest therein. Notwithstanding anything in clause (A)
to the contrary, the Mortgagor shall have the right to amend, supplement or
modify any Superior Mortgage, if (x) the then outstanding principal balance
of the indebtedness secured by such Superior Mortgage is not increased
thereby, and (y) in the case of any After-Acquired Fee Mortgage, such
amendment, supplement or agreement does not increase the property covered
thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each Superior
Mortgage, the note secured thereby and any other instrument evidencing or
securing the indebtedness owing to any holder of any Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to obtain
an estoppel certificate or letter addressed to the Mortgagee from holders
of the Superior Mortgages, such certificate or letter to be in such form as
the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication with
respect to events which relate to the possible impairment of the security
of this Mortgage, which it shall give or receive under the Superior
Mortgages and shall promptly notify the Mortgagor of any default under any
Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing Encumbrances
and any mortgage, assignment, security agreement, financing statement or other
lien securing any Working Capital Facility (the "Working Capital Facility Lien")
encumbering Mortgagor's interest in the affected portions of the Trust Estate or
any part thereof.
The foregoing provisions of this Section 5.22(c) shall be
self-operative with respect to Existing Encumbrances and shall be self-operative
with respect to any Working Capital Facility Lien, and no further instrument
shall be required to give effect to such subordination. Mortgagee shall,
however, from time to time, execute instruments in form
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<PAGE>
and substance reasonably satisfactory to the holder of the Working Capital
Facility Lien, confirming such subordination and agreeing to such other matters
reasonably required by the holder of the Working Capital Facility Lien which do
not, in the aggregate, materially adversely reduce or impair the rights of
Trustee under the Mortgage, and Mortgagor and others may rely conclusively
thereon, provided that Mortgagee shall have no liability thereunder and all
costs and expenses (including reasonable attorneys' fees) shall be paid by
Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing Encumbrances.
The provisions of this Section 5.22(d) shall be self-operative, and no further
instrument shall be required to give effect to such subordination.
Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey
Clerk's Office after the recordation of the Note Mortgage, the lien of this
Mortgage ranks pari passu with, and not junior to, the lien created by the Note
Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges
that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien
upon the Trust Estate which is PARI PASSU with the lien of this Mortgage.
Mortgagee further acknowledges and agrees that whenever it is provided in the
Note Mortgage that the Mortgagor shall deliver any notice or document, or is
required to make any payment thereunder, the delivery of such notice or document
or the making of such payment pursuant to the terms of the Note Mortgage shall
also constitute the delivery of such notice or document or the making of such
payment in satisfaction of the terms, conditions and provisions of this Mortgage
to the same extent as the same constitutes satisfaction of the terms, conditions
and provisions of the Note Mortgage.
Section 6.02. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
Section 6.03. MODIFICATION. This Mortgage is subject to
"modification" within the meaning of N.J.S.A. 46:9-
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8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority
provisions of such statute. Such modification may include, without limitation,
a change in the interest rate, maturity date or other terms and conditions of
this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF
THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be
duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
59
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Exhibit G
Intercreditor Agreement Terms
<PAGE>
Exhibit G
Outline of Material Terms of the
Intercreditor Agreement
for
Resorts International, Inc.
Subject Credit Senior Secured Loan due July 15, 2002 (the
Facilities "Senior Facility");
Senior Mortgage Notes due [March] 15,
2003 (the "Senior Mortgage Notes");
Junior Mortgage Notes due June 15, 2004
(the "Junior Mortgage Notes"); and
Any other credit facilities which may be
required by the Indentures for the
Senior Facility, the Senior Mortgage
Notes or the Junior Mortgage Notes to be
included in the Intercreditor Agreement
(the "Additional Facilities," and
together with the Senior Facility, the
Senior Mortgage Notes and the Junior
Mortgage Notes, the "Credit Facilities")
Creditor Parties Senior Facility Trustee;
Senior Mortgage Note Trustee;
Junior Mortgage Note Trustee; and any
lenders (or trustees or agents on behalf
of any lenders) which provide Additional
Facilities (collectively, the
"Trustees") Each Creditor Party, by its
execution of the Intercreditor Agreement
(whether directly or through its trustee
or agent), acknowledges the making of
the other Credit Facilities and the
intended uses of proceeds thereof and
waives any right to object to any
contemporaneous or existing Credit
Facility as having constituted a
fraudulent conveyance.
Classification of Initial Designations:Credit Facilities
Class 1 Facilities: Senior Facility,
all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
<PAGE>
Class 2 Facilities: Senior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Class 3 Facilities: Junior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Subsequent Designations - as indicated
on the signature page(s) to be executed
by the lenders (or any trustees or
agents on behalf of any lenders) which
provide Additional Facilities and
consented to by all other parties at
such time.
Borrower Parties Resorts International Hotel Financing,
Inc. ("RIHF"), as borrower under the
Secured Facilities;
Resorts International Hotel, Inc.
("RIH") as guarantor under the Secured
Facilities and issuer of the secured
intercompany notes to RIHF collaterally
assigned to each respective Trustee;
Resorts International, Inc. ("RII"), as
guarantor under the Senior Facility and
issuer of any intercompany notes which
may be issued to RIH; and
[GRI, Inc. ("GRI", and together with
RIHF, RIH and RII, the "Borrower
Parties") as guarantor under the Senior
Facility and issuer of any intercompany
notes which may be issued to RIH.]1*
The Borrower Parties will execute the
Intercreditor Agreement principally for
the purposes of (i) acknowledging the
relative rights of and relationships
among the Secured Facilities established
therein and (ii) agreeing not to take
any actions, including making any
payments, inconsistent therewith.
- -------------------
* Subject to discussion on structure
2
<PAGE>
Relative Priorities Liens:
Notwithstanding the time of filing,
recording or perfecting of the Security
Documents (which will be defined to
include the Mortgages and other liens
and encumbrances):
Each Lien created on behalf of a Class 1
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 1 Facility and (ii) senior
to any Lien created on behalf of any
Class 2 Facility or Class 3 Facility.
Each Lien created on behalf of a Class 2
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 2 Facility, (ii) senior to
any Lien created on behalf of any Class
3 Facility and (iii) junior to any Lien
created on behalf of any Class 1
Facility.
Each Lien created on behalf of a Class 3
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 3 Facility, and (ii) junior
to any Lien created on behalf of any
Class 1 Facility or Class 2 Facility.
Subrogation To be waived by all guarantors.
Mortgage Default Each Class 3 Creditor shall notify each
Cure Provisions Class 2 Creditor and each Class 1
Creditor of any Default or Event of
Default under its respective Class 3
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 1
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 3
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 2 Creditor shall notify each
Class 1 Creditor and each Class 3
Creditor of any Default or Event of
3
<PAGE>
Default under its respective Class 2
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 1 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 2
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 1 Creditor shall notify each
Class 2 Creditor and each Class 3
Creditor of any Default or Event of
Default under its respective Class 1
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 1
Facility or the Mortgage or other
Security Documents securing its
facility.
In addition, each Trustee will be
obligated to notify all other Trustees
prior to exercising any remedies with
respect to any shared collateral.
Application of Proceeds from dispositions of
Proceeds collateral, insurance proceeds,
condemnation awards and similar amounts
will be applied in accordance with
relative priorities of Liens.
Representations and Each party to the Intercreditor
Warranties Agreement will make appropriate
representations, including those
relating to its corporate existence,
power and authority, as well as to the
validity and enforceability of the
Intercreditor Agreement.
Amendments Intercreditor Agreement may not be
amended except pursuant to a writing
executed by all parties thereto.
Amendments for the sole purpose of
adding permitted parties may be executed
by the Trustees without the consent of
4
<PAGE>
the creditors for whom they serve if all
conditions precedent to the incurrence
of such indebtedness have been
satisfied. Amendments to sections [ ]
and [ ] may be executed by the
Trustees only with the approval of 100%
of the creditors for whom they serve and
amendments to sections [ ] and [ ]
may be executed by the Trustees only
with the approval of 66 2/3% of the
creditors for whom they serve.
Third Party Each party to the Intercreditor
Beneficiarie Agreement will acknowledge that such
agreement is being entered into for the
benefit of the lenders under the Credit
Facilities and their respective
successors and assigns, each of whom is
a direct intended third-party
beneficiary.
Certain Specific performance; no waivers;
Miscellaneous cooperation and further assurances.
Provisions
Governing Law New York
<PAGE>
[GD&C Draft--12/30/93]
[NA932820.031]
--------------------------------------------
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
Issuer,
RESORTS INTERNATIONAL HOTEL, INC.,
Guarantor,
and
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Trustee
--------------------------------------------
I N D E N T U R E
Dated as of [ ], 1994
--------------------------------------------
11.375% JUNIOR MORTGAGE NOTES DUE 2004
<PAGE>
CROSS-REFERENCE TABLE
SECTION OF TRUST INDENTURE ACT OF 1939 SECTION OF INDENTURE
- -------------------------------------- --------------------
310(a)(1) . . . . . . . . . . . . . . . . . . . . 8.08; 8.09
(a)(2) . . . . . . . . . . . . . . . . . . . . 8.09
(a)(3) . . . . . . . . . . . . . . . . . . . . 8.14(b)
(a)(4) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b). . . . . . . . . . . . . . . . . . . . . . 8.08
(c). . . . . . . . . . . . . . . . . . . . . . Not Applicable
311(a). . . . . . . . . . . . . . . . . . . . . . 8.13
(b). . . . . . . . . . . . . . . . . . . . . . 8.13
(c). . . . . . . . . . . . . . . . . . . . . . Not Applicable
312(a). . . . . . . . . . . . . . . . . . . . . . 9.01; 9.02(a)
(b). . . . . . . . . . . . . . . . . . . . . . 9.02(b)
(c). . . . . . . . . . . . . . . . . . . . . . 9.02(c)
313(a). . . . . . . . . . . . . . . . . . . . . . 9.03(a)
(b). . . . . . . . . . . . . . . . . . . . . . 9.03(a)
(c). . . . . . . . . . . . . . . . . . . . . . 9.03(a)
(d). . . . . . . . . . . . . . . . . . . . . . 9.03(b)
314(a). . . . . . . . . . . . . . . . . . . . . . 9.04
(b). . . . . . . . . . . . . . . . . . . . . . 6.02
(c)(1) . . . . . . . . . . . . . . . . . . . . 1.06
(c)(2) . . . . . . . . . . . . . . . . . . . . 1.06
(c)(3) . . . . . . . . . . . . . . . . . . . . 9.04(c); 12.07(i)
(d). . . . . . . . . . . . . . . . . . . . . . 6.02
(e). . . . . . . . . . . . . . . . . . . . . . 1.06
(f). . . . . . . . . . . . . . . . . . . . . . Not Applicable
315(a). . . . . . . . . . . . . . . . . . . . . . 8.01(a)
(b). . . . . . . . . . . . . . . . . . . . . . 8.02
(c). . . . . . . . . . . . . . . . . . . . . . 8.01(b)
(d). . . . . . . . . . . . . . . . . . . . . . 8.01(c)
(e). . . . . . . . . . . . . . . . . . . . . . 7.14
316(a)(l)(A). . . . . . . . . . . . . . . . . . . 7.12(b)
(a)(l)(B). . . . . . . . . . . . . . . . . . . 7.13
(a)(2) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b). . . . . . . . . . . . . . . . . . . . . . 7.08
317(a)(l) . . . . . . . . . . . . . . . . . . . . 7.03
(a)(2) . . . . . . . . . . . . . . . . . . . . 7.04
(b). . . . . . . . . . . . . . . . . . . . . . 12.03
318(a). . . . . . . . . . . . . . . . . . . . . . 1.07
---------------------
Note: This Cross-Reference Table shall not be deemed, for any
purpose, to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . . 16
Section 1.03. Notices, etc., to Trustee, RIH and the
Company. . . . . . . . . . . . . . . . . . . . . . 17
Section 1.04. Notices to Noteholders; Waiver.. . . . . . . . . . . 18
Section 1.05. Form and Contents of Documents Delivered
to Trustee.. . . . . . . . . . . . . . . . . . . . . 19
Section 1.06. Compliance Certificates and Opinions.. . . . . . . . 20
Section 1.07. Conflict with Trust Indenture Act. . . . . . . . . . 21
Section 1.08. Effect of Headings and Table of Contents.. . . . . . 21
Section 1.09. Successors and Assigns.. . . . . . . . . . . . . . . 21
Section 1.10. Separability Clause. . . . . . . . . . . . . . . . . 21
Section 1.11. Benefits of Indenture. . . . . . . . . . . . . . . . 21
Section 1.12. Governing Law. . . . . . . . . . . . . . . . . . . . 21
Section 1.13. Casino Control Act.. . . . . . . . . . . . . . . . . 22
Section 1.14. General Application. . . . . . . . . . . . . . . . . 22
ARTICLE TWO
NOTE FORM
Section 2.01. Form Generally.. . . . . . . . . . . . . . . . . . . 22
Section 2.02. Form of Notes. . . . . . . . . . . . . . . . . . . . 23
Section 2.03. Form of Trustee's Certificate of
Authentication.. . . . . . . . . . . . . . . . . . . 29
(i)
<PAGE>
PAGE
----
Section 2.04. Form of the Guaranty.. . . . . . . . . . . . . . . . 29
ARTICLE THREE
THE NOTE
Section 3.01. General Title. . . . . . . . . . . . . . . . . . . . 30
Section 3.02. Form and Denominations.. . . . . . . . . . . . . . . 30
Section 3.03. Execution, Authentication, Delivery and
Dating . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.04. Temporary Notes. . . . . . . . . . . . . . . . . . . 31
Section 3.05. Registration, Transfer and Exchange. . . . . . . . . 31
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Notes. . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.07. Payment of Interest on Notes; Interest
Rights Preserved.. . . . . . . . . . . . . . . . . . 33
Section 3.08. Persons Deemed Owners. . . . . . . . . . . . . . . . 34
Section 3.09. Cancellation.. . . . . . . . . . . . . . . . . . . . 35
Section 3.10. Term and Form. . . . . . . . . . . . . . . . . . . . 35
Section 3.11. Payment of Interest in Additional Notes. . . . . . . 36
Section 3.12. Exchangeability. . . . . . . . . . . . . . . . . . . 37
Section 3.13. Redemption . . . . . . . . . . . . . . . . . . . . . 37
Section 3.14. Authentication and Delivery of Original
Issue. . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE FOUR
GUARANTY
Section 4.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.02. Execution and Delivery of Guaranty . . . . . . . . . 39
Section 4.03 Mortgage Securing Guaranty . . . . . . . . . . . . . 39
(ii)
<PAGE>
PAGE
----
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. Payment of Indebtedness; Satisfaction and
Discharge of Indenture . . . . . . . . . . . . . . . 40
Section 5.02. Application of Deposited Money . . . . . . . . . . . 41
Section 5.03. Repayment to the Company . . . . . . . . . . . . . . 42
ARTICLE SIX
SECURITY
Section 6.01. Assignment Agreement . . . . . . . . . . . . . . . . 42
Section 6.02. Recording, Etc.. . . . . . . . . . . . . . . . . . . 43
Section 6.03. Custody of Mortgage Documents. . . . . . . . . . . . 45
Section 6.04. Suits to Protect the Trust Estate and
Mortgage Documents . . . . . . . . . . . . . . . . . 45
ARTICLE SEVEN
REMEDIES
Section 7.01. Events of Default. . . . . . . . . . . . . . . . . . 46
Section 7.02. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . 50
Section 7.03. Covenant to Pay Trustee Amounts Due on Notes
and Right of Trustee to Judgment . . . . . . . . . . 51
Section 7.04. Trustee May File Proofs of Claim . . . . . . . . . . 52
Section 7.05. Trustee May Enforce Claims Without
Possession of Notes. . . . . . . . . . . . . . . . . 52
Section 7.06. Application of Money Collected . . . . . . . . . . . 53
Section 7.07. Limitation on Suits. . . . . . . . . . . . . . . . . 53
Section 7.08. Unconditional Right of Noteholders to
Receive Principal and Interest . . . . . . . . . . . 54
Section 7.09. Restoration of Rights and Remedies . . . . . . . . . 54
(iii)
<PAGE>
PAGE
----
Section 7.10. Rights and Remedies Cumulative . . . . . . . . . . . 55
Section 7.11. Delay or Omission Not Waiver . . . . . . . . . . . . 55
Section 7.12. Other Rights . . . . . . . . . . . . . . . . . . . . 55
Section 7.13. Waiver of Past Defaults. . . . . . . . . . . . . . . 56
Section 7.14. Undertaking for Costs. . . . . . . . . . . . . . . . 56
Section 7.15. Enforcement. . . . . . . . . . . . . . . . . . . . . 57
Section 7.16. Management of Casino-Hotel . . . . . . . . . . . . . 57
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. Certain Duties and Responsibilities. . . . . . . . . 58
Section 8.02. Notice of Defaults . . . . . . . . . . . . . . . . . 59
Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . . . 59
Section 8.04. Not Responsible for Recitals or Issuance
of Notes or Application of Proceeds. . . . . . . . . 61
Section 8.05. May Hold Notes . . . . . . . . . . . . . . . . . . . 61
Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . . . 62
Section 8.07. Compensation and Reimbursement . . . . . . . . . . . 62
Section 8.08. Disqualification; Conflicting Interests. . . . . . . 63
Section 8.09. Corporate Trustee Required; Eligibility. . . . . . . 63
Section 8.10. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . 63
Section 8.11. Acceptance of Appointment by Successor . . . . . . . 65
Section 8.12. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . 65
Section 8.13. Preferential Collection of Claims Against
Company. . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.14. Co-trustees and Separate Trustees. . . . . . . . . . 66
(iv)
<PAGE>
PAGE
----
Section 8.15. Appointment of Authenticating Agent. . . . . . . . . 68
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 9.01. Company to Furnish Trustee Semi-Annual
Lists of Noteholders . . . . . . . . . . . . . . . . 69
Section 9.02. Preservation of Information;
Communications to Noteholders. . . . . . . . . . . . 69
Section 9.03. Reports by Trustee . . . . . . . . . . . . . . . . . 70
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 10.01. Consolidation, Merger, Conveyance or
Transfer Only on Certain Terms . . . . . . . . . . . 72
Section 10.02. Successor Entity Substituted . . . . . . . . . . . . 73
Section 10.03. Successor Management of Casino-Hotel . . . . . . . . 74
Section 10.04. Limitation on Sales of Trust Estate. . . . . . . . . 74
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. Without Consent of Noteholders . . . . . . . . . . . 74
Section 11.02. With Consent of Noteholders. . . . . . . . . . . . . 75
Section 11.03. Execution of Amendments and Supplements. . . . . . . 77
Section 11.04. Effect of Amendment or Supplement. . . . . . . . . . 77
Section 11.05. Conformity with Trust Indenture Act. . . . . . . . . 77
Section 11.06. Reference in Notes to Amendment or
Supplement . . . . . . . . . . . . . . . . . . . . . 78
(v)
<PAGE>
ARTICLE TWELVE
COVENANTS
Section 12.01. Payment of Principal and Interest. . . . . . . . . . 78
Section 12.02. Maintenance of Office or Agency. . . . . . . . . . . 79
Section 12.03. Money for Security Payments to Be Held in
Trust. . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.04. Corporate Existence. . . . . . . . . . . . . . . . . 81
Section 12.05. To Keep Books; Inspection by Trustee . . . . . . . . 81
Section 12.06. Reports and Compliance Certificates. . . . . . . . . 81
Section 12.07. Limitation on Dividends and Restricted
Payments . . . . . . . . . . . . . . . . . . . . . . 83
Section 12.08. Limitation on Additional Indebtedness and
Issuance of Notes. . . . . . . . . . . . . . . . . . 85
Section 12.09. Limitation on Repayment of Subordinated
Indebtedness . . . . . . . . . . . . . . . . . . . . 86
Section 12.10. Limitation on Certain Transactions . . . . . . . . . 86
Section 12.11. Restriction of Activities. . . . . . . . . . . . . . 86
Section 12.12. Limitation on Subsidiaries; Consolidated
Group. . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.13. Limitations on Liens . . . . . . . . . . . . . . . . 88
Section 12.14. Compliance with Laws . . . . . . . . . . . . . . . . 88
Section 12.15. Payment of Taxes and Other Claims. . . . . . . . . . 88
Section 12.16. Maintenance of Properties. . . . . . . . . . . . . . 89
Section 12.17. Insurance . . . . . . . . . . . . . . . . . . . . . 89
Section 12.18 Waiver of Stay, Extension or Usury Laws. . . . . . . 89
Section 12.19. Appointment to Fill a Vacancy in Office
of Trustee . . . . . . . . . . . . . . . . . . . . . 90
Section 12.20 Validity of Liens. . . . . . . . . . . . . . . . . . 90
(vi)
<PAGE>
PAGE
----
Section 12.21. Transactions with Stockholders and
Affiliates . . . . . . . . . . . . . . . . . . . . . 91
Section 12.22. Limitation on Open Market Purchases. . . . . . . . . 91
ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. General Applicability of Article . . . . . . . . . . 91
Section 13.02. Election to Redeem; Notice to Trustee. . . . . . . . 91
Section 13.03. Selection by Trustee of Notes to Be
Redeemed . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.04. Notice of Redemption . . . . . . . . . . . . . . . . 92
Section 13.05. Deposit of Redemption Price. . . . . . . . . . . . . 92
Section 13.06. Notes Payable on Redemption Date . . . . . . . . . . 93
Section 13.07. Notes Redeemed in Part . . . . . . . . . . . . . . . 93
Section 13.08. Redemption Pursuant to Casino Control
Act. . . . . . . . . . . . . . . . . . . . . . . . . 93
(vii)
<PAGE>
TABLE OF EXHIBITS
EXHIBITS DOCUMENT
- -------- --------
Exhibit A RIH Junior Promissory Note
Exhibit B Assignment Agreement from Resorts
International Hotel Financing, Inc.
Exhibit C Subordination Provisions
Exhibit D Mortgage securing RIH Junior Promissory Note
between Resorts International Hotel, Inc. and
Resorts International Hotel Financing, Inc.
Exhibit E Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
Exhibit F Mortgage securing Guaranty of Junior Mortgage
Notes between Resorts International Hotel,
Inc. and U.S. Trust Company of California, N.A.,
as Trustee
Exhibit G Intercreditor Agreement Terms
(vii)
<PAGE>
INDENTURE
THIS INDENTURE dated as of [ ], 1994, among Resorts International
Hotel Financing, Inc., a Delaware corporation (the "Company"), Resorts
International Hotel, Inc., a New Jersey corporation ("RIH"), and U.S. Trust
Company of California, N.A., a national banking association, as
trustee (together with its successors as such trustee, the "Trustee").
PRELIMINARY STATEMENT
The capitalized terms used in this Indenture which are not otherwise
defined herein have the meanings set forth in Article I.
The Company has duly authorized the creation, execution and delivery of
its 11.375% Junior Mortgage Notes due 2004 (the "Notes"), issuable in
accordance with the terms hereof, and RIH has duly authorized the guaranty of
the Company's obligations under this Indenture, and, to secure the Notes and to
provide therefor, each of the Company and RIH has duly authorized the execution
and delivery of this Indenture.
Each $1,000 principal amount of the Notes will be issued with one share
of Resorts International, Inc.'s Class B Redeemable Common Stock (the "Class B
Common Stock") (each $1,000 principal amount of the Notes and share of Class B
Common Stock are referred to collectively herein as a "Unit"). Each Note may
not be transfered separately from the share(s) of Class B Common Stock issued
in respect of such Note.
All things have been done which are necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee
hereunder and duly issued by the Company, the valid obligations of the Company,
and to constitute this Indenture a valid agreement of the Company and RIH, in
accordance with the terms of the Notes and this Indenture.
THEREFORE, for and in consideration of the premises and the purchase or
acceptance of the Notes by the Holders thereof, RIH and the Company do hereby
covenant and agree to and with the Trustee, for the Ratable Benefit of all
Holders of the Notes thereto appertaining, as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as well as
the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for
shall be made, in accordance with GAAP consistently applied; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"ACCOUNTANT" means a Person engaged in the practice of accounting
who (except as otherwise expressly provided in this Indenture) may
be employed by or affiliated with the Company or RIH.
"ACT" when used with respect to any Noteholder or Noteholders has
the meaning stated in Section 1.02(a).
"ADDITIONAL NOTES" means additional 11.375% Junior Mortgage Notes
due 2004 issued in payment of interest accrued on outstanding Notes
pursuant to Section 3.11.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, and, with
respect to any specified natural Person, any other Person having a
relationship by blood, marriage or adoption not more remote than
first cousin with such specified Person. For purposes of this
definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms
2
<PAGE>
"controlling" and "controlled" have meanings correlative to the
foregoing; PROVIDED, HOWEVER, that, except as may be required under
the TIA, the term "Affiliate" shall not include, with respect to
the Company or RIH, any of Fidelity Management & Research Company,
TCW Special Credits or funds or accounts managed or advised by
either of them.
"AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured
by an After-Acquired Fee Mortgage.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section
2.07 of the Mortgage.
"ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of
the date hereof, providing for the assignment of the RIH Junior
Promissory Note and other Mortgage Documents to the Trustee by the
Company, and acknowledgment thereof by RIH, a copy of which is
attached hereto as Exhibit B.
"ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and
Rents dated as of the date hereof, from RIH to the Company securing
the RIH Junior Promissory Note, a copy of which is attached hereto
as Exhibit E.
"AUTHENTICATING AGENT" means any Person named as Authenticating
Agent for the Notes in accordance with the provisions of this
Indenture until a successor Authenticating Agent becomes such
pursuant thereto, and thereafter Authenticating Agent shall mean
such successor.
"AUTHORIZED SIGNATURE" means the signatures of the chairman of the
board, the president or a Vice President and of the treasurer, an
assistant treasurer, the controller, an assistant controller, the
secretary or an assistant secretary of the Company or RIH, as the
case may be.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person,
any lease of any property (whether real, personal or mixed) by such
Person as lessee which, in conformity with GAAP consistently
applied, is accounted for as a capitalized lease on the balance
sheet of such Person.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture,
fixtures and equipment at any time contained therein.
3
<PAGE>
"CASINO CONTROL ACT" means the New Jersey Casino Control Act and
the regulations promulgated thereunder, as amended.
"CASINO CONTROL COMMISSION" means the New Jersey Casino Control
Commission, as from time to time constituted, or if at any time
after the execution of this Indenture such Commission is not
existing and performing the duties theretofore assigned to it,
then the body performing such duties at such time.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act
of 1934, or if at any time after the execution of this instrument
such Commission is not existing and performing the duties
theretofore assigned to it under the TIA, then the body
performing such duties at such time.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor entity shall have
become such pursuant to the applicable provisions of this
Indenture, and thereafter, except to the extent otherwise
contemplated by Section 10.02, "Company" shall mean such
successor entity exclusively.
"COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean,
respectively, a written consent, order or request signed with an
Authorized Signature and delivered to the Trustee.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, an amount equal to the sum of (i) the consolidated net
income (or loss) of such Person for such period determined in
accordance with GAAP consistently applied, excluding interest
income, interest expense and gains or losses from extraordinary or
nonrecurring items, plus (ii) all amounts deducted in computing such
consolidated net income (or loss) in respect of depreciation and
amortization, plus (iii) non-cash charges arising from the reduction
of CRDA Deposits to market value, minus (iv) taxes based upon or
measured by income which are payable in cash, minus (v) CRDA
Deposits.
"CONSOLIDATED INTEREST CHARGES" means, with respect to any Person
for any period, the consolidated interest expense (not including
the non-cash amortization of discount on the original issuance of
(a) the RIH Promissory Note, (b) any intercompany indebtedness
of RIH issued in connection with Indebtedness represented by the Junior
4
<PAGE>
Mortgage Facility and (c) any intercompany indebtedness of
RIH issued in connection with Indebtedness represented by the
Working Capital Facility), whether payable in cash or in-kind (and
with respect to RIH, including, without limitation, the interest
paid or accrued (without duplication) on (i) the RIH
Promissory Note, (ii) any intercompany indebtedness of RIH issued
in connection with Indebtedness represented by the Junior Mortgage
Facility and (iii) any intercompany indebtedness of RIH issued in
connection with Indebtedness represented by the Working Capital
Facility), without deduction for interest income (other than cash interest
income received from RII in payment of its interest cost
on any Working Capital Facility), in each case for such Person
and its consolidated Subsidiaries for such period
determined in accordance with GAAP consistently applied.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH
and its consolidated Subsidiaries for the immediately preceding
four consecutive fiscal quarters to (b) Consolidated Interest
Charges of RIH and its consolidated Subsidiaries for such period.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, an amount equal to consolidated net income (or loss) of
such Person for such period determined in accordance with GAAP
consistently applied, minus (a) federal and state taxes based upon
or measured by income which are payable in cash, plus (b) non-cash
charges arising from federal and state taxes based upon or measured
by income.
"CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the
Casino Reinvestment Development Authority in an amount equal to
1.25% of RIH's gross revenue in order to satisfy its investment
obligation pursuant to the Casino Control Act, and (b) the amounts
invested in qualified investments in lieu of any of the quarterly
deposits (or portion thereof) referred to in clause (a) above.
"CRDA DISPUTE" means the dispute existing on the date hereof
between RIH and the New Jersey Casino Reinvestment Development
Authority regarding CRDA Deposits and New Jersey Casino
Reinvestment Authority Notes, which dispute involves an amount
of approximately $30,000,000.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both,
would become an Event of Default.
"DEFAULTED INTEREST" has the meaning stated in Section 3.07.
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"EFFECTIVE DATE" means the date on which the prepackaged plan of
reorganization of RII and GRI becomes effective.
"EVENT OF DEFAULT" has the meaning stated in Section 7.01. An
Event of Default shall "exist" if an Event of Default shall have
occurred and be continuing.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
"FAIR MARKET VALUE" of any Notes means (a) the average of the
closing sales price of the Notes for the 30 trading days
immediately prior to the date of determination of such value on
the largest national securities exchange on which such Notes shall
have traded on such trading days, or (b) if no such sales of such
Notes occurred during such 30-day period or if the Notes are not so
listed but are traded in the over-the-counter market with
quotations available in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), the average of the
means between the "bid" and "asked" prices on such national
securities exchange or as quoted on NASDAQ, as the case may be,
during such 30-day period, or (c) if the Notes are not traded on a
national securities exchange or quoted on NASDAQ, the fair market
value of such Notes as of the date of determination as determined
by agreement of two nationally recognized Independent investment
banking firms, one to be chosen by the Company and the other by the
Holder of the Notes being valued, with the costs of each such firm
being the responsibility of the Person selecting such firm. If
such firms cannot agree upon such fair market value, such firms
shall select a third nationally recognized Independent investment
banking firm, which shall determine such fair market value, the
costs of such third firm being shared equally by the Company and
such Holder.
"F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01
of the Mortgage.
"GAAP" means United States generally accepted accounting
principles.
"GRI" means GGRI, Inc., a Delaware corporation.
"GROUND LEASES" has the meaning stated in Granting Clause Second of
the Mortgage.
"GUARANTY" means the guaranty contained in Article Four.
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"GUARANTY MORTGAGE" means the Mortgage securing Guaranty of Junior
Mortgage Notes dated as of the date hereof, between RIH, as
mortgagor, and the Trustee, as mortgagee, securing the Guaranty,
a copy of which is attached hereto as Exhibit F.
"HOTEL" means that portion of the Casino-Hotel not included within
the Casino.
"INDEBTEDNESS" means, as applied to any Person, without
duplication, any indebtedness, exclusive of deferred taxes,
(a) in respect of borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to
a portion thereof); (b) evidenced by bonds, notes, debentures or
similar instruments or letters of credit; (c) representing the
balance deferred and unpaid of the purchase price of any property,
if and to the extent such indebtedness would appear as a liability
upon a balance sheet of such Person prepared in accordance with
GAAP (but excluding trade accounts payable arising in the ordinary
course of business that are not overdue by more than 90 days or are
being contested by such Person in good faith); (d) any Capitalized
Lease Obligations (other than, with respect to RIH or the Company,
the Ground Leases) of such Person; and (e) Indebtedness of others
guaranteed by such Person, including, without limitation, every
obligation of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or
to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness, (ii) to purchase
property, securities or services for the purpose of assuring the
holder of such Indebtedness of the payment of such Indebtedness, or
(iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; PROVIDED,
HOWEVER, that the guaranty by any Person shall not include
endorsements by such Person for collection or deposit, in either
case in the ordinary course of business. The term "INDEBTEDNESS"
does not include: (1) any of the types of indebtedness described in
clauses (a) through (e) above (inclusive) owed by the Company to
RIH or any of their Subsidiaries, by RIH to the Company or any of
their Subsidiaries or by any such Subsidiary to RIH, the Company or
any other such Subsidiary (including, without limitation, the RIH
Promissory Note and the RIH Junior Promissory Note); (2) the
Guaranty, the Junior Guaranty, the Senior Guaranty and the Working
Capital Facility Guaranty; (3) matters relating to the CRDA
Dispute, New Jersey Casino Reinvestment Development Authority
Notes or CRDA Deposits; and (4) any payments made by the Company
or RIH under the RII Management Agreement, the RII Tax Sharing
Agreement or the Services Agreement.
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"INDENTURE" means this instrument as originally executed or as it
may from time to time be supplemented, modified or amended by one
or more indentures or other instruments supplemental hereto entered
into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified
Person means such a Person who (a) is in fact independent, (b) does not
have any direct financial interest or any material indirect financial
interest in the Company or in any other obligor upon the Notes or
in any Affiliate of the Company or of such other obligor and (c) is
not connected with the Company or such other obligor or any
Affiliate of the Company or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate
shall be furnished to the Trustee, such Person shall be appointed
by a Company Order, and such opinion or certificate shall state
that the signer has read this definition and that the signer is
Independent within the meaning hereof. A Person who is performing
or who has performed services as an independent contractor to any
specified Person shall not be considered not Independent merely by
reason of the fact that such Person is or has performed such
services.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated
as of the date hereof, among the Trustee, the trustee under the
Senior Mortgage Note Indenture and such other parties that may
from time to time become a party thereto, which shall incorporate
the terms set forth in Exhibit G.
"INTEREST PAYMENT DATE" means the date on which an installment of
interest on the Notes is due and payable.
"JUNIOR GUARANTY" means the Guaranty and any other guaranty of the
Junior Mortgage Facility by RIH.
"JUNIOR MORTGAGE FACILITY" means the Notes and any secured or
unsecured facility or facilities entered into by RIH or the
Company providing for the making of loans to RIH or the Company
on a revolving or term basis, or the issuance of notes, debentures
or bonds by RIH or the Company, as such agreement, indenture or
instrument may be amended, supplemented or modified from time to
time, or any refinancing thereof, in an aggregate principal amount
up to $35,000,000 plus additional notes, debentures or bonds issued
in payment of interest accrued on outstanding notes, debentures or
bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if
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any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of
the Mortgage and the Guaranty Mortgage. The term "Junior Mortgage
Facility" does not include the Junior Guaranty.
"LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the
Mortgage.
"MATURITY" when used with respect to any Note means the date on
which the principal (or any portion thereof) of such Note becomes
due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration or call for
redemption or otherwise.
"MORTGAGE" means the Mortgage securing the RIH Junior Promissory
Note dated as of the date hereof, between the Company, as successor
mortgagee, and RIH, as mortgagor.
"MORTGAGE DEBT" means, at any point in time, the RIH
Promissory Note, the RIH Junior Promissory Note and any secured
Indebtedness outstanding under any Working Capital Facility.
"MORTGAGE DOCUMENTS" means (a) the Mortgage, the Guaranty Mortgage,
the RIH Junior Promissory Note, the Assignment of Leases and Rents
and any other security document to which either RIH or the Company
is a party relating to the Notes, which is executed and delivered
pursuant to or in connection with the Mortgage, the Guaranty
Mortgage or the Assignment Agreement, and (b) any mortgage, deed
of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of
operating assets and any other security document to which either
RIH or the Company is a party relating to the Junior Mortgage
Facility.
"NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a).
"NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall
mean bonds issued by the Casino Reinvestment Development Authority,
a public authority created under the Casino Control Act.
"NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in
connection with the acquisition, purchase, improvement or
development of property or assets (other than the Trust Estate)
used by the Company, RIH or any Subsidiary of RIH or the Company to
engage in the casino business, the hotel business or related or
ancillary business or purpose and which is secured only by such
assets and without recourse to RIH, the Company or any Subsidiary
of RIH or the Company or the Trust Estate for such indebtedness.
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<PAGE>
"NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is
registered in the Note Register.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
stated in Section 3.05.
"NOTES" has the meaning stated in the Preliminary Statement of this
instrument and more particularly includes any Note authenticated
and delivered hereunder, including, without limitation, any
Additional Notes. The term "Notes" does not include the
Guaranty.
"OFFICER" of the Company or RIH means any Person authorized to
execute an Authorized Signature.
"OFFICERS' CERTIFICATE" delivered by the Company or RIH means a
certificate signed with an Authorized Signature and delivered to
the Trustee. Whenever this Indenture requires that an Officers'
Certificate be signed also by an Accountant or other expert, such
Accountant or other expert may (except as otherwise expressly
provided in this Indenture) be in the general employ of the
Company or RIH.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Indenture) be an
employee of the Company or RIH. Unless otherwise specifically
provided in this Indenture, such counsel may rely as to any
statement of facts not personally known to such counsel and
relating to such opinion on an Officers' Certificate, to the
extent not rejected by the Trustee and its counsel (which
rejection shall not be unreasonably given).
"OUTSTANDING" when used with respect to Notes means, as of the date
of determination, all Notes theretofore authenticated and delivered
under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying
Agent in trust for the Holders of such Notes;
(c) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered under this Indenture; and
(d) Notes alleged to have been destroyed, lost or stolen which
have been paid as provided in Section 3.06;
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PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of Notes Outstanding have given any
request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor
upon the Notes or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be outstanding. In
determining whether the Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice,
consent or waiver, only Notes which the Trustee actually knows
to be so owned shall be so disregarded.
"OUTSTANDING AMOUNT" of any Indebtedness at any time means the
principal amount outstanding of such Indebtedness at such time.
"PAYING AGENT" means any Person now or hereafter authorized by the
Company to pay the principal of or interest on any Notes on behalf
of the Company.
"PERMITS" has the meaning stated in Section 1.01 of the Mortgage.
"PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or any other entity or government or any agency or
political subdivision thereof.
"PLACE OF PAYMENT" when used with respect to the Notes means a city
or any political subdivision thereof in which the Company is by
this Indenture required to maintain an office or agency for the
payment of the principal of or interest on the Notes.
"PLAN" means the Plan of Reorganization of RII and GRI dated [ ],
1994.
"PREDECESSOR NOTES" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for purposes of this
definition, any Note authenticated and delivered under Section 3.06
in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the lost, destroyed or stolen Note.
"PREMISES" has the meaning stated in Granting Clause Third of the
Mortgage.
"RATABLE BENEFIT" means, for any class or classes of Indebtedness
at any time, in proportion to the total Outstanding Amount of such
class or classes held by each holder thereof at such time.
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Outstanding Amount of such class or classes held by each holder
thereof at such time.
"REDEMPTION DATE" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to this
Indenture.
"REDEMPTION PRICE" when used with respect to any Note to be
redeemed means the price at which it is to be redeemed pursuant
to this Indenture. It does not include installments of interest
due on or before the Redemption Date.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Notes means the date specified in the
provisions of this Indenture.
"RESPONSIBLE OFFICER" means any Vice President, any Assistant Vice
President or any other officer of assistant officer of the Trustee assigned
by the Trustee to administer its corporate trust matters.
"RESTRICTED PAYMENT" means (a) any declaration or payment of any
dividend or the making of any distribution to holders of capital
stock of RIH or the Company or any Subsidiary of RIH or the Company
in respect of such capital stock (other than to RIH or the Company
or a direct or indirect wholly owned Subsidiary of RIH or the
Company), (b) any purchase, redemption or other acquisition or
retirement for value of any capital stock (or warrants, rights or
options to acquire any capital stock or Indebtedness convertible
into or exchangeable for any capital stock) of RIH or the Company
or any Subsidiary of RIH or the Company (other than purchases,
redemptions, acquisitions or retirement solely from RIH or the
Company or a direct or indirect wholly owned Subsidiary of RIH or
the Company); PROVIDED, HOWEVER, that any such purchase, redemption
or other acquisition or retirement that is required by the Casino
Control Commission or under the Casino Control Act shall not
constitute a Restricted Payment. The term "Restricted Payment"
also shall not include any loan or advance to RII of all or any
portion of the proceeds of the Indebtedness represented by the
Working Capital Facility.
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"RIH" means the person named as "RIH" in the first paragraph of
this instrument until a successor entity shall have become such
pursuant to the applicable provisions of the Indenture, and
thereafter, except to the extent otherwise contemplated by
Section 10.02, "RIH" shall mean such successor entity
exclusively.
"RIH JUNIOR PROMISSORY NOTE" means the secured junior promissory
note, dated the date hereof, made by RIH in the principal amount of
$35,000,000, plus any additional junior promissory notes issued in
connection with the payment of interest accrued on outstanding
Notes payable to the order of the Company, a copy of which is
attached hereto as Exhibit A.
"RIH SALE" means (a) a consolidation, combination or merger
involving RIH and any other Person, (b) a sale, assignment,
conveyance or transfer or RIH's interest in the Trust Estate,
substantially as an entirety, to any other Person or group of
Persons in one transaction or a series of related transactions, or
(c) any transaction as a result of which RIH ceases to be a direct
or indirect wholly owned Subsidiary of RII; PROVIDED, HOWEVER, that
any of the transactions described in clauses (a), (b) and (c) above
shall not constitute an RIH Sale if the other party or parties to
the transaction consists of only one or more of the following
Persons: the Company or any wholly owned direct or indirect
subsidiary of RIH or the Company; PROVIDED, FURTHER, HOWEVER, that
notwithstanding any other provision of this definition, if the
primary effect of any of the aforesaid transactions is the
redemption of the Notes, then such transaction shall not be
considered to be an RIH Sale.
"RIH PROMISSORY NOTE" means the secured promissory note,
amended and restated as of the date hereof, made by RIH in the
principal amount of $125,000,000 payable to the order of the
Company, a copy of which is attached to the Senior Mortgage Note
Indenture as Exhibit A.
"RIHF SENIOR FACILITY" means the senior secured note facility
contemplated by the purchase agreement dated as of the date
hereof, among the Company, RIH, RII and funds managed by Fidelity
Management and Research Company, which allows the Company to borrow
up to $20,000,000 in aggregate principal amount through the
issuance of RIHF Senior Facility Notes. The term "RIHF Senior
Facility" does not include the Working Capital Facility Guaranty.
"RIHF SENIOR FACILITY NOTES" means, collectively, the notes
executed and delivered by the Company under the RIHF Senior
Facility.
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"RII" means Resorts International, Inc., a Delaware corporation.
"RII MANAGEMENT CONTRACT" means the Management Contract dated as of
the date hereof, between RII and RIH pursuant to which RII provides
certain management services to RIH for an annual fee of 3% of the
gross revenues of RIH.
"RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated
as of the date hereof between RII and RIH pursuant to which (i) RIH
will not make any payments to RII or any other Affiliate in respect
of taxes, other than to reimburse RII for any cash payments
actually made by RII in respect of any federal, state or local
income or alternative minimum taxes arising from the earnings or
operations of RIH; PROVIDED, HOWEVER, that RIH shall not be
required to reimburse RII for cash payments in respect of
federal, state or local income or alternative minimum taxes that
would not have been owed but for the reduction, if any, of the
amount of the consolidated net operating loss carryforwards or
consolidated current losses of the affiliated group of which RII
is a common parent which resulted from the inclusion in the
consolidated return filed for such group for any taxable year
ending after the Effective Date of the income of any entity other
than RIH, other than income directly attributable to the
consummation of the Plan, including but not limited to the
transfer of the stock of RIB (as defined in the Plan) and the
assets of the U.S. Paradise Island Subsidiaries (as defined in the
Plan), and (ii) RIH will be entitled to any refund (plus the
interest thereon) of any taxes for which RIH is required to
reimburse RII.
"SENIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of
Leases and Rents dated as of the date hereof, from RIH to the
Company securing the RIH Promissory Note.
"SENIOR GUARANTY" means the guaranty of the 11% Senior Mortgage
Notes due 2003 by RIH contained in Article Four of the Senior
Mortgage Note Indenture.
"SENIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty
of Senior Mortgage Notes dated as of the date hereof, between RIH,
as mortgagor, and State Street Bank and Trust Company of
Connecticut, N.A., as mortgagee.
"SENIOR MORTGAGE" means the Mortgage securing the RIH
Promissory Note dated as of the date hereof, between the Company,
as successor mortgagee, and RIH, as mortgagor.
"SENIOR MORTGAGE DOCUMENTS" means the Senior Mortgage, the Senior
Guaranty Mortgage, the RIH
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Promissory Note, the Senior Assignment of Leases and Rents and any
other security document to which either RIH or the Company is
a party relating to the Senior Mortgage Notes, which is executed
and delivered pursuant to or in connection with the Senior Mortgage,
the Senior Guaranty Mortgage or the Senior Assignment Agreement.
"SENIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of
the date hereof, among the Company, RIH and State Street Bank and
Trust Company of Connecticut, N.A., as trustee, pursuant to which
the Senior Mortgage Notes were issued, as originally executed or as
it may from time to time be supplemented, modified or amended by
one or more indentures or other instruments supplemental thereto
entered pursuant to the applicable provisions thereof.
"SENIOR MORTGAGE NOTES" means the 11% Mortgage Notes due
2003 of the Company issued pursuant to the Senior Mortgage Note
Indenture.
"SERVICES AGREEMENT" means the Services Agreement dated as of
September 17, 1992, between RII, RIH and The Griffin Group, Inc.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on
Notes means a date fixed by the Trustee pursuant to Section 3.07.
"STATED MATURITY" when used with respect to any Note means the date
specified in such Note as the fixed date on which the principal of
such Note is due and payable.
"SUBSIDIARY" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly,
by such Person or one or more Subsidiaries of such Person.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of
1939, as amended.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this
Indenture, and thereafter Trustee shall mean such successor
Trustee.
"TRUST ESTATE" has the meaning stated in the Granting Clauses to
the Mortgage.
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"VICE PRESIDENT" when used with respect to the Company, RIH or the
Trustee means any vice president, whether or not designated by a
number or a word added to the title.
"WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the
RIHF Senior Facility Notes issued thereunder) and any other secured
or unsecured facility or facilities entered into by RIH and/or the Company
providing for the making of working capital loans to RIH or
the Company (with RII [and GRI] as a guarantor[s] thereunder) on a
revolving or term basis, or the issuance of notes, debentures or
bonds by RIH, the Company or RII, as such agreement may be amended,
supplemented or modified from time to time, or any refinancing
thereof, in an aggregate principal amount up to $20,000,000;
PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if any, securing the Working
Capital Facility may be senior to the lien of the Mortgage, the
Guaranty Mortgage, the Senior Mortgage and the Senior Guaranty
Mortgage. The term "Working Capital Facility" does not include
the Working Capital Facility Guaranty.
"WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage,
deed of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of operating
assets and any other security document to which either RIH or the
Company is a party relating to the Working Capital Facility.
"WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the
Working Capital Facility by RIH, including, without limitation,
the guaranty of the RIHF Senior Facility Notes.
Section 1.02. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Noteholders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Noteholders signing such instrument
or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in
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favor of the Company and (subject to Section 8.01(c)) in favor of the
Trustee, if made in the manner provided in this Section 1.02.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness
of such execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds,certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) The fact and date of execution of any such instrument or writing
and the authority of any Person executing the same may also be
proved in any other manner which the Trustee deems sufficient; and
the Trustee may in any instance require further proof with respect
to any of the matters referred to in this Section 1.02.
(d) The ownership of Notes shall be proved by the Note Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind every
future Holder of the same Note and the Holder of every Note issued
upon the transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Note.
(f) The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holder of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this
Indenture to be given or taken by holders of Notes. With regard
to any record date set pursuant to this Section 1.02(f) the holders
of Outstanding Notes on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to give or take
the relevant action, whether or not such Persons remain holders
after such record date.
(g) Until a waiver or consent becomes effective, such a waiver or
consent by a Holder is a continuing waiver or consent by the Holder
and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note, even if
notation of the waiver or consent is not made on any Note.
However, any such Holder or
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subsequent Holder may, until such waiver or consent becomes effective,
revoke the waiver or consent as to his Note or portion of his Note.
Such revocation shall be effective only if the Trustee receives the notice
of such revocation before the date on which the waiver or consent has
become effective.
Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH AND THE COMPANY.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with, the Company,
RIH or the Trustee shall be deemed given when either (i) delivered
by hand or (ii) two days after sending by registered or certified
mail, postage prepaid, in either case, addressed as follows:
To the Company:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
To RIH:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
To the Trustee:
U.S. Trust Company of California, N.A.
555 S. Flower Street
Suite 2700
Los Angeles, California 90071
Attn.: Corporate Trust Department
To Casino Control Commission:
New Jersey Casino Control Commission
Arcade Building
Tenessee Avenue & Boardwalk
Atlantic City, New Jersey 08401
Attn.: Chairman
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To Director of Division of Gaming Enforcement:
New Jersey Division of Gaming Enforcement
140 E. Front Street
CN 047
Trenton, New Jersey 08625
Attn.: Director
(b) By notice to the Company, RIH and/or the Trustee, Casino
Control Commission and/or Director of Division of Gaming Enforcement,
given as provided above, any party may designate additional or substitute
addresses for such notices, which, notwithstanding Section 1.03(a),
shall be deemed given when received.
Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER.
Where this Indenture provides for notice to Noteholders of any
event, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder of such Notes, at the address of
such Holder as it appears in the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for
the provision of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular
Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by Noteholders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impracticable to give such
notice by mail, then such notification may be given by any other
method that the Trustee shall consider to be reasonable and shall
be deemed to be a sufficient giving of such notice for every
purpose hereunder.
Section 1.05. FORM AND CONTENTS OF
DOCUMENTS DELIVERED TO TRUSTEE.
Whenever several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or
give an opinion with respect to
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some matters and one or more other such Persons as to such matters in
one or several documents.
Any certificate or opinion of an Officer of the Company or of RIH
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an Officer
or Officers of the Company or RIH stating that the information with
respect to such factual matters is in the possession of the Company
or RIH, unless such counsel knows that the certificate or opinion
or representations with respect to such matters are erroneous. If
appropriate to the matter being opined upon and to the extent not
prohibited by the TIA, any Opinion of Counsel may be subject to
rights of creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Company
or RIH shall deliver any document as a condition of the granting of
such application, or as evidence of the Company's or RIH's compliance
with any term hereof, it is intended that the truth and accuracy, at the
time of the granting of such application or at the effective date of such
certificate or report (as the case may be), of the facts and opinions
stated in such document shall in such case be conditions precedent
to the right of the Company or RIH to have such application granted
or to the sufficiency of such certificate or report.
Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company or RIH to the
Trustee to take any action under any provision of this Indenture or
any Mortgage Document, the Company or RIH shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture or such Mortgage Document relating
to the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent,
if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such
documents is specifically
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required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture or any Mortgage
Document shall include:
(a) a statement that each individual signing such certificate
or opinion has read such condition or covenant and the definitions
herein relating thereto;
(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 each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
condition or covenant has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.07. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof or of the Mortgage Documents or the
Assignment Agreement limits, qualifies or conflicts with another
provision hereof or of the Mortgage Documents or the Assignment
Agreement which is required to be included herein or therein by
any of the provisions of the TIA, such required provision shall
control.
Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and in the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 1.09. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company or
RIH shall, subject to Section 10.02, bind its successors and
assigns, whether so expressed or not.
Section 1.10. SEPARABILITY CLAUSE.
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
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provisions shall not in any way be affected or impaired thereby.
Section 1.11. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person other than the parties hereto and their
successors hereunder, any separate trustee or co-trustee appointed
under Section 8.14 and the Holders of Notes, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.12. GOVERNING LAW.
This Indenture and each Note shall be deemed to be a contract under
the laws of the State of New York and shall be construed in
accordance with and governed by the internal laws of the State of
New York.
Section 1.13. CASINO CONTROL ACT.
Each of the provisions of this Indenture is subject to and shall be
enforced in compliance with the provisions of the Casino Control
Act, unless such provisions are in conflict with the TIA, in which case
the TIA shall control.
Section 1.14. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject
in each instance to the giving of any notice and the expiration of
any grace period provided for in Section 7.01 as a condition to
such Default becoming an Event of Default, unless the TIA requires
otherwise, in which case the TIA shall control.
(b) For the purposes of this Indenture, it is understood that an
event which does not materially diminish the value of the
Trustee's interest in the Trust Estate shall not be deemed an
impairment of security, as that phrase is used in this Indenture.
(c) This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company, other than the Mortgage and
the Guaranty Mortgage. Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.
(d) In the event of a conflict between any provision of this
Indenture and any provision of a Mortgage Document, the provision
of this Indenture shall prevail.
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ARTICLE TWO
NOTE FORM
Section 2.01. FORM GENERALLY.
The Notes and the Trustee's certificate of authentication shall be
substantially in the forms set forth in this Article Two, with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and
may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange, or as may,
consistently herewith, be determined by the officers executing
such Notes as evidenced by their execution thereof. Any portion of
the text of any Note may be set forth on the reverse thereof.
The definitive Notes shall be printed, lithographed or engraved or
produced by any combination of these methods or produced in any
other manner permitted by the rules of any securities exchange on
which the Notes may be listed, all as determined by the officers
executing such Notes as evidenced by their execution thereof.
Section 2.02. FORM OF NOTES.
The form of the Notes shall be substantially as follows:
[FACE OF NOTES]
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
11.375% Junior Mortgage Note
due 2004
THIS NOTE HAS BEEN ISSUED AS PART OF A UNIT WITH A
NUMBER OF SHARES OF CLASS B STOCK OF RESORTS
INTERNATIONAL, INC. SUCH THAT ONE SHARE OF CLASS B
STOCK HAS BEEN ISSUED IN RESPECT OF EACH $1,000
PRINCIPAL AMOUNT OF NOTES. THIS NOTE MAY NOT BE
TRANSFERRED SEPARATELY FROM THE SHARES OF CLASS B STOCK
ISSUED IN RESPECT OF THIS NOTE.
No. $
------------- -------------
Resorts International Hotel Financing, Inc., a Delaware corporation
(hereinafter called the "Company", which term includes any
successor entity under the Indenture referred to on the reverse),
for value received, hereby promises to pay to______________, or registered
assigns, on December 15, 2004 the sum of _____________ Dollars (or so much
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thereof as shall not have been paid upon prior redemption) and to
pay interest (computed on the basis of a 360-day year of twelve
30-day months based on the actual number of days elapsed) thereon
from [ ], 1994 [the Effective Date], or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, semi-annually at June 15 and December 15 in each year
(commencing December 15, 1994), at the rate of 11.375% per annum,
until the principal hereof is paid or made available for payment.
Interest also shall accrue on Additional Notes (as defined below)
at such rates from and including the date of issuance thereof until
the principal amount thereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in said Indenture,
be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date. Any such interest not so punctually paid
or duly provided for (including by issuance of Additional Notes in
lieu of cash interest payment) shall forthwith cease to be payable
to the Holder on such Regular Record Date, and may be paid to the
Person in whose name this Note (or one or more Predecessor Notes)
is registered at the close of business on a Special Record Date for
the payment of such defaulted interest to be fixed by the Trustee,
notice thereof being given to Noteholders not less than ten days
prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed and upon
such notice as may be required by such exchange, all as more fully
provided in said Indenture. The principal of and interest on this
Note shall be payable at the corporate trust office of the Trustee,
as defined on the reverse, or at an office or agency of the Company
in the Borough of Manhattan, City and State of New York. All such
payments shall be made in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts, or by check or, at the option
of the Company, on any Interest Payment Date, if Consolidated Cash
Flow of RIH and its consolidated Subsidiaries for the period of
four fiscal quarters ended on the last day of the last quarter
ended prior to such Interest Payment Date was less than
$35,000,000, all or any portion of such interest may be paid in
additional Notes in a principal amount equal to the amount of
accrued interest so paid ("Additional Notes"), PROVIDED, HOWEVER,
that Additional Notes shall be issued in minimum denominations of
$100 (but not fractions thereof) in a principal amount equal to
such interest payment, or portion thereof, which the Company
elects to so pay. The Company shall pay cash in lieu of issuing
any fractional Additional Notes. The issuance of such Additional
Notes shall constitute
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full payment of interest in respect of which such Additional
Notes are issued in the principal amount so issued.
All interest payments made in Additional Notes must be made PRO
RATA in respect of all outstanding Notes, on the basis of the
respective dollar amounts of accrued and unpaid interest on such
Notes. The Additional Notes shall be issued as Units such that one
share of Class B Common Stock shall be issued in respect of each
$1,000 principal amount of Additional Notes. The Additional Notes
may not be transferred separately from the shares of Class B Common
Stock issued in respect of such Additional Notes. All interest
payments made in cash (other than cash
payments made in lieu of issuance of fractional Additional Notes)
shall be made PRO RATA in respect of all outstanding Notes, on the
basis of the respective dollar amounts of accrued and unpaid
interest on such Notes. The Company may deliver any such
interest payment to the Paying Agent or may mail any such
interest payment to a Holder at the Holder's registered address.
"Consolidated Cash Flow" means, with respect to any period, an
amount equal to the sum of (i) the consolidated net income (or
loss) of RIH for such period determined in accordance with GAAP
consistently applied, excluding interest income, interest expense
and gains or losses from extraordinary or nonrecurring items, plus
(ii) all amounts deducted in computing such consolidated net income
(or loss) in respect of depreciation and amortization, plus (iii)
non-cash charges arising from the reduction of CRDA Deposits to
market value, minus (iv) taxes based upon or measured by income
which are payable in cash, minus (v) CRDA Deposits.
Unless the certificate of authentication hereon has been executed
by the Trustee or the Authenticating Agent by manual signature,
this Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the Company has caused this Note to be
executed.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Dated: By:
----------------- -------------------------
Attest:
-----------------
[BACK OF NOTES]
This Note is one of a duly authorized issue of Notes of the Company
designated as "11.375% Junior Mortgage Notes due 2004" (the
"Notes"), issued under an Indenture dated as of __________ __,
1994 (the "Indenture"), among the Company, Resorts International
Hotel, Inc., a New Jersey corporation, as guarantor ("RIH"), and
U.S. Trust Company of California, N.A., a national
banking association, as Trustee (the "Trustee", which term
includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is
hereby made for a description of the nature and extent of the
security, the respective rights thereunder of the Holders of the
Notes, the Trustee and the Company and the terms upon which the
Notes are, and are to be, authenticated and delivered. Payment of
principal and interest (including interest on overdue principal)
and performance of all obligations under the Indenture is
guaranteed by RIH (the "Guaranty"). The Notes are secured by an
assignment of one or more secured junior promissory notes of RIH,
which owns and operates the property known as Merv Griffin's
Resorts Casino Hotel, and of a mortgage on the Trust Estate made
by RIH (the "Mortgage"). Additionally, the Guaranty is secured by
a separate direct mortgage of the Trust Estate made by RIH to the
Trustee (the "Guaranty Mortgage"). All terms in this Note defined
in the Indenture shall have the same meaning herein as therein.
The lien of the Mortgage is pari passu with the lien of the
Guaranty Mortgage and junior to the lien securing payment of the
RIHF Senior Facility Notes, the lien, if any, securing any other
secured Working Capital Facility, the lien (if any) securing the
Working Capital Facility Guaranty, to the lien securing payment of
the Senior Mortgage Notes and to the lien securing the Senior
Mortgage Guaranty.
The Notes may be redeemed at the option of the Company, as a whole
or from time to time in part, on or after
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the fifth anniversary of the Effective Date on notice as provided in
the Indenture, at par together with interest accrued and unpaid thereon
to the date fixed for redemption. In the event of an RIH Sale, all the
Notes shall be redeemed by the Company, whether such RIH Sale occurs before,
on or after the fifth anniversary of the Effective Date, at par
together with interest, if any, accrued and unpaid thereon to the
Redemption Date; PROVIDED, HOWEVER, that such obligation of the
Company to redeem the Notes in the event of a proposed RIH Sale
shall cease to exist if the Holders of not less than 66-2/3% in
Outstanding Amount of the Outstanding Notes have consented to such
proposed RIH Sale.
Notwithstanding the foregoing, each Holder by accepting a Note
agrees that if the Casino Control Commission does not waive the
qualification requirement as to the Holder (whether the record
owner or beneficial owner) of this Note and requires that the
Holder be qualified under the Casino Control Act, then, in such
event, the Holder must qualify under the Casino Control Act. If
the Holder does not so qualify, the Holder must dispose of its
interest in this Note, within 30 days after the Company's receipt
of notice of such finding, or the Company may repurchase this Note
at the lower of the Holder's original cost and the Fair Market
Value of this Note, plus accrued interest thereon to the date of
such repurchase. Commencing on the date the Casino Control
Commission serves notice upon either RIH or the Company that
any Holder is disqualified, it shall be unlawfull for any such
disqualified Holder: (i) to receive any dividends or interest upon
this Note; (ii) to exercise, directly or through any trustee or
nominee, any right conferred by this Note; or (iii) to receive any
remuneration in any form from either the Company or RIH for services
rendered or otherwise.
It is provided in the Indenture that Notes of a denomination larger
than $1,000 may be redeemed in part ($1,000 or a multiple thereof)
and that upon any partial redemption of any such Note the same
shall be surrendered in exchange for one or more new Notes in
authorized form for the unredeemed portion of principal. Notes
(or portions thereof as aforesaid) for whose redemption and payment
provision is made in accordance with the Indenture shall thereupon
cease to be entitled to the lien of the Indenture and the Mortgage
and shall cease to bear interest from and after the date fixed for
redemption.
If an Event of Default shall occur, the principal of the Notes and
all accrued and unpaid interest thereon may become or be declared due and
payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereto and the modification
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of the rights and obligations of the Company and the rights of the Holders
of the Notes under the Indenture at any time by the Company with the
consent of the Holders of a majority or 66-2/3%, as the case may
be, in aggregate Outstanding Amount of the Notes at the time
Outstanding affected by such modification. The Indenture also
contains provisions permitting the Holders of specified percentages
in Outstanding Amount of Notes at the time Outstanding on behalf of
the Holders of all the Notes to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of
any Note issued upon the transfer hereof or in exchange hereof or
in lieu hereof, in respect of anything done or offered to be done
by the Trustee in the Company in reliance thereon, whether or not
notation of such action is made upon this Note.
The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holders of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by the
Indenture to be given or taken by holders of Notes. With regard
to any such record date, the holders of Outstanding Notes on such
record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action,
whether or not such Persons remain holders after such record date.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal
of and interest on this Note at the times, places and rates, and in
the coin or currency, or, in the case of interest payments, by
issuance of Additional Notes in lieu of cash interest payment,
herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable on the Note Register
of the Company, upon surrender of this Note for transfer at the
corporate trust office of the Trustee, or at an office or agency
of the Company in the Borough of Manhattan, City and State of New
York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
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<PAGE>
The Notes are issuable only as registered Notes without coupons in
denominations of $1,000 and integral multiples thereof, except that
Additional Notes may be in denominations of $100 and integral
multiples of $100. As provided in the Indenture, and subject to
certain limitations therein set forth, Notes are exchangeable for a
like aggregate principal amount of Notes of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any transfer or exchange
hereinbefore referred to, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is
registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or
not this Note be overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary.
Section 2.03. FORM OF TRUSTEE'S
CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
U.S. Trust Company of California, N.A.
as Trustee
By:
-------------------------
Authorized Signature
Section 2.04. FORM OF THE GUARANTY.
The form of the Guaranty of RIH shall be substantially as follows
and shall appear on the reverse of each Note:
GUARANTY OF
RESORTS INTERNATIONAL HOTEL, INC.
For value received, Resorts International Hotel, Inc., a New Jersey
corporation, hereby unconditionally guarantees, as more fully set
forth in Article Four of the Indenture, to the Holder of this Note
the payment of the principal of and interest on this Note in the amounts
and at the time when due and interest on the overdue principal and
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interest, if any, of this Note, if lawful, and the payment or performance
of all other obligations of the Company to the Holder or the Trustee,
all in accordance with and subject to the terms and limitations of
this Note and Article Four of the Indenture, the foregoing Guaranty
being a guaranty of payment and not of collectibility and being absolute
and in no way conditional or contingent. This Guaranty will not become
effective until the Trustee or the Authenticating Agent signs the certificate
of authentication on such Note. As more fully described in the
Indenture, this Guaranty is secured by a mortgage of the Trust
Estate made by RIH to the Trustee.
RESORTS INTERNATIONAL HOTEL,
INC.
Dated: By:
----------------- ----------------------------
Attest:
-----------------
ARTICLE THREE
THE NOTES
Section 3.01. GENERAL TITLE.
The general title of the Notes shall be "11.375% Junior Mortgage
Notes due 2004".
Section 3.02. FORM AND DENOMINATIONS.
The form of the Notes shall be as provided by the provisions of
this Indenture.
The Notes shall be issuable only in registered form and in such
denominations as shall be provided in the provisions of this
Indenture. The Notes shall be of the denominations of $1,000 and
any integral multiple thereof except that Additional Notes may be
in denominations of $100 and integral multiples of $100.
Section 3.03. EXECUTION, AUTHENTICATION,
DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its
chairman of the board, vice chairman of the board, its president,
or one of its Vice Presidents and attested to by an Officer of the
Company other than an Officer who has executed the Notes.The signature
of any of these Persons on the Notes
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may be manual or facsimile. Notes bearing the manual or facsimile signatures
of individuals who were at any time Officers of the Company shall
bind the Company, notwithstanding that such individuals or any of
them shall have ceased to be such prior to the authentication and
delivery of such Notes.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication and the Trustee shall
authenticate and deliver such Notes as in this Indenture provided
and not otherwise. All Notes shall be dated the date of their
authentication.
No Note shall be secured by, or be entitled to any lien, right or
benefit under, this Indenture or be valid or obligatory for any
purpose, unless there appears on such Note a certificate of
authentication substantially in the form provided for herein,
executed by the Trustee or the Authenticating Agent by manual
signature, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 3.04. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Request the Trustee shall authenticate
and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any
denomination, substantially of the tenor of the definitive Notes
in lieu of which they are issued, in registered form, without
coupons, with provision for registration as to principal and with
such appropriate insertions, omissions, substitutions and other
variations as the Officers executing such Notes may determine, as
evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive
Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be
exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company in a Place of Payment
therefor, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Notes, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Notes of authorized denominations. Until so exchanged, temporary
Outstanding Notes shall in all respects be entitled to the security
and benefits of this Indenture.
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Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE.
The Company shall cause to be kept at one of the offices or
agencies maintained by the Company as provided in Section 12.02 a
register (herein sometimes referred to as the "Note Register") in
which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Notes and
registration of transfers of Notes entitled to be registered or
transferred as herein provided. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers
of Notes as herein provided.
Upon surrender for transfer of any Note at the office or agency of
the Company in a Place of Payment therefor, the Company shall
execute and, upon request of the Company, the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees,
one or more new Notes of any authorized denominations and of a like
aggregate principal amount. The Trustee has no obligation to determine that
any Note has been properly transferred and may conclusively rely on
instructions given to the Company pursuant to this Section 3.05.
All Notes surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly canceled by the Trustee and
thereafter disposed of as directed by a Company Request.
All Notes issued upon any transfer or exchange of Notes shall be
the valid obligations of the Company, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as
the Notes surrendered upon such transfer or exchange.
Every Note presented or surrendered for transfer, exchange or
discharge from registration shall (if so required by the Company
or the Note Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company
and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration, discharge
from registration, transfer or exchange of Notes, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Notes, other than exchanges under Section 3.04 or 11.06
not involving any transfer.
The Company shall not be required (i) to issue, transfer or exchange
any Note during a period beginning at the
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opening of business 15 days before the day of the mailing of a notice of
redemption of Notes under Section 13.04 and ending at the close of business on
the day of such mailing, or (ii) to transfer or exchange any Note so
selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
Section 3.06. MUTILATED, DESTROYED,
LOST AND STOLEN NOTES.
If (a) any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Note and (b) there is
delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a new Note of like tenor
and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 3.06, the
Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith.
Every new Note issued pursuant to this Section 3.06 in lieu of any
destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the security and benefits
of this Indenture equally and ratably with all other Notes.
The provisions of this Section 3.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or
stolen Notes.
Section 3.07. PAYMENT OF INTEREST ON
NOTES; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Note (or
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one or more Predecessor Notes) is registered at the close of business
on the Regular Record Date for such interest specified in the provisions of
this Indenture.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date ("Defaulted
Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date solely by virtue of such Holder having
been such Holder; and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in subsection
(a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest on the Notes to the Persons in whose names such
Notes (or their respective Predecessor Notes) are registered
at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee
in writing of the amount of Defaulted Interest proposed to be
paid on each Note and the date of the proposed payment (which
date shall be such as will enable the Trustee to comply with
the next sentence hereof), and at the same time the Company
shall deposit with the Trustee an amount of money equal to,
or Additional Notes having a principal amount equal to, the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money or Additional Notes when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as provided in this
subsection (a) and not to be deemed part of the Trust
Estate. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall
be not more than 15 nor less than ten days prior to the date
of the proposed payment and not less than ten days after the
receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of a Note
at his address as it appears in the Note Register not less
than ten days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered on such Special Record
Date and shall no longer be payable pursuant to subsection
(b) of this Section 3.07.
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(b) The Company may make payment of any Defaulted Interest
on the Notes in any other lawful manner not inconsistent with
the requirements of any securities exchange in which the Notes
may be listed and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this subsection (b), such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.07, each Note
delivered under this Indenture upon transfer of or in exchange for
or in lieu of any other Note shall carry all the rights to interest
accrued and unpaid, and to accrue, which were carried by such other
Note.
Section 3.08. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Note is registered
as the owner of such Note for the purpose of receiving payment of
principal of, and interest on, such Note and for all other purposes
whatsoever whether or not such Note be overdue, and, to the extent
permitted by law, neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
Section 3.09. CANCELLATION.
All Notes surrendered for payment, redemption, transfer, exchange
or conversion, if surrendered to the Trustee, shall be promptly
canceled by it, and, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee and, if not already
canceled, shall be promptly canceled by it. The Company shall
deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Notes so delivered shall
be promptly canceled by the Trustee. No Note shall be
authenticated in lieu of or in exchange for any Note canceled as
provided in this Section 3.09, except as expressly provided by this
Indenture. All canceled Notes held by the Trustee shall be
disposed of as directed by a Company Request.
Section 3.10. TERM AND FORM.
The Stated Maturity of the Notes shall be December 15, 2004. The
aggregate principal amount of Notes that may be authenticated,
delivered and outstanding is limited to $35,000,000, plus
Additional Notes, if any, issued by the Company pursuant to the
terms hereof. The Notes shall bear interest from [ ], 1994 [the
Effective Date] or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, payable semi-
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annually on June 15 and December 15 of each year, commencing
December 15, 1994. The Notes shall bear interest at the rate of
11.375% per annum until the principal thereof shall become due and
payable, and at the rate of 14.375% per annum on any overdue
principal and, to the extent permitted by law, overdue interest.
Interest shall be computed on the basis of a 360-day year of twelve
30-day months based on the actual number of days elapsed.
The principal and the Redemption Price of the Notes and interest on
the Notes on each Interest Payment Date shall be payable at a Place
of Payment, and, in addition to any other lawful means of such
payment, may be paid by check payable to the order of the
Noteholder.
The Regular Record Date referred to in Section 3.07 for the payment
of the interest on the Notes payable, and punctually paid or duly
provided for, on any Interest Payment Date shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date.
Section 3.11. PAYMENT OF INTEREST IN ADDITIONAL NOTES
(a) Notwithstanding any other provision of this Indenture or the
Notes, the Company, at its option and in its sole discretion, on
any Interest Payment Date, if Consolidated Cash Flow of RIH and its
consolidated Subsidiaries for the period of four consecutive fiscal
quarters of RIH ended on the last day of the last quarter ended
prior to such Interest Payment Date was less than $35,000,000, may
pay all or any portion of interest accrued on the Outstanding Notes
(including without limitation any Additional Notes previously
issued to pay interest) in Additional Notes. The Additional Notes
shall have a principal amount equal to the amount of such interest
payment, or portion thereof, which the Company elects to so pay.
The Company shall pay cash in lieu of issuing any fractional Additional
Notes. The issuance of such Additional Notes shall constitute full
payment of interest in respect of which such Additional Notes are
issued in the principal amount so issued.
(b) All interest payments made in Additional Notes pursuant to
Section 3.11(a) shall be made PRO RATA in respect
of all outstanding Notes, on the basis of the respective dollar amounts
of accrued and unpaid interest on such Notes. All interest
payments made in cash (other than cash payments made in lieu of
issuance of fractional Additional Notes) shall be so made PRO RATA
in respect of all outstanding Notes, on the basis of the respective
dollar amounts of accrued and unpaid interest on such Notes.
(c) Prior to the issuance of any Additional Notes, a Trust Officer of
the Trustee and any Paying Agent shall have
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received an Officers' Certificate from the Company at least five Business
Days prior to the relevant Regular Record Date stating that the Company will
pay such interest in Additional Notes, together with a resolution of
the Board of Directors authorizing the issuance of the appropriate
principal amount of Additional Notes. On or before the date that
is three Business Days following the relevant Regular Record Date,
the Company will deliver an Officers' Certificate to the Trustee
demonstrating the computation of the principal amount of Additional
Notes issuable to the Holders and an Opinion of Counsel that the
issuance of such Additional Notes is in compliance with all federal
securities laws, and that such Additional Notes will be binding
obligations of the Company, enforceable according to their terms.
(d) THE ADDITIONAL NOTES SHALL BE ISSUED AS UNITS SUCH THAT
ONE SHARE OF CLASS B STOCK SHALL BE ISSUED IN RESPECT OF EACH
$1,000 PRINCIPAL AMOUNT OF ADDITIONAL NOTES. THE ADDITIONAL
NOTES MAY NOT BE TRANSFERRED SEPARATELY FROM THE SHARES OF
CLASS B COMMON STOCK ISSUED IN RESPECT OF SUCH ADDITIONAL NOTES.
Section 3.12. EXCHANGEABILITY.
Subject to Section 3.05, all Notes and Additional Notes shall be
fully interchangeable with other Notes and Additional Notes, and,
upon surrender at the office or agency of the Company in a Place of
Payment therefor, all Notes shall be exchangeable for other Notes
of a different authorized denomination or denominations, as
requested by the Holder surrendering the same. The Company will
execute, and the Trustee shall authenticate and deliver, Notes
whenever the same are required for any such exchange.
Section 3.13. REDEMPTION.
The Company may, at its option, redeem, in accordance with Article
Thirteen, all or from time to time any part of the Notes on or
after the fifth anniversary of the Effective Date, at par
together, in each case, with interest, if any, accrued and unpaid
thereon to the Redemption Date. In the event of an RIH Sale, all
Notes shall be redeemed by the Company, whether such RIH Sale occurs
before, on or after the fifth anniversary of the Effective Date, at par
together with interest, if any, accrued and unpaid thereon to the
Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company
to redeem the Notes in the event of a proposed RIH Sale shall cease to
exist if the Holders of not less than 66-2/3% in Outstanding Amount
of the Outstanding Notes have consented to such proposed RIH Sale.
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Section 3.14. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE.
Forthwith upon the execution and delivery of this Indenture, Notes
up to an aggregate principal amount of $35,000,000 may be executed
by the Company and delivered to the Trustee for authentication, and
shall thereupon be authenticated and delivered by the Trustee upon
Company Order, without any further action by the Company.
ARTICLE FOUR
GUARANTY
Section 4.01. GUARANTY.
RIH hereby guarantees (such guaranty to be referred to herein as
the "Guaranty") to each Holder 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 hereunder or
thereunder, that: (a) the principal of and interest on the Notes
will be promptly paid in the amounts and at the times when due,
whether at the maturity or Interest Payment Date, by acceleration,
call for redemption or otherwise, and interest on the overdue
principal, if any, of the Notes, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will
be promptly paid in full or performed, all in accordance with the
terms hereof and thereof; and (b) in case of any extension of time
of payment or renewal of any Notes or payment or performance of any
of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension
or renewal, whether at Stated Maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed
for whatever reason, RIH will be obligated to pay the same
immediately. RIH hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of
the Notes with respect to any provisions hereof or thereof, any
releases of collateral, any delays in obtaining or realizing upon or
failures to obtain or realize upon collateral, the recovery of
any judgment against the Company, any action to enforce the same or
any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. This Guaranty is a
guaranty of payment and not of collectibility, and is secured by
the Guaranty Mortgage, as described therein. RIH hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event
of insolvency or bankruptcy of the Company, any right to
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require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Guaranty
will not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture. If any
Noteholder or the Trustee is required by any court or otherwise to
return to either RIH or the Company, or any custodian, trustee,
liquidator or other similar official acting in relation to either
RIH or the Company, any amount paid by either RIH or the Company to
the Trustee or such Noteholder, this Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and
effect. RIH agrees that it shall not be entitled to, and hereby
irrevocably waives, any right of subrogation in relation to the
Company in respect of any obligations guaranteed hereby. RIH
further agrees that, as between RIH, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Section 7.02 for the purposes of this Guaranty, notwithstanding
any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of such
obligations as provided in Section 7.02, such obligations
(whether or not due and payable) shall forthwith become due and
payable by RIH for the purpose of this Guaranty.
Section 4.02. EXECUTION AND DELIVERY OF GUARANTY.
To evidence its Guaranty set forth in Section 4.01, RIH hereby
agrees to execute its Guaranty substantially in the form set forth
in Section 2.04, to be endorsed on each Note authenticated and
delivered by the Trustee and that this Indenture shall be executed
on behalf of RIH by an Authorized Signature.
RIH hereby agrees that its Guaranty set forth in Section 4.01 shall
remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guaranty; PROVIDED,
HOWEVER, that the Trustee or the Authenticating Agent has
signed the certificate of authentication on such Note.
If an Officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates a Note on which a Guaranty
is endorsed, the Guaranty shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of RIH.
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Section 4.03 MORTGAGE SECURING GUARANTY.
In order to secure the due and punctual payment of all amounts
which may ever become owing under the Guaranty, when and as the
same shall be due and payable, and performance of all other
obligations of RIH to the Holders or the Trustee under the
Guaranty, according to the terms hereof, RIH has mortgaged and
encumbered all of its right, title and interest in and to the Trust
Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has
the full right, power and authority to grant, bargain, sell,
release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm the property constituting the Trust Estate, in the
manner and form done, or intended to be done, in the Guaranty
Mortgage, free and clear of all liens, pledges, charges and
encumbrances, whatsoever, except for the items described in
clauses (a) through (d) (inclusive) of Section 12.13, and (a) will
forever warrant and defend the title to the same against the claims
of all Persons whatsoever in accordance with the terms of the
Guaranty Mortgage, (b) will execute, acknowledge and deliver to
the Trustee such further instruments as the Trustee may require or
request, and (c) will do or cause to be done all such acts and
things as may be reasonably necessary or proper, or as may be
required by the Trustee (other than obtaining a loan title
insurance policy or title policy endorsement pertaining to the
Guaranty Mortgage), to assure and confirm to the Trustee its
interest in the Trust Estate and the right, title and interest in
and to the Guaranty Mortgage, so as to render the same available
for the security and benefit of this Guaranty secured thereby,
according to the intent and purposes herein expressed. The
Guaranty Mortgage creates and vests in the Trustee a direct and
valid lien, which lien is pari passu with the lien of the Mortgage
and junior to the liens securing payment of the RIHF Senior
Facility Notes, any other secured Working Capital Facility, the
Working Capital Facility Guaranty, the Senior Mortgage Notes and
the Senior Guaranty. To the extent that any security interest in
the Trust Estate or the Guaranty Mortgage is deemed to be granted
and to be governed by the Uniform Commercial Code, the Guaranty
Mortgage is deemed to be a security agreement.
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. PAYMENT OF INDEBTEDNESS;
SATISFACTION AND DISCHARGE OF INDENTURE.
Whenever the following conditions exist, namely:
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(a) all Notes theretofore authenticated and delivered have been
canceled by the Trustee or delivered to the Trustee for cancellation,
excluding, however,
(1) Notes for the payment of which money has theretofore been
deposited in trust with the Trustee or a Paying Agent (other than the
Company) or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust as provided in
Section 12.03,
(2) Notes alleged to have been destroyed, lost or stolen which
have been replaced or paid as provided in Section 3.06, except for any
such Note which, prior to the satisfaction and discharge of this
Indenture, has been presented to the Trustee with a claim of ownership
and enforceability by the Holder thereof and where enforceability has
not been determined adversely against such Holder by a court of
competent jurisdiction, and
(3) other than any Notes excluded by clauses (1) and (2) of this
Section 5.01(a), Notes which have become due and payable, Notes which
will become due and payable at their Stated Maturity within one year
and Notes which have been or are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name and at the expense
of the Company, provided the Company, in the case of such Notes, has
deposited or caused to be deposited with the Trustee in trust for the
purpose an amount sufficient to pay and discharge the entire
indebtedness on such Notes for principal and interest to the date of
maturity thereof in the case of Notes which have become due and
payable or to the Stated Maturity or Redemption Date, as the case may
be;
(b) the Company or RIH has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company or RIH has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each of which shall state that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with;
then this Indenture and the lien, rights and interests created hereby shall
cease, terminate and become null and void (except as to any surviving rights of
transfer or exchange of Notes herein or therein provided for and any right to
receive payments of principal and interest as provided in
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Section 5.01(a)(3)) and the Trustee and each co-trustee and
separate trustee, if any, then acting as such hereunder shall,
at the expense of the Company, execute and deliver a
termination statement prepared by the Company in form reasonably satisfactory
to the Trustee and such instruments of satisfaction and discharge as may
be necessary and pay, assign, transfer and deliver to the Company or upon
Company Order all cash, securities and other personal property then held by it
hereunder, other than pursuant to Section 5.01(a)(3).
In the absence of satisfaction of all of the above conditions, the
payment of all Outstanding Notes shall not render this Indenture inoperative.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 8.07 shall survive.
Section 5.02. APPLICATION OF DEPOSITED MONEY.
Money deposited with the Trustee pursuant to Section 5.01 shall
constitute a separate trust fund for the benefit of the Persons entitled
thereto. Subject to the provisions of Section 12.03, such money shall be
applied by the Trustee to the payment (either directly or through any Paying
Agent, as the Trustee may determine) to the Persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with the
Trustee.
Section 5.03. REPAYMENT TO THE COMPANY.
The Trustee and any Paying Agent shall promptly pay to the Company
upon request any excess money or securities held by them at any time. Any
money (or, with respect to interest to be paid in Additional Notes, such
Additional Notes) deposited with the Trustee or any Paying Agent, or then
held by the Company, in Trustee or any Paying Agent, or then held by the
Company, in trust, for the payment of the principal of, or interest on,
any Note and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Company on its
request, or (if then held by the Company) shall be discharged from such
trust, unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property law, and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with regard to such money (or Additional Notes), and all liability
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of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may at the expense
of the Company cause to be published once, in a newspaper published
in the English language, customarily published on each business day and
of general circulation in the City of New York, State of New York, or
mailed to each such Holder, or both, notice that such money (or
Additional Notes) remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of
such publication or mailing, as the case may be, any unclaimed
balance of such money then remaining will be paid to the Company.
ARTICLE SIX
SECURITY
Section 6.01. ASSIGNMENT AGREEMENT.
In order to secure the due and punctual payment of the principal of
and interest on the Notes, when and as the same shall be due and payable,
whether at Maturity or at an Interest Payment Date, by acceleration, call for
redemption or otherwise, of the Notes and performance of all other obligations
of the Company to the Holders or the Trustee under this Indenture, according to
the terms hereof, the Company has made an assignment of all of its right, title
and interest in and to the Mortgage Documents (other than the Guaranty Mortgage)
to the Trustee pursuant to the Assignment Agreement. RIH has the full right,
power and authority to grant, bargain, sell, release, convey, hypothecate,
assign, mortgage, pledge, transfer and confirm the property constituting the
Trust Estate, in the manner and form done, or intended to be done, in the
Mortgage Documents, and the Company has the full right, power and authority to
grant, bargain, sell, release, re-convey, assign, transfer and confirm,
absolutely, all of its right, title and interest in and to the Mortgage
Documents, in each case free and clear of all liens, pledges, charges and
encumbrances, whatsoever, except for the items described in clauses (a) through
(d) (inclusive) of Section 12.13, and (a) each will forever warrant and defend
the title to the same against the claims of all persons whatsoever in accordance
with the terms of the Mortgage Documents and the Assignment Agreement, (b) each
will execute, acknowledge and deliver to the Trustee such further assignments,
transfers, assurances or other instruments as the Trustee may require or
request, and (c) each will do or cause to be done all such acts and things as
may be reasonably necessary or proper, or as may be required by the Trustee, to
assure and confirm to the Trustee its interest in the Trust Estate and the
right, title and interest in and to the Mortgage Documents, so as to render the
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same available for the security and benefit of this Indenture and of the Notes
secured hereby, according to the intent and purposes herein expressed. The
Mortgage Documents (other than the Guaranty Mortgage) and the Assignment
Agreement together create and vest in the Trustee a direct and valid lien, which
is pari passu with the Guaranty Mortgage, junior to the liens securing payment
of the RIHF Senior Facility Notes, any other secured Working Capital Facility,
the Working Capital Facility Guaranty, the Senior Mortgage Notes and the Senior
Guaranty on the property constituting the Trust Estate and the interest in the
Mortgage Documents which they purport to create. To the extent that any
security interest in the Trust Estate or the Mortgage Documents are deemed to be
granted and to be governed by the Uniform Commercial Code, the Mortgage and the
Assignment Agreement are deemed to be security agreements.
Section 6.02. RECORDING, ETC.
The Company will cause, at its own expense, the Assignment Agreement,
the Mortgage Documents, this Indenture and all amendments or supplements
thereto, 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 in order fully to preserve and protect the lien of the Mortgage Documents
and the Assignment Agreement on all parts of the Trust Estate and the Mortgage
Documents and the interest in the RIH Junior Promissory Note and to effectuate
and preserve the security of the Noteholders and all rights of the Trustee.
The Company shall furnish to the Trustee:
(a) promptly after the execution and delivery of this Indenture or
other instrument of further assurance or amendment, including any
supplemental indenture, an Opinion or Opinions of Counsel either (1)
stating that, in the opinion of such counsel, this Indenture, the Mortgage
Documents and the assignment to the Trustee of the Mortgage Documents
intended to be made by the Assignment Agreement and all other instruments
of further assurance or amendment have been properly recorded, registered
and filed to the extent necessary to make effective the liens intended to
be created by the Mortgage Documents and the Assignment Agreement, 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 the
Mortgage Documents and the Assignment Agreement 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
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been executed and filed that are necessary fully to preserve and protect
the rights of the Noteholders and the Trustee hereunder and under the
Mortgage Documents and the Assignment Agreement, or (2) stating that, in
the opinion of such counsel, no such action is necessary to make such liens
and assignments effective; and
(b) within 60 days after June 30 in each year beginning with the year
1995, an Opinion or Opinions of Counsel, dated as of such date, either (1)
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 all supplemental indentures, financing
statements, continuation statements or other instruments of further
assurance as is necessary to maintain the liens of the Mortgage Documents
and the assignment of the Mortgage Documents to the Trustee made by the
Assignment Agreement 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 Noteholders and the Trustee
hereunder and under the Mortgage Documents and the Assignment Agreement, or
(2) stating that, in the opinion of such counsel, no such action is
necessary to maintain such liens and assignments.
The Company and RIH shall cause TIA SECTION 314(d) relating to the
release of property from the liens of the Mortgage to be complied with. Any
certificate or opinion required by TIA SECTION 314(d) may be made by an Officer
of the Company or RIH, unless otherwise required by TIA SECTION 314(d).
Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS.
The Trustee shall hold in its possession the Mortgage Documents,
except as it from time to time may be required for actions, suits or proceedings
relating to the Mortgage Documents or for the purpose of enforcing or realizing
upon any right or value thereby represented. The Trustee may, from time to
time, in its sole discretion, for the purpose of convenient location of the
Mortgage Documents, appoint one or more agents to hold physical custody, for the
account of the Trustee, of the Mortgage Documents.
Section 6.04. SUITS TO PROTECT THE TRUST
ESTATE AND MORTGAGE DOCUMENTS.
Upon five days' prior written notice to the Company (or such shorter
period or without notice if deemed necessary and appropriate by the Trustee),
the Trustee shall have the
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power, but not the obligation, to institute and to maintain such suits and
proceedings as it may deem necessary or appropriate
to prevent any impairment of the Trust Estate by any acts which may be
unlawful or in violation of the Mortgage Documents, the Assignment
Agreement or this Indenture, and such suits and proceedings as the Trustee
may deem necessary or appropriate to preserve or protect its interest and
the interests of the Noteholders in the Trust Estate and the Mortgage Documents
and the principal, interest, issues, profits, rents, revenues and other income
arising therefrom (including 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 result in an impairment of security hereunder or be
materially prejudicial to the interests of the Noteholders or of the Trustee).
The Trustee shall also have authority to exercise any rights or powers conferred
on the Trustee as the holder of the Note.
ARTICLE SEVEN
REMEDIES
Section 7.01. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", whenever used herein, means any one of the
following events (including any applicable notice requirement and any period of
grace as specified in this Section 7.01) (whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Note when such
interest becomes due and payable and continuance of such default (the
deposit with the Trustee pursuant to Section 3.07 of funds or Additional
Notes sufficient to make such interest payment in full being deemed to cure
any such default for the purposes hereof) for a period of ten days; or
(b) default in the payment of all or any portion of the principal
of any Note at its Maturity; or
(c) default in the performance or breach of any covenant of the
Company or RIH in this Indenture (other than a covenant a default in the
performance or breach of which is elsewhere in this Section 7.01
specifically dealt with), the Assignment Agreement or any of the
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Mortgage Documents and continuance of such default or breach for a
period of 30 days (or such shorter or longer cure period, if any, as
may be specified in respect of such default or breach in the Assignment
Agreement or the applicable Mortgage Document, as the case may be), and
(other than with respect to Sections 12.07, 12.08, 12.09, 12.10, 12.11,
12.12, 12.13 or 12.21) after there has been given (i) to the Company by
the Trustee or (ii) to the Company and the Trustee by the Holders of at
least 25% in Outstanding Amount of the Outstanding Notes, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; PROVIDED,
HOWEVER, that, if such default or breach is of a covenant set forth in
Section 12.02, 12.04, 12.05, 12.11, 12.13 or 12.21, and if such default or
breach is of such a nature that is curable but is not susceptible of being
cured with due diligence within such 30-day period (or such shorter or
longer cure period) (for reasons other than lack of funds), then such
period shall be extended for such further period of time as may reasonably
be required to cure such default or breach, so long as (i) RIH delivers an
Officers' Certificate to the Trustee within such period stating (A) the
applicability of the provisions of this proviso to such default or breach,
(B) the Company's or RIH's intention to remedy such default or breach with
reasonable diligence and (C) the steps which the Company or RIH has
undertaken to remedy such default or breach, and (ii) RIH delivers to the
Trustee additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate described in clause
(i) above, in which case such period shall be extended for such further
period of time as may reasonably be required to cure such default or
breach, provided that the Company or RIH is then proceeding and
thereafter continues to proceed to cure such default or breach with
reasonable diligence; PROVIDED FURTHER, HOWEVER, that such additional
period of time shall not in any case exceed 60 days; or
(d) a proceeding or case shall be commenced, without the application
or consent of the Company or RIH, in any court of competent jurisdiction,
seeking (i) its liquidation, reorganization, dissolution or winding-up, or
the composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Company or RIH
or of all or any substantial part of its assets, or (iii) similar relief in
respect of the Company or RIH under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing
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shall be entered and continue unstayed and in effect, for a period
of 60 consecutive days; or
(e) the commencement by the Company or RIH of a voluntary case under
the federal bankruptcy laws or any other applicable federal or state law,
or the consent or acquiescence by any of them to the filing of any such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or other similar
official) of the Company or RIH or any substantial part of any of their
property, or the making by any of them of an assignment for the benefit of
creditors, or the taking of action by the Company or RIH in furtherance of
any such action; or
(f) the revocation, suspension or involuntary loss of any Permit
which results in the cessation of a substantial portion of the operations
of the Casino-Hotel for a period of more than 90 consecutive days; or
(g) (i) a default by the Company, RIH or any of their Subsidiaries
under any Indebtedness (other than the Indebtedness represented by the
Working Capital Facility and the Junior Mortgage Facility) in an aggregate
principal amount in excess of $5,000,000, which default results in the
acceleration of the maturity of any such Indebtedness under the evidence of
indebtedness, indenture or other instrument governing such Indebtedness;
provided, however, that, if such default under such evidence of
indebtedness, indenture or other instrument shall be cured by the obligor,
or be waived by the holders of such Indebtedness, in each case as may be
permitted by such evidence of indebtedness, indenture or other instrument
and in each case resulting in rescission of such acceleration thereunder,
then the Event of Default hereunder by reason of such default shall be
deemed likewise to have been thereupon cured or waived; or (ii) a default
by the Company, RIH or any of their Subsidiaries under any Indebtedness
represented by the Working Capital Facility or the Junior Mortgage
Facility, the effect of which default (after the expiration of any
applicable notice or grace periods) is to permit the holder or holders of
any such Indebtedness represented by the Working Capital Facility or the
Junior Mortgage Facility in an aggregate principal amount in excess of
$5,000,000 (or a trustee or agent on behalf of such holder or holders) to
cause the acceleration of the maturity of such Indebtedness represented by
the Working Capital Facility or the Junior Mortgage Facility under the
evidence of indebtedness, indenture or other instrument governing such
Indebtedness; provided, however, that if such default under such evidence
of indebtedness, indenture or other instrument shall be
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cured by the obligor, or be waived by the holders of such Indebtedness,
in each case as may be permitted by such evidence of indebtedness,
indenture or other instrument and, if such default resulted in the
acceleration of the maturity of such Indebtedness, such acceleration
shall have been rescinded thereunder, then the Event of Default hereunder
by reason of such default shall be deemed likewise to have been thereupon
cured or waived; or (iii) the existence of a final judgment of a court of
competent jurisdiction in an amount in excess of $3,000,000 against the
Company, RIH or the Trust Estate, which judgment has not been satisfied
or otherwise provided for, for a period of 30 days (during which execution
shall not be effectively stayed) following the date on which such judgment
becomes a lien against the Trust Estate or any
part thereof (unless the lawsuit in question was commenced without
effective service of process upon either the Company or RIH in which case
such 30-day period shall not commence until the Company or RIH receives
notice of such final judgment); or (iv) the existence of a final judgment
of a court of competent jurisdiction in an amount in excess of $15,000,000
against the Company, RIH or the Trust Estate, which judgment has not been
satisfied or otherwise provided for, for a period of 60 days (during which
execution shall not be effectively stayed) following the date of such final
judgment; or (v) the existence of a final judgment of a court of competent
jurisdiction, regardless of amount, against the Company, RIH or the Trust
Estate, which judgment has not been satisfied or otherwise provided for,
for a period of 60 days (during which execution shall not be effectively
stayed) following the date of such final judgment, if such judgment, by
itself or upon recordation or other action of the judgment creditor,
imposes or would impose a lien on the Trust Estate or any part thereof
senior to the lien of the Mortgage; or
(h) default in the performance, or breach, of any covenant of the
Company or RIH in Article Ten; or
(i) the existence of a judgment of a court of competent jurisdiction
in an amount in excess of $3,000,000 against RIH regarding the CRDA
Dispute, which judgment has not been stayed, satisfied or otherwise
provided for, for a period of 30 days (during which execution shall not be
effectively stayed) (unless the lawsuit in question was commenced without
effective service of process upon RIH in which case such 30-day period
shall not commence until RIH receives notice of such final judgment); or
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(j) if RII fails to pay or discharge or cause to be paid or
discharged, within 30 days before the same shall become delinquent, all
taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of
Default or Default shall be deemed to exist hereunder with respect to any
tax liability not paid or discharged by RII if and to the extent that the
amount, applicability or validity of such tax liabilities is being
contested in good faith by appropriate proceedings if adequate reserves
therefor have been established in accordance with GAAP; provided further,
however, that this clause (j) shall not apply to amounts due with respect
to any period during which neither the Company, RIH nor any of their
Subsidiaries is included in RII's consolidated group for federal income tax
purposes.
No action, event, claim, liability or judgment regarding the CRDA
Dispute shall constitute a Default or an Event of Default under this
Section 7.01 unless and until a judgment shall have been entered against
RIH which constitutes an Event of Default pursuant to clause (i) of this
Section 7.01.
Section 7.02. ACCELERATION OF MATURITY;
RESCISSION AND ANNULMENT.
If an Event of Default (other than one referred to in clause (d) or
(e) of Section 7.01) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes
Outstanding may declare the Outstanding Amount of all the Notes and all accrued
interest to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee, if given by any Noteholders), and upon any such
declaration such Outstanding Amount shall become immediately due and payable.
If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs,
then the Outstanding Amount of all the Notes shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company.
At any time after such a declaration of acceleration has been made,
but before any judgment or decree for payment of money due on any Notes has been
obtained by the Trustee as hereinafter provided in this Article Seven, the
Holders of a majority in Outstanding Amount of the Notes may, by written notice
to the Company and the Trustee, rescind and annul such declaration and its
consequences if:
(a) the Company has deposited with the Trustee a sum sufficient to
pay:
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(1) all overdue installments of interest on all Notes,
(2) the principal of any Notes which have become due otherwise
than by such declaration of acceleration and interest thereon at the
rate or rates prescribed therefor in the Notes, and
(3) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(b) all Events of Default, other than the non-payment of the
Outstanding Amount of Notes which have become due solely by such
declaration of acceleration, have been cured, or have been waived as
provided in Section 7.13.
No such rescission and annulment shall affect any subsequent default
or impair any right consequent thereon.
Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON
NOTES AND RIGHT OF TRUSTEE TO JUDGMENT.
The Company covenants that, if:
(a) default is made in the payment of any interest upon any Note
when such interest becomes due and payable and such default continues
for a period of 10 days (the deposit with the Trustee during such 10 day
period pursuant to Section 3.07 of funds or Additional Notes (if
permitted hereby) sufficient to make such interest payment in full
being deemed to cure any such default for the purposes hereof), or
(b) default is made in the payment of the principal of any
Note at its Maturity,
then, upon demand of the Trustee, the Company will pay to the Trustee for the
benefit of the Holders of such Notes, the whole amount then due and payable on
such Notes for principal and interest, with interest at the rate prescribed
therefor in the Notes on overdue principal and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel. If the Company fails to pay
such amounts forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled to sue for and recover judgment
against the Company, RIH and any other obligor on the Notes for the whole amount
so due and unpaid. The Trustee shall be entitled to institute such suit either
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before, after or during the pendency of any proceedings for the enforcement of
this Indenture or of the Mortgage Documents or of the Assignment Agreement, but
only after the occurrence of an Event of Default.
Subject to the Intercreditor Agreement, in the case of a foreclosure
of the Mortgage and a sale of the Trust Estate and application of the proceeds
as provided in Section 7.06, the Trustee, in its own name and as trustee of an
express trust, shall be entitled to enforce payment of, and to receive, all
amounts then remaining due and unpaid upon the Notes, for the benefit of the
Holders thereof, and shall be entitled to recover judgment for any portion of
the same remaining unpaid, with interest as aforesaid. No recovery of any such
judgment upon any property of the Company shall affect or impair the security
provided by this Indenture and the Assignment Agreement or the lien of the
Mortgage upon the Trust Estate or any rights, powers or remedies of the Holders
of the Notes.
Section 7.04. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or RIH or any other obligor upon the
Notes or the property of the Company or RIH or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal (or any portion
thereof) of the Notes shall then be due and payable, as therein expressed or by
declaration or otherwise, and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Outstanding Notes and to file
such 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 of the Noteholders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Trustee, and in the event that the
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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 8.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or compensation affecting the Notes
or the rights of any Holder thereof, or to authorize the Trustee to vote on the
claim of any Noteholder in any such proceeding.
Section 7.05. TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture, the Notes, the
Assignment Agreement or the Mortgage Documents may be prosecuted and enforced by
the Trustee without the possession of any of the Notes or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the Ratable Benefit of the Holders of the Notes in respect
of which such judgment has been recovered.
Section 7.06. APPLICATION OF MONEY COLLECTED.
Subject to the Intercreditor Agreement, any money collected by the
Trustee pursuant to this Article Seven or pursuant to Article Three or Section
5.11 or 5.20 of the Mortgage which is not required to be paid to the Mortgagor
thereunder shall be applied in the following order, at the date or dates fixed
by the Trustee and upon such date interest shall cease to accrue, and, in case
of the distribution of such money on account of principal upon presentation
of the Notes, and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
(a) FIRST: To the payment of all amounts due the Trustee under
Section 8.07;
(b) SECOND: To the payment of the whole amount then due upon the
Outstanding Notes, for principal and interest, in respect of which or for
the benefit of which such money has been collected, with interest (to the
extent that such interest has been collected by the Trustee or a sum
sufficient therefor has been so collected and payment thereof is legally
enforceable at the respective rate or rates prescribed therefor in the
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Notes) on overdue principal; and in case such proceeds shall be
insufficient to pay in full the whole amount so due and unpaid upon such
Notes, then first, payment of accrued but unpaid interest (with interest
thereon as aforesaid), and second, to outstanding principal, in each case,
ratably according to the aggregate amount so due; and
(c) THIRD: To the payment of the remainder, if any, to the
Company or to whomever may be lawfully entitled to receive the same or as
a court of competent jurisdiction may direct.
Section 7.07. LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute any
proceeding, judicial or otherwise, under or with respect to this Indenture, the
Assignment Agreement or the Mortgage Documents, or for the appointment of a
receiver or trustee or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in Outstanding Amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holder of a
majority in Outstanding Amount of the Outstanding Notes;
it being understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Indenture, the Assignment
Agreement or the Mortgage Documents, to affect, disturb or
prejudice the right of any other Holders of Notes, or to obtain
or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, the Assignment
Agreement or the Mortgage Documents,
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except in the manner herein and therein provided and for the Ratable
Benefit of all Notes.
Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS
TO RECEIVE PRINCIPAL AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note on the Stated Maturity or
Interest Payment Dates expressed in such Note (or, in the case of redemption,
on the Redemption Date) and to institute suit for the enforcement of any such
payment and such rights shall not be impaired without the consent of such
Holder.
Section 7.09. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Indenture, the Assignment Agreement
or the Mortgage Documents and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee
or to such Noteholder, then and in every such case the Company, the Trustee
and the Noteholders shall, subject to any determination in such proceeding,
be restored to their former positions hereunder, and thereafter all rights
and remedies of the Trustee and the Noteholders shall continue as though
no such proceeding had been instituted.
Section 7.10. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the Trustee or
to the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 7.11. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon an Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article Seven or by
law to the Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the Noteholders, as
the case may be.
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Section 7.12. OTHER RIGHTS.
Subject to Section 8.03(e), the Holders of a majority in Outstanding
Amount of the Outstanding Notes shall have the right, during the continuance
of an Event of Default,
(a) to require the Trustee to proceed to enforce this Indenture,
either by judicial proceedings for the enforcement of the payment of the
Notes by the foreclosure of the Mortgage and exercise of any remedies under
the Mortgage Documents and the Assignment Agreement and the sale of the
Trust Estate or otherwise or, at the election of the Trustee, by the
exercise of the power of entry and/or sale conferred by the Mortgage; and
(b) to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee hereunder, provided that
(1) such direction shall not be in conflict with any rule of law
or this Indenture or any applicable Mortgage Document or the
Assignment Agreement;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) the Trustee shall not be required to determine if any
action so directed would be unjustly prejudicial to the Holders
not taking part in such direction.
Section 7.13. WAIVER OF PAST DEFAULTS.
Before any judgment or decree for payment of money due has been
obtained by the Trustee as provided in this Article Seven, the Holders of not
less than 66-2/3% in Outstanding Amount of the Outstanding Notes may, by Act of
such Noteholders delivered to the Trustee and the Company, on behalf of the
Holders of all the Notes waive any past Default hereunder and its consequences,
except a Default
(a) in the payment of the principal of or interest on any Note, or
(b) in respect of a covenant or provision hereof which under Article
Eleven cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
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Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right subsequent thereon.
Section 7.14. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, the Assignment Agreement or the Mortgage Documents, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claim or defense made by
such party litigant; but the provisions of this Section 7.14 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Noteholders, or group of Noteholders, holding in the aggregate more than 10% in
Outstanding Amount of the Outstanding Notes, or to any suit instituted by any
Noteholder for the enforcement of the payment of the principal of or interest on
any Note on or after the Stated Maturity expressed in such Note (or, in the case
of redemption, on or after the Redemption Date) or the relevant Interest Payment
Date.
Section 7.15. ENFORCEMENT.
In case an Event of Default shall occur and be continuing, the
Trustee, in it discretion may, subject to the provisions of Section 7.12,
proceed to protect and enforce its rights and the rights of the Noteholders
under this Indenture by a suit, action or proceeding in equity or at law or
otherwise, whether for the specific performance of any covenant or agreement
contained in this Indenture or in aid of the execution of any power granted in
this Indenture or for the enforcement of any other legal, equitable or other
remedy, as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Noteholders
hereunder.
In case an Event of Default shall occur and be continuing under the
Mortgage, the Trustee, as assignee of the Mortgage Documents, in its discretion
may, subject to the provisions of Section 7.12, proceed to enforce its rights
under the Mortgage Documents and the Assignment Agreement.
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Section 7.16. MANAGEMENT OF CASINO-HOTEL.
Notwithstanding any provision of this Article Seven to the contrary,
(a) following an Event of Default under the Mortgage and the taking
of possession of the Trust Estate by the Trustee and/or the appointment of
a receiver of the Trust Estate or any part thereof, the Trustee or any such
receiver shall be authorized, in addition to the rights and power of the
Trustee and such receiver set forth elsewhere in this Indenture, the
Assignment Agreement and the Mortgage Documents, to retain one or more
experienced operators of hotels and/or casinos to manage and operate
the Casino-Hotel on behalf of the Noteholders, provided that any such
operator shall have all necessary legal qualifications, including all
Permits, to manage the Casino-Hotel; and
(b) no Noteholder shall have any right to take possession of, operate
or manage all or any portion of the Casino-Hotel, individually or as a
member of a group, unless such Noteholder shall have all necessary legal
qualifications, including all Permits, to do so and shall otherwise be
qualified to be retained to manage the Casino-Hotel under subsection (a) of
this Section 7.16.
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and the Mortgage
Documents, and no implied covenants or obligations shall be read into
this Indenture and the Mortgage Documents against the Trustee; and
(2) 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 expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture or the
Mortgage Documents; but in the case of any such certificates or opinions
which by any provision hereof or thereof are specifically required to be
furnished to the Trustee, the Trustee shall be
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under a duty to examine the same to determine whether or not they conform
to the requirements of this Indenture and the Mortgage Documents.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture or the Mortgage Documents, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(c) No provision of this Indenture or any Mortgage Document shall
be construed to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct,
except that
(1) this Section 8.01(c) shall not be construed to limit the effect
of Section 8.01(a);
(2) the Trustee shall not be liable for any error of judgment made
in good faith by it, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in Outstanding Amount of the
Outstanding Notes relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture or any
Mortgage Document; and
(4) no provision of this Indenture or the Mortgage Documents
shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture or the Mortgage Documents relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to
the provisions of this Section 8.01.
Section 8.02. NOTICE OF DEFAULTS.
Within 45 days after the occurrence of any Default hereunder of which
a Responsible Officer of the
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Trustee has actual knowledge, the Trustee shall transmit by mail to all
Holders of Notes as their names and addresses appear in the Note Register,
notice of such Default hereunder known to the Trustee, unless such
Default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the
case of a default in the payment of the principal of or interest on any Note,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the best interests of the Noteholders.
Section 8.03. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 8.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by the Trustee 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 or any of the Mortgage
Documents at the request or direction
of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Trustee reasonable security or
indemnity reasonably satisfactory to the Trustee against the costs,
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expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) 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, direction, consent, order,
bond, debenture, other evidence of indebtedness or other paper or 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 RIH, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(h) the Trustee shall not be deemed to have knowledge of and shall
not be required to take any action with respect to any event of Default
(other than an Event of default described in Sections 7.01(a) and (b) or
any event which would, with the giving of notice or the passage of time
or both, constitute an Event of Default, unless the Trustee shall have
actual knowledge of such event or shall have been notified in writing of
such event by Noteholders holding in the aggregate more than 25% in
Outstanding Amount of the Outstanding Notes;
(i) subject to Section 8.01(c), the Trustee shall not be personally
liable, in case of entry by it upon the Trust Estate, for debts contracted
or liabilities or damages incurred in the management or operation of the
Trust Estate; and
(j) in addition to and not in limitation of its other powers
hereunder, the Trustee shall have such power and authority as may be
necessary to enter into and accept delivery of any document as may be
necessary to effect on behalf of the Holders of the Notes the
subordination of the indebtedness in respect of the Notes to any secured
Working Capital Facility (in accordance with the provisions of the
Mortgage), and upon written request of the Company, the Trustee shall enter
into such agreements on behalf of the holders of the Notes.
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Section 8.04. NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS.
The recitals contained herein and in the Notes, except in a
certificate of authentication on the Notes, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representation as to the validity or sufficiency of this
Indenture, the Notes or the Mortgage Documents. The Trustee shall not be
accountable for the use or application by the Company of Notes or the proceeds
thereof or of any money paid to the Company or by a Company Order under any
provision hereof.
Section 8.05. MAY HOLD NOTES.
The Trustee, any Paying Agent, Note Registrar, Authenticating Agent or
any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Notes and, subject to Sections 8.08 and 8.13, if
operative, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent
or such other agent.
Section 8.06. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 8.07. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder and under the Mortgage Documents
(which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein and in the Mortgage
Documents, to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
the Trustee's negligence or bad faith; and
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(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this Indenture or the trust created hereunder or the
performance of its duties hereunder, including the reasonable costs and
expenses of defending itself against or investigaing any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder (including reasonable attorneys' fees and
expenses).
As security for the performance of the obligations of the Company and
RIH under this Section 8.07, the Trustee shall be secured under this Indenture
and the Mortgage Documents by a lien prior to the Mortgage upon all property
and funds held or collected by the Trustee, and for the payment of such
compensation, expenses, reimbursements and indemnity the Trustee shall
have the right to use and apply any money held by it pursuant hereto.
Notwithstanding the satisfaction of this Indenture, the obligations
of the Company and RIH under this Section 8.07 shall survive.
Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The Trustee
shall comply with TIA SECTION 310(b) including the second sentence
of TIA SECTION 310(b)(9).
Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the law of the United States of
America or of any state, authorized under such laws to exercise corporate trust
powers, having (or in the case of a corporation included in a bank holding
company system, the related bank holding company having) a combined capital and
surplus of at least $100,000,000, subject to supervision or examination by
federal or state authority. In addition, if the Trustee is a corporation
included in a bank holding company system, the Trustee, independently of such
bank holding company, shall meet the capital requirements of TIA
SECTION 310(a)(2). The Trustee shall comply with 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
certificates of interest or participation in other securities of the Company are
outstanding, if the requirements for such exclusion set forth in TIA
SECTION 310(b)(1) are met. If such
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corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of such supervising or examining authority,
then for the purposes of this Section 8.09, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 8.09, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article Eight.
Section 8.10. RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article Eight shall become effective until
the acceptance of appointment by the successor Trustee under Section 8.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in Outstanding Amount of the Outstanding Notes, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 8.08 after written
request therefor by the Company or by any Noteholder who is a bona fide
Holder of a Note, or
(2) the Trustee shall cease to be eligible under Section 8.09 and
shall fail to resign after written request therefor by the Company or by
any Noteholder who is a bona fide Holder of a Note, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (i) the Company by a Company Order may remove the
Trustee, or (ii) subject to Section 7.14, any Noteholder who is a bona fide
Holder of a Note may, on behalf
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of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Company, by a Company Order, shall promptly appoint a successor Trustee.
In case all or substantially all of the Trust Estate shall be in the possession
of a receiver or trustee lawfully appointed, such receiver or trustee, by
written instrument, may similarly appoint a successor to fill such vacancy
until a new Trustee shall be so appointed by the Noteholders. If, within one
year after such resignation, removal or incapacity or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in Outstanding Amount of the Outstanding Notes delivered to the
Company and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede the successor Trustee appointed by the Company or by such
receiver or trustee. If no successor Trustee shall have been so appointed by
the Company or the Noteholders and accepted appointment in the manner
hereinafter provided, subject to Section 7.14, any Noteholder who is a bona fide
Holder of a Note may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give written notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to each
Noteholder by mailing such notice by first-class mail, postage prepaid, to each
Noteholder as such Noteholder's name and address appears in the Note Register;
provided, however, that failure of the Company to give such notice shall not
affect the resignation or removal of such Trustee. Each notice shall include
the name of the successor Trustee and the address of its principal corporate
trust office.
Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall became effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the estates, properties,
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument conveying and transferring to
such successor Trustee all the estates,
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properties, rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder, subject nevertheless
to its lien, if any, provided for in Section 8.07. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such estates, properties, rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article Eight.
Section 8.12. MERGER, CONVERSION, CONSOLIDATION
OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article Eight, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.
Section 8.13. PREFERENTIAL COLLECTION
OF CLAIMS AGAINST COMPANY.
The Trustee will comply with TIA SECTION 311(a). A Trustee who has
resigned or been removed shall be subject to TIA SECTION 311(a) to the extent
indicated.
Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES.
At any time or times, for the purpose of meeting the legal
requirements of the TIA or of any jurisdiction in which any of the Trust Estate
may at the time be located or in which it shall be necessary or desirable for
the Trustee to act, the Company and the Trustee shall have power to appoint,
and, upon the written request of the Trustee or of the Holders of at least 25%
in Outstanding Amount of the Notes Outstanding, the Company shall for such
purpose join with the Trustee in the execution, delivery and performance of all
instruments and
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agreements necessary or proper to appoint, one or more Persons
approved by the Trustee either to act as co-trustee, jointly with the Trustee,
of all or any part of the Mortgage Documents or of the Trust Estate covered by
such Mortgage Documents, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section 8.14. If the Company does not join in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default has occurred and is continuing, the Trustee alone shall
have power to make such appointment.
Should any written instrument from the Company be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Company within three business days of such request.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) the Notes shall be authenticated and delivered, and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised
solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed
by the Trustee or by the Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee
or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Trustee
shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee;
(c) the Trustee, at any time, by an instrument in writing executed by
it may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section 8.14. A successor to any co-trustee
or
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separate trustee so resigned or removed may be appointed in the manner
provided in this Section 8.14;
(d) the Trustee, or any other such trustee hereunder, shall not be
personally liable by reason of any act or omission of any co-trustee or
separate trustee hereunder, and no co-trustee or separate trustee hereunder
shall be personally liable by reason of any act or omission of the Trustee,
or any other such trustee hereunder;
(e) any Act of Noteholders delivered to the Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee; and
(f) any co-trustee or separate trustee appointed hereunder shall be
entitled to compensation and indemnification from the Company under Section
8.07 hereunder and shall be entitled to all such other rights and
protections afforded the Trustee hereunder.
Section 8.15. APPOINTMENT OF AUTHENTICATING AGENT.
Upon the request of the Company, the Trustee shall appoint an
Authenticating Agent with power to act on its behalf and subject to its
direction in the authentication and delivery of the Notes designated for such
authentication by the Company and containing provisions therein for such
authentication in connection with transfers and exchanges under Sections 3.04,
3.05, 3.06 and 13.07, as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by those Sections to
authenticate and deliver such Notes. For all purposes of this Indenture, the
authentication and delivery of Notes by the Authenticating Agent pursuant to
this Section 8.15 shall be deemed to be the authentication and delivery of Notes
"by the Trustee". Such Authenticating Agent shall at all times be a bank or
trust company having its principal office in the Borough of Manhattan, City and
State of New York, and shall at all times be a corporation organized and doing
business under the laws of the United States or of any State with a combined
capital and surplus of at least $50,000,000 and authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authority. If such corporation publishes reports of condition
at least annually pursuant to law or the requirements of such authority, then
for the purposes of this Section 8.15 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be
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consolidated, or any corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation succeeding to the corporate trust business of any Authenticating
Agent, shall be the successor of the Authenticating Agent hereunder,
if such successor corporation is otherwise eligible under this Section 8.15,
without the execution or filing of any further act on the part of
the parties hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section 8.15, the
Trustee shall promptly appoint a successor Authenticating Agent, and shall give
written notice of such appointment to the Company.
The Company agrees to pay to the Authenticating Agent from time to
time reasonable compensation for its services. The provisions of
Sections 3.10, 8.04 and 8.05 shall be applicable to any Authenticating Agent.
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS
BY TRUSTEE
Section 9.01. COMPANY TO FURNISH TRUSTEE
SEMI-ANNUAL LISTS OF NOTEHOLDERS.
The Company will furnish or cause to be furnished to the Trustee
semi-annually, not less than 45 days nor more than 60 days after each date
(month and day) specified as a semi-annual Interest Payment Date for the Notes
(whether or not any Notes are then Outstanding), and at such other times as the
Trustee may request in writing, within 60 days after receipt by the Company of
any such request, a list in such form as the Trustee may reasonably require
containing all the information in the possession or control of the Company, or
any of its Paying Agents other than the Trustee, as to the names and addresses
of the Holders of Notes, obtained since the date as of which the next previous
list, if any, was furnished, excluding from any such list the names and
addresses received by the Trustee in its capacity as Note Registrar. Any such
list may be dated as of a date not more than 15 days prior to
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the time such information is furnished and need not include
information received after such date.
Section 9.02. PRESERVATION OF INFORMATION;
COMMUNICATIONS TO NOTEHOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Notes (1) contained in the
most recent list furnished to the Trustee as provided in Section 9.01, (2)
received by the Trustee in the capacity of Paying Agent (if so acting)
hereunder or (3) received by the Trustee in its capacity as Note Registrar.
The Trustee may destroy any list furnished or provided in Section 9.01 upon
receipt of a new list so furnished.
(b) Holders may communicate pursuant to TIA SECTION 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Note Registrar and any other Person shall have
the protection of TIA SECTION 312(c).
(c) Every Holder of Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any Paying Agent shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders of Notes in
accordance with Section 9.02(b), regardless of the source from which information
was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 9.02(b).
Section 9.03. REPORTS BY TRUSTEE.
(a) Within 60 days after each May 15 beginning with May 15, 1995, the
Trustee shall transmit to each Noteholder a report dated as of such May 15 that
complies with TIA SECTION 313(a). The Trustee shall also comply with TIA
SECTION 313(b) and SECTION 313(c).
(b) A copy of each such report shall, at the time of such
transmission to Noteholders, be filed by the Trustee with any stock exchange on
which the Notes are listed and also with the Commission. The Company will
notify the Trustee when the Notes are listed on any stock exchange.
(c) The Trustee will provide the Casino Control Commission and the
Director of the Division of Gaming Enforcement of New Jersey with:
(1) copies of all notices, reports and other written communications
which the Trustee gives to Noteholders;
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(2) a list of Noteholders promptly after the original issuance of the
Notes and a list of Noteholders annually on December 1 of each year,
or such other time as requested by the Casino Control Commission or
Director of the Division of Gaming Enforcement;
(3) notice of any Event of Default under this Indenture actually
known by the Trustee or of any event, occurrence or condition actually
known by the Trustee which, with the giving of notice or lapse of time
or both would constitute an Event of Default under this Indenture
(including the Guaranty), the RIH Junior Promissory Note or the
Mortgage Documents (as such term is defined in such instruments),
any acceleration of the Indebtedness evidenced or secured hereby or
thereby, the institution of any legal actions or proceedings before
any court or governmental authority in respect of this Indenture
(including the Guaranty) or the Mortgage Documents, the entering
into or taking possession of any property constituting the Trust
Estate and any rescission, annulment or waiver in respect of an
Event of Default under any instruments described in this
clause (3);
(4) notice of the removal or resignation of the Trustee;
(5) notice of any transfer or assignment of rights under this
Indenture (including the Guaranty) (but not in respect of the Notes) or the
Mortgage Documents after a Responsible Officer of the Trustee becomes aware
of the same; and
(6) a copy of any amendment to the Notes, this Indenture (including
the Guaranty) or the Mortgage Documents immediately;
PROVIDED, HOWEVER, that the Trustee shall not be liable to any Person (other
than the Casino Control Commission and the Director of the Division of
Gaming Enforcement of New Jersey) for any failure to provide any of the
above-mentioned documents to the Casino Control Commission and the Director
of the Division of Gaming Enforcement of New Jersey.
The notice specified in Section 9.03(c) above shall be in writing and, except
as set forth below, shall be given immediately after the Trustee has
actual knowledge of any circumstances requiring such notice. In the case of any
notice in respect of any Default or Event of Default under any instrument
described in Section 9.03(c), such notice shall be accompanied by a copy of
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any notice from the Holders of Notes, or a representative thereof or the
Trustee, to the defaulting Person and, if accompanied by any such notice to the
defaulting Person, shall be given simultaneously with the giving of any such
notice to the defaulting Person. In the case of any legal actions or
proceedings, such notice shall be accompanied by a copy of the complaint or
other initial pleading or document.
The Trustee and its Responsible Officers shall cooperate with the
Casino Control Commission and the Director of the Division of Gaming
Enforcement of New Jersey in order to provide such Commission and Director
with information and documentation relevant to compliance with Section 9.03(c)
above and as otherwise required by the Casino Control Act.
The expiration date of the current gaming Permit held by RIH is
February 26, 1994. Subsequent gaming Permits held by RIH are scheduled to
expire every two years on February 26th, commencing February 26, 1996 unless
and until the Trustee is advised otherwise. RIH will advise the Trustee of
any change in such expiration date within five business days of knowledge
thereof.
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE
OR TRANSFER ONLY ON CERTAIN TERMS.
Neither the Company nor RIH shall consolidate, combine or merge with
or into any other Person or permit any other Person to consolidate, combine or
merge with or into the Company or RIH, as the case may be; and neither the
Company with respect to its assets nor RIH with respect to the Trust Estate
shall sell, assign, convey or transfer its interest in such assets or the Trust
Estate, as the case may be, substantially as an entirety (and notwithstanding
anything to the contrary contained herein (including the proviso at the end of
this sentence), but subject to the provisions of the Mortgage regarding
dispositions of the Trust Estate, neither the Company with respect to its assets
nor RIH with respect to the Trust Estate may sell, assign, convey or transfer
such assets or the Trust Estate, as the case may be, other than substantially as
an entirety) to any other Person or group of Persons in one transaction or a
series of related transactions, or permit any other Person or group of Persons
to convey or transfer all or substantially all of its assets, subject to
liabilities other than DE MINIMIS liabilities, to
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the Company or RIH; and the Company and RIH shall not transfer,
convey, sell or otherwise dispose of to any
other Person, or issue to any Person, any equity interest in the Company or RIH,
as the case may be (each of the aforesaid transactions described in this Section
10.01 is referred to herein as a "Combination Transaction"); PROVIDED, HOWEVER,
that (i) the Company may engage in a Combination Transaction in which the only
other party or parties is RIH or a direct or indirect wholly owned Subsidiary of
the Company or RIH, and (ii) the Company or RIH may engage in any other
Combination Transaction (either independently or at the same time as other
Combination Transactions), subject to the following with respect to each such
Combination Transaction:
(a) the conditions set forth in Section 10.03 are satisfied;
(b) in the event the Company or RIH shall consolidate, combine or
merge with or into another Person or sell, assign, convey or transfer its
interest in its assets or in the Trust Estate, as the case may be,
substantially as an entirety (but not less than
substantially as an entirety) to another Person in one transaction or a
series of related transactions, the entity which is formed by or survives
such consolidation, combination or merger or the Person to which such
assets or the Trust Estate are conveyed or transferred:
(1) shall be organized and existing under the laws of the United
States of America, any state thereof, or the District of Columbia;
(2) shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form reasonably satisfactory
to the Trustee, the performance and observance
of every covenant, obligation and condition of this Indenture to be
performed or observed by the Company or RIH, whichever the case may
be;
(3) shall expressly assume, by an instrument executed and
delivered to the Trustee, in form reasonably satisfactory to the
Trustee, the due and punctual performance of every covenant,
obligation and condition of the Mortgage Documents and Assignment
Agreement to be performed by the Company or RIH, whichever the case
may be; and
(4) immediately after and giving effect to such transaction
could incur at least $1.00 of additional Indebtedness under Section
12.08;
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(c) immediately after giving effect to such transaction, no Event of
Default, or Default hereunder or under the Mortgage shall have occurred and
be continuing;
(d) such Combination Transaction shall be on such terms as shall not
impair the lien and security and priority hereof or of the Mortgage
Documents or of the Assignment Agreement and the rights and powers of the
Trustee and the Holders of the Notes hereunder and thereunder; and
(e) the Company or RIH, as the case may be, shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each of
which shall state that such Combination Transaction and such supplemental
indenture comply with this Article Ten and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Section 10.02. SUCCESSOR ENTITY SUBSTITUTED.
Upon any consolidation, combination or merger or any conveyance or
transfer of an interest in the assets of the Company or in the Trust Estate
permitted by Section 10.01, the successor entity formed by such consolidation or
into which the Company or RIH is combined or to which such conveyance or
transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, and shall be bound by every obligation and liability
of, the Company or RIH, whichever the case may be, under this Indenture with the
same effect as if such successor entity had been named as the Company or RIH
herein; PROVIDED, HOWEVER, that no such consolidation or combination involving
the Company or RIH, unless such transaction is in compliance with the provisions
of this Article Ten, shall have the effect of releasing the Person named as "the
Company" or "RIH", as the case may be, in the first paragraph of this
instrument, or any successor entity which shall theretofore have become such in
the manner prescribed in this Article Ten, from its liability as obligor and
maker on the RIH Junior Promissory Note or any of the Notes.
Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL.
Neither the Company nor RIH shall engage in any Combination
Transaction unless, immediately following such Combination Transaction, (a) RIH
(or any successor entity) shall be eligible for and shall meet all relevant
Legal Requirements, including holding all permits, required for the normal
operation of the business of owning and operating the Casino-Hotel, and (b) RIH
(or any successor entity) shall be controlled by a Person that is, or shall
retain to manage the
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Casino-Hotel one or more Persons that are, experienced in
the operation and management of casino-hotels.
Section 10.04. LIMITATION ON SALES OF TRUST ESTATE.
Except as otherwise expressly permitted by the Mortgage and this
Indenture, neither the Company nor RIH shall sell, assign, lease, sublease,
hypothecate, pledge, mortgage or otherwise transfer all or any part of the
assets of the Company or the Trust Estate or any interest therein (including,
without limitation, any interest in the Ground Leases). Without limiting the
generality of the foregoing, RIH shall not separate, or attempt to separate, its
ownership of its interest in the Ground Leases from the ownership of the
buildings constituting the Casino-Hotel or any part thereof.
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS.
Without the consent of the Holders of any Notes, the parties hereto
may from time to time amend or supplement this Indenture, the Assignment
Agreement, the Notes or the Mortgage Documents, as long as the form of such
amendment or supplement is satisfactory to the Trustee, for any of the
following purposes:
(a) to correct or amplify the description of the Trust
Estate or better to assure, convey and confirm unto the Trustee the
assignment of the Mortgage Documents; or
(b) to add additional conditions, limitations and restrictions
thereafter to be observed to the conditions, limitations and restrictions
on the authorized amount, terms of issue, authentication and delivery of
Notes as herein set forth; or
(c) to comply with Article Ten; or
(d) to add to the covenants of the Company for the benefit of the
Holders of all Notes or to surrender any right or power herein conferred
upon the Company; or
(e) to cure any ambiguity, defect or inconsistency in any of the
enumerated documents, provided such action shall not adversely affect the
interests of the Holders of the Notes; or
(f) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to
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effect the qualification of this Indenture under the TIA or under
any similar federal statute hereafter enacted, and to add to this
Indenture such other provisions as may be expressly permitted by the TIA,
EXCLUDING, HOWEVER, the provisions referred
to in TIA SECTION 316(a)(2) as in effect at the date as of which
this instrument was executed or any corresponding provision in any similar
federal statute hereafter enacted; or
(g) to effectuate any subordination contemplated in Section 8.03(i);
or
(h) to comply with the requirements of the Casino Control Act.
The terms of any such enumerated document entered into pursuant to
this Section 11.01 shall be subject to prior approval of the Casino Control
Commission in consultation with the New Jersey Division of Gaming Enforcement.
Section 11.02. WITH CONSENT OF NOTEHOLDERS.
With the consent of the Holders of not less than 66-2/3% in Outstanding Amount
of the Notes then Outstanding, by Act of such Holders delivered to the Company
and the Trustee, the parties hereto may amend or supplement this Indenture, the
Mortgage Documents, the Assignment Agreement or the Notes, provided that the
form of such amendment or supplement is reasonably satisfactory to the Trustee.
The Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding
may waive compliance by the Company or RIH with any provision of this
Indenture, the Mortgage Documents, the Assignment Agreement or the Notes,
except a default in the payment of principal of or interest on any Note,
without notice to any Noteholder. Notwithstanding
the foregoing, no modification, waiver, consent or amendment to the Notes or
this Indenture shall permit the redemption of the Notes prior to the fifth
anniversary of the Effective Date (other than pursuant to an RIH Sale) unless
the same also shall have ben approved by the holders of 66-2/3% in Outstanding
Amount (as such term is defined in the Senior Mortgage Note Indenture) of the
Senior Mortgage Notes then Outstanding (as such terms are defined in the Senior
Mortgage Note Indenture). Without the consent of the Holder of each
Outstanding Note affected thereby, an amendment, supplement or waiver,
including a waiver pursuant to Section 7.13, may not:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal amount
thereof or the interest thereon or the amount payable upon the redemption
thereof, or change any Place of Payment where, or the coin or currency in
which, any Note, or the interest thereon, is payable, or
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impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date); or
(b) reduce the percentage in Outstanding Amount of the Outstanding
Notes, the consent of whose Holders is required for any amendment,
supplement or waiver; or
(c) modify or alter the provisions of the proviso to the definition
of the term Outstanding; or
(d) modify any of the provisions of this Section or Section
7.13, except to increase any percentage provided thereby or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Note affected thereby; or
(e) permit the creation of any lien ranking prior to the lien of the
Mortgage (except for such liens expressly permitted pursuant to Section
12.13).
In determining whether to execute any amendment or supplement, subject
to Sections 11.02(a) through (e), the Trustee may in its discretion determine
whether or not any Notes would be affected by any such amendment or supplement
and any such determination shall be conclusive upon the Holders of all Notes,
whether theretofore or thereafter authenticated and delivered hereafter. The
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such Act shall approve the substance
thereof.
In connection with any amendment, supplement or waiver under this
Indenture, the Company or RIH may, but shall not be obligated to, offer to any
Holder who consents to such amendment, supplement or waiver, or to all Holders,
at the discretion of the Company or RIH, consideration for such Holder's consent
to such amendment, supplement or waiver. The terms of any such enumerated
document entered into pursuant to this Section 11.02 shall be subject to the
prior approval of the Casino Control Commission in consultation with New Jersey
Division of Gaming Enforcement.
Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS.
In executing, or accepting the additional trusts created by, any
amendment or supplement permitted by this Article or the modification thereby of
the trusts already created by this Indenture, the Trustee shall be entitled to
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receive from the Company, and, subject to Section 8.01(c), shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution
of such amendment or supplement is authorized or permitted by this Indenture.
The Trustee may, but shall not, except to the extent required in the case of
a supplemental indenture entered into under Section 11.01(e), be obligated
to, enter into any such amendment or supplement which affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise.
Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT.
Upon the execution of any amendment or supplement under this Article,
every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the TIA and Casino Control Act as then in effect.
Section 11.06. REFERENCE IN NOTES TO
AMENDMENT OR SUPPLEMENT.
In the absence of a direction from the Company, Notes authenticated
and delivered after the execution of any amendment
or supplement pursuant to this Article may, and if required by the Trustee
shall, bear a notation in form approved by the Trustee as to any matter provided
for in such amendment or supplement. If the Company shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Company,
to any such amendment or supplement may be prepared and executed by the Company
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
ARTICLE TWELVE
COVENANTS
Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay or cause to be paid the
principal of and interest on each of the Notes at the place or places, at the
respective times and in the manner provided in the Notes and this Indenture.
Each installment of interest on the Notes may be paid by mailing checks for such
interest payable to or upon the written order of (or, with respect to interest
to be paid in Additional Notes, such
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Additional Notes) the Holders of Notes entitled thereto, to such address and in
such name as they shall appear on the Note Register. Any installment of
principal and interest shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Company or a Subsidiary of the Company
or any Affiliate thereof) holds on that date money in immediately available
funds designated exclusively for and sufficient to pay the installment (or, with
respect to interest to be paid in Additional Notes, such Additional Notes)
and the Trustee and/or the Paying Agent has not received instructions from
the Company not to make such payment or is not prohibited from making such
payment to the Noteholders pursuant to the terms of this Indenture.
The Company shall pay interest (including post-petition interest in
any proceeding under any applicable bankruptcy law) to the extent legally
permitted on overdue principal at the rate set forth in the Notes; and it shall
pay interest (including post-petition interest in any proceeding under any
applicable bankruptcy law) on unpaid interest otherwise payable under the first
clause of this sentence at the same rate to the extent legally permitted.
Section 12.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain, in the Borough of Manhattan, the City of
New York, State of New York, an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company initially
appoints the Trustee as its agent for presentation or surrender of Notes for
payment or registration, transfer or exchange. The Trustee (or its corporate
parent) will maintain an office in the Borough of Manhattan, the City of New
York, State of New York, for such purposes.
The Company may from time to time designate one or more other offices
or agencies (in or outside the City of New York, State of New York) where the
Notes may be presented or surrendered for any or all such purposes, and may from
time to time rescind such designations; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York, State of New York, for such purposes as stated in this Section
12.02. The Company will give prompt written notice to the Trustee of any such
designation and any change in the location of any such office or agency.
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If at any time the Company shall fail to maintain such an office or
agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may
be made or served at the principal corporate trust office of the
Trustee, and the Company hereby appoints the Trustee its agent to
receive all such presentations, surrenders, notices and demands.
Section 12.03. MONEY FOR SECURITY
PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of, or interest on, any of the
Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum, sufficient to pay the principal or interest so becoming due until
such sums shall be paid or issued to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of such action or any
failure so to act.
The Company will, on or before each due date of the principal of or
interest on, any Notes, deposit with a Paying Agent a sum in same day funds (or,
with respect to interest to be paid in Additional Notes, such Additional Notes),
sufficient to pay the principal or interest so becoming due, such sum, as the
case may be, to be held in trust for the benefit of the Persons entitled to such
principal or interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums received by it as such agent for the payment of
the principal of or interest on Notes (whether such sums have been paid
to it by the Company or by any other obligor on the Notes) in trust
for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;
(b) promptly give the Trustee notice of any failure by the Company
(or any other obligor upon the Notes) to make any payment of the principal
of, or interest on, the Notes when the same shall be due and payable; and
(c) at any time during the continuance of any such failure, upon the
written request of the Trustee,
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forthwith pay to the Trustee all sums so held in trust by such Paying
Agent.
Any money (or, with respect to interest to be paid in Additional
Notes, such Additional Notes) deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, or
interest on, any Note and remaining unclaimed for two years after such principal
or interest has become due and payable shall be paid to the Company on its
request, or (if then held by the Company) shall be discharged from such trust,
unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
regard to such money (or Additional Notes), and all liability of the Company as
trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each business day and of general
circulation in the City of New York, State of New York, or mailed to each such
Holder, or both, notice that such money (or Additional Notes) remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, as the case may be, any unclaimed
balance of such money then remaining will be paid to the Company.
Section 12.04. CORPORATE EXISTENCE.
Subject to Article Ten, each of the Company and RIH 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 existence of each of its Subsidiaries
in accordance with the respective organizational documents of the Company, RIH
and each such Subsidiary and the rights (charter and statutory), licenses,
permits, approvals and governmental franchises of it and each of its
Subsidiaries necessary to the conduct of its and their respective businesses,
including, without limitation, all licenses, permits, approvals and franchises
necessary to assure the continued operation of RIH's gaming operations at
the Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned
subsidiary of RIH may consolidate with, merge into or
transfer or distribute all or part of its properties and assets to RIH or the
Company or as otherwise provided in Section 10.01.
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Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE.
The Company and RIH will each keep proper books of record and account,
in which full and correct entries shall be made of all material dealings or
transactions of or in relation to the Notes and the properties, business and
affairs of the Company and RIH in accordance with GAAP. The Company and RIH
will at any and all times, upon the written request of the Trustee and at the
expense of RIH, permit the Trustee by its representatives to inspect the
Casino-Hotel and the books of account, records, reports and other papers of the
Company and RIH, and to make copies and extracts therefrom, and will afford and
procure a reasonable opportunity to make any such inspection (provided that the
Company and RIH shall have received reasonable advance notice of such inspection
and that any such inspection shall not unreasonably interfere with the business
operations of the Company and RIH). The Company and RIH will furnish to the
Trustee any and all information as the Trustee may reasonably request with
respect to the performance by the Company and RIH of their covenants in this
indenture.
Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES.
(a) RIH shall furnish or cause to be furnished to the Trustee, within
105 days after each fiscal year of RIH: (i) a copy of annual audited financial
statements of RIH prepared in conformity with GAAP, accompanied by a report of
Ernst & Young or of another firm of independent certified public accountants of
recognized national standing selected by RIH (the "National Accountants"),
together with a certificate from such National Accountants stating that their
audit examination has included a review of the terms of this Indenture and that
the National Accountants have not become aware of any Event of Default or that a
Default has occurred and is continuing, and if they have become aware of any
such Event of Default or Default, describing it; PROVIDED, HOWEVER, that the
National Accountants shall not be liable to any Person for any failure to
discover any Event of Default or Default in connection with such review; and
(ii) a copy of annual unaudited financial statements of RIH, including notes to
such financial statements and corresponding management's discussion and
analysis, in form and substance comparable to that which would be required to be
filed with the Commission in an Annual Report on Form 10-K under the
Exchange Act, prepared in the same manner as the audited financial
statements referred to in clause (i) of this Section 12.06(a), signed
by a proper accounting officer of RIH. RIH, contemporaneously with
the furnishing of such audited financial statements to the Trustee
under clause (i) of this Section 12.06(a), shall mail copies of such
audited financial statements to the Holders (which need not include the
certificate referred to in such clause (i)).
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(b) RIH shall furnish or cause to be furnished to the Trustee, within
60 days after each quarter of each fiscal year of RIH, except the final quarter
of such fiscal year, a copy of unaudited financial statements of RIH prepared on
a consistent basis with the audited financial statements referred to in clause
(i) of Section 12.06(a), signed by a proper accounting officer of RIH and
consisting of at least a balance sheet as at the close of such quarter and
statements of operations and cash flow for such quarter and for the period from
the beginning of such fiscal year to the close of such quarter, including notes
to such financial statements and corresponding management's discussion and
analysis, in form and substance comparable to that which would be required to be
filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange
Act. RIH, contemporaneously with the furnishing of such unaudited financial
statements to the Trustee under this Section 12.06(b), shall mail copies of such
unaudited financial statements to the Holders (which need not be signed by a
proper accounting officer of RIH).
(c) RIH shall furnish or cause to be furnished to the Trustee,
contemporaneously with the furnishing of a copy of the annual financial
statements and of the quarterly financial statements referred to in Section
12.06(a) and Section 12.06(b), an Officers' Certificate dated the date of such
annual financial statement or such quarterly financial statements to the effect
that no Default or Event of Default has occurred and is continuing, or, if there
is any such Default or Event of Default, describing it and the steps, if any,
being taken to cure it.
(d) RIH shall furnish or cause to be furnished to the Trustee,
copies of each filing and report made by RIH or the Company with the Commission
pursuant to the reporting and filing requirements of Section 13 or 15(d) of the
Exchange Act, within 15 days after RIH or the Company, as applicable, is
required to file the same.
(e) RIH agrees that, if RIH becomes exempt from the Commission
reporting and filing requirements of Section 13 or 15(d) of the Exchange Act,
RIH shall prepare such periodic reports as it would otherwise have been required
to file with the Commission and (i) at its own expense, cause all such periodic
reports to be filed with the Commission, the Trustee and any exchange
upon which the Notes then are listed, in each case on the date when such
periodic report would have been required to be filed with the Commission under
Section 13 or 15(d) of the Exchange Act, if either of such provisions were
applicable, and (ii) keep copies of such periodic reports available at its
office and promptly provide any Person who so requests with a copy of any such
periodic report, at the Company's expense.
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(f) Each of the Company and RIH shall comply with the provisions of
SECTION 314(a) of the Trust Indenture Act.
(g) The Company shall deliver to the Trustee, promptly upon becoming
aware of any Default or Event of Default (but in no event later than five
business days thereafter) in the performance of any covenant or agreement of the
Company contained in this Indenture or any of the Mortgage Documents, an
Officers' Certificate specifying with particularity such event.
Section 12.07. LIMITATION ON DIVIDENDS
AND RESTRICTED PAYMENTS.
(a) The Company hereby covenants that, on and after the date of this
Indenture, it will not, directly or indirectly, make, or permit any Subsidiary
of the Company to make, any Restricted Payment.
(b) RIH hereby covenants that, on or after the date of this Indenture,
it will not, directly or indirectly, make, or permit any Subsidiary of RIH to
make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's
Consolidated Interest Coverage Ratio, as certified to the Trustee by an
Officers' Certificate, calculated at the time of the declaration of the dividend
or distribution is equal to or exceeds two, then RIH may declare and pay cash
dividends or make cash distributions in respect of any class of capital stock of
RIH in an amount not to exceed in the aggregate with any other such cash
dividends or distributions declared or made from and after the date hereof, 50
percent of RIH's Consolidated Net Income from and after the date hereof; and
(ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the
Trustee by an Officer's Certificate, calculated at the time of the declaration
of the dividend or distribution is equal to or exceeds two; and (2) RIH has cash
in excess of the amount required to pay interest on the Notes and the Junior
Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may
declare and pay cash dividends or make cash distributions in respect of any
class of capital stock of RIH in an amount not to exceed such excess cash
amount.
(c) The Company and RIH will not, and will not permit any of their
respective Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction of any kind on the ability of
any Subsidiary of RIH or the Company: (i) to pay dividends or make any other
distribution on the capital stock of such Subsidiary that is owned by RIH, the
Company or a wholly owned Subsidiary of the Company or RIH, as applicable; (ii)
to pay any Indebtedness owed by such Subsidiary to RIH, the Company or any
wholly owned Subsidiary of the Company or RIH, as
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applicable; (iii) to make loans or advances to RIH, the Company or any wholly
owned Subsidiary of the Company or RIH, as applicable; or (iv) to transfer any
of its property or assets to the Company, RIH or any wholly owned Subsidiary of
the Company or RIH, as applicable, except (A) any restrictions existing on or
prior to the date hereof, or in connection with agreements in effect, or entered
into, on the date hereof, or any permitted amendments, renewals, refundings,
refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and
conditions of any such amendments, renewals, refundings, refinancings or
extensions are no more restrictive with respect to the matters set forth
in clauses (i) through (iv) of this Section 12.07(c) than the agreements
being amended, refunded, renewed, refinanced or extended; (B) any restrictions
or encumbrances existing or arising pursuant to the terms of Indebtedness
of a Person outstanding at the time such Person becomes a Subsidiary
of the Company or RIH and not incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary of the Company
or RIH or any permitted amendments, renewals, refinancings or extensions
thereof; PROVIDED, HOWEVER, that the terms and conditions of any such
amendments, renewals, refundings, refinancings or extensions are no more
restrictive with respect to the matters set forth in clauses (i) through (iv) of
this Section 12.07(c) than the agreements being amended, renewed, refunded,
refinanced or extended; (c) encumbrances or restrictions existing under or by
reason of applicable law or regulation (including, without limitation, the
Casino Control Act) or this Indenture; (d) customary provisions restricting
assignment of contracts or subletting or assignment of any lease governing a
leasehold interest of any Subsidiary of the Company or RIH; or (e) net worth
maintenance requirements imposed by any governmental authority.
Section 12.08. LIMITATION ON ADDITIONAL
INDEBTEDNESS AND ISSUANCE OF NOTES.
(a) The Company and RIH shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to,
including, without limitation, through any merger or consolidation to which
the Company, RIH or any of their respective Subsidiaries is a party
or through any other acquisition of any such Subsidiary
(collectively, "incur"), or have outstanding, any Indebtedness other than,
without duplication, the following:
(i) the Notes and the Senior Mortgage Notes;
(ii) Indebtedness represented by the Junior Mortgage Facility;
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(iii) Indebtedness represented by the Working Capital Facility;
(iv) Indebtedness represented by Capitalized Lease Obligations in an
amount not in excess of $5,000,000 in the aggregate at any time
outstanding;
(v) Indebtedness represented by F,F&E Financing Agreements in an
amount not in excess of $10,000,000 in the aggregate at any time
outstanding;
(vi) unsecured Indebtedness in an amount not in excess of $5,000,000
in the aggregate at any time outstanding that is subordinated and junior to
the Notes at least to the extent set forth in the Subordination Provisions
attached hereto as Exhibit C and which Indebtedness does not have any
requirements for amortization payments, mandatory redemption or sinking
fund payments prior to the stated maturity of the Notes and does not
provide for the payment of interest in cash at any time when the most
recent installment of interest on the Notes was not paid in cash;
(vii) Non-Recourse Indebtedness in an amount not in excess of
$25,000,000 in the aggregate at any time outstanding;
(viii) After-Acquired Fee Mortgage Debt in an amount not in
excess of $3,000,000 in the aggregate at any time outstanding; and
(ix) Intercompany advances between RIH, the Company or any of their
direct or indirect Subsidiaries on the one hand, and RII, on the other
hand, in an aggregate amount not to exceed $1,000,000.
(b) The Company and RIH shall not permit any of their respective
Subsidiaries to issue (other than to the Company, RIH or a direct or indirect
wholly owned Subsidiary of the Company or RIH) any capital stock which has
voting rights or has a preference as to any distribution over its common stock.
Section 12.09. LIMITATION ON REPAYMENT
OF SUBORDINATED INDEBTEDNESS.
Neither the Company nor RIH shall, and neither the Company nor RIH
shall permit any Subsidiary to, directly or indirectly, purchase, redeem,
defease (including, but not limited to, in-substance or legal defeasance) or
otherwise acquire or retire for value prior to the stated maturity of,
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or prior to any scheduled mandatory redemption or sinking fund payment with
respect to (collectively, to "repay" or a "repayment"), the principal of
any Indebtedness of the Company, RIH or any Subsidiary of the Company or
RIH which is subordinated (whether pursuant to its terms or by operation
of law) in right of payment to the Notes.
Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS.
Each of the Company and RIH covenants that it will not, and will not
permit any Subsidiary to, repurchase any Notes in the open market if an Event of
Default shall have occurred and shall be continuing hereunder, under the Senior
Mortgage Note Indenture or under the Senior Facility Note Indenture.
Section 12.11. RESTRICTION OF ACTIVITIES.
(a) RIH shall not, on or after the date of execution of this
Indenture, until the date that is 91 days after the payment in full by the
Company of the principal of (and interest, if any, on) all Outstanding Notes,
engage in any business or investment activities other than those necessary for,
incident to, connected with or arising out of acquiring, financing, owning and
operating the Casino-Hotel or additional hotels or casinos or related or
ancillary businesses.
(b) Neither the Company nor RIH shall make any loans to any
Affiliate or any other Person other than (i) Indebtedness of the type described
in clause (ix) of Section 12.08(a), and (ii) loans to RII from the proceeds of
the Indebtedness represented by the Working Capital Facility; PROVIDED,
HOWEVER, that RIH shall have the right to make loans to employees of RIH
actively involved in the operation of the Casino-Hotel or to engage in credit
transactions in the operation of the Casino-Hotel, if such loans or credit
transactions are in the ordinary course of business of operating a casino-hotel.
(c) The Company shall not engage in any business (and shall not have
any Subsidiaries) other than (i) to collect principal, interest (and any
interest on overdue principal and interest) and other amounts under any
intercompany notes or guaranties made to the order of or otherwise in favor of
the Company, (ii) to preserve its rights under this Indenture and the Mortgage
Documents and otherwise to comply with its obligations thereunder and under the
Notes, (iii) to do or cause to be done all things necessary or appropriate to
protect the Trust Estate, (iv) to preserve its rights under the Senior Mortgage
Indenture and the Senior Mortgage Documents and otherwise to comply with its
obligations thereunder and under the Senior Mortgage Notes,
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(v) to issue Indebtedness represented by the Working Capital
Facility, (vi) to preserve its rights under the Working Capital
Facility and otherwise comply with its obligations under the Working
Capital Facility, (vii) to incur any other Indebtedness permitted under
this Indenture, (viii) to do all such acts and deeds necessary in
connection with the Junior Mortgage Facility and the documents and
instruments relating thereto and the Working Capital Facility and
the documents and instruments relating thereto, (ix) to declare, issue and pay
dividends on, or make any redemptions or repurchases of, the Company's capital
stock as contemplated by its Certificate of Incorporation (to the extent
permitted hereby) and otherwise to comply with and perform the provisions of its
Certificate of Incorporation and By-laws, and (x) to do such further acts and
deeds to effectuate any of the matters listed in the foregoing clauses of this
Section 12.11(c).
Section 12.12. LIMITATION ON SUBSIDIARIES;
CONSOLIDATED GROUP.
The Company and RIH shall not have any Subsidiaries except the
Subsidiaries existing on the date of this Indenture and Subsidiaries acquired by
the Company or RIH in transactions not prohibited by the other provisions of
this Indenture which are and shall at all times be wholly owned (directly or
indirectly) by the Company or RIH.
Section 12.13. LIMITATIONS ON LIENS.
Neither the Company nor RIH will create, incur, suffer to exist or
permit to be created or incurred any mortgage, lien, charge or encumbrance on or
pledge of the Mortgage Documents or any of the Trust Estate, other than (a) the
lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the
Trust Estate in connection with Indebtedness permitted by clauses (i), (ii),
(iii), (iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on the
Trust Estate, and (d) a notice of intention or building contract filed by a
mechanic, materialman or laborer under the New Jersey lien law. Without
limiting the generality of the previous sentence, but notwithstanding the
provisions of such sentence, RIH shall not be deemed to have breached such
provisions by virtue of the existence of liens for Impositions (as defined in
the Mortgage) or mechanics' liens so long as RIH is in good faith
contesting the validity of such liens in accordance with
the provisions of Section 5.09 of the Mortgage.
Section 12.14. COMPLIANCE WITH LAWS.
Each of the Company and RIH shall comply, and shall cause
each of its Subsidiaries to comply, with the Casino Control Act and
all other applicable statutes (including,
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without limitation, ERISA), rules, regulations, orders and
restrictions of the United States of America, states and municipalities, and of
any governmental department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing in respect of the conduct of its
business and the ownership of its properties and assets, including, without
limitation, the Trust Estate, except such as are being contested in good faith
by appropriate proceedings in accordance with the Mortgage Documents (to the
extent applicable) and except for such non-compliances as will not in the
aggregate have a material adverse effect on the business, properties, operations
or financial condition of the Company, RIH or their respective Subsidiaries.
Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company or RIH shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes, assessments
and governmental charges levied or imposed upon the Company, RIH or any of their
respective Subsidiaries or upon the Trust Estate or any portion thereof or upon
the income, profits or property of the Company, RIH or any of their respective
Subsidiaries, and (b) all lawful claims for labor, materials and supplies which,
if unpaid, will by law become a Lien upon the Trust Estate or upon any other
property of the Company, RIH or any of their respective Subsidiaries; PROVIDED,
HOWEVER, that the Company and RIH shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessments, charge or claim the
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings in accordance with the Mortgage Documents (to the extent
applicable) if adequate reserves therefor have been established in accordance
with GAAP.
Section 12.16. MAINTENANCE OF PROPERTIES.
Each of the Company and RIH shall cause the Trust Estate and all other
properties (other than obsolete equipment) owned by or leased to it or any of
its Subsidiaries, and used or useful in the conduct of its business or the
business of the Company, RIH or such Subsidiary to be maintained and kept in
good condition, repair and working order, except for reasonable wear and use,
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as required by the Mortgage Documents
or, to the extent not governed by the Mortgage Documents, as in the reasonable
judgment of the Board of Directors of RII may be necessary so that
the business carried on in connection therewith may be properly
and advantageously conducted at all times.
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Section 12.17. INSURANCE.
Each of the Company and RIH shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable insurers,
appropriate insurance on each of their respective properties and businesses
against liabilities, casualties, risks and contingencies of the type and in
amounts required by the Mortgage Documents or, to the extent not governed by the
Mortgage Documents, as customarily maintained by corporations and other entities
engaged in the same or similar businesses and similarly situated; PROVIDED,
HOWEVER, that any such insurer shall be qualified to do business in the
jurisdiction where the insured property is located.
Section 12.18 WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each of the Company and RIH covenants (to the extent that it may
lawfully do so) that it will not, and will not cause or permit any of its
Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit
or advantage of, any stay or extension law or any usury law or other law that
would prohibit or forgive the Company or RIH from paying all or any portion of
the principal of, or premium, if any, and interest on the Notes or the RIH
Junior Promissory Note or the Guaranty as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture or the RIH Junior Promissory Note or the Guaranty;
and (to the extent that it may lawfully do so) the Company and RIH hereby
expressly waive all benefit or advantage of any such law, and covenant that they
will not hinder, delay or impede the execution of any power granted to the
Trustee herein and in the Mortgage Documents, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 12.19. APPOINTMENT TO FILL A
VACANCY IN OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 8.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
Section 12.20 VALIDITY OF LIENS.
Each of the Company and RIH represents and warrants that it has, and
covenants that it shall continue to have, full corporate power and lawful
authority to grant, release, convey, assign, transfer, mortgage, pledge,
hypothecate and otherwise create the lien on the Trust Estate; and the Company
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and RIH shall warrant, preserve and defend the interest of the Trustee in and to
the Trust Estate against the claims of all Persons, except as otherwise
expressly permitted by the Mortgage Documents or this Indenture, and will take
all action necessary to maintain and preserve the lien on the Trust Estate
contemplated therein.
Section 12.21. TRANSACTIONS WITH
STOCKHOLDERS AND AFFILIATES.
Each of the Company and RIH covenants that it shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, enter into or permit
to exist any transaction (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company or RIH or with any Affiliate of any such holder, unless
(a) such transaction is upon fair and reasonable terms which are no less
favorable to the Company or such Subsidiary, as the case may be, than would be
available in an arm's-length transaction with an unrelated person and (b) if
over $250,000, such transaction is determined in the good faith judgment of a
majority of the members of the Board of Directors of either (i) RII, so long as
RII owns directly or indirectly a majority of the outstanding capital stock of
RIH, directly or indirectly, or (ii) RIH, to be in the best interests of the
Company, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this
provision shall not apply to (A) any agreements, documents, instruments or
transactions entered into in connection with the RIHF Senior Facility Notes, (B)
the Services Agreement, (C) the RII Management Contract, or (D) the RII Tax
Sharing Agreement.
Section 12.22. LIMITATION ON OPEN MARKET PURCHASES
The Company and RIH shall not, and shall not permit any of their
respective Subsidiaries to, purchase or otherwise acquire (other
than pursuant to Article Thirteen) any Notes unless all interest
accrued on the Notes and payable on the Interest Payment Date
immediately preceding the date of such repurchase was paid solely
in cash and not in Additional Notes.
ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. GENERAL APPLICABILITY OF ARTICLE.
Notes which are redeemable before their Stated Maturity shall be
redeemable in accordance with their terms and in accordance with this Article.
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Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes shall be evidenced by
a Company Order. Redemption of any Notes shall not take place earlier than 15
days after the corporate action taken to authorize the redemption. In case of
any redemption at the election of the Company of less than all the Outstanding
Notes, the Company shall, at least 60 days prior to the Redemption Date fixed by
the Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of Notes
to be redeemed.
Section 13.03. SELECTION BY TRUSTEE
OF NOTES TO BE REDEEMED.
If less than all the Outstanding Notes are to be redeemed, the
particular Notes to be redeemed shall be selected by a random, automated
selection process or PRO RATA, as deemed appropriate by the Trustee, not more
than 60 days prior to the Redemption Date by the Trustee from the Outstanding
Notes which have not previously been called for redemption, and such selection
method may provide for the selection for redemption of portions (equal to the
greater of $1,000 and the smallest authorized denomination of the Notes of such
series, or a multiple thereof) of the principal of Notes of a denomination
larger than $1,000.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note which has been or is to be redeemed.
Section 13.04. NOTICE OF REDEMPTION.
Notice of redemption shall be given by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the Company
by first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Notes of such series to be
redeemed, at his address appearing in the Note Register.
Any notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives the notice. In any case, failure to duly give notice by mail,
or any defect in
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the notice to the Holder of any Notes designated for redemption in
whole or in part, shall not affect the validity of the proceedings for the
redemption of any other Notes.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the principal amount of Notes to be redeemed, and, if less than
all outstanding Notes are to be redeemed, the identification (and, in the
case of partial redemption, the respective principal amounts) of the Notes
to be redeemed;
(d) that on the Redemption Date, the Redemption Price of each of the
Notes to be redeemed will become due and payable and that the interest
thereon shall cease to accrue from and after such date; and
(e) the place or places where the Notes to be redeemed are to be
surrendered for payment of the Redemption Price.
Section 13.05. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 12.03) an amount of
money sufficient to pay the Redemption Price of all the Notes which are to be
redeemed on that date. Such money shall be held in trust for the benefit of the
Persons entitled to such Redemption Price and shall not be deemed to be part of
the Trust Estate.
Section 13.06. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price. Installments of interest due on or prior to the Redemption
Date shall be payable to the Holders of the Notes registered as such on the
relevant Record Dates according to the terms of such Notes and the provisions of
Section 3.07.
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If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate prescribed therefor in the Note.
Section 13.07. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by the Holder thereof or his attorney
duly authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note, without service charge, a
new Note or Notes of any authorized denomination or denominations as requested
by such Holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT.
Notwithstanding the provisions of this Article Thirteen, if the Casino
Control Commission does not waive the qualification requirements as to any
Noteholder (whether the record owner or beneficial owner) and requires that such
Noteholder be qualified under the Casino Control Act, then, in such event, such
Noteholder must qualify under such Act. If a Noteholder does not so qualify,
the Noteholder must dispose of its interest in the Notes, within 30 days after
the Company's receipt of notice of such finding, or the Company may repurchase
such Notes at the lower of the Outstanding Amount and the Fair Market Value of
such Notes, plus accrued interest to the date of such repurchase. Commencing
on the date the Casino Control Commission serves notice upon either RIH or the
Company that any Holder is disqualified, it shall be unlawful for any such
disqualified Holder: (i) to receive any dividends or interest upon this Note;
(ii) to exercise, directly or through any trustee or nominee, any right
conferred by this Note; or (iii) to receive any remuneration in any form from
either the Company or RIH for services rendered or otherwise.
------------------------------
This instrument may be executed in any number of counterparts or with
counterpart signatures, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest: By:
------------------- ------------------------------
Name:
Title:
RESORTS INTERNATIONAL HOTEL, INC.
Attest: By:
------------------- ------------------------------
Name:
Title:
U.S. TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
Attest: By:
------------------- ------------------------------
Name:
Title:
95
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on __________, 1993, _______________ personally came before
me, and he acknowledged under oath, to my satisfaction, that: (a) he is the
______________ of Resorts International Hotel Financing, Inc., the corporation
named in this document; (b) he is the attesting witness to the signing of this
document by the proper corporate officer who is _______________ of Resorts
International Hotel Financing Inc.; (c) this document was signed and delivered
by the corporation as its voluntary act duly authorized by a proper resolution
of its Board of Directors; (d) he knows the proper seal of the corporation which
was affixed to this document; and (e) he signed this proof to attest to the
truth of these facts.
-------------------------
Signed and sworn to
before me on _________, 1993.
- ----------------------
Notary Public of the
State of New York
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ________, 1993, ________________ personally came before
me, and this person acknowledged under oath, to my satisfaction, that: (a) this
person is the __________________________ of Resorts International Hotel, Inc.,
the corporation named in this document; (b) this person is the attesting witness
to the signing of this document by the proper corporate officer who is
______________________, the __________________________ of Resorts International
Hotel, Inc.; (c) this document was signed and delivered by the corporation by
its voluntary act duly authorized by a proper resolution of its Board of
Directors; (d) this person knows the proper seal of the corporation which was
affixed to this document; and (e) this person signed this proof to attest to the
truth of these facts.
--------------------
Signed and sworn to
before me on _________, 1993.
- -------------------------
Notary Public
[seal]
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ________, 1993, ________________ personally came before
me, and this person acknowledged under oath, to my satisfaction, that: (a) this
person is the __________________________ of U.S. Trust Company of California,
N.A., a national banking association named in this document; (b) this
person is the attesting witness to the signing of this document by the proper
corporate officer who is ______________________, the __________________________
of U.S. Trust Company of California, N.A., a national banking association;
(c) this document was signed and delivered by the corporation by its voluntary
act duly authorized by a proper resolution of its Board of Directors; (d) this
person knows the proper seal of the corporation which was affixed to this
document; and (e) this person signed this proof to attest to the truth of these
facts.
-------------------------
Signed and sworn to
before me on _________, 1993.
- -------------------------
Notary Public
[seal]
<PAGE>
Exhibit A
RIH Senior Promissory Note
<PAGE>
EXHIBIT A
AMENDED AND RESTATED SECURED PROMISSORY NOTE
$35,000,000 [ ], 1994
WHEREAS, in partial repayment of certain inter-company debt owed by
Resorts International Hotel, Inc., a New Jersey corporation
("RIH"), to Resorts International, Inc., a Delaware corporation ("RII"), RIH has
issued to RII a promissory note on the date hereof in the principal
amount of $35,000,000 (as the same may be amended or restated from
time to time, the "Note"), which Note is secured by a Mortgage
Securing RIH Junior Promissory Note dated as of the date hereof (the
"Mortgage"), by RIH, as Mortgagor, which Mortgage encumbers certain real
property owned or leased by
RIH together with all buildings and improvements erected thereon
(collectively, the "Property"); and
WHEREAS, RII has transferred the Note and the Mortgage to RIHF in
exchange for 11.375% Junior Mortgage Notes due 2004 (the "Junior
Notes") in an aggregate principal amount of $35,000,000, which
Junior Notes were issued pursuant to that certain Indenture dated
as of even date herewith (the "Indenture") among RIHF, as issuer,
RIH, as guarantor, and U.S. Trust Company of California, N. A., as trustee
(the "Trustee"); and
WHEREAS, RIHF has requested RIH to amend and restate the Note;
NOW, THEREFORE, RIH agrees to amend and restate the Note as
follows:
RIH, for value received hereby promises to pay to the order of RIHF
(RIHF and any subsequent holder of this Note being herein referred
to as the "Payee"), the principal sum of Thirty-Five Million
Dollars ($35,000,000), or such other principal sum as shall be
outstanding hereunder, on December 15, 2004 (the "Maturity Date") in
accordance with the provisions hereof, with interest on such
principal sum from time to time outstanding, computed from
[ ], 1994 [the Effective Date], in semi-annual installments of
interest on June 15 and December 15 of each year, commencing
initially on December 15, 1994, at a rate of 11.375% per annum on
the
<PAGE>
unpaid balance hereof, until the principal hereof is paid in
full. Payments of principal and interest on this Note shall be
made at [address of the Payee], or at such other
address as the Payee may designate in writing. Interest will be
computed on the basis of a 360-day year of twelve 30-day months based
on the actual number of days elapsed. Principal and interest shall
be paid in money of the United States that at the time of payment
is legal tender for public and private debts. The principal sum of
this Note shall be increased from time to time if any Additional
Notes (as defined in the Indenture) are issued under the Indenture
as of the date of their original issuance by the principal amount
of such Additional Notes.
l.(a) This Note shall be prepaid (i) in connection with, but only
to the extent of, any redemption of the Junior Notes of RIHF issued
pursuant to the Indenture (all prepayments of this Note are
hereinafter referred to as "Prepayments"), and/or (ii) by the
surrender to the Trustee of the principal amount of any Junior
Notes purchased or otherwise acquired by RIH or the Company (as
defined in the Indenture) other than pursuant to the redemption
provisions of the Junior Notes for cancellation in accordance with
the provisions of the Junior Notes or the Indenture (it being
expressly understood that the same Junior Notes shall reduce the
principal amount of this Note only once). Each Prepayment under
clause (i) above shall be made at the time that payment is required
or permitted to be made by the Company to the Trustee under the
Indenture in respect of any redemption of Junior Notes. Each
Prepayment under clause (ii) above shall be deemed to be made at
the time of surrender of such Junior Notes for cancellation. Each
Prepayment of this Note pursuant to clause (i) above shall be in an
amount equal to the aggregate amount paid to holders of Junior
Notes on account of the redemption thereof (other than interest),
together with accrued and unpaid interest on the amount of the
reduction in the principal amount of this Note as a result of such
Prepayment. The principal amount of this Note shall be reduced as
a result of such prepayment in an amount equal to the aggregate
principal amount of the Junior Notes so redeemed or surrendered.
(b)Except as set forth in Section 1(a), this Note may not be prepaid
in whole or in part.
2.RIH shall pay interest on overdue principal and prepayment
premium at the rate of 14.375% per annum.
3.This Note is secured by the Mortgage on the Property.
2
<PAGE>
4.If (i) RIH defaults in the payment of interest when
the same becomes due and payable and the default continues for a
period of ten days following receipt of a notice from the Payee or
the Trustee specifying such default and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder;
(ii) RIH defaults in the payment of the principal or any part
thereof when the same becomes due and payable at Maturity (as
defined in the Mortgage); (iii) there shall occur any other Event
of Default under the Mortgage or any other Note (as defined in the
Mortgage); or (iv) there shall occur any other Event of Default
under the Indenture, then on the happening of any such event, the
Payee may declare the entire Outstanding Amount (as defined in the
Indenture) of this Note and all accrued and unpaid interest thereon
and all sums due under Section 5 of this Note and the Mortgage
(collectively, the "Debt") to become immediately due and payable.
5. RIH hereby waives presentment and demand for payment, notice of
dishonor, protest and notice of protest of this Note and agrees to
pay all costs of collection when incurred, including reasonable
attorneys' fees, which costs may be added to the amount due under
this Note and be receivable therewith, and to perform and comply
with each of the terms, covenants and provisions contained in this
Note and the Mortgage on the part of RIH to be observed or
performed. Except as expressly provided herein, no release of
any security for the principal sum due under this Note or extension
of time for payment of this Note, or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note or
the Mortgage shall release, discharge, modify, change or affect the
liability of RIH under this Note or the Mortgage.
6. RIH covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury,
stay or extension law or any other law which would prohibit or
forgive RIH from paying all or any portion of the interest on this
Note, wherever enacted, now or at any time hereafter in force, or
which may otherwise affect the covenants or the performance of this
Note or the Mortgage; and RIH (to the extent that it may lawfully
do so) 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 Payee, but will
suffer and permit the execution of every such power as though no
such law had been enacted.
7. This Note shall be deemed to be a contract under the laws of the
State of New York and shall be construed
3
<PAGE>
in accordance with and
governed by the internal laws of the State of New York.
8. This Note may not be changed or terminated orally, but only by an
agreement in writing signed by the party against whom enforcement
of such change or termination is sought.
9. RIH shall not claim any credit or deduction from the interest or
principal due hereunder by reason of payment of any tax assessed
upon the Property.
10. Whenever the provisions of this Note and the provisions of the
Indenture shall be inconsistent, the provisions of the Indenture
shall govern.
11. This Note is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act. This note shall not be
transferred, assigned or amended without prior approval of the New Jersey Casino
Control Commission.
12. Whenever used herein, the singular number shall include the
plural, the plural the singular, and the words "Payee" and "RIH"
shall include their respective successors and assigns.
IN WITNESS WHEREOF, RIH has duly executed this Note as of the day
and year first above written.
RESORTS INTERNATIONAL HOTEL, INC.
By: ________________________
Name:
Title:
4
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this [ ] day of [ ], 1994, before
me, the subscriber, a Notary public of the State of New York,
personally appeared [ ], [ ] of RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation, and he
acknowledged that he signed, sealed and delivered the same as his
voluntary act and deed and the act and deed of said RESORTS
INTERNATIONAL HOTEL, INC., and that he received a true copy of
the within instrument on behalf of said corporation.
_____________________________________
Notary Public of the State of New York
[Seal]
5
<PAGE>
Exhibit B
Assignment Agreement from Resorts
International Hotel Financing, Inc.
<PAGE>
NA932810098 - JUNIOR MORTGAGE ASSIGNMENT
GD&C DRAFT DATED 12/17/93
==============================================================================
ASSIGNMENT OF AGREEMENTS
________________
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignor,
TO
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
a national banking association,
as Assignee
Dated as of _________________, 1994
===============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware
corporation ("ASSIGNOR"), having an address at c/o Resorts
International, Inc., 1133 Boardwalk, Atlantic City, New Jersey
08401, to U. S. TRUST COMPANY OF CALIFORNIA, N.A.
a national banking association, having an address at
555 South Flower Street, Suite 2780 Los Angeles, California 90071,
in its capacity as Trustee ("ASSIGNEE"), under that certain Indenture
dated as of
even date herewith (the "INDENTURE") among Assignor, Assignee and
Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR").
WITNESSETH:
WHEREAS, in partial repayment of certain inter-company debt owed by
Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"),
Mortgagor has issued to RII a promissory note on the date hereof in the
principal amount of $35,000,000 (as the same may be amended or
restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof (the "MORTGAGE"), which Mortgage encumbers
certain real property owned or leased by Mortgagor as more
specifically described on SCHEDULE 1 hereto together with all
buildings and improvements erected thereon (collectively, the
"PROPERTY"); and
WHEREAS, RII has transferred the RIH Junior Promissory Note and the
Mortgage to Assignor in exchange for 11.375% Junior Mortgage Notes
due 2004 (the "NOTES") in an aggregate principal amount of
$35,000,000, which Notes were issued pursuant to the Indenture;
and
WHEREAS, as further security for the obligations of Mortgagor under
the RIH Junior Promissory Note, Mortgagor has executed and
delivered (i) an Assignment of Operating Assets and (ii) an
Assignment of Leases and Rents, each in favor of Assignor (as
assignee of RII) and each dated as of the
date hereof (said Assignments and the Mortgage collectively
referred to herein as the "RIH JUNIOR PROMISSORY NOTE MORTGAGE
DOCUMENTS"), pursuant to which Mortgagor granted
<PAGE>
a security interest in specified personal property, assigned certain other
rights and assigned all right, title and interest of Mortgagor in
leases and rents to Assignor, all as security for the performance
and observance of obligations of Mortgagor under the RIH Junior
Promissory Note; and
WHEREAS, the rights and obligations of the Assignee hereunder are
subject to the terms set forth in that certain Intercreditor
Agreement dated as of the date hereof among Assignor, Assignee,
Mortgagor, Fidelity Management and Trust Company, as trustee, and
State Street Bank and Trust Company of Connecticut, National
Association, as trustee (and such other parties that may from
time to time become a party thereto); and
WHEREAS, in order to secure payment of the Notes and all other
payments due to the holder(s) from time to time of the Notes
(collectively, the "HOLDERS") or the Trustee under the Indenture,
Assignor has agreed to execute this Assignment and to be bound by
its terms;
NOW, THEREFORE, THIS ASSIGNMENT
FURTHER WITNESSETH:
That Assignor in consideration of the purchase of the Notes by the
Holders, Ten Dollars ($10.00) lawful money of the United States of
America duly paid to Assignor by Assignee at or before the
execution and delivery of these presents and for other good and
valuable consideration, the receipt of which are hereby
acknowledged, does hereby sell, assign and transfer unto
Assignee and unto its successors and to its assigns forever, for
its benefit and for the benefit of the Holders, and does hereby
grant to Assignee a security interest in and to all of Assignor's
estate, right, title and interest in, to and under any and all of
the following described property, rights and interests
(collectively, the "ASSIGNED PROPERTIES"):
GRANTING CLAUSE FIRST
All right, title and interest of Assignor in and to the RIH Junior
Promissory Note, including all renewals, extensions, modifications
and replacements of the same, and without limiting the generality
of the foregoing, the present, continuing and future right to make
claim for, collect or cause to be collected, receive or cause to be
received directly from Mortgagor thereunder, all payments of
principal, interest and other sums of money payable thereunder.
GRANTING CLAUSE SECOND
All right, title and interest of Assignor in and to
the RIH Junior Promissory Note Mortgage Documents, including
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<PAGE>
all extensions, renewals, modifications, supplements and replacements
of the same.
TO HAVE AND TO HOLD all said properties, rights and
interests unto Assignee and its successors and assigns forever.
THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and
covenants with Assignee as follows:
ARTICLE ONE
PARTICULAR COVENANTS OF ASSIGNOR
Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents,
warrants and covenants that it is duly authorized to enter into
this Assignment, and to grant and convey a lien on and security
interest in the Assigned Properties to Assignee in the manner and
to the extent herein set forth and that all action on its part
required for the execution and delivery of this Assignment has
been duly and effectively taken.
Section 1.02. FURTHER ACTION REQUIRED.
(a) Assignor covenants that it will, from time to time, execute and
deliver such further instruments and take such further actions as
may be required to carry out the purposes of this Assignment.
(b) Assignor hereby appoints Assignee as its lawful attorney-in-fact
(such power being coupled with an interest) in the name of Assignor
or Assignee or both to execute any instruments or to take any
actions to enforce all rights, powers and remedies of Assignor
under or pursuant to the Assigned Properties.
(c) Nothing contained herein shall limit the rights of Assignee
contained in the Mortgage or the Indenture.
(d) Until this Assignment is discharged in accordance with Section 5.01
hereof, no amendment, waiver, modification, discharge, release,
enforcement or satisfaction by Assignor of any of the rights or
remedies under the Assigned Properties shall be effective without
the prior consent and approval of Assignee, and Assignor shall have
no power or authority to take any such action without such consent
and approval.
ARTICLE TWO
OBLIGATIONS TO ASSIGNEE
Section 2.01. CONTINUING OBLIGATIONS.
3
<PAGE>
(a) Assignee shall have no obligation, duty or liability with
respect to the Assigned Properties or any of them (other than
those specifically assumed in its capacity as Trustee pursuant to
the Indenture).
(b) Assignor shall at all times remain liable to observe and perform
all of its covenants and obligations, if any, under the Assigned
Properties, and does hereby agree to indemnify and hold harmless
Assignee, its successors and assigns, from any liability, loss,
damage or expense it or they may incur under the Assigned
Properties or by reason of this Assignment.
ARTICLE THREE
PAYMENTS
Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due
and to become due under or pursuant to the Assigned Properties
shall be paid by Mortgagor directly to Assignee at the address set
forth in Section 6.02 hereof. Neither Assignor nor Assignee shall
have the right, without Mortgagor's prior written consent, to
instruct Mortgagor to pay Revenues to Assignor or in any manner or
to any party other than directly to Assignee.
Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins
in the execution of this Assignment to acknowledge (a) the
assignment by Assignor to Assignee of Assignor's right, title and
interest in, to and under the Assigned Properties, (b) Mortgagor's
agreement to make payment of all Revenues under the Assigned
Properties directly to Assignee at the address set forth in this
Assignment, and (c) the right of Assignee to exercise or enforce in
its own name, in the name of Assignor, or both, all of the rights,
powers and remedies of Assignor in, to and under the Assigned
Properties.
Section 3.03. REVENUES. As used herein, the term "REVENUES" shall
mean (a) all amounts paid or payable by Mortgagor under the RIH
Junior Promissory Note or the RIH Junior Promissory Note Mortgage
Documents, and (b) the net proceeds realized upon or as a result of
the enforcement of any mortgage lien or security interest granted
under the Assigned Properties or this Assignment or upon or as a
result of the exercise of any right or remedy under the Assigned
Properties or this Assignment.
Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor
hereby acknowledges, that Mortgagor may rely exclusively on
Assignee's directive that Assignee is entitled to take action
under this Assignment.
4
<PAGE>
ARTICLE FOUR
DEFAULT PROVISIONS AND REMEDIES
Section 4.01. ENFORCEMENT OF REMEDIES.
(a) Upon the occurrence of any default under the
Indenture or the Assigned Properties, or any of them (each, a
"DEFAULT"), not cured within the applicable grace period after the
applicable notice provision, if any, has been satisfied (each
called an "EVENT OF DEFAULT"), Assignee may, at its option, (i)
proceed directly to protect and enforce its rights and the rights
of any Holders under this Assignment or pursuant to the Assigned
Properties, or any one of them, by such suits, actions or special
proceedings in equity or at law, or by proceedings in the office of
any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein, or in
the Assigned Properties, or any of them, or in aid of execution of
any power granted herein or pursuant to the Assigned Properties, or
any one of them, or for the enforcement of any proper legal or
equitable remedy, including, without limitation, foreclosure of
the Mortgage and/or the sale of the collateral or part thereof
secured thereby at such foreclosure sale, subject to statutory and
other legal requirements, as Assignee shall deem most effective to
protect and enforce such rights, and Assignor hereby appoints
Assignee as its lawful attorney-in-fact (such power being coupled
with an interest) in the name of Assignor or Assignee or both to
effectuate such foreclosure and/or sale of such collateral or part
thereof; or (ii) instruct, direct and cause Assignor to effectuate
the foregoing on behalf of and for the benefit of Assignee and the
Holders, it being further understood that Mortgagor joins in the
execution of this Assignment in order to acknowledge its agreement
to promptly and duly execute and deliver any and all documents and
take any and all actions required by Assignee in order to permit
Assignee to foreclose and/or sell such collateral or part thereof,
and obtain the benefits of this Assignment, as aforesaid.
(b) Upon the occurrence of any Event of Default, Assignee shall be
entitled to sue for, enforce payment of and receive any and all
amounts then and at any time remaining due from Assignor or
Mortgagor for principal and interest on the RIH Junior Promissory
Note, or other sums due under the RIH Junior Promissory Note
Mortgage Documents, as the case may be, or otherwise under any of
the provisions of the Assigned Properties, or any of them, with
interest on overdue payments of such principal, at the rate set
forth in the RIH Junior Promissory Note, from the date of Default
to the date of such payment, together with any and all fees, costs
and expenses of collection (including reasonable attorneys' fees
and court costs), subject to statutory and other legal
requirements.
5
<PAGE>
(c) Regardless of the occurrence of an Event of Default, upon five
days' written notice to Mortgagor (or such shorter period or
without notice if deemed necessary and appropriate by Assignee),
Assignee may institute and maintain or cause in the name of
Assignor or Assignee or both to be instituted and maintained such
suits and proceedings as it may be advised by its counsel shall be
necessary and appropriate to prevent any impairment of the Assigned
Properties, or any of them, and to protect its interests in the
Assigned Properties, and in the rents, issues, rights, revenues
and other income arising therefrom, including power to institute
and maintain proceedings to restrain the enforcement or compliance
with any 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 the
security hereunder or would be materially prejudicial to the
interests of Assignee.
(d) Nothing contained in this Article Four is intended to grant
Assignee any greater remedies and rights than those allowed to
Assignor in the respective Assigned Properties. In the event of
any conflict between the remedies and rights contained in any of
the Assigned Properties and the remedies and rights contained in
this Article Four, then the remedies and rights set forth in the
applicable Assigned Property shall govern.
ARTICLE FIVE
DISCHARGE OF ASSIGNMENT
Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or
cause to be paid, or there shall otherwise be paid, to Assignee
and/or the Holders' all amounts required to be paid by Assignor
pursuant to the Indenture and the Notes, and the conditions
precedent for the Indenture shall cease, determine and become
null and void in accordance with Section 5.01 of the Indenture,
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statements filed in connection
herewith and execute and deliver to Assignor and to Mortgagor all
such instruments as may be appropriate to evidence such discharge
and satisfaction of said lien or liens, and Assignee shall pay over
or deliver to Assignor all other moneys and securities held by it
pursuant to this Assignment, which are not required for the payment
of (a) principal and redemption price, if applicable, of and
interest on, the Notes, and (b) all other amounts required to be
paid by Assignor pursuant to the Indenture and the Notes.
6
<PAGE>
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the
covenants, stipulations, obligations and agreements contained in
this Assignment shall be binding upon and inure to the benefit of
Assignor, Assignee and Mortgagor (to the extent applicable to
Mortgagor) and their respective successors and assigns.
Section 6.02. NOTICES.
(a) Any request, notice, demand, authorization, direction, request or
other instrument authorized or required by this Assignment to be
given to or filed with Assignor, Assignee or Mortgagor
(collectively, "NOTICES") shall be deemed given when either (i)
delivered by hand or (ii) five days after sending by registered or
certified mail, postage prepaid, in either case addressed as follows:
If to Assignor, at:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Assignee, at:
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
555 South Flower Street
Suite 2780
Los Angeles, California 90071
Attention: Corporate Trust Department
If to Mortgagor, at:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to Mortgagor, Assignor and/or Assignee, given as
provided above, any party may designate additional or substitute
addresses for Notices, which shall, notwithstanding Section
6.02(a), be deemed given with received.
Section 6.03. PARTIAL INVALIDITY. In case any one
or more of the provisions of this Assignment shall for any
7
<PAGE>
reason be held to be illegal or invalid, such illegality or
invalidity shall not affect any other provision of this
Assignment, but this Assignment shall be construed and
enforced at the time as if such illegal or invalid
provisions had not been contained herein or therein, nor shall such
illegality or invalidity or any application thereof affect any
legal and valid application herein or thereof from time to time.
Section 6.04. APPLICABLE LAW. This Assignment shall be governed
by and construed under the internal laws of the State of New
Jersey, without giving effect to the principles of conflicts of
law.
Section 6.05. NO AMENDMENT. For so long as the Notes shall remain
outstanding, the Assigned Properties may not be modified, amended
or terminated except in accordance with the provisions of the
Indenture or the Assigned Properties.
Section 6.07. CASINO CONTROL ACT. Each of the provisions of this
Assignment is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act. This Agreement
shall not be transferred, assigned or amended without prior approval
of the New Jersey Casino Control Commission.
IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed
this Assignment Agreement as of the date first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest:
_________________________________ By:_______________________________
President
RESORTS INTERNATIONAL HOTEL, INC.
Attest:
_________________________________ By:_______________________________
President
8
<PAGE>
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Attest:
___________________________________ By:_________________________________
Title
9
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of U.S. TRUST COMPANY OF CALIFORNIA, N.A., the
corporation named in the within instrument; that
__________________ is the Vice President of said Corporation;
that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of
directors of the said corporation; that deponent well knows the
corporate seal of said corporation; and that the seal affixed to
said instrument is the proper corporate seal and was thereto
affixed and said instrument signed and delivered by said Vice
President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
10
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation named
in the within instrument; that ____________ is the Vice President of said
Corporation; that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of directors of
the said corporation; that deponent well knows the corporate seal
of said corporation; and that the seal affixed to said instrument
is the proper corporate seal and was thereto affixed and said
instrument signed and delivered by said Vice President as and for
the voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
11
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation
named in the within instrument; that ______________ is the Vice
President of said corporation; that the execution, as well as the
making of this instrument, has been duly authorized by a proper
resolution of the board of directors of the said corporation; that
deponent well knows the corporate seal of said corporation; and
that the seal affixed to said instrument is the proper corporate
seal and was thereto affixed and said instrument signed and
delivered by said Vice President as and for the voluntary act and
deed of said corporation. In presence of deponent who thereupon
subscribed his name thereto as attesting witness; and deponent
signed this proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
12
<PAGE>
EXHIBIT C
SUBORDINATION PROVISIONS
<PAGE>
EXHIBIT C
SUBORDINATION PROVISIONS
A. SUBORDINATION. Anything herein to the contrary notwithstanding,
Subordinated Debt, including principal, premium, if any, and interest, shall be
subordinate and junior to the extent set forth in subparagraphs (i) to (v),
inclusive, below, to all Senior Indebtedness.
(i) If the Company (as defined in this Exhibit C) shall default in
the payment of any principal of or interest on any Senior Indebtedness when
the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration of acceleration or otherwise, then, unless
and until such default shall have been remedied by payment in full in cash
or waived or shall have ceased to exist or all amounts then due and payable
in respect of Senior Indebtedness shall have been paid in full or provision
shall have been made for such payment in cash, no holder of the
Subordinated Debt shall accept or receive any direct or indirect payment
(in cash, property, by set-off or otherwise) of or on account of any
Subordinated Debt.
(ii) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Company, and in the
event of any proceedings for voluntary liquidation, dissolution or other
winding up of the Company, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Indebtedness shall first be paid in
full in cash, or such payment shall have been provided for in cash, before
any payment of or on account of principal or interest is made by the
Company upon the Subordinated Debt.
(iii) In any of the proceedings referred to in subparagraph (ii)
above, any payment or distribution of any kind or character, whether in
cash, property, stock or obligations, which may be payable or deliverable
by the Company in respect of the Subordinated Debt shall be paid or
delivered directly to the holders of Senior Indebtedness (or to a banking
institution selected by the court or Person making the payment or delivery
or designated by any holder of Senior Indebtedness) for application in
payment thereof in accordance with the priorities then existing among such
holders, unless and
<PAGE>
until all principal of and interest on all Senior Indebtedness shall have
been paid in full in cash or such payment shall have been provided for;
PROVIDED, HOWEVER, that no such delivery shall be made to holders of Senior
Indebtedness of stock or obligations which are issued pursuant to
reorganization proceedings or dissolution or liquidation proceedings, or
upon any merger, consolidation, sale, lease, transfer or other disposal not
prohibited by the provisions of the Subordinated Debt, by the Company, as
reorganized, or by the corporation succeeding to the Company or acquiring
its property and assets, if such stock or obligations are subordinate and
junior (whether by law or agreement) at least to the extent provided in
this Section ___ to the payment of all Senior Indebtedness then outstanding
and to the payment of any stock or obligations which are issued in exchange
or substitution for any Senior Indebtedness then outstanding.
(iv) Upon the occurrence and continuance of any Default Subordination
Event (other than under circumstances when the terms of subparagraph (ii)
above are applicable), no holder of the Subordinated Debt shall accept or
receive any direct or indirect payment (in cash, property, by set-off or
otherwise) of or on account of any indebtedness in respect of the
Subordinated Debt during the Applicable Stand-Still Period; PROVIDED,
HOWEVER, that in the case of any payment on or in respect of any
Subordinated Debt which would (in the absence of any such Default
Subordination Event) have been due and payable on any date (a "Scheduled
Payment Date") during such Applicable Stand-Still Period, the provisions of
this subparagraph (iv) shall not prevent such payment (a "Scheduled
Payment") on or after the date (the "Deferred Maturity Date") immediately
following the termination of such Applicable Stand-Still Period.
Notwithstanding the foregoing provisions of this subparagraph (iv), the
failure by the Company to make a Scheduled Payment on a Scheduled Payment
Date during an Applicable Stand-Still Period shall nevertheless constitute
an Event of Default.
(v) If any payment or distribution of any character, whether in cash,
securities or other property, shall be received by any holder of
Subordinated Debt in contravention of any of the terms of this Section ___
and before all the Senior Indebtedness shall have been paid in full, such
payment or distribution shall be received in trust for the benefit of the
holders of the Senior Indebtedness at the time outstanding in accordance
with the priorities then existing among such holders, and shall forthwith
be paid over or delivered and transferred to the holders of Senior
Indebtedness.
<PAGE>
B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions of this
Section ___ are for the purpose of defining the relative rights of the holders
of Senior Indebtedness on the one hand, and the holders of the Subordinated Debt
on the other hand, against the Company and its property; and nothing herein
shall impair, as between the Company and the holders of the Subordinated Debt,
the obligation of the Company, which is unconditional and absolute, to pay to
the holders thereof the principal thereof and premium, if any, and interest
thereon in accordance with their terms and the provisions hereof, nor shall
anything herein prevent the holders of the Subordinated Debt from exercising all
remedies otherwise permitted by applicable law or hereunder upon default
hereunder or under the Subordinated Debt (including, without limitation, the
right to demand payment and sue for performance hereof and of the Subordinated
Debt and to accelerate the maturity thereof as provided in Section ___), subject
to the rights, if any, under this Section ___ of holders of Senior Indebtedness
to receive cash, property, stock or obligations otherwise payable or deliverable
by the Company to the holders of the Subordinated Debt; PROVIDED, HOWEVER, that
upon the commencement and during the continuance of an Applicable Stand-Still
Period the holders of the Subordinated Debt, to the extent they are otherwise
entitled to do so, will not accelerate the maturity of the Subordinated Debt or
pursue any other remedy to enforce payment thereof or initiate any bankruptcy or
insolvency proceeding relative to the Company unless and until the earlier of
(i) the end of such Applicable Stand-Still Period and (ii) the acceleration of
the Senior Indebtedness related to such Applicable Stand-Still Period.
C. Subrogation. Upon payment in full of Senior Indebtedness, the
holders of the Subordinated Debt shall be subrogated to the rights of the
holders of the Senior Indebtedness to receive payments or distributions of
assets of the Company made on Senior Indebtedness until the principal of and
premium, if any, and interest on the Subordinated Debt shall be paid in full,
and, for the purposes of such subrogation, no payments to the holders of Senior
Indebtedness of any cash, property, stock or obligations to which the holders of
the Subordinated Debt would be entitled except for the provisions of
subparagraph (iii) of Section A above shall, as between the Company, its
creditors (other than the holders of the Senior Indebtedness) and the holders of
the Subordinated Debt, be deemed to be a payment by the Company to or on account
of the Senior Indebtedness.
D. DEFINITIONS.
"DEFAULT SUBORDINATION EVENT" means the existence of all of the
following: (i) an event of default shall have occurred and be continuing in
respect of the Senior
<PAGE>
Indebtedness, (ii) the holders of the Subordinated Debt shall have received a
notice from or on behalf of any holder of Senior Indebtedness specifying that
such event of default has occurred and is continuing and that such notice
constitutes a "Default Subordination Notice", and (iii) no other Default
Subordination Notice shall have been delivered by or on behalf of any holder of
Senior Indebtedness within the 365-day period immediately preceding the giving
of such notice.
The "APPLICABLE STAND-STILL PERIOD" relating to any Default
Subordination Event shall be deemed to continue until the event of default under
the Senior Indebtedness giving rise thereto shall have been cured (by payment or
otherwise) or waived or a period of 180 days shall have elapsed from the giving
of the Default Subordination Notice relating thereto, in any such case whichever
shall be the shorter period.
"SENIOR INDEBTEDNESS" shall mean and include all obligations (whether
now outstanding or hereafter incurred), for the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise, including, without
limitation, principal, interest, premium, fees, expenses and indemnities,
whether now owing or hereafter incurred (including any interest accruing
subsequent to the commencement of a proceeding described in Section 7.04,
regardless of whether the claims of holders of such payment obligations for such
interest are allowed in any such proceeding).
<PAGE>
NA932810086 - NOTE MORTGAGE
RIH JUNIOR PROMISSORY NOTE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING
RIH JUNIOR PROMISSORY NOTE
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
a Delaware corporation,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING
RIH JUNIOR PROMISSORY NOTE
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation
("RIHF"), having an address at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or
assigns which shall than be the Noteholder (as hereinafter defined),
being referred to herein as "Mortgagee").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to
Mortgagor and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and in order to
secure (i) the payment of the principal amount (and premium, if any)
of the secured junior promissory note by Mortgagor to Mortgagee in the
principal amount of $35,000,000 as amended and restated the date hereof
(hereinafter collectively referred to as the "Note"), in lawful money of the
United States, to be paid in accordance with the provisions thereof (and all
renewals, extensions, and modifications thereof) all of which are hereby made
an integral part hereof as though set forth at length herein; (ii) payment of
interest (including interest on all overdue principal and premium, if
any) becoming due under the provisions of the Note; (iii) payment by
Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee
pursuant to any term or provision of this Mortgage; (iv) performance
of each covenant, term, condition and agreement of Mortgagor herein or
in the Note contained; (v) all costs and expenses, including reasonable
counsel fees and expenses as provided in Section 3.07, which may arise
in respect of the Note and this Mortgage or of the obligations secured
hereby; and (vi) performance and observance of all of the provisions
herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released,
conveyed and confirmed unto Mortgagee and its successors hereunder and
assigns forever, all of its right, title and interest in, to and under
any of the following described property:
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GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and
franchises particularly described in annexed Schedule 1 (the "Owned
Land") which Schedule is hereby made a part of, and deemed to be
described in, this Granting Clause as fully as if set forth in this
Granting Clause at length.
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the
"Ground Leases") particularly described in Schedule 2, which Schedule
is hereby made a part of, and deemed to be described in, this Granting
Clause as fully as if set forth in this Granting Clause at length,
which Ground Leases cover the real property described in such Schedule
2 (the "Leased Land") and in and to any and all modifications,
extensions and renewals of the Ground Leases and all options set forth
therein, together with (i) all credits, deposits, privileges and rights
of the Mortgagor as lessee under the Ground Leases, now or at any time
existing, (ii) the leaseholds and the leasehold estates created by the
Ground Leases and (iii) all of the estates, rights, titles, claims or
demands whatsoever of Mortgagor, either in law or in equity, in
possession or in expectancy, of, in and to the Ground Leases and the
Leased Land, together with (x) any and all other, further or additional
title, estates, interests or rights which may at anytime be acquired by
the Mortgagor in or to the Leased Land, and the Mortgagor expressly
agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or
any other greater estate to the Leased Land pursuant to the Ground
Leases, or otherwise, the lien of this Mortgage shall attach, extend
to, cover and be a lien upon such fee simple title or other greater
estate and thereupon the lien of this Mortgage shall be prior to the
lien of any mortgage or deed of trust placed on such acquired title,
estate, interest or right subsequent to the date of this Mortgage
(except as otherwise provided herein) and (y) any right to possession
or statutory term of years derived from, or incident to, the Ground
Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the
"Code") or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation.
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GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and
proceeds of the property subjected or required to be subjected to the
lien of this Mortgage, including, without limitation, the property
described in Granting Clauses First, Second, and Sixth (such property
is hereinafter collectively referred to as the "Premises") and all the
estate, right, title and interest of every nature whatsoever of the
Mortgagor in and to the same and every part thereof. The collective
metes and bounds description of the Owned Land and the Leased Land is
set forth in annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the
date of execution of this Mortgage or hereafter entered into by the
Mortgagor, if any, including extensions, renewals or amendments of all
of the same, and the immediate and continuing right as security in
accordance with an Assignment of Leases and Rents of even date herewith
between Mortgagor and Mortgagee, and, after the occurrence of an Event
of Default, to make claim for, collect, receive and receipt for (and
to apply the same as provided herein) any and all rents, income,
revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof,
whether payable as rent, insurance proceeds, condemnation awards,
security or otherwise and whether payable prior to or subsequent to the
maturity date of the Note, to receive and give notices and consents
thereunder, to bring actions and proceedings thereunder or for the
enforcement thereof, to make waivers and agreements, to take such
action upon the happening of a default under any Lease, including the
commencement, conduct and consummation of any proceedings at law or in
equity as shall be permitted by any provision of any Lease, and to do
any and all things which the Mortgagor or any lessor is or may become
entitled to do under the Leases; provided, that the assignment made by
this granting Clause Fourth shall not impair or diminish any obligation
of the Mortgagor under the Leases, or shall any such obligation be
imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting
Clause Third, the Mortgagor's rights, privileges and franchises in and
to the following, to the extent of the Mortgagor's interest therein and
thereto and to the extent assignable (collectively, "Operating Assets"):
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(a) bookings and receipts for the use of guest rooms,
banquet facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including
guaranties and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks,
trade names, service marks, service names, logos, copyrights,
warranties and other items of intangible personal property relating
to the ownership or operation of the Casino-Hotel, including, without
limitation, (1) telephone and other communication numbers, (2) all
software licensing agreements as are required to operate computer
software systems at the Casino-Hotel, all transferable proprietary
interest in software required to operate the computer systems at the
Casino Hotel and books and records relating to the software programs,
and (3) lessee's interest under leases of Tangible Personal Property;
(e) all agreements entered into by or on behalf of the
Mortgagor or which have been assigned to the Mortgagor, for the design
and construction, and for the equipping and furnishing, of the
Casino-Hotel, including architect's agreements, engineering agreements,
construction contracts, consulting agreements and agreements or
purchase orders for all items of Tangible Personal Property and payment
and performance bonds in favor of the Mortgagor in connection with the
Trust Estate (and all warranties and guaranties thereunder and
warranties and guaranties of any subcontractor and bond issued in
connection with the work to be performed by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other articles of
tangible personal property which are, or are to be located on, or
used in connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six wheels, located or to be located in the Casino-Hotel, and all
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furnishings and equipment to be used in connection with the
operation thereof;
(iii) all cards, dice, gaming chips and placques,
tokens, chip racks, dealing shoes, dice cups, dice sticks,
layouts, paddles, roulette balls and other consumable supplies
and items to be used in connection with the gaming operations of
the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether in use or held in reserve storage
for future use, in connection with the operation of the
Casino-Hotel, which are on hand or on order whether stored on-site
or off-site;
(v) all consumables and operating supplies of every
kind and nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on
any of the Owned Land, including without limitation, accounting
supplies, guest supplies, forms, printing, stationery, food and
beverage stock, bar supplies, laundry supplies and brochures to
existing purchase orders;
(vi) all sets and scenery, costumes, props and other
items of tangible personal property on hand or on order for use
in the production of shows in the showroom of the Casino-Hotel;
and
(vii) all cars, limousines, vans, buses, trucks and
other vehicles owned or leased by the Mortgagor for use in
Casino-Hotel operations, together with all equipment, parts and
supplies used to service, repair, maintain and equip the
foregoing;
(g) all drawings, designs, plans and specifications prepared
by the architects, interior designers, landscape designers and any
other consultants for the development of the Premises, as amended from
time to time;
(h) any administrative and judicial proceedings initiated by
the Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of
such proceedings;
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high
roller" lists; and
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(j) all of the goodwill in connection with the operation of
the Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding
anything contained in this Mortgage to the contrary, the Mortgagor may
share facilities, operations and employees with any other hotel owned
by any Affiliate of the Mortgagor provided that (i) such sharing of
facilities is permitted by all applicable Legal Requirements, (ii)
terms on which such facilities are shared are not detrimental to the
operations of the Casino-Hotel or the financial condition of the
Mortgagor and (iii) the regular operation of the Casino-Hotel would
not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair
or diminish any obligation of the Mortgagor with respect to the
Operating Assets, nor shall any such obligation be imposed on the
Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and
to all buildings and improvements of every kind and description now or
hereafter erected or placed on the Owned Land and/or the Leased Land
and all fixtures and articles of personal property now or hereafter
attached to or contained in and used in connection with such buildings
and improvements, including, but not limited to, all apparatus,
furniture, furnishings, machinery, motors, elevators, fittings,
radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and
hot water boilers, lighting and power plants, pipes, plumbing,
radiators, sinks, bath tubs, water closets, gas and electrical
fixtures, awnings, shades, screens, blinds, dishwashers, freezers,
vacuum cleaning systems, office equipment and other furnishings, and
all plumbing, heating, lighting, cooking, laundry, ventilating,
incinerating, air-conditioning and sprinkler equipment or other fire
prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or
articles in substitution therefor, whether or not the same are or shall
be attached to the Owned Land, the Leased Land or to any such buildings
and improvements thereon, in any manner; and
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(b) All of the Mortgagor's right, title and interest in
and to (i) the Leased Land, if the Mortgagor acquires the fee simple
title to the Leased Land or any part thereof (subject to the
provisions of Section 2.06 hereof), (ii) all air rights and rights to
maintain supporting columns and all rights to construct and
maintain bridges, and to create private rights of way over
streets now or hereafter owned or enjoyed by the Mortgagor and
appurtenant to the Owned Land or Leased Land, and (iii) all right,
title and interest of Mortgagor as grantee or licensee in and to
the following to the extent necessary for the use and enjoyment of
the Owned Land or the Leased Land: (A) all those plots, pieces or
parcels of land and air rights, more particularly described on
Schedule 5, attached hereto and made a part hereof (the "Bridge
Easement Parcels"), with respect to which Mortgagor has easements,
licenses or other rights of possession or use pursuant to these
certain easement and license agreements more particularly
described on Schedule 5 (the "Bridge Easements"), (B) all those
plots, pieces or parcels of land and air rights, more particularly
described on Schedule 6 attached hereto and made a part hereof (the
"Elevator Easement Parcels"), with respect to which Mortgagor has
easements, licenses or other rights of possession or use pursuant
to those certain license agreements more particularly described on
Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece
or parcel of land and air rights more particularly described on
Schedule 7 attached hereto and made a part hereof (the
"Turn-Around Easement Parcel") with respect to which Mortgagor
has easements, licenses, or other rights of possession or use
pursuant to that certain easement more particularly described on
Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement
Parcels, the Elevator Easement Parcels and the Turn-Around
Easement Parcel are collectively referred to herein as the
"Easement Parcels"; and the Bridge Easements, the Elevator
Easements and the Turn-Around Easement are collectively referred
to as the "Easements"), together with all rights of way,
privileges, liberties, tenements, hereditaments and
appurtenances belonging or in any way appertaining to such
estates, it being the intention hereof that all property,
interests, rights and privileges and franchises pertaining to the
Premises (other than Excepted Property) shall be as fully embraced
within and subjected to the lien hereof as if such property were
specifically described herein.
To the extent the grant of a security interest in
any portion of the Trust Estate is governed by the Uniform
Commercial Code, this Mortgage is hereby deemed to be as well
a security agreement under the Uniform Commercial Code for the
purpose of creating hereby a security interest in all of the
Mortgagor's right, title and interest in and to such property,
securing the obligations secured hereby, for the benefit of
the Mortgagee;
* * *
TOGETHER with all of the Mortgagor's right, title and interest
in and to all mineral and water rights and any title or reversion, in
and to the beds of the ways, streets, avenues and alleys adjoining
the Premises to the center line
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thereof and in and to all strips, gaps and gores adjoining the premises
on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and
interest to and singular the tenements, hereditaments, easements,
appurtenances, passages, water courses, riparian rights, other
rights, liberties and privileges thereof or in any way appertaining
to the Premises, including any other claim at law or in equity as
well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore
or hereafter to be made to the present and all subsequent owners of
the Trust Estate for any taking by eminent domain, either permanent
or temporary, of all or any part of the Trust Estate or any
easement or appurtenances thereof, including severance and
consequential damage and change in grade of streets, all in
accordance with and subject to the provisions of the Superior
Instrument Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on
any insurance policies described in Section 5.11, and the right to
receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Trust Estate
or otherwise, all in accordance with and subject to the provisions
of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted
property, rights, title, interest, privileges and franchises, the
Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases,
Operating Assets, Easements, properties, options, credits, deposits,
rights, privileges and franchises of every kind and description, real,
personal or mixed, granted hereby, bargained, sold, aliened, assigned,
transferred, hypothecated, pledged, released, conveyed, mortgaged, or
confirmed as aforesaid, or intended, agreed or covenanted so to be,
together with all the appurtenances thereto appertaining (the Premises,
Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being
herein collectively called the "Trust Estate") unto the Mortgagee and
its successors and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing
Encumbrances and, after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the
Mortgagee and the Noteholder as set forth in that certain
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Intercreditor Agreement dated as of the date hereof among RIH, RIHF,
Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee
under that certain note purchase agreement dated as of the date hereof
among Fidelity, RIH and RIHF, and State Street Bank and Trust Company
of Connecticut, National Association ("State Street"), as trustee under
that certain indenture dated as of the date hereof among State Street,
RIH and RIHF (and such other parties that may from time to time become
a party thereto).
BUT IN TRUST, NEVERTHELESS, for the benefit and security of
the Noteholder.
UPON CONDITION that, until the happening of an Event of
Default and subject to the provisions of Article Two, the Mortgagor
shall be permitted to possess and use the Trust Estate, and to receive
and use the rents, issues, profits, revenues and other income of the
Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust
Estate is to be held and applied by the Mortgagee, subject to the
further covenants, conditions and trusts hereinafter set forth, and the
Mortgagor does hereby covenant and agree to and with the Mortgagee,
for the benefit of the holder of the Note as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this
Mortgage, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural
as well as the singular;
(b) all accounting terms not otherwise defined herein have
the meanings assigned to them, and all computations herein
provided for shall be made in accordance with generally accepted
accounting principles consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Mortgage as a whole and not
to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
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"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in
Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good
standing of the American Institute of Real Estate Appraisers) who is
(i) of recognized standing among appraisers of properties similar to
the Casino-Hotel and (ii) experienced in the appraisals of properties
of a similar size and scope to that of the Casino-Hotel, selected by
the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in
Section 1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in
Section 1.01 of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for
gaming and related activities.
"CASINO-HOTEL" means the casino and hotel complex and
ancillary structures and facilities located on the Premises and
furniture, fixtures and equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature
which results in damage, loss or destruction to any buildings or
improvements on the Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section
10.01 of the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both,
would become an Event of Default.
"DEPOSITARY" means an Independent entity to which insurance
proceeds or a condemnation award is paid to be held in trust for
restoration pursuant to the provisions of a Ground Lease or Superior
Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01.
An Event of Default shall "exist" if an Event of Default shall have
occurred and be continuing.
"EXCEPTED PROPERTY" means:
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(1) subject to the provisions of the Assignment of Leases
and Rents, any cash held by the Mortgagor from rents, issues, profits,
revenues and other proceeds of the Trust Estate to the extent that such
cash may be, but has not been, distributed or paid out in accordance
with the Services Agreement or in accordance with the provisions of
Section 12.07 the Indenture;
(2) all personal property owned by lessees under Leases and
the personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to
the provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a
security interest in which is prohibited by the New Jersey Casino
Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated
thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in
Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a
Superior Mortgage secured by or imposing a lien on all or a portion of
the Trust Estate on a parity with or senior to the lien of this
Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon
any Tangible Personal Property and other items constituting Operating
Assets, such as computer software, which are financed, purchased or
leased by the Mortgagor, provided that, except as set forth on
Schedule 3, the principal amount of the indebtedness secured by
such lien shall not exceed eighty-five (85%) percent of the cost to
the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause
Second.
"GUARANTY MORTGAGE" means that certain Mortgage Securing
Guaranty of Junior Mortgage Notes dated as of the date hereof from
Mortgagor to U.S. Trust Company of California, N.A., a
national banking association, which secures the Notes (as defined in
the Indenture), the lien of which shall be PARI PASSU with the lien of
this Mortgage.
"HOTEL" means that portion of the Casino-Hotel not included
within the Casino.
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"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11.375% Junior
Mortgage Notes due 2004, dated as of even date herewith among the
Mortgagor, RIHF, as issuer, and U.S. Trust Company of California,
N.A., as trustee, as it may from time to time be
supplemented, modified or amended by one or more trust indentures
or other instruments supplemental thereto entered into pursuant to
the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person
means such a Person who (a) is in fact independent, (b) does not have
any direct financial interest or any material indirect financial
interest in the Mortgagor or in any other obligor upon the Note
or in any Affiliate of the Mortgagor or of such other obligor and
(c) is not connected with the Mortgagor or such other obligor or
any Affiliate of the Mortgagor or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate
shall be furnished to the Mortgagee, such opinion or certificate
shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof. A Person who is
performing or who has performed services as an independent
contractor to any specified Person shall not be considered not
Independent merely by reason of the fact that such Person is or has
performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section
5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance
policy covering or applicable to the Trust Estate or any part thereof,
all requirements of the issuer of any such policy, and all orders,
rules, regulations and other requirements of the National Board of
Fire Underwriters (or any other body exercising similar functions)
applicable to or affecting the Trust Estate or any part thereof or
any use or condition of the Trust Estate or any other part thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so
elects, any bank, trust company or insurance company with net worth in
excess of $100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected
by the Mortgagor authorized to issue insurance in the State of New
Jersey with an A.M. Best rating as high or higher than the rating of
insurance companies insuring other casino-hotels in Atlantic City,
New Jersey.
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"LEASE" means each lease or sublease demising all or any
portion of the Owned Land, the Leased Land or the buildings or
improvements thereon and made by the Mortgagor as lessor or sublessor,
as the case may be, or any spaces in any building or buildings which
constitute a part of the Trust Estate, including every agreement
relating thereto or entered into in connection therewith and every
guaranty of the performance and observance of the covenants,
conditions and agreements to be performed by the lessee under any
such lease. Notwithstanding the foregoing, the term "Lease" shall
not include any transient room rentals.
"LEASED LAND" has the meaning stated in Granting Clause
Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements (including, without limitation, the New Jersey
Environment Cleanup Responsibility Act and the New Jersey Spill
Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies,
officials and officers, of governments, federal, state and
municipal (including, without limitation, the New Jersey
Department of Environmental Protection, the Atlantic City Bureau
of Investigations, Division of Protection, the Atlantic City Bureau
of Investigations, Division of Gaming Enforcement of the State of
New Jersey, and the Casino Control Commission of the State of New
Jersey), foreseen or unforeseen, ordinary or extraordinary, which
now is or at any time hereafter becomes applicable to the Trust
Estate or any part thereof, or any of the adjoining sidewalks, or
the use of the Casino-Hotel as a gaming or gambling facility or any
other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Note means the date
on which the principal of such Note becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration or prepayment or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section
1.01 of the Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the
first paragraph of this instrument until a successor entity shall have
become such pursuant to the applicable provisions of this Mortgage,
and thereafter, except to the extent otherwise contemplated by
Section 4.02, "Mortgagor" shall mean such successor entity exclusively.
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"NOTEHOLDER" shall mean the holder or holders of the Note.
"NOTE" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an
officer of the Mortgagor and delivered to the Mortgagee. Whenever this
Mortgage requires that an Officers' Certificate be signed also by
an Architect or an Accountant or other expert, such Architect,
Accountant or other expert may (except as otherwise expressly
provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause
Fifth.
"OPINION OF Counsel" means a written opinion of counsel who
may (except as otherwise expressly provided in this Mortgage) be an
employee of the Mortgagor or an employee of an Affiliate of the
Mortgagor. Unless otherwise specifically provided in this Mortgage,
such counsel may rely, as to any state of facts not personally known
to such counsel and relating to such opinions, on an Officers'
Certificate to the extent not rejected by the Trustee and its counsel
(which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued
by [list title insurance companies], pursuant to Title Commitment No.
____________ redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01
of the Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of
compliance, certificates of operation, certificates of occupancy and
permits required for the lawful ownership, occupancy, operation and use
of all or a material portion of the Premises whether held by the
Mortgagor or any other Person (which may be temporary or permanent)
(including, without limitation, those required for the use of the
Casino-Hotel as a licensed casino facility), in accordance with all
applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges
not yet due and payable or if due and payable are not delinquent
to the extent that any fine, penalty, interest or cost may be
added for nonpayment thereof;
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(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights
granted as provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of
the Indenture;
(8) any Working Capital Facility Lien;
(9) liens created by the Senior Mortgage Documents; and
(10) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or any other entity or government or any agency or
political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made
in accordance with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing,
Inc., a Delaware corporation.
"SENIOR GUARANTY MORTGAGE" has the meaning set forth in
Section 1.01 of the Indenture.
"SENIOR MORTGAGE" has the meaning set forth in Section 1.01
of the Indenture.
"SENIOR MORTGAGE DOCUMENTS" has the meaning set forth in
Section 1.01 of the Indenture.
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"SERVICES AGREEMENT" has the meaning set forth in Section
1.01 of the Indenture.
"SETTLEMENT COSTS" has the meaning stated in Section 5.20.
"STATED MATURITY" when used with respect to a note means the
date specified in such note as the fixed date on which the principal of
such note is due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable
terms, conditions and provisions of (i) the Ground Leases with respect
to the Leased Land; and (ii) Superior Mortgages with respect to the
portion of the Trust Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage,
the Senior Guaranty Mortgage, any Working Capital Facility Lien and any
After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent
domain of the whole or any part of the Premises, by a competent
authority, or any public or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in
Granting Clause Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the
first paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the
Granting Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01
of the Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section
1.01 of the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in
Section 5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Mortgage to
be made upon, given or furnished to, or filed with, the Mortgagor
or the Mortgagee (collectively, "Notices") shall be deemed given
when either (i) delivered by hand or (ii) two days after sending by
registered or certified mail, postage prepaid, addressed as
follows:
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To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to the Mortgagor, the Mortgagee and the
Trustee, any party may designate additional or substitute address for
Notices which, notwithstanding Subsection (a) above, shall be deemed
given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO
MORTGAGEE. Whenever several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one
or more other such Persons as to such matters in one or several
documents.
Any certificate or opinion of an Officer of the Mortgagor
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such
Officer knows that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of,
or representations by, an Officer or Officers of the Mortgagor
stating that the information with respect to such factual matters
is in the possession of the Mortgagor, unless such counsel knows
that the certificate or opinion or representations with respect to
such matters are erroneous. If appropriate to the matter being
opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of
creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Mortgage, they may, but
need not, be consolidated and form one instrument.
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Whenever in this Mortgage, in connection with any application
or certificate or report to the Mortgagee, it is provided that the
Mortgagor shall deliver any document as a condition of the
granting of such application, or as evidence of the Mortgagor's
compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the
effective date of such certificate or report (as the case may be),
of the facts and opinions stated in such document shall in such
case be conditions precedent to the right of the Mortgagor to have
such application granted or to the sufficiency of such certificate
or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon
any application or request by the Mortgagor to the Mortgagee to take
any action under any provision of this Mortgage, the Mortgagor
shall furnish to the Mortgagee an Officers' Certificate stating
that all conditions precedent, if any, provided for in this
Mortgage relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied
with, except that in the case of any such application or request as
to which the furnishing of such documents is specifically required
by any provision of this Mortgage relating to such particular
application or request, no additional certificate or opinion need
be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Mortgage shall include:
(a) a statement that each individual signing
such certificate or opinion has read such condition
or covenant and the definitions herein relating
thereto;
(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 each
such individual, he has made such examination or
investigation as is necessary to enable him to
express an informed opinion as to whether or not
such condition or covenant has been complied with; and
(d) a statement as to whether, in the
opinion of each such individual, such condition
or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section
headings herein are for convenience only and shall not affect the
construction hereof.
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Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit
of the parties hereto and of the respective successors and assigns of
the parties hereto to the same effect as if each such successor or
assign were in each case named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged,
released nor any of its provisions waived except by agreement in writing
executed by the Mortgagor and the Mortgagee and in accordance with
the provisions of this Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in
this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this
Mortgage, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns, any benefit or
any legal or equitable right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed
to be a contract under the laws of the State of New Jersey and shall be
construed in accordance with and governed by the laws of the State
of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever
the provisions of this Mortgage and the provisions of the Indenture
shall be inconsistent, the provisions of the Indenture shall
govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
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proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
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indemnity against such risk or liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT.
Each provision of this Mortgage is subject to and shall be enforced in
compliance with the provisions of the New Jersey Casino Control Act. This
Mortgage shall not be transferred, assigned or amended without prior approval
of the New Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall
pay or cause to be paid, or there shall otherwise be paid, to the
Mortgagee all amounts required to be paid by the Mortgagor
pursuant to the Note, and the conditions precedent for the
Indenture to cease, determine and become null and void in
accordance with Section 5.01 of the Indenture shall have occurred,
the Mortgagee shall promptly cancel and discharge this Mortgage,
and execute and deliver to the Mortgagor all such instruments as
may be necessary, required or appropriate to evidence such
discharge and satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be
subject in each instance to the giving of any notice and the expiration
of any grace period provided for in Section 3.01 as a condition to
such Default making it an Event of Default, unless the Trust
Indenture Act requires otherwise, in which case the Trust
Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that
an event which does not materially diminish the value of the
Mortgagee's interest in the Trust Estate shall not be deemed an
"impairment of security", as that phrase is used in this Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE.
So long as there shall have been no acceleration of maturity of the Note under
Section 3.02, the Mortgagor shall be suffered and permitted, with power freely
and without let or hindrance on the part of the Mortgagee, subject to
the provisions of this Mortgage and the Guaranty Mortgage, to possess, use,
manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust
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and settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time
to time, unless an Event of Default shall have occurred and be continuing,
without any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right
to pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to
the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
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Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions
contained in this Mortgage or the Indenture to the contrary, including, without
limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles
Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and
other items constituting operating assets, such as computer software subject to
any FF&E Financing Agreement, or becomes the lessee under a lease for any of the
same and if the document evidencing such FF&E Financing Agreement prohibits
subordinate liens or the provisions of any such lease prohibits any assignment
thereof by the lessee, and if any such prohibition is customary with respect to
similar transactions of the lender or lessor, as the case may be, then the
property so purchased or the lessee's interest in the lease, as the case may be,
shall be deemed to be Excepted Property. If any such FF&E Financing Agreement
permits subordinate liens then the Mortgagee agrees to execute and deliver to
the Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination of
the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part of the Released Fee Land (the land to be so conveyed is hereinafter
referred to as the "Released Land"), free from the lien of the Mortgage,
provided that:
(i) the Mortgagor furnishes the Mortgagee with an Officers'
Certificate requesting the release of such property from the Trust Estate
and stating (w) so long as the Released Land is owned or used by an
Affiliate of the Mortgagor, the Released Land shall not be operated in a
manner in competition with the operation of the Casino-Hotel as a casino,
(x) that no permanent structures have been constructed on the Released
Land, (y) that the Mortgagor is not required to hold the Released Land in
order to maintain all Permits and in order to comply with the provisions of
all material contracts to which the Mortgagor is a party or by which the
Mortgagor is bound and either (A) the Mortgagor has made adequate provision
to maintain all Permits and to comply with such contractual requirements
by: (1) owning and using the
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balance of the Trust Estate; (2) acquiring fee title to any real property
that would enable Mortgagor to maintain all Permits and satisfy such
contractual requirements; or (3) acquiring a Qualified Leasehold Interest
in real property that would enable the Mortgagor to maintain such Permits
and satisfy such contractual requirements; or (B) neither the requirements
of such Permits nor such contracts require the Mortgagor to own the
Released Land or use or operate any land in the manner in which the
Released Land is intended to be used; or (C) such requirements have been
waived, and (z) that such conveyance will not materially interfere with the
operation of the Casino-Hotel;
(ii) the Mortgagor delivers to the Mortgagee an Opinion of
Counsel to the effect that the Mortgagor is not required to own and use the
Released Land in order to maintain in good standing all Permits or by the
provisions of any material contract to which the Mortgagor is a party or by
which it is bound to own and use the Released Land;
(iii) the Mortgagor delivers to the Mortgagee, if applicable, an
endorsement to the Original Policy in accordance with Section 2.05(d);
(iv) the Mortgagor delivers to the Mortgagee an executed
counterpart of the instruments of conveyance in recordable form, which
shall contain a covenant prohibiting the use of the Released Land by any
Affiliate of the Mortgagor (A) as a casino or (B) in a manner in
competition with the operation of the Casino-Hotel as a casino prior to the
latest Stated Maturity Date of the Note; and
(v) in the case of a conveyance or release described in (A) or
(B) above, if the Released Land is being conveyed to an Affiliate of the
Mortgagor, the cash consideration received by the Mortgagor for the
Released Land shall not be less than the product of the Release Price
multiplied by the area (in square feet) of the Released Land.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.05
and, if applicable, Section 2.05 of the Guaranty Mortgage,
PROVIDED, that the Mortgagee shall have no liability thereunder and all costs
and expenses (including reasonable attorneys' fees) shall be paid by the
Mortgagor.
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Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be continuing, to have
an Affiliate exercise such options(s) or for the Mortgagor to exercise such
options(s) on behalf of an Affiliate and in connection therewith to cause fee
simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with
the following:
(i) an Officers' Certificate requesting the release of the
Released Fee Land from the Trust Estate and stating that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain all
Permits and in order to comply with the provisions of all material
contracts to which the Mortgagor is a party or by which the Mortgagor is
bound, (B) such Affiliate has received all Permits necessary to own the
Released Fee Land (including without limitation all approvals required by
the Casino Control Commission of the State of New Jersey), (C) there has
been delivered to the Mortgagor and the Mortgagee a true copy of an
instrument executed by such Affiliate stating that (i) such Affiliate may
only engage in the activity of owning the Released Fee Land and (ii) such
Affiliate shall not convey the Released Fee Land to another Affiliate of
the Mortgagor, unless such other Affiliate executes and delivers to the
Mortgagor and the Mortgagee, the instruments that would have been required
to be delivered pursuant to clause (C) if the Mortgagor conveyed the
Released Fee Land to such other Affiliate (provided that this restriction
shall only be effective until such time as this Mortgage shall be satisfied
of record) and (D) the deed conveying the Released Fee Land to such
Affiliate shall state that such conveyance is made subject to the terms,
provisions and conditions of the applicable Ground Lease and that the fee
and leasehold interests in the Released Fee Land shall not merge by reason
of the Mortgagor and/or any Affiliate owning both the leasehold and fee
estate therein, and that such estates shall always remain separate and
distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to which
the
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Mortgagor is a party or by which it is bound to own the Released Fee Land
and (B) the instruments described in clause (C) of subparagraph (i) were
duly executed by and are binding upon such Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, and agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED
that the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
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Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if
no Event of Default has occurred and is continuing and (ii) if the Mortgagor
shall acquire Released Fee Land, then simultaneously with the acquisition
thereof, the Mortgagor shall have the right to encumber such fee simple title
with a mortgage (such mortgage and any refinancing thereof permitted by the
Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The
lien of this Mortgage on the Released Fee Land shall be subordinated to the lien
of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of
other Superior Mortgages which shall become a lien thereon in accordance with
the terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee Mortgage
(A) does not exceed 75% of the cost to the Mortgagor of such fee simple
title at the time of the acquisition and (B) satisfies the criteria set
forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers fee
simple title to the Leased Land or any part thereof, such After-Acquired
Fee Mortgage contains provisions binding on the holder of the
After-Acquired Fee Mortgage and its successors and assigns confirming the
provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire Released
Fee Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstanding, the subordination of this Mortgage to
any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall
not be
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self-operative but shall be effective only upon the execution and delivery by
the Mortgagee of an instrument in writing effecting such subordination. The
Mortgagee shall deliver such instrument of subordination on the following
conditions: (x) the Mortgagee shall have received an Officers' Certificate
confirming that the conditions of (i) through (vi) of paragraph (a) have been
satisfied, together with a true and correct copy of the After- Acquired Fee
Mortgage and all other instruments securing the indebtedness evidenced thereby
and (y) the instrument of subordination shall specifically state that this
Mortgage is being subordinated not with respect to the lien of this Mortgage on
the Ground Lease or on the leasehold estate created thereby, but only with
respect to the fee simple title to the Leased Land or applicable part thereof
and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of any interest on the Note when such
interest becomes due and payable and continuance of such default for a
period of 10 days after there has been given a written notice to the
Mortgagor specifying such default and stating that such notice is a "Notice
of Default" hereunder; or
(b) default in the payment of the principal of any Note at its
Maturity; or
(c) an "Event of Default" as defined in Section 3.01 of the Guaranty
Mortgage shall occur; or
(d) default in the payment of any other sum due under the Note or
this Mortgage and the continuance of such default for a period of 10 days
after there has been given to the Mortgagor a written notice specifying
such default and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(e) default in the performance, or breach, of any covenant of the
Mortgagor in this Mortgage (other than a
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covenant a default in the performance or breach of which is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 30 days after there has been given to the Mortgagor
a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder,
unless (i) the default or breach is of such a nature that is curable but
not susceptible of being cured with due diligence within such 30-day period
(for reasons other than the lack of funds), (ii) the Mortgagor delivers an
Officers' Certificate to the Mortgagee within such 30-day period stating
(A) the applicability of the provisions of Clause (i) to such default or
breach, (B) the Mortgagor's intention to remedy such default or breach with
reasonable diligence and (C) the steps which the Mortgagor has undertaken
to remedy such default or breach and (iii) the Mortgagor delivers to the
Mortgagee additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate described in Clause
(ii), in which case such 30 day period shall be extended for such further
period of time as may reasonably be required to cure the same, provided
that the Mortgagor is then proceeding and thereafter continues to proceed
to cure the same with reasonable diligence; or
(f) an "Event of Default" as defined in Section 7.01 of the
Indenture, shall occur; or
(g) default by the Mortgagor under any of the terms of any Ground
Lease which shall not be fully cured or waived prior to the expiration of
any grace period contained in such Ground Lease, unless prior to the
expiration of such grace period, the Mortgagor gives the Mortgagee an
Officers' Certificate, an Opinion of Counsel and a true copy of the
Injunction referred to below, which Certificate and Opinion state that (i)
a court of competent jurisdiction has issued an injunction (which is in
force and effect and has not been modified or reversed on appeal) tolling
or staying the expiration of the grace period set forth in such Ground
Lease with respect to such default, (ii) such injunction specifically
provides that in addition to the tolling or stay describe in (i) above,
such tolling or stay also applies to the Mortgagee for purposes of
determining the duration and expiration of the periods during which the
Mortgagee may exercise its rights under such Ground Lease (including
without limitation, periods to cure lessee defaults and delivering a
guarantee and the period during which the Mortgagee may elect to enter into
a new lease thereunder), (iii) such injunction further provides that the
tolling or stay under (i) and (ii) shall be effective until such time that
the Mortgagee is personally served
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with notice of the expiration of such injunction and (iv) the Mortgagee is
named as a party in any action or proceeding involving such injunction and
therefore entitled to notice of any modification or termination thereof;
and, if such injunction is issued, then so long as such injunction remains
in force and effect and the preceding provisions of this Section 3.01(g)
have been complied with, the grace period referred to in the third line of
this subparagraph (g) shall be deemed to mean the grace period after giving
effect to any such tolling or stay in (i) above; or
(h) default by the Mortgagor under any of the terms of any Superior
Mortgage which default results in the acceleration of the maturity of such
Superior Mortgage and which shall not be fully cured or waived prior to the
expiration of any grace period contained in such Superior Mortgage, unless
prior to the expiration of such grace period, the Mortgagor gives the
Mortgagee an Officers' Certificate and an Opinion of Counsel and a true
copy of the injunction referred to below, which Certificate and Opinion
shall state (i) that a court of competent jurisdiction has issued an
injunction (which is in force and effect and has not been modified or
reversed on appeal) tolling or staying the expiration of the grace period
set forth in such Superior Mortgage with respect to such default and (ii)
the Mortgagee is named a party in any action or proceeding relating to such
injunction and therefore is entitled to notice of any modification or
termination thereof; and if such injunction is issued, then so long as such
injunction remains in force and effect, and the preceding provisions of
this Section 3.01(h) have been complied with, the grace period referred to
in the third line of this subparagraph (h) shall be deemed to mean the
grace period after giving effect to any such tolling or stay; or
(i) any modification, amendment or supplement of any Ground Lease
without the prior written consent of the Mortgage; or
(j) any modification, amendment or supplement of any Superior
Mortgage without the prior written consent of the Mortgagee, except to the
extent that such modification, amendment or supplement is permitted by
Section 5.22(b)(i) hereof; or
(k) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a period
of 60 days after there has been given a written notice to the Mortgagor
specifying that such notice is a "Notice of Default" hereunder; or
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(l) any representation or warranty of the Mortgagor set forth in this
Mortgage or in any notice, certificate, demand or request delivered to the
Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the
time when made and the facts constituting such incorrectness impairs the
Mortgagee's security and such impairment continues for a period of 30 days
after there has been given to the Mortgagor a written notice specifying
that such notice is a "Notice of Default" hereunder, unless (i) such
impairment is curable, but not susceptible of cure within such 30-day
period (for reasons other than lack of funds), (ii) the Mortgagor gives an
Officers' Certificate to the Mortgagee within such 30-day period stating
(A) the applicability of the provisions of (i) to such impairment, (B) the
Mortgagor's intention to remedy the same with reasonable diligence and (C)
the steps which the Mortgagor has undertaken to remedy such default or
breach and (iii) the Mortgagor delivers to the Mortgagee additional
Officers' Certificates every 30 days thereafter updating the information
contained in the certificate described in (ii), in which case such 30-day
period shall be extended for such further period of time as may reasonably
be required to cure the same, provided that the Mortgagor is then
proceeding and thereafter continues to proceed to cure the same with
reasonable diligence.
Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is
continuing, then the Mortgagee may declare the Outstanding Amount of the Note to
be due and payable immediately, by a notice in writing to the Mortgagor and upon
any such declaration such principal shall become immediately due and payable.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys
received by the Mortgagee pursuant to the provisions of this Article Three
(including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance
with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this Mortgage
and such proceeding has been discontinued or abandoned for any reason or has
been determined adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such proceeding
had been instituted.
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Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect the indebtedness secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including
reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection
therewith, together with interest at the rate then payable on the Note, from the
date of payment less the net amount received by the Mortgagee or the Trustee, as
their interests may appear under any title insurance policy, and, until paid,
all such expenses, together with interest as aforesaid, shall be a lien on the
Trust Estate.
Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time insist
upon, plead, claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law now or hereafter in force, in order
to prevent or hinder the enforcement of this Mortgage or the absolute sale of
the Trust Estate, or any part hereof, or the possession thereof by any purchaser
at any sale under this Article Three; and the Mortgagor, for itself and all who
may claim under it, so far as it or they now or hereafter may lawfully do so,
hereby waives the benefit of all such laws. The Mortgagor, for itself and all
who may claim under it, waives, to the extent that it may lawfully do so, all
right to have the property in the Trust Estate marshalled upon any foreclosure
hereof, and agrees that any court having jurisdiction to foreclose this Mortgage
may order the sale of the Trust Estate as an entirety.
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If any law in this Section 3.08 referred to and now in force, of which
the Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of
an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event
of Default shall occur and be continuing, the Mortgagee, with or without entry,
in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee
may determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Mortgage or in
aid of the execution of any power granted in this Mortgage or for the
foreclosure of this
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Mortgage or for the enforcement of any other legal,
equitable or other remedy, as the Mortgagee,
being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Mortgagee; the
failure to join tenants shall not be asserted as a defense to
any foreclosure or proceeding to enforce the rights of the
Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of
the Trust Estate, whether made under the power of sale hereby given or
pursuant to judicial proceedings, to the extent permitted by law:
(a) the principal of and accrued interest on the Note, if
not previously due, shall at once become and be immediately
due and payable;
(b) subject to the provisions of Section 3.14 and the
receipt of any required prior approvals of the New Jersey Casino Control
Commission, the Mortgagee may bid for and purchase the property offered for
sale, and upon compliance with the terms of sale may hold, retain and
possess and dispose of such property, without further accountability,
and may, in paying the purchase money therefor, delivery any notes or
claims for interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned
to the holders thereof after being appropriately stamped to
show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and
instrument of assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true
and lawful attorney of the Mortgagor, in its name and stead,
to make all necessary deeds, bills of sale and instruments of
assignment and transfer of the property thus sold; and for
that purpose it may execute all necessary deeds, bills of
sale and instruments of assignment and transfer, and may
substitute one or more persons, firms or corporations with
like power, the Mortgagor hereby ratifying and confirming all
that its attorney or such substitute or substitutes shall
lawfully do by virtue hereof; but if so requested by the
Mortgagee or by any purchaser, the Mortgagor shall ratify and
confirm any such sale or transfer by executing and delivering
to the Mortgagee or to such purchaser or purchasers all proper
deeds, bills of sale, instruments
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of assignment and transfer and releases as may be designated in any such
request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of,
in and to the property so sold shall be divested and such sale
shall be a perpetual bar both at law and in equity against the
Mortgagor, its successors and assigns, and against any and all
persons claiming or who may claim the property sold or any
part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making
such sale shall be a sufficient discharge to the purchaser or
purchasers at such sale for his or their purchase money and
such purchaser or purchasers and his or their assigns or
personal representatives shall not, after paying such
purchase money and receiving such receipt, be obliged to see
to the application of such purchase money, or be in anywise
answerable for any loss, misapplication or non-application
thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of
Default and commencement of judicial proceedings by the Mortgagee
to enforce any right under this Mortgage, the Mortgagee shall be
entitled, as against the Mortgagor, without notice or demand and
without regard to the adequacy of the security for the Note or the
solvency of the Mortgagor, to the appointment of a receiver of the
Trust Estate, and of the rents, issues, profits, revenues and other
income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights
under this Section 3.12 shall be subject to the provisions of the
New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon
5 days' prior written notice to the Mortgagor (or such shorter
period or without notice if deemed necessary and appropriate by the
Mortgagee), the Mortgagee shall have power to institute and
maintain such proceedings as it may deem necessary and appropriate
to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its
interests in the Trust Estate and in the rents, issues, profits,
revenues and other income arising therefrom, including power to
institute and maintain proceedings to restrain the enforcement of
or compliance with any 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 the
security hereunder or be materially prejudicial to the interests of
the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the
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contrary, following an Event of Default and the taking of possession
of the Trust Estate or any part thereof by the Mortgagee and/or
the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized,
in addition to the rights and powers of the Mortgagee and such
receiver set forth elsewhere in this Mortgage, to retain one or
more experienced operators of hotels and/or casinos to manage the
Casino-Hotel, PROVIDED that any such operator shall have all
necessary legal qualifications, including all Permits, to manage
the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR
TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with
all provisions applicable to the Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any
consolidation or combination or any conveyance or transfer of
the Trust Estate or any portion thereof in accordance with Section
10.01 of the Indenture, the successor entity formed by such
consolidation or into which the Mortgagor is combined or to which
such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the
Mortgagor under this Mortgage with the same effect as if such
successor entity had been named as the Mortgagor herein; PROVIDED,
HOWEVER, that no such conveyance or transfer of the Trust Estate
substantially as an entirety, unless such conveyance or transfer is
in compliance with the provisions of Article Ten of the Indenture,
shall have the effect of releasing the Person named as "the
Mortgagor" in the first paragraph of this instrument or any
successor entity which shall theretofore have become such in the
manner prescribed in such Article Ten from its liability as obligor
or maker of the Note.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE.
Except as otherwise expressly permitted by this Mortgage or the
Indenture, the Mortgagor shall not sell, assign, lease, sublease,
hypothecate, pledge, mortgage or otherwise transfer all or any part
of the Trust Estate or any interest therein (including without
limitation any interest in the Ground Leases). Without limiting the
generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground
Leases from its ownership of the buildings constituting the Casino-Hotel
or any part thereof.
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ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Mortgagor will duly and punctually pay the principal of (and
premium, if any) and interest on the Note in accordance with the
terms of the Note and this Mortgage.
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants
and agrees to comply with all of the terms and conditions set forth
in any FF&E Financing Agreements before the expiration of any
applicable notice and cure periods contained in the FF&E Financing
Agreements.
Section 5.03. LIMITATIONS ON LIENS.
(a) The Mortgagor will not create, incur, suffer or permit to be
created or incurred or to exist any mortgage, lien, charge or
encumbrance on or pledge of any of the Trust Estate, other than
(i) Permitted Encumbrances, (ii) liens on the Trust Estate in
connection with indebtedness permitted by clauses (i), (ii),
(iii), (iv) or (v) of Section 12.08(a) of the Indenture, and
(iii) a building contract or a notice of intention filed by a
mechanic, materialman or laborer under the New Jersey lien law.
Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the
Mortgagor shall not be deemed to have breached the provisions of
the foregoing sentence by virtue of the existence of a lien for
Impositions or mechanics liens so long as the Mortgagor is in good
faith contesting the validity of the same in accordance with the
provisions of Section 5.09 to the extent that the matters described
in (i) and (ii) do not constitute a default under any Ground Lease
or Superior Mortgage.
(b) Mortgagee acknowledges that, contemporaneously with the
execution and delivery of this Mortgage, it has assigned this
Mortgage to the Trustee and that the Trustee is also the mortgagee
under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon
the same Trust Estate pari passu with the lien of this Mortgage.
Mortgagee further acknowledges and agrees that whenever it is
provided in the Guaranty Mortgage that the Mortgagor shall deliver
any notice or document, or is require to make any payment
thereunder, the delivery of such notice or document or the making
of such payment pursuant to the terms of the Guaranty Mortgage
shall also constitute the delivery of such notice or document or
the making of such payment in satisfaction of the terms, conditions
and provisions of this Mortgage to the same extent as the same
constitutes satisfaction of the terms, conditions and provisions
of the Guaranty Mortgage.
Section 5.04. [Reserved]
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Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on
behalf of the Mortgagor, (a) to appear in and defend any action or
proceeding brought with respect to the Trust Estate or any part
thereof and (b) upon 5 days' prior written notice to the Mortgagor
(or such shorter period or without notice if deemed necessary and
appropriate by the Mortgage), to commence any action or proceeding
to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The
Mortgagor represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of
New Jersey and all other applicable laws to execute and deliver
this Mortgage, and all corporate action on its part necessary
for the valid execution and delivery of this Mortgage has been
duly and effectively taken;
(b) it is the lawful owner and is lawfully seized
and possessed of the Owned Land and all buildings and
improvements thereon, free and clear of all liens, charges or
encumbrances, other than the lien of the Mortgage Documents,
any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable
title to the leasehold interests and leasehold estates
under the Ground Leases and to the Ground Leases, subject
to no lien, encumbrance or charge other than the lien of
the Mortgage Documents, any Working Capital Facility Lien
and Existing Encumbrances;
(d)(i) the Ground Leases are valid and subsisting demises of
the Leased Land for the terms therein set forth, (ii) there
are no defaults thereunder by any Lessor or the lessee as to
which written notice has been given to or by the lessee,
(iii) the Mortgagor has delivered true and correct copies of
the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in
full force and effect and has not been modified, amended or
supplemented, except as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no
lien, encumbrance or charge, other than the lien of the
Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to
execute this Mortgage and to grant, bargain, sell, alien,
convey, assign, transfer, hypothecate,
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pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the
Operating Assets and the Ground Leases, without the consent of
any third party, other than governmental authorities but any
applicable or necessary consent or approval of any such governmental
authority has been given or waived at or prior to the
execution and delivery of this Mortgage), and this Mortgage
constitutes a valid third mortgage lien and third priority
security interest in the Trust Estate PARI PASSU with the
lien of the Guaranty Mortgage, subject only to Working
Capital Facility Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend
(x) the title to Trust Estate (including without limitation, its
leasehold estates under the lessee's interests in the Ground
Leases) (subject to Permitted Encumbrances) and (y) the priority
of the lien of this Mortgage (subject to Permitted Encumbrances
other than Restricted Encumbrances), against the claims and
demands of all persons whomsoever, at the Mortgagor's sole cost
and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will,
as provided in Section 5.13, from time to time subject its right,
title and interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments
of further assurance, including all financing statements and
continuation statements covering security interests in personal
property, to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, and will execute
and file such financing statements and cause to be issued and filed
such continuation statements, all in such manner and in such places
as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party
under the Uniform Commercial Code to all property comprising the
Trust Estate (to the extent a grant of a security interest therein
is governed by the Uniform Commercial Code) and to perfect,
preserve and protect the lien of this Mortgage as a valid
mortgage lien of record and a valid security interest on the
Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all
expenses incident to the execution and delivery of this Mortgage,
and any instrument of further assurance, and all federal, state,
county and municipal stamp taxes and other taxes, duties, imposts,
assessments and charges arising out of or in connection with the
execution and delivery of the Note, this Mortgage, any financing
statement or continuation statement with respect to the personal
property constituting
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part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF
PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE
REQUIREMENTS. The Mortgagor will:
(a)subject to the provisions of Section 5.09 relating to
contests, pay or cause to be paid promptly (or when
installments of the same shall become due and payable, if,
by law or by agreement or arrangement with the applicable
governmental agency or authority, the same may be paid in
installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are
payable by the Mortgagor pursuant to any Superior Instrument
Requirement), all taxes (including, without limitation, real
estate taxes, personal or other property taxes and all sales,
value added, use and similar taxes), assessments (including,
without limitation, all assessments for public improvements
or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to
the satisfaction of this Mortgage), water, sewer or other
rents, rates and charges, excises, levies, license fees,
permit fees, inspection fees and other authorization fees and
other charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of
every character (including all interest, additions to tax and
penalties thereon), that may be assessed, levied, confirmed or
imposed on or in respect of or be a lien upon (1) the Trust
Estate (including without limitation the Leased Land) or any
part thereof or any rent therefrom or any estate, right or
interest therein, or (2) any acquisition, occupancy, use,
leasing, or possession of or activity conducted on the real
property or any part thereof included in the Trust Estate or
any gross receipts thereof or of the rent therefrom (all of
the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any
other provision of this Mortgage, the Mortgagor shall not be
required to pay any income, profits or revenue tax upon the
income of the Mortgagee, the Trustee or any Noteholder nor
any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee,
the Trustee or the Noteholder nor any interest, additions to
tax or penalties in respect thereof, unless such tax is
imposed, levied or assessed in substitution for any
Impositions that the Mortgagor is required to pay pursuant
to this Section 5.08. The Mortgagor will deliver to the
Mortgagee official receipts or other proof evidencing
payments of any Impositions in accordance with the
requirements of this Section 5.08. The Mortgagor shall
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not be entitled to any credit for taxes or assessments paid
against the Note;
(b) except for such property which the Mortgagor may dispose
of or replace pursuant to Section 2.02, maintain and keep all
its properties used or useful in the conduct of its business
(other than obsolete equipment), including, without
limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition,
except for reasonable wear and use, and make or cause to be
made all such needful and proper repairs, renewals and
replacements thereto consistent with the standards of other
casino-hotels in Atlantic City, New Jersey;
(c) occupy and continuously operate the Casino-Hotel and
keep the Casino-Hotel supplied with Tangible Personal
Property, all in a manner consistent with the standards of
other casino-hotels in Atlantic City, New Jersey (provided
that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section
3.01(f));
(d) subject to the provisions of Section 5.09 relating to
contests, the Mortgagor at its sole expense will timely
(1) comply with all Legal Requirements and Insurance
Requirements, whether or not compliance therewith shall
require structural changes in the buildings and improvements
included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof,
(2) procure, maintain and comply with all permits and other
authorizations required for (i) the use of the Casino as a
gaming and gambling facility, (ii) the on-premises consumption
of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made,
and for the proper erection, installation, operation and
maintenance of the improvements or any part thereof, and
(3) comply with any instruments of record at the time in
force affecting the Trust Estate or any part thereof, if the
failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the
foregoing, the Mortgagor represents and warrants that at the
time of the execution of this Mortgage, the Mortgagor is in
compliance with the requirements of clauses (1), (2) and (3);
(e) in the event of the passage after the date of this
Mortgage of any law of the State of New Jersey, or any other
governmental entity, changing in any way the laws now in force
for the taxation of mortgages, or debts secured thereby, for
state or local purposes, or the manner of the operation of
any such taxes, so as to affect the interest of the
Mortgagee, then and in such
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event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for
any reason payment by the Mortgagor of any such new or
additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured
hereby wholly or partially usurious under any of the terms or
provisions of the Note, or this Mortgage, or otherwise, the
Mortgagee may, at the Mortgagee's option, declare the whole
sum secured by this Mortgage, with interest thereon, to be
due and payable 90 days after notice of election thereof has
been given by the Mortgagee, or the Mortgagee may, at the
Mortgagee's option, pay that amount or portion of such taxes
as renders the loan or indebtedness secured hereby unlawful or
usurious, in which event the Mortgagor shall concurrently
therewith pay the remaining lawful and nonusurious portion or
balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may,
at its sole expense, contest by appropriate legal proceedings
conducted in good faith and with due diligence, the amount or validity
or application, in whole or in part of any Imposition or lien
therefor or any Legal Requirement or Insurance Requirement or the
application of any instrument of record affecting the Trust Estate
or any part thereof or any claims of mechanics, materialmen,
suppliers, or vendors or lien therefore, and may withhold payment
of the same pending such proceedings if permitted by law, or make
payment under protest, or defer compliance with any such Legal
Requirement, any such Insurance Requirement or the terms of any
such instrument, and the same shall not be a Default hereunder,
provided that (a) in the case of any Impositions or lien therefor
or any claims of mechanics, materialmen, suppliers or vendors or
lien therefor, such proceedings shall suspend the collection
thereof from each of the Mortgagor, the Mortgagee, the Trustee,
the Noteholder and the Trust Estate, (b) neither the Trust Estate
nor any interest therein would be in any danger of being sold,
forfeited, or lost, (c) such action would not result in or
constitute a default under any Ground Lease or Superior Mortgage,
(d) in the case of a Legal Requirement, neither the Noteholder nor
the Mortgagee shall be in any danger of any civil or any criminal
liability, and the failure of the Mortgagor to comply with such
Legal Requirement shall not affect the continuance in good
standing of any Permit or result in the suspension, termination,
non-renewal or material adverse modification of any permit, and
(e) in the case of an Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any
insurance required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without
limiting the generality of the first sentence of Section 5.03 and
notwithstanding the provisions of Section 5.03(a)(ii), the
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Mortgagor will cause to be removed, either by payment, or bonding
or otherwise, all claims and demands of mechanics, materialmen,
laborers, and others which, if unpaid, might result in, or permit
the creation of, a lien on the Premises and/or Trust Estate or any
part thereof, or on the revenues, rents, issues, income and profits
arising therefrom and in general will do or cause to be done
everything necessary so that the lien hereof shall be fully
preserved, at the cost of the Mortgagor, without expense to the
Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage
by fire, lightning, and other risks from time to time included
under "all-risk" policies and against loss or damage by
sprinkler leakage, water damage, collapse, malicious
mischief and explosion in respect of any steam and pressure
boiler and similar apparatus located on such insurable
properties, in amounts at all times sufficient to prevent
the Mortgagor from becoming a coinsurer within the terms of
the applicable policies, but in any event such insurance
shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the
"Insurance Amount"): (i) 100% of the then full insurable value
of such insurable properties, the term "full insurable value"
to mean the actual replacement cost (excluding the costs of
foundation, footing, excavation, paving, landscaping and
other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36
calendar months), by an Architect, contractor, appraiser, or
an Insurer, (ii) the amount required to be maintained pursuant
to the Superior Instrument Requirements;
(2) war risk insurance as and when such insurance is obtainable
from the United States of America or any agency thereof as
promptly as reasonably practicable after the same becomes so
obtainable, in an amount not less than the Insurance Amount,
or in such lesser amount as may then be so obtainable;
(3) public liability, including personal injury and property
damage and comprehensive general liability connected with the
possession, use, leasing, operation or condition of such
insurable properties in such amounts as, in the Mortgagor's
judgment, are prudent, considering the cost of such insurance,
for personal injury and
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property damage with respect to any one occurrence, which may
be under an umbrella policy. Anything contained in this clause
(3) to the contrary notwithstanding, the Superior Instrument Requirements
with respect to the kinds and amount of insurance described in
this clause (3) shall be satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to
any work (to the extent the risks to be covered thereby are
not already covered by other policies of insurance maintained
by the Mortgagor) on or about such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time
that the Mortgagor is renewing any policy for such insurance
or taking out any new or replacement such policy covering a
period of less than 12 months, the Mortgagor shall deliver to
the Mortgagee an Officers' Certificate certifying that the
period of coverage to be maintained by the Mortgagor under
such policy is the maximum that can be maintained at rates
determined by the Mortgagor to be reasonable for such
coverage;
(6) to the extent available, flood insurance in an amount not
less than the Insurance Amount, or such lesser amount as may
then be so obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time
customarily insured against by persons owning or using
casino-hotels of comparable size in the boardwalk area of
Atlantic City, New Jersey and (ii) required to be maintained
pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to
maintain a deductible with respect to the insurance policies
described in clauses (1), (2), (6) and (7) in an amount not to
exceed (x) for the twelve month period commencing the date hereof,
$100,000 with respect to the insurance policies described in
clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels
of a similar size and value in Atlantic City, New Jersey (but in no
event more than $1,000,000), (ii) the Mortgagor shall be
permitted to maintain a $200,000 self insured
retention under the general liability policy described in
clause (3) and a deductible with respect to the other insurance
policies described in clause (3) in an amount not to exceed the
amount of deductible as is customarily maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the Mortgagor
shall not reduce its insurance coverage for the matters described
in clause (3) (which for purposes of
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this paragraph means a reduction in single limits or an increase
in deductible) unless and until the Mortgagor delivers to the
Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained at rates
determined by the Mortgagor to be reasonable for such coverage,
(x) the amount of the proposed reduction, (y) the premium for the
existing and the proposed reduced coverage, and (z) that the
proposed deductible satisfied the criteria set forth in this clause (iii), and
(iv) the Mortgagor shall be permitted to maintain a deductible with
respect to the insurance policies described in clause (5) in the
forms of and in an amount not to exceed the amount of deductible as
is customarily maintained by casino-hotels of similar size in
Atlantic City, New Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of
workers' compensation insurance, name as additional insureds the Mortgagee
and, to the extent required by the Superior Instrument
Requirements, the Lessors and the holders of the Superior
Mortgages, (2) provide that all insurance proceeds for losses,
except in the case of public liability insurance and workers'
compensation insurance or as otherwise provided in Subsections
(d), (e) and (f) of this Section 5.11, be payable solely to the
Mortgagee or such other party as is required to receive such
proceeds under a Superior Mortgage, (3) except in the case of workers'
compensation, include effective waivers
(whether under the terms of any such policy or otherwise) by the
insurer of all claims for insurance premiums against all lost
payees and named insureds (other than the Mortgagor) and all
rights of subrogation against any named insured, (4) except in the
case of public liability and workers' compensation insurance,
provide that any losses shall be payable notwithstanding (i) any
act, failure to act, negligence of, or violation or breach of
warranties, declarations or conditions contained in such policy by
the Mortgagor or the Mortgagee or any other named insured or loss
payee (including, without limitation, with respect to the Released
Fee Land, the holders of any After-Acquired Fee Mortgages), (ii)
the occupation or use of the insurable properties for purposes more
hazardous than permitted by the terms of the policy, (iii) any
foreclosure or other proceeding or notice of sale relating to the
insurable properties or (iv) any change in the title to or
ownership or possession of the insurable properties, (5) contain
a non-contributory mortgagee clause in favor of the Mortgagee, and
(6) provide that if all or any part of such policy is cancelled,
terminated or expires, the insurer will forthwith give notice
thereof to each named insured an loss payee and that no
cancellation, reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by
each named insured and loss payee of written notice thereof.
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(c) The Mortgagor will deliver to the Mortgagee, (1)
duplicate originals of all insurance policies that the Mortgagor is
required to maintain pursuant to this Section 5.11 and (2) within
30 days after each reduction in insurance required to be maintained
by the Mortgagor hereunder, an Officers' Certificate setting forth
the particulars as to all such insurance policies and certifying
that the same comply with the requirements of this Section 5.11,
that all premiums or installments thereof then due thereon have
been paid and that the same are in full force and effect. The
Mortgagee shall not be responsible for effecting or renewing any
insurance or for the responsibility or solvency of the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x)
results in damage, loss or destruction in an amount in excess of
$5,000,000 to any buildings or improvements on the Premises
and/or any Tangible Personal Property or (y) pursuant to any
Superior Instrument Requirement, would require the deposit of
insurance proceeds with the Depositary, or action or proceeding
with respect thereto. Whenever the Superior Instrument
Requirements require or permit the selection of the Depositary
by the Mortgagor, the Mortgagor shall select the Insurance Trustee
as the Depositary. Within 30 days after any Casualty which results
in any damage, loss or destruction in an amount in excess of
$10,000,000 to any buildings or improvements of the Premises
and/or any Tangible Personal Property, the Mortgagor shall deliver
to the Mortgagee a certificate of an Architect stating whether, in
such Architect's opinion, applicable Legal Requirements permit the
Restoration of such buildings and improvements for the same uses
and to the same size and quality in all material respects, as
existed immediately prior to the Casualty (and if such certificate
states the Legal Requirements do not permit such Restoration, such
certificate shall describe the manner closest approximating such
criteria to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of Appraised
Value dated not more than 10 days prior to delivery setting forth
the Appraised Value immediately prior to the Casualty and the
estimated Appraised Value immediately after the Restoration). If
the Mortgagor is required to deliver such Certificates of Appraised
Value and if based on such Certificates of Appraised Value
immediately after Restoration, the aggregate Outstanding Amount
of First Mortgage Debt immediately after such Restoration shall
exceed the greater of (i) 66 2/3% of the Appraised Value
immediately after such Restoration or (ii) the quotient of the
Outstanding Amount of First Mortgage Debt immediately prior to such
Casualty divided by the Appraised Value immediately prior to the
Casualty multiplied by the Appraised Value immediately after such
Restoration, then the proceeds of any insurance shall, at the
election of Mortgagee, either be applied to Restoration as set
forth in Subsections (e), (h) and (i)
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below) or paid and delivered to the Mortgagee to the extent of the then
Outstanding Amount of the Notes and any other interest or other sums due
hereunder or thereunder to be applied to the satisfaction of the Mortgage to
the extent proceeds are available for such purpose and provided
that no additional sums are due to the Trustee or the Noteholders
under the Notes or the Indenture, the balance of any net insurance
proceeds shall be paid to the Mortgagor. Notwithstanding the
foregoing sentence, if such Certificates of Appraised Values
indicates that the Outstanding Amount of First Mortgage Debt
immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the
proceeds of insurance will be made available for Restoration
(subject to paragraphs, (e), (h) and (i) below) if the Mortgagor
obtains an irrevocable commitment from a nationally recognized
financial institution having a combined capital and surplus of at
least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor
as additions to capital in an amount equal to the Outstanding
Amount of First Mortgage Debt in excess of the Appraised Value
necessary to be paid down so that the Outstanding Amount of First
Mortgage Debt will not exceed either of the two amounts determined
pursuant to such clauses (i) and (ii), PROVIDED that such commitment
may only be released if, upon an Appraisal at any time following
completion of such Restoration, the aggregate Outstanding Amount of
the First Mortgage Debt does not exceed 66-2/3% of the Appraised
Value.
(e) Subject to the provisions of Subsection (d) above,
in case a Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined)
does not exceed the sum of $10,000,000, the net insurance proceeds
shall be paid by the Mortgagee to the Mortgagor (unless the
Superior Instrument Requirements provide that the same shall
be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more
or if the Superior Instrument Requirements provide that the same shall
be paid to the Depositary, the net insurance proceeds shall
be paid by the Mortgagee to the Insurance Trustee (or other
Depositary required by the Superior Instrument Requirements,
provided that such Depositary holds such proceeds in trust for
purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable
promptness under the circumstances and thereafter with due
diligence proceed to perform and complete in a good and
workmanlike manner the restoration, repair, replacement or
rebuilding of the damage or destruction
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resulting from the Casualty (all of which restoration, repair, replacement
or rebuilding are referred to as the "Restoration") in accordance with
the plans and specifications submitted to the Insurance Trustee, in
conformance with all Legal Requirements and Superior
Instrument Requirements, and in accordance with the further
provisions of this Subsection (e), regardless of the extent of
any such Casualty and whether or not net insurance proceeds,
if any, shall be available or, if available, shall be
sufficient, for the purpose of the Restoration (provided,
however, that if the Mortgagor does not receive any net
insurance proceeds within 30 days after any Casualty because
the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration
shall be deferred until such proceeds are made available to
the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an
Officers' Certificate certifying that the Mortgagor is diligently and
continuously adjusting such loss with the Insurer, (ii) the
Mortgagor delivers to the Mortgagee an Officers' Certificate
within such 30-day period requesting the extension of such
period, estimating the date on which such proceeds will be
available and describing the Mortgagor's efforts to adjust
such loss and certifying that such extension does not
constitute a default or a breach of any of the provisions of
any of the Ground Leases (or if so, such default or breach has
been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate
described in Clause (ii)). All Restoration work shall be
performed in accordance with the applicable provisions of
Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements
and, prior to commencing any Restoration, the Mortgagor shall
obtain all Permits necessary in connection therewith, and
shall obtain, and keep in full force and effect until the
completion of such Restoration, such additional insurance as
the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration
shall be accompanied by a certificate of the Mortgagor and an
Opinion of Counsel to the effect that upon the completion of
the Restoration pursuant to the plans and specifications the
Premises, and all buildings and improvements, thereon will
comply with all superior Instrument Requirements, Legal
Requirements and Insurance Requirements. Notwithstanding
anything in this Section 5.11 to the contrary, if such
Casualty is in an amount less than $5,000,000, the
Mortgagor shall not be required to perform and complete such
Restoration (unless the performance and completion of the
Restoration is necessary in order for the Mortgagor to be in
compliance with any term, provision or condition of this
Mortgage
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(other than this Section 5.11(e)) or any Superior
Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall
be held by the Mortgagor in trust for the purpose of paying
the cost of the Restoration, except as otherwise provided
herein;
(5) Any net insurance proceeds that the Insurance
Trustee holds pursuant to this Subsection (e), shall be deposited
in an interest-bearing investment reasonably designate by Mortgagor
(to the extent the Mortgagor is permitted to designate such
investment under the Superior Instrument Requirements) (and
the interest thereon shall be added to such proceeds) and
shall be paid by the Insurance Trustee in reimburse the
Mortgagor for, or to make payment for, the Restoration,
after the Insurance Trustee deducts therefrom the amount of
any reasonable costs and expenses incurred in connection with
the performance of its obligations under this Section 5.11.
The Insurance Trustee shall make such payments not more
frequently than once every 30 days upon the written request
of the Mortgagor (unless more frequent payments are required
by Superior Instrument Requirements), by paying to the
Mortgagor or the persons named in the certificate described
in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate from time to time as the
Restoration progresses, provided the Mortgagor has complied
with the requirements of this Subsection (e) and such payment
is permitted by an applicable Superior Instrument
Requirements. The Mortgagor's written request shall be
accompanied by (i) the certificate described in Clause (6) of
this Subsection (e) and (ii) a title company or official
search, or other evidence reasonably acceptable to the
Insurance Trustee, showing that there have not been filed
with respect to the Premises, any vendor's, contractor's
mechanic's, laborer's or materialman's statutory or similar
lien which has not been discharged of record (or bonded
against or secured by other security) or any other
encumbrance irrespective of its priority (other than
Permitted Encumbrances).
(6) The certificate required by Clause (5) of this
Subsection (e) shall (A) be an Officers' Certificate,
countersigned by the Architect in charge of the Restoration with
respect to the matters described in (i) and (v) below, (B) be dated
not more than 10 days prior to such request and (C) set forth (in
addition to any other requirements contained in any
applicable Superior Instrument Requirements) that:
(i) all of the Restoration work theretofore performed
is in substantial compliance with the
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plans and specifications theretofore submitted to the Insurance
Trustee and in compliance with all Superior Instrument Requirements,
Legal Requirements and Insurance Requirements;
(ii) the sum then requested either has been paid by the
Mortgagor or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered
services or furnished or contracted to deliver materials
for the Restoration therein specified, and the names and
addresses of such persons, a brief description of such
services and materials and the several amounts so paid
or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the
basis in any pervious or then pending request for the
withdrawal of net insurance proceeds, and that the sum
then requested does not exceed the value of the services
and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to
Subclause (ii) of this Clause (6) in such certificate
to be due for services or materials, and except for
amounts in dispute and/or customary retainages, there
is no outstanding indebtedness known to the person
signing such certificate, after due inquiry, which is
then due for labor, wages, materials, supplies or
services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons
signing such certificate, of the Restoration in order
to complete the same does not exceed the net insurance
proceeds remaining in the hands of Insurance Trustee
after payment of the sum requested in such certificate
or if such estimated cost does exceed such insurance
proceeds such certificate shall state the amount of any
such deficiency. If the certificate states that such
deficiency will exist, the Mortgagor shall deliver the
amount of such deficiency in cash or cash equivalent to
the Insurance Trustee simultaneously with the delivery
of such certificate, which amount shall be deemed
insurance proceeds for purposes of this Section
5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the
entire cost of the Restoration, then, after completion of the
Restoration, the Mortgagor shall pay the deficiency. If all
or any part of the net insurance proceeds are not used for
the restoration in accordance
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with this Subsection (e) (because such proceeds exceed the amount
required to complete the Restoration), then upon completion of the
Restoration in accordance with this Subsection (e), such
amount not so used, if held by the Insurance Trustee, shall
be paid to the Mortgagor (if permitted by Superior Instrument
Requirements).
(f) Provided that no Event of Default has occurred and is continuing,
all net business interruption insurance proceeds shall be paid to
the Mortgagor, to be segregated from the other funds of Mortgagor
and held in trust by Mortgagor for the following purposes and in
the following order of priority: (i) for the payment of Impositions
and amounts due under the Ground Leases and Superior Mortgages;
(ii) for debt service for the estimated period of Restoration (for
purposes of this Section 5.11(f), interest and principal payments
due on any payment date under the Note will deemed to accrue in
equal daily installments beginning the day after the immediately
preceding payment date and ending on such payment date); and (iii)
for any expense incurred in connection with the operation or
business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to
be maintained pursuant to this Section 5.11, unless the same are
permitted by Superior Instrument Requirements and the Mortgagee is
included therein as a named insured, with loss payable to the
Mortgagee and the Insurance Trustee pursuant to Section 5.11(b)
hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall
promptly deliver to the Mortgagee a duplicate original of the
policy of such insurance, a copy thereof certified by the insurer
or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance
claims by reason of damage or destruction to any
portion of the Trust Estate may be adjusted by the Mortgagor, but the
Mortgagee shall have the right (but not the obligation) to join the
Mortgagor in adjusting, and approving the adjustment of, any such
loss except in the event of a loss where the amount of insurance
reasonably anticipated to be received with respect to such loss is
less than Five Million Dollars ($5,000,000), and the Mortgagor
shall assist the Mortgagee in any such adjustment at the request of
the Mortgagee. If the Mortgagee at its election as aforesaid joins
the Mortgagor in any adjustment process, then the Mortgagee's
approval of the adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary,
if an Event of Default shall have occurred and be continuing, the
Mortgagee may, at its option, (A) refrain from paying to the
Mortgagor or the Insurance Trustee any net insurance proceeds or
(B) instruct the Insurance Trustee to
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pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee,
as the case may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not
authorize, permit or make any demolition, alteration or
improvement of any building included in the Trust Estate or any
new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in
this Section 5.12 set forth.
Unless an Event of Default shall have occurred and be continuing,
the Mortgagor shall have the right at all times to make or permit
such alterations, improvements or new constructions, structural or
otherwise (herein sometimes called collectively "alterations"), of
or on the Trust Estate, to be made in all cases subject to the
following conditions:
(a) no alteration shall be undertaken or carried out except in
conformity with all Superior Instrument Requirements, Legal
Requirements and Insurance Requirements;
(b) if the estimated cost of any alteration, together with other
alterations that constitute a single construction plan or
project (whether or not accomplished in several stages or
procedures), exceeds $5,000,000, the building or buildings,
as so improved or altered, upon completion of the work shall
be of a value not less than the value of such building or
buildings immediately prior to the making of such
alterations;
(c) any alteration which is structural in nature or involves an
estimated cost of more than $5,000,000 shall be conducted
under the supervision of an Architect, and no such alteration
shall be undertaken until 10 days after there shall have been
filed with the Mortgagee detailed plans and specifications and
cost estimates therefor, stating that such plans and
specification conform to all, prepared and approved in
writing by such Architect and accompanied by a certificate of
such Architect stating that such plans and specifications
conform to all applicable provisions of this Section 5.12;
(d) no alteration involving an estimated cost of more than
$5,000,000 shall be undertaken until the Mortgagor has
furnished to the Mortgagee, at the Mortgagor's sole cost and
expense, a surety bond or bonds, covering performance, and
labor and material payments with respect to the work to be so
performed, naming the Mortgagee as obligee, issued by a
responsible surety company, authorized to do business in the
state of New Jersey, in a form generally and customarily used
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by such surety in an amount equal to the estimated cost of
construction of the work covered by the plans and
specifications therefor, guaranteed and conditioned upon
the performance and completion of such construction,
substantially in conformity with the such plans and
specifications and within a reasonable time, subject to
delays by fire, strikes, lock-out, acts of God, inability to
obtain labor or materials, governmental restrictions, enemy
action, civil commotion or unavoidable Casualty or other
similar causes beyond the control of the Mortgagor, free and
clear of all liens, claims and liabilities for the cost of
such alterations. In the event such surety bond or bonds
shall be unobtainable the Mortgagor shall deliver to the
Mortgagee security by cash, letter of credit or other
guarantee, affording substantially the same protection as
would such bond or bonds;
(e) all work done in connection with any alterations
shall be done promptly and in good and workmanlike manner.
The work in connection with any alteration shall be prosecuted with
reasonable dispatch, delays due to fire, strikes, lockouts,
acts of God, inability to obtain labor or materials,
governmental restrictions, enemy action, civil commotion or
unavoidable casualty or similar causes beyond the control of
the Mortgagor excepted;
(f) if the estimated cost of alterations exceed $5,000,000, the
Mortgagor shall have delivered to the Mortgagee (A) prior to
the commencement of such alterations, additions or
improvements copies of all Permits required for the
commencement of such work together with a certificate of the
Architect or an Opinion of Counsel to the effect that all
Permits required for the commencement of such alterations
have been obtained; and (B) within a reasonable period of
time after the completion of the alterations, copies of all
Permits required in connection with the completion thereof,
together with either an Opinion of Counsel or a certificate
of the Architect that all such Permits have been so obtained
by the Mortgagor and that the Mortgagor has complied with all
the requirements of this Section 5.12;
(g) no alterations of any kind shall be made to any building
which shall change the use or reduce the size or quality of
the building in any material respect; and
(h) no alterations costing in excess of
$5,000,000, together with other alterations that
constitute a single construction plan or project (whether or
not accomplished in several stages or procedures), shall be
made to any building if such alterations are not
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expected to be completed at least 120 days prior to the maturity
date of the Note (except if such alterations are required in
order to comply with Legal Requirements or Superior Instrument
Requirements).
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d),
enter into any Lease, or renew, modify, extend, terminate, or
amend any Lease, except in the ordinary course of business
of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or
collection of, any rental payments under any Lease more than
one year in advance of the respective periods in respect of
which they are to accrue, except that, in connection with
the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected
and received in advance in an amount not in excess of three months'
rent and/or a security deposit may be required thereunder in an
amount not exceeding one year's rent;
(c) collaterally assign, transfer or hypothecate
(other than to the Mortgagee hereunder, to the mortgagee under the
Guaranty Mortgage or to the holder of any Working Capital
Facility Lien) any rental payment under any Lease whether
then due or to accrue in the future, the interest of the
Mortgagor as landlord under any Lease or the rents, issues or
profits of the Trust Estate;
(d) after the date hereof, enter into any Lease,
or renew any Lease unless such Lease contains terms to the
effect as follows:
(1) the Lease and the rights of the tenants
thereunder shall be subject and subordinate to the
rights of the Mortgagee under this Mortgage, the
mortgagee under the Guaranty Mortgage and the holders
of any Superior Mortgage,
(2) the Lease may be assigned by the
landlord thereunder to the Mortgagee,
(3) the rights and remedies of the tenant in
respect of any obligations of the landlord thereunder
shall be nonrecourse as to any assets of the landlord
other than its equity in the building in which the
leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee
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under any new lease entered into in the event of a termination
of a Ground Lease;
(e) modify any Lease with respect to the matters described
in clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than
with any Affiliate of the Mortgagor) for a term of not
less than 3 nor more than 10 years, the Mortgagee shall deliver a
non-disturbance and attornment agreement substantially in the form of
Schedule 4 hereto, following receipt of a certificate of a leasing broker
(who is not an Affiliate of the Mortgagor or the broker involved in such
transaction) experienced with respect to leases of commercial space in the
Atlantic City area stating that the rent under the Lease is not less than
fair market rent and that the other terms of the Lease are fair and
reasonable in the commercial leasing market. The Mortgagor shall, upon
demand, reimburse the Mortgagee for any costs and expenses (including
reasonable attorney's fees) incurred by the Mortgagee in connection with
the preparation, review and delivery of such non-disturbance and attornment
agreements.
Promptly after the execution and delivery hereof, the Mortgagor
will cause the lessee under each Lease now in effect and promptly after
each Lease is executed or becomes effective after the date of the execution
and delivery hereof, the Mortgagor will cause the lessee under each such.
Lease, to be duly notified in writing (unless the substance and effect of
such notice shall be contained in such Lease) of the subjection of the
owner's interest, as lessor, in and to such Lease to the lien of this
Mortgage and of the name and address of the Mortgagee. Each such notice
shall state that the lease of such lessee is a Lease as herein defined.
If a new Mortgagee is at any time appointed hereunder or the address
of the Mortgagee shall at any time be changed, the Mortgagor will cause
each lessee under each Lease to be promptly notified in writing of the name
address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur
any expenditure other than de minimis amounts) to obtain from each lessee
under each Lease to whom any notice is sent pursuant to this paragraph an
acknowledgment of receipt of such notice, and the Mortgagor will promptly
deliver to the Mortgagee, upon request, a copy of each such acknowledgment
of receipt which it is able to obtain. The Mortgagee shall not be
responsible for securing or causing the Mortgagor to secure any such
acknowledgment.
Nothing contained in this Section 5.13 shall limit the
provisions of Section 4.04 hereof.
Section 5.14. [Reserved]
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Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject
to Article Four, the Mortgagor will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence
as a corporation, and its rights (both statutory and under its
articles of incorporation) and franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The
Mortgagor will keep proper books of record and account in accordance
with Section 12.05 of the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall
fail to perform any of its covenants in this Mortgage and
such failure shall continue for 10 days following notice
thereof given by the Mortgagee (or at any time, without
notice, in case of emergency), the Mortgagee may (but is not
obligated to), at any time and from time to time, take any
action or make advances, to effect performance of any such
covenant on behalf of the Mortgagor; and all moneys so used
or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith,
together with interest on all of the same at the rate of
interest set forth in the Note, shall be repaid by the
Mortgagor upon demand and such advances shall be secured
under this Mortgage prior to the Note.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The
Mortgagor covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury, stay
or extension law or any other law which would prohibit or forgive the
Mortgagor from paying all or any portion of the obligations evidenced
by the Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may otherwise affect the covenants
or the performance of this Mortgage; and the Mortgagor (to the extent
that it may lawfully do so) 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
Mortgagee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN.
(a) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Taking affecting the Trust
Estate. If the Taking (i) is estimated to result in an award of more
than [$5,000,000] or (ii) the Taking would interfere with or adversely
affect the operation of the Casino-Hotel in accordance with Legal
Requirements then within 30 days after any such Taking, the Mortgagor
shall
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deliver to the Mortgagee a certificate of an Architect stating
whether, in such Architect's opinion, applicable Legal Requirements
permit the Restoration of any buildings and improvements for the same
uses and the same size and quality in all material respects as existed
immediately prior to the Taking (and if such certificate states that
Legal Requirements do not permit such Restoration, such certificate
shall describe the manner closest approximating such criteria to which
the buildings and improvements could be so restored and shall be
accompanied by a Certificate of Appraised Value dated not more than 10
days prior to delivery setting forth the Appraised Value immediately
prior to the Taking and the estimated Appraised Value immediately
after the permitted Restoration). If the Mortgagor is required to
deliver such Certificates of Appraised Value and if based on such
Certificates of Appraised Value immediately after Restoration, the
aggregate Outstanding Amount of First Mortgage Debt immediately after
such Restoration shall exceed the greater of (i) 66-2/3% of the
Appraised Value immediately after such Restoration or (ii) the
quotient of the Outstanding Amount of the First Mortgage Debt
immediately prior to such Taking divided by the Appraised Value
immediately prior to the Taking multiplied by the Appraised Value
immediately after such Restoration, then the Taking shall be deemed a
Taking of "the whole or substantially all of the Premises."
Notwithstanding the foregoing sentence, if such Certificates of
Appraised Value indicate that the Outstanding Amount of First Mortgage
Debt immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the
Taking will not be deemed a Taking of "the whole or substantially all
of the Premises", if the Mortgagor obtains an irrevocable commitment
from a nationally recognized financial institution having a combined
capital and surplus of at least [$100,000,000], to supply, upon an
acceleration under this Mortgage as a result of an Event of Default,
funds to the Mortgagor as additions to capital in an amount equal to
the Outstanding Amount of First Mortgage Debt in excess of the
Appraised Value necessary to be paid down so that the Outstanding
Amount of First Mortgage Debt will not exceed either of the two
amounts determined pursuant to such clauses (i) and (ii), PROVIDED
that such commitment may only be released if, upon an Appraisal at any
time following completion of such Restoration, the aggregate
Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3%
of the Appraised Value.
(b) If at any time there shall occur a Taking of less than the
whole or substantially all of the Premises and the award or
awards resulting therefrom payable to the Mortgagor (and not
to any Lessor or the holder of any Superior Mortgage) (after
there shall have been first deducted the fees and expenses
incurred in connection with the termination, settlement and
collection of such award or awards, including but not
limited to reasonable counsel fees and expenses,
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hereinafter referred to as "Settlement Costs") (i) shall not exceed
the sum of [$10,000,000] (except to the extent that the Insurance
trustee or a Depositary is required to hold such amount pursuant to a
Superior Instrument Requirement), the entire amount of such award
shall be paid to the Mortgagor; and (ii) if such award is
[$10,000,000] or more, the entire amount of such award shall be paid
to the Insurance Trustee (or other Depositary required by a Superior
Mortgage, provided that such Depositary holds such award in trust for
purposes of paying the cost of Restoration). In either event, such
awards shall be applied to the cost of demolition, repair, Restoration
and replacement of the Trust Estate to as nearly practicable to their
uses, value and condition immediately prior to the Taking (except to
the extent otherwise provided by Superior Instrument Requirements).
The Mortgagor shall promptly commence and with due diligence perform
that Restoration in accordance with clauses (3), (4) and (7) of
Section 5.11(e) (after substituting the words "Taking" of "Casualty"
and "award" for "not insurance proceeds"), at no cost to the
Mortgagee. All claims or suits arising out of any Taking may be
settled by the Mortgagor, except that the Mortgagee shall have the
right (but not the obligation) to participate in such claim or suit,
and not the obligation) to participate in such claim or suit, and to
approve settlement thereof (and notwithstanding anything in the Ground
Leases to the contrary, the Mortgagor shall not agree to any
settlement or compromise of the amount of any such claim or suit),
except a claim or suit where the amount reasonably anticipated to be
received by the Mortgagor is less than $5,000,000. If the Mortgagee
at its election as aforesaid joins such claim or suit, the Mortgagee's
approval of such settlement shall not be unreasonably withheld. The
Insurance Trustee shall promptly pay such sums as are received by it
from such Taking from time to time in accordance with the procedures
set forth in clauses (5) and (6) of Section 5.11(e) (after
substituting the words "Taking" for "Casualty" and "award" for "net
insurance proceeds").
(c) If at any time there shall occur a Taking of the whole or
substantially all of the Premises, then the award payable to the
Mortgagor shall not be applied to Restoration but shall instead be
paid and delivered to the Trustee (subject to the rights of the
Lessors under the Superior Leases and the holders of any Superior
Mortgages) to the extent of the then Outstanding Amount of the Note
and any other interest or other sums due hereunder or thereunder to be
applied to the satisfaction of this Mortgage to the extent proceeds
are available for such purpose and provided that no additional sums
are due the Trustee or the Noteholder under the Note or the Indenture,
the balance of any award shall be paid to the Mortgagor.
(d) Notwithstanding anything contained herein to the contrary,
if an Event of Default shall have occurred and
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is continuing, the Mortgagee may, at its option, (A) refrain from
paying to the Mortgagor or the Insurance Trustee any award or
(B) instruct the Insurance Trustee to pay to the Mortgagee any
award then held by the Insurance Trustee, as the case may be.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause
to be done all things necessary to preserve and keep unimpaired the
rights of the Mortgagor, as lessee under the Ground Lease, and to
prevent any termination, surrender, cancellation, forfeiture or
impairment thereof. The Mortgagor shall at all times fully perform
and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all
taxes, assessments and other charges mentioned therein) prior to the
expiration of any notice and/or cure period provided in each such
Ground Lease. Upon receipt by the Mortgagee from a Lessor of any
written notice of default by the lessee thereunder, Mortgagee may rely
thereon and take any action the Mortgagee deems necessary in its sole
discretion to prevent or to cure any default by the Mortgagor in the
performance of or compliance with any of the agreements, covenants,
terms or conditions imposed upon or assumed by the Mortgagor as lessee
under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by the Mortgagor
or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers'
Certificate, Opinion of Counsel and a copy of the injunction, all as
described in Section 3.01(g), the Mortgagee shall not take any such
action unless and until the Mortgagor and/or the Mortgagee no longer
has the benefit of any tolling or stay referred to in Section 3.01(g).
Without limiting the generality of Section 3.09 hereof, the Mortgagor
hereby expressly grants to the Mortgagee, and agrees that the
Mortgagee shall have, the absolute and immediate right to enter in and
upon the Premises or any part thereof to such extent and as often as
the Mortgagee, in its sole discretion, deems necessary or desirable
for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. Subject to the
preceding and without limiting the Mortgagee's other remedies under
this Mortgage, the Mortgagee may pay and expend such sums of money as
the Mortgagee in its sole discretion deems necessary for any such
purpose, and the Mortgagor hereby agrees to pay to the Mortgagee,
immediately and without demand, all such sums so paid and expended by
the Mortgagee, together with interest thereon from the date of each
such payment at the highest rate of interest set forth in the Note.
All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this
Mortgage.
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(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and
that it will not without the express written consent of the Mortgagee
modify, change, supplement, alter or amend such Ground Leases either
orally or in writing and, as further security for the repayment of the
indebtedness secured hereby and for the performance of the covenants
herein and in such Ground Leases contained, the Mortgagor hereby
assigns to the Mortgagee all of its rights, privileges and
prerogatives as lessee under such Ground Leases to terminate, cancel,
modify, change, supplement, alter or amend such Ground Leases, and any
such termination, cancellation, modification, change, supplement,
alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing
and (2) either (A) there has been an acceleration of maturity of the
Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises
its rights under Section 3.09 hereof, the Mortgagee shall have no
right to terminate, cancel, modify, change, supplement, alter or amend
the Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of
the Mortgagor's obligations under such Ground Leases, pursuant to such
Ground Leases or otherwise, shall release the Mortgagor from any of
its obligations under this Mortgage, including its obligations with
respect to the payment of rent as provided for in such Ground Leases
and the performance of all of the terms, provisions, covenants,
conditions and agreements contained in such Ground Leases, to be kept,
performed and complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest
in the improvements on the Leased Land and the leasehold estates shall
not merge by and shall always remain separate and distinct,
notwithstanding the union of such estates either in the Lessor or in
the lessee, or in a third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in
writing of any request made by the Mortgagor, as lessee under each of
the Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any
arbitration proceedings, as well as all proceedings thereunder. In
addition, the Mortgagor shall promptly
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deliver to the Mortgagee a copy of the determination of the
arbitrators in each such arbitration proceeding. The Mortgagee shall
have the right to participate in such arbitration proceedings in
association with the Mortgagor or on its own behalf as an interested
party in accordance with the terms of the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of
any Ground Lease to any mortgage deed of trust or other lien of the
fee interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option
under any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such
election to the Lessor or (B) the Mortgagor acquires fee simple title
or any other estate, title or interest in the Leased Land, the
Mortgagor shall promptly notify the Mortgagee of such acquisition and
shall cause to be executed and
recorded all such other and further assurances or other instruments in
writing as may be required by law or, in the opinion of the Mortgagee, be
reasonably desirable to carry out the intent and meaning of clause (x) of
Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease
by any Lessor or any trustee arising from or in connection with any
case, proceeding or other action commenced or pending by or against
any Lessor under the Code or any comparable provision contained in any
present or future federal, state, local, foreign or other statute,
law, rule or regulation, the Mortgagor shall give notice thereof to
the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any
and all of the Mortgagor's rights as lessee under Section 365(h) of
the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation ("Comparable Provision") and (B) covenants that it shall
not elect to treat any Ground Lease as terminated pursuant to Section
365(h) of the Code or any Comparable Provision without the prior
written consent of the Mortgagee and (C) agrees that any such election
by the Mortgagor without such consent shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to
the Mortgagee all of the Mortgagor's claims and rights to the payment
of damages arising from any rejection by Lessor of any Ground lease
under the Code or any Comparable Provision. The Mortgagee shall have
the right to proceed in its own name or in
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the name of the Mortgagor in respect of any claim, suit, action or
proceeding relating to the rejection of any Ground Lease, including,
without limitation, the right to file and prosecute, in cooperation
with the Mortgagor, any proofs of claim, complaints, motions,
applications notices and other documents, in any case in respect of
Lessor under the Code or any Comparable Provision. This assignment
constitutes a present, irrevocable and unconditional assignment of the
foregoing claims, rights and remedies, and shall continue in effect
until all of the indebtedness and obligations secured by this Mortgage
shall have been satisfied and discharged in full. Any amounts
received by the Mortgagee in damages arising out of the rejection of
any Ground Lease as aforesaid shall be applied first to all reasonable
costs and expenses of the Mortgagee (including, without limitation,
reasonable attorneys' fees) incurred in connection with the exercise
of any of its rights or remedies under this Section 5.21, and
thereafter as provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or
all of the Ground Leases the Mortgagor shall give the Mortgagee not
less than 10 days' prior notice of the date on which the Mortgagor
shall apply to the Bankruptcy Court or other judicial body with
appropriate jurisdiction for authority to reject the lease. The
Mortgagee shall have the right, but not the obligation, to serve upon
the Mortgagor within such 10 day period a notice stating that (a) the
Mortgagee demands that the Mortgagor assume and assign such Ground
Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any
Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s).
If the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a)
of the preceding sentence within 30 days after the notice shall have
been given subject to the performance by the Mortgagee of the covenant
provided for in clause (b) of the preceding sentence. Effective upon
the entry of an order for relief in respect of the Mortgagor under
Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby
assigns and transfers to the Mortgagee a non-exclusive right to apply
to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
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(x) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other communications or
notices with respect to events which relate to the possible impairment
of the security of this Mortgage, which it shall give or receive under
the Ground Leases and shall promptly notify the Mortgagor of any
default under any Ground lease on the part of the Lessor or the
Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the
Lessor under each Ground Lease, to the end that the Mortgagor may
enjoy all of the rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed
net rent, taxes and assessments, payable under the Ground Leases have
been paid to the extent they were due and payable to the date hereof
and that the Mortgagor has not received notice of its failure to pay
any other amounts payable under the Ground Leases which have not been
cured.
(d) If both the Lessor's and lessee's estates under any of the
Ground Leases or any portion thereof shall at any time become vested
in one owner, this Mortgage and the lien created hereby shall
nevertheless not be merged, extinguished, destroyed or terminated by
application of the doctrine of merger and, in such event, Mortgagee
shall continue to have all of the rights and privileges of the a
leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease
shall be terminated prior to the natural expiration of its term due to
default by the lessee thereunder, and if pursuant to such Ground
Lease, the Mortgagee or its designee shall acquire from the Lessor a
new lease of the Leased land or any portion thereof, the Mortgagor
shall have no right, title or interest in or to such lease or the
leasehold estate created thereby, or the options therein contained.
(f) Any leases for parking purposes hereafter entered into by
the Mortgagor as lessee shall contain provisions permitting the
assignment of the same to the Mortgagee and the Trustee and permitting
assignment without the lessor's consent if this Mortgage is
foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements,
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covenants, terms and conditions imposed upon or assumed by it as
mortgagor under the Superior Mortgages prior to the expiration of any
notice and/or cure period provided in each such Superior Mortgage. If
a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior
Mortgage has been accelerated as a result thereof, the Mortgagee may
rely thereon and take any action the Mortgagee deems necessary in its
sole discretion to prevent or to cure any default by the Mortgagor in
the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the
Mortgagor as mortgagor under each of the Superior Mortgages even
though the existence of such default or the nature thereof may be
questioned or denied by the Mortgagor or by any party on behalf of the
Mortgagor provided that if the Mortgagor has heretofore taken such
actions as described in Section 3.01(h), the Mortgagee shall not take
any such action unless and until the Mortgagor and/or the Mortgagee no
longer has the benefit of any such tolling or stay referred to in
Section 3.01(h). Without limiting the generality of Section 3.09
hereof, the Mortgagor hereby expressly grants to the Mortgagee, and
agrees that upon such acceleration the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any
part thereof to such extent and as often as the Mortgagee, in its sole
discretion, deems necessary for the purpose permitted by the
immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money
as the Mortgagee in its sole discretion deems necessary for any such
purpose and (ii) in its sole discretion prepay any Superior Mortgage,
and the Mortgagor hereby agrees to pay to the Mortgagee, immediately
and without demand, all such sums referred to in (i) and (ii) above so
paid and expended by the Mortgagee, together with interest thereon
from the date of each such payment at the rate of interest set forth
in the Note. All sums so paid and expended by the Mortgagee and the
interest thereon shall be added to and be secured by the lien of this
Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first obtaining the
written consent of the Mortgagee in each instance: (A) modify any of
the terms, covenants or conditions of any Superior Mortgage, and
without limiting the foregoing, the Mortgagor shall not, without
satisfying such conditions, enter into or obtain any agreement whereby
the holder of any Superior Mortgage waives, postpones, extends,
reduces or modifies the payment of the installment of principal or
interest or any other item or amount now required to be paid under the
terms of any Superior Mortgage or modifies any other provision
thereof, or (B) acquire or permit or suffer any Affiliate of the
Mortgagor to acquire any Superior
64
<PAGE>
Mortgage or any interest therein. Notwithstanding anything in clause
(A) to the contrary, the Mortgagor shall have the right to amend,
supplement or modify any Superior Mortgage, if (x) the then
outstanding principal balance of the indebtedness secured by such
Superior Mortgage is not increased thereby, and (y) in the case of any
After-Acquired Fee Mortgage, such amendment, supplement or agreement
does not increase the property covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each
Superior Mortgage, the note secured thereby and any other instrument
evidencing or securing the indebtedness owing to any holder of any
Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an estoppel certificate or letter addressed to the Mortgagee
from holders of the Superior Mortgages, such certificate or letter to
be in such form as the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any
default under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified
portions of the Trust Estate shall be subject and subordinate to any
Existing Encumbrances, to the liens created by the Senior Mortgage
Documents and any mortgage, assignment, security agreement, financing
statement or other lien securing any Working Capital Facility (the
"Working Capital Facility Lien") encumbering Mortgagor's interest in
the affected portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be
self-operative with respect to the liens created by the Senior
Mortgage Documents and any Working Capital Facility Lien, and no
further instrument shall be required to give effect to such
subordination. Mortgagee shall, however, from time to time, execute
instruments in form and substance reasonably satisfactory to the
holder of the liens created by the Senior Mortgage Documents and the
holder of the Working Capital Facility Lien, confirming such
subordination and agreeing to such other matters reasonably required
by the holders of such liens which do not, in the aggregate,
65
<PAGE>
materially adversely reduce or impair the rights of Trustee under the
Mortgage, and Mortgagor and others may rely conclusively thereon,
provided that Mortgagee shall have no liability thereunder and all
costs and expenses (including reasonable attorneys' fees) shall be
paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions
of the Trust Estate shall be subject and subordinate to any Existing
Encumbrances. The provisions of this Section 5.22(d) shall be
self-operative, and no further instrument shall be required to give
effect to such subordination.
Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County,
New Jersey Clerk's Office prior to the recordation of the Guaranty
Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not
senior to, the lien created by the Guaranty Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. COUNTERPARTS. This instrument may be executed in
any number of counterparts, each of which as executed shall be deemed
to be an original, but all such counterparts shall constitute one and
the same instrument.
Section 6.02. MODIFICATION. This Mortgage is subject to
modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and
this Mortgage shall have the benefit of the lien priority provisions
of such statute. Such modification may include, without limitation, a
change in the interest rate, maturity date or other terms and
conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE
COPY OF THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
66
<PAGE>
ATTEST:______________________ By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
ATTEST:______________________ By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
67
<PAGE>
Exhibit E
Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
<PAGE>
NA932810100 - ASSIGNMENT OF RENTS
(RIH JUNIOR PROMISSORY NOTE)
GD&C DRAFT DATED 12/17/93
=============================================================================
ASSIGNMENT
OF LEASES AND RENTS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignee
Dated as of _________________, 1994
==========================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having
its principal office at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation,
having its principal office at c/o Resorts International, Inc.,
1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to
secure: (i) the obligations of Assignor under a promissory note
dated as of the date hereof made by Assignor to Assignee in the
principal amount of $35,000,000 (as the same may be amended or
restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof, between Assignor, as mortgagor,
and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used
and not otherwise defined herein shall have the meanings ascribed
to those terms in the Mortgage); and (ii) the performance and
observance of all of the provisions herein contained;
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages and other Existing Encumbrances),
all leases or occupancy agreements wherein it is lessor concerning
or affecting the use or occupancy of the certain real property
owned or leased by Assignor, which real property is described on
SCHEDULE 1 hereto and which real property, together with all
buildings and improvements erected thereon, is hereinafter
collectively referred to as the "PROPERTY", or any part thereof,
now existing or which may be executed at any time in the future,
and all amendments, extensions and renewals of such leases or
occupancy agreements, and any of them, all of which are
collectively referred to as the "LEASES", all rents and other
income which may now or hereafter be or become due or owing under
the Leases, and any of them, and any and all payments derived from
or relating to the Leases to which Assignor is entitled, including
but not limited to (a) claims for the recovery of damages done to
the Property, (b) claims for damages resulting from acts of
insolvency or acts of bankruptcy or otherwise, and (c) lump sum
payments for the
<PAGE>
cancellation of Leases or the waiver of any
obligation or term thereof prior to the expiration date;
PROVIDED, HOWEVER, that no Excepted Property is conveyed
hereby; it being intended hereby to establish a present and
complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the Leases and all the rents,
payments and other income arising thereunder; PROVIDED, HOWEVER,
that Assignor is hereby granted a license by Assignee to (i) collect
all of such rents, payments and other income herein assigned which
may become due during the life of this Assignment and (ii) enter
into, renew, modify, extend, terminate, amend, collectively
assign, transfer or hypothecate any or all of the Leases, in
accordance with the provisions of Sections 4.04 and 5.13 of the
Mortgage, each until an Event of Default under the Mortgage (an
"EVENT OF DEFAULT") shall have occurred and be continuing. Upon
the occurrence of an Event of Default, Assignor agrees to deposit
with Assignee upon demand such of the Leases and the rents payable
thereunder as may from time to time be designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to demand, collect, receive and give receipts and
complete acquittance for any and all other rents and other
amounts herein assigned which may be or become due and payable
under the Leases, and at its discretion to file any claim or take
any other action or proceeding and make any settlement of any
claims, either in its own name or in the name of Assignor or
otherwise, which Assignee may deem necessary or desirable in order
to collect and enforce the payment of any and all rents and other
amounts herein assigned. No right shall be exercised by Assignee
under this paragraph until an Event of Default has occurred. All
lessees under the Leases are hereby expressly authorized and
directed, after the occurrence, and during the continuance, of an
Event of Default, to pay all rents and other sums herein assigned
to Assignee or such nominee as Assignee may designate in writing
delivered to and received by such lessees, who thereafter are
expressly relieved of any and all duty, liability or obligation to
Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Assignment and to collect the rents and other sums assigned
hereunder. Assignee shall be under no obligation to exercise any
of the rights or to press any of the claims assigned to it
hereunder, or to perform or carry out any of the obligations of
Assignor under any of the Leases, and does not assume any of the
liabilities in connection with or arising or growing out of the
covenants and agreements of Assignor in the Leases. It is further
2
<PAGE>
understood that this Assignment shall not operate to place
responsibility for the control, care, management or repair of
Assignor's estates or interests in and to the Property, or parts
thereof, upon Assignee, nor shall it operate to make Assignee
liable for the carrying out of any of the terms and conditions of
any of the Leases, or for any waste to Assignor's estates or
interests in and to the Property by any lessee or sublessee of
Assignor under any leases, or by any occupant of the Property, or
by any party whatsoever or for any dangerous or defective condition
of the Property or for any negligence in the management, upkeep,
repair or control of Assignor's estates or interests in and to the
Property resulting in loss or injury or death to any lessee,
licensee, employee or stranger thereat. No right shall be
exercised by Assignee under this paragraph until an Event of
Default has occurred.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
Nothing herein contained is intended to limit or reduce the rights
of Assignee or the obligations of Assignor set forth in the
Mortgage, but rather all of the terms, provisions and conditions
of this Assignment are in addition to and in supplement of such
rights and obligations. If any provision contained in this
Assignment is in conflict with, or inconsistent with, any
provision in the Mortgage, the provisions contained in the
Mortgage shall govern and control.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this
Assignment shall be null and void with respect to those Leases (the
"RELEASED LEASES") which cover exclusively the portion of the
Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Leases shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of a portion of the
Property as aforesaid to confirm any reversion of Assignee's
right, title and interest in the Released Leases effectuated in
accordance with this paragraph, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 or 2.06 of the
Mortgage (as the case may be), provided that Assignee shall have
no liability thereunder and all costs and expenses shall be paid by
Assignor.
3
<PAGE>
Assignee acknowledges that (i) contemporaneously with the execution
and delivery of this Assignment, it has assigned this Assignment to U.S. Trust
Company of California, N.A. ("Trustee"), as trustee under an Indenture
of even date herewith among Assignor, Assignee and Trustee (the
"Indenture"), and (ii) that the Trustee is also the assignee under
an Assignment of Leases and Rents dated as of the date hereof from
Assignor to Trustee securing the obligations of Assignor in respect
of the Guaranty under and as defined in the Indenture (the "Other
Assignment"), which assignment creates a lien on the Leases and
rents and income due and owing thereunder PARI PASSU with the lien
of this Assignment. Assignee further acknowledges and agrees that
whenever it is provided in the Other Assignment that the Assignor
shall deliver any notice or document, or is require to make any
payment thereunder, the delivery of such notice or document or the
making of such payment pursuant to the terms of such Other
Assignment shall also constitute the delivery of such notice or
document or the making of such payment in satisfaction of the
terms, conditions and provisions of this Assignment to the same
extent as the same constitutes satisfaction of the terms,
conditions and provisions of the Other Assignment.
Upon the termination of the Mortgage and the payment in full of the
obligations secured thereby, this Assignment shall be and become
null and void, and all estate, right, title and interest of
Assignee in and to the Leases shall revert to Assignor and
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statement filed in connection
herewith and execute and deliver to Assignor all such instruments
as may be appropriate to evidence such discharge and satisfaction
of this Assignment (provided that Assignee shall have no liability
hereunder or thereunder and all costs and expenses shall be paid by
Assignor); otherwise, this Assignment shall remain in full force
and effect as herein provided, shall inure to the benefit of
Assignee and its successors and assigns, and shall be binding
upon Assignor and its successors and assigns, and any subsequent
holder of Assignor's right, title and interest and estate in and to
the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without the prior approval of
the New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain Intercreditor Agreement dated
as of the date hereof among
4
<PAGE>
Assignor, Assignee, Fidelity Management and Trust Company,
as trustee, Trustee and State Street Bank and Trust
Company of Connecticut, National Association, as trustee (and
such other parties that may from time to time become a party
thereto).
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
RESORTS INTERNATIONAL HOTEL,
FINANCING, INC., a Delaware
corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared _____________,
who, being by me duly sworn on his oath, deposes and makes proof to
my satisfaction, that he is the (Asst.) Secretary of RESORTS
INTERNATIONAL HOTEL, INC., the corporation named in the within
instrument; that ______________ is the (Vice) President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the
corporation named in the within instrument; that ____________ is
the Vice President of said corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
__________________________
[Name]
Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
7
<PAGE>
Exhibit F
Mortgage securing Guaranty of Junior
Mortgage Notes between Resorts International
Hotel, Inc. and U.S. Trust Company of
California, N.A.
<PAGE>
------------------------------------
: NA932810097 - GUARANTY MORTGAGE :
: JUNIOR NOTES :
: GD&C DRAFT DATED 12/17/93 :
------------------------------------
MORTGAGE SECURING GUARANTY
OF JUNIOR MORTGAGE NOTES
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
U.S. Trust Company of California, N.A.,
a national banking association,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING GUARANTY
OF JUNIOR MORTGAGE NOTES
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and U.S.
Trust Company of California, N.A., a national banking association having an
address at 555 South Flower Street, Suite 2780, Los Angeles, California
90071 ("Mortgagee"), in its capacity as Trustee under that
certain Indenture dated as of even date herewith (the "Indenture") among
Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the
payments of principal and interest due on the 11.375% Junior Mortgage Notes due
2004 in an aggregate principal amount of $35,000,000, issued pursuant to the
provisions of the Indenture (defined therein, and hereinafter collectively
referred to herein, as the "Notes"), in accordance with the terms and conditions
of Article Fourth of the Indenture; and performance and observance of all of the
provisions herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and
confirmed unto Mortgagee and its successors hereunder and assigns forever, all
of its right, title and interest in, to and under any of the following described
property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause as
fully as if set forth in this Granting Clause at length.
<PAGE>
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and franchises of
the Mortgagor as lessee in those certain leases (the "Ground Leases")
particularly described in Schedule 2, which Schedule is hereby made a part of,
and deemed to be described in, this Granting Clause as fully as if set forth in
this Granting Clause at length, which Ground Leases cover the real property
described in Schedule 2 (the "Leased Land") and in and to any and all
modifications, extensions and renewals of the Ground Leases and all options set
forth therein, together with (i) all credits, deposits, privileges and rights of
the Mortgagor as lessee under the Ground Leases, now or at any time existing,
(ii) the leaseholds and the leasehold estates created by the Ground Leases and
(iii) all of the estates, rights, titles, claims or demands whatsoever of
Mortgagor, either in law or in equity, in possession or in expectancy, of, in
and to the Ground Leases and the Leased Land, together with (x) any and all
other, further or additional title, estates, interests or rights which may at
anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or any other
greater estate to the Leased Land pursuant to the Ground Leases, or otherwise,
the lien of this Mortgage shall attach, extend to, cover and be a lien upon such
fee simple title or other greater estate and thereupon the lien of this Mortgage
shall be prior to the lien of any mortgage or deed of trust placed on such
acquired title, estate, interest or right subsequent to the date of this
Mortgage (except as otherwise provided herein) and (y) any right to possession
or statutory term of years derived from, or incident to, the Ground Leases
pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any
comparable provision contained in any present or future federal, state, local,
foreign or other statute, law, rule or regulation.
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and proceeds of
the property subjected or required to be subjected to the lien of this Mortgage,
including, without limitation, the property described in Granting Clauses First,
Second, and Sixth (such property is hereinafter collectively referred to as the
"Premises") and all the estate, right, title and interest of every nature
whatsoever of the Mortgagor in and to the same and every part thereof. The
collective
2
<PAGE>
metes and bounds description of the Owned Land and the Leased Land is set forth
in annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the date of execution
of this Mortgage or hereafter entered into by the Mortgagor, if any, including
extensions, renewals or amendments of all of the same, and the immediate and
continuing right as security in accordance with an Assignment of Leases and
Rents of even date herewith between Mortgagor and Mortgagee, and, after the
occurrence of an Event of Default, to make claim for, collect, receive and
receipt for (and to apply the same as provided herein) any and all rents,
income, revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof, whether
payable as rent, insurance proceeds, condemnation awards, security or otherwise
and whether payable prior to or subsequent to the maturity date of the Notes, to
receive and give notices and consents thereunder, to bring actions and
proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any Lease,
including the commencement, conduct and consummation of any proceedings at law
or in equity as shall be permitted by any provision of any Lease, and to do any
and all things which the Mortgagor or any lessor is or may become entitled to do
under the Leases; provided, that the assignment made by this granting Clause
Fourth shall not impair or diminish any obligation of the Mortgagor under the
Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting Clause Third,
the Mortgagor's rights, privileges and franchises in and to the following, to
the extent of the Mortgagor's interest therein and thereto and to the extent
assignable (collectively, "Operating Assets"):
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including guaranties
and warranties relating thereto;
(c) the Permits;
3
<PAGE>
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties and
other items of intangible personal property relating to the ownership or
operation of the Casino-Hotel, including, without limitation, (1) telephone
and other communication numbers, (2) all software licensing agreements as
are required to operate computer software systems at the Casino-Hotel, all
transferable proprietary interest in software required to operate the
computer systems at the Casino Hotel and books and records relating to the
software programs, and (3) lessee's interest under leases of Tangible
Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor or
which have been assigned to the Mortgagor, for the design and construction,
and for the equipping and furnishing, of the Casino-Hotel, including
architect's agreements, engineering agreements, construction contracts,
consulting agreements and agreements or purchase orders for all items of
Tangible Personal Property and payment and performance bonds in favor of
the Mortgagor in connection with the Trust Estate (and all warranties and
guaranties thereunder and warranties and guaranties of any subcontractor
and bond issued in connection with the work to be performed by any
subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery, apparatus,
appliances, fixtures and fittings and other articles of tangible
personal property which are, or are to be located on, or used in
connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap tables,
blackjack tables, roulette tables, baccarat tables, and big six
wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the operation
thereof;
(iii) all cards, dice, gaming chips and placques, tokens, chip
racks, dealing shoes, dice cups, dice sticks, layouts, paddles,
roulette balls and other consumable supplies and items to be used
4
<PAGE>
in connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils, silverware
and uniforms, whether in use or held in reserve storage for future
use, in connection with the operation of the Casino-Hotel, which are
on hand or on order whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind and
nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on any
of the Owned Land, including without limitation, accounting supplies,
guest supplies, forms, printing, stationery, food and beverage stock,
bar supplies, laundry supplies and brochures to existing purchase
orders;
(vi) all sets and scenery, costumes, props and other items of
tangible personal property on hand or on order for use in the
production of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by the
architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to
time;
(h) any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
(i) any customer lists utilized by the Mortgagor, including lists of
transient guests and restaurant and bar patrons and "high roller" lists;
and
(j) all of the goodwill in connection with the operation of the
Premises.
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The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on which such facilities are shared
are not detrimental to the operations of the Casino-Hotel or the financial
condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel
would not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair or
diminish any obligation of the Mortgagor with respect to the Operating Assets,
nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures and
articles of personal property now or hereafter attached to or contained in and
used in connection with such buildings and improvements, including, but not
limited to, all apparatus, furniture, furnishings, machinery, motors, elevators,
fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and hot water
boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath
tubs, water closets, gas and electrical fixtures, awnings, shades, screens,
blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and
other furnishings, and all plumbing, heating, lighting, cooking, laundry,
ventilating, incinerating, air-conditioning and sprinkler equipment or other
fire prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or articles in
substitution therefor, whether or not the same are or shall be attached to the
Owned Land, the Leased Land or to any such buildings and improvements thereon,
in any manner; and
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(b) All of the Mortgagor's right, title and interest in and to (i) the
Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land
or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all
air rights and rights to maintain supporting columns and all rights to construct
and maintain bridges, and to create private rights of way over streets now or
hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or
Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or
licensee in and to the following to the extent necessary for the use and
enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or
parcels of land and air rights, more particularly described on Schedule 5,
attached hereto and made a part hereof (the "Bridge Easement Parcels"), with
respect to which Mortgagor has easements, licenses or other rights of possession
or use pursuant to these certain easement and license agreements more
particularly described on Schedule 5 (the "Bridge Easements"), (B) all those
plots, pieces or parcels of land and air rights, more particularly described on
Schedule 6 attached hereto and made a part hereof (the "Elevator Easement
Parcels"), with respect to which Mortgagor has easements, licenses or other
rights of possession or use pursuant to those certain license agreements more
particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all
that plot, piece or parcel of land and air rights more particularly described on
Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement
Parcel") with respect to which Mortgagor has easements, licenses, or other
rights of possession or use pursuant to that certain easement more particularly
described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement
Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are
collectively referred to herein as the "Easement Parcels"; and the Bridge
Easements, the Elevator Easements and the Turn-Around Easement are collectively
referred to as the "Easements"), together with all rights of way, privileges,
liberties, tenements, hereditaments and appurtenances belonging or in any way
appertaining to such estates, it being the intention hereof that all property,
interests, rights and privileges and franchises pertaining to the Premises
(other than Excepted Property) shall be as fully embraced within and subjected
to the lien hereof as if such property were specifically described herein.
To the extent the grant of a security interest in any portion of the Trust
Estate is governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be as well a security agreement under the Uniform Commercial Code
for the purpose of creating hereby a security interest in all of the Mortgagor's
right, title and interest in and to such property, securing the obligations
secured hereby, for the benefit of the Mortgagee;
* * *
TOGETHER with all of the Mortgagor's right, title and interest in and to
all mineral and water rights and any title or reversion, in and to the beds of
the ways, streets,
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avenues and alleys adjoining the Premises to the center line thereof and in and
to all strips, gaps and gores adjoining the premises on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to and
singular the tenements, hereditaments, easements, appurtenances, passages, water
courses, riparian rights, other rights, liberties and privileges thereof or in
any way appertaining to the Premises, including any other claim at law or in
equity as well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore or hereafter to
be made to the present and all subsequent owners of the Trust Estate for any
taking by eminent domain, either permanent or temporary, of all or any part of
the Trust Estate or any easement or appurtenances thereof, including severance
and consequential damage and change in grade of streets, all in accordance with
and subject to the provisions of the Superior Instrument Requirements and
Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any insurance
policies described in Section 5.11, and the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Trust Estate or otherwise, all in accordance with and subject to
the provisions of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted property, rights,
title, interest, privileges and franchises, the Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating
Assets, Easements, properties, options, credits, deposits, rights, privileges
and franchises of every kind and description, real, personal or mixed, granted
hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or
covenanted so to be, together with all the appurtenances thereto appertaining
(the Premises, Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its successors
and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after
the date hereof, to Permitted Encumbrances.
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SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the
Noteholder as set forth in that certain Intercreditor Agreement dated as of the
date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company
("Fidelity"), as trustee under that certain note purchase agreement dated as of
the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust
Company of Connecticut, National Association ("State Street"), as trustee under
that certain indenture dated as of the date hereof among State Street, RIH and
RIHF (and such other parties that may from time to time become a party thereto).
BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the
Noteholders without any priority of any of the Notes over any other of the
Notes.
UPON CONDITION that, until the happening of an Event of Default and subject
to the provisions of Article Two, the Mortgagor shall be permitted to possess
and use the Trust Estate, and to receive and use the rents, issues, profits,
revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be
held and applied by the Mortgagee, subject to the further covenants, conditions
and trusts hereinafter set forth, and the Mortgagor does hereby covenant and
agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall
be made in accordance with generally accepted accounting principles
consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Mortgage
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as a whole and not to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the
American Institute of Real Estate Appraisers) who is (i) of recognized standing
among appraisers of properties similar to the Casino-Hotel and (ii) experienced
in the appraisals of properties of a similar size and scope to that of the
Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of
the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of
the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming and related
activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary structures
and facilities located on the Premises and furniture, fixtures and equipment at
any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which results
in damage, loss or destruction to any buildings or improvements on the Premises
and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the
Indenture.
"DEFAULT" means the occurrence and continuance of an Event of Default or an
event which, after notice or lapse of time or both, would become an Event of
Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds or a
condemnation award is paid to be held in trust for restoration pursuant to the
provisions of a Ground Lease or Superior Mortgage.
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"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of
Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
(1) subject to the provisions of the Assignment of Leases and Rents,
any cash held by the Mortgagor from rents, issues, profits, revenues and
other proceeds of the Trust Estate to the extent that such cash may be, but
has not been, distributed or paid out in accordance with the Services
Agreement or in accordance with the provisions of Section 12.07 of the
Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage
secured by or imposing a lien on all or a portion of the Trust Estate on a
parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible
Personal Property and other items constituting Operating Assets, such as
computer software, which are financed, purchased or leased by the Mortgagor,
provided that, except as set forth on Schedule 3, the principal amount of the
indebtedness secured by such lien shall not exceed eighty-five (85%) percent of
the cost to the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
"GUARANTY" has the meaning set forth in Article Fourteen of the Indenture.
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"HOTEL" means that portion of the Casino-Hotel not included within the
Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes
due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and Mortgagee, as trustee, as it may from time to time be supplemented, modified
or amended by one or more trust indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means such a
Person who (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in the Mortgagor or in any
other obligor upon the Notes or in any Affiliate of the Mortgagor or of such
other obligor and (c) is not connected with the Mortgagor or such other obligor
or any Affiliate of the Mortgagor or such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is herein provided that any Independent Person's opinion
or certificate shall be furnished to the Mortgagee, such opinion or certificate
shall state that the signer has read this definition and that the signer is
Independent within the meaning thereof. A Person who is performing or who has
performed services as an independent contractor to any specified Person shall
not be considered not Independent merely by reason of the fact that such Person
is or has performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy covering
or applicable to the Trust Estate or any part thereof, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Trust Estate or any
part thereof or any use or condition of the Trust Estate or any other part
thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any
bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
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"INSURER" means an insurance company or companies selected by the Mortgagor
authorized to issue insurance in the State of New Jersey with an A.M. Best
rating as high or higher than the rating of insurance companies insuring other
casino-hotels in Atlantic City, New Jersey.
"LEASE" means each lease or sublease demising all or any portion of the
Owned Land, the Leased Land or the buildings or improvements thereon and made by
the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any
building or buildings which constitute a part of the Trust Estate, including
every agreement relating thereto or entered into in connection therewith and
every guaranty of the performance and observance of the covenants, conditions
and agreements to be performed by the lessee under any such lease.
Notwithstanding the foregoing, the term "Lease" shall not include any transient
room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements (including, without limitation, the
New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill
Compensation and Control Act of 1976) of all governments, departments,
commissions, boards, courts, authorities, agencies, officials and officers, of
governments, federal, state and municipal (including, without limitation, the
New Jersey Department of Environmental Protection, the Atlantic City Bureau of
Investigations, Division of Protection, the Atlantic City Bureau of
Investigations, Division of Gaming Enforcement of the State of New Jersey, and
the Casino Control Commission of the State of New Jersey), foreseen or
unforeseen, ordinary or extraordinary, which now is or at any time hereafter
becomes applicable to the Trust Estate or any part thereof, or any of the
adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling
facility or any other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Notes means the date on which the
principal of such Notes becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration or prepayment
or otherwise.
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"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture.
"NOTE MORTGAGE" means that certain Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH
Junior Promissory Note (as defined in the Indenture), the lien of which shall be
pari passu with the lien of this Mortgage.
"NOTES" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of the
Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that
an Officers' Certificate be signed also by an Architect or an Accountant or
other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may (except as
otherwise expressly provided in this Mortgage) be an employee of the Mortgagor
or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically
provided in this Mortgage, such counsel may rely, as to any state of facts not
personally known to such counsel and relating to such opinions, on an Officers'
Certificate to the extent not rejected by the Trustee and its counsel (which
rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list
title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
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"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material portion
of the Premises whether held by the Mortgagor or any other Person (which may be
temporary or permanent) (including, without limitation, those required for the
use of the Casino-Hotel as a licensed casino facility), in accordance with all
applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet due
and payable or if due and payable are not delinquent to the extent that any
fine, penalty, interest or cost may be added for nonpayment thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien;
(9) liens created by the Senior Mortgage Documents; and
(10) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or any
other entity or government or any agency or political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture.
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"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance
with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware
corporation.
"SENIOR GUARANTY MORTGAGE" has the meaning stated in Section 1.01 of the
Indenture.
"SENIOR MORTGAGE" has the meaning stated in Section 1.01 of the Indenture.
"SENIOR MORTGAGE DOCUMENTS" has the meaning stated in Section 1.01 of the
Indenture.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"STATED MATURITY" when used with respect to a note means the date specified
in such note as the fixed date on which the principal of such note is due and
payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions
and provisions of (i) the Ground Leases with respect to the Leased Land; and
(ii) Superior Mortgages with respect to the portion of the Trust Estate
encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior
Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee
Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of the
whole or any part of the Premises, by a competent authority, for any public or
quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause
Fifth.
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"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of
the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the Granting
Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c)
of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice (including,
without limitation, a notice of default), consent, waiver or other document
provided or permitted by this Mortgage to be made upon, given or furnished to,
or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be
deemed given when either (i) delivered by hand or (ii) two days after sending by
registered or certified mail, postage prepaid, addressed as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
U.S. Trust Company of California, N.A.
555 South Flower Street, Suite 2780
Los Angeles, California 90071
Attention: Corporate Trust Department
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party
may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE.
Whenever several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified
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by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Officer or Officers of the Mortgagor stating that
the information with respect to such factual matters is in the possession of the
Mortgagor, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. If appropriate to
the matter being opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of creditors and
the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor shall
deliver any document as a condition of the granting of such application, or as
evidence of the Mortgagor's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Mortgagor to have such application granted or to
the sufficiency of such certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application
or request by the Mortgagor to the Mortgagee to take any action under any
provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Mortgage relating to the proposed action have been complied with and
an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except
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that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Mortgage
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Mortgage shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture,
this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each case
named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged, released nor
any of its provisions waived except by agreement in writing executed by the
Mortgagor and the Mortgagee and in accordance with the provisions of this
Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of
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the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the
Guaranty, express or implied, shall give to any Person, other than the parties
hereto and their successors and assigns, any benefit or any legal or equitable
right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions
of this Mortgage and the provisions of the Indenture shall be inconsistent, the
provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
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(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
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Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Mortgage shall
not be transferred, assigned or amended without the prior approval of the New
Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to
be paid, or there shall otherwise be paid, to the Mortgagee all amounts required
to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and
the Notes, and the conditions precedent for the Indenture to cease, determine
and become null and void in accordance with Section 5.01 of the Indenture shall
have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage,
and execute and deliver to the Mortgagor all such instruments as may be
necessary, required or appropriate to evidence such discharge and satisfaction
of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject in each
instance to the giving of any notice and the expiration of any grace period
provided for in Section 3.01 as a condition to such Default making it an Event
of Default, unless the Trust Indenture Act requires otherwise, in which case the
Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an event
which does not materially diminish the value of the Mortgagee's interest in the
Trust Estate
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shall not be deemed an "impairment of security", as that phrase is used in this
Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So
long as there shall have been no demand for payment under the Guaranty pursuant
to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted,
with power freely and without let or hindrance on the part of the Mortgagee,
subject to the provisions of this Mortgage and the Note Mortgage, to possess,
use, manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to
time, unless an Event of Default shall have occurred and be continuing, without
any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when,
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in the Mortgagor's reasonable opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right to
pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to the
exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
The Mortgagee shall, from time to time, promptly execute any written
instrument in form satisfactory to it to confirm the propriety of any action
taken by the Mortgagor under this Section 2.02, provided that the conditions set
forth in Section 2.02 of the Note Mortgage have been satisfied.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions
contained in this Mortgage or the Indenture to the contrary, including, without
limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles
Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and
other items constituting operating assets, such as computer software subject to
any FF&E Financing Agreement, or becomes the lessee under a lease for any of the
same and if the document evidencing such FF&E Financing Agreement prohibits
subordinate liens or the provisions of any such lease prohibits any assignment
thereof by the lessee, and if any such prohibition is customary with respect to
similar transactions of the lender or lessor, as the case may be, then the
property so purchased or the lessee's interest in the lease, as the case may be,
shall be deemed to be Excepted Property. If any such FF&E Financing Agreement
permits subordinate liens then the Mortgagee agrees to execute and deliver to
the Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination of
the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and
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from time to time, unless an Event of Default shall have occurred and be
continuing, to convey all or any part of the Released Fee Land (the land to be
so conveyed is hereinafter referred to as the "Released Land"), free from the
lien of the Mortgage, provided that the conditions set forth in Section 2.05(a)
of the Note Mortgage have been satisfied.
(b) The Mortgagee shall, from time to time, promptly execute any written
instrument in form reasonably satisfactory to the prospective purchaser to
confirm the release of the Released Fee Land, upon receipt by the Mortgagee of
an Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the Mortgagor's compliance with this Section 2.05 and, if
applicable, Section 2.05 of the Note Mortgage, provided, that
the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be continuing, to have
an Affiliate exercise such options(s) or for the Mortgagor to exercise such
options(s) on behalf of an Affiliate and in connection therewith to cause fee
simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with
the following:
(i) an Officers' Certificate requesting the release of the Released
Fee Land from the Trust Estate and stating that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain all Permits and
in order to comply with the provisions of all material contracts to which
the Mortgagor is a party or by which the Mortgagor is bound, (B) such
Affiliate has received all Permits necessary to own the Released Fee Land
(including without limitation all approvals required by the Casino Control
Commission of the State of New Jersey), (C) there has been delivered to the
Mortgagor and the Mortgagee a true copy of an instrument executed by such
Affiliate stating that (i) such Affiliate may only engage in the activity
of owning the Released Fee Land and (ii) such Affiliate shall not convey
the Released Fee Land to another Affiliate of the Mortgagor,
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unless such other Affiliate executes and delivers to the Mortgagor and the
Mortgagee, the instruments that would have been required to be delivered
pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to
such other Affiliate (provided that this restriction shall only be
effective until such time as this Mortgage shall be satisfied of record)
and (D) the deed conveying the Released Fee Land to such Affiliate shall
state that such conveyance is made subject to the terms, provisions and
conditions of the applicable Ground Lease and that the fee and leasehold
interests in the Released Fee Land shall not merge by reason of the
Mortgagor and/or any Affiliate owning both the leasehold and fee estate
therein, and that such estates shall always remain separate and distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain in good standing
all Permits or by the provisions of any material contract to which the
Mortgagor is a party or by which it is bound to own the Released Fee Land
and (B) the instruments described in clause (C) of subparagraph (i) were
duly executed by and are binding upon such Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, an agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any written
instrument in form reasonably satisfactory to the prospective purchaser to
confirm the release of the Released Fee Land, upon receipt by the Mortgagee of
an Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the
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Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall
have no liability thereunder and all costs and expenses (including reasonable
attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if no
Event of Default has occurred and is continuing and (ii) if the Mortgagor shall
acquire Released Fee Land, then simultaneously with the acquisition thereof, the
Mortgagor shall have the right to encumber such fee simple title with a mortgage
(such mortgage and any refinancing thereof permitted by the Indenture is
hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this
Mortgage on the Released Fee Land shall be subordinated to the lien of the
After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other
Superior Mortgages which shall become a lien thereon in accordance with the
terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple title to
such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee Mortgage (A)
does not exceed 75% of the cost to the Mortgagor of such fee simple title
at the time of the acquisition and (B) satisfies the criteria set forth in
Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers fee
simple title to the Leased Land or any part thereof, such After-Acquired
Fee Mortgage contains provisions binding on the holder of the
After-Acquired Fee Mortgage and its successors and assigns confirming the
provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an Affiliate of
the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents shall
contain a provision binding upon the holder of such After-Acquired Fee
Mortgage and other loan documents that all insurance proceeds in the event
of a Casualty and awards for Takings of less than the entire Released Fee
Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate
requesting such subordination and
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certifying that the requirements of (i) through (v) above have been
satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this Mortgage
to the contrary notwithstanding, the subordination of this Mortgage to any
After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not
be self-operative but shall be effective only upon the execution and delivery by
the Mortgagee of an instrument in writing effecting such subordination. The
Mortgagee shall deliver such instrument of subordination on the following
conditions: (x) the Mortgagee shall have received an Officers' Certificate
confirming that the conditions of (i) through (vi) of paragraph (a) have been
satisfied, together with a true and correct copy of the After-Acquired Fee
Mortgage and all other instruments securing the indebtedness evidenced thereby
and (y) the instrument of subordination shall specifically state that this
Mortgage is being subordinated not with respect to the lien of this Mortgage on
the Ground Lease or on the leasehold estate created thereby, but only with
respect to the fee simple title to the Leased Land or applicable part thereof
and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default by the Mortgagor under the Guaranty and continuance of
such default for a period of 10 days after there has been given a written
notice to the Mortgagor specifying such default and stating that such
notice is a "Notice of Default" hereunder; or
(b) an "Event of Default," as defined in Section 3.01 of the Note
Mortgage, shall occur; or
(c) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a period
of 60 days after there has been given a written notice to the Mortgagor
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specifying that such notice is a "Notice of Default" hereunder; or
(d) any representation or warranty of the Mortgagor set forth in this
Mortgage shall prove to be incorrect as of the time when made and the facts
constituting such incorrectness impairs the Mortgagee's security and such
impairment continues for a period of 30 days, unless such impairment is
curable, but not susceptible of cure within such 30-day period (for reasons
other than lack of funds), provided that the conditions set forth in
Section 3.01(l) of the Note Mortgage have been satisfied.
Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs
and is continuing, and the Mortgagee has declared the Outstanding Amount of the
Note to be due and payable immediately pursuant to Section 3.02 of the Note
Mortgage, then the Mortgagee may declare all obligations under the Guaranty to
be due and payable immediately.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys
received by the Mortgagee pursuant to the provisions of this Article Three
(including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance
with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has
instituted any proceeding to enforce any right or remedy under this Mortgage and
such proceeding has been discontinued or abandoned for any reason or has been
determined adversely to the Mortgagee, then and in every such case the Mortgagor
and the Mortgagee shall, subject to any determination in such proceeding, be
restored to its former position hereunder, and thereafter all rights and
remedies of the Mortgagee shall continue as though no such proceeding had been
instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Mortgagee is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
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Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be
commenced (including, without limitation, an action to foreclose this Mortgage
or to collect under the Guaranty secured hereby) to which action or proceeding
the Mortgagee is made or becomes a party, or in which it becomes necessary in
the opinion of the Mortgagee to defend or uphold the lien of this Mortgage,
then, to the extent it has not already done so pursuant to the terms of Section
3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses,
including reasonable attorneys' fees and expenses, incurred by the Mortgagee in
connection therewith, together with interest at the rate then payable on the
Notes, from the date of payment less the net amount received by the Mortgagee or
the Trustee, as their interests may appear under any title insurance policy,
and, until paid, all such expenses, together with interest as aforesaid, shall
be a lien on the Trust Estate.
Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent
that it may lawfully so agree, the Mortgagor will not at any time insist upon,
plead, claim or take the benefit or advantage of, any appraisement, valuation,
stay, extension or redemption law now or hereafter in force, in order to prevent
or hinder the enforcement of this Mortgage or the absolute sale of the Trust
Estate, or any part hereof, or the possession thereof by any purchaser at any
sale under this Article Three; and the Mortgagor, for itself and all who may
claim under it, so far as it or they now or hereafter may lawfully do so, hereby
waives the benefit of all such laws. The Mortgagor, for itself and all who may
claim under it, waives, to the extent that it may lawfully do so, all right to
have the property in the Trust Estate marshalled upon any foreclosure hereof,
and agrees that any court having jurisdiction to foreclose this Mortgage may
order the sale of the Trust Estate as an entirety.
If any law in this Section 3.08 referred to and now in force, of which the
Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the
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contract herein contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an
Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of
Default shall occur and be continuing, the Mortgagee, with or without entry, in
its discretion may:
(a) sell, subject to any mandatory requirements of applicable law,
the Trust Estate as an entirety, or in such parcels, as the Mortgagee may
determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this Mortgage by
sale pursuant to judicial proceedings or by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Mortgage or in aid of the execution
of any power granted in this Mortgage or for the foreclosure of this
Mortgage or for the enforcement of any other legal, equitable or other
remedy, as the Mortgagee, being advised by counsel, shall deem most
effectual to protect
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and enforce any of the rights of the Mortgagee; the failure to join tenants
shall not be asserted as a defense to any foreclosure or proceeding to
enforce the rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate,
whether made under the power of sale hereby given or pursuant to judicial
proceedings, to the extent permitted by law:
(a) all obligations owing under the Guaranty, if not previously due,
shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt of any
required prior approvals of the New Jersey Casino Control Commission, the
Mortgagee may bid for and purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain and possess and dispose
of such property, without further accountability, and may, in paying the
purchase money therefor, delivery any notes or claims for interest thereon
in lieu of cash to the amount which shall, upon distribution of the net
proceeds of such sale, be payable thereon, and such notes or claims for
interest thereon, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the holders thereof after
being appropriately stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or purchasers
a good and sufficient deed, bill of sale and instrument of assignment and
transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and lawful
attorney of the Mortgagor, in its name and stead, to make all necessary
deeds, bills of sale and instruments of assignment and transfer of the
property thus sold; and for that purpose it may execute all necessary
deeds, bills of sale and instruments of assignment and transfer, and may
substitute one or more persons, firms or corporations with like power, the
Mortgagor hereby ratifying and confirming all that its attorney or such
substitute or substitutes shall lawfully do by virtue hereof; but if so
requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify
and confirm any such sale or transfer by executing and delivering to the
Mortgagee or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment and transfer and releases as may be
designated in any such request;
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(e) all right, title, interest, claim and demand whatsoever, either
at law or in equity or otherwise, of the Mortgagor of, in and to the
property so sold shall be divested and such sale shall be a perpetual bar
both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such sale
shall be a sufficient discharge to the purchaser or purchasers at such sale
for his or their purchase money and such purchaser or purchasers and his or
their assigns or personal representatives shall not, after paying such
purchase money and receiving such receipt, be obliged to see to the
application of such purchase money, or be in anywise answerable for any
loss, misapplication or non-application thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and
commencement of judicial proceedings by the Mortgagee to enforce any right under
this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security for
the Guaranty or the solvency of the Mortgagor, to the appointment of a receiver
of the Trust Estate, and of the rents, issues, profits, revenues and other
income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this
Section 3.12 shall be subject to the provisions of the New Jersey Casino Control
Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have
power to institute and maintain such proceedings as it may deem necessary and
appropriate to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its interests in the
Trust Estate and in the rents, issues, profits, revenues and other income
arising therefrom, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any 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 the security
hereunder or be materially prejudicial to the interests of the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision
of this Article Three to the
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contrary, following an Event of Default and the taking of possession of the
Trust Estate or any part thereof by the Mortgagee and/or the appointment of
receiver of the Trust Estate or any part thereof, the Mortgagee or any such
receiver shall be authorized, in addition to the rights and powers of the
Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one
or more experienced operators of hotels and/or casinos to manage the
Casino-Hotel, PROVIDED that any such operator shall have all necessary legal
qualifications, including all Permits, to manage the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the
Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or
combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the successor entity
formed by such consolidation or into which the Mortgagor is combined or to which
such conveyance or transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Mortgagor under this Mortgage
with the same effect as if such successor entity had been named as the Mortgagor
herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust
Estate substantially as an entirety, unless such conveyance or transfer is in
compliance with the provisions of Article Ten of the Indenture, shall have the
effect of releasing the Person named as "the Mortgagor" in the first paragraph
of this instrument or any successor entity which shall theretofore have become
such in the manner prescribed in such Article Ten from its liability as
guarantor.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise
expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not
sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise
transfer all or any part of the Trust Estate or any interest therein (including
without limitation any interest in the Ground Leases). Without limiting the
generality of the foregoing, the Mortgagor shall not separate, or attempt to
separate, its ownership of its interest in the Ground Leases from its ownership
of the buildings constituting the Casino-Hotel or any part thereof.
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ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. [Reserved]
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing Agreements before the expiration of any applicable notice and cure
periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur,
suffer or permit to be created or incurred or to exist any mortgage, lien,
charge or encumbrance on or pledge of any of the Trust Estate, other than (i)
Permitted Encumbrances, (ii) liens on the Trust Estate in connection with
indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section
12.08(a) of the Indenture, and (iii) a building contract or a notice of
intention filed by a mechanic, materialman or laborer under the New Jersey lien
law. Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the Mortgagor shall
not be deemed to have breached the provisions of the foregoing sentence by
virtue of the existence of a lien for Impositions or mechanics liens so long as
the Mortgagor is in good faith contesting the validity of the same in accordance
with the provisions of Section 5.09 to the extent that the matters described in
(i) and (ii) do not constitute a default under any Ground Lease or Superior
Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges
the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a)
to appear in and defend any action or proceeding brought with respect to the
Trust Estate or any part thereof and (b) upon 5 days' prior written notice to
the Mortgagor (or such shorter period or without notice if deemed necessary and
appropriate by the Mortgage), to commence any action or proceeding to protect
the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor
represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to
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execute and deliver this Mortgage, and all corporate action on its part
necessary for the valid execution and delivery of this Mortgage has been
duly and effectively taken;
(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the Mortgage
Documents, any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than the
lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has been
given to or by the lessee, (iii) the Mortgagor has delivered true and
correct copies of the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in full force
and effect and has not been modified, amended or supplemented, except as
described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to execute
this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer,
hypothecate, pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the Operating Assets
and the Ground Leases, without the consent of any third party, other than
governmental authorities but any applicable or necessary consent or
approval of any such governmental authority has been given or waived at or
prior to the execution and delivery of this Mortgage), and this Mortgage
constitutes a valid third mortgage lien and third priority security
interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage,
subject only to Working Capital Facility Liens and Existing Encumbrances.
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The Mortgagor hereby does and will forever warrant and defend (x) the title
to Trust Estate (including without limitation, its leasehold estates under the
lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and
(y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances
other than Restricted Encumbrances), against the claims and demands of all
persons whomsoever, at the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as
provided in Section 5.13, from time to time subject its right, title and
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments of
further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, and will execute and file such financing statements and cause to be
issued and filed such continuation statements, all in such manner and in such
places as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party under the
Uniform Commercial Code to all property comprising the Trust Estate (to the
extent a grant of a security interest therein is governed by the Uniform
Commercial Code) and to perfect, preserve and protect the lien of this Mortgage
as a valid mortgage lien of record and a valid security interest on the Trust
Estate subject to Permitted Encumbrances (other than Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all expenses
incident to the execution and delivery of this Mortgage, and any instrument of
further assurance, and all federal, state, county and municipal stamp taxes and
other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Mortgage, any financing
statement or continuation statement with respect to the personal property
constituting part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL
REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to contests,
pay or cause to be paid promptly (or when installments of the same shall
become due and payable, if, by law or by agreement or arrangement with the
applicable governmental agency or authority, the same
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may be paid in installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are payable by the
Mortgagor pursuant to any Superior Instrument Requirement), all taxes
(including, without limitation, real estate taxes, personal or other
property taxes and all sales, value added, use and similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
profits or revenue tax upon the income of the Mortgagee, the Trustee or the
Noteholders nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholders nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed in substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Guaranty;
(b) except for such property which the Mortgagor may dispose of or
replace pursuant to Section 2.02, maintain and keep all its properties used
or useful in the conduct of its business (other than obsolete equipment),
including, without limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition, except for
reasonable wear and use, and make or cause to be made all
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such needful and proper repairs, renewals and replacements thereto
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey;
(c) occupy and continuously operate the Casino-Hotel and keep the
Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to contests,
the Mortgagor at its sole expense will timely (1) comply with all Legal
Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if the failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the foregoing, the
Mortgagor represents and warrants that at the time of the execution of this
Mortgage, the Mortgagor is in compliance with the requirements of clauses
(1), (2) and (3);
(e) in the event of the passage after the date of this Mortgage of
any law of the State of New Jersey, or any other governmental entity,
changing in any way the laws now in force for the taxation of mortgages, or
debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of the Mortgagee,
then and in such event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for any reason payment by the Mortgagor of any
such new or additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured hereby wholly or
partially usurious under any of the terms or provisions of the Note, or
this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option,
declare the whole sum secured by this Mortgage, with interest
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thereon, to be due and payable 90 days after notice of election thereof has
been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's
option, pay that amount or portion of such taxes as renders the loan or
indebtedness secured hereby unlawful or usurious, in which event the
Mortgagor shall concurrently therewith pay the remaining lawful and
nonusurious portion or balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense,
contest by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part of any
Imposition or lien therefor or any Legal Requirement or Insurance Requirement or
the application of any instrument of record affecting the Trust Estate or any
part thereof or any claims of mechanics, materialmen, suppliers, or vendors or
lien therefore, and may withhold payment of the same pending such proceedings if
permitted by law, or make payment under protest, or defer compliance with any
such Legal Requirement, any such Insurance Requirement or the terms of any such
instrument, and the same shall not be a Default hereunder, provided that (a) in
the case of any Impositions or lien therefor or any claims of mechanics,
materialmen, suppliers or vendors or lien therefor, such proceedings shall
suspend the collection thereof from each of the Mortgagor, the Mortgagee, the
Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor
any interest therein would be in any danger of being sold, forfeited, or lost,
(c) such action would not result in or constitute a default under any Ground
Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the
Noteholders nor the Mortgagee shall be in any danger of any civil or any
criminal liability, and the failure of the Mortgagor to comply with such Legal
Requirement shall not affect the continuance in good standing of any Permit or
result in the suspension, termination, non-renewal or material adverse
modification of any permit, and (e) in the case of an Insurance Requirement, the
failure of the Mortgagor to comply therewith shall not affect the validity of
any insurance required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality
of the first sentence of Section 5.03 and notwithstanding the provisions of
Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment,
or bonding or otherwise, all claims and demands of mechanics, materialmen,
laborers, and others which, if unpaid, might result in, or permit the creation
of, a lien on the Premises and/or Trust Estate or any part thereof, or on the
revenues, rents, issues, income and profits arising therefrom and in general
will do or cause to be done everything necessary so
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that the lien hereof shall be fully preserved, at the cost of the Mortgagor,
without expense to the Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable properties,
in amounts at all times sufficient to prevent the Mortgagor from becoming a
coinsurer within the terms of the applicable policies, but in any event
such insurance shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the "Insurance
Amount"): (i) 100% of the then full insurable value of such insurable
properties, the term "full insurable value" to mean the actual replacement
cost (excluding the costs of foundation, footing, excavation, paving,
landscaping and other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36 calendar months),
by an Architect, contractor, appraiser, or an Insurer, or (ii)
the amount required to be maintained pursuant to the Superior Instrument
Requirements;
(2) war risk insurance as and when such insurance is obtainable from
the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then be
so obtainable;
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the cost
of such insurance, for personal injury and property damage with respect to
any one occurrence, which may be under an umbrella policy. Anything
contained in this clause (3) to the contrary notwithstanding, the Superior
Instrument Requirements with respect to the
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kinds and amount of insurance described in this clause (3) shall be
satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already covered
by other policies of insurance maintained by the Mortgagor) on or about
such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time that the
Mortgagor is renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates determined
by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable size
in the boardwalk area of Atlantic City, New Jersey and (ii) required to be
maintained pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1), (2),
(6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, $100,000 with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
$1,000,000), (ii) the Mortgagor shall be permitted to maintain a
$200,000 self insured retention under the general liability policy
described in clause (3) and a deductible with respect
to the other insurance policies described in clause (3) in an amount not
to exceed the amount of deductible as is customarily maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not
reduce its insurance coverage for the matters described in clause (3) (which for
purposes of this paragraph means a reduction in single limits or an increase in
deductible) unless and until the Mortgagor
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delivers to the Mortgagee an Officers' Certificate certifying (w) that the
coverage the Mortgagor was theretofore maintaining cannot be maintained at rates
determined by the Mortgagor to be reasonable for such coverage, (x) the amount
of the proposed reduction, (y) the premium for the existing and the proposed
reduced coverage, and (z) that the proposed deductible satisfied the criteria
set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to
maintain a deductible with respect to the insurance policies described in clause
(5) in the forms of and in an amount not to exceed the amount of deductible as
is customarily maintained by casino-hotels of similar size in Atlantic City, New
Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of workers'
compensation insurance, name as additional insureds the Mortgagee, in both
its individual and fiduciary capacities, and, to the extent
required by the Superior Instrument Requirements, the Lessors and the
holders of the Superior Mortgages, (2) provide that all insurance proceeds for
losses, except in the case of public liability insurance and workers'
compensation insurance or as otherwise provided in Subsections (d), (e) and (f)
of this Section 5.11, be payable solely to the Mortgagee or such other party as
is required to receive such proceeds under a Superior Mortgage, (3)
except in the case of workers' compensation, include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all lost payees and
named insureds (other than the Mortgagor) and all rights of subrogation against
any named insured, (4) except in the case of public liability and workers'
compensation insurance, provide that any losses shall be payable notwithstanding
(i) any act, failure to act, negligence of, or violation or breach of
warranties, declarations or conditions contained in such policy by the Mortgagor
or the Mortgagee or any other named insured or loss payee (including, without
limitation, with respect to the Released Fee Land, the holders of any
After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable
properties for purposes more hazardous than permitted by the terms of the
policy, (iii) any foreclosure or other proceeding or notice of sale relating to
the insurable properties or (iv) any change in the title to or ownership or
possession of the insurable properties, (5) contain a non-contributory mortgagee
clause in favor of the Mortgagee, and (6) provide that if all or any part of
such policy is cancelled, terminated or expires, the insurer will forthwith give
notice thereof to each named insured and loss payee and that no cancellation,
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by each named insured and loss payee of
written notice thereof.
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(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals
of all insurance policies that the Mortgagor is required to maintain pursuant to
this Section 5.11 and (2) within 30 days after each reduction in insurance
required to be maintained by the Mortgagor hereunder, an Officers' Certificate
setting forth the particulars as to all such insurance policies and certifying
that the same comply with the requirements of this Section 5.11, that all
premiums or installments thereof then due thereon have been paid and that the
same are in full force and effect. The Mortgagee shall not be responsible for
effecting or renewing any insurance or for the responsibility or solvency of the
insurers.
(d) The Mortgagor shall give written notice to the Mortgagee immediately
upon obtaining knowledge of any Casualty which (x) results in damage, loss or
destruction in an amount in excess of [$5,000,000] to any buildings or
improvements on the Premises and/or any Tangible Personal Property or (y)
pursuant to any Superior Instrument Requirement, would require the deposit of
insurance proceeds with the Depositary, or action or proceeding with respect
thereto. Whenever the Superior Instrument Requirements require or permit the
selection of the Depositary by the Mortgagor, the Mortgagor shall select the
Insurance Trustee as the Depositary. Within 30 days after any Casualty which
results in any damage, loss or destruction in an amount in excess of
$10,000,000 to any buildings or improvements of the Premises and/or any
Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a
certificate of an Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit the Restoration of such buildings and
improvements for the same uses and to the same size and quality in all material
respects, as existed immediately prior to the Casualty (and if such certificate
states the Legal Requirements do not permit such Restoration, such certificate
shall describe the manner closest approximating such criteria to which the
buildings and improvements could be so restored and shall be accompanied by a
Certificate of Appraised Value dated not more than 10 days prior to delivery
setting forth the Appraised Value immediately prior to the Casualty and the
estimated Appraised Value immediately after the Restoration). If the Mortgagor
is required to deliver such Certificates of Appraised Value and if based on such
Certificates of Appraised Value immediately after Restoration, the aggregate
Outstanding Amount of First Mortgage Debt immediately after such Restoration
shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after
such Restoration or (ii) the quotient of the Outstanding Amount of First
Mortgage Debt immediately prior to such Casualty divided by the Appraised Value
immediately prior to the Casualty multiplied by the Appraised Value immediately
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after such Restoration, then the proceeds of any insurance shall, at the
election of Mortgagee, either be applied to Restoration as set forth in
Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to
the extent of the then Outstanding Amount of the Note and any other interest or
other sums due hereunder or thereunder to be applied to the satisfaction of the
Mortgage to the extent proceeds are available for such purpose and provided that
no additional sums are due to the Trustee or the Noteholder under the Indenture,
the balance of any net insurance proceeds shall be paid to the Mortgagor.
Notwithstanding the foregoing sentence, if such Certificates of Appraised Values
indicates that the Outstanding Amount of First Mortgage Debt immediately after
such Restoration exceeds the greater of the two amounts determined pursuant to
subclauses (i) and (ii) above, the proceeds of insurance will be made available
for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor
obtains an irrevocable commitment from a nationally recognized financial
institution having a combined capital and surplus of at least $100,000,000, to
supply, upon an acceleration under this Mortgage as a result of an Event of
Default, funds to the Mortgagor as additions to capital in an amount equal to
the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value
necessary to be paid down so that the Outstanding Amount of First Mortgage Debt
will not exceed either of the two amounts determined pursuant to such clauses
(i) and (ii), PROVIDED that such commitment may only be released if, upon an
Appraisal at any time following completion of such Restoration, the aggregate
Outstanding Amount of the First Mortgage Debt does not exceed 66-
2/3% of the Appraised Value.
(e) Subject to the provisions of Subsection (d) above, in case a Casualty
occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of $10,000,000, the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to
the Insurance Trustee (or other Depositary required by the Superior
Instrument Requirements, provided that such Depositary holds such proceeds
in trust for purposes of paying the costs of Restoration);
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(3) the Mortgagor shall commence with reasonable promptness under the
circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair,
replacement or rebuilding of the damage or destruction resulting from the
Casualty (all of which restoration, repair, replacement or rebuilding are
referred to as the "Restoration") in accordance with the plans and
specifications submitted to the Insurance Trustee, in conformance with all
Legal Requirements and Superior Instrument Requirements, and in accordance
with the further provisions of this Subsection (e), regardless of the
extent of any such Casualty and whether or not net insurance proceeds, if
any, shall be available or, if available, shall be sufficient, for the
purpose of the Restoration (provided, however, that if the Mortgagor does
not receive any net insurance proceeds within 30 days after any Casualty
because the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration shall be deferred
until such proceeds are made available to the Mortgagor, provided that (i)
Mortgagor delivers to the Mortgagee an Officers' Certificate
certifying that the Mortgagor is diligently and continuously
adjusting such loss with the Insurer, (ii) the Mortgagor
delivers to the Mortgagee an Officers' Certificate
within such 30-day period requesting the extension of such period,
estimating the date on which such proceeds will be available and describing
the Mortgagor's efforts to adjust such loss and certifying that such
extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach
has been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter updating the
information contained in the certificate described in Clause (ii)). All
Restoration work shall be performed in accordance with the applicable
provisions of Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements and, prior to
commencing any Restoration, the Mortgagor shall obtain all Permits
necessary in connection therewith, and shall obtain, and keep in full force
and effect until the completion of such Restoration, such additional
insurance as the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration shall be
accompanied by a certificate of the Mortgagor and an Opinion of Counsel to
the effect that upon the completion of the Restoration pursuant to the
plans and specifications the Premises, and all buildings and improvements,
thereon will comply with all superior Instrument Requirements, Legal
Requirements and Insurance
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Requirements. Notwithstanding anything in this Section 5.11 to the
contrary, if such Casualty is in an amount less than $5,000,000, the
Mortgagor shall not be required to perform and complete such Restoration
(unless the performance and completion of the Restoration is necessary in
order for the Mortgagor to be in compliance with any term, provision or
condition of this Mortgage (other than this Section 5.11(e)) or any
Superior Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designated by Mortgagor (to the extent the Mortgagor
is permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds)
and shall be paid by the Insurance Trustee to reimburse the Mortgagor for,
or to make payment for, the Restoration, after the Insurance Trustee
deducts therefrom the amount of any reasonable costs and expenses incurred
in connection with the performance of its obligations under this Section
5.11. The Insurance Trustee shall make such payments not more frequently
than once every 30 days upon the written request of the Mortgagor (unless
more frequent payments are required by Superior Instrument Requirements),
by paying to the Mortgagor or the persons named in the certificate
described in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate from time to time as the Restoration progresses,
provided the Mortgagor has complied with the requirements of this
Subsection (e) and such payment is permitted by an applicable Superior
Instrument Requirements. The Mortgagor's written request shall be
accompanied by (i) the certificate described in Clause (6) of this
Subsection (e) and (ii) a title company or official search, or other
evidence reasonably acceptable to the Insurance Trustee, showing that there
have not been filed with respect to the Premises, any vendor's,
contractor's, mechanic's, laborer's or materialman's statutory or similar
lien which has not been discharged of record (or bonded against or secured
by other security) or any other encumbrance irrespective of its priority
(other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate,
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countersigned by the Architect in charge of the Restoration with respect to
the matters described in (i) and (v) below, (B) be dated not more than 10
days prior to such request and (C) set forth (in addition to any other
requirements contained in any applicable Superior Instrument Requirements)
that:
(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance
Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered services or
furnished or contracted to deliver materials for the Restoration
therein specified, and the names and addresses of such persons, a
brief description of such services and materials and the several
amounts so paid or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net
insurance proceeds, and that the sum then requested does not exceed
the value of the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in such certificate to be due for services or
materials, and except for amounts in dispute and/or customary
retainages, there is no outstanding indebtedness known to the person
signing such certificate, after due inquiry, which is then due for
labor, wages, materials, supplies or services in connection with such
Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if
such estimated cost does exceed such insurance proceeds such
certificate shall state the amount of any such deficiency. If the
certificate states that such deficiency will exist, the Mortgagor
shall deliver the amount of
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such deficiency in cash or cash equivalent to the Insurance Trustee
simultaneously with the delivery of such certificate, which amount
shall be deemed insurance proceeds for purposes of this Section
5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the entire
cost of the Restoration, then, after completion of the Restoration, the
Mortgagor shall pay the deficiency. If all or any part of the net
insurance proceeds are not used for the Restoration in accordance with this
Subsection (e) (because such proceeds exceed the amount required to
complete the Restoration), then upon completion of the Restoration in
accordance with this Subsection (e), such amount not so used, if held by
the Insurance Trustee, shall be paid to the Mortgagor (if permitted by
Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is continuing, all
net business interruption insurance proceeds shall be paid to the Mortgagor, to
be segregated from the other funds of Mortgagor and held in trust by Mortgagor
for the following purposes and in the following order of priority: (i) for the
payment of Impositions and amounts due under the Ground Leases and Superior
Mortgages; (ii) for debt service for the estimated period of Restoration (for
purposes of this Section 5.11(f), interest and principal payments due on any
payment date under the Notes will deemed to accrue in equal daily installments
beginning the day after the immediately preceding payment date and ending on
such payment date); and (iii) for any expense incurred in connection with the
operation or business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent in
form or contributing in the event of loss with that required to be maintained
pursuant to this Section 5.11, unless the same are permitted by Superior
Instrument Requirements and the Mortgagee is included therein as a named
insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant
to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall promptly deliver to
the Mortgagee a duplicate original of the policy of such insurance, a copy
thereof certified by the insurer or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance
claims by reason of damage or destruction to any portion of the Trust
Estate may adjusted by the Mortgagor, but the Mortgagee shall have the
right (but not the obligation) to join the Mortgagor in adjusting, and approving
the adjustment of, any such loss except in the event of a loss where the amount
of insurance reasonably anticipated
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to be received with respect to such loss is less than Five Million Dollars
($5,000,000), and the Mortgagor shall assist the Mortgagee in any such
adjustment at the request of the Mortgagee. If the Mortgagee at its election as
aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's
approval of the adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary, if an Event
of Default shall have occurred and be continuing, the Mortgagee may, at its
option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any
net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case
may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or
make any demolition, alteration or improvement of any building included in the
Trust Estate or any new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in this Section 5.12
set forth.
Unless an Event of Default shall have occurred and be continuing, the
Mortgagor shall have the right at all times to make or permit such alterations,
improvements or new constructions, structural or otherwise (herein sometimes
called collectively "alterations"), of or on the Trust Estate, to be made in all
cases subject to the conditions set forth in Section 5.12 of the Note Mortgage.
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d), enter into any
Lease, or renew, modify, extend, terminate, or amend any Lease, except in
the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection of, any
rental payments under any Lease more than one year in advance of the
respective periods in respect of which they are to accrue, except that, in
connection with the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected and received in
advance in an amount not in excess of three months' rent and/or a security
deposit may be required thereunder in an amount not exceeding one year's
rent;
(c) collaterally assign, transfer or hypothecate (other than to the
Mortgagee hereunder, to
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the mortgagee under the Note Mortgage or to the holder of any Working
Capital Facility Lien) any rental payment under any Lease whether then due
or to accrue in the future, the interest of the Mortgagor as landlord under
any Lease or the rents, issues or profits of the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any Lease
unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder shall be
subject and subordinate to the rights of the Mortgagee under this
Mortgage, the mortgagee under the Note Mortgage and the holders of any
Superior Mortgage,
(2) the Lease may be assigned by the landlord thereunder to the
Mortgagee,
(3) the rights and remedies of the tenant in respect of any
obligations of the landlord thereunder shall be nonrecourse as to any
assets of the landlord other than its equity in the building in which
the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and subordinate to
the rights of the lessee under any new lease entered into in the event
of a termination of a Ground Lease;
(e) modify any Lease with respect to the matters described in clauses
(1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate of the
Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee
shall deliver a non-disturbance and attornment agreement substantially in the
form of Schedule 4 hereto, following receipt of a certificate of a leasing
broker (who is not an Affiliate of the Mortgagor or the broker involved in such
transaction) experienced with respect to leases of commercial space in the
Atlantic City area stating that the rent under the Lease is not less than fair
market rent and that the other terms of the Lease are fair and reasonable in the
commercial leasing market. The Mortgagor shall, upon demand, reimburse the
Mortgagee for any costs and expenses (including reasonable attorney's fees)
incurred by the Mortgagee in connection with the preparation, review and
delivery of such non-disturbance and attornment agreements.
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Promptly after the execution and delivery hereof, the Mortgagor will cause
the lessee under each Lease now in effect and promptly after each Lease is
executed or becomes effective after the date of the execution and delivery
hereof, the Mortgagor will cause the lessee under each such Lease, to be duly
notified in writing (unless the substance and effect of such notice shall be
contained in such Lease) of the subjection of the owner's interest, as lessor,
in and to such Lease to the lien of this Mortgage and of the name and address of
the Mortgagee. Each such notice shall state that the lease of such lessee is a
Lease as herein defined. If a new Mortgagee is at any time appointed hereunder
or the address of the Mortgagee shall at any time be changed, the Mortgagor will
cause each lessee under each Lease to be promptly notified in writing of the
name and address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur any
expenditure other than de minimis amounts) to obtain from each lessee under each
Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of
receipt of such notice, and the Mortgagor will promptly deliver to the
Mortgagee, upon request, a copy of each such acknowledgment of receipt which it
is able to obtain. The Mortgagee shall not be responsible for securing or
causing the Mortgagor to secure any such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to
Article Four, the Mortgagor will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation, and
its rights (both statutory and under its articles of incorporation) and
franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will
keep proper books of record and account in accordance with Section 12.05 of the
Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
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expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Notes, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Guaranty.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law or any other law which
would prohibit or forgive the Mortgagor from paying all or any portion of the
obligations under the Guaranty as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect the covenants or
the performance of this Mortgage; and the Mortgagor (to the extent that it may
lawfully do so) 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 Mortgagee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions
of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking
affecting the Trust Estate.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause to be done
all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall
at all times fully perform and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all taxes,
assessments and other charges mentioned therein) prior to the expiration of any
notice and/or cure period provided in each such Ground Lease. Upon receipt by
the Mortgagee from a Lessor of any written notice of default by the lessee
thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems
necessary in its sole discretion to prevent or to cure any default by the
Mortgagor in the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the Mortgagor as
lessee under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by
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the Mortgagor or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate,
Opinion of Counsel and a copy of the injunction, all as described in Section
3.01(g), the Mortgagee shall not take any such action unless and until the
Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay
referred to in Section 3.01(g). Without limiting the generality of Section 3.09
hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that
the Mortgagee shall have, the absolute and immediate right to enter in and upon
the Premises or any part thereof to such extent and as often as the Mortgagee,
in its sole discretion, deems necessary or desirable for the purpose permitted
by the immediately preceding sentence, subject only to applicable Legal
Requirements. Subject to the preceding and without limiting the Mortgagee's
other remedies under this Mortgage, the Mortgagee may pay and expend such sums
of money as the Mortgagee in its sole discretion deems necessary for any such
purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately
and without demand, all such sums so paid and expended by the Mortgagee,
together with interest thereon from the date of each such payment at the highest
rate of interest set forth in the Notes. All sums so paid and expended by the
Mortgagee, and the interest thereon, shall be added to and be secured by the
lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and
that it will not without the express written consent of the Mortgagee
modify, change, supplement, alter or amend such Ground Leases either
orally or in writing and, as further security for the repayment of the
indebtedness secured hereby and for the performance of the covenants
herein and in such Ground Leases contained, the Mortgagor hereby
assigns to the Mortgagee all of its rights, privileges and
prerogatives as lessee under such Ground Leases to terminate, cancel,
modify, change, supplement, alter or amend such Ground Leases, and any
such termination, cancellation, modification, change, supplement,
alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing
and (2) either (A) there has been an acceleration of maturity of the
Notes pursuant to Section 3.02 of the Note Mortgage or (B) the
Mortgagee exercises its rights under Section 3.09 hereof, the
Mortgagee shall have no right to terminate, cancel, modify, change,
supplement, alter or amend the Ground Leases;
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(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of
the Mortgagor's obligations under such Ground Leases, pursuant to such
Ground Leases or otherwise, shall release the Mortgagor from any of
its obligations under this Mortgage, including its obligations with
respect to the payment of rent as provided for in such Ground Leases
and the performance of all of the terms, provisions, covenants,
conditions and agreements contained in such Ground Leases, to be kept,
performed and complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest
in the improvements on the Leased Land and the leasehold estates shall
not merge by and shall always remain separate and distinct,
notwithstanding the union of such estates either in the Lessor or in
the lessee, or in a third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in
writing of any request made by the Mortgagor, as lessee under each of
the Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any
arbitration proceedings, as well as all proceedings thereunder. In
addition, the Mortgagor shall promptly deliver to the Mortgagee a copy
of the determination of the arbitrators in each such arbitration
proceeding. The Mortgagee shall have the right to participate in such
arbitration proceedings in association with the Mortgagor or on its
own behalf as an interested party in accordance with the terms of the
Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such
election to the Lessor or (B) the Mortgagor acquires fee simple title
or any other estate, title or interest in the Leased Land, the
Mortgagor shall promptly notify the Mortgagee of such acquisition and
shall cause to be executed and recorded all such other and further
assurances or other instruments in writing as may be required by law
or, in the opinion of the Mortgagee, be reasonably
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desirable to carry out the intent and meaning of clause
(x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease
by any Lessor or any trustee arising from or in connection with any
case, proceeding or other action commenced or pending by or against
any Lessor under the Code or any comparable provision contained in any
present or future federal, state, local, foreign or other statute,
law, rule or regulation, the Mortgagor shall give notice thereof to
the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any
and all of the Mortgagor's rights as lessee under Section 365(h) of
the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation ("Comparable Provision") and (B) covenants that it shall
not elect to treat any Ground Lease as terminated pursuant to Section
365(h) of the Code or any Comparable Provision without the prior
written consent of the Mortgagee and (C) agrees that any such election
by the Mortgagor without such consent shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to
the Mortgagee all of the Mortgagor's claims and rights to the payment
of damages arising from any rejection by Lessor of any Ground lease
under the Code or any Comparable Provision. The Mortgagee shall have
the right to proceed in its own name or in the name of the Mortgagor
in respect of any claim, suit, action or proceeding relating to the
rejection of any Ground Lease, including, without limitation, the
right to file and prosecute, in cooperation with the Mortgagor, any
proofs of claim, complaints, motions, applications notices and other
documents, in any case in respect of Lessor under the Code or any
Comparable Provision. This assignment constitutes a present,
irrevocable and unconditional assignment of the foregoing claims,
rights and remedies, and shall continue in effect until all of the
indebtedness and obligations secured by this Mortgage shall have been
satisfied and discharged in full. Any amounts received by the
Mortgagee in damages arising out of the rejection of any Ground Lease
as aforesaid shall be applied first to all reasonable costs and
expenses of the Mortgagee (including, without limitation, reasonable
attorneys' fees) incurred in connection with the exercise of any of
its rights or remedies under this Section 5.21, and thereafter as
provided in Section 3.03 hereof;
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(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or
all of the Ground Leases the Mortgagor shall give the Mortgagee not
less than 10 days' prior notice of the date on which the Mortgagor
shall apply to the Bankruptcy Court or other judicial body with
appropriate jurisdiction for authority to reject the lease. The
Mortgagee shall have the right, but not the obligation, to serve upon
the Mortgagor within such 10 day period a notice stating that (a) the
Mortgagee demands that the Mortgagor assume and assign such Ground
Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any
Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s).
If the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a)
of the preceding sentence within 30 days after the notice shall have
been given subject to the performance by the Mortgagee of the covenant
provided for in clause (b) of the preceding sentence. Effective upon
the entry of an order for relief in respect of the Mortgagor under
Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby
assigns and transfers to the Mortgagee a non-exclusive right to apply
to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
(x) the Mortgagor shall promptly give to the Mortgagee copies of
(A) all notices of default or (B) any other communications or notices
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Ground Leases and shall promptly notify the Mortgagor of any default
under any Ground Lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all
of the rights granted to it under the Ground Leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any
portion thereof to or from an Affiliate.
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(c) The Mortgagor hereby represents and warrants that all fixed net rent,
taxes and assessments, payable under the Ground Leases have been paid to the
extent they were due and payable to the date hereof and that the Mortgagor has
not received notice of its failure to pay any other amounts payable under the
Ground Leases which have not been cured.
(d) If both the Lessor's and Lessee's estates under any of the Ground
Leases or any portion thereof shall at any time become vested in one owner, this
Mortgage and the lien created hereby shall nevertheless not be merged,
extinguished, destroyed or terminated by application of the doctrine of merger
and, in such event, Mortgagee shall continue to have all of the rights and
privileges of the leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease shall be
terminated prior to the natural expiration of its term due to default by the
Lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its
designee shall acquire from the Lessor a new lease of the Leased land or any
portion thereof, the Mortgagor shall have no right, title or interest in or to
such lease or the leasehold estate created thereby, or the options therein
contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times fully
perform and comply with all agreements, covenants, terms and conditions imposed
upon or assumed by it as mortgagor under the Superior Mortgages prior to the
expiration of any notice and/or cure period provided in each such Superior
Mortgage. If a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior Mortgage
has been accelerated as a result thereof, the Mortgagee may rely thereon and
take any action the Mortgagee deems necessary in its sole discretion to prevent
or to cure any default by the Mortgagor in the performance of or compliance with
any of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as mortgagor under each of the Superior Mortgages even though the
existence of such default or the nature thereof may be questioned or denied by
the Mortgagor or by any party on behalf of the Mortgagor provided that if the
Mortgagor has heretofore taken such actions as
58
<PAGE>
described in Section 3.01(h), the Mortgagee shall not take any such action
unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of
any such tolling or stay referred to in Section 3.01(h). Without limiting the
generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the
Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any part
thereof to such extent and as often as the Mortgagee, in its sole discretion,
deems necessary for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. The Mortgagee may (i) pay and
expend such sums of money as the Mortgagee in its sole discretion deems
necessary for any such purpose and (ii) in its sole discretion prepay any
Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee,
immediately and without demand, all such sums referred to in (i) and (ii) above
so paid and expended by the Mortgagee, together with interest thereon from the
date of each such payment at the rate of interest set forth in the Note. All
sums so paid and expended by the Mortgagee and the interest thereon shall be
added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first satisfying the
conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A)
modify any of the terms, covenants or conditions of any Superior
Mortgage, and without limiting the foregoing, the Mortgagor shall not,
without satisfying such conditions, enter into or obtain any agreement
whereby the holder of any Superior Mortgage waives, postpones,
extends, reduces or modifies the payment of the installment of
principal or interest or any other item or amount now required to be
paid under the terms of any Superior Mortgage or modifies any other
provision thereof, or (B) acquire or permit or suffer any Affiliate of
the Mortgagor to acquire any Superior Mortgage or any interest
therein. Notwithstanding anything in clause (A) to the contrary, the
Mortgagor shall have the right to amend, supplement or modify any
Superior Mortgage, if (x) the then outstanding principal balance of
the indebtedness secured by such Superior Mortgage is not increased
thereby, and (y) in the case of any After-Acquired Fee Mortgage, such
amendment, supplement or agreement does not increase the property
covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the Mortgagor under each
Superior Mortgage, the note secured thereby and any other instrument
evidencing or
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<PAGE>
securing the indebtedness owing to any holder of any Superior
Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an estoppel certificate or letter addressed to the Mortgagee
from holders of the Superior Mortgages, such certificate or letter to
be in such form as the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any
default under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions of the
Trust Estate shall be subject and subordinate to any Existing Encumbrances, the
liens created by the Senior Mortgage Documents and any mortgage, assignment,
security agreement, financing statement or other lien securing any Working
Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's
interest in the affected portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be self-operative
with respect to the liens created by the Senior Mortgage Note Documents and any
Working Capital Facility Lien, and no further instrument shall be required to
give effect to such subordination. Mortgagee shall, however, from time to time,
execute instruments in form and substance reasonably satisfactory to the holder
of the Working Capital Facility Lien, confirming such subordination and agreeing
to such other matters reasonably required by the holder of the liens created by
the Senior Mortgage Documents and the holders of such liens which do not, in the
aggregate, materially adversely reduce or impair the rights of Trustee under the
Mortgage, and Mortgagor and others may rely conclusively thereon, provided that
Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of the
Trust Estate shall be subject and subordinate to any Existing Encumbrances. The
provisions of this Section 5.22(d) shall be self-operative, and no further
instrument shall be required to give effect to such subordination.
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<PAGE>
Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding
recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office
after the recordation of the Note Mortgage, the lien of this Mortgage ranks PARI
PASSU with, and not junior to, the lien created by the Note Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it
is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon
the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee
further acknowledges and agrees that whenever it is provided in the Note
Mortgage that the Mortgagor shall deliver any notice or document, or is required
to make any payment thereunder, the delivery of such notice or document or the
making of such payment pursuant to the terms of the Note Mortgage shall also
constitute the delivery of such notice or document or the making of such payment
in satisfaction of the terms, conditions and provisions of this Mortgage to the
same extent as the same constitutes satisfaction of the terms, conditions and
provisions of the Note Mortgage.
Section 6.02. COUNTERPARTS. This instrument may be executed in any number
of counterparts, each of which as executed shall be deemed to be an original,
but all such counterparts shall constitute one and the same instrument.
Section 6.03. MODIFICATION. This Mortgage is subject to "modification"
within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have
the benefit of the lien priority provisions of such statute. Such modification
may include, without limitation, a change in the interest rate, maturity date or
other terms and conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS
MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly
executed and attested, all as of the day and year first above written.
61
<PAGE>
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
62
<PAGE>
Exhibit G
Intercreditor Agreement Terms
<PAGE>
Exhibit G
Outline of Material Terms of the
Intercreditor Agreement
for
Resorts International, Inc.
Subject Credit Senior Secured Loan due July 15, 2002 (the
Facilities "Senior Facility");
Senior Mortgage Notes due [March] 15,
2003 (the "Senior Mortgage Notes");
Junior Mortgage Notes due June 15, 2004
(the "Junior Mortgage Notes"); and
Any other credit facilities which may be
required by the Indentures for the
Senior Facility, the Senior Mortgage
Notes or the Junior Mortgage Notes to be
included in the Intercreditor Agreement
(the "Additional Facilities," and
together with the Senior Facility, the
Senior Mortgage Notes and the Junior
Mortgage Notes, the "Credit Facilities")
Creditor Parties Senior Facility Trustee;
Senior Mortgage Note Trustee;
Junior Mortgage Note Trustee; and any
lenders (or trustees or agents on behalf
of any lenders) which provide Additional
Facilities (collectively, the
"Trustees") Each Creditor Party, by its
execution of the Intercreditor Agreement
(whether directly or through its trustee
or agent), acknowledges the making of
the other Credit Facilities and the
intended uses of proceeds thereof and
waives any right to object to any
contemporaneous or existing Credit
Facility as having constituted a
fraudulent conveyance.
Classification of Initial Designations:Credit Facilities
Class 1 Facilities: Senior Facility,
all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
<PAGE>
Class 2 Facilities: Senior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Class 3 Facilities: Junior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Subsequent Designations - as indicated
on the signature page(s) to be executed
by the lenders (or any trustees or
agents on behalf of any lenders) which
provide Additional Facilities and
consented to by all other parties at
such time.
Borrower Parties Resorts International Hotel Financing,
Inc. ("RIHF"), as borrower under the
Secured Facilities;
Resorts International Hotel, Inc.
("RIH") as guarantor under the Secured
Facilities and issuer of the secured
intercompany notes to RIHF collaterally
assigned to each respective Trustee;
Resorts International, Inc. ("RII"), as
guarantor under the Senior Facility and
issuer of any intercompany notes which
may be issued to RIH; and
[GRI, Inc. ("GRI", and together with
RIHF, RIH and RII, the "Borrower
Parties") as guarantor under the Senior
Facility and issuer of any intercompany
notes which may be issued to RIH.]1*
The Borrower Parties will execute the
Intercreditor Agreement principally for
the purposes of (i) acknowledging the
relative rights of and relationships
among the Secured Facilities established
therein and (ii) agreeing not to take
any actions, including making any
payments, inconsistent therewith.
- -------------------
* Subject to discussion on structure
2
<PAGE>
Relative Priorities Liens:
Notwithstanding the time of filing,
recording or perfecting of the Security
Documents (which will be defined to
include the Mortgages and other liens
and encumbrances):
Each Lien created on behalf of a Class 1
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 1 Facility and (ii) senior
to any Lien created on behalf of any
Class 2 Facility or Class 3 Facility.
Each Lien created on behalf of a Class 2
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 2 Facility, (ii) senior to
any Lien created on behalf of any Class
3 Facility and (iii) junior to any Lien
created on behalf of any Class 1
Facility.
Each Lien created on behalf of a Class 3
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 3 Facility, and (ii) junior
to any Lien created on behalf of any
Class 1 Facility or Class 2 Facility.
Subrogation To be waived by all guarantors.
Mortgage Default Each Class 3 Creditor shall notify each
Cure Provisions Class 2 Creditor and each Class 1
Creditor of any Default or Event of
Default under its respective Class 3
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 1
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 3
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 2 Creditor shall notify each
Class 1 Creditor and each Class 3
Creditor of any Default or Event of
3
<PAGE>
Default under its respective Class 2
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 1 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 2
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 1 Creditor shall notify each
Class 2 Creditor and each Class 3
Creditor of any Default or Event of
Default under its respective Class 1
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 1
Facility or the Mortgage or other
Security Documents securing its
facility.
In addition, each Trustee will be
obligated to notify all other Trustees
prior to exercising any remedies with
respect to any shared collateral.
Application of Proceeds from dispositions of
Proceeds collateral, insurance proceeds,
condemnation awards and similar amounts
will be applied in accordance with
relative priorities of Liens.
Representations and Each party to the Intercreditor
Warranties Agreement will make appropriate
representations, including those
relating to its corporate existence,
power and authority, as well as to the
validity and enforceability of the
Intercreditor Agreement.
Amendments Intercreditor Agreement may not be
amended except pursuant to a writing
executed by all parties thereto.
Amendments for the sole purpose of
adding permitted parties may be executed
by the Trustees without the consent of
4
<PAGE>
the creditors for whom they serve if all
conditions precedent to the incurrence
of such indebtedness have been
satisfied. Amendments to sections [ ]
and [ ] may be executed by the
Trustees only with the approval of 100%
of the creditors for whom they serve and
amendments to sections [ ] and [ ]
may be executed by the Trustees only
with the approval of 66 2/3% of the
creditors for whom they serve.
Third Party Each party to the Intercreditor
Beneficiarie Agreement will acknowledge that such
agreement is being entered into for the
benefit of the lenders under the Credit
Facilities and their respective
successors and assigns, each of whom is
a direct intended third-party
beneficiary.
Certain Specific performance; no waivers;
Miscellaneous cooperation and further assurances.
Provisions
Governing Law New Yor
<PAGE>
SCHEDULE "2"
SOFTWARE
1. Casino Customer Rating Software for Games and Slots.
2. Casino Tracking System for Field Agents, Junkets,
Special Events and Commissioned Agents.
3. Casino Player Marketing System.
4. Casino/Hotel Computer Interface.
5. Property - Player Interface.
6. Casino Purges.
7. Complimentary Slips.
8. Enhancements developed by _____________________
relating to the Hotel System computer software leased
from IBM.
9. Modifications and enhancements developed by
_______________________ with respect to the
Inventory/Purchasing System software licensed from
____________________________________
10. MVP Card software.
11. D-Card software for consolidation of debit information
concerning room, food and beverage charges.
12. Accounts Receivable System software.
13. Interactive Television Services software.
14. Maid Accounting System software.
15. Source Archive System software for monitoring each
programmer's use of each software unit.
46
<PAGE>
16. Income Journal System software.
17. Cross System Support software used for maintaining
back-up files.
18. Guest Refund Check System software.
19. Check Reconciliation System software used in connection
with payroll, guest refunds and accounts payable.
20. W-2 Program software.
21. W-2G/10425 Reporting System software used to generate
W-2G forms for slot winnings.
22. Shipment Management Tools software.
23. Software Tool Version software used to monitor the
version of software being used.
24. Worker Tracker System software used to monitor and
prioritize problem reports with respect to software and
hardware and requests for modifications.
25. Show Reservation & Ticket Box Office System software.
26. Payroll/Personnel System software.
27. Problem Management software used to monitor reports of
system problems, person assigned to repair, length of
time to respond, etc.
28. Employee Survey System software used to generate
information based on responses from guest comment
cards.
29. Gross Revenue Tip Reporting and Allocation System
software.
30. Surveillance Tracking System software. (Currently
under development).
31. Record Retention System software. (Currently under
development).
47
<PAGE>
32. Prospect Database software used for a direct mail
marketing system for prospective customers.
33. Job Accounting System software used to identify each
job and program running on the main system at any given
time.
34. Security Audit System software used to monitor security
codes assigned to employees.
48
<PAGE>
EXHIBIT C
1994 STOCK OPTION PLAN
[To Be Completed]
<PAGE>
EXHIBIT D
RIHF SENIOR FACILITY TERM SHEET
RESORTS INTERNATIONAL, INC.
Revised Term Sheet for
11.0% Senior Secured Loan due 2002
Issuer Resorts International Hotel
Financing, Inc. ("RIHF" or "Issuer").
Guarantors Resorts International Hotel, Inc.
("RIH") and, if any proceeds are
loaned by RIH to RII, Resorts
International, Inc. ("RII").
Issue Senior Secured Loan due 2002.
Principal Up to $20 million.
Availability Available in one borrowing during the
twelve months following the effective
date of the Plan of Reorganization of
RII and GGRI, Inc.
Maturity July 15, 2002 (approx. 8 years).
Interest 11.0% payable semi-annually in cash
on January 15th and July 15th on the basis of
a 360-day year consisting of twelve 30-day months.
Interest will accrue on the principal amount
advanced from the date of drawdown.
Security - A secured promissory note from RIH in an
aggregate principal amount of $20 million
(the "RIH Note") payable in amounts and at times
necessary to pay the principal of and interest on
the RIHF Senior Facility Note issued pursuant to
the Senior Facility Indenture (the "Indenture"),
with a collateral assignment of the mortgage,
assignment of leases and rents and assignment of
operating assets securing such note. The mortgage
securing the RIH Note will be a first priority lien
on all property and improvements of Merv Griffin's
Resorts Casino Hotel in Atlantic City, New Jersey.
- The guarantee of RIH will be secured by a first
mortgage, an assignment of leases and rents and an
assignment of operating assets (in form and substance
similar to the mortgage, assignment of leases and
rents and assignment of assets securing the 11% Senior
Mortgage Notes due 2003 (the "Senior Mortgage Notes"))
which mortgage shall be PARI PASSU with the liens
created by the mortgage documents securing the
RIH Note.
- If any proceeds are loaned by RIH to RII, the
collateral securing RIH's guarantee will include
the promissory note by RII evidencing such loan.
Rank Senior as to payment of all principal, interest,
premiums, fees and expenses to all debt, including
Senior Mortgage Notes and Junior Mortgage Notes.
Mandatory Redemption Upon the merger or consolidation of RIH or GGRI, Inc.
or a sale of assets by RIH; provided that such a merger
or consolidation shall be permitted without mandatory
redemption only if (i) all tests applicable to the
Senior Mortgage Notes are satisfied, and (ii) the
surviving entity assumes all obligations of its
predecessor under the Indenture.
Optional Redemption At any time during a period ending on the third
anniversary of the funding date at 103% of par. At
any time thereafter at par.
Open Market Purchases Authorized, in accordance with the Indenture (on terms
similar to those set forth in the indenture for the
Senior Mortgage Notes).
Indenture Modifications Requirement of two-thirds of outstanding principal
amount (on terms similar to those set forth in the
indenture for the Senior Mortgage Notes).
Use of Proceeds Advances will be made to RIHF and must be loaned by
RIHF to RIH. No further restrictions.
Conditions to Advances Execution of an Indenture reasonably satisfactory to
Purchaser based generally upon the indenture for the
Senior Mortgage Notes (except as described herein or
as agreed); no defaults or Events of Default under and
as defined in the Indenture and the indenture for the
Senior Mortgage Notes or Junior Mortgage Notes; and
effectiveness of a registration statement covering
Purchaser's public resale of the Notes by Purchaser
(see "Registration", below).
Indenture Covenants Payments of principal and interest; corporate
existence; quarterly and annual financial reports;
compliance certificates and notice of defaults;
limitation on dividends and restricted payments.
In addition, RII shall be limited as to debt
incurrence so that it may (i) issue the intercompany
notes contemplated hereby, and (ii) incur additional
indebtedness to the extent that RII's Pro Forma
Consolidated Interest Coverage Ratio for the four
full fiscal quarters next preceding the date such
additional indebtedness is proposed to be incurred
would have been less than or equal to ____, determined
on a pro forma basis (including pro forma for the
intended application of the net proceeds of such
indebtedness) as if such additional indebtedness had
been outstanding at the beginning of such four quarter
period.
Cross-Defaults The Senior Facility loan will contain cross defaults
to the Senior Mortgage Notes and the Junior Mortgage
Notes and cross-acceleration provisions similar to
those set forth in the indenture for the Senior
Mortgage Notes.
Registration As a condition to the advance of funds hereunder,
Issuer, RII, RIH and GGRI, Inc. shall take such
actions as may be necessary to ensure that all notes
issued to Purchaser in respect of the Senior Facility
loan may be re-sold publicly by Purchaser, without
restriction under the Securities Act of 1933, as
amended, immediately following the issuance thereof,
provided such re-sale occurs within 180 days
thereafter.
<PAGE>
BY-LAWS
OF
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
(a Delaware corporation)
(Adopted September 30, 1993)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered
office of RESORTS INTERNATIONAL FINANCING, INC. (the
"CORPORATION") in the State of Delaware shall be at 1013
Centre Road, City of Wilmington, County of New Castle, and the
name of the registered agent in charge thereof is Corporation
Service Company.
SECTION 2. OTHER OFFICES. The Corporation also may
have an office or offices at any other place or places within
or without the State of Delaware.
ARTICLE II
MEETINGS OF STOCKHOLDERS; STOCKHOLDERS'
CONSENT IN LIEU OF MEETING
SECTION 1. ANNUAL MEETINGS. The annual meeting of
the stockholders for the election of directors, and for the
transaction of such other business as may properly come before
the meeting, shall be held at such place, date and hour as
shall be fixed by the Board of Directors (the "BOARD") and
designated in the notice or waiver of notice thereof; except
that no annual meeting need be held if all actions, including
the election of directors, required by the General Corporation
Law of Delaware to be taken at a stockholders' annual meeting
are taken by written consent in lieu of meeting pursuant to
SECTION 5 of this Article.
SECTION 2. SPECIAL MEETINGS. Special meetings of
the stockholders may be called at any time by the Board, the
Chairman of the Board or the President of the Corporation or a
stockholder or stockholders holding of record at least a
majority of the shares of outstanding stock of the
Corporation, such meetings to be held at such place, date and
hour as shall be designated in the notice or waiver of notice
thereof.
<PAGE>
SECTION 3. PLACE OF MEETINGS. All meetings of the
stockholders shall be held at such places, within or without
the State of Delaware, as may from time to time be designated
by the person or persons calling the respective meeting and
specified in the respective notices or waivers of notice
thereof.
SECTION 4. NOTICE OF MEETINGS. Unless waived in
writing by the stockholder of record or unless such
stockholder shall be represented at the meeting in person or
by proxy, written notice of each meeting of stockholders shall
be given not less than 10 nor more than 60 days before the
date of such meeting to each stockholder of record entitled to
vote at such meeting. Such notice shall state the place, date
and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is
called.
SECTION 5. STOCKHOLDERS' CONSENT IN LIEU OF
MEETINGS. Any action by stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed
by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled
to vote thereon were present and voted. Every written consent
shall bear the date of the signature of each stockholder who
signs the consent and such writing or writings shall be filed
with the minutes of stockholder meetings within 60 days of the
earliest dated consent. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have
not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and
affairs of the Corporation shall be managed by or under the
direction of the Board, which may exercise all such powers of
the Corporation and do all such lawful acts and things as are
not by law or by the Certificate of Incorporation directed or
required to be exercised or done by the stockholders.
SECTION 2. NUMBER AND TERM OF HOLDING OFFICE. The
number of directors which shall constitute the whole Board
shall be two or such other number as from time to time shall
be fixed by resolution of the Board. Directors need not be
stockholders. Each director shall hold office until the
annual meeting next after his election and until his successor
2
<PAGE>
shall be elected and shall qualify or until his earlier death
or resignation or removal in the manner hereinafter provided.
SECTION 3. CHAIRMAN OF THE BOARD AND ORGANIZATION
OF BUSINESS. The Board may elect from among its members a
Chairman of the Board who shall be an officer of the Board.
The Chairman of the Board shall preside at all meetings of the
Board at which he shall be present and shall perform such
other duties as may be assigned to him from time to time by
the Board. In the absence of the Chairman of the Board, the
President, if a director, or, in his absence, a chairman
chosen by a majority of the directors present, shall act as
Chairman. The Secretary of the Corporation or, in his
absence, any person (who shall be an Assistant Secretary if an
Assistant Secretary shall be present) whom the Chairman shall
appoint, shall act as secretary of such meeting and keep the
minutes thereof.
SECTION 4. RESIGNATIONS. Any director may resign
at any time by giving written notice of his resignation to the
Board, the President or the Secretary of the Corporation. Any
such resignation shall take effect at the time specified
therein or, if such time is not specified therein, immediately
upon its receipt.
SECTION 5. REMOVAL OF DIRECTORS. Any director or
the entire Board may be removed, either with or without cause,
at any time by the holders of a majority of the shares then
entitled to vote at an election of directors or by written
consent of the stockholders pursuant to SECTION 5 of
ARTICLE II hereof.
SECTION 6. VACANCIES. In case of any vacancy on
the Board or in case of any newly created directorship, a
director to fill the vacancy or the newly created directorship
for the unexpired portion of the term being filled may be
elected by a majority of the directors of the Corporation then
in office, even though the directors then in office may
constitute less than a quorum, or by a sole remaining
director.
SECTION 7. PLACE OF MEETING. The Board may hold
its meetings at such place or places within or without the
State of Delaware as the Board may from time to time by
resolution determine or as shall be designated in the notices
or waivers of notice thereof.
SECTION 8. MEETINGS. (A) ANNUAL MEETINGS. As
soon as practicable after each annual election of directors,
the Board shall meet for the purpose of organization and the
transaction of other business, unless it shall have transacted
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<PAGE>
all such business by written consent pursuant to SECTION 11 of
this Article.
(B) OTHER MEETINGS. Other meetings of the Board
shall be held at such times and places as the Board shall from
time to time determine or upon call by the Chairman of the
Board, the President or any two or more of the directors.
SECTION 9. NOTICE OF MEETINGS. The Secretary of
the Corporation shall give notice to each director of each
meeting, including the time and place of such meeting. Notice
of each such meeting shall be mailed to each director
addressed to him at his residence or usual place of business,
at least two days before the day on which such meeting is to
be held, or shall be sent to him by telegraph, cable, wireless
or other form of recorded communication or be delivered
personally or by telephone not later than the day before the
day on which such meeting is to be held. Notice of any
meeting shall not be required to be given to any director who
shall attend such meeting. A written waiver of notice, signed
by the person entitled thereto, whether before or after the
time stated therein, shall be equivalent to adequate notice.
SECTION 10. QUORUM AND MANNER OF ACTING. Except as
provided in SECTION 6 of this Article, a majority of the total
number of directors shall be necessary at any meeting of the
Board in order to constitute a quorum for the transaction of
business at such meeting, and the vote of a majority of those
directors present at any such meeting at which a quorum shall
be present shall be necessary for the passage of any
resolution or act of the Board, except as otherwise expressly
required by law or the Certificate of Incorporation or these
By-laws. In the absence of a quorum for any such meeting, a
majority of the directors present thereat may adjourn such
meeting from time to time until a quorum shall be present.
Notice of any adjourned meeting need not be given.
SECTION 11. UNANIMOUS DIRECTOR CONSENT IN LIEU OF
MEETING. Any action by the Board or a committee appointed
pursuant to SECTION 1 of ARTICLE IV hereof may be taken
without a meeting if all members of the Board or such
committee, as the case may be, consent to such action in
writing and the writing or writings are filed with the minutes
of the proceedings of the Board or such committee.
SECTION 12. ACTION BY MEANS OF CONFERENCE TELEPHONE
OR SIMILAR COMMUNICATIONS EQUIPMENT. Any one or more members
of the Board, or of any committee designated by the Board, may
participate in a meeting of the Board or any such committee,
as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and
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participation in a meeting by such means shall constitute
presence in person at such meeting.
SECTION 13. REMUNERATION. No director shall be
entitled to receive from the Corporation any amounts or fees
for attendance at meetings of the Board or of any committee,
or both, unless the Board shall otherwise determine. The
Board may provide that the Corporation shall reimburse each
director or member of a committee for any expenses incurred by
him on account of his attendance at any such meeting. Nothing
contained in this Section shall be construed to preclude any
director from serving the Corporation in any other capacity
and receiving remuneration therefor.
ARTICLE IV
COMMITTEES
SECTION 1. COMMITTEES. The Board may, by
resolution passed by a majority of the whole Board, designate
one or more committees, each committee to consist of one or
more directors of the Corporation. The Board may designate
one or more directors as alternate members of any committee
who may replace an absent or disqualified member at any
meeting of such committee. In the absence or disqualification
of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board to act at the meeting in
the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the
Board constituting such committee, shall have and may exercise
all the delegable powers and authority of the Board in the
management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all
papers that may require it. Notices for meetings of a
committee shall be given in the manner required by SECTION 9
of ARTICLE III hereof and may be waived in writing or
dispensed with as therein provided. Unless otherwise provided
in the resolution of the Board constituting any such
committee, such committee shall adopt its own resolutions of
procedure and shall keep a record of its proceedings which
shall be reported upon to the Board and filed with the minutes
of the proceedings of the Board or such committee.
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ARTICLE V
OFFICERS
SECTION 1. NUMBER. The officers of the Corporation
shall be a President, a Secretary and a Treasurer and may
include a Chairman of the Board, one or more Vice Presidents,
one or more Assistant Secretaries and one or more Assistant
Treasurers. Each such officer shall be elected or appointed
by the Board and shall hold office until his successor shall
be elected or appointed and qualified or until his earlier
death or resignation or removal in the manner hereinafter
provided. Any number of offices may be held by the same
person.
The Board may elect or appoint such other officers
of the Corporation as it shall deem necessary who shall have
such authority and shall perform such duties as the Board may
prescribe.
All officers elected or appointed by the Board shall
be subject to removal at any time by the Board with or without
cause.
Any officer may resign at any time by giving written
notice to the Board or the President or the Secretary of the
Corporation, and such resignation shall take effect at the
time specified therein or, if such time is not specified
therein, immediately upon its receipt.
SECTION 2. THE PRESIDENT. The President of the
Corporation, subject to the direction of the Board, shall be
the chief executive officer of the Corporation, shall have
general charge of the business and affairs of the Corporation,
shall have the direction of all other officers, agents and
employees and may assign such duties to the other officers of
the Corporation as he shall deem appropriate.
SECTION 3. SECRETARY. The Secretary of the
Corporation shall keep the records of all meetings of
stockholders and of the Board. He shall affix the seal of the
Corporation to all deeds, contracts, bonds or other
instruments requiring the corporate seal when the same shall
have been signed on behalf of the Corporation by a duly
authorized officer and shall be the custodian of all
contracts, deeds, documents and all other indicia of title to
properties owned by the Corporation and of its other corporate
records.
SECTION 4. ASSISTANT SECRETARIES. The Assistant
Secretaries, if any, in order of their seniority or in any
other order determined by the Board shall, in the absence or
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disability of the Secretary, perform the duties and exercise
the powers of the Secretary and shall perform such other
duties as the Board or the Secretary shall prescribe.
SECTION 5. THE TREASURER. The Treasurer shall have
the care and custody of the corporate funds and other valuable
effects, including securities, and shall keep full and
accurate accounts of the receipts and disbursements in books
belonging to the Corporation, and shall deposit all moneys and
other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the
Board. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper
vouchers for such disbursements, and shall render to the
President and directors, at the meetings of the Board, or
whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of
the Corporation; and, in general, the Treasurer shall perform
all the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by
the President or the Board.
SECTION 6. ASSISTANT TREASURERS. The Assistant
Treasurers, if any, in the order of their seniority or in any
other order determined by the Board, shall in the absence or
disability of the Treasurer perform the duties and exercise
the powers of the Treasurer and shall perform such other
duties as the Board or the Treasurer may prescribe.
ARTICLE VI
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. EXECUTION OF DOCUMENTS. The Board shall
designate the officers, employees and agents of the
Corporation who shall have power to execute and deliver deeds,
contracts, mortgages, bonds, debentures, checks, drafts and
other orders for the payment of money and other documents for
and in the name of the Corporation and may authorize such
officers, employees and agents to delegate such power
(including authority to redelegate) by written instrument to
other officers, employees or agents of the Corporation.
SECTION 2. DEPOSITS. All funds of the Corporation
not otherwise employed shall be deposited from time to time to
the credit of the Corporation or otherwise as the Board, the
Treasurer or any other officer of the Corporation to whom
power in that respect shall have been delegated by the Board
shall select.
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SECTION 3. PROXIES IN RESPECT OF STOCK OR OTHER
SECURITIES OF OTHER CORPORATIONS. The President or any
officer of the Corporation designated by the Board shall have
authority from time to time to appoint an agent or agents of
the Corporation to exercise in the name and on behalf of the
Corporation the powers and rights which the Corporation may
have as the holder of stock or other securities or interests
in any other corporation or business entity and to vote or
consent in respect of such stock, securities or interests; the
President or such designated officer may instruct the person
or persons so appointed as to the manner of exercising such
powers and rights and the manner of such voting or consenting;
and the President or such designated officer may execute or
cause to be executed in the name and on behalf of the
Corporation and under its corporate seal, or otherwise, such
written proxies, powers of attorney or other instruments as he
may deem necessary or proper in order that the Corporation may
exercise its said powers and rights.
ARTICLE VII
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR STOCK. Every owner of
stock of the Corporation shall be entitled to have a
certificate or certificates, to be in such form as the Board
shall prescribe, certifying the number and class of shares of
the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the
order in which they shall be issued and shall be signed in the
name of the Corporation by the President or a Vice President,
and by the Secretary or an Assistant Secretary or by the
Treasurer or an Assistant Treasurer. Any of or all of the
signatures on the certificates may be a facsimile. In case
any officer, transfer agent or registrar who has signed, or
whose facsimile signature has been placed upon, any such
certificate, shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, such
certificate may nevertheless be issued by the Corporation with
the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been
placed thereupon, were such officer, transfer agent or
registrar at the date of issue. A record shall be kept of the
respective names of the persons, firms or corporations owning
the stock represented by such certificates, the number and
class of shares represented by such certificates,
respectively, and the respective dates thereof, and in case of
cancellation, the respective dates of cancellation. Every
certificate surrendered to the Corporation for exchange or
transfer shall be cancelled, and no new certificate or
certificates shall be issued in exchange for any existing
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certificate until such existing certificate shall have been so
cancelled, except in cases provided for in SECTION 4 of this
Article.
SECTION 2. TRANSFERS OF STOCK. Transfers of shares
of stock of the Corporation shall be made only on the books of
the Corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary, or with a transfer
agent appointed as provided in SECTION 3 of this Article, and
upon surrender of the certificate or certificates for such
shares properly endorsed and the payment of all taxes thereon.
The person in whose name shares of stock stand on the books of
the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation. Whenever any transfer of
shares shall be made for collateral security, and not
absolutely, such fact shall be so expressed in the entry of
transfer if, when the certificate or certificates shall be
presented to the Corporation for transfer, both the transferor
and the transferee request the Corporation to do so.
SECTION 3. REGULATIONS. The Board may make such
rules and regulations as it may deem expedient, not
inconsistent with these By-laws, concerning the issue,
transfer and registration of certificates for shares of the
stock of the Corporation. It may appoint, or authorize any
officer or officers to appoint, one or more transfer clerks or
one or more transfer agents and one or more registrars, and
may require all certificates for stock to bear the signature
or signatures of any of them.
SECTION 4. LOST, STOLEN, DESTROYED, AND MUTILATED
CERTIFICATES. In any case of loss, theft, destruction or
mutilation of any certificate of stock, another may be issued
in its place upon proof of such loss, theft, destruction or
mutilation and upon the giving of a bond of indemnity to the
Corporation in such form and in such sum as the Board may
direct; PROVIDED, HOWEVER, that a new certificate may be
issued without requiring any bond when, in the judgment of the
Board, it is proper so to do.
ARTICLE VIII
BOOKS AND RECORDS, SEAL, FISCAL YEAR
SECTION 1. BOOKS AND RECORDS. The books and
records of the Corporation may be kept at such places within
or without the State of Delaware as the Board may from time to
time determine.
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SECTION 2. SEAL. The Board shall provide a
corporate seal, which shall be in the form of a circle and
shall bear the full name of the Corporation and the words and
figures "Corporate Seal 1993 Delaware".
SECTION 3. FISCAL YEAR. The fiscal year of the
Corporation shall end on the 31st day of December in each
year, unless changed by resolution of the Board.
ARTICLE IX
INDEMNIFICATION
SECTION 1. ACTION, ETC., OTHER THAN BY OR IN THE
RIGHT OF THE CORPORATION. The Corporation shall indemnify any
person who shall be or shall have been a party or shall be
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he
shall be or shall have been a director, officer, employee or
agent of the Corporation, or shall be or shall have been
serving at the request of the Corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
shall have acted in good faith and in a manner he reasonably
shall have believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct shall have been unlawful. The termination
of any action, suit or proceedings by judgment, order,
settlement, conviction or upon a plea of NOLO CONTENDERE or
its equivalent, shall not, of itself, create a presumption
that the person shall not have acted in good faith and in a
manner which he reasonably shall have believed to be in or not
opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, that he shall
have had reasonable cause to believe that his conduct shall
have been unlawful.
SECTION 2. ACTIONS, ETC., BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall indemnify any person who
shall be or shall have been a party or shall be threatened to
be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he shall be
or shall have been a director, officer, employee or agent of
the Corporation, or shall be or shall have been serving at the
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request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or
suit if he shall have acted in good faith and in a manner he
reasonably shall have believed to be in or not opposed to the
best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to
be liable to the Corporation unless and only to the extent
that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person shall be fairly and
reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
SECTION 3. DETERMINATION OF RIGHT OF
INDEMNIFICATION. Any indemnification under SECTION 1 or 2 of
this Article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent shall be proper in the circumstances because
he shall have met the applicable standard of conduct set forth
in SECTION 1 or 2 of this Article. Such determination shall
be made (i) by the Board by a majority vote of a quorum
consisting of directors who shall not have been parties to
such action, suit or proceeding, (ii) if such a quorum shall
not be obtainable, or, even if obtainable, if a quorum of
disinterested directors shall so direct, by independent legal
counsel in a written opinion, or (iii) by the stockholders.
SECTION 4. RIGHT TO INDEMNIFICATION.
Notwithstanding the other provisions of this Article, to the
extent that a director, officer, employee or agent of the
Corporation shall be successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
SECTION 1 or 2 of this Article, or in defense of any claim,
issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
SECTION 5. PREPAID EXPENSES. Expenses (including
attorneys' fees) incurred by an officer or director in
defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or
proceeding as authorized by the Board in the specific case
upon receipt of an undertaking by or on behalf of such officer
or director to repay such amount if it shall ultimately be
determined that he shall not be entitled to be indemnified by
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the Corporation as authorized in this Article. Such expenses
(including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any,
as the Board deems appropriate.
SECTION 6. OTHER RIGHTS AND REMEDIES. The
indemnification provided by this Article shall not be deemed
exclusive of any other rights to which a person seeking
indemnification may be entitled by law or under any agreement,
vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 7. INSURANCE. Upon resolution passed by
the Board, the Corporation may purchase and maintain insurance
on behalf of any person who shall be or shall have been a
director, officer, employee or agent of the Corporation, or
shall be or shall have been serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the
provisions of this Article.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required to be given by these
By-laws or the Certificate of Incorporation of the Corporation
or the laws of the State of Delaware, the person entitled
thereto may, in person or by attorney thereunto authorized, in
writing or by telegraph, cable or other form of recorded
communication, waive such notice, whether before or after the
meeting or other matter in respect of which such notice is
given, and in such event such notice need not be given to such
person and such waiver shall be deemed equivalent to such
notice.
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ARTICLE XI
AMENDMENTS
These By-laws may be altered or repealed by the vote
of the Board, subject to the power of the stockholders of the
Corporation to alter or repeal any By-law made by the Board.
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P.I. RESORTS LIMITED
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
(ADOPTED ON 15TH, DECEMBER 1993)
PRELIMINARY AND CONSTRUCTION
1. The Articles contained in the First Schedule to
the Companies Act shall not apply to the Company.
2. (1) In these Articles, except where the subject
or context otherwise requires:
"Articles" means the articles of association of the
Company on the date hereof as the same may be amended from
time to time;
the "board" means the directors or any of them acting
as the board of directors of the Company;
"Closing Date" shall mean the date the Company acquires
the Paradise Island assets of Resorts International Inc.;
"Commonwealth" means the Commonwealth of The Bahamas;
"Companies Act" means the Companies Act 1992 including
any modification or re-enactment thereof for the time being
in force;
"Company" means P. I. Resorts Limited, the company to
which these Articles apply;
"director" means a director of the Company;
"dollar" or "$" means the lawful currency of the United
States of America;
"holder" means, in relation to any shares, the member
whose name is entered in the register of members as the
holder of such shares;
"Ordinary Shares" means the Ordinary Shares of $0.01
each of the Company having the rights set forth in these
Articles;
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"Preference Shares" means the Preference Shares of
$0.01 each of the Company having the rights set forth in
these Articles;
"secretary" means the secretary of the Company and
includes a joint, assistant, deputy or temporary secretary
and any other person appointed to perform the duties of the
secretary; and
"shares" means shares in the Company including the
Ordinary Shares and the Preference Shares.
(2) Save as aforesaid or as otherwise defined herein
any words or expressions defined in the Companies Act (but
excluding any modification thereof not in force at the date of
adoption of these Articles) shall, if not inconsistent with the
subject or the context, bear the same meaning in these Articles.
(3) For the purposes of these Articles, references to
writing include references to any visible substitute for writing
and to anything partly in one form and partly in another form;
words denoting the singular number include the plural number and
vice versa; words denoting the masculine gender include the
feminine gender and vice versa; and references to persons include
references to bodies corporate.
3. In addition to the registered office of the
Company in the Commonwealth, which shall be at such place as the
directors shall from time to time appoint, the Company may have
an office for the transaction of business at any other place, and
meetings of the Company or of the directors may be held either
within or without the Commonwealth at such place as the directors
may determine.
SHARES
4. The authorized share capital of the Company at the
date of adoption of these Articles is $350,000 divided into
35,000,000 Ordinary Shares of $0.01 each and 10,000,000
Preference Shares of $0.01 each, having the rights set forth in
these Articles. The Preference Shares may be issued by the
Directors from time to time in one or more Series having such
rights as the board may by resolution determine. All the shares
of the Company shall be in registered form, shall be fully paid
for at the time of issuance and shall be nonassessable.
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5. Without prejudice to any special rights previously
conferred on the holders of existing shares in the Company, any
shares in the Company may be issued with such preferred, deferred
or other special rights or such restrictions, whether in regard
to dividend, voting, return of share capital or otherwise, as the
board may from time to time by resolution determine. Preference
Shares may be voting, non-voting or voting only for specific
purposes or in specific circumstances; PROVIDED, HOWEVER that the
Company shall be prohibited from issuing any non-voting
Preference Shares which are not entitled to at least one vote per
share in the specific case where an event of default in the
payment of dividends has occurred with respect to such shares.
6. Where at any time the share capital is divided
into different classes or series of shares, the rights attached
to any class or series (unless otherwise provided by the terms of
issue of the shares of the class or series) may only be varied
or abrogated with the sanction of a resolution of the board and
either (i) the consent in writing of the holders of a majority in
nominal value of the issued shares of the class or series or (ii)
the sanction of a resolution of members holding shares of that
class or series passed at a separate general meeting of the
holders of the shares of that class or series.
CERTIFICATES
7. Every person whose name is entered as a member in
the register of members shall, without payment, be entitled to a
certificate under the common seal of the Company specifying the
share or shares held by him and the amount paid up thereon,
provided that in respect of a share or shares held jointly by
several persons the Company shall not be bound to issue more than
one certificate, and delivery of a certificate for a share to one
of several joint holders shall be sufficient delivery to all.
8. A share certificate defaced, lost or destroyed may
be renewed or replaced on payment of such fee, if any, as may be
prescribed, and on such terms, if any, as to evidence and
indemnity as the directors think fit.
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PURCHASE OF SHARES
9. Subject to and in accordance with the provisions
of the Companies Act and without prejudice to any relevant
special rights attached to any class or series of shares, the
Company may, with the agreement of the holders of the relevant
shares, purchase any of its own shares of any class or series
(including redeemable shares) at any price (whether at par or
above or below par), and any shares to be so purchased may be
selected by the Company in any manner whatsoever.
TRANSFER AND TRANSMISSION OF SHARES
10. Subject to Article 11, the instrument of transfer
of any share in the Company shall be executed by the transferor
(or its duly authorized agent), and the transferor shall be
deemed to remain the holder of the share until the name of the
transferee is entered in the register of members in respect
thereof.
11. Shares in the Company shall be transferred in any
usual or common form. The transfer agent for the Company or the
Company's board may determine if a form of transfer is usual or
common in the case of any question or dispute concerning a
transfer.
12. The board may:
(a) decline to register a transfer of shares
unless the instrument of transfer is
accompanied by the certificate or
certificates of the shares to which it
relates, and such other evidence as the board
may reasonably require to show the right of
the transferor to make the transfer; and
(b) suspend the registration of transfers during
the fourteen days immediately preceding the
ordinary general meeting in each year.
13. The executors or administrators of a deceased sole
holder of a share shall be the only persons recognized by the
Company as having any title to the share. In the case of a share
registered in the names of two or more holders, the survivors or
the executors or administrators of
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the deceased survivor shall be the only persons recognized by the
Company as having any title to the share.
14. Any person becoming entitled to a share in
consequence of the death or bankruptcy of a member shall, upon
such evidence being produced as may from time to time be required
by the board, have the right, either to be registered as a member
in respect of the share or, instead of being registered himself,
to make such transfer of the share as the deceased or bankrupt
person could have made; but the directors shall, in either case,
have the same right to decline or suspend registration as they
would have had in the case of a transfer of the share by the
deceased or bankrupt person before the death or bankruptcy.
15. A person becoming entitled to a share by reason of
the death or bankruptcy of the holder shall be entitled to the
same dividends and other advantages to which he would be entitled
if he were the registered holder of the share, except that he
shall not, before being registered as a member in respect of the
share, be entitled in respect of it to exercise any right
conferred by membership in relation to meetings of the Company.
ALTERATION OF CAPITAL
16. The Company may, by a resolution of the holders of
Ordinary Shares, increase the share capital by such sum to be
divided into shares of such amount as the resolution shall
prescribe.
17. The Company may, by resolution of the board (and
the holders of the Ordinary Shares, if and to the extent required
by the Companies Act):
(a) consolidate and divide its share capital into
shares of larger amount than its existing
shares;
(b) subdivide its existing shares, or any of them
or divide the whole or any part of its share
capital into shares of smaller amount than is
fixed by the Articles; or
(c) reduce its share capital in any manner and
with and subject to any incident authorized
and consent required by law.
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GENERAL MEETINGS
18. The statutory general meeting of the Company shall
be held within the period required by Section 70 of the Companies
Act.
19. (1) A general meeting shall be held once in every
year at such time (not being more than fifteen months after the
holding of the last preceding general meeting) and at such place
as may be prescribed by the board.
(2) In default of a general meeting so held, a general
meeting shall be held in the month next following and may be
convened by any two or more members holding Ordinary Shares
carrying at least one-tenth of the votes of all members entitled
to vote at general meetings, in the same manner as nearly as
possible as that in which meetings are to be convened by the
directors and any such meetings shall be held at such place as the
members convening the meeting may designate in the notice
thereof.
20. The above-mentioned general meetings shall be
called annual general meetings; all other general meetings shall
be called extraordinary.
21. The board may, whenever it thinks fit, convene an
extraordinary general meeting, and extraordinary general meetings
shall also be convened by the board on the requisition, in
accordance with Section 71 of the Companies Act, of members of
the Company holding not less than one-tenth of the paid-up
capital of the Company, or, in default, may be convened by such
requisitionists, as provided by Section 71(3) of the Companies
Act.
PROCEEDINGS AT GENERAL MEETINGS
22. (1) Thirty-days' notice at the least (exclusive
of the day on which the notice is served or deemed to be served,
but inclusive of the day for which notice is given) specifying
the place, the day and the hour of meeting and, in case of
special business, the general nature of that business, shall be
given in the manner hereinafter mentioned, or in such other
manner, if any, as may be prescribed by the Company in general
meeting, to such persons as are under the Articles entitled to
receive such notices from the Company.
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(2) Every notice convening a general meeting shall
include a statement having reasonable prominence that a member
entitled to attend and vote is entitled to appoint a proxy to
attend and vote instead of him, and that a proxy need not also be
a member.
23. All business shall be deemed special that is
transacted at an extraordinary meeting, as shall all that is
transacted at an ordinary meeting with the exception of
(i) sanctioning a dividend, (ii) the consideration of the
accounts, balance-sheets and the ordinary report of the directors
and auditors, (iii) election of directors and other officers in
the place of those retiring by rotation and (iv) the fixing of
the remuneration of the auditors.
24. No business shall be transacted by any general
meeting unless a quorum of members is present at the time when
the meeting proceeds to business; save as herein otherwise
provided, members present in person or by proxy holding at least
a majority of the then outstanding of Ordinary Shares shall be a
quorum.
25. Where within half an hour from the time appointed
for the meeting a quorum is not present, the meeting, if convened
upon the requisition of members, shall be dissolved; in any other
case it shall stand adjourned to the same day in the next week,
at the same time and place and where at the adjourned meeting a
quorum is not present within half an hour from the time appointed
for the meeting, the members present shall be a quorum.
26. The chairman, if any, of the board shall preside
as chairman at every general meeting of the Company.
27. Where there is no such chairman or at any meeting
he is not present within fifteen minutes after the time appointed
for holding the meeting or at which he is unwilling to act as
chairman, the directors in office prior to such meeting who are
present shall choose someone of their number to be chairman.
28. (1) The chairman may, with the consent of any
meeting at which a quorum is present (and shall if so directed by
the meeting), adjourn the meeting from time to time and from
place to place, but no business shall be transacted at any
adjourned meeting other than the business left unfinished at the
meeting from which the adjournment takes place.
7
<PAGE>
(2) When a meeting is adjourned for ten days or more,
notice of the adjourned meeting shall be given as in the case of
any original meeting.
(3) Save as aforesaid, it shall not be necessary to
give any notice of an adjournment or of the business to be
transacted at an adjourned meeting.
29. At any general meeting a resolution put to the
vote of the meeting shall be decided on a voice call or show of
hands, unless a poll is (before or on the declaration of the
result of the show of hands) demanded by at least two members
present in person or by proxy holding Ordinary Shares carrying at
least one-tenth of the votes of all members entitled to vote at
the meeting or by the chairman and unless a poll is so demanded,
a declaration by the chairman that a resolution has, on a voice
call or show of hands, been carried or carried unanimously or by
a particular majority or lost, and an entry to that effect in the
book of the proceedings of the Company, shall be conclusive
evidence of the fact, without proof of the number or proportion
of the votes recorded in favor of or against that resolution.
30. If a poll is duly demanded it shall be taken in
such manner as the chairman directs, and the results of the poll
shall be deemed to be the resolution of the meeting at which the
poll is demanded.
31. The demand for a poll may, before the poll is
taken, be withdrawn but only with the consent of the chairman and
a demand so withdrawn shall not be taken to have invalidated the
result of the voice call or show of hands taking place before the
demand was made.
VOTES OF MEMBERS
32. Every member shall have one vote for each Ordinary
Share of which he is the holder. Voting rights of Preference
Shares (if any) shall be as specified in accordance with Article
5.
33. In the case of joint holders of the vote of the
senior who tenders a vote, whether in person or by proxy, shall
be accepted to the exclusion of the votes of the other joint
holders; and for this purpose seniority shall be determined by
the order in which the names stand in the register of members.
8
<PAGE>
34. A member of unsound mind, or in respect of whom an
order has been made by any court having jurisdiction with respect
to persons of unsound mind, may vote, whether on a voice call,
show of hands or on a poll, by his committee or other person in
the nature of a committee appointed by that court.
PROXIES
35. (1) The instrument appointing a proxy shall be in
writing under the hand of the appointer or his attorney duly
authorized in writing or, if the appointer is a corporation,
either under the common seal or under the hand of an officer or
attorney so authorized.
(2) An instrument appointing a proxy may be in the
following form or in any other form which the board may approve:
"I of
being a member of P. I. Resorts Limited,
hereby appoint of
as my proxy to vote for
me and on my behalf at the general meeting of the
Company to be held on the day of and at
any adjournment thereof."
36. The instrument appointing a proxy and the power of
attorney or other authority, if any, under which it is signed or
a certified copy of that power or authority shall be deposited at
the registered office of the Company not less than forty-eight
hours before the holding of the meeting at which the person named
in the instrument proposes to vote, or shall be delivered to the
Company at such meeting, and in default the instrument of proxy
shall not be treated as valid.
37. A vote given in accordance with the terms of an
instrument of proxy shall be valid notwithstanding the previous
death or insanity of the principal or revocation of the
instrument of proxy, or the authority under which the instrument
of proxy was executed, or transfer of the shares in respect of
which the vote is given, provided no transfer shall have been received
at the registered office of the Company before the meeting or
adjourned meeting at which the instrument or proxy is used.
9
<PAGE>
CORPORATE REPRESENTATIVES
38. Any body corporate which is a member of the
Company may by resolution of its directors or other governing
body or by authority to be given under seal or under the hand of
an officer duly authorized by it authorize such person as it
thinks fit to act as its representative at any meeting of the
Company or at any separate meeting of the holders of any class or
series of shares and such authority may be general or in respect
of specific meetings. A person so authorized shall be entitled
to exercise the same power on behalf of the grantor of the
authority as the grantor could exercise if it were an individual
member of the Company and the grantor shall for the purposes of
these Articles be deemed to be present in person at any such
meeting if a person so authorized is present at it.
CLASS MEETINGS
SERIES MEETINGS
39. All provisions of these Articles relating to
general meetings of the Company shall apply mutatis mutandis to
every separate meeting of the holders of any class or series of
shares in the capital of the Company.
DIRECTORS
40. Unless otherwise determined by a resolution of the
members, the number of the directors shall be five.
41. The directors shall be appointed and may be
removed in accordance with the Companies Act.
42. It shall be presumed that it is in the best
interests of the Company to allow directors to participate in
meetings of the board or of committees thereof by telephonic
communication and otherwise as set forth in Article 56 and,
accordingly, it shall be a term of appointment of each director
that he irrevocable consents to the holding of such meetings in
the manner set forth in Article 56.
43. The directors of the Company holding office
immediately following the Closing Date shall hold office until
the date of the annual general meeting to be held in 1997. At
the annual general meeting held in 1997 and at each subsequent
annual general meeting, directors shall be appointed by
resolution of the holders of Ordinary Shares in
10
<PAGE>
accordance with these Articles (including provisions as to nomination)
and any director so appointed (and any director appointed to fill a
vacancy in the directors prior to the next annual general
meeting) shall hold office until the date of the next annual
general meeting of the Company, or if later the date his
successor shall be duly elected and qualified.
EXECUTIVE DIRECTORS
44. The board may appoint one or more of its body to
be the holder of any one or more executive office (except that of
auditor) under the Company and may enter into an agreement or
arrangement with any director for his employment by the Company
or for the provision by him of any services outside the scope of
the ordinary duties of a director. Any such appointment,
agreement or arrangement may be made upon such terms, including
terms as to remuneration, as the board determines, and any
remuneration which is so determined may be in addition to or in
lieu of any ordinary remuneration as a director. The board may
revoke or vary any such appointment but without prejudice to any
rights or claims which the person whose appointment is revoked or
varied may have against the Company by reason thereof.
45. Any appointment of a director to an executive
office shall terminate if he ceases to be a director but without
prejudice to any rights or claims which he may have against the
Company by reason of the termination of such appointment. A
director appointed to an executive office shall not ipso facto
cease to be a director if his appointment to such executive
officer terminates.
46. The emoluments of any director holding executive
office for his services as such shall be determined by the board,
and may be of any description, and (without limiting the
generality of the foregoing) may include admission to or
continuance of membership of any scheme (including any share
acquisition scheme) or fund instituted or established or financed
or contributed to by the Company for the provision of pensions,
life assurance or other benefits for employees or their
dependents, or the payment of a pension or other benefits to him
or his dependents on or after retirement or death, apart from
membership of any such scheme or fund.
11
<PAGE>
POWERS AND DUTIES OF THE BOARD
47. The business of the Company shall be managed by
the board, which may exercise all such powers of the Company as
are not by the Companies Act or by these Articles, required to be
exercised by the Company in general meeting, subject nevertheless
to these Articles (including in particular Article 68 for so long
as it is in effect) and to the Companies Act.
PROCEEDINGS OF DIRECTORS
48. (1) The directors may meet together for the
dispatch of business, adjourn and otherwise regulate their
meetings, as they think fit.
(2) Questions arising at any meeting shall be decided
by a majority of votes.
(3) A director may, and the secretary on the
requisition of a director shall, at any time summon a meeting of
the directors. Directors shall be given reasonable notice
(which, except in the case of emergencies shall be not less than
three business days) of the time and place appointed for such
meeting of the directors, which notice may be waived by any or
all directors at any time before or after such meeting.
49. The quorum necessary for the transaction of the
business of the directors may be fixed by the directors and
unless so fixed shall be three.
50. The continuing directors may act notwithstanding
any vacancy in their body, but, if and so long as their number is
reduced below the number fixed by or pursuant to the Articles as
the necessary quorum of directors, the continuing directors may
act for the purpose of summoning a general meeting of the
Company, but for no other purpose.
51. The directors may elect a chairman of their
meetings and determine the period for which he is to hold office;
but if no such chairman is elected or if at any meeting the
chairman is not present within five minutes after the time
appointed for holding the same, the directors present may choose
one of their number to be chairman of the meeting.
12
<PAGE>
52. The directors may delegate any of their powers to
committees consisting of such members of the Company or members
of their body as they think fit; any committee so formed shall in
the exercise of the powers so delegated conform to any
regulations that may be imposed on them by the directors.
53. A committee may elect a chairman of their
meetings; if no such chairman is elected or if at any meeting the
chairman is not present within five minutes after the time
appointed for holding the same, the members present may choose
one of their number to be chairman of the meeting.
54. (1) A committee shall meet and adjourn as
determined by the board and otherwise as they think proper.
(2) Questions arising at any meeting shall be
determined by a majority of votes of the members present.
55. A resolution in writing signed by a simple
majority of the directors entitled to vote on that resolution at
a meeting of the board or of the members of an existing committee
of the board with authority to consider and act on the matter
(not being less than the number of directors required to form a
quorum of the board) shall be as valid and effectual as if it had
been passed at a meeting of the board or (as the case may be) a
committee of the board duly convened and held and for this
purpose a resolution may consist of several documents to the same
effect, each signed by one or more directors.
56. A meeting of the board or of a committee of the
board may, if all the directors consent, consist of a conference
between directors who are not all in one place, but of whom each
is able (directly or by telephonic communication) to speak to
each of the others, and to be heard and recognized by each of the
others. A director taking part in such a conference shall be
deemed to be present in person at the meeting and shall be
entitled to vote or be counted in a quorum accordingly. Such a
meeting shall be deemed to take place where the largest group of
those participating in the conference is assembled, or, if there
is no such group, where the chairman of the meeting then is. The
word meeting in these Articles shall be construed accordingly.
13
<PAGE>
57. The board shall cause minutes to be made in books
provided for the purpose:
(a) of all appointments of officers made by the
board;
(b) of the names of the directors or members
present at each meeting of the directors and
of any committee of the directors; and
(c) of all resolutions and proceedings at all
meetings of the Company and of the board or
committees of the board.
POWERS OF ATTORNEY
58. The board may from time to time and at any time by
power of attorney appoint any company, firm or person or body of
persons, whether nominated directly or indirectly by the board,
to be the attorney or attorneys of the Company for such purposes
and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the board under these Articles)
and for such period and subject to such conditions as they may
think fit, and any such powers of attorney may contain such
provisions for the protection and convenience of persons dealing
with any such attorney as the board may think fit and may also
authorize any such attorney to delegate all or any of the powers,
authorities and discretions vested in him.
THE SEAL
59. The seal of the Company shall not be affixed to
any instrument except by the authority of a resolution of the
directors, and in the presence of at least two directors and of
the secretary or such other person as the directors may appoint
for the purpose; and those two directors and secretary or other
person as aforesaid shall sign every instrument to which the seal
of the Company is so affixed in their presence. The Company is
hereby authorized to adopt and use an official seal in accordance
with the provisions of Section 26 of the Companies Act.
14
<PAGE>
DIVIDENDS AND RESERVE
60. The board may from time to time declare and pay to
the members of the Company such quarterly dividends as appear to
the directors to be justified by the profits of the Company.
61. No dividend shall be paid otherwise than out of
profits or surplus available for the purpose in accordance with
the Companies Act.
62. The directors may, before recommending any
dividend, set aside out of the profits of the Company such sums
as they think proper as a reserve or reserves which shall, at the
discretion of the directors, be applicable for meeting
contingencies or for equalizing dividends or for any other
purpose to which the profits of the Company may be properly
applied, and pending such application may, at the like
discretion, either be employed in the business of the Company or
be invested in such investments (other than shares of the
Company), as the directors may from time to time think fit.
63. Where several persons are registered as joint
holders of any share any one of them may give effectual receipts
for any dividend payable on the share.
64. No dividend shall bear interest against the
Company.
ACCOUNTS
65. The directors shall cause true accounts to be
kept:
(a) of the sums of money received and expended by
the Company and the matter in respect of
which such receipt and expenditure takes
place; and
(b) of the assets and liabilities of the Company.
66. The books of account shall be kept at the
registered office of the Company or at such other place or places
as the directors think fit and shall always be open to the
inspection of the directors.
15
<PAGE>
67. The directors shall from time to time determine
whether and to what extent and at what time and places and under
what conditions or regulation the accounts and books of the
Company or any of them shall be open to the inspection of members
not being directors, and no member (not being a director) shall
have any right of inspecting any account or book or document of
the Company except as conferred by statute or authorized by the
directors or by the Company in general meeting.
68. Once at least in every year the directors shall
lay before the Company in general meeting a profit and loss
account for the period since the preceding account or (in the
case of the first account) since the incorporation of the
Company, made up to a date not more than six months before such
meeting.
69. (1) A balance-sheet shall be made out in every
year and laid before the Company in general meeting made up to a
date not more than six months before such meeting.
(2) The balance-sheet shall be accompanied by a report
of the board as to the state of the Company's affairs and the
amount which they recommend to be paid by way of dividend and the
amount, if any, which they propose to carry to a reserve fund.
70. A copy of the balance-sheet and report shall,
seven days previous to the meeting, be sent to the persons
entitled to receive notices of general meetings in the manner in
which notices are to be given hereunder.
NOTICES
71. (1) A notice may be given by the Company to any
member either personally or by sending it by post to him to his
registered address.
(2) Where a notice is sent by post, service of the
notice shall be deemed to be effected by properly addressing,
pre-paying and posting a letter (by air-mail if to an address
outside the country from which it is sent) containing the notice
and, unless the contrary is proved, to have been effected three
days after posting (or seven days if sent to an address outside
the country from which it is sent).
16
<PAGE>
72. A notice may be given by the Company to the joint
holders of a share by giving the notice to the joint holder named
first in the register in respect of the share.
73. A notice may be given by the Company to the
persons entitled to a share in consequence of the death or
bankruptcy of a member by sending it through the post in a pre-
paid letter addressed to them by name or by the title of
representatives of the deceased, or trustees of the bankrupt, or
by any like description, at the address, if any, supplied for the
purpose by the persons claiming to be so entitled, or (until such
an address has been so supplied) by giving the notice in any
manner in which the same might have been given if the death or
bankruptcy has not occurred.
74. Notice of every general meeting shall be given in
some manner hereinbefore authorized to the members of the
Company, including any person entitled to a share in consequence
of the death or bankruptcy of a member, who, but for his death or
bankruptcy, would be entitled to receive notice of the meeting
and to very director. No other persons shall be entitled to
receive notice of general meetings.
INDEMNITY
75. The Company shall, subject to the provisions of
Article 79, indemnity to the fullest extent permitted by the
Companies Act any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative and whether external or internal to the Company by
reason of the fact that he is or was a director or officer of the
Company, or is or was serving at the request of the Company as a
director or officer of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
suit, action or proceeding if he acted in good faith and in a
manner which he reasonably believed to be in, or not opposed to,
the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful.
76. Subject to Article 79, expenses incurred by a
director or officer in defending a civil or criminal action,
17
<PAGE>
suit or proceeding shall be paid by the Company in advance of the
final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to
repay such amount if it shall ultimately be determined that he is
not entitled under Article 75 to be indemnified by the Company in
respect of such expenses.
77. The board shall from time to time cause the
Company to purchase and maintain insurance from reputable
insurance carriers on behalf of any person who is or was a
director or officer of the Company, or is or was serving at the
request of the Company as a director or officer of another
corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such with reasonable limits and subject to reasonable
and customary deductibles, for so long as such insurance is
available from such carriers.
78. The Company's indemnification under Article 76 of
any person who is or was serving, at the request of the Company
as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, shall be reduced by
amounts such person receives as indemnification (i) under any
policy of insurance purchased and maintained on his behalf by
the Company, (ii) from such other corporation, partnership,
joint venture, trust or other enterprise, or (iii) under any
other applicable indemnification provision.
79. (a) It shall be a condition of the Company's
obligation to indemnify or advance expenses under Articles 75 and
76 that the person asserting, or proposing to assert, the right
to be indemnified, promptly after receipt of notice of
commencement of any action, suit or proceeding in respect of
which a claim for indemnification is or is to be made against the
Company notify the Company of the commencement of such action,
suit or proceeding, including therewith a copy of all papers
served and the name of counsel retained or to be retained by such
person in connection with such action, suit or proceeding, and
thereafter to keep the Company timely and fully apprised of all
developments and proceedings in connection with such action, suit
or proceeding or as the Company shall request; and the fees and
expenses of any counsel retained by a person asserting, or
proposing to assert, the right to be indemnified under
18
<PAGE>
Article 75 shall be at the expense of such person unless the counsel
retained shall have been approved by the Company in writing,
which approval shall not be unreasonably withheld.
(b) If a claim for indemnification and advancement of
expenses under Articles 75 and 76 is not paid in full by the
Company within forty five (45) days after a written claim
therefor has been received by the Company, the claimant may at
any time thereafter bring suit against the Company to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expenses
of prosecuting such claim.
80. To the fullest extent permitted by the Companies
Act as it exists on the date hereof or as it may hereafter be
amended, no director or officer of the Company shall be liable to
the Company or its members for monetary or other damages for
breach of fiduciary duty as a director or officer.
81. The provisions of Articles 75 to 80 shall continue
as to, and for the benefit of, a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
82. No amendment to or repeal of the provisions of
Articles 75 to 80 shall apply to or have any effect on the
eligibility for, or entitlement to, indemnification, advancement
of expenses and the other rights provided by, or granted pursuant
to, Articles 75 to 80 for or with respect to any acts or omissions
of any director or officer occurring prior to any such amendment or
repeal.
19
<PAGE>
[GD&C Draft -- 12/30/93]
[NA932010.156]
--------------------------------------------
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
Issuer,
RESORTS INTERNATIONAL HOTEL, INC.,
Guarantor,
and
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
Trustee,
--------------------------------------------
I N D E N T U R E
Dated as of [ ], 1994
--------------------------------------------
11% MORTGAGE NOTES DUE 2003
--------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
Section of Trust Indenture Act of 1939 Section of Indenture
- -------------------------------------- --------------------
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . .8.08; 8.09
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .8.09
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . .8.14(b)
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.08
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.01; 9.02(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(c)
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(b)
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . .1.06
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . .1.06
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . .9.04(c); 12.07(i)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.06
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.14
316(a)(l)(A) . . . . . . . . . . . . . . . . . . . . . . . .7.12(b)
(a)(l)(B) . . . . . . . . . . . . . . . . . . . . . . . .7.13
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.08
317(a)(l). . . . . . . . . . . . . . . . . . . . . . . . . .7.03
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .7.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .12.03
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.07
- -------------------------
Note: This Cross-Reference Table shall not be deemed, for any
purpose, to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . 16
Section 1.03. Notices, etc., to Trustee, RIH, the Company, Casino
Control Commission and Director of Gaming
Enforcement.. . . . . . . . . . . . . . . . . . . . 18
Section 1.04. Notices to Noteholders; Waiver. . . . . . . . . . . 19
Section 1.05. Form and Contents of Documents Delivered to
Trustee.. . . . . . . . . . . . . . . . . . . . . . 20
Section 1.06. Compliance Certificates and Opinions. . . . . . . . 21
Section 1.07. Conflict with Trust Indenture Act.. . . . . . . . . 21
Section 1.08. Effect of Headings and Table of Contents. . . . . . 22
Section 1.09. Successors and Assigns. . . . . . . . . . . . . . . 22
Section 1.10. Separability Clause.. . . . . . . . . . . . . . . . 22
Section 1.11. Benefits of Indenture.. . . . . . . . . . . . . . . 22
Section 1.12. Governing Law.. . . . . . . . . . . . . . . . . . . 22
Section 1.13. Casino Control Act. . . . . . . . . . . . . . . . . 22
Section 1.14. General Application.. . . . . . . . . . . . . . . . 22
(i)
<PAGE>
Page
----
ARTICLE TWO
NOTE FORM
Section 2.01. Form Generally. . . . . . . . . . . . . . . . . . . 23
Section 2.02. Form of Notes.. . . . . . . . . . . . . . . . . . . 24
Section 2.03. Form of Trustee's Certificate of Authentication.. . 28
Section 2.04. Form of the Guaranty. . . . . . . . . . . . . . . . 29
ARTICLE THREE
THE NOTES
Section 3.01. General Title.. . . . . . . . . . . . . . . . . . . 29
Section 3.02. Form and Denominations. . . . . . . . . . . . . . . 30
Section 3.03. Execution, Authentication, Delivery and
Dating. . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.04. Temporary Notes.. . . . . . . . . . . . . . . . . . 30
Section 3.05. Registration, Transfer and Exchange.. . . . . . . . 31
Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes.. . . . 32
Section 3.07. Payment of Interest on Notes; Interest Rights
Preserved.. . . . . . . . . . . . . . . . . . . . . 33
Section 3.08. Persons Deemed Owners.. . . . . . . . . . . . . . . 34
Section 3.09. Cancellation. . . . . . . . . . . . . . . . . . . . 34
Section 3.10. Term and Form.. . . . . . . . . . . . . . . . . . . 35
Section 3.11. Exchangeability.. . . . . . . . . . . . . . . . . . 35
Section 3.12. Redemption. . . . . . . . . . . . . . . . . . . . . 35
Section 3.13. Authentication and Delivery of Original
Issue.. . . . . . . . . . . . . . . . . . . . . . . 36
(ii)
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ARTICLE FOUR
GUARANTY
Section 4.01. Guaranty. . . . . . . . . . . . . . . . . . . . . . 36
Section 4.02. Execution and Delivery of Guaranty. . . . . . . . . 37
Section 4.03 Mortgage Securing Guaranty. . . . . . . . . . . . . 38
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. Payment of Indebtedness; Satisfaction and
Discharge of Indenture. . . . . . . . . . . . . . . 39
Section 5.02. Application of Deposited Money. . . . . . . . . . . 40
Section 5.03. Repayment to the Company. . . . . . . . . . . . . . 40
ARTICLE SIX
SECURITY
Section 6.01. Assignment Agreement. . . . . . . . . . . . . . . . 41
Section 6.02. Recording, Etc. . . . . . . . . . . . . . . . . . . 42
Section 6.03. Custody of Mortgage Documents.. . . . . . . . . . . 43
Section 6.04. Suits to Protect the Trust Estate and
Mortgage Documents. . . . . . . . . . . . . . . . . 44
ARTICLE SEVEN
REMEDIES
Section 7.01. Events of Default.. . . . . . . . . . . . . . . . . 44
Section 7.02. Acceleration of Maturity; Rescission and
Annulment.. . . . . . . . . . . . . . . . . . . . . 48
Section 7.03. Covenant to Pay Trustee Amounts Due on Notes
and Right of Trustee to Judgment. . . . . . . . . . 49
Section 7.04. Trustee May File Proofs of Claim. . . . . . . . . . 50
Section 7.05. Trustee May Enforce Claims Without Possession
of Notes. . . . . . . . . . . . . . . . . . . . . . 51
(iii)
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Section 7.06. Application of Money Collected. . . . . . . . . . . 51
Section 7.07. Limitation on Suits.. . . . . . . . . . . . . . . . 52
Section 7.08. Unconditional Right of Noteholders to Receive
Principal and Interest. . . . . . . . . . . . . . . 53
Section 7.09. Restoration of Rights and Remedies. . . . . . . . . 53
Section 7.10. Rights and Remedies Cumulative. . . . . . . . . . . 53
Section 7.11. Delay or Omission Not Waiver. . . . . . . . . . . . 54
Section 7.12. Other Rights. . . . . . . . . . . . . . . . . . . . 54
Section 7.13. Waiver of Past Defaults.. . . . . . . . . . . . . . 54
Section 7.14. Undertaking for Costs.. . . . . . . . . . . . . . . 55
Section 7.15. Enforcement.. . . . . . . . . . . . . . . . . . . . 55
Section 7.16. Management of Casino-Hotel. . . . . . . . . . . . . 56
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. Certain Duties and Responsibilities. . . . . . . 56
Section 8.02. Notice of Defaults.. . . . . . . . . . . . . . . 58
Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . 58
Section 8.04. Not Responsible for Recitals or Issuance of
Notes or Application of Proceeds.. . . . . . . . 60
Section 8.05. May Hold Notes.. . . . . . . . . . . . . . . . . 60
Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . 60
Section 8.07. Compensation and Reimbursement.. . . . . . . . . 60
Section 8.08. Disqualification; Conflicting Interests. . . . . 61
Section 8.09. Corporate Trustee Required; Eligibility. . . . . 61
(iv)
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Section 8.10. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . 62
Section 8.11. Acceptance of Appointment by Successor.. . . . . 64
Section 8.12. Merger, Conversion, Consolidation or
Succession to Business.. . . . . . . . . . . . . 64
Section 8.13. Preferential Collection of Claims Against
Company. . . . . . . . . . . . . . . . . . . . . 64
Section 8.14. Co-trustees and Separate Trustees. . . . . . . . 65
Section 8.15. Appointment of Authenticating Agent. . . . . . . 66
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 9.01. Company to Furnish Trustee Semi-Annual Lists
of Noteholders.. . . . . . . . . . . . . . . . . 67
Section 9.02. Preservation of Information; Communications
to Noteholders.. . . . . . . . . . . . . . . . . 68
Section 9.03. Reports by Trustee.. . . . . . . . . . . . . . . 68
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 10.01. Consolidation, Merger, Conveyance or Transfer
Only on Certain Terms. . . . . . . . . . . . . . 70
Section 10.02. Successor Entity Substituted.. . . . . . . . . . 72
Section 10.03. Successor Management of Casino-Hotel.. . . . . . 73
Section 10.04. Limitation on Sales of Trust Estate. . . . . . . 73
Section 10.05 RIH Sale . . . . . . . . . . . . . . . . . . . . 73
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. Without Consent of Noteholders.. . . . . . . . . 73
Section 11.02. With Consent of Noteholders. . . . . . . . . . . 74
(v)
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Section 11.03. Execution of Amendments and Supplements. . . . . 76
Section 11.04. Effect of Amendment or Supplement. . . . . . . . 76
Section 11.05. Conformity with Trust Indenture Act. . . . . . . 76
Section 11.06. Reference in Notes to Amendment or Supplement. . 76
ARTICLE TWELVE
COVENANTS
Section 12.01. Payment of Principal and Interest. . . . . . . . 77
Section 12.02. Maintenance of Office or Agency. . . . . . . . . 77
Section 12.03. Money for Security Payments to Be Held in Trust. 78
Section 12.04. Corporate Existence. . . . . . . . . . . . . . . 79
Section 12.05. To Keep Books; Inspection by Trustee.. . . . . . 80
Section 12.06. Reports and Compliance Certificates. . . . . . . 80
Section 12.07. Limitations and Dividends and Restricted
Payments.. . . . . . . . . . . . . . . . . . . . 82
Section 12.08. Limitations on Additional Indebtedness and
Issuance of Notes. . . . . . . . . . . . . . . . 83
Section 12.09. Limitations on Repayment of Subordinated
Indebtedness.. . . . . . . . . . . . . . . . . . 84
Section 12.10. Limitation on Certain Transactions.. . . . . . . 85
Section 12.11. Restriction of Activities. . . . . . . . . . . . 85
Section 12.12. Limitation on Subsidiaries Consolidated Group. . 86
Section 12.13. Limitations on Liens.. . . . . . . . . . . . . . 86
Section 12.14. Compliance with Laws.. . . . . . . . . . . . . . 87
Section 12.15. Payment of Taxes and Other Claims. . . . . . . . 87
Section 12.16. Maintenance of Properties. . . . . . . . . . . . 87
(vi)
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Section 12.17. Insurance. . . . . . . . . . . . . . . . . . . . 88
Section 12.18. Waiver of Stay, Extension or Usury Laws. . . . . 88
Section 12.19. Appointment to Fill a Vacancy in Office of
Trustee. . . . . . . . . . . . . . . . . . . . . 89
Section 12.20. Validity of Liens. . . . . . . . . . . . . . . . 89
Section 12.21. Transactions with Stockholders and Affiliates. . 89
ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. General Applicability of Article.. . . . . . . . 90
Section 13.02. Election to Redeem; Notice to Trustee. . . . . . 90
Section 13.03. Selection by Trustee of Notes to Be Redeemed.. . 90
Section 13.04. Notice of Redemption.. . . . . . . . . . . . . . 90
Section 13.05. Deposit of Redemption Price. . . . . . . . . . . 91
Section 13.06. Notes Payable on Redemption Date.. . . . . . . . 91
Section 13.07. Notes Redeemed in Part.. . . . . . . . . . . . . 92
Section 13.08. Redemption Pursuant to Casino Control Act. . . . 92
ARTICLE FOURTEEN
DEFEASANCE
Section 14.01. Discharge of the Indenture and Defeasance of
the Securities.. . . . . . . . . . . . . . . . . 93
Section 14.02. Application of Deposited Money.. . . . . . . . . 94
Section 14.03. Repayment to the Company.. . . . . . . . . . . . 94
(vii)
<PAGE>
TABLE OF EXHIBITS
-----------------
Exhibits Document
-------- --------
Exhibit A RIH Senior Promissory Note
Exhibit B Assignment Agreement from Resorts
International Hotel Financing, Inc.
Exhibit C Subordination Provisions
Exhibit D Mortgage securing RIH Senior Promissory Note
between Resorts International Hotel, Inc. and
Resorts International Hotel Financing, Inc.
Exhibit E Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
Exhibit F Mortgage securing Guaranty of Senior Mortgage
Notes between Resorts International Hotel,
Inc. and State Street Bank and Trust Company
of Connecticut, National Association, as Trustee
Exhibit G Intercreditor Agreement Terms
<PAGE>
INDENTURE
THIS INDENTURE dated as of [ ], 1994, among
Resorts International Hotel Financing, Inc., a Delaware corporation (the
"Company"), Resorts International Hotel, Inc., a New Jersey corporation ("RIH"),
and State Street Bank and Trust Company of Connecticut, National Association, a
national banking association, as trustee (together with its successors as such
trustee, the "Trustee").
PRELIMINARY STATEMENT
The capitalized terms used in this Indenture which are not otherwise
defined herein have the meanings set forth in Article I.
The Company has duly authorized the creation, execution and
delivery of its 11% Mortgage Notes due 2003 (the "Notes"), issuable in
accordance with the terms hereof, and RIH has duly authorized the guaranty of
the Company's obligations under this Indenture, and, to secure the Notes and to
provide therefor, each of the Company and RIH has duly authorized the execution
and delivery of this Indenture.
All things have been done which are necessary to make the Notes,
when executed by the Company and authenticated and delivered by the
Trustee hereunder and duly issued by the Company, the valid obligations of the
Company, and to constitute this Indenture a valid agreement of the Company and
RIH, in accordance with the terms of the Notes and this Indenture.
THEREFORE, for and in consideration of the premises and the
purchase or acceptance of the Notes by the Holders thereof, RIH and the Company
do hereby covenant and agree to and with the Trustee, for the Ratable Benefit of
all Holders of the Notes thereto appertaining, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
<PAGE>
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as
well as the singular;
(b) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein,
have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have
the meanings assigned to them, and all computations herein
provided for shall be made, in accordance with GAAP consistently
applied; and
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision.
"ACCOUNTANT" means a Person engaged in the practice of accounting
who (except as otherwise expressly provided in this Indenture) may
be employed by or affiliated with the Company or RIH.
"ACT" when used with respect to any Noteholder or Noteholders has
the meaning stated in Section 1.02(a).
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, and, with respect to any specified natural
Person, any other Person having a relationship by blood, marriage or adoption
not more remote than first cousin with such specified Person. For purposes of
this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be
required under the TIA, the term "Affiliate" shall not include, with respect to
the Company or RIH, any of Fidelity Management & Research Company,
TCW Special Credits or funds or accounts managed or advised by either of them.
"AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured
by an After-Acquired Fee Mortgage.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section
2.07 of the Mortgage.
"ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of
the date hereof, providing
<PAGE>
for the assignment of the RIH Senior Promissory Note
and other Mortgage Documents to the Trustee by the Company, and acknowledgment
thereof by RIH, a copy of which is attached hereto as Exhibit B.
"ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and
Rents dated as of the date hereof, from RIH to the Company securing the RIH
Senior Promissory Note, a copy of which is attached hereto as Exhibit E.
"AUTHENTICATING AGENT" means any Person named as Authenticating
Agent for the Notes in accordance with the provisions of this Indenture until a
successor Authenticating Agent becomes such pursuant thereto, and thereafter
Authenticating Agent shall mean such successor.
"AUTHORIZED SIGNATURE" means the signatures of the chairman of the
board, the president or a Vice President and of the treasurer, an assistant
treasurer, the controller, an assistant controller, the secretary or an
assistant secretary of the Company or RIH, as the case may be.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person,
any lease of any property (whether real, personal or mixed) by such
Person as lessee which, in conformity with GAAP consistently applied, is
accounted for as a capitalized lease on the balance sheet of such Person.
"CASE" means, collectively, the bankruptcy cases involving RII and
GRI in the United States Bankruptcy Court for the District of Delaware.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture,
fixtures and equipment at any time contained therein.
"CASINO CONTROL ACT" means the New Jersey Casino Control Act and
the regulations promulgated thereunder, as amended.
"CASINO CONTROL COMMISSION" means the New Jersey Casino Control
Commission, as from time to time constituted, or if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties theretofore assigned to it, then the body performing such duties at such
time.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01.
3
<PAGE>
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or
if at any time after the execution of this instrument such Commission is not
existing and performing the duties theretofore assigned to it under the TIA,
then the body performing such duties at such time.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor entity shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter, except to the extent otherwise contemplated by Section 10.02,
"Company" shall mean such successor entity exclusively.
"COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean,
respectively, a written consent, order or request signed with an
Authorized Signature and delivered to the Trustee.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, an amount equal to the sum of (i) the consolidated net
income (or loss) of such Person for such period determined in accordance with
GAAP consistently applied, excluding interest income, interest expense and gains
or losses from extraordinary or nonrecurring items, plus (ii) all amounts
deducted in computing such consolidated net income (or loss) in respect of
depreciation and amortization, plus (iii) non-cash charges arising from the
reduction of CRDA Deposits to market value, minus (iv) taxes based upon or
measured by income which are payable in cash, minus (v) CRDA Deposits.
"CONSOLIDATED INTEREST CHARGES" means, with respect to any Person
for any period, the consolidated interest expense (not including
the non-cash amortization of discount on the original issuance of (a) the RIH
Senior Promissory Note, (b) any intercompany indebtedness of RIH issued in
connection with Indebtedness represented by the Junior Mortgage Facility and (c)
any intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Working Capital Facility), whether payable in cash or in-kind
(and with respect to RIH, including, without limitation, the interest
paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii)
any intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Junior Mortgage Facility and (iii) any intercompany
indebtedness of RIH issued in connection with Indebtedness represented by the
Working Capital Facility), without deduction for interest income (other than
cash interest income received from RII in payment of its interest cost
on any Working Capital Facility), in each case for such Person and
4
<PAGE>
its consolidated Subsidiaries for such period determined in
accordance with GAAP consistently applied.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH
and its consolidated Subsidiaries for the immediately preceding four consecutive
fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated
Subsidiaries for such period.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, an amount equal to consolidated net income (or loss) of such Person for
such period determined in accordance with GAAP consistently applied, minus (a)
federal and state taxes based upon or measured by income which are payable in
cash, plus (b) non-cash charges arising from federal and state taxes based upon
or measured by income.
"CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the
Casino Reinvestment Development Authority in an amount equal to
1.25% of RIH's gross revenue in order to satisfy its investment
obligation pursuant to the Casino Control Act, and (b) the amounts
invested in qualified investments in lieu of any of the quarterly
deposits (or portion thereof) referred to in clause (a) above.
"CRDA DISPUTE" means the dispute existing on the date hereof
between RIH and the New Jersey Casino Reinvestment Development
Authority regarding CRDA Deposits and New Jersey Casino
Reinvestment Authority Notes, which dispute involves an amount
of approximately $30,000,000.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both,
would become an Event of Default.
"DEFAULTED INTEREST" has the meaning stated in Section 3.07.
"EFFECTIVE DATE" means the date on which the prepackaged plan of
reorganization of RII and GRI becomes effective.
"EVENT OF DEFAULT" has the meaning stated in Section 7.01. An
Event of Default shall "exist" if an Event of Default shall have
occurred and be continuing.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
5
<PAGE>
"FAIR MARKET VALUE" of any Notes means (a) the average of the
closing sales price of the Notes for the 30 trading days immediately prior to
the date of determination of such value on the largest national securities
exchange on which such Notes shall have traded on such trading days, or (b) if
no such sales of such Notes occurred during such 30-day period or if the Notes
are not so listed but are traded in the over-the-counter market with
quotations available in the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the average of the means between the "bid" and
"asked" prices on such national securities exchange or as quoted on NASDAQ, as
the case may be, during such 30-day period, or (c) if the Notes are not traded
on a national securities exchange or quoted on NASDAQ, the fair market
value of such Notes as of the date of determination as determined
by agreement of two nationally recognized Independent investment banking firms,
one to be chosen by the Company and the other by the Holder of the Notes being
valued, with the costs of each such firm being the responsibility of the Person
selecting such firm. If such firms cannot agree upon such fair market value,
such firms shall select a third nationally recognized Independent investment
banking firm, which shall determine such fair market value, the costs of such
third firm being shared equally by the Company and such Holder.
"F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01
of the Mortgage.
"GAAP" means United States generally accepted accounting
principles.
"GRI" means GGRI, Inc., a Delaware corporation.
"GROUND LEASES" has the meaning stated in Granting Clause Second of
the Mortgage.
"GUARANTY" means the guaranty contained in Article Four.
"GUARANTY MORTGAGE" means the Mortgage securing Guaranty of
Mortgage Notes dated as of the date hereof, between RIH, as
mortgagor, and the Trustee, as mortgagee, securing the Guaranty,
a copy of which is attached hereto as Exhibit F.
"HOTEL" means that portion of the Casino-Hotel not included within
the Casino.
"INDEBTEDNESS" means, as applied to any Person, without
duplication, any indebtedness, exclusive of deferred taxes,
(a) in respect of borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to a portoin
thereof); (b) evidenced by bonds,
6
<PAGE>
notes, debentures or similar instruments or letters of credit; (c) representing
the balance deferred and unpaid of the purchase price of any property, if and to
the extent such indebtedness would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP (but excluding trade accounts
payable arising in the ordinary course of business that are not overdue by more
than 90 days or are being contested by such Person in good faith); (d) any
Capitalized Lease Obligations (other than, with respect to RIH or the
Company, the Ground Leases) of such Person; and (e) Indebtedness of
others guaranteed by such Person, including, without limitation, every
obligation of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness, (ii) to purchase property, securities or services for the purpose
of assuring the holder of such Indebtedness of the payment of such Indebtedness,
or (iii) to maintain working capital, equity capital or other financial
sta tement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; PROVIDED,
HOWEVER, that the guaranty by any Person shall not include endorsements by such
Person for collection or deposit, in either case in the ordinary course of
business. The term "INDEBTEDNESS" does not include: (1) any of the types of
indebtedness described in clauses (a) through (e) above (inclusive) owed by the
Company to RIH or any of their Subsidiaries, by RIH to the Company or any of
their Subsidiaries or by any such Subsidiary to RIH, the Company or
any other such Subsidiary (including, without limitation, the RIH Promissory
Note and the RIH Junior Promissory Note); (2) the Guaranty, the
Junior Guaranty and the Working Capital Facility Guaranty; (3) matters relating
to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes
or the CRDA Deposits; and (4) any payments made by the Company or RIH under
the RII Management Agreement, the RII Tax Sharing Agreement or the Services
Agreement.
"INDENTURE" means this instrument as originally executed or as it
may from time to time be supplemented, modified or amended by one or more
indentures or other instruments supplemental hereto entered into pursuant to the
applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Company or
in any other obligor upon the Notes or in any Affiliate of the Company or of
such other obligor and (c) is not connected with the Company or such other
obligor or any Affiliate of the Company or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or person
7
<PAGE>
performing similar functions. Whenever it is herein provided
that any Independent Person's opinion or certificate shall
be furnished to the Trustee, such Person shall be appointed
by a Company Order, and such opinion or certificate shall state
that the signer has read this definition and that the signer is
Independent within the meaning hereof. A Person who is performing
or who has performed services as an independent contractor to any
specified Person shall not be considered not Independent merely by
reason of the fact that such Person is or has performed such
services.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated
as of the date hereof, among the Trustee, the trustee under the
Junior Mortgage Note Indenture and such other parties that may
from time to time become a party thereto, which shall incorporate
the terms set forth in Exhibit G.
"INTEREST PAYMENT DATE" means the date on which an installment of
interest on the Notes is due and payable.
"JUNIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of
Leases and Rents dated as of the date hereof, from RIH to the
Company securing the RIH Junior Promissory Note.
"JUNIOR GUARANTY" means any guaranty of the Junior Mortgage
Facility by RIH, including, without limitation, the guaranty of
the Junior Mortgage Notes due 2004 by RIH contained in Article Four
of the Junior Mortgage Note Indenture.
"JUNIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty
of Junior Mortgage Notes dated as of the date hereof, between RIH,
as mortgagor, and [The Chase Manhattan Bank (National
Association)], as mortgagee, securing the Junior Guaranty.
"JUNIOR MORTGAGE" means the Mortgage securing the RIH Junior
Promissory Note dated as of the date hereof, between the Company,
as successor mortgagee, and RIH, as mortgagor.
"JUNIOR MORTGAGE DOCUMENTS" means (a) the Junior Mortgage, the
Junior Guaranty Mortgage, the RIH Junior Promissory Note, the
Junior Assignment of Leases and Rents and any other security
document to which either RIH or the Company is a party relating to
the Junior Mortgage Notes, which is executed and delivered pursuant
to or in connection with the Junior Mortgage, the Junior Guaranty
Mortgage or the Junior Assignment Agreement, and (b) any mortgage,
deed of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of operating assets
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and any other security document to which either RIH or the
Company is a party relating to the Junior Mortgage Facility.
"JUNIOR MORTGAGE FACILITY" means the Junior Mortgage Notes and any
secured or unsecured facility or facilities entered into by RIH or
the Company providing for the making of loans to RIH or the Company
on a revolving or term basis, or the issuance of notes, debentures
or bonds by RIH or the Company, as such agreement, indenture or
instrument may be amended, supplemented or modified from time to
time, or any refinancing thereof, in an aggregate principal amount
up to $35,000,000 plus additional notes, debentures or bonds issued
in payment of interest accrued on outstanding notes, debentures or
bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if any, securing the Junior
Mortgage Facility shall be PARI PASSU with the lien of the Junior
Mortgage and the Junior Guaranty Mortgage. The term "JUNIOR
MORTGAGE FACILITY" does not include the Junior Guaranty.
"JUNIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of
the date hereof, among the Company, RIH and [The Chase Manhattan
Bank (National Association)], as trustee, pursuant to which the
Junior Mortgage Notes were issued, as originally executed or as it
may from time to time be supplemented, modified or amended by one
or more indentures or other instruments supplemental thereto
entered pursuant to the applicable provisions thereof.
"JUNIOR MORTGAGE NOTES" means the 11.375% Junior Mortgage Notes due
2004 of the Company issued pursuant to the Junior Mortgage Note
Indenture, including, without limitation, any Additional Notes (as
defined in the Junior Mortgage Note Indenture).
"LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the
Mortgage.
"MATURITY" when used with respect to any Note means the date on
which the principal (or any portion thereof) of such Note becomes
due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration or call for
redemption or otherwise.
"MORTGAGE" means the Mortgage securing the RIH Senior Promissory
Note dated as of the date hereof, between the Company, as successor
mortgagee, and RIH, as mortgagor.
"MORTGAGE DEBT" means, at any point in time, the RIH Senior
Promissory Note, the RIH Junior Promissory Note and any
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secured Indebtedness outstanding under any Working Capital Facility.
"MORTGAGE DOCUMENTS" means the Mortgage, the Guaranty Mortgage, the
RIH Promissory Note, the Assignment of Leases and Rents and
any other security document to which either RIH or the Company is a
party relating to the Notes, which is executed and delivered pursuant to or in
connection with the Mortgage, the Guaranty Mortgage or the Assignment Agreement.
"NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a).
"NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall
mean bonds issued by the Casino Reinvestment Development Authority,
a public authority created under the Casino Control Act.
"NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in
connection with the acquisition, purchase, improvement or
development of property or assets (other than the Trust Estate)
used by the Company, RIH or any Subsidiary of RIH or the Company to
engage in the casino business, the hotel business or related or
ancillary business or purpose and which is secured only by such
assets and without recourse to RIH, the Company or any Subsidiary
of RIH or the Company or the Trust Estate for such indebtedness.
"NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is
registered in the Note Register.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
stated in Section 3.05.
"NOTES" has the meaning stated in the Preliminary Statement of this
instrument and more particularly includes any Note authenticated
and delivered hereunder. The term "Notes" does not include the
Guaranty.
"OFFICER" of the Company or RIH means any Person authorized to
execute an Authorized Signature.
"OFFICERS' CERTIFICATE" delivered by the Company or RIH means a
certificate signed with an Authorized Signature and delivered to
the Trustee. Whenever this Indenture requires that an Officers'
Certificate be signed also by an Accountant or other expert, such
Accountant or other expert may (except as otherwise expressly
provided in this Indenture) be in the general employ of the
Company or RIH.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in
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this Indenture) be an employee of the Company or RIH. Unless otherwise
specifically provided in this Indenture, such counsel may rely as to any
statement of facts not personally known to such counsel and relating to
such opinion on an Officers' Certificate, to the extent not rejected by
the Trustee and its counsel (which rejection shall not be unreasonably
given).
"OUTSTANDING" when used with respect to Notes means, as of the date
of determination, all Notes theretofore authenticated and delivered
under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(b) Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the
Trustee or any Paying Agent in trust for the Holders of such
Notes;
(c) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered under this Indenture;
and
(d) Notes alleged to have been destroyed, lost or stolen
which have been paid as provided in Section 3.06;
PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of Notes Outstanding have given any
request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor
upon the Notes or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding. In
determining whether the Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent
or waiver, only Notes which the Trustee actually knows to be so
owned shall be so disregarded.
"OUTSTANDING AMOUNT" of any Indebtedness at any time means the
principal amount outstanding of such Indebtedness at such time.
"PAYING AGENT" means any Person now or hereafter authorized by the
Company to pay the principal of or interest on any Notes on behalf
of the Company.
"PERMITS" has the meaning stated in Section 1.01 of the Mortgage.
"PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
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"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or any other entity or government or any agency or
political subdivision thereof.
"PLACE OF PAYMENT" when used with respect to the Notes means a city
or any political subdivision thereof in which the Company is by
this Indenture required to maintain an office or agency for the
payment of the principal of or interest on the Notes.
"PLAN" means the Plan of Reorganization of RII and GRI dated
[ ], 1994.
"PREDECESSOR NOTES" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for purposes of this
definition, any Note authenticated and delivered under Section 3.06
in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the lost, destroyed or stolen Note.
"PREMISES" has the meaning stated in Granting Clause Third of the
Mortgage.
"RATABLE BENEFIT" means, for any class or classes of Indebtedness
at any time, in proportion to the total Outstanding Amount of such
class or classes held by each holder thereof at such time.
"REDEMPTION DATE" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to this
Indenture.
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"REDEMPTION PRICE" when used with respect to any Note to be
redeemed means the price at which it is to be redeemed pursuant
to this Indenture. It does not include installments of interest
due on or before the Redemption Date.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Notes means the date specified in the
provisions of this Indenture.
"RESPONSIBLE OFFICER" means any Vice President, any Assistant
Vice President or any other officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"RESTRICTED PAYMENT" means (a) any declaration or payment of any
dividend or the making of any distribution to holders of capital
stock of RIH or the Company or any Subsidiary of RIH or the Company
in respect of such capital stock (other than to RIH or the Company
or a direct or indirect wholly owned Subsidiary of RIH or the
Company), (b) any purchase, redemption or other acquisition or
retirement for value of any capital stock (or warrants, rights or
options to acquire any capital stock or Indebtedness convertible
into or exchangeable for any capital stock) of RIH or the Company
or any Subsidiary of RIH or the Company (other than purchases,
redemptions, acquisitions or retirement solely from RIH or the
Company or a direct or indirect wholly owned Subsidiary of RIH or
the Company); PROVIDED, HOWEVER, that any such purchase, redemption
or other acquisition or retirement that is required by the Casino
Control Commission or under the Casino Control Act shall not
constitute a Restricted Payment. The term "Restricted Payment"
also shall not include any loan or advance to RII of all or any
portion of the proceeds of the Indebtedness represented by the
Working Capital Facility.
"RIH" means the person named as "RIH" in the first paragraph of
this instrument until a successor entity shall have become such
pursuant to the applicable provisions of the Indenture, and
thereafter, except to the extent otherwise
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contemplated by Section 10.02, "RIH" shall mean such successor entity
exclusively.
"RIH JUNIOR PROMISSORY NOTE" means, collectively, the secured
junior promissory note, dated the date hereof, made by RIH in the
principal amount of $35,000,000, plus any additional junior
promissory notes, issued in connection with the payment of
interest accrued on outstanding Junior Mortgage Notes, payable to
the order of the Company, a copy of which is attached to the Junior
Mortgage Note Indenture as Exhibit A.
"RIH SALE" means (a) a consolidation, combination or merger
involving RIH and any other Person, (b) a sale, assignment, conveyance
or transfer or RIH's interest in the Trust Estate, substantially as an
entirety, to any other Person or group of Persons in one transaction or a
series of related transactions, or (c) any transaction as a result of
which RIH ceases to be a direct or indirect wholly owned Subsidiary of
RII; provided, however, that nay of the transactions described in clauses
(a), (b), and (c) above shall not constitute an RIH Sale if the other
party or parties to the transaction consists of only one or more of the
following Persons: the Company provided, further, however, that
notwithstanding any other provision of this definition, if the primary
effect of any of the aforesaid transactions is the redemption of the Notes,
then such transaction shall not be considered to be a RIH Sale.
"RIH PROMISSORY NOTE" means the secured senior promissory
note, amended and restated as of the date hereof, made by RIH in the principal
amount of $125,000,000 payable to the order of the Company, a copy of which
is attached hereto as Exhibit A.
"RIHF SENIOR FACILITY" means the senior secured note facility
contemplated by the purchase agreement dated as of the date
hereof, among the Company, RIH, RII and funds managed by Fidelity
Management and Research Company, which allows the Company to borrow
up to $20,000,000 in aggregate principal amount through the
issuance of RIHF Senior Facility Notes. The term "RIHF SENIOR
FACILITY" does not include the Working Capital Facility Guaranty.
"RIHF SENIOR FACILITY NOTES" means, collectively, the notes
executed and delivered by the Company under the RIHF Senior
Facility.
"RII" means Resorts International, Inc., a Delaware corporation.
"RII MANAGEMENT CONTRACT" means the Management Contract dated as of
the date hereof, between RII and RIH
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pursuant to which RII provides certain management services to RIH for an
annual fee of 3% of the gross revenues of RIH.
"RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated
as of the date hereof between RII and RIH pursuant to which (i) RIH
will not make any payments to RII or any other Affiliate in respect
of taxes, other than to reimburse RII for any cash payments
actually made by RII in respect of any federal, state or local
income or alternative minimum taxes arising from the earnings or
operations of RIH; PROVIDED, HOWEVER, that RIH shall not be
required to reimburse RII for cash payments in respect of
federal, state or local income or alternative minimum taxes that
would not have been owed but for the reduction, if any, of the
amount of the consolidated net operating loss carryforwards or
consolidated current losses of the affiliated group of which RII
is a common parent which resulted from the inclusion in the
consolidated return filed for such group for any taxable year
ending after the Effective Date of the income of any entity other
than RIH, other than income directly attributable to the
consummation of the Plan, including but not limited to the
transfer of the stock of RIB (as defined in the Plan) and the
assets of the U.S. Paradise Island Subsidiaries (as defined in the
Plan), and (ii) RIH will be entitled to any refund (plus the
interest thereon) of any taxes for which RIH is required to
reimburse RII.
"SERVICES AGREEMENT" means the Services Agreement dated as of
September 17, 1992, between RII, RIH and The Griffin Group, Inc.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on
Notes means a date fixed by the Trustee pursuant to Section 3.07.
"STATED MATURITY" when used with respect to any Note means the date
specified in such Note as the fixed date on which the principal of
such Note is due and payable.
"SUBSIDIARY" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly,
by such Person or one or more Subsidiaries of such Person.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of
1939, as amended.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this
Indenture, and thereafter Trustee shall mean such successor
Trustee.
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"TRUST ESTATE" has the meaning stated in the Granting Clauses to
the Mortgage.
"U.S. GOVERNMENT OBLIGATIONS" has the meaning stated in Section
14.01.
"U.S. LEGAL TENDER" means such coin or currency of the United
States of America as at the time of payment shall be legal tender
for the payment of public and private debts, PROVIDED that for
purposes of Article Fourteen, U.S. Legal Tender includes wire
transfer payable in U.S. Legal Tender.
"VICE PRESIDENT" when used with respect to the Company, RIH or the
Trustee means any vice president, whether or not designated by a
number or a word added to the title.
"WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the
RIHF Senior Facility Notes issued thereunder) and any other secured
or unsecured facility or facilities entered into by RIH and/or the
Company providing for the making of working capital loans to RIH or
the Company (with RII [and GRI] as a guarantor[s] thereunder) on a revolving
or term basis, or the issuance of notes, debentures or bonds
by RIH, the Company or RII, as such agreement may be amended,
supplemented or modified from time to time, or any refinancing
thereof, in an aggregate principal amount up to $20,000,000;
PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if any, securing the Working
Capital Facility may be senior to the lien of the Mortgage, the
Guaranty Mortgage, the Junior Mortgage and the Junior Guaranty
Mortgage. The term "WORKING CAPITAL FACILITY" does not include
the Working Capital Facility Guaranty.
"WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage,
deed of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of operating
assets and any other security document to which either RIH or the
Company is a party relating to the Working Capital Facility.
"WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the
Working Capital Facility by RIH, including, without limitation,
the guaranty of the RIHF Senior Facility Notes.
Section 1.02. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Noteholders may be embodied
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in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Noteholders signing such instrument
or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Company
and (subject to Section 8.01(c)) in favor of the Trustee, if made in
the manner provided in this Section 1.02.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness
of such execution or by the certificate of any notary public or
other officer authorized by law to take acknowledgments of deeds,
certifying that the individual
signing such instrument or writing acknowledged to him the execution
thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or
partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The fact and date of execution of any such instrument or
writing and the authority of any Person executing the same may also
be proved in any other manner which the Trustee deems sufficient; and
the Trustee may in any instance require further proof with respect
to any of the matters referred to in this Section 1.02.
(d) The ownership of Notes shall be proved by the Note Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind
every future Holder of the same Note and the Holder of every Note
issued upon the transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Note.
(f) The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holder of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this
Indenture to be given or taken by holders of Notes. With regard
to any record date set pursuant to this
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Section 1.02(f) the holders of Outstanding Notes on such record date (or their
duly appointed agents), and only such Persons, shall be entitled to give or
take the relevant action, whether or not such Persons remain holders
after such record date.
(g) Until a waiver or consent becomes effective, such waiver or
consent by a Holder is a continuing waiver or consent by the
Holder and every subsequent Holder of a Note or portion of a Note
that evidences the same debt as the consenting Holder's Note, even
if notation of the waiver or consent is not made on any Note.
However, any such Holder or subsequent Holder may, until such
waiver or consent becomes effective, revoke the waiver or consent
as to his Note or portion of his Note. Such revocation shall be
effective only if the Trustee receives the notice of such
revocation before the date on which the waiver or consent has
become effective.
Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH, THE COMPANY, CASINO
CONTROL COMMISSION AND DIRECTOR OF GAMING ENFORCEMENT.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with, the Company,
RIH, the Trustee, the Casino Control Commission or the Director of
the Division of Gaming Enforcement be deemed given when either
(i) delivered by hand or (ii) two days after sending by registered
or certified mail, postage prepaid, in either case, addressed as follows:
To the Company:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
To RIH:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
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To the Trustee:
State Street Bank and Trust Company of Connecticut,
National Association
750 Main Street
Hartford, Connecticut 06103
Attn.: Corporate Trust Department
To Casino Control Commission:
New Jersey Casino Control Commission
Arcade Building
Tennessee Avenue & Boardwalk
Atlantic City, New Jersey 08401
Attn.: Chairman
To Director of Division of Gaming Enforcement:
New Jersey Division of Gaming Enforcement
140 E. Front Street
CN 047
Trenton, New Jersey 08625
Attn.: Director
(b) By notice to the Company, RIH, the Trustee, Casino Control
Commission and/or Director of the Division of Gaming Enforcement, given
as provided above, any party may designate additional or substitute
addresses for such notices, which, notwithstanding Section 1.03(a),
shall be deemed given when received.
Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER.
Where this Indenture provides for notice to Noteholders of any
event, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder of such Notes, at the address of
such Holder as it appears in the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for
the provision of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular
Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event,
and such waiver shall be the equivalent of such notice. Waivers of
notice by Noteholders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
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In case, by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impracticable to give such
notice by mail, then such notification may be given by any other
method that the Trustee shall consider to be reasonable and shall
be deemed to be a sufficient giving of such notice for every
purpose hereunder.
Section 1.05. FORM AND CONTENTS OF
DOCUMENTS DELIVERED TO TRUSTEE.
Whenever several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other
such Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Company or of RIH
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an Officer
or Officers of the Company or RIH stating that the information with
respect to such factual matters is in the possession of the Company
or RIH, unless such counsel knows that the certificate or opinion
or representations with respect to such matters are erroneous. If
appropriate to the matter being opined upon and to the extent not
prohibited by the TIA, any Opinion of Counsel may be subject to
rights of creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the
Company or RIH shall deliver any document as a condition of the
granting of such application, or as evidence of the Company's or
RIH's compliance with any term hereof, it is intended that the
truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or
report (as the case may be), of the facts and opinions stated in
such document shall in such case be conditions precedent to the
right of the Company or
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RIH to have such application granted or to the sufficiency of such certificate
or report.
Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company or RIH to the
Trustee to take any action under any provision of this Indenture
or any Mortgage Document, the Company or RIH shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture or such Mortgage Document relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any,
have been complied with, except that in the case of any such
application or request as to which the furnishing of such
documents is specifically required by any provision of this
Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture or any Mortgage
Document shall include:
(a) a statement that each individual signing such
certificate or opinion has read such condition or covenant
and the definitions herein relating thereto;
(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 each such
individual, he has made such examination or investigation
as is necessary to enable him to express an informed opinion
as to whether or not such condition or covenant has been
complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied
with.
Section 1.07. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof or of the Mortgage Documents or the
Assignment Agreement limits, qualifies or conflicts with another
provision hereof or of the Mortgage Documents or the Assignment
Agreement which is required to be included herein or therein by
any of the provisions of the TIA, such required provision shall
control.
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Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and in the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 1.09. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company or
RIH shall, subject to Section 10.02, bind its successors and
assigns, whether so expressed or not.
Section 1.10. SEPARABILITY CLAUSE.
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 1.11. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person other than the parties hereto and their
successors hereunder, any separate trustee or co-trustee appointed
under Section 8.14 and the Holders of Notes, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.12. GOVERNING LAW.
This Indenture and each Note shall be deemed to be a contract under
the laws of the State of New York and shall be construed in
accordance with and governed by the internal laws of the State of
New York.
Section 1.13. CASINO CONTROL ACT.
Each of the provisions of this Indenture is subject to and shall be
enforced in compliance with the provisions of the Casino Control
Act, unless such provisions are in conflict with the TIA, in which
case the TIA shall control.
Section 1.14. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject
in each instance to the giving of any notice and the expiration of
any grace period provided for in Section 7.01 as a condition to
such Default becoming an Event of Default, unless the TIA requires
otherwise, in which case the TIA shall control.
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(b) For the purposes of this Indenture, it is understood that an
event which does not materially diminish the value of the
Trustee's interest in the Trust Estate shall not be deemed an
impairment of security, as that phrase is used in this Indenture.
(c) This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company, other than the Mortgage and
the Guaranty Mortgage. Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.
(d) In the event of a conflict between any provision of this
Indenture and any provision of a Mortgage Document, the provision
of this Indenture shall prevail.
ARTICLE TWO
NOTE FORM
Section 2.01. FORM GENERALLY.
The Notes and the Trustee's certificate of authentication shall be
substantially in the forms set forth in this Article Two, with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and
may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange, or as may,
consistently herewith, be determined by the officers executing
such Notes as evidenced by their execution thereof. Any portion of
the text of any Note may be set forth on the reverse thereof.
The definitive Notes shall be printed, lithographed or engraved or
produced by any combination of these methods or produced in any
other manner permitted by the rules of any securities exchange on
which the Notes may be listed, all as determined by the officers
executing such Notes as evidenced by their execution thereof.
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Section 2.02. FORM OF NOTES.
The form of the Notes shall be substantially as follows:
[Face of Notes]
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
11% MORTGAGE NOTE DUE 2003
No.______________ $________________
Resorts International Hotel Financing, Inc., a Delaware corporation
(hereinafter called the "Company", which term includes any
successor entity under the Indenture referred to on the reverse),
for value received, hereby promises to pay to ______________, or registered
assigns, on September 15, 2003 the sum of __________ Dollars (or so much
thereof as shall not have been paid upon prior redemption) and to
pay interest (computed on the basis of a 360-day year of twelve
30-day months based on the actual number of days elapsed) thereon
from [ ], 1994 [the Effective Date], or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, semi-annually at March 15 and September 15 in each
year (commencing September 15, 1994), at the rate of 11% per annum,
until the principal hereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in said Indenture,
be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the Person
in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on a Special Record Date for
the payment of such defaulted interest to be fixed by the Trustee,
notice thereof being given to Noteholders not less than ten days
prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes of this series may be
listed and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture. The principal of and
interest on this Note shall be payable at the corporate trust
office of the Trustee, as defined on the reverse, or at an office
or agency of the Company in the Borough of Manhattan, City and
State of New York. All such payments shall be made in such coin or
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currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
At the option of the Company, payment of interest may be made by
check mailed to the address of the Person entitled thereto as such
address shall appear on the Note Register.
Unless the certificate of authentication hereon has been executed
by the Trustee or the Authenticating Agent by manual signature,
this Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS
OF THE STATE OF NEW YORK AND SHALL BE CONSTRUE IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Dated: ______________________ By:________________________
Attest:______________________
[Back of Notes]
This Note is one of a duly authorized issue of Notes of the Company
designated as "11% Mortgage Notes due 2003" (the "Notes"),
issued under an Indenture dated as of __________ __, 1994 (the
"Indenture"), among the Company, Resorts International Hotel,
Inc., a New Jersey corporation, as guarantor ("RIH"), and State
Street Bank and Trust Company of Connecticut, National Association,
a national banking association, as Trustee (the "Trustee", which
term includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is
hereby made for a description of the nature and extent of the
security, the respective rights thereunder of the Holders of the
Notes, the Trustee and the Company and the terms upon which the
Notes are, and are to be, authenticated and delivered. Payment of
principal and interest (including interest on overdue principal)
and performance of all obligations under the Indenture is
guaranteed by RIH (the "Guaranty"). The Notes are secured by an assignment
of one or more secured senior promissory notes of RIH, which owns and
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operates the property known as Merv Griffin's
Resorts Casino Hotel, and of a mortgage on the Trust Estate made
by RIH (the "Mortgage"). Additionally, the Guaranty is secured by
a separate direct mortgage of the Trust Estate made by RIH to the
Trustee (the "Guaranty Mortgage"). All terms in this Note defined
in the Indenture shall have the same meaning herein as therein.
The lien of the Mortgage is pari passu with the lien of the
Guaranty Mortgage, junior to the lien securing payment of the
RIHF Senior Facility Notes and any other secured Working Capital
Facility and junior to the lien (if any) securing the Working
Capital Facility Guaranty.
The Notes may be redeemed at the option of the Company, as a whole
or from time to time in part, on or after the fifth anniversary of
the Effective Date on notice as provided in the Indenture, at par
together with interest accrued and unpaid thereon to the date fixed
for redemption. In the event of an RIH Sale, all the Notes shall
be redeemed by the Company, whether such RIH Sale occurs before, on
or after the fifth anniversary of the Effective Date, at par
together with interest, if any, accrued and unpaid thereon to the
Redemption Date; PROVIDED, HOWEVER, that such obligation of the
Company to redeem the Notes in the event of a proposed RIH Sale
shall cease to exist if the Holders of not less than 66-2/3% in
Outstanding Amount of the Outstanding Notes have consented to such
proposed RIH Sale.
Notwithstanding the foregoing, each Holder by accepting a Note
agrees that if the Casino Control Commission does not waive the
qualification requirement as to the Holder (whether the record
owner or beneficial owner) of this Note and requires that the
Holder be qualified under the Casino Control Act, then, in such
event, the Holder must qualify under the Casino Control Act. If
the Holder does not so qualify, the Holder must dispose of its
interest in this Note, within 30 days after the Company's receipt
of notice of such finding, or the Company may repurchase this Note
at the lower of the Holder's original cost and the Fair Market
Value of this Note, plus accrued interest thereon to the date of
such repurchase. Commencing on the date the Casino Control Commission
serves notice upon either RIH or the Company that any Holder is disqualified,
it shall be unlawful for any such disqualified Holder: (i) to receive any
dividends or interest upon this Note; (ii) to exercise, directly or through
any trustee or nominee, any right conferred by this Note;
or (iii) to receive any remuneration in any form from either the Company or
RIH for services rendered or otherwise.
It is provided in the Indenture that Notes of a denomination larger
than $1,000 may be redeemed in part ($1,000 or a multiple thereof)
and that upon any partial
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redemption of any such Note the same shall be surrendered in exchange
for one or more new Notes in authorized form for the unredeemed portion of
principal. Notes (or portions thereof as aforesaid) for whose redemption and
payment provision is made in accordance with the Indenture shall thereupon
cease to be entitled to the lien of the Indenture and the Mortgage
and shall cease to bear interest from and after the date fixed for
redemption.
If an Event of Default shall occur, the principal of the Notes and
all accrued and unpaid interest thereon may
become or be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereto and the modification of the rights and
obligations of the Company and the rights of the Holders of the
Notes under the Indenture at any time by the Company with the
consent of the Holders of a majority or 66-2/3%, as the case may
be, in aggregate Outstanding Amount of the Notes at the time
Outstanding affected by such modification. The Indenture also
contains provisions permitting the Holders of specified percentages
in Outstanding Amount of Notes at the time Outstanding on behalf of
the Holders of all the Notes to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of
any Note issued upon the transfer hereof or in exchange hereof or
in lieu hereof, in respect of anything done or offered to be done
by the Trustee in the Company in reliance thereon, whether or not
notation of such action is made upon this Note.
The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holders of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by the
Indenture to be given or taken by holders of Notes. With regard
to any such record date, the holders of Outstanding Notes on such
record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action,
whether or not such Persons remain holders after such record date.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal
of and interest on this Note at the times, places and rates, and in
the coin or currency, herein prescribed.
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As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable on the Note Register
of the Company, upon surrender of this Note for transfer at the
corporate trust office of the Trustee, or at an office or agency
of the Company in the Borough of Manhattan, City and State of New
York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Note Registrar
duly executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
The Notes are issuable only as registered Notes without coupons in
denominations of $1,000 and integral multiples thereof. As
provided in the Indenture, and subject to certain limitations
therein set forth, Notes are exchangeable for a like aggregate
principal amount of Notes of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any transfer or exchange
hereinbefore referred to, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is
registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or
not this Note be overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary.
Section 2.03. FORM OF TRUSTEE'S
CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, as Trustee
By:__________________________
Authorized Signature
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Section 2.04. FORM OF THE GUARANTY.
The form of the Guaranty of RIH shall be substantially as follows
and shall appear on the reverse of each Note:
GUARANTY OF
RESORTS INTERNATIONAL HOTEL, INC.
For value received, Resorts International Hotel, Inc., a New Jersey
corporation, hereby unconditionally guarantees, as more fully set
forth in Article Four of the Indenture, to the Holder of this Note
the payment of the principal of and interest on this Note in the
amounts and at the time when due and interest on the overdue
principal and interest, if any, of this Note, if lawful, and the
payment or performance of all other obligations of the Company to
the Holder or the Trustee, all in accordance with and subject to
the terms and limitations of this Note and Article Four of the
Indenture, the foregoing Guaranty being a guaranty of payment and
not of collectibility and being absolute and in no way conditional
or contingent. This Guaranty will not become effective until the
Trustee or the Authenticating Agent signs the certificate of
authentication on such Note. As more fully described in the
Indenture, this Guaranty is secured by a mortgage of the Trust
Estate made by RIH to the Trustee.
RESORTS INTERNATIONAL HOTEL, INC.
Dated:__________________________ By:_______________________________
Attest:_________________________
ARTICLE THREE
THE NOTES
Section 3.01. GENERAL TITLE.
The general title of the Notes shall be "11% Mortgage Notes
due 2003".
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Section 3.02. FORM AND DENOMINATIONS.
The form of the Notes shall be as provided by the provisions of
this Indenture.
The Notes shall be issuable only in registered form and in such
denominations as shall be provided in the provisions of this
Indenture. The Notes shall be of the denominations of $1,000 and
any integral multiple thereof.
Section 3.03. EXECUTION, AUTHENTICATION,
DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its
chairman of the board, vice chairman of the board, its president,
or one of its Vice Presidents and attested to by an Officer of the
Company other than an Officer who has executed the Notes. The
signature of any of these Persons on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signatures of
individuals who were at any time Officers of the Company shall
bind the Company, notwithstanding that such individuals or any of
them shall have ceased to be such prior to the authentication and
delivery of such Notes.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication and the Trustee shall
authenticate and deliver such Notes as in this Indenture provided
and not otherwise. All Notes shall be dated the date of their
authentication.
No Note shall be secured by, or be entitled to any lien, right or
benefit under, this Indenture or be valid or obligatory for any
purpose, unless there appears on such Note a certificate of
authentication substantially in the form provided for herein,
executed by the Trustee or the Authenticating Agent by manual
signature, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 3.04. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Request the Trustee shall authenticate
and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any
denomination, substantially of the tenor of the definitive Notes
in lieu of which they are issued, in registered form, without
coupons, with provision for registration as to principal and with such
appropriate insertions, omissions, substitutions and other variations as
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the Officers executing such Notes may determine, as evidenced by their
execution of such Notes.
If temporary Notes are issued, the Company will cause definitive
Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be
exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company in a Place of Payment
therefor, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Company
shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Notes of
authorized denominations. Until so exchanged, temporary
Outstanding Notes shall in all respects be entitled to the
security and benefits of this Indenture.
Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE.
The Company shall cause to be kept at one of the offices or
agencies maintained by the Company as provided in Section 12.02 a
register (herein sometimes referred to as the "Note Register") in
which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Notes and
registration of transfers of Notes entitled to be registered or
transferred as herein provided. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers
of Notes as herein provided.
Upon surrender for transfer of any Note at the office or agency of
the Company in a Place of Payment therefor, the Company shall
execute and, upon request of the Company, the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one
or more new Notes of any authorized denominations and of a like aggregate
principal amount. The Trustee has no obligation to determine that any Note
has been properly transferred and may conclusively rely on instructions
given by the Company pursuant to this Section 3.05.
All Notes surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly canceled by the Trustee and
thereafter disposed of as directed by a Company Request.
All Notes issued upon any transfer or exchange of Notes shall be
the valid obligations of the Company, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as
the Notes surrendered upon such transfer or exchange.
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Every Note presented or surrendered for transfer, exchange or
discharge from registration shall (if so required by the Company
or the Note Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company
and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration, discharge
from registration, transfer or exchange of Notes, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
transfer or exchange of Notes, other than exchanges under
Section 3.04 or 11.06 not involving any transfer.
The Company shall not be required (i) to issue, transfer or exchange
any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of
Notes under Section 13.04 and ending at the close of business on the day of
such mailing, or (ii) to transfer or exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.
Section 3.06. MUTILATED, DESTROYED,
LOST AND STOLEN NOTES.
If (a) any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Note and (b) there is
delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a new Note of like tenor
and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 3.06, the
Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith.
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Every new Note issued pursuant to this Section 3.06 in lieu of any
destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the security and benefits
of this Indenture equally and ratably with all other Notes.
The provisions of this Section 3.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or
stolen Notes.
Section 3.07. PAYMENT OF INTEREST ON
NOTES; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to
the Person in whose name that Note (or one or more Predecessor
Notes) is registered at the close of business on the Regular Record Date
for such interest specified in the provisions of this Indenture.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date ("Defaulted
Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date solely by virtue of such Holder having
been such Holder; and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in subsection
(a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest on the Notes to the Persons in whose names such
Notes (or their respective Predecessor Record Date for the
payment of such Defaulted Interest Notes) are registered
at the close of business on a Special, which shall be fixed in
the following manner. The Company shall notify the Trustee
in writing of the amount of Defaulted Interest proposed to be
paid on each Note and the date of the proposed payment (which
date shall be such as will enable the Trustee to comply with
the next sentence hereof), and at the same time the Company
shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as
provided in this subsection (a) and not to be deemed part of
the Trust Estate. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which
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shall be not more than 15 nor less than ten days prior to the
date of the proposed payment and not less than ten days after
the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor
to be mailed, first-class postage prepaid, to each Holder of
a Note at his address as it appears in the Note Register not
less than ten days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid,
such Defaulted Interest shall be paid to the Persons in whose
names the Notes (or their respective Predecessor Notes) are
registered on such Special Record Date and shall no longer be
payable pursuant to subsection (b) of this Section 3.07.
(b) The Company may make payment of any Defaulted Interest
on the Notes in any other lawful manner not inconsistent with
the requirements of any securities exchange in which the Notes
may be listed and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this subsection (b), such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.07, each Note
delivered under this Indenture upon transfer of or in exchange for
or in lieu of any other Note shall carry all the rights to interest
accrued and unpaid, and to accrue, which were carried by such other
Note.
Section 3.08. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Note is registered
as the owner of such Note for the purpose of receiving payment of
principal of, and interest on, such Note and for all other purposes
whatsoever whether or not such Note be overdue, and, to the extent
permitted by law, neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
Section 3.09. CANCELLATION.
All Notes surrendered for payment, redemption, transfer, exchange
or conversion, if surrendered to the Trustee, shall be promptly
canceled by it, and, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee and, if not already
canceled, shall be promptly canceled by it. The Company shall
deliver to the Trustee for
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cancellation any Notes previously authenticated and delivered hereunder which
the Company may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Note shall be
authenticated in lieu of or in exchange for any Note canceled as
provided in this Section 3.09, except as expressly provided by this
Indenture. All canceled Notes held by the Trustee shall be
disposed of as directed by a Company Request.
Section 3.10. TERM AND FORM.
The Stated Maturity of the Notes shall be September 15, 2003. The
aggregate principal amount of Notes that may be authenticated,
delivered and outstanding is limited to $125,000,000. The Notes
shall bear interest from [ ], 1994 [the Effective Date] or from the
most recent Interest Payment Date to which interest has been paid
or duly provided for, payable semi-annually on March 15 and
September 15 each year, commencing September 15, 1994. The Notes
shall bear interest at the rate of 11% per annum until the
principal thereof shall become due and payable, and at the rate
of 14% per annum on any overdue principal and, to the extent
permitted by law, overdue interest. Interest shall be computed
on the basis of a 360-day year of twelve 30-day months based on the
actual number of days elapsed.
The principal and the Redemption Price of the Notes and interest on
the Notes on each Interest Payment Date shall be payable at a Place
of Payment, and, in addition to any other lawful means of such
payment, may be paid by check payable to the order of the
Noteholder.
The Regular Record Date referred to in Section 3.07 for the payment
of the interest on the Notes payable, and punctually paid or duly
provided for, on any Interest Payment Date shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date.
Section 3.11. EXCHANGEABILITY.
Subject to Section 3.05, all Notes shall be fully interchangeable
with other Notes, and, upon surrender at the office or agency of
the Company in a Place of Payment therefor, all Notes shall be
exchangeable for other Notes of a different authorized
denomination or denominations, as requested by the Holder
surrendering the same. The Company will execute, and the Trustee
shall authenticate and deliver, Notes whenever the same are
required for any such exchange.
Section 3.12. REDEMPTION.
The Company may, at its option, redeem, in accordance with Article
Thirteen, all or from time to time any
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part of the Notes on or after the fifth anniversary of the Effective Date,
at par together, in each case, with interest, if any, accrued and unpaid
thereon to the Redemption Date. In the event of an RIH Sale, all
the Notes shall be redeemed by the Company whether such RIH Sale
occurs before, on or after the fifth anniversary of the Effective
Date, at par together with interest, if any, accrued and unpaid
thereon to the Redemption Date; PROVIDED, HOWEVER, that such
obligation of the Company to redeem the Notes in the event of a
proposed RIH Sale shall cease to exist if the Holders of not less
than 66-2/3% in Outstanding Amount of the Outstanding Notes have
consented to such proposed RIH Sale.
Section 3.13. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE.
Forthwith upon the execution and delivery of this Indenture, Notes
up to an aggregate principal amount of $125,000,000 may be executed
by the Company and delivered to the Trustee for authentication, and shall
thereupon be authenticated and delivered by the Trustee upon Company Order,
without any further action by the Company.
ARTICLE FOUR
GUARANTY
Section 4.01. GUARANTY.
RIH hereby guarantees (such guaranty to be referred to herein as
the "Guaranty") to each Holder 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 hereunder or
thereunder, that: (a) the principal of and interest on the Notes
will be promptly paid in the amounts and at the times when due,
whether at the maturity or Interest Payment Date, by acceleration,
call for redemption or otherwise, and interest on the overdue
principal, if any, of the Notes, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will
be promptly paid in full or performed, all in accordance with the
terms hereof and thereof; and (b) in case of any extension of time
of payment or renewal of any Notes or payment or performance of any
of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension
or renewal, whether at Stated Maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed
for whatever reason, RIH will be obligated to pay the same
immediately. RIH hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or
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this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Notes with respect to any provisions hereof or
thereof, any releases of collateral, any delays in obtaining or realizing upon
or failures to obtain or realize upon collateral, the recovery of
any judgment against the Company, any action to enforce the same or
any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. This Guaranty is a
guaranty of payment and not of collectibility, and is secured by
the Guaranty Mortgage, as described therein. RIH hereby waives
diligence, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Guaranty
will not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture. If any
Noteholder or the Trustee is required by any court or
otherwise to return to either RIH or the Company, or any custodian,
trustee, liquidator or other similar official acting in relation to either
RIH or the Company, any amount paid by either RIH or the Company to
the Trustee or such Noteholder, this Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and
effect. RIH agrees that it shall not be entitled to, and hereby
irrevocably waives, any right of subrogation in relation to the
Company in respect of any obligations guaranteed hereby. RIH
further agrees that, as between RIH, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Section 7.02 for the purposes of this Guaranty, notwithstanding
any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of such
obligations as provided in Section 7.02, such obligations
(whether or not due and payable) shall forthwith become due and
payable by RIH for the purpose of this Guaranty.
Section 4.02. EXECUTION AND DELIVERY OF GUARANTY.
To evidence its Guaranty set forth in Section 4.01, RIH hereby
agrees to execute its Guaranty substantially in the form set forth
in Section 2.04, to be endorsed on each Note authenticated and
delivered by the Trustee and that this Indenture shall be executed
on behalf of RIH by an Authorized Signature.
RIH hereby agrees that its Guaranty set forth in Section 4.01 shall
remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guaranty; PROVIDED,
HOWEVER, that the Trustee or the
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Authenticating Agent has
signed the certificate of authentication on such Note.
If an Officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates a Note on which a
Guaranty is endorsed, the Guaranty shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of RIH.
Section 4.03 MORTGAGE SECURING GUARANTY.
In order to secure the due and punctual payment of all amounts
which may ever become owing under the Guaranty, when and as the
same shall be due and payable, and performance of all other
obligations of RIH to the Holders or the Trustee under the Guaranty,
according to the terms hereof, RIH has mortgaged and
encumbered all of its right, title and interest in and to the Trust
Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has
the full right, power and authority to grant, bargain, sell,
release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm the property constituting the Trust Estate, in the
manner and form done, or intended to be done, in the Guaranty
Mortgage, free and clear of all liens, pledges, charges and
encumbrances, whatsoever, except for the items described in
clauses (a) through (d) (inclusive) of Section 12.13, and (a) will
forever warrant and defend the title to the same against the claims
of all Persons whatsoever in accordance with the terms of the
Guaranty Mortgage, (b) will execute, acknowledge and deliver to
the Trustee such further instruments as the Trustee may require or
request, and (c) will do or cause to be done all such acts and
things as may be reasonably necessary or proper, or as may be
required by the Trustee (other than obtaining a loan title
insurance policy or title policy endorsement pertaining to the
Guaranty Mortgage), to assure and confirm to the Trustee its
interest in the Trust Estate and the right, title and interest in
and to the Guaranty Mortgage, so as to render the same available
for the security and benefit of this Guaranty secured thereby,
according to the intent and purposes herein expressed. The
Guaranty Mortgage creates and vests in the Trustee a direct and
valid lien, which lien is senior to the lien securing payment of
the Junior Mortgage Facility, senior to any lien securing the
Junior Guaranty, PARI PASSU with the lien of the Mortgage, junior
to the lien securing payment of the RIHF Senior Facility Notes and
any other secured Working Capital Facility and junior to any lien
securing the Working Capital Facility Guaranty. To the extent that
any security interest in the Trust Estate or the Guaranty Mortgage
is deemed to be
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granted and to be governed by the Uniform Commercial Code, the Guaranty
Mortgage is deemed to be a security agreement.
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. PAYMENT OF INDEBTEDNESS;
SATISFACTION AND DISCHARGE OF INDENTURE.
Whenever the following conditions exist, namely:
(a) all Notes theretofore authenticated and delivered have been
canceled by the Trustee or delivered to the Trustee for
cancellation, excluding, however,
(1) Notes for the payment of which money has theretofore
been deposited in trust with the Trustee
or a Paying Agent (other than the Company) or segregated and held in
trust by the Company and thereafter repaid to the
Company or discharged from such trust as provided in
Section 12.03,
(2) Notes alleged to have been destroyed, lost or stolen
which have been replaced or paid as provided in
Section 3.06, except for any such Note which, prior to
the satisfaction and discharge of this Indenture, has
been presented to the Trustee with a claim of ownership
and enforceability by the Holder thereof and where
enforceability has not been determined adversely
against such Holder by a court of competent
jurisdiction, and
(3) other than any Notes excluded by clauses (1) and (2) of
this Section 5.01(a), Notes which have become due and
payable, Notes which will become due and payable at
their Stated Maturity within one year and Notes which
have been or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name and at the expense of the Company, provided the
Company, in the case of such Notes, has deposited or
caused to be deposited with the Trustee in trust for the
purpose an amount sufficient to pay and discharge the
entire indebtedness on such Notes for principal and
interest to the date of maturity thereof in the case of
Notes which have become due and payable or to the Stated
Maturity or Redemption Date, as the case may be;
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(b) the Company or RIH has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company or RIH has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each of which shall
state that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with;
then this Indenture and the lien, rights and interests created
hereby shall cease, terminate and become null and void (except as
to any surviving rights of transfer or exchange of Notes herein or
therein provided for and any right to receive payments of principal
and interest as provided in Section 5.01(a)(3)) and the Trustee and
each co-trustee and separate trustee, if any, then acting as such
hereunder shall, at the expense of the Company, execute and deliver
a termination statement prepared by the Company in form reasonably
satisfactory to the Trustee and such instruments of satisfaction and
discharge as may be necessary and pay, assign, transfer and deliver
to the Company or upon Company Order all cash, securities and other personal
property then held by it hereunder, other than pursuant to Section 5.01(a)(3).
In the absence of satisfaction of all of the above conditions, the
payment of all Outstanding Notes shall not render this Indenture
inoperative.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 8.07
shall survive.
Section 5.02. APPLICATION OF DEPOSITED MONEY.
Money deposited with the Trustee pursuant to Section 5.01 shall
constitute a separate trust fund for the benefit of the Persons
entitled thereto. Subject to the provisions of Section 12.03, such
money shall be applied by the Trustee to the payment (either
directly or through any Paying Agent, as the Trustee may
determine) to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the
Trustee.
Section 5.03. REPAYMENT TO THE COMPANY.
The Trustee and any Paying Agent shall promptly pay to the Company
upon request any excess money or securities held by them at any
time. Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust, for the payment of the principal of, or
interest on, any Note and remaining unclaimed for two years
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after such principal or interest has become due and payable shall be paid to
the Company on its request, or (if then held by the Company) shall be dis-
charged from such trust, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with regard to such money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the ex-
pense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each business day and of general
circulation in the City of new York, State of New York, or mailed to each such
Holder, or both, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, as the case may be, any unclaimed balance of such
money then remaining will be paid to the Company.
ARTICLE SIX
SECURITY
Section 6.01. ASSIGNMENT AGREEMENT.
In order to secure the due and punctual payment of the principal of
and interest on the Notes, when and as the same shall be due and
payable, whether at Maturity or at an Interest Payment Date, by
acceleration, call for redemption or otherwise, of the Notes and
performance of all other obligations of the Company to the Holders
or the Trustee under this Indenture, according to the terms hereof,
the Company has made an assignment of all of its right, title and
interest in and to the Mortgage Documents (other than the Guaranty
Mortgage) to the Trustee pursuant to the Assignment Agreement. RIH
has the full right, power and authority to grant, bargain,
sell, release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm the property constituting the Trust Estate, in the
manner and form done, or intended to be done, in the Mortgage
Documents, and the Company has the full right, power and authority
to grant, bargain, sell, release, re-convey, assign, transfer and
confirm, absolutely, all of its right, title and interest in and to
the Mortgage Documents, in each case free and clear of all liens,
pledges, charges and encumbrances, whatsoever, except for the items
described in clauses (a) through (d) (inclusive) of Section 12.13,
and (a) each will forever warrant and defend the title to the same
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against the claims of all persons whatsoever in accordance with the
terms of the Mortgage Documents and the Assignment Agreement,
(b) each will execute, acknowledge and deliver to the Trustee
such further assignments, transfers, assurances or other
instruments as the Trustee may require or request, and (c) each
will do or cause to be done all such acts and things as may be
reasonably necessary or proper, or as may be required by the
Trustee, to assure and confirm to the Trustee its interest in the
Trust Estate and the right, title and interest in and to the
Mortgage Documents, so as to render the same available for the
security and benefit of this Indenture and of the Notes secured
hereby, according to the intent and purposes herein expressed.
The Mortgage Documents (other than the Guaranty Mortgage) and the
Assignment Agreement together create and vest in the Trustee a
direct and valid lien, which is PARI PASSU with the Guaranty
Mortgage, junior to the lien securing payment of the RIHF Senior
Facility Notes and any other secured Working Capital Facility and
junior to any lien securing payment of the Working Capital Facility
Guaranty, on the property constituting the Trust Estate and the
interest in the Mortgage Documents which they purport to create.
To the extent that any security interest in the Trust Estate or the
Mortgage Documents are deemed to be granted and to be governed by
the Uniform Commercial Code, the Mortgage and the Assignment
Agreement are deemed to be security agreements.
Section 6.02. RECORDING, ETC.
The Company will cause, at its own expense, the Assignment
Agreement, the Mortgage Documents, this Indenture and all
amendments or supplements thereto, to be registered, recorded and
filed and/or re-recorded, refiled and renewed in such manner and in
such place or places, if any, as may be required by law in order
fully to preserve and protect the lien of the Mortgage Documents
and the Assignment Agreement on all parts of the Trust Estate and
the Mortgage Documents and the interest in the RIH Promissory Note
and to effectuate and preserve the security of the Noteholders and
all rights of the Trustee.
The Company shall furnish to the Trustee:
(a) promptly after the execution and delivery of this
Indenture or other instrument of further assurance or
amendment, including any supplemental indenture, an Opinion
or Opinions of Counsel either (1) stating that, in the opinion
of such counsel, this Indenture, the Mortgage Documents and
the assignment to the Trustee of the Mortgage Documents
intended to be made by the Assignment Agreement and all
other instruments of further assurance or amendment have been
properly recorded, registered and filed to the extent
necessary to make effective the liens intended to be created by the
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Mortgage Documents and the Assignment Agreement, 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 the Mortgage Documents and the Assignment
Agreement 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 Mortgage
Documents and the Assignment Agreement, or (2) stating that,
in the opinion of such counsel, no such action is necessary
to make such liens and assignments effective; and
(b) within 60 days after June 30 in each year beginning with
the year 1995, an Opinion or Opinions of Counsel, dated as of
such date, either (1) 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 all supplemental indentures, financing
statements, continuation statements or other instruments of
further assurance as is necessary to maintain the liens of the
Mortgage Documents and the assignment of the Mortgage
Documents to the Trustee made by the Assignment Agreement
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 Noteholders
and the Trustee hereunder and under the Mortgage Documents
and the Assignment Agreement, or (2) stating that, in the
opinion of such counsel, no such action is necessary to
maintain such liens and assignments.
The Company and RIH shall cause TIA SECTION 314(d) relating to the release
of property from the liens of the Mortgage to be complied with.
Any certificate or opinion required by TIA SECTION 314(d) may be made by an
Officer of the Company or RIH, unless otherwise required by TIA
SECTION 314(d).
Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS.
The Trustee shall hold in its possession the Mortgage Documents,
except as it from time to time may be required for actions, suits
or proceedings relating to the Mortgage Documents or for the
purpose of enforcing or realizing upon any right or value thereby
represented. The Trustee may, from time to time, in its sole
discretion, for
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the purpose of convenient location of the Mortgage Documents, appoint
one or more agents to hold physical custody, for the account of the Trustee,
of the Mortgage Documents.
Section 6.04. SUITS TO PROTECT THE TRUST
ESTATE AND MORTGAGE DOCUMENTS.
Upon five days' prior written notice to the Company (or such
shorter period or without notice if deemed necessary and
appropriate by the Trustee), the Trustee shall have the power, but
not the obligation to institute and to maintain such suits and proceedings
as it may deem necessary or appropriate to prevent any impairment of the
Trust Estate by any acts which may be unlawful or in violation of
the Mortgage Documents, the Assignment Agreement or this Indenture,
and such suits and proceedings as the Trustee may deem necessary or
appropriate to preserve or protect its interest and the interests
of the Noteholders in the Trust Estate and the Mortgage Documents
and the principal, interest, issues, profits, rents, revenues and
other income arising therefrom (including 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 result in an impairment of security hereunder or be
materially prejudicial to the interests of the Noteholders or of
the Trustee). The Trustee shall also have authority to exercise
any rights or powers conferred on the Trustee as the holder of the
Note.
ARTICLE SEVEN
REMEDIES
Section 7.01. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", whenever used herein, means any one of the
following events (including any applicable notice requirement and
any period of grace as specified in this Section 7.01) (whatever
the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Note
when such interest becomes due and payable and continuance of
such default (the deposit with the Trustee pursuant to Section
3.07 of funds sufficient to make such interest payment in full
being deemed to cure any such
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default for the purposes hereof) for a period of ten days; or
(b) default in the payment of all or any portion of the
principal of any Note at its Maturity; or
(c) default in the performance or breach of any covenant of
the Company or RIH in this Indenture (other than a covenant a
default in the performance or breach of which is elsewhere in
this Section 7.01 specifically dealt with), the Assignment
Agreement or any of the Mortgage Documents and continuance of
such default or breach for a period of 30 days (or such
shorter or longer cure period, if any, as may be specified
in respect of such default or breach in the Assignment
Agreement or the applicable Mortgage Document, as the case
may be), and (other than with respect to Sections 12.07,
12.08, 12.09, 12.10, 12.11, 12.12, 12.13 or 12.21) after
there has been given (i) to the Company by the Trustee or
(ii) to the Company and the Trustee by the Holders of at least
25% in Outstanding Amount of the Outstanding Notes, a written
notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of
Default" hereunder; PROVIDED, HOWEVER, that, if such default
or breach is of a covenant set forth in Section 12.02, 12.04,
12.05, 12.11, 12.13 or 12.21, and if such default or breach is
of such a nature that is curable but is not susceptible of
being cured with due diligence within such 30-day period (or
such shorter or longer cure period) (for reasons other than
lack of funds), then such period shall be extended for such
further period of time
as may reasonably be required to cure such default or breach, so
long as (i) RIH delivers an
Officers' Certificate to the Trustee within such period
stating (A) the applicability of the provisions of this
proviso to such default or breach, (B) the Company's or RIH's
intention to remedy such default or breach with reasonable
diligence and (C) the steps which the Company or RIH has
undertaken to remedy such default or breach, and (ii) RIH
delivers to the Trustee additional Officers' Certificates
every 30 days thereafter updating the information contained
in the certificate described in clause (i) above, in which case
such period shall be extended for such further period of time
as may reasonably be required to cure such default or breach,
provided that the Company or RIH is then proceeding and
thereafter continues to proceed to cure such default or
breach with reasonable diligence; PROVIDED FURTHER, HOWEVER,
that such additional period of time shall not in any case
exceed 60 days; or
(d) a proceeding or case shall be commenced, without the
application or consent of the Company or RIH,
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in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator
or the like of the Company or RIH or of all or any
substantial part of its assets, or (iii) similar relief in
respect of the Company or RIH under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of
60 consecutive days; or
(e) the commencement by the Company or RIH of a voluntary
case under the federal bankruptcy laws or any other
applicable federal or state law, or the consent or
acquiescence by any of them to the filing of any such
petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or
sequestrator (or other similar official) of the Company or
RIH or any substantial part of any of their property, or the
making by any of them of an assignment for the benefit of
creditors, or the taking of action by the Company or RIH in
furtherance of any such action; or
(f) the revocation, suspension or involuntary loss of any
Permit which results in the cessation of a substantial
portion of the operations of the Casino-Hotel for a period
of more than 90 consecutive days; or
(g) (i) a default by the Company, RIH or any of their
Subsidiaries under any Indebtedness (other than the
Indebtedness represented by the Working Capital Facility and
the Junior Mortgage Facility) in an aggregate principal amount
in excess of $5,000,000, which default results in the
acceleration of the maturity of any such Indebtedness under
the evidence of indebtedness, indenture or other instrument
governing such Indebtedness; PROVIDED, HOWEVER, that, if such
default under such evidence of indebtedness, indenture or
other instrument shall be cured by the obligor, or be waived
by the holders of such Indebtedness, in each case as may be
permitted by such evidence of indebtedness, indenture or
other instrument and in each case resulting in rescission of
such acceleration thereunder, then the Event of Default
hereunder by reason of such default shall be deemed likewise
to have been thereupon cured or waived; or (ii) a default by
the Company, RIH or any of their Subsidiaries under any
Indebtedness represented by the Working Capital Facility or
the Junior Mortgage Facility, the effect of which default
(after the expiration of any applicable notice or grace
periods) is to permit the
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holder or holders of any such Indebtedness represented by the Working
Capital Facility or the Junior Mortgage Facility in an aggregate principal
amount in excess of $5,000,000 (or a trustee or agent on behalf of
such holder or holders) to cause the acceleration of the
maturity of such Indebtedness represented by the Working
Capital Facility or the Junior Mortgage Facility under the
evidence of indebtedness, indenture or other instrument
governing such Indebtedness; PROVIDED, HOWEVER, that if such
default under such evidence of indebtedness, indenture or
other instrument shall be cured by the obligor, or be waived
by the holders of such Indebtedness, in each case as may be
permitted by such evidence of indebtedness, indenture or
other instrument (and, if such default resulted in the
acceleration of the maturity of such Indebtedness, such
acceleration shall have been rescinded thereunder) then the
Event of Default hereunder by reason of such default shall be
deemed likewise to have been thereupon cured or waived; or
(iii) the existence of a final judgment of a court of
competent jurisdiction in an amount in excess of $3,000,000
against the Company, RIH or the Trust Estate, which judgment
has not been satisfied or otherwise provided for, for a
period of 30 days (during which execution shall not be
effectively stayed) following the date on which such
judgment becomes a lien against the Trust Estate or any part
thereof (unless the lawsuit in question was commenced without
effective service of process upon either the Company or RIH in
which case such 30-day period shall not commence until the
Company or RIH receives notice of such final judgment); or
(iv) the existence of a final judgment of a court of competent
jurisdiction in an amount in excess of $15,000,000 against the
Company, RIH or the Trust Estate, which judgment has not been
satisfied or otherwise provided for, for a period of 60 days
(during which execution shall not be effectively stayed)
following the date of such final judgment; or (v) the
existence of a final judgment of a court of competent
jurisdiction, regardless of amount, against the Company, RIH
or the Trust Estate, which judgment has not been satisfied or
otherwise provided for, for a period of 60 days (during which
execution shall not be effectively stayed) following the date
of such final judgment, if such judgment, by itself or upon
recordation or other action of the judgment creditor, imposes
or would impose a lien on the Trust Estate or any part thereof
senior to the lien of the Mortgage; or
(h) default in the performance, or breach, of any covenant
of the Company or RIH in Article Ten; or
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(i) the existence of a judgment of a court of competent
jurisdiction in an amount in excess of $3,000,000 against RIH regarding the
CRDA Dispute, which judgment has not been stayed, satisfied or otherwise
provided for, for a period of 30 days (during which execution shall not be
effectively stayed) (unless the lawsuit in question was commenced without
effective service of process upon RIH in which case such 30-day period
shall not commence until RIH receives notice of such final judgment); or
(j) if RII fails to pay or discharge or cause to be paid or
discharged, within 30 days before the same shall become delinquent, all
taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of
Default or Default shall be deemed to exist hereunder with respect to
any tax liability not paid or discharged by RII if and to the extent
that the amount, applicability or validity of such tax liabilities is
being contested in good faith by appropriate proceedings if adequate
reserves therefor have been established in accordance with GAAP; PROVIDED
FURTHER, HOWEVER, that this clause (j) shall not apply to amounts due
with respect to any period during which neither the Company, RIH nor any
of their Subsidiaries is included in RII's consolidated group for federal
income tax purposes.
No action, event, claim, liability or judgment regarding the CRDA
Dispute shall constitute a Default or an Event of Default under this Section
7.01 unless and until a judgment shall have
been entered against RIH which constitutes an Event of Default pursuant
to clause (i) of this Section 7.01.
Section 7.02. ACCELERATION OF MATURITY;
RESCISSION AND ANNULMENT.
If an Event of Default (other than one referred to in clause (d) or
(e) of Section 7.01) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes
Outstanding may declare the Outstanding Amount and all accrued interest of
all the Notes to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee, if given by any Noteholders), and upon any such
declaration such Outstanding Amount shall become immediately due and payable.
If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs,
then the Outstanding Amount of all the Notes shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company.
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At any time after such a declaration of acceleration has been made,
but before any judgment or decree for payment of money due on any
Notes has been obtained by the Trustee as hereinafter provided in
this Article Seven, the Holders of a majority in Outstanding Amount
of the Notes may, by written notice to the Company and the Trustee,
rescind and annul such declaration and its consequences if:
(a) the Company has deposited with the Trustee a sum
sufficient to pay:
(1) all overdue installments of interest on all Notes,
(2) the principal of any Notes which have become due
otherwise than by such declaration of acceleration and
interest thereon at the rate or rates prescribed
therefor in the Notes, and
(3) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel; and
(b) all Events of Default, other than the non-payment of the
Outstanding Amount of Notes which have become due solely by
such declaration of acceleration, have been cured, or have
been waived as provided in Section 7.13.
No such rescission and annulment shall affect any subsequent
default or impair any right consequent thereon.
Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON
NOTES AND RIGHT OF TRUSTEE TO JUDGMENT.
The Company covenants that, if:
(a) default is made in the payment of any interest on any
Note when such interest becomes due and payable, and such
default continues for a period of 10 days (the deposit with the
Trustee during such 10 day period pursuant to Section 3.07 of funds
sufficient to make such interest payment in full being deemed to
cure any such default for the purposes hereof), or
(b) default is made in the payment of the principal of any
Note at its Maturity,
then, upon demand of the Trustee, the Company will pay to the
Trustee for the benefit of the Holders of such Notes, the whole
amount then due and payable on such Notes for principal and
interest, with interest at the rate prescribed therefor in
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the Notes on overdue principal and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel. If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, shall be entitled to sue for and recover judgment
against the Company, RIH and any other obligor on the Notes for the
whole amount so due and unpaid. The Trustee shall be entitled to
institute such suit either before, after or during the pendency of
any proceedings for the enforcement of this Indenture or of the
Mortgage Documents or of the Assignment Agreement, but only after
the occurrence of an Event of Default.
Subject to the Intercreditor Agreement, in the case of a
foreclosure of the Mortgage and a sale of the Trust Estate and
application of the proceeds as provided in Section 7.06, the
Trustee, in its own name and as trustee of an express trust,
shall be entitled to enforce payment of, and to receive, all
amounts then remaining due and unpaid upon the Notes, for the
benefit of the Holders thereof, and shall be entitled to recover
judgment for any portion of the same remaining unpaid, with
interest as aforesaid. No recovery of any such judgment upon any
property of the Company shall affect or impair the security
provided by this Indenture and the Assignment Agreement or the
lien of the Mortgage upon the Trust Estate or any rights, powers or
remedies of the Holders of the Notes.
Section 7.04. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company
or RIH or any other obligor upon the Notes or the property of the Company or
RIH or of such other obligor or their creditors, the Trustee (irrespective of
whether the principal (or any portion thereof) of the Notes shall then be due
and payable, as therein expressed or by declaration or otherwise, and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the
Outstanding Notes and to file such 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
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advances of the Trustee, its agents and counsel) and of the Noteholders
allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding 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 8.07.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Noteholder any
plan of reorganization, arrangement, adjustment or compensation affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
on the claim of any Noteholder in any such proceeding.
Section 7.05. TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture, the Notes,
the Assignment Agreement or the Mortgage Documents may be prosecuted and
enforced by the Trustee without the possession of any of the Notes or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the Ratable Benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
Section 7.06. APPLICATION OF MONEY COLLECTED.
Subject to the Intercreditor Agreement, any money
collected by the Trustee pursuant to this Article Seven or pursuant
to Article Three or Section 5.11 or 5.20 of the Mortgage which is
not required to be paid to the Mortgagor thereunder shall be
applied in the following order, at the date or dates fixed by the
Trustee and upon such date interest shall cease to accrue, and, in
case of the distribution of such money on account of principal upon
presentation of the Notes, and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:
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(a) FIRST: To the payment of all amounts due the
Trustee under Section 8.07;
(b) SECOND: To the payment of the whole amount then
due upon the Outstanding Notes, for principal and interest,
in respect of which or for the benefit of which such money
has been collected, with interest (to the extent that such
interest has been collected by the Trustee or a sum sufficient
therefor has been so collected and payment thereof is legally
enforceable at the respective rate or rates prescribed
therefor in the Notes) on overdue principal; and in case such
proceeds shall be insufficient to pay in full the whole amount
so due and unpaid upon such Notes, then first, payment of
accrued but unpaid interest (with interest thereon as
aforesaid), and second, to outstanding principal, in each
case, ratably according to the aggregate amount so due; and
(c) THIRD: To the payment of the remainder, if any, to the
Company or to whomever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct.
Section 7.07. LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute
any proceeding, judicial or otherwise, under or with respect to
this Indenture, the Assignment Agreement or the Mortgage Documents,
or for the appointment of a receiver or trustee or for any other
remedy hereunder, unless:
(a) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in Outstanding
Amount of the Outstanding Notes shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day
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period by the Holder of a majority in Outstanding Amount of the
Outstanding Notes;
it being understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Indenture, the Assignment
Agreement or the Mortgage Documents, to affect, disturb or
prejudice the right of any other Holders of Notes, or to obtain
or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, the Assignment
Agreement or the Mortgage Documents, except in the manner herein
and therein provided and for the Ratable Benefit of all Notes.
Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS
TO RECEIVE PRINCIPAL AND INTEREST.
Notwithstanding any other provision in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest
on such Note on the Stated Maturity or Interest Payment Dates
expressed in such Note (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any
such payment and such rights shall not be impaired without the
consent of such Holder.
Section 7.09. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Noteholder has instituted any
proceeding to enforce any right or remedy under this Indenture, the
Assignment Agreement or the Mortgage Documents and such proceeding
has been discontinued or abandoned for any reason or has been
determined adversely to the Trustee or to such Noteholder, then and
in every such case the Company, the Trustee and the Noteholders
shall, subject to any determination in such proceeding, be restored
to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
Section 7.10. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to
the Trustee or to the Noteholders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right
or remedy.
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Section 7.11. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of
any Note to exercise any right or remedy accruing upon an Event of
Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Seven or by law to the
Trustee or to the Noteholders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the
Noteholders, as the case may be.
Section 7.12. OTHER RIGHTS.
Subject to Section 8.03(e), the Holders of a majority in
Outstanding Amount of the Outstanding Notes shall have the right, during
the continuance of an Event of Default,
(a) to require the Trustee to proceed to enforce this
Indenture, either by judicial proceedings for the
enforcement of the payment of the Notes by the foreclosure
of the Mortgage and exercise of any remedies under the
Mortgage Documents and the Assignment Agreement and the sale
of the Trust Estate or otherwise or, at the election of the
Trustee, by the exercise of the power of entry and/or sale
conferred by the Mortgage; and
(b) to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee
hereunder, provided that
(1) such direction shall not be in conflict with
any rule of law or this Indenture or any applicable Mortgage
Document or the Assignment Agreement;
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction; and
(3) the Trustee shall not be required to determine if
any action so directed would be unjustly prejudicial to the
Holders not taking part in such direction.
Section 7.13. WAIVER OF PAST DEFAULTS.
Before any judgment or decree for payment of money due
has been obtained by the Trustee as provided in this Article Seven,
the Holders of not less than 66-2/3% in Outstanding Amount of the
Outstanding Notes may, by Act of such Noteholders delivered to the
Trustee and the Company, on
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behalf of the Holders of all the Notes waive any past Default hereunder
and its consequences, except a Default
(a) in the payment of the principal of or interest on
any Note, or
(b) in respect of a covenant or provision hereof which
under Article Eleven cannot be modified or amended without the
consent of the Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other Default or impair any
right subsequent thereon.
Section 7.14. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of
any Note by his acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, the
Assignment Agreement or the Mortgage Documents, or in any suit
against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claim or defense
made by such party litigant; but the provisions of this Section
7.14 shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Noteholders, or group of Noteholders,
holding in the aggregate more than 10% in Outstanding Amount of
the Outstanding Notes, or to any suit instituted by any Noteholder
for the enforcement of the payment of the principal of or interest
on any Note on or after the Stated Maturity expressed in such Note
(or, in the case of redemption, on or after the Redemption Date) or
the relevant Interest Payment Date.
Section 7.15. ENFORCEMENT.
In case an Event of Default shall occur and be
continuing, the Trustee, in it discretion may, subject to the
provisions of Section 7.12, proceed to protect and enforce its
rights and the rights of the Noteholders under this Indenture by
a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement
contained in this Indenture or in aid of the execution of any power
granted in this Indenture or for the enforcement of any other
legal, equitable or other remedy,
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as the Trustee, being advised by counsel, shall deem most effectual to protect
and enforce any of the rights of the Trustee or the Noteholders hereunder.
In case an Event of Default shall occur and be continuing
under the Mortgage, the Trustee, as assignee of the Mortgage
Documents, in its discretion may, subject to the provisions of
Section 7.12, proceed to enforce its rights under the Mortgage
Documents and the Assignment Agreement.
Section 7.16. MANAGEMENT OF CASINO-HOTEL.
Notwithstanding any provision of this Article Seven to
the contrary,
(a) following an Event of Default under the Mortgage and
the taking of possession of the Trust Estate by the Trustee
and/or the appointment of a receiver of the Trust Estate or
any part thereof, the Trustee or any such receiver shall be
authorized, in addition to the rights and power of the Trustee
and such receiver set forth elsewhere in this Indenture, the
Assignment Agreement and the Mortgage Documents, to retain
one or more experienced operators of hotels and/or casinos to
manage and operate the Casino-Hotel on behalf of the Noteholders,
provided that any such operator shall have all necessary legal
qualifications, including all Permits, to manage the
Casino-Hotel; and
(b) no Noteholder shall have any right to take
possession of, operate or manage all or any portion of the
Casino-Hotel, individually or as a member of a group, unless
such Noteholder shall have all necessary legal qualifications,
including all Permits, to do so and shall otherwise be
qualified to be retained to manage the Casino-Hotel under
subsection (a) of this Section 7.16.
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of
Default,
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
Indenture and the Mortgage Documents, and no implied covenants or
obligations shall be read into this Indenture and the Mortgage Documents
against the Trustee; and
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(2) 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 expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture or the
Mortgage Documents; but in the case of any such certificates or
opinions which by any provision hereof or thereof are specifically
required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture and the
Mortgage Documents.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture or the Mortgage Document,
and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
(c) No provision of this Indenture or any Mortgage Document
shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that
(1) this Section 8.01(c) shall not be construed to limit
the effect of Section 8.01(a);
(2) the Trustee shall not be liable for any error of
judgment made in good faith by it, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than
a majority in Outstanding Amount of the Outstanding Notes
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Indenture or any Mortgage Document; and
(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
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(d) Whether or not therein expressly so provided, every
provision of this Indenture and the Mortgage Documents relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section 8.01.
Section 8.02. NOTICE OF DEFAULTS.
Within 45 days after the occurrence of any Default hereunder of which
a Responsible Officer of the Trustee has actual knowledge, the Trustee shall
transmit by mail to all Holders of Notes as their names and addresses appear
in the Note Register, notice of such Default hereunder known to the Trustee,
unless such Default shall have been cured or waived; PROVIDED, HOWEVER, that,
except in the case of a default in the payment of the principal of
or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the best interests of the
Noteholders.
Section 8.03. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 8.01:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, coupon, other
evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel, and the
written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection in respect
of any action taken, suffered or omitted by
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the Trustee 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 or any
of the Mortgage Documents at the request or direction of any of the
Noteholders pursuant to this Indenture, unless such Noteholders shall
have offered to the Trustee reasonable security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) 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, direction, consent, order,
bond, debenture, other evidence of indebtedness or other paper or
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 RIH, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or
by or through agents or attorneys, and the Trustee shall not
be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be deemed to have knowledge
of and shall not be required to take any action with respect
to any Event of Default (other than an Event of Default described
in Section 7.01(a) and (b) or any event which would, with the giving
of notice or the passage of time or both, constitute an Event of Default,
unless the Trustee shall have actual knowledge of such event or shall have
been notified in writing of such event by Noteholders holding in the
aggregate more than 25% in Outstanding Amount of the Outstanding Notes;
(i) subject to Section 8.01(c), the Trustee shall not be
personally liable, in case of entry by it upon the Trust
Estate, for debts contracted or liabilities or damages
incurred in the management or operation of the Trust Estate;
and
(j) in addition to and not in limitation of its other
powers hereunder, the Trustee shall have such power and
authority as may be necessary to enter into and
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accept delivery of any document as may be necessary to effect
on behalf of the Holders of the Notes the subordination of the
indebtedness in respect of the Notes to any secured Working
Capital Facility (in accordance with the provisions of the
Mortgage), and upon written request of the Company, the
Trustee shall enter into such agreements on behalf of the
holders of the Notes.
Section 8.04. NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS.
The recitals contained herein and in the Notes, except
in a certificate of authentication on the Notes, shall be taken as
the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Indenture,
the Notes or the Mortgage Documents. The Trustee shall not be
accountable for the use or application by the Company of Notes or the proceeds
thereof or of any money paid to the Company or by a Company Order under any
provision hereof.
Section 8.05. MAY HOLD NOTES.
The Trustee, any Paying Agent, Note Registrar,
Authenticating Agent or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee
of Notes and, subject to Sections 8.08 and 8.13, if operative, may
otherwise deal with the Company with the same rights it would have
if it were not Trustee, Paying Agent, Note Registrar,
Authenticating Agent or such other agent.
Section 8.06. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law.
The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Company.
Section 8.07. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder and
under the Mortgage Documents (which compensation shall not be
limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(b) except as otherwise expressly provided herein and in
the Mortgage Documents, to reimburse the Trustee
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upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustee's negligence
or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this
Indenture or the trust created hereunder or the performance of its duties
hereunder, including the reasonable costs and expenses of
defending itself against or investigating any claim or liability in con-
nection with the exercise or performance of any of its powers or
duties hereunder (including reasonable attorneys' fees and expenses).
As security for the performance of the obligations of the
Company and RIH under this Section 8.07, the Trustee shall be
secured under this Indenture and the Mortgage Documents by a lien
prior to the Mortgage upon all property and funds held or collected by the
Trustee, and for the payment of such compensation, expenses, reimbursements
and indemnity the Trustee shall have the right to use and apply any money held
by it pursuant hereto.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company and RIH under this Section 8.07 shall survive.
Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS.
This Indenture shall always have a Trustee who satisfies
the requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The
Trustee shall comply with TIA SECTION 310(b) including the second sentence
of TIA SECTION 310(b)(9).
Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which
shall be a corporation organized and doing business under the law
of the United States of America or of any state, authorized under
such laws to exercise corporate trust powers, having (or in the case of a
corporation included in a bank holding company system, the related bank holding
company having) a combined capital and surplus of at least
$100,000,000, subject to supervision or examination by federal or
state authority. In addition, if the Trustee is a
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corporation included in a bank holding company system, the Trustee,
independently of such bank holding company, shall meet the capital requirements
of TIA SECTION 310(a)(2). The Trustee shall comply with 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 certificates of interest or participation in other securities, of the
Company are outstanding, if the requirements for such exclusion set forth in
TIA SECTION 310(b)(1) are met. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of such
supervising or examining authority, then for the purposes of this Section 8.09,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section 8.09, it shall resign
immediately in the manner and with the effect hereinafter specified
in this Article Eight.
Section 8.10. RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article Eight
shall become effective until the acceptance of appointment by the
successor Trustee under Section 8.11.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in Outstanding Amount of the Outstanding
Notes, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 8.08
after written request therefor by the Company or by any
Noteholder who is a bona fide Holder of a Note, or
(2) the Trustee shall cease to be eligible under Section
8.09 and shall fail to resign after written request therefor
by the Company or by any Noteholder who is a bona fide Holder
of a Note, or
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(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, (i) the Company by a Company Order may
remove the Trustee, or (ii) subject to Section 7.14, any Noteholder
who is a bona fide Holder of a Note may, on behalf of himself and
all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
the Trustee for any cause, the Company, by a Company Order, shall
promptly appoint a successor Trustee. In case all or substantially
all of the Trust Estate shall be in the possession of a receiver or
trustee lawfully appointed, such receiver or trustee, by written instrument,
may similarly appoint a successor to fill such vacancy until a new Trustee
shall be so appointed by the Noteholders. If, within one year after such
resignation, removal or incapacity or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in Outstanding Amount of the Outstanding
Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment, become the successor Trustee and supersede the
successor Trustee appointed by the Company or by such receiver or
trustee. If no successor Trustee shall have been so appointed by
the Company or the Noteholders and accepted appointment in the
manner hereinafter provided, subject to Section 7.14, any
Noteholder who is a bona fide Holder of a Note may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give written notice of each
resignation and each removal of the Trustee and each appointment of
a successor Trustee to each Noteholder by mailing such notice by first-class
mail, postage prepaid, to each Noteholder as such Noteholder's name and address
appear in the Note Register; provided, however, that failure of the Company
to give such notice shall not affect the resignation or removal of such
Trustee. Each notice shall include the name of the successor Trustee and the
address of its principal corporate trust office.
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Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall became
effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the estates,
properties, rights, powers, trusts and duties of the retiring
Trustee; but, on request of the Company or the successor Trustee,
such retiring Trustee shall, upon payment of its charges, execute
and deliver an instrument conveying and transferring to such
successor Trustee all the estates, properties, rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder, subject nevertheless to its lien,
if any, provided for in Section 8.07. Upon request of any such
successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such estates,
properties, rights, powers and trusts.
No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article Eight.
Section 8.12. MERGER, CONVERSION, CONSOLIDATION
OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this
Article Eight, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any
Notes shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated
such Notes.
Section 8.13. PREFERENTIAL COLLECTION
OF CLAIMS AGAINST COMPANY.
The Trustee will comply with TIA SECTION 311(a).
A Trustee
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who has resigned or been removed shall be subject to
TIA SECTION 311(a) to the extent indicated.
Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES.
At any time or times, for the purpose of meeting the
legal requirements of the TIA or of any jurisdiction in which any
of the Trust Estate may at the time be located or in which it shall
be necessary or desirable for the Trustee to act, the Company and
the Trustee shall have power to appoint, and, upon the written
request of the Trustee or of the Holders of at least 25% in
Outstanding Amount of the Notes Outstanding, the Company shall for
such purpose join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Trustee either to
act as co-trustee, jointly with the Trustee, of all or any part of
the Mortgage Documents or of the Trust Estate covered by such
Mortgage Documents, or to act as separate trustee of any such
property, in either case with such powers as may be provided in
the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or
power deemed necessary or desirable, subject to the other
provisions of this Section 8.14. If the Company does not join in
such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default has occurred
and is continuing, the Trustee alone shall have power to make such
appointment.
Should any written instrument from the Company be
required by any co-trustee or separate trustee so appointed for
more fully confirming to such co-trustee or separate trustee such
property, title, right or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by the
Company within three business days of such request.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to
the following terms, namely:
(a) the Notes shall be authenticated and delivered, and
all rights, powers, duties and obligations hereunder in
respect of the custody of securities, cash and other personal
property held by, or required to be deposited or pledged with,
the Trustee hereunder, shall be exercised solely, by the
Trustee;
(b) the rights, powers, duties and obligations hereby
conferred or imposed upon the Trustee in respect of any
property covered by such appointment shall be conferred or
imposed upon and exercised or performed by the Trustee or by
the Trustee and such co-trustee or
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separate trustee jointly,
as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that
under any law of any jurisdiction in which any particular act
is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee;
(c) the Trustee, at any time, by an instrument in writing
executed by it may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section
8.14. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided
in this Section 8.14;
(d) the Trustee, or any other such trustee hereunder,
shall not be personally liable by reason of any act or
omission of any co-trustee or separate trustee hereunder, and
no co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the
Trustee, or any other such trustee hereunder;
(e) any Act of Noteholders delivered to the Trustee
shall be deemed to have been delivered to each such co-trustee
and separate trustee; and
(f) any co-trustee or separate trustee appointed
hereunder shall be entitled to compensation and indemnification
from the Company under Section 8.07 hereunder and shall be
entitled to all such other rights and protections afforded
the Trustee hereunder.
Section 8.15 APPOINTMENT OF AUTHENTICATING AGENT.
Upon the request of the Company, the Trustee shall
appoint an Authenticating Agent with power to act on its behalf and
subject to its direction in the authentication and delivery of the
Notes designated for such authentication by the Company and
containing provisions therein for such authentication in connection
with transfers and exchanges under Sections 3.04, 3.05, 3.06 and
13.07, as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by those
Sections to authenticate and deliver such Notes. For all purposes
of this Indenture, the authentication and delivery of Notes by the
Authenticating Agent pursuant to this Section 8.15 shall be
deemed to be the authentication and delivery of Notes "by the
Trustee". Such Authenticating Agent shall at all times be a bank
or trust company having its principal office in the Borough of
Manhattan, City and State of New York, and shall at all times be a
corporation organized and doing business under the laws
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of the
United States or of any State with a combined capital and surplus
of at least $50,000,000 and authorized under such laws to exercise
corporate trust powers and subject to supervision or examination by
federal or state authority. If such corporation publishes reports
of condition at least annually pursuant to law or the requirements
of such authority, then for the purposes of this Section 8.15 the
combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published.
Any corporation into which any Authenticating Agent may
be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or
any corporation succeeding to the corporate trust business of any
Authenticating Agent, shall be the successor of the Authenticating
Agent hereunder, if such successor corporation is otherwise
eligible under this Section 8.15, without the execution or filing
of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and the Company. The
Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such
Authenticating Agent and the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this
Section 8.15, the Trustee shall promptly appoint a successor
Authenticating Agent, and shall give written notice of such
appointment to the Company.
The Company agrees to pay to the Authenticating Agent
from time to time reasonable compensation for its services.
The provisions of Sections 3.10, 8.04 and 8.05 shall be applicable
to any Authenticating Agent.
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS
BY TRUSTEE
Section 9.01. COMPANY TO FURNISH TRUSTEE
SEMI-ANNUAL LISTS OF NOTEHOLDERS.
The Company will furnish or cause to be furnished to the
Trustee semi-annually, not less than 45 days nor more than
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60 days
after each date (month and day) specified as a semi-annual Interest
Payment Date for the Notes (whether or not any Notes are then
Outstanding), and at such other times as the Trustee may request
in writing, within 60 days after receipt by the Company of any such
request, a list in such form as the Trustee may reasonably require
containing all the information in the possession or control of the
Company, or any of its Paying Agents other than the Trustee, as to
the names and addresses of the Holders of Notes, obtained since the
date as of which the next previous list, if any, was furnished,
excluding from any such list the names and addresses received by
the Trustee in its capacity as Note Registrar. Any such list may
be dated as of a date not more than 15 days prior to the time such
information is furnished and need not include information received
after such date.
Section 9.02. PRESERVATION OF INFORMATION;
COMMUNICATIONS TO NOTEHOLDERS.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders of
Notes (1) contained in the most recent list
furnished to the Trustee as provided in Section 9.01, (2) received
by the Trustee in the capacity of Paying Agent (if so acting)
hereunder or (3) received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided
in Section 9.01 upon receipt of a new list so furnished.
(b) Holders may communicate pursuant to TIA SECTION
312(b) with other Holders with respect to their rights under this
Indenture or the Notes. The Company, the Trustee, the Note
Registrar and any other Person shall have the protection of TIA
SECTION 312(c).
(c) Every Holder of Notes, by receiving and holding the
same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any Paying Agent shall be held
accountable by reason of the disclosure of any such information as
to the names and addresses of the Holders of Notes in accordance
with Section 9.02(b), regardless of the source from which
information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request
made under Section 9.02(b).
Section 9.03. REPORTS BY TRUSTEE.
(a) Within 60 days after each May 15 beginning with
May 15, 1995, the Trustee shall transmit to each Noteholder a
report dated as of such May 15 that complies with TIA SECTION
313(a). The Trustee shall also comply with TIA SECTION 313(b)
and SECTION 313(c).
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(b) A copy of each such report shall, at the time of
such transmission to Noteholders, be filed by the Trustee with any
stock exchange on which the Notes are listed and also with the
Commission. The Company will notify the Trustee when the Notes are
listed on any stock exchange.
(c) The Trustee will provide the Casino Control
Commission and the Director of the Division of Gaming Enforcement
of New Jersey with:
(1) copies of all notices, reports and other written
communications which the Trustee gives to Noteholders;
(2) a list of Noteholders promptly after the original
issuance of the Notes and a list of Noteholders annualy on December 1
of each year, or such other time as requested by the Casino Control
Commission or Director of Division of Gaming Enforcement;
(3) notice of any Event of Default under this Indenture or
of any event, occurrence or condition actually known by the
Trustee which, with the giving of notice or lapse of time or
both would constitute an Event of Default under this Indenture
(including the Guaranty),
the RIH Promissory Note or the Mortgage Documents (as
such term is defined in such instruments), any acceleration
of the Indebtedness evidenced or secured hereby or thereby,
the institution of any legal actions or proceedings before any
court or governmental authority in respect of this Indenture
(including the Guaranty) or the Mortgage Documents, the
entering into or taking possession of any property
constituting the Trust Estate and any rescission, annulment
or waiver in respect of an Event of Default under any
instruments described in this clause (3);
(4) notice of the removal or resignation of the Trustee;
(5) notice of any transfer or assignment of rights under
this Indenture (including the Guaranty) (but not in respect
of the Notes) or the Mortgage Documents after a Responsible Officer of
the Trustee becomes aware of the same; and
(6) a copy of any amendment to the Notes, this Indenture
(including the Guaranty) or the Mortgage Documents immediately;
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provided
however, that the Trustee shall not be liable to any Person (other than
the Casino Control Commission and the Director of the Division of Gaming
Enforcement of New Jersey) for any failure to provide any of the above-
mentioned documents to the Casino Control Commission and the Director of
the Division of Gaming Enforcement of New Jersey.
The notice specified in Section 9.03 (c) above shall be in writing and,
except as set forth below, shall be given immediately
after the Trustee has actual knowledge of any circumstances
requiring such notice. In the case of any notice in respect of
any Default or Event of Default under any instrument described in
Section 9.03(c), such notice shall be accompanied by a copy of any
notice from the Holders of Notes, or a representative thereof or
the Trustee, to the defaulting Person and, if accompanied by any
such notice to the defaulting Person, shall be given simultaneously
with the giving of any such notice to the defaulting Person. In
the case of any legal actions or proceedings, such notice shall be
accompanied by a copy of the complaint or other initial pleading or
document.
The Trustee and its Responsible Officers shall cooperate
with the Casino Control Commission and the Director of the Division of Gaming
Enforcement of New Jersey in order to provide such Commission and
Director with information and documentation relevant to compliance
with Section 9.03(c) above and as otherwise required by the Casino
Control Act.
The expiration date of the current gaming Permit held by
RIH is February 26, 1994. Subsequent gaming Permits held by RIH
are scheduled to expire every two years on February 26th, commencing February
26, 1996 unless and until the Trustee is advised otherwise. RIH
will advise the Trustee of any change
in such expiration date within five business days of knowledge thereof.
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE
OR TRANSFER ONLY ON CERTAIN TERMS.
Neither the Company nor RIH shall consolidate, combine or
merge with or into any other Person or permit any other Person to
consolidate, combine or merge with or into the Company or RIH, as
the case may be; and neither the Company with respect to its assets
nor RIH with respect to the Trust
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Estate shall sell, assign, convey
or transfer its interest in such assets or the Trust Estate, as the
case may be, substantially as an entirety (and notwithstanding
anything to the contrary contained herein (including the proviso
at the end of this sentence, but subject to Section 10.05), but subject to the
provisions of the Mortgage regarding dispositions of the Trust Estate, neither
the Company with respect to its assets nor RIH with respect to the
Trust Estate may sell, assign, convey or transfer such assets or
the Trust Estate, as the case may be, other than substantially as
an entirety) to any other Person or group of Persons in one
transaction or a series of related transactions, or permit any
other Person or group of Persons to convey or transfer all or
substantially all of its assets, subject to liabilities other than
DE MINIMIS liabilities, to the Company or RIH; and the Company
and RIH shall not transfer, convey, sell or otherwise dispose of to
any other Person, or issue to any Person, any equity interest in
the Company or RIH, as the case may be (each of the aforesaid
transactions described in this Section 10.01 is referred to herein
as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) the
Company may engage in a Combination Transaction in which the only
other party or parties is RIH or a direct or indirect wholly owned
Subsidiary of the Company or RIH, and (ii) the Company or RIH may
engage in any other Combination Transaction (either independently
or at the same time as other Combination Transactions), subject to
the following with respect to each such Combination Transaction:
(a) the conditions set forth in Section 10.03 are
satisfied;
(b) in the event the Company or RIH shall consolidate,
combine or merge with or into another Person or sell,
assign, convey or transfer its interest in its assets or in
the Trust Estate, as the case may be, substantially as an
entirety (but not less than
substantially as an entirety) to another Person in one
transaction or a series of related transactions, the entity
which is formed by or survives such consolidation, combination
or merger or the Person to which such assets or the Trust
Estate are conveyed or transferred:
(1) shall be organized and existing under the laws
of the United States of America, any state thereof, or
the District of Columbia;
(2) shall expressly assume, by an indenture
supplemental hereto, in form reasonably satisfactory to the
Trustee, executed and delivered to the
Trustee, the performance and observance of every
covenant, obligation and condition of this Indenture
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to be performed or observed by the Company or RIH,
whichever the case may be;
(3) shall expressly assume, by an instrument
executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the due and punctual performance of
every covenant, obligation and condition of the Mortgage
Documents and Assignment Agreement to be performed by
the Company or RIH, whichever the case may be; and
(4) immediately after and giving effect to such
transaction could incur at least $1.00 of additional
Indebtedness under Section 12.08;
(c) immediately after giving effect to such transaction,
no Event of Default, or Default hereunder or under the Mortgage
shall have occurred and be continuing;
(d) such Combination Transaction shall be on such terms
as shall not impair the lien and security and priority hereof
or of the Mortgage Documents or of the Assignment Agreement
and the rights and powers of the Trustee and the Holders of
the Notes hereunder and thereunder; and
(e) the Company or RIH, as the case may be, shall have
delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each of which shall state that such
Combination Transaction and such supplemental indenture
comply with this Article Ten and that all conditions
precedent herein provided for relating to such transaction
have been complied with.
Section 10.02. SUCCESSOR ENTITY SUBSTITUTED.
Upon any consolidation, combination or merger or any
conveyance or transfer of an interest in the assets of the Company
or in the Trust Estate permitted by Section 10.01, the successor
entity formed by such consolidation or into which
the Company or RIH is combined or to which such conveyance or
transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, and shall be bound by every obligation
and liability of, the Company or RIH, whichever
the case may be, under this Indenture with the same effect as if
such successor entity had been named as the Company or RIH herein;
PROVIDED, HOWEVER, that no such consolidation or combination
involving the Company or RIH, unless such transaction is in
compliance with the provisions of this Article Ten, shall have the
effect of releasing the Person named as "the Company" or "RIH", as
the case may be, in the first paragraph of this instrument, or any
successor entity which shall theretofore have become such in the
manner
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prescribed in this Article Ten, from its liability as
obligor and maker on the RIH Promissory Note or any of the
Notes.
Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL.
Neither the Company nor RIH shall engage in any
Combination Transaction unless, immediately following such
Combination Transaction, (a) RIH (or any successor entity) shall
be eligible for and shall meet all relevant Legal Requirements,
including holding all permits, required for the normal operation
of the business of owning and operating the Casino-Hotel, and (b)
RIH (or any successor entity) shall be controlled by a Person that
is, or shall retain to manage the Casino-Hotel one or more Persons
that are, experienced in the operation and management of
casino-hotels.
Section 10.04. LIMITATION ON SALES OF TRUST ESTATE.
Except as otherwise expressly permitted by the Mortgage
and this Indenture, neither the Company nor RIH shall sell, assign,
lease, sublease, hypothecate, pledge, mortgage or otherwise transfer
all or any part of the assets of the Company or the Trust Estate or
any interest therein (including, without limitation, any interest in
the Ground Leases). Without limiting the generality of the
foregoing, RIH shall not separate, or attempt to separate, its
ownership of its interest in the Ground Leases from the ownership
of the buildings constituting the Casino-Hotel or any part thereof.
Section 10.05 RIH SALE.
The foregoing provisions of this Article Ten shall not apply in
connection with an RIH Sale.
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS.
Without the consent of the Holders of any Notes, the
parties hereto may from time to time amend or supplement this
Indenture, the Assignment Agreement, the Notes or the Mortgage
Documents, as long as the form of such amendment or supplement
is satisfactory to the Trustee, for any of the following purposes:
(a) to correct or amplify the description of the Trust
Estate or better to assure, convey and confirm unto the
Trustee the assignment of the Mortgage Documents; or
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(b) to add additional conditions, limitations and
restrictions thereafter to be observed to the conditions,
limitations and restrictions on the authorized amount, terms
of issue, authentication and delivery of Notes as herein set
forth; or
(c) to comply with Article Ten; or
(d) to add to the covenants of the Company for the
benefit of the Holders of all Notes or to surrender any right
or power herein conferred upon the Company; or
(e) to cure any ambiguity, defect or inconsistency in
any of the enumerated documents, provided such action shall not
adversely affect the interests of the Holders of the Notes;
or
(f) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect
the qualification of this Indenture under the TIA or under any
similar federal statute hereafter enacted, and to add to this
Indenture such other provisions as may be expressly permitted
by the TIA, EXCLUDING, HOWEVER, the provisions referred to in
TIA SECTION 316(a)(2) as in effect at the date as of which this
instrument was executed or any corresponding provision in
any similar federal statute hereafter enacted; or
(g) to effectuate any subordination contemplated in
Section 8.03(i); or
(h) to comply with the requirements of the Casino Control Act.
The terms of any such enumerated document entered into
pursuant to this Section 11.01 shall be subject to prior approval of
the Casino Control Commission in consultation with the New Jersey Division
of Gaming Enforcement.
Section 11.02. WITH CONSENT OF NOTEHOLDERS.
With the consent of the Holders of not less than 66-2/3%
in Outstanding Amount of the Notes then Outstanding, by Act of such
Holders delivered to the Company and the Trustee, the parties
hereto may amend or supplement this Indenture, the Mortgage
Documents, the Assignment Agreement or the Notes, provided that the form of
such amendment or supplement is reasonably satisfactory to the Trustee. The
Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding may
waive compliance by the Company or RIH with any provision of this
Indenture, the Mortgage
Documents, the Assignment Agreement or the Notes, except a default
in the payment of principal of or interest on any Note, without
notice to any
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Noteholder. Without the consent of the Holder of each
Outstanding Note affected thereby, an amendment, supplement or
waiver, including a waiver pursuant to Section 7.13, may not:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal
amount thereof or the interest thereon or the amount payable
upon the redemption thereof, or change any Place of Payment
where, or the coin or currency in which, any Note, or the
interest thereon, is payable, or impair the right to
institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date); or
(b) reduce the percentage in Outstanding Amount of the
Outstanding Notes, the consent of whose Holders is required
for any amendment, supplement or waiver; or
(c) modify or alter the provisions of the proviso to the
definition of the term Outstanding; or
(d) modify any of the provisions of this Section or
Section 7.13, except to increase any percentage provided
thereby or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of
the Holder of each Note affected thereby; or
(e) permit the creation of any lien ranking prior to the
lien of the Mortgage (except for such liens expressly
permitted pursuant to Section 12.13).
In determining whether to execute any amendment or
supplement, subject to Sections 11.02(a) through (e), the Trustee
may in its discretion determine whether or not any Notes would be
affected by any such amendment or supplement and any such
determination shall be conclusive upon the Holders of all Notes,
whether theretofore or thereafter authenticated and delivered
hereafter. The Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders
under this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such
Act shall approve the substance thereof.
In connection with any amendment, supplement or waiver
under this Indenture, the Company or RIH may, but shall not be
obligated to, offer to any Holder who consents to such amendment,
supplement or waiver, or to all Holders, at the
discretion of the Company or RIH,consideration for such Holder's
consent to such amendment,supplement or waiver. The terms of any such
enumerated document entered into pursuant to
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this Section 11.02 shall be
subject to the prior approval of the Casino Control Commission in consultation
with the New Jersey Division of Gaming Enforecement.
Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS.
In executing, or accepting the additional trusts created
by, any amendment or supplement permitted by this Article or the
modification thereby of the trusts already created by this
Indenture, the Trustee shall be entitled to receive from the Company, and,
subject to Section 8.01(c), shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such amendment or
supplement is authorized or permitted by this Indenture. The
Trustee may, but shall not, except to the extent required in the
case of a supplemental indenture entered into under Section
11.01(e), be obligated to, enter into any such amendment or
supplement which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT.
Upon the execution of any amendment or supplement under
this Article, every Holder of Notes theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the TIA and Casino Control
Act as then in effect.
Section 11.06. REFERENCE IN NOTES TO
AMENDMENT OR SUPPLEMENT.
In the absence of a direction from the Company,
Notes authenticated and delivered after the execution of
any amendment or supplement pursuant to this Article may, and if
required by the Trustee shall, bear a notation in form approved by
the Trustee as to any matter provided for in such amendment or
supplement. If the Company shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the
Company, to any such amendment or supplement may be prepared and
executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Notes.
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ARTICLE TWELVE
COVENANTS
Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay or cause to be
paid the principal of and interest on each of the Notes at the
place or places, at the respective times and in the manner provided
in the Notes and this Indenture. Each installment of interest on
the Notes may be paid by mailing checks for such interest payable to
or upon the written order of the Holders of Notes entitled thereto,
to such address and in such name as they shall appear on the Note
Register. Any installment of principal and interest shall be
considered paid on the date it is due if the Trustee or Paying
Agent (other than the Company or a Subsidiary of the Company or
any Affiliate thereof) holds on that date money in immediately
available funds designated exclusively for and sufficient to pay
the installment and the Trustee and/or the Paying Agent has not
received instructions from the Company not to make such payment or
is not prohibited from paying such money to the Noteholders
pursuant to the terms of this Indenture.
The Company shall pay interest (including post-petition
interest in any proceeding under any applicable bankruptcy law) to
the extent legally permitted on overdue principal at the rate set
forth in the Notes; and it shall pay interest (including
post-petition interest in any proceeding under any applicable
bankruptcy law) on unpaid interest otherwise payable under the
first clause of this sentence at the same rate to the extent
legally permitted.
Section 12.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain, in the Borough of Manhattan,
the City of New York, State of New York, an office or agency where
Notes may be presented or surrendered for payment, where Notes may
be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Notes
and this Indenture may be served. The Company initially appoints
the Trustee as its agent for presentation or surrender of Notes for
payment or registration, transfer or exchange. The Trustee (or its corporate
parent) will maintain an office in the Borough of Manhattan, the City of New
York, State of New York, for such purposes.
The Company may from time to time designate one or more
other offices or agencies (in or outside the City of New
York, State of New York) where the Notes may be presented or
surrendered for any or all such purposes, and may from time to
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time rescind such designations; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York, State of New York, for such
purposes as stated in this Section 12.02. The Company will give
prompt written notice to the Trustee of any such designation and
any change in the location of any such office or agency.
If at any time the Company shall fail to maintain such
an office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and
demands may be made or served at the principal corporate trust
office of the Trustee, and the Company hereby appoints the Trustee
its agent to receive all such presentations, surrenders, notices
and demands.
Section 12.03. MONEY FOR SECURITY
PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of, or
interest on, any of the Notes, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum, sufficient to pay
the principal or interest so becoming due until such sums shall be
paid or issued to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of such action or
any failure so to act.
The Company will, on or before each due date of the
principal of or interest on, any Notes, deposit with a Paying Agent
a sum in same day funds, sufficient to pay the principal or
interest so becoming due, such sum, as the case may be, to be held
in trust for the benefit of the Persons entitled to such principal
or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of such action or any
failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all sums received by it as such agent for the
payment of the principal of or interest on Notes (whether such
sums have been paid to it by the Company or by any other
obligor on the Notes) in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
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(b) promptly give the Trustee notice of any failure by
the Company (or any other obligor upon the Notes) to make any
payment of the principal of, or interest on, the Notes when
the same shall be due and payable; and
(c) at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent.
Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the
principal of, or interest on, any Note and remaining unclaimed for
two years after such principal or interest has become due and
payable shall be paid to the Company on its request, or (if then
held by the Company) shall be discharged from such trust, unless
otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, and the Holder of such
Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with regard to such money, and all
liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each
business day and of general circulation in the City of New York,
State of New York, or mailed to each such Holder, or both, notice
that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
publication or mailing, as the case may be, any unclaimed balance
of such money then remaining will be paid to the Company.
Section 12.04. CORPORATE EXISTENCE.
Subject to Article Ten, each of the Company and RIH 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
existence of each of its Subsidiaries in accordance with the
respective organizational documents of the Company, RIH and each
such Subsidiary and the rights (charter and statutory), licenses,
permits, approvals and governmental franchises of it and each of
its Subsidiaries necessary to the conduct of its and their
respective businesses, including, without limitation, all
licenses, permits, approvals and franchises necessary to assure
the continued operation of RIH's gaming operations at the
Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly
owned subsidiary of RIH may consolidate with, merge into or
transfer or distribute all or part of its properties and assets
to RIH or the Company or as otherwise provided in Section 10.01.
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Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE.
The Company and RIH will each keep proper books of record
and account, in which full and correct entries shall be made of all
material dealings or transactions of or in relation to the Notes
and the properties, business and affairs of the Company and RIH in
accordance with GAAP. The Company and RIH will at any and all
times, upon the written request of the Trustee and at the expense
of RIH, permit the Trustee by its representatives to inspect the
Casino-Hotel and the books of account, records, reports and other
papers of the Company and RIH, and to make copies and extracts
therefrom, and will afford and procure a reasonable opportunity to
make any such inspection (provided that the Company and RIH shall
have received reasonable advance notice of such inspection and that
any such inspection shall not unreasonably interfere with the
business operations of the Company and RIH). The Company and RIH
will furnish to the Trustee any and all information as the Trustee
may reasonably request with respect to the performance by the
Company and RIH of their covenants in this indenture.
Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES.
(a) RIH shall furnish or cause to be furnished to the
Trustee, within 105 days after each fiscal year of RIH: (i) a copy
of annual audited financial statements of RIH prepared in
conformity with GAAP, accompanied by a report of Ernst & Young or
of another firm of independent certified public accountants of
recognized national standing selected by RIH (the "National
Accountants"), together with a certificate from such National
Accountants stating that their audit examination has included a
review of the terms of this Indenture and that the National
Accountants have not become aware of any Event of Default or that
a Default has occurred and is continuing, and if they have become
aware of any such Event of Default or Default, describing it;
PROVIDED, HOWEVER, that the National Accountants shall not be
liable to any Person for any failure to discover any Event of
Default or Default in connection with such review; and (ii) a copy
of annual unaudited financial statements of RIH, including notes
to such financial statements and corresponding management's
discussion and analysis, in form and substance comparable to that
which would be required to be filed with the Commission in an
Annual Report on Form 10-K under the Exchange Act, prepared in the
same manner as the audited financial statements referred to in
clause (i) of this Section 12.06(a), signed by a proper accounting
officer of RIH. RIH contemporaneously with the furnishing of such
audited financial statements to the Trustee under clause (i) this
Section 12.06(a), RIH shall mail copies of such audited financial
statements to the Holders (which need not include the
certificate referred to in such clause (i)).
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(b) RIH shall furnish or cause to be furnished to the
Trustee, within 60 days after each quarter of each fiscal year of
RIH, except the final quarter of such fiscal year, a copy of
unaudited financial statements of RIH prepared on a consistent
basis with the audited financial statements referred to in clause
(i) of Section 12.06(a), signed by a proper accounting officer of
RIH and consisting of at least a balance sheet as at the close of
such quarter and statements of operations and cash flow for such
quarter and for the period from the beginning of such fiscal year
to the close of such quarter, including notes to such financial
statements and corresponding management's discussion and analysis,
in form and substance comparable to that which would be required to
be filed with the Commission in a Quarterly Report on Form 10-Q
under the Exchange Act. RIH contemporaneously with the furnishing
of such unaudited financial statements to the Trustee under this
Section 12.06(b), RIH shall mail copies of such unaudited financial
statements to the Holders (which need not be signed by a proper
accounting officer of RIH).
(c) RIH shall furnish or cause to be furnished to the
Trustee, contemporaneously with the furnishing of a copy of the
annual financial statements and of the quarterly financial
statements referred to in Section 12.06(a) and Section 12.06(b),
an Officers' Certificate dated the date of such annual financial
statement or such quarterly financial statements to the effect that
no Default or Event of Default has occurred and is continuing, or,
if there is any such Default or Event of Default, describing it and
the steps, if any, being taken to cure it.
(d) RIH shall furnish or cause to be furnished to the
Trustee, copies of each filing and report made by RIH or the Company
with the Commission pursuant to the reporting and filing requirements
of Section 13 or 15(d) of the Exchange Act, within 15 days after RIH
or the Company, as applicable, is required to file the same.
(e) RIH agrees that, if RIH becomes exempt from the
Commission reporting and filing requirements of Section 13 or 15(d)
of the Exchange Act, RIH shall prepare such periodic reports as it
would otherwise have been required to file with the Commission and
(i) at its own expense, cause all such periodic reports to be filed
with the Commission, the Trustee and any exchange upon which the
Notes then are listed, in each case on the date when such periodic
report would have been required to be filed with the Commission
under Section 13 or 15(d) of the Exchange Act, if either of such
provisions were applicable, and (ii) keep copies of such periodic
reports available at its office and promptly provide any Person who so
requests with a copy of any such periodic report, at the Company's
expense.
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(f) Each of the Company and RIH shall comply with the
provisions of SECTION 314(a) of the Trust Indenture Act.
(g) The Company shall deliver to the Trustee, promptly
upon becoming aware of any Default or Event of Default (but in no
event later than five business days thereafter) in the performance
of any covenant or agreement of the Company contained in this
Indenture or any of the Mortgage Documents, an Officers' Certificate
specifying with particularity such event.
Section 12.07. LIMITATIONS AND DIVIDENDS
AND RESTRICTED PAYMENTS.
(a) The Company hereby covenants that, on and after the
date of this Indenture, it will not, directly or indirectly, make,
or permit any Subsidiary of the Company to make, any Restricted
Payment.
(b) RIH hereby covenants that, on or after the date of
this Indenture,it will not, directly or indirectly make, or permit
any Subsidiary of RIH to make, any Restricted Payment; PROVIDED,
HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio,
as certified to the Trustee by an Officers' Certificate, calculated
at the time of the declaration of the dividend or distribution is
equal to or exceeds two, then RIH may declare and pay cash dividends
or make cash distributions in respect of any class of capital stock
of RIH in an amount not to exceed in the aggregate with any other
such cash dividends or distributions declared or made from and after
the date hereof, 50 percent of RIH's Consolidated Net Income from
and after the date hereof; and (ii) if (1) RIH's Consolidated
Interest Coverage Ratio, as certified to the Trustee by an
Officer's Certificate, calculated at the time of the declaration
of the dividend or distribution is equal to or exceeds two, and (2)
RIH has cash in excess of the amount required to pay interest on
the Notes and the Junior Mortgage Notes on the next Interest
Payment Date plus $20,000,000, then RIH may declare and pay cash
dividends or make cash distributions in respect of any class of
capital stock of RIH in an amount not to exceed such excess cash
amount.
(c) The Company and RIH will not, and will not permit
any of their respective Subsidiaries to, create or otherwise cause
or suffer to exist or become effective any encumbrance or
restriction of any kind on the ability of any Subsidiary of RIH or
the Company: (i) to pay dividends or make any other distribution
on the capital stock of such Subsidiary that is owned by RIH, the
Company or a wholly owned
Subsidiary of the Company or RIH, as applicable; (ii) to pay any
Indebtedness owed by such Subsidiary to RIH, the Company or any
wholly owned Subsidiary of the Company or RIH, as
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applicable; (iii)
to make loans or advances to RIH, the Company or any wholly owned
Subsidiary of the Company or RIH, as applicable; or (iv) to
transfer any of its property or assets to the Company, RIH or any
wholly owned Subsidiary of the Company or RIH, as applicable,
except (A) any restrictions existing on or prior to the date
hereof, or in connection with agreements in effect, or entered
into, on the date hereof, or any permitted amendments, renewals,
refundings, refinancings or extensions thereof; PROVIDED, HOWEVER,
that the terms and conditions of any such amendments, renewals,
refundings, refinancings or extensions are no more restrictive with
respect to the matters set forth in clauses (i) through (iv) of
this Section 12.07(c) than the agreements being amended, refunded,
renewed, refinanced or extended; (B) any restrictions or
encumbrances existing or arising pursuant to the terms of
Indebtedness of a Person outstanding at the time such Person
becomes a Subsidiary of the Company or RIH and not incurred in
connection with, or in contemplation of, such Person becoming a
Subsidiary of the Company or RIH or any permitted amendments,
renewals, refinancings or extensions thereof; PROVIDED, HOWEVER,
that the terms and conditions of any such amendments, renewals,
refundings, refinancings or extensions are no more restrictive with
respect to the matters set forth in clauses (i) through (iv) of this
Section 12.07(c) than the agreements being amended, renewed,
refunded, refinanced or extended; (c) encumbrances or restrictions
existing under or by reason of applicable law or regulation
(including, without limitation, the Casino Control Act) or this
Indenture; (d) customary provisions restricting assignment of
contracts or subletting or assignment of any lease governing a
leasehold interest of any Subsidiary of the Company or RIH; or
(e) net worth maintenance requirements imposed by any governmental
authority.
Section 12.08. LIMITATIONS ON ADDITIONAL
INDEBTEDNESS AND ISSUANCE OF NOTES.
(a) The Company and RIH shall not, and shall not permit
any of their respective Subsidiaries to, directly or indirectly,
incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to, including, without limitation,
through any merger or consolidation to which the Company, RIH or
any of their respective Subsidiaries is a party or through any other
acquisition of any such Subsidiary (collectively, "incur"), or
have outstanding, any Indebtedness other than, without duplication,
the following:
(i) the Notes;
(ii) Indebtedness represented by the Junior Mortgage
Facility;
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(iii) Indebtedness represented by the Working Capital
Facility;
(iv) Indebtedness represented by Capitalized Lease
Obligations in an amount not in excess of $5,000,000 in the
aggregate at any time outstanding;
(v) Indebtedness represented by F,F&E Financing
Agreements in an amount not in excess of $10,000,000 in the
aggregate at any time outstanding;
(vi) unsecured Indebtedness in an amount not in excess of
$5,000,000 in the aggregate at any time outstanding that is
subordinated and junior to the Junior Mortgage Notes at least
to the extent set forth in the Subordination Provisions
attached hereto as Exhibit C and which Indebtedness does not
have any requirements for amortization payments, mandatory
redemption or sinking fund payments prior to the stated
maturity of the Junior Mortgage Notes and does not provide
for the payment of interest in cash at any time when the most
recent installment of interest on the Junior Mortgage Notes
was not paid in cash;
(vii) Non-Recourse Indebtedness in an amount not in
excess of $25,000,000 in the aggregate at any time outstanding;
(viii) After-Acquired Fee Mortgage Debt in an amount not
in excess of $3,000,000 in the aggregate at any time
outstanding; and
(ix) Intercompany advances between RIH, the Company or
any of their direct or indirect Subsidiaries on the one hand,
and RII, on the other hand, in an in excess of $1,000,000 in the
aggregate at any time outstanding.
(b) The Company and RIH shall not permit any of their
respective Subsidiaries to issue (other than to the Company, RIH or
a direct or indirect wholly owned Subsidiary of the Company or RIH)
any capital stock which has voting rights or has a preference as to
any distribution over its common stock.
Section 12.09. LIMITATIONS ON REPAYMENT
OF SUBORDINATED INDEBTEDNESS.
Neither the Company nor RIH shall, and neither the
Company nor RIH shall permit any Subsidiary to, directly or
indirectly, purchase, redeem, defease (including, but not
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limited to, in-substance or legal defeasance) or otherwise acquire
or retire for value prior to the stated maturity of, or prior to
any scheduled mandatory redemption or sinking fund payment with
respect to (collectively, to "repay" or a "repayment"), the
principal of any Indebtedness of the Company, RIH or any Subsidiary
of the Company or RIH which is subordinated (whether pursuant to
its terms or by operation of law) in right of payment to the Notes;
PROVIDED, HOWEVER, that this Section 12.09 shall not apply with
respect to the Indebtedness represented by the Junior Mortgage
Facility.
Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS.
Each of the Company and RIH covenants that it will not,
and will not permit any Subsidiary to, repurchase any Notes in the
open market if an Event of Default shall have occurred and shall be
continuing hereunder, under the Junior Mortgage Note Indenture or
under the Senior Facility Note Indenture.
Section 12.11. RESTRICTION OF ACTIVITIES.
(a) RIH shall not, on or after the date of execution of
this Indenture, until the date that is 91 days after the payment in
full by the Company of the principal of (and interest, if any, on)
all Outstanding Notes, engage in any business or investment
activities other than those necessary for, incident to, connected
with or arising out of acquiring, financing, owning and operating
the Casino-Hotel or additional hotels or casinos or related or
ancillary businesses.
(b) Neither the Company nor RIH shall make any loans
to any Affiliate or any other Person other than (i) Indebtedness of
the type described in clause (ix) of Section 12.08(a), and (ii)
loans to RII from the proceeds of the Indebtedness represented by
the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have
the right to make loans to employees of RIH actively involved in
the operation of the Casino-Hotel or to engage in credit
transactions in the operation of the Casino-Hotel, if such loans
or credit transactions are in the ordinary course of business of
operating a casino-hotel.
(c) The Company shall not engage in any business (and
shall not have any Subsidiaries) other than (i) to
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collect
principal, interest (and any interest on overdue principal and
interest) and other amounts under any intercompany notes or
guaranties made to the order of or otherwise in favor of the
Company, (ii) to preserve its rights under this Indenture and the
Mortgage Documents and otherwise to comply with its obligations
thereunder and under the Notes, (iii) to do or cause to be done all
things necessary or appropriate to protect the Trust Estate, (iv)
to preserve its rights under the Junior Mortgage Indenture and the
Junior Mortgage Documents and otherwise to comply with its
obligations thereunder and under the Junior Mortgage Notes, (v) to
issue the Indebtedness represented by any other Junior Mortgage
Facility Notes, (vi) to issue Indebtedness represented by the
Working Capital Facility; (vii) to preserve its rights under the
Working Capital Facility and otherwise comply with its obligations
under the Working Capital Facility, (viii) to incur any other
Indebtedness permitted under this Indenture, (ix) to do all such
acts and deeds necessary in connection with the Junior Mortgage
Facility and the documents and instruments relating thereto and in
connection with the Working Capital Facility and the documents and
instruments relating thereto, (x) to declare, issue and pay
dividends on, or make any redemptions or repurchases of, the
Company's capital stock as contemplated by its Certificate of
Incorporation (to the extent permitted hereby) and otherwise to
comply with and perform the provisions of its Certificate of
Incorporation and By-laws, and (xi) to do such further acts and
deeds to effectuate any of the matters listed in the foregoing
clauses of this Section 12.11(c).
Section 12.12. LIMITATION ON SUBSIDIARIES
CONSOLIDATED GROUP.
The Company and RIH shall not have any Subsidiaries
except the Subsidiaries existing on the date of this Indenture and
Subsidiaries acquired by the Company or RIH in transactions not
prohibited by the other provisions of this Indenture which are and
shall at all times be wholly owned (directly or indirectly) by the
Company or RIH.
Section 12.13. LIMITATIONS ON LIENS.
Neither the Company nor RIH will create, incur, suffer to
exist or permit to be created or incurred any mortgage, lien, charge
or encumbrance on or pledge of the Mortgage Documents or any of the
Trust Estate, other than (a) the lien of the Mortgage Documents and
the Assignment Agreement, (b) liens on the Trust Estate in
connection with Indebtedness permitted by clauses (i), (ii), (iii),
(iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on
the Trust Estate, and (d) a notice of intention or building
contract filed by a mechanic, materialman or laborer under the New
Jersey lien law. Without limiting the generality of the
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previous
sentence, but notwithstanding the provisions of such sentence, RIH
shall not be deemed to have breached such provisions by virtue of
the existence of liens for Impositions (as defined in the Mortgage)
or mechanics' liens so long as RIH is in good faith contesting the
validity of such liens in accordance with the provisions of Section
5.09 of the Mortgage.
Section 12.14. COMPLIANCE WITH LAWS.
Each of the Company and RIH shall comply, and shall cause
each of its Subsidiaries to comply, with the Casino Control Act and
all other applicable statutes (including, without limitation, ERISA),
rules, regulations, orders and restrictions of the United States of
America, states and municipalities, and of any governmental
department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing in respect of the
conduct of its business and the ownership of its properties and
assets, including, without limitation, the Trust Estate, except such
as are being contested in good faith by appropriate proceedings in
accordance with the Mortgage Documents (to the extent applicable)
and except for such non-compliances as will not in the aggregate
have a material adverse effect on the business, properties,
operations or financial condition of the Company, RIH or their
respective Subsidiaries.
Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company or RIH shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (a) all
taxes, assessments and governmental charges levied or imposed upon
the Company, RIH or any of their respective Subsidiaries or upon the
Trust Estate or any portion thereof or upon the income, profits or
property of the Company, RIH or any of their respective
Subsidiaries, and (b) all lawful claims for labor, materials and
supplies which, if unpaid, will by law become a Lien upon the Trust
Estate or upon any other property of the Company, RIH or any of
their respective Subsidiaries; PROVIDED, HOWEVER, that the Company
and RIH shall not be required to pay or discharge or cause to be
paid or discharged any such tax, assessments, charge or claim the
amount, applicability or validity of which is being contested in
good faith by appropriate proceedings in accordance with the
Mortgage Documents (to the extent applicable) if adequate
reserves therefor have been established in accordance with GAAP.
Section 12.16. MAINTENANCE OF PROPERTIES.
Each of the Company and RIH shall cause the Trust Estate
and all other properties (other than obsolete
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equipment) owned by or
leased to it or any of its Subsidiaries, and used or useful in the
conduct of its business or the business of the Company, RIH or such
Subsidiary to be maintained and kept in good condition, repair
and working order, except for reasonable wear and use, and will
cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as required by the
Mortgage Documents or, to the extent not governed by the Mortgage
Documents, as in the reasonable judgment of the Board of Directors
of RII may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times.
Section 12.17. INSURANCE.
Each of the Company and RIH shall maintain, and shall
cause each of its Subsidiaries to maintain, with financially sound
and reputable insurers, appropriate insurance on each of their
respective properties and businesses against liabilities,
casualties, risks and contingencies of the type and in amounts
required by the Mortgage Documents or, to the extent not governed
by the Mortgage Documents, as customarily maintained by corporations
and other entities engaged in the same or similar businesses and
similarly situated; PROVIDED, HOWEVER, that any such insurer shall
be qualified to do business in the jurisdiction where the insured
property is located.
Section 12.18. WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each of the Company and RIH covenants (to the extent that
it may lawfully do so) that it will not, and will not cause or permit
any of its Subsidiaries to, at any time insist upon, or plead, or in
any manner whatsoever claim, and will resist any and all efforts to
be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or
forgive the Company or RIH from paying all or any portion of the
principal of, or premium, if any, and interest on the Notes or the
RIH Promissory Note or the Guaranty as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which
may affect the covenants or the performance of this Indenture or
the RIH Promissory Note or the Guaranty; and (to the extent
that it may lawfully do so) the Company and RIH hereby expressly
waive all benefit or advantage of any such law, and covenant that
they will not hinder, delay or impede the execution of any power
granted to the Trustee herein and in the Mortgage Documents, but
will suffer and permit the execution of every such power as though
no such law had been enacted.
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Section 12.19. APPOINTMENT TO FILL A
VACANCY IN OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy
in the office of Trustee, will appoint, in the manner provided in
Section 8.10, a Trustee, so that there shall at all times be a
Trustee hereunder.
Section 12.20. VALIDITY OF LIENS.
Each of the Company and RIH represents and warrants that
it has, and covenants that it shall continue to have, full corporate
power and lawful authority to grant, release, convey, assign,
transfer, mortgage, pledge, hypothecate and otherwise create the
lien on the Trust Estate; and the Company and RIH shall warrant,
preserve and defend the interest of the Trustee in and to the Trust
Estate against the claims of all Persons, except as otherwise
expressly permitted by the Mortgage Documents or this Indenture, and
will take all action necessary to maintain and preserve the lien on
the Trust Estate contemplated therein.
Section 12.21. TRANSACTIONS WITH
STOCKHOLDERS AND AFFILIATES.
Each of the Company and RIH covenants that it shall not,
and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction (including,
without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the
Company or RIH or with any Affiliate of any such holder, unless (a)
such transaction is upon fair and reasonable terms which are no less
favorable to the Company or such Subsidiary, as the case may be,
than would be available in an arm's-length transaction with an
unrelated person and (b) if over $250,000, such transaction is
determined in the good faith judgment of a majority of the members
of the Board of Directors of either (i) RII, so long as RII owns,
directly or indirectly, a majority of the outstanding capital stock
of RIH, directly or indirectly, or (ii) RIH, to be in the best
interests of the Company, RIH or such Subsidiary as applicable;
PROVIDED, HOWEVER, that this provision shall not apply to (A)
any agreements, documents, instruments or transactions entered into
in connection with the RIHF Senior Facility Notes, (B) the Services
Agreement, (C) the RII Management Contract, or (D) the RII Tax
Sharing Agreement.
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ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. GENERAL APPLICABILITY OF ARTICLE.
Notes which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and in accordance
with this Article.
Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes shall be
evidenced by a Company Order. Redemption of any Notes shall not take
place earlier than 15 days after the corporate action taken to
authorize the redemption. In case of any redemption at the election
of the Company of less than all the Outstanding Notes, the Company
shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal
amount of Notes to be redeemed.
Section 13.03. SELECTION BY TRUSTEE
OF NOTES TO BE REDEEMED.
If less than all the Outstanding Notes are to be redeemed,
the particular Notes to be redeemed shall be selected by a random,
automated selection process or pro rata, as deemed appropriate by
the Trustee, not more than 60 days prior to the Redemption Date by
the Trustee from the Outstanding Notes which have not previously
been called for redemption, and such selection method may provide
for the selection for redemption of portions (equal to the greater
of $1,000 and the smallest authorized denomination of the Notes of
such series, or a multiple thereof) of the principal of Notes of a
denomination larger than $1,000.
The Trustee shall promptly notify the Company in writing
of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to
be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Notes shall relate, in the case of any Note redeemed or to be
redeemed only in part, to the portion of the principal of such Note
which has been or is to be redeemed.
Section 13.04. NOTICE OF REDEMPTION.
Notice of redemption shall be given by the Company or, at
the Company's request, by the Trustee in the name and
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at the expense
of the Company by first-class mail, postage prepaid, mailed not
less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Notes of such series to be redeemed, at his
address appearing in the Note Register.
Any notice which is mailed in the manner herein provided
shall be conclusively presumed to have been duly given, whether or
not the Holder receives the notice. In any case, failure to duly
give notice by mail, or any defect in the notice to the Holder of
any Notes designated for redemption in whole or in part, shall not
affect the validity of the proceedings for the redemption of any
other Notes.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the principal amount of Notes to be redeemed, and, if
less than all outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the
respective principal amounts) of the Notes to be redeemed;
(d) that on the Redemption Date, the Redemption Price of
each of the Notes to be redeemed will become due and payable
and that the interest thereon shall cease to accrue from and
after such date; and
(e) the place or places where the Notes to be redeemed are
to be surrendered for payment of the Redemption Price.
Section 13.05. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting
as its own Paying Agent, segregate and hold in trust as provided in
Section 12.03) an amount of money sufficient to pay the Redemption
Price of all the Notes which are to be redeemed on that date. Such
money shall be held in trust for the benefit of the Persons
entitled to such Redemption Price and shall not be deemed to be
part of the Trust Estate.
Section 13.06. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the
Notes so to be redeemed shall, on the Redemption Date, become due
and payable at the Redemption Price therein specified and from and
after such date (unless the Company
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<PAGE>
shall default in the payment of
the Redemption Price) such Notes shall cease to bear interest.
Upon surrender of any such Note for redemption in accordance with
said notice, such Note shall be paid by the Company at the
Redemption Price. Installments of interest due on or prior to
the Redemption Date shall be payable to the Holders of the Notes
registered as such on the relevant Record Dates according to the
terms of such Notes and the provisions of Section 3.07.
If any Note called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until
paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Note.
Section 13.07. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly
executed by the Holder thereof or his attorney duly authorized in
writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note, without
service charge, a new Note or Notes of any authorized denomination
or denominations as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.
Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT.
Notwithstanding the provisions of this Article Thirteen,
if the Casino Control Commission does not waive the qualification
requirements as to any Noteholder (whether the record owner or
beneficial owner) and requires that such Noteholder be qualified
under the Casino Control Act, then, in such event, such Noteholder
must qualify under such Act. If a Noteholder does not so qualify,
the Noteholder must dispose of its interest in the Notes, within 30
days after the Company's receipt of notice of such finding, or the
Company may repurchase such Notes at the lower of the Outstanding
Amount and the Fair Market Value of such Notes, plus accrued
interest to the date of such repurchase. Commencing on the date the Casino
Control Commission serves notice upon either RIH or the Company that any Holder
is disqualified, it shall be unlawful for any such disqualified Holder: (i) to
receive any dividends or interest upon this Note; (ii) to exercise, directly
or through any trustee or nominee, any right conferred by this Note; or (iii)
to receive any remuneration in any form from either the Company or RIH for
services rendered or otherwise.
92
<PAGE>
ARTICLE FOURTEEN
DEFEASANCE
Section 14.01. DISCHARGE OF THE INDENTURE
AND DEFEASANCE OF THE SECURITIES.
The Company shall be deemed to have paid and discharged
the entire Indebtedness on the Notes and the provisions of this
Indenture (except as to any surviving rights of transfer or exchange
of Notes herein or therein provided for and any right to receive
payments of principal and interest as provided in this Section
14.01), if:
(1) The Company irrevocably deposits in trust with
the Trustee, pursuant to an irrevocable trust and security
agreement in form and substance reasonably satisfactory to the
Trustee, U.S. Legal Tender or direct non-callable obligations
of, or non-callable obligations guaranteed as to timely payment
by, the United States of America for the payment of which
obligation or guarantee the full faith and credit of the United
States of America is pledged ("U.S. Government Obligations")
maturing as to principal and interest in such amounts and at
such times as are sufficient, without consideration of the
reinvestment of such interest and after payment of all Federal,
state and local taxes or other charges or assessments in respect
thereof payable by the Trustee, in the opinion of a nationally
recognized firm of independent public accountants expressed in
a written certification thereof (in form and substance reasonably
satisfactory to the Trustee) delivered to the Trustee, to pay
reasonable compensation to the Trustee under Section 8.07 and
the principal of and interest on the outstanding Notes on the
dates on which any such payments are due and payable in
accordance with the terms of the Indenture and of the Notes;
(2) Such deposits shall not cause the Trustee to
have a conflicting interest as defined in and for purposes of
the TIA;
(3) Such deposit will not result in a Default under
this Indenture;
(4) The Company shall deliver to the Trustee an
Opinion of Counsel, or a private ruling of the Internal
Revenue Service, in form and substance satisfactory to the
Trustee, to the effect that Holders of the Notes will not
recognize income, gain or loss for Federal income tax purposes
as a result of such deposit
and the defeasance contemplated hereby and will be subject to
Federal income tax in the same amounts and in
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the same manner
and at the same times as would have been the case if such
deposit and defeasance had not occurred;
(5) The deposit shall not result in the Company,
the Trustee or the trust becoming or being deemed to be an
"investment company" under the Investment Company Act of 1940,
as amended;
(6) The Holders shall have a perfected security
interest under applicable law in the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 14.01(1);
and
(7) The Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent specified herein relating to the
defeasance contemplated by this Section 14.01 have been
complied with.
If all or any portion of the Notes are to be redeemed
through such irrevocable trust, the Company must make arrangements
satisfactory to the Trustee, at the time of such deposit, for the
giving of the notice of such redemption or redemptions by the
Trustee in the name and at the expense of the Company.
The Trustee and each co-trustee and separate trustee,
if any, then acting as such hereunder shall, at the expense of the
Company, execute and deliver a termination statement and such
instruments of satisfaction and discharge as may be necessary and
pay, assign, transfer and deliver to the Company or upon Company
Order all cash, securities and other personal property then held
by it hereunder, other than pursuant to this Section 14.01.
Section 14.02. APPLICATION OF DEPOSITED MONEY.
U.S. Legal Tender or U.S. Government Obligations
deposited with the Trustee pursuant to Section 14.01 shall be
applied by the Trustee in accordance with Section 5.02.
Section 14.03. REPAYMENT TO THE 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 in accordance with the provisions of Section 5.03.
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<PAGE>
____________________
This instrument may be executed in any number of
counterparts or with counterpart signatures, each of which as
executed shall be deemed to be an original, but all such
counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed and attested, all as of the day
and year first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest: By:
------------------------- --------------------------
Name:
Title:
RESORTS INTERNATIONAL HOTEL, INC.
Attest: By:
_________________________ __________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, as Trustee
Attest: By:
_________________________ __________________________
Name:
Title:
95
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ___________, 1993, ____________________
personally came before me, and he acknowledged under oath, to my
satisfaction, that: (a) he is the ______________ of Resorts
International Hotel Financing, Inc., the corporation named in this
document; (b) he is the attesting witness to the signing of this
document by the proper corporate officer who is ___________________
of Resorts International Hotel Financing Inc.; (c) this document
was signed and delivered by the corporation as its voluntary act
duly authorized by a proper resolution of its Board of Directors;
(d) he knows the proper seal of the corporation which was affixed to
this document; and (e) he signed this proof to attest to the truth
of these facts.
________________________________
Signed and sworn to
before me on _________, 1993.
_____________________________
Notary Public of the
State of New York
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ___________, 1993, _________________
personally came before me, and this person acknowledged under oath,
to my satisfaction, that: (a) this person is the ________________
of Resorts International Hotel, Inc., the corporation named in this
document; (b) this person is the attesting witness to the signing
of this document by the proper corporate officer who is
______________________, the __________________________ of Resorts
International Hotel, Inc.; (c) this document was signed and
delivered by the corporation by its voluntary act duly authorized
by a proper resolution of its Board of Directors; (d) this person
knows the proper seal of the corporation which was affixed to this
document; and (e) this person signed this proof to attest to the
truth of these facts.
--------------------------------
Signed and sworn to
before me on _________, 1993.
- -----------------------------
Notary Public
[seal]
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ________, 1993, ________________
personally came before me, and this person acknowledged under oath,
to my satisfaction, that: (a) this person is the _________________
of State Street Bank and Trust Company of Connecticut, National
Association, a national banking association named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is __________________,
the __________________________ of State Street Bank and Trust
Company of Connecticut, National Association; (c) this document was
signed and delivered by the corporation by its voluntary act duly
authorized by a proper resolution of its Board of Directors;
(d) this person knows the proper seal of the corporation which
was affixed to this document; and (e) this person signed this proof
to attest to the truth of these facts.
--------------------------------
Signed and sworn to
before me on _________, 1993.
- -----------------------------
Notary Public
<PAGE>
Exhibit A
RIH Senior Promissory Note
<PAGE>
EXHIBIT A
AMENDED AND RESTATED SECURED PROMISSORY NOTE
$125,000,000 [ ], 1994
WHEREAS, in partial repayment of certain inter-
company debt owed by Resorts International Hotel, Inc., a New
Jersey corporation ("RIH"), to Resorts International, Inc., a Delaware
corporation ("RII"), RIH has issued to RII a promissory note
on the date hereof in the principal amount of $125,000,000 (as
the same may be amended or restated from time to time, the
"Note"), which Note is secured by a Mortgage Securing RIH
Promissory Note dated as of the date hereof (the "Mortgage"), by RIH,
as mortgagor which Mortgage encumbers certain real property
owned or leased by RIH together with all buildings and improvements erected
thereon (collectively, the "Property"); and
WHEREAS, RII has transferred the Note and the
Mortgage to RIHF in exchange for 11% Mortgage Notes due
2003 (the "Notes") in an aggregate principal amount of
$125,000,000, which Notes were issued pursuant to that
certain Indenture dated as of even date herewith (the
"Indenture") among RIHF, as issuer, RIH, as guarantor, and
State Street Bank and Trust Company of Connecticut, National
Association, as trustee (the "Trustee"); and
WHEREAS, RIHF has requested RIH to amend and restate
the Note;
NOW, THEREFORE, RIH agrees to amend and restate the
Note as follows:
RIH, for value received hereby promises to pay to
the order of RIHF (RIHF and any subsequent holder of this Note
being herein referred to as the "Payee"), the principal sum of
One Hundred Twenty-Five Million Dollars ($125,000,000), or
such other principal sum as shall be outstanding hereunder, on
September 15, 2003 (the "Maturity Date") in accordance with
the provisions hereof, with interest on such principal sum
from time to time outstanding, computed from [ ], 1994
[the Effective Date], in semi-annual installments of interest
on March 15 and September 15 of each year, commencing
1
<PAGE>
initially on September 15, 1994, at a rate of 11% per annum on
the unpaid balance hereof, until the principal hereof is paid
in full. Payments of principal and interest on this Note
shall be made at [address of the Payee], or
at such other address as the Payee may designate in writing.
Interest will be computed on the basis of a 360-day year of
twelve 30-day months, based on the actual number of days
elapsed. Principal and interest shall be paid in money of the
United States that at the time of payment is legal tender for
public and private debts.
l.(a) This Note shall be prepaid (i) in connection
with, but only to the extent of, any redemption of the
Notes of RIHF issued pursuant to the Indenture (all
prepayments of this Note are hereinafter referred to as
"Prepayments"), and/or (ii) by the surrender to the Trustee of
the principal amount of any Notes purchased or
otherwise acquired by RIH or the Company (as defined in the
Indenture) other than pursuant to the redemption provisions of
the Notes and surrendered to the Trustee for
cancellation in accordance with the provisions of the
Notes or the Indenture (it being expressly understood that the
same Notes shall reduce the principal amount of this
Note only once). Each Prepayment under clause (i) above shall
be made at the time that payment is required or permitted to
be made by the Company to the Trustee under the Indenture in
respect of any redemption of Notes. Each Prepayment
under clause (ii) above shall be deemed to be made at the time
of surrender of such Notes for cancellation. Each
Prepayment of this Note pursuant to clause (i) above shall be
in an amount equal to the aggregate amount paid to holders of
Notes on account of the redemption thereof (other than
interest), together with accrued and unpaid interest on the
amount of the reduction in the principal amount of this Note
as a result of such Prepayment. The principal amount of this
Note shall be reduced as a result of such prepayment in an
amount equal to the aggregate principal amount of the
Notes so redeemed or surrendered.
(b) Except as set forth in Section 1(a), this Note
may not be prepaid in whole or in part.
2. RIH shall pay interest on overdue principal and
prepayment premium at the rate of 14% per annum.
3. This Note is secured by the Mortgage on the
Property.
4. If (i) RIH defaults in the payment of interest
when the same becomes due and payable and the default
continues for a period of ten days following receipt of a
notice from the Payee or the Trustee specifying such default
2
<PAGE>
and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; (ii) RIH defaults in the
payment of the principal or any part thereof when the same
becomes due and payable at Maturity (as defined in the
Mortgage); (iii) there shall occur any other Event of Default
under the Mortgage or any other Note (as defined in the
Mortgage); or (iv) there shall occur any other Event of
Default under the Indenture, then on the happening of any such
event, the Payee may declare the entire Outstanding Amount (as
defined in the Indenture) of this Note and all accrued and
unpaid interest thereon and all sums due under Section 5 of
this Note and the Mortgage (collectively, the "Debt") to
become immediately due and payable.
5. RIH hereby waives presentment and demand for
payment, notice of dishonor, protest and notice of protest of
this Note and agrees to pay all costs of collection when
incurred, including reasonable attorneys' fees, which costs
may be added to the amount due under this Note and be
receivable therewith, and to perform and comply with each of
the terms, covenants and provisions contained in this Note and
the Mortgage on the part of RIH to be observed or performed.
Except as expressly provided herein, no release of any
security for the principal sum due under this Note or
extension of time for payment of this Note, or any installment
hereof, and no alteration, amendment or waiver of any
provision of this Note or the Mortgage shall release,
discharge, modify, change or affect the liability of RIH under
this Note or the Mortgage.
6. RIH covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit
or advantage of, any usury, stay or extension law or any other
law which would prohibit or forgive RIH from paying all or any
portion of the interest on this Note, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect
the covenants or the performance of this Note or the Mortgage;
and RIH (to the extent that it may lawfully do so) 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 Payee, but will
suffer and permit the execution of every such power as though
no such law had been enacted.
7. This Note shall be deemed to be a contract
under the laws of the State of New York and shall be construed
in accordance with and governed by the internal laws of the
State of New York.
8. This Note may not be changed or terminated
orally, but only by an agreement in writing signed by the
3
<PAGE>
party against whom enforcement of such change or termination
is sought.
9. RIH shall not claim any credit or deduction
from the interest or principal due hereunder by reason of
payment of any tax assessed upon the Property.
10. Whenever the provisions of this Note and the
provisions of the Indenture shall be inconsistent, the
provisions of the Indenture shall govern.
11. This Note is subject to and shall be enforced
in compliance with the provisions of the New Jersey Casino
Control Act. This Note shall not be transferred, assigned or amended
without the prior approval of the New Jersey Casino Control Commission.
12. Whenever used herein, the singular number shall
include the plural, the plural the singular, and the words
"Payee" and "RIH" shall include their respective successors
and assigns.
IN WITNESS WHEREOF, RIH has duly executed this Note
as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL, INC.
By: _____________________________
Name:
Title:
4
<PAGE>
STATE OF NEW YORK )
)ss.
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this [ ] day of [ ],
1994, before me, the subscriber, a Notary public of the State
of New York, personally appeared [ ], [ ] of
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation,
and he acknowledged that he signed, sealed and delivered the
same as his voluntary act and deed and the act and deed of
said RESORTS INTERNATIONAL HOTEL, INC., and that he received a
true copy of the within instrument on behalf of said
corporation.
Notary Public of the State of New York
[Seal]
5
<PAGE>
Exhibit B
Assignment Agreement from Resorts
International Hotel Financing, Inc.
<PAGE>
NA932280131 - MORTGAGE ASSIGNMENT
GD&C DRAFT DATED 10/17/93
==============================================================================
ASSIGNMENT OF AGREEMENTS
________________
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignor,
TO
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Assignee
Dated as of _________________, 1994
==============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware
corporation ("ASSIGNOR"), having an address at c/o Resorts
International, Inc., 1133 Boardwalk, Atlantic City, New Jersey
08401, to STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association ("ASSIGNEE"),
having an address at 750 Main Street Suite 1114 Hartford, Connecticut
06103 in its capacity as Trustee under that certain Indenture dated as
of even date herewith (the "INDENTURE") among Assignor, Assignee and
Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR").
WITNESSETH:
WHEREAS, in partial repayment of certain inter-company debt owed by
Mortgagor to Griffin Resorts, Inc., a Delaware corporation ("GRI"),
Mortgagor has issued to GRI a promissory note on the date hereof in
the principal amount of $125,000,000 (as the same may be amended or
restated from time to time, the "RIH SENIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Senior Promissory
Note dated as of the date hereof, between Mortgagor, as mortgagor
and GRI, as mortgagee (the "MORTGAGE"), which Mortgage encumbers
certain real property owned or leased by Mortgagor as more
specifically described on SCHEDULE 1 hereto together with all
buildings and improvements erected thereon (collectively, the
"PROPERTY"); and
WHEREAS, in partial repayment of certain inter-company debt, and as
a partial dividend or return of capital, GRI has transferred the
RIH Senior Promissory Note and the Mortgage to Resorts
International, Inc., a Delaware corporation ("RII"); and
WHEREAS, RII has transferred the RIH Senior Promissory Note and the
Mortgage to Assignor in exchange for 11% Senior Mortgage Notes due
2003 (the "NOTES") in an aggregate principal amount of
$125,000,000, which Notes were issued pursuant to the Indenture;
and
WHEREAS, as further security for the obligations of Mortgagor under
the RIH Senior Promissory Note, Mortgagor has executed and
delivered (i) an Assignment of Operating Assets and (ii) an
Assignment of Leases and Rents, each in favor of Assignor (as
assignee of RII (as assignee of GRI)) and each dated as of the
date hereof (said Assignments and the Mortgage collectively
referred to herein as the "RIH SENIOR PROMISSORY NOTE MORTGAGE
DOCUMENTS"), pursuant to which Mortgagor granted
<PAGE>
a security interest in specified personal property, assigned certain other
rights and assigned all right, title and interest of Mortgagor in
leases and rents to Assignor, all as security for the performance
and observance of obligations of Mortgagor under the RIH Senior
Promissory Note; and
WHEREAS, the rights and obligations of the Assignee hereunder are
subject to the terms set forth in that certain Intercreditor
Agreement dated as of the date hereof among Assignor, Assignee,
Mortgagor, Fidelity Management and Trust Company, as trustee, and
The Chase Manhattan Bank (National Association), as trustee (and
such other parties that may from time to time become a party
thereto); and
WHEREAS, in order to secure payment of the Notes and all other
payments due to the holder(s) from time to time of the Notes
(collectively, the "HOLDERS") or the Trustee under the Indenture,
Assignor has agreed to execute this Assignment and to be bound by
its terms;
NOW, THEREFORE, THIS ASSIGNMENT
FURTHER WITNESSETH:
That Assignor in consideration of the purchase of the Notes by the
Holders, Ten Dollars ($10.00) lawful money of the United States of
America duly paid to Assignor by Assignee at or before the
execution and delivery of these presents and for other good and
valuable consideration, the receipt of which are hereby
acknowledged, does hereby sell, assign and transfer unto
Assignee and unto its successors and to its assigns forever, for
its benefit and for the benefit of the Holders, and does hereby
grant to Assignee a security interest in and to all of Assignor's
estate, right, title and interest in, to and under any and all of
the following described property, rights and interests
(collectively, the "ASSIGNED PROPERTIES"):
GRANTING CLAUSE FIRST
All right, title and interest of Assignor in and to the RIH Senior
Promissory Note, including all renewals, extensions, modifications
and replacements of the same, and without limiting the generality
of the foregoing, the present, continuing and future right to make
claim for, collect or cause to be collected, receive or cause to be
received directly from Mortgagor thereunder, all payments of
principal, interest and other sums of money payable thereunder.
GRANTING CLAUSE SECOND
All right, title and interest of Assignor in and to the RIH Senior
Promissory Note Mortgage Documents, including all extensions,
renewals, modifications, supplements and replacements of the same.
2
<PAGE>
TO HAVE AND TO HOLD all said properties, rights and interests unto
Assignee and its successors and assigns forever.
THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and
covenants with Assignee as follows:
ARTICLE ONE
PARTICULAR COVENANTS OF ASSIGNOR
Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents,
warrants and covenants that it is duly authorized to enter into
this Assignment, and to grant and convey a lien on and security
interest in the Assigned Properties to Assignee in the manner and
to the extent herein set forth and that all action on its part
required for the execution and delivery of this Assignment has
been duly and effectively taken.
Section 1.02. FURTHER ACTION REQUIRED.
(a) Assignor covenants that it will, from time to time, execute and
deliver such further instruments and take such further actions as
may be required to carry out the purposes of this Assignment.
(b) Assignor hereby appoints Assignee as its lawful attorney-in-fact
(such power being coupled with an interest) in the name of Assignor
or Assignee or both to execute any instruments or to take any
actions to enforce all rights, powers and remedies of Assignor
under or pursuant to the Assigned Properties.
(c) Nothing contained herein shall limit the rights of Assignee
contained in the Mortgage or the Indenture.
(d) Until this Assignment is discharged in accordance with Section
5.01 hereof, no amendment, waiver, modification, discharge, release,
enforcement or satisfaction by Assignor of any of the rights or
remedies under the Assigned Properties shall be effective without
the prior consent and approval of Assignee, and Assignor shall have
no power or authority to take any such action without such consent
and approval.
ARTICLE TWO
OBLIGATIONS TO ASSIGNEE
Section 2.01. CONTINUING OBLIGATIONS.
(a) Assignee shall have no obligation, duty or liability with
respect to the Assigned Properties or any of
3
<PAGE>
them (other than those specifically assumed in its capacity as Trustee
pursuant to the Indenture).
(b) Assignor shall at all times remain liable to observe and perform
all of its covenants and obligations, if any, under the Assigned
Properties, and does hereby agree to indemnify and hold harmless
Assignee, its successors and assigns, from any liability, loss,
damage or expense it or they may incur under the Assigned
Properties or by reason of this Assignment.
ARTICLE THREE
PAYMENTS
Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due
and to become due under or pursuant to the Assigned Properties
shall be paid by Mortgagor directly to Assignee at the address set
forth in Section 6.02 hereof. Neither Assignor nor Assignee shall
have the right, without Mortgagor's prior written consent, to
instruct Mortgagor to pay Revenues to Assignor or in any manner or
to any party other than directly to Assignee.
Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins
in the execution of this Assignment to acknowledge (a) the
assignment by Assignor to Assignee of Assignor's right, title and
interest in, to and under the Assigned Properties, (b) Mortgagor's
agreement to make payment of all Revenues under the Assigned
Properties directly to Assignee at the address set forth in this
Assignment, and (c) the right of Assignee to exercise or enforce in
its own name, in the name of Assignor, or both, all of the rights,
powers and remedies of Assignor in, to and under the Assigned
Properties.
Section 3.03. REVENUES. As used herein, the term "REVENUES" shall
mean (a) all amounts paid or payable by Mortgagor under the RIH
Senior Promissory Note or the RIH Senior Promissory Note Mortgage
Documents, and (b) the net proceeds realized upon or as a result of
the enforcement of any mortgage lien or security interest granted
under the Assigned Properties or this Assignment or upon or as a
result of the exercise of any right or remedy under the Assigned
Properties or this Assignment.
Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor
hereby acknowledges, that Mortgagor may rely exclusively on
Assignee's directive that Assignee is entitled to take action
under this Assignment.
4
<PAGE>
ARTICLE FOUR
DEFAULT PROVISIONS AND REMEDIES
Section 4.01. ENFORCEMENT OF REMEDIES.
(a) Upon the occurrence of any default under the
Indenture or the Assigned Properties, or any of them (each, a
"DEFAULT"), not cured within the applicable grace period after the
applicable notice provision, if any, has been satisfied (each
called an "EVENT OF DEFAULT"), Assignee may, at its option, (i)
proceed directly to protect and enforce its rights and the rights
of any Holders under this Assignment or pursuant to the Assigned
Properties, or any one of them, by such suits, actions or special
proceedings in equity or at law, or by proceedings in the office of
any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein, or in
the Assigned Properties, or any of them, or in aid of execution of
any power granted herein or pursuant to the Assigned Properties, or
any one of them, or for the enforcement of any proper legal or
equitable remedy, including, without limitation, foreclosure of
the Mortgage and/or the sale of the collateral or part thereof
secured thereby at such foreclosure sale, subject to statutory and
other legal requirements, as Assignee shall deem most effective to
protect and enforce such rights, and Assignor hereby appoints
Assignee as its lawful attorney-in-fact (such power being coupled
with an interest) in the name of Assignor or Assignee or both to
effectuate such foreclosure and/or sale of such collateral or part
thereof; or (ii) instruct, direct and cause Assignor to effectuate
the foregoing on behalf of and for the benefit of Assignee and the
Holders, it being further understood that Mortgagor joins in the
execution of this Assignment in order to acknowledge its agreement
to promptly and duly execute and deliver any and all documents and
take any and all actions required by Assignee in order to permit
Assignee to foreclose and/or sell such collateral or part thereof,
and obtain the benefits of this Assignment, as aforesaid.
(b) Upon the occurrence of any Event of Default, Assignee shall be
entitled to sue for, enforce payment of and receive any and all
amounts then and at any time remaining due from Assignor or
Mortgagor for principal and interest on the RIH Senior Promissory
Note, or other sums due under the RIH Senior Promissory Note
Mortgage Documents, as the case may be, or otherwise under any of
the provisions of the Assigned Properties, or any of them, with
interest on overdue payments of such principal, at the rate set
forth in the RIH Senior Promissory Note, from the date of Default
to the date of such payment, together with any and all fees, costs
and expenses of collection (including reasonable attorneys' fees
and court costs), subject to statutory and other legal
requirements.
5
<PAGE>
(c) Regardless of the occurrence of an Event of Default, upon five
days' written notice to Mortgagor (or such shorter period or
without notice if deemed necessary and appropriate by Assignee),
Assignee may institute and maintain or cause in the name of
Assignor or Assignee or both to be instituted and maintained such
suits and proceedings as it may be advised by its counsel shall be
necessary and appropriate to prevent any impairment of the Assigned
Properties, or any of them, and to protect its interests in the
Assigned Properties, and in the rents, issues, rights, revenues
and other income arising therefrom, including power to institute
and maintain proceedings to restrain the enforcement or compliance
with any 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 the
security hereunder or would be materially prejudicial to the
interests of Assignee.
(d) Nothing contained in this Article Four is intended to grant
Assignee any greater remedies and rights than those allowed to
Assignor in the respective Assigned Properties. In the event of
any conflict between the remedies and rights contained in any of
the Assigned Properties and the remedies and rights contained in
this Article Four, then the remedies and rights set forth in the
applicable Assigned Property shall govern.
ARTICLE FIVE
DISCHARGE OF ASSIGNMENT
Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or
cause to be paid, or there shall otherwise be paid, to Assignee
and/or the Holders' all amounts required to be paid by Assignor
pursuant to the Indenture and the Notes, and the conditions
precedent for the Indenture shall cease, determine and become
null and void in accordance with Section 5.01 of the Indenture,
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statements filed in connection
herewith and execute and deliver to Assignor and to Mortgagor all
such instruments as may be appropriate to evidence such discharge
and satisfaction of said lien or liens, and Assignee shall pay over
or deliver to Assignor all other moneys and securities held by it
pursuant to this Assignment, which are not required for the payment
of (a) principal and redemption price, if applicable, of and
interest on, the Notes, and (b) all other amounts required to be
paid by Assignor pursuant to the Indenture and the Notes.
6
<PAGE>
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the
covenants, stipulations, obligations and agreements contained in
this Assignment shall be binding upon and inure to the benefit of
Assignor, Assignee and Mortgagor (to the extent applicable to
Mortgagor) and their respective successors and assigns.
Section 6.02. NOTICES.
(a) Any request, notice, demand, authorization, direction, request
or other instrument authorized or required by this Assignment to be
given to or filed with Assignor, Assignee or Mortgagor
(collectively, "NOTICES") shall be deemed given when either (i)
delivered by hand or (ii) five days after sending by registered or
certified mail, postage prepaid, in either case addressed as
follows:
If to Assignor, at:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Assignee, at:
_________________________
_________________________
_________________________
Attention: _____________
If to Mortgagor, at:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to Mortgagor, Assignor and/or Assignee, given as
provided above, any party may designate additional or substitute
addresses for Notices, which shall, notwithstanding Section
6.02(a), be deemed given with received.
Section 6.03. PARTIAL INVALIDITY. In case any one or more of the
provisions of this Assignment shall for any reason be held to be
illegal or invalid, such illegality or
7
<PAGE>
invalidity shall not affect any other provision of this Assignment, but this
Assignment shall be construed and enforced at the time as if such illegal or
invalid provisions had not been contained herein or therein, nor shall such
illegality or invalidity or any application thereof affect any legal and valid
application herein or thereof from time to time.
Section 6.04. APPLICABLE LAW. This Assignment shall be governed
by and construed under the internal laws of the State of New
Jersey, without giving effect to the principles of conflicts of
law.
Section 6.05. NO AMENDMENT. For so long as the Notes shall remain
outstanding, the Assigned Properties may not be modified, amended
or terminated except in accordance with the provisions of the
Indenture or the Assigned Properties.
Section 6.07. CONTROL ACT. Each of the provisions of this
Assignment is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act.
IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed
this Assignment Agreement as of the date first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest:
_________________________________________ By:_____________________________
President
RESORTS INTERNATIONAL HOTEL, INC.
Attest:
_________________________________________ By:______________________________
President
STATE STREET BANK AND TRUST
8
<PAGE>
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION
Attest:
_______________________________________ By:______________________________
Title
9
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel Financing, Inc., the
corporation named in the within instrument; that
__________________ is the Vice President of said Corporation;
that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of
directors of the said corporation; that deponent well knows the
corporate seal of said corporation; and that the seal affixed to
said instrument is the proper corporate seal and was thereto
affixed and said instrument signed and delivered by said Vice
President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
10
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, the corporation named in the within
instrument; that ____________ is the Vice President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
11
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation
named in the within instrument; that ______________ is the Vice
President of said corporation; that the execution, as well as the
making of this instrument, has been duly authorized by a proper
resolution of the board of directors of the said corporation; that
deponent well knows the corporate seal of said corporation; and
that the seal affixed to said instrument is the proper corporate
seal and was thereto affixed and said instrument signed and
delivered by said Vice President as and for the voluntary act and
deed of said corporation. In presence of deponent who thereupon
subscribed his name thereto as attesting witness; and deponent
signed this proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
12
<PAGE>
EXHIBIT C
SUBORDINATION PROVISIONS
A. SUBORDINATION. Anything herein to the contrary
notwithstanding, the Subordinated Debt, including principal,
premium, if any, and interest, shall be subordinate and junior to
the extent set forth in subparagraphs (i) to (v), inclusive, below,
to all Senior Indebtedness.
(i) If the Company (as defined in this Exhibit C)
shall default in the payment of any principal of or interest
on any Senior Indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, then, unless
and until such default shall have been remedied by payment in
full in cash or waived or shall have ceased to exist or all
amounts then due and payable in respect of Senior Indebtedness
shall have been paid in full or provision shall have been made
for such payment in cash, no holder of the Subordinated Debt
shall accept or receive any direct or indirect payment (in
cash, property, by set-off or otherwise) of or on account of
any Subordinated Debt.
(ii) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or
any receivership proceedings in connection therewith, relative
to the Company, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of
the Company, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Indebtedness shall
first be paid in full in cash, or such payment shall have been
provided for in cash, before any payment of or on account of
principal or interest is made by the Company upon the
Subordinated Debt.
(iii) In any of the proceedings referred to in
subparagraph (ii) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable by the
Company in respect of the Subordinated Debt shall be paid or
delivered directly to the holders of Senior Indebtedness (or
to a banking institution selected by the court or Person
making the payment or delivery or designated by any holder of
Senior Indebtedness) for application in payment thereof in
accordance with the priorities then existing among such
holders, unless and
<PAGE>
until all principal of and interest on all Senior Indebtedness
shall have been paid in full in cash or such payment shall
have been provided for; PROVIDED, HOWEVER, that no such
delivery shall be made to holders of Senior Indebtedness of
stock or obligations which are issued pursuant to
reorganization proceedings or dissolution or liquidation
proceedings, or upon any merger, consolidation, sale, lease,
transfer or other disposal not prohibited by the provisions
of the Subordinated Debt, by the Company, as reorganized, or
by the corporation succeeding to the Company or acquiring its
property and assets, if such stock or obligations are
subordinate and junior (whether by law or agreement) at least
to the extent provided in this Section ___ to the payment of
all Senior Indebtedness then outstanding and to the payment
of any stock or obligations which are issued in exchange or
substitution for any Senior Indebtedness then outstanding.
(iv) Upon the occurrence and continuance of any
Default Subordination Event (other than under circumstances
when the terms of subparagraph (ii) above are applicable), no
holder of the Subordinated Debt shall accept or receive any
direct or indirect payment (in cash, property, by set-off or
otherwise) of or on account of any indebtedness in respect of
the Subordinated Debt during the Applicable Stand-Still Period;
PROVIDED, HOWEVER, that in the case of any payment on or in
respect of any Subordinated Debt which would (in the absence
of any such Default Subordination Event) have been due and
payable on any date (a "Scheduled Payment Date") during such
Applicable Stand-Still Period, the provisions of this
subparagraph (iv) shall not prevent such payment (a
"Scheduled Payment") on or after the date (the "Deferred
Maturity Date") immediately following the termination of such
Applicable Stand-Still Period. Notwithstanding the foregoing
provisions of this subparagraph (iv), the failure by the
Company to make a Scheduled Payment on a Scheduled Payment
Date during an Applicable Stand-Still Period shall
nevertheless constitute an Event of Default.
(v) If any payment or distribution of any
character, whether in cash, securities or other property,
shall be received by any holder of Subordinated Debt in
contravention of any of the terms of this Section ___ and
before all the Senior Indebtedness shall have been paid in
full, such payment or distribution shall be received in trust
for the benefit of the holders of the Senior Indebtedness at
the time outstanding in accordance with the priorities then
existing among such holders, and shall forthwith be paid over
or delivered and transferred to the holders of Senior
Indebtedness.
<PAGE>
B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions
of this Section ___ are for the purpose of defining the relative
rights of the holders of Senior Indebtedness on the one hand, and
the holders of the Subordinated Debt on the other hand, against the
Company and its property; and nothing herein shall impair, as
between the Company and the holders of the Subordinated Debt, the
obligation of the Company, which is unconditional and absolute, to
pay to the holders thereof the principal thereof and premium, if
any, and interest thereon in accordance with their terms and the
provisions hereof, nor shall anything herein prevent the holders of
the Subordinated Debt from exercising all remedies otherwise
permitted by applicable law or hereunder upon default hereunder
or under the Subordinated Debt (including, without limitation, the
right to demand payment and sue for performance hereof and of the
Subordinated Debt and to accelerate the maturity thereof as
provided in Section ___), subject to the rights, if any, under
this Section ___ of holders of Senior Indebtedness to receive cash,
property, stock or obligations otherwise payable or deliverable by
the Company to the holders of the Subordinated Debt; PROVIDED,
HOWEVER, that upon the commencement and during the continuance of
an Applicable Stand-Still Period the holders of the Subordinated
Debt, to the extent they are otherwise entitled to do so, will not
accelerate the maturity of the Subordinated Debt or pursue any
other remedy to enforce payment thereof or initiate any bankruptcy
or insolvency proceeding relative to the Company unless and until
the earlier of (i) the end of such Applicable Stand-Still Period and
(ii) the acceleration of the Senior Indebtedness related to such
Applicable Stand-Still Period.
C. SUBROGATION. Upon payment in full of Senior
Indebtedness, the holders of the Subordinated Debt shall be
subrogated to the rights of the holders of the Senior Indebtedness
to receive payments or distributions of assets of the Company made
on Senior Indebtedness until the principal of and premium, if any,
and interest on the Subordinated Debt shall be paid in full, and,
for the purposes of such subrogation, no payments to the holders
of Senior Indebtedness of any cash, property, stock or obligations
to which the holders of the Subordinated Debt would be entitled
except for the provisions of subparagraph (iii) of Section A above
shall, as between the Company, its creditors (other than the
holders of the Senior Indebtedness) and the holders of the
Subordinated Debt, be deemed to be a payment by the Company to or
on account of the Senior Indebtedness.
D. DEFINITIONS.
"COMPANY" means RIH, the Company or any of their respective
subsidiaries, as the case may be.
<PAGE>
"DEFAULT SUBORDINATION EVENT" means the existence of all
of the following: (i) an event of default shall have occurred and
be continuing in respect of the Senior Indebtedness, (ii) the
holders of the Subordinated Debt shall have received a notice from
or on behalf of any holder of Senior Indebtedness specifying that
such event of default has occurred and is continuing and that such
notice constitutes a "Default Subordination Notice", and (iii) no
other Default Subordination Notice shall have been delivered by or
on behalf of any holder of Senior Indebtedness within the 365-day
period immediately preceding the giving of such notice.
The "APPLICABLE STAND-STILL PERIOD" relating to any
Default Subordination Event shall be deemed to continue until the
event of default under the Senior Indebtedness giving rise thereto
shall have been cured (by payment or otherwise) or waived or a
period of 180 days shall have elapsed from the giving of the
Default Subordination Notice relating thereto, in any such case
whichever shall be the shorter period.
"SENIOR INDEBTEDNESS" shall mean and include all
obligations (whether now outstanding or hereafter incurred), for
the payment of which the Company is responsible or liable as
obligor, guarantor or otherwise, including, without limitation,
principal, interest, premium, fees, expenses and indemnities,
whether now owing or hereafter incurred (including any interest
accruing subsequent to the commencement of a proceeding described
in Section 7.04, regardless of whether the claims of holders of
such payment obligations for such interest are allowed in any such
proceeding).
<PAGE>
Exhibit D
Mortgage securing RIH Senior Promissory
Note between Resorts International
Hotel, Inc, and Resorts International
Hotel Financing, Inc.
<PAGE>
NA932010185 - MORTGAGE
RIH SENIOR PROMISSORY NOTE
GD&C DRAFT DATED (DATE 10/11/93)
MORTGAGE SECURING
RIH SENIOR PROMISSORY NOTE
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
a Delaware corporation,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING
RIH SENIOR PROMISSORY NOTE
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having
an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City,
New Jersey 08401 (RIHF, or its successors or assigns which shall than be the
Noteholder (as hereinafter defined), being referred to herein as "Mortgagee").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to secure (i) the payment of the
principal amount (and premium, if any) of the secured senior promissory note
by Mortgagor to Mortgagee in the principal amount of $125,000,000 (hereinafter
collectively referred to as the "Note"), in lawful money of the United States,
to be paid in accordance with the provisions thereof (and all renewals,
extensions, and modifications thereof) all of which are hereby made an
integral part hereof as though set forth at length herein; (ii) payment of
interest (including interest on all overdue principal and premium,
if any) becoming due under the provisions of the Note; (iii) payment
by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee
pursuant to any term or provision of this Mortgage; (iv) performance of each
covenant, term, condition and agreement of Mortgagor herein or in the Note
contained; (v) all costs and expenses, including reasonable counsel fees and
expenses as provided in Section 3.07, which may arise in respect of the Note
and this Mortgage or of the obligations secured hereby; and (vi) performance
and observance of all of the provisions herein contained, Mortgagor has
executed and delivered this Mortgage and has bargained, sold, aliened,
mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and
its successors hereunder and assigns forever, all of its right, title and
interest in, to and under any of the following described property:
<PAGE>
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause
as fully as if set forth in this Granting Clause at length.
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the "Ground
Leases") particularly described in Schedule 2, which Schedule is hereby made
a part of, and deemed to be described in, this Granting Clause as fully
as if set forth in this Granting Clause at length, which Ground Leases
cover the real property described in such Schedule 2 (the "Leased Land")
and in and to any and all modifications, extensions andrenewals
of the Ground Leases and all options set forth therein, together with (i) all
credits, deposits, privileges and rights of the Mortgagor as lessee under the
Ground Leases, now or at any time existing, (ii) the leaseholds and the
leasehold estates created by the Ground Leases and (iii) all of the estates,
rights, titles, claims or demands whatsoever of Mortgagor, either in law
or in equity, in possession or in expectancy, of, in and to the Ground
Leases and the Leased Land, together with (x) any and all other, further
or additional title, estates, interests or rights which may at anytime be
acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to
payment in full of all indebtedness secured hereby, acquire fee simple
title or any other greater estate to the Leased Land pursuant to
the Ground Leases, or otherwise, the lien of this Mortgage shall attach,
extend to, cover and be a lien upon such fee simple title or other
greater estate and thereupon the lien of this Mortgage shall be prior
to the lien of any mortgage or deed of trust placed on such acquired
title, estate, interest or right subsequent to the date of this Mortgage
and (y) any right to possession or statutory term of years derived from,
or incident to, the Ground Leases pursuant to Section 365(h) of
the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in
any present or future federal, state, local, foreign or other statute, law,
rule or regulation.
<PAGE>
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and
proceeds of the property subjected or required to be subjected to the lien
of this Mortgage, including, without limitation, the property described in
Granting Clauses First, Second, and Sixth (such property is hereinafter
collectively referred to as the "Premises") and all the estate, right,
title and interest of every nature whatsoever of the Mortgagor in and
to the same and every part thereof. The collective metes and bounds
description of the Owned Land and the Leased Land is set forth in
annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the
date of execution of this Mortgage or hereafter entered into by
the Mortgagor, if any, including extensions, renewals or amendments
of all of the same, and the immediate and continuing right as
security in accordance with an Assignment of Leases and Rents of even date
herewith between Mortgagor and Mortgagee, and, after the occurrence of an
Event of Default, to make claim for, collect, receive and receipt for (and to
apply the same as provided herein) any and all rents, income, revenues,
issues, profits, security and other sums of money payable or receivable
thereunder or pursuant thereto, and all proceeds thereof, whether payable
as rent, insurance proceeds, condemnation awards, security or
otherwise and whether payable prior to or subsequent to the maturity date of
the Note, to receive and give notices and consents thereunder, to bring actions
and proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any
Lease, including the commencement, conduct and consummation of any
proceedings at law or in equity as shall be permitted by any provision
of any Lease, and to do any and all things which the Mortgagor
or any lessor is or may become entitled to do under the Leases;
provided, that the assignment made by this granting Clause Fourth
shall not impair or diminish any obligation of the Mortgagor
under the Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of
Granting Clause Third, the Mortgagor's rights, privileges and
franchises in and to the following, to the extent of the
Mortgagor's interest therein and thereto and to the extent assignable
(collectively, "Operating Assets"):
<PAGE>
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including
guaranties and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties
and other items of intangible personal property relating to the
ownership or operation of the Casino-Hotel, including, without
limitation, (1) telephone and other communication numbers, (2) all
software licensing agreements as are required to operate computer software
systems at the Casino-Hotel, all transferable proprietary interest in software
required to operate the computer systems at the Casino Hotel and books
and records relating to the software programs, and (3) lessee's
interest under leases of Tangible Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor or
which have been assigned to the Mortgagor, for the design and construction,
and for the equipping and furnishing, of the Casino-Hotel, including
architect's agreements, engineering agreements, construction contracts,
consulting agreements and agreements or purchase orders for all items
of Tangible Personal Property and payment and performance bonds in
favor of the Mortgagor in connection with the Trust Estate (and all
warranties and guaranties thereunder and warranties and guaranties of any
subcontractor and bond issued in connection with the work to be
performed by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances,
fixtures and fittings and other articles of tangible personal property
which are, or are to be located on, or used in connection with the
operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six
<PAGE>
wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the
operation thereof;
(iii) all cards, dice, gaming chips and placques, tokens,
chip racks, dealing shoes, dice cups, dice sticks, layouts,
paddles, roulette balls and other consumable supplies and items to be
used in connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether in use or held in reserve storage
for future use, in connection with the operation of the Casino-Hotel,
which are on hand or on order whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind and
nature for use in all of the operating departments of the Casino-Hotel,
or in the improvements now or hereafter located on any of the Owned
Land, including without limitation, accounting supplies, guest
supplies, forms, printing, stationery, food and beverage stock, bar
supplies, laundry supplies and brochures to existing purchase orders;
(vi) all sets and scenery, costumes, props and other items of
tangible personal property on hand or on order for use in the production
of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by
the architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to time;
(h)any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
<PAGE>
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high roller"
lists; and
(j) all of the goodwill in connection with the operation of
the Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on which such facilities are shared
are not detrimental to the operations of the Casino-Hotel or the financial
condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel
would not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair
or diminish any obligation of the Mortgagor with respect to the Operating
Assets, nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures
and articles of personal property now or hereafter attached to or contained
in and used in connection with such buildings and improvements, including,
but not limited to, all apparatus, furniture, furnishings, machinery,
motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice
machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces,
coal and oil-burning apparatus, wall cabinets, machinery, generators,
partitions, steam and hot water boilers, lighting and power plants, pipes,
plumbing, radiators, sinks, bath tubs, water closets, gas and electrical
fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum
cleaning systems, office equipment and other furnishings, and all plumbing,
heating, lighting, cooking, laundry, ventilating, incinerating,
air-conditioning and sprinkler equipment or other fire prevention or
extinguishing apparatus and material, and fixtures and appurtenances thereto;
and all renewals or replacements thereof or articles in substitution therefor,
whether or not the same are or shall be attached to the Owned Land, the
Leased Land or to any such buildings and improvements thereon, in any
manner, and to the extent the grant of a security interest in any
portion of the Trust Estate is governed by the Uniform
Commercial Code, this
<PAGE>
Mortgage is hereby deemed to be as well a security agreement under
the Uniform Commercial Code for the purpose of creating hereby a
security interest in all of the Mortgagor's right, title and interest
in and to such property, securing the obligations secured hereby, for
the benefit of the Mortgagee; and
(b) All of the Mortgagor's right, title and interest in
and to (i) the Leased Land, if the Mortgagor acquires the fee simple
title to the Leased Land or any part thereof (subject to the provisions
Section 2.06 hereof), (ii) all air rights and rights to maintain
supporting columns and all rights to construct and maintain bridges,
and to create private rights of way over streets now or hereafter owned or
enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and
(iii) all right, title and interest of Mortgagor as grantee or licensee
in and to the following to the extent necessary for the use and
enjoyment of the Owned Land or the Leased Land: (A) all those plots,
pieces or parcels of land and air rights, more particularly described on
Schedule 5, attached hereto and made a part hereof (the "Bridge Easement
Parcels"), with respect to which Mortgagor has easements, licenses or other
rights of possession or use pursuant to these certain easement and license
agreements more particularly described on Schedule 5 (the "Bridge
Easements"), (B) all those plots, pieces or parcels of land and air
rights, more particularly described on Schedule 6 attached hereto and
made a part hereof (the "Elevator Easement Parcels"), with respect to which
Mortgagor has easements, licenses or other rights of possession or use
pursuant to those certain license agreements more particularly described
on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or
parcel of land and air rights more particularly described on Schedule 7
attached hereto and made a part hereof (the "Turn-Around Easement Parcel")
with respect to which Mortgagor has easements, licenses, or other rights of
possession or use pursuant to that certain easement more particularly
described on Schedule 7 (the "Turn-Around Easement"), (the Bridge
Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement
Parcel are collectively referred to herein as the "Easement Parcels"; and the
Bridge Easements, the Elevator Easements and the Turn-Around Easement
are collectively referred to as the "Easements"), together with all
rights of way, privileges, liberties, tenements, hereditaments and
ppurtenances belonging or in any way appertaining to such estates, it
being the intention hereof that all property, interests, rights and privileges
and franchises pertaining to the Premises (other than Excepted Property) shall
be as fully embraced within and subjected to the lien hereof as if such
property were specifically described herein.
* * *
<PAGE>
TOGETHER with all of the Mortgagor's right, title and interest
in and to all mineral and water rights and any title or reversion, in
and to the beds of the ways, streets, avenues and alleys adjoining the
Premises to the center line thereof and in and to all strips, gaps and gores
adjoining the premises on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to
and singular the tenements, hereditaments, easements, appurtenances,
passages, water courses, riparian rights, other rights, liberties and
privileges thereof or in any way appertaining to the Premises, including
any other claim at law or in equity as well as any after-acquired title,
franchise or license and the reversion and reversions and remainder and
remainders thereof; and
TOGETHER with all awards and other compensation heretofore or
hereafter to be made to the present and all subsequent owners of
the Trust Estate for any taking by eminent domain, either permanent
or temporary, of all or any part of the Trust Estate or any easement or
appurtenances thereof, including severance and consequential damage
and change in grade of streets, all in accordance with and subject to the
provisions of the Superior Instrument Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any
insurance policies described in Section 5.11, and the right to
receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Trust Estate or
otherwise, all in accordance with and subject to the provisions of
Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted
property, rights, title, interest, privileges and franchises, the
Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases,
Operating Assets, Easements, properties, options, credits, deposits,
rights, privileges and franchises of every kind and description, real,
personal or mixed, granted hereby, bargained, sold, aliened, assigned,
transferred, hypothecated, pledged, released, conveyed, mortgaged, or
confirmed as aforesaid, or intended, agreed or covenanted so to
be, together with all the appurtenances thereto appertaining (the Premises,
Leases, Ground Leases, Operating Assets, Easements, properties, options,
credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its
successors and assigns forever.
<PAGE>
SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and,
after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the Mortgagee
and the Noteholder as set forth in that certain Intercreditor Agreement
dated as of the date hereof among RIH, RIHF, Trustee, Fidelity Management and
Trust Company ("Fidelity"), as trustee under that certain note purchase
agreement dated as of the date hereof among Fidelity, RIH and RIHF, and
The Chase Manhattan Bank (National Association) ("Chase"), as trustee under
that certain indenture dated as of the date hereof among Chase, RIH
and RIHF (and such other parties that may from time to time become a party
thereto).
BUT IN TRUST, NEVERTHELESS, for the benefit and security of the
Noteholder.
UPON CONDITION that, until the happening of an Event of Default and
subject to the provisions of Article Two, the Mortgagor shall be permitted to
possess and use the Trust Estate, and to receive and use the rents, issues,
profits, revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is
to be held and applied by the Mortgagee, subject to the further covenants,
conditions and trusts hereinafter set forth, and the Mortgagor does hereby
covenant and agree to and with the Mortgagee, for the benefit of the holder
of the Note as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage,
except as otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as
well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided
for shall be made in accordance with generally accepted accounting
principles consistently applied; and
<PAGE>
(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Mortgage as a whole and not
to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in
Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good
standing of the American Institute of Real Estate Appraisers) who is (i) of
recognized standing among appraisers of properties similar to the Casino-Hotel
and (ii) experienced in the appraisals of properties of a similar size and
scope to that of the Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in
Section 1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in
Section 1.01 of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming
and related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture, fixtures and
equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which
results in damage, loss or destruction to any buildings or improvements on the
Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in
Section 10.01 of the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both, would become
an Event of Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds
or a condemnation award is paid to be
<PAGE>
held in trust for restoration pursuant to the provisions of a Ground Lease or
Superior Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event
of Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
(1) subject to the provisions of the Assignment of Leases and
Rents, any cash held by the Mortgagor from rents, issues, profits,
revenues and other proceed of the Trust Estate to the extent that such
cash may be, but has not been, distributed or paid out in accordance with
the Services Agreement or in accordance with the provisions of
Section 12.07 the Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior
Mortgage secured by or imposing a lien on all or a portion of the Trust Estate
on a parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any
Tangible Personal Property and other items constituting Operating Assets, such
as computer software, which are financed, purchased or leased by the
Mortgagor, provided that, except as set forth on Schedule 3, the principal
amount of the indebtedness secured by such lien shall not exceed
eighty-five (85%) percent of the cost to the Mortgagor of such property at the
time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
<PAGE>
"GUARANTY MORTGAGE" means that certain Mortgage Securing Guaranty of
Senior Mortgage Notes dated as of the date hereof from Mortgagor to State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association, which secures the Notes (as defined in the Indenture),
the lien of which shall be PARI PASSU with the lien of this Mortgage.
"HOTEL" means that portion of the Casino-Hotel not included within
the Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11% Senior Mortgage Notes
due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and State Street Bank and Trust Company of Connecticut, National Association,
as trustee, as it may from time to time be supplemented, modified or amended
by one or more trust indentures or other instruments supplemental thereto
entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the
Mortgagor or in any other obligor upon the Note or in any Affiliate of the
Mortgagor or of such other obligor and (c) is not connected with the Mortgagor
or such other obligor or any Affiliate of the Mortgagor or such other obligor
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the
Mortgagee, such opinion or certificate shall state that the signer has read
this definition and that the signer is Independent within the meaning
thereof. A Person who is performing or who has performed services as an
independent contractor to any specified Person shall not be considered not
Independent merely by reason of the fact that such Person is or has performed
such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy
covering or applicable to the Trust Estate or any part thereof, all
requirements of the issuer of any such policy, and all orders, rules,
regulations and other requirements of the National Board of Fire Underwriters
(or any other body exercising similar functions) applicable to or affecting
the Trust Estate or any part thereof or any use or condition of the Trust
Estate or any other part thereof.
<PAGE>
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects,
any bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected by the
Mortgagor authorized to issue insurance in the State of New Jersey with an
A.M. Best rating as high or higher than the rating of insurance companies
insuring other casino-hotels in Atlantic City, New Jersey.
"LEASE" means each lease or sublease demising all or any portion of
the Owned Land, the Leased Land or the buildings or improvements thereon and
made by the Mortgagor as lessor or sublessor, as the case may be, or any
spaces in any building or buildings which constitute a part of the Trust
Estate, including every agreement relating thereto or entered into in
connection therewith and every guaranty of the performance and observance of
the covenants, conditions and agreements to be performed by the lessee under
any such lease. Notwithstanding the foregoing, the term "Lease" shall
not include any transient room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements (including,
without limitation, the New Jersey Environment Cleanup Responsibility Act and
the New Jersey Spill Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, of governments, federal, state and municipal (including, without
limitation, the New Jersey Department of Environmental Protection, the
Atlantic City Bureau of Investigations, Division of Protection, the Atlantic
City Bureau of Investigations, Division of Gaming Enforcement of the State of
New Jersey, and the Casino Control Commission of the State of New Jersey),
foreseen or unforeseen, ordinary or extraordinary, which now is or at any time
hereafter becomes applicable to the Trust Estate or any part thereof, or any
of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or
gambling facility or any other use or condition of the Trust Estate or any
part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Note means the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at
<PAGE>
the Stated Maturity or by declaration of acceleration or prepayment
or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDER" shall mean the holder or holders of the Note.
"NOTE" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of
the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires
that an Officers' Certificate be signed also by an Architect or an Accountant
or other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Mortgage) be an employee of
the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless
otherwise specifically provided in this Mortgage, such counsel may rely, as
to any state of facts not personally known to such counsel and relating to
such opinions, on an Officers' Certificate to the extent not rejected by the
Trustee and its counsel (which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by
[list title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
<PAGE>
"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material
portion of the Premises whether held by the Mortgagor or any other Person
(which may be temporary or permanent) (including, without limitation, those
required for the use of the Casino-Hotel as a licensed casino facility), in
accordance with all applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet
due and payable or if due and payable are not delinquent to the extent
that any fine, penalty, interest or cost may be added for nonpayment
thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien; and
(9) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or any other entity or government or any agency or political subdivision
thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
<PAGE>
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made
in accordance with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing, Inc., a
Delaware corporation.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"SETTLEMENT COSTS" has the meaning stated in Section 5.20.
"STATED MATURITY" when used with respect to a note means the date
specified in such note as the fixed date on which the principal of such note
is due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms,
conditions and provisions of (i) the Ground Leases with respect to the Leased
Land; and (ii) Superior Mortgages with respect to the portion of the Trust
Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, any Working Capital
Facility Lien and any After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of
the whole or any part of the Premises, by a competent authority, for any
public or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting
Clause Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the
Granting Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of
the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in
Section 5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
<PAGE>
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent, waiver or other
document provided or permitted by this Mortgage to be made upon, given or
furnished to, or filed with, the Mortgagor or the Mortgagee (collectively,
"Notices") shall be deemed given when either (i) delivered by hand or (ii) two
days after sending by registered or certified mail, postage prepaid, addressed
as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any
party may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO
MORTGAGEE. Whenever
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such
Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such Officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Officer or Officers
of the Mortgagor stating that the information with respect to such factual
matters is in the possession of the Mortgagor, unless such counsel knows that
the certificate or opinion or representations with respect to such matters are
<PAGE>
erroneous. If appropriate to the matter being opined upon and to the extent
not prohibited by the Trust Indenture Act, any Opinion of Counsel may be
subject to rights of creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor
shall deliver any document as a condition of the granting of such application,
or as evidence of the Mortgagor's compliance with any term hereof, it is
intended that the truth and accuracy, at
the time of the granting of such application or at the effective date of such
certificate or report (as the case may be), of the facts and opinions stated
in such document shall in such case be conditions precedent to the right of
the Mortgagor to have such application granted or to the sufficiency of such
certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Mortgagor to the Mortgagee to take any action
under any provision of this Mortgage, the Mortgagor shall furnish to the
Mortgagee an Officers' Certificate stating that all conditions precedent,
if any, provided for in this Mortgage relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Mortgage relating to such particular application or request, no additional
certificate or opinion need be furnished. Every certificate or opinion with
respect to compliance with a condition or covenant provided for in this
Mortgage shall include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he
has made such
<PAGE>
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such condition or covenant has been
complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each
case named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged,
released nor any of its provisions waived except by agreement in writing
executed by the Mortgagor and the Mortgagee and in accordance with the
provisions of this Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this
Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage,
express or implied, shall give to any Person, other than the parties hereto
and their successors and assigns, any benefit or any legal or equitable right,
remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the
provisions of this Mortgage and the provisions of the Indenture shall be
inconsistent, the provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the
holder of a security interest in this
<PAGE>
Mortgage and the Note, except as otherwise provided in Section 8.01 of the
Indenture:
(a) the Mortgagee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the Mortgagee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Mortgagee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by the Mortgagee hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to exercise any of
the rights or powers vested in it by this Mortgage at the request or
direction of any Noteholder pursuant to the Indenture, unless such holder
shall have offered to the Mortgagee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, or other paper or document but the Mortgagee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Mortgagee shall determine to
make such further inquiry or investigation, it shall be entitled (subject
to the express limitations with respect thereto contained in this Mortgage)
to examine the books, records and premises of the Mortgagor, personally or
by agent or attorney;
(f) the Mortgagee may execute any of the trusts or power hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys, and the Mortgagee shall not be responsible for any
<PAGE>
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in case of entry
by it upon the Trust Estate, for debts contracted or liabilities or damages
incurred in the management or operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the Mortgagee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of its obligations hereunder, or in the exercise of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or
cause to be paid, or there shall otherwise be paid, to the Mortgagee all
amounts required to be paid by the Mortgagor pursuant to the Note, and the
conditions precedent for the Indenture to cease, determine and become null and
void in accordance with Section 5.01 of the Indenture shall have occurred, the
Mortgagee shall promptly cancel and discharge this Mortgage, and execute and
deliver to the Mortgagor all such instruments as may be necessary, required or
appropriate to evidence such discharge and satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject
in each instance to the giving of any notice and the expiration of any grace
period provided for in Section 3.01 as a condition to such Default making it
an Event of Default, unless the Trust Indenture Act requires otherwise, in
which case the Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an
event which does not materially diminish the value of the Mortgagee's interest
in the Trust Estate shall not be deemed an "impairment of security", as that
phrase is used in this Mortgage.
<PAGE>
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT
RELEASE. So long as there shall have been no acceleration of maturity of the
Note under Section 3.02, the Mortgagor shall be suffered and permitted, with
power freely and without let or hindrance on the part of the Mortgagee, subject
to the provisions of this Mortgage and the Guaranty Mortgage, to possess, use,
manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time
to time, unless an Event of Default shall have occurred and be continuing,
without any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any
question affecting the Mortgagor's right to sell or otherwise dispose of
the same, free from the lien of this Mortgage;
(b)to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and
add to any Tangible Personal Property; provided, however, that no change
shall be made in the location of any such property subject to the lien pf
this Mortgage which would in any respect impair the security of this
Mortgage upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the
right to pay dividends or make cash distributions pursuant to Section 12.07 of
the Indenture) received from the sale or disposition of any Tangible
<PAGE>
Personal Property under Subsection (a) of this Section 2.02, in the business
of operating the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect
to the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible
Personal Property.
The Mortgagee shall, from time to time, promptly execute any written
instrument in form satisfactory to it to confirm the propriety of any action
taken by the Mortgagor under this Section 2.02, upon receipt by the Mortgagee
of an Officers' Certificate stating that the action so to be confirmed was
duly taken in conformity with this Section 2.02, and that the execution of
such written instrument is appropriate to confirm the propriety of such action
under this Section 2.02, PROVIDED, that the Mortgagee shall have no liability
thereunder and all costs and expenses (including reasonable attorneys' fees)
shall be paid by the Mortgagor.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any
provisions contained in this Mortgage or the Indenture to the contrary,
including, without limitation, the provisions of Granting Clauses Fifth and
Sixth and of Articles Two and Five hereof, if
the Mortgagor acquires Tangible Personal Property and other items constituting
operating assets, such as computer software subject to any FF&E Financing
Agreement, or becomes the lessee under a lease for any of the same and if the
document evidencing such F&E Financing Agreement prohibits subordinate liens
or the provisions of any such lease prohibits any assignment thereof by the
lessee, and if any such prohibition is customary with respect to similar
transactions of the lender or lessor, as the case may be, then the property so
purchased or the lessee's interest in the lease, as the case may be, shall be
deemed to be Excepted Property. If any such FF&E Financing Agreement permits
subordinate liens then the Mortgagee agrees to execute and deliver to the
Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination
of the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part
<PAGE>
of the Released Fee Land (the land to be so conveyed is hereinafter referred
to as the "Released Land"), free from the lien of the Mortgage, provided that:
(i) the Mortgagor furnishes the Mortgagee with an Officers'
Certificate requesting the release of such property from the Trust Estate
and stating (w) so long as the Released Land is owned or used by an
Affiliate of the Mortgagor, the Released Land shall not be operated in a
manner in competition with the operation of the Casino-Hotel as a casino,
(x) that no permanent structures have been constructed on the Released
Land, (y) that the Mortgagor is not required to hold the Released Land
in, order to maintain all Permits and in order to comply with the
provisions of all material contracts to which the Mortgagor is a party or
by which the Mortgagor is bound and either (A) the Mortgagor has made
adequate provision to maintain all Permits and to comply
with such contractual requirements by: (1) owning and using the balance
of the Trust Estate; (2) acquiring fee title to any real property that
would enable Mortgagor to maintain all Permits and satisfy such
contractual requirements; or (3) acquiring a Qualified Leasehold Interest
in real property that would enable the Mortgagor to maintain such Permits
and satisfy such contractual requirements; or (B) neither the
requirements of such Permits nor such contracts require the Mortgagor to
own the Released Land or use or operate any land in the manner in which
the Released Land is intended to be used; or (C) such requirements have
been waived, and (z) that such conveyance will not materially interfere
with the operation of the Casino-Hotel;
(ii) the Mortgagor delivers to the Mortgagee an Opinion of Counsel
to the effect that the Mortgagor is not required to own and use the
Released Land in order to maintain in good standing all Permits or by the
provisions of any material contract to which the Mortgagor is a party or
by which it is bound to own and use the Released Land;
(iii) the Mortgagor delivers to the Mortgagee, if applicable, an
endorsement to the Original Policy in accordance with Section 2.05(d);
(iv) the Mortgagor delivers to the Mortgagee an executed
counterpart of the instruments of conveyance in recordable form, which
shall contain a covenant prohibiting the use of the Released Land by any
Affiliate of the Mortgagor (A) as a casino or (B) in a manner in
competition with the operation of
<PAGE>
the Casino-Hotel as a casino prior to the latest Stated Maturity Date of
the Note; and
(v) in the case of a conveyance or release described in (A) or (B)
above, if the Released Land is being conveyed to an Affiliate of the
Mortgagor, the cash consideration received by the Mortgagor for the
Released Land shall not be less than the product of the Release Price
multiplied by the area (in square feet) of the Released Land.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective
purchaser to confirm the release of the Released Fee Land, upon receipt
by the Mortgagee of an Officers' Certificate stating that the Mortgagor is
entitled to such release by virtue of the Mortgagor's compliance with this
Section 2.05, PROVIDED, that the Mortgagee shall have no liability thereunder
and all costs and expenses (including reasonable attorneys' fees) shall be
paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in
the event the Mortgagor intends to exercise an option to acquire fee title to
Leased Land under the provisions of any Ground Lease, the Mortgagor shall have
the right, unless an Event of Default shall have occurred and be continuing,
to have an Affiliate exercise such options(s) or for the Mortgagor to exercise
such options(s) on behalf of an Affiliate and in connection therewith to cause
fee simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee
with the following:
(i) an Officers' Certificate requesting the release of the Released
Fee Land from the Trust Estate and stating that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain all Permits
and in order to comply with the provisions of all material contracts to
which the Mortgagor is a party or by which the Mortgagor is bound, (B)
such Affiliate has received all Permits necessary to own the Released Fee
Land (including without limitation all approvals required by the Casino
Control Commission of the State of New Jersey), (C) there has been
delivered to the Mortgagor and the Mortgagee a true copy of an instrument
executed by such Affiliate stating that
<PAGE>
(i) such Affiliate may only engage in the activity of owning the
Released Fee Land and (ii) such Affiliate shall not convey the Released
Fee Land to another Affiliate of the Mortgagor, unless such other
Affiliate executes and delivers to the Mortgagor and the Mortgagee, the
instruments that would have been required to be delivered pursuant to
clause (C) if the Mortgagor conveyed the Released Fee Land to such
other Affiliate (provided that this restriction shall only be effective
until such time as this Mortgage shall be satisfied of record) and (D)
the deed conveying the Released Fee Land to such Affiliate shall state
that such conveyance is made subject to the terms, provisions and
conditions of the applicable Ground Lease and that the fee and leasehold
interests in the Released Fee Land shall not merge by reason of the
Mortgagor and/or any Affiliate owning both the leasehold and fee estate
therein, and that such estates shall always remain separate and distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor is
not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to
which the Mortgagor is a party or by which it is bound to own the
Released Fee Land and (B) the instruments described in clause (C) of
subparagraph (i) were duly executed by and are binding upon such
Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory
to Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by
Mortgagee, including, without limitation, (A) a covenant of the landlord not
to terminate the Ground Lease for any reason whatsoever (including without
limitation, due to any default by tenant of its obligations under such Ground
Lease), and (B) an agreement by the landlord not to accept payment of any
fixed or base rent from the tenant (and, if tendered by the Mortgagor, and
agreement to return same to the Mortgagor) or any other charges payable
thereunder at any time that an Event of Default shall have occurred and shall
be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective
purchaser to confirm the
<PAGE>
release of the Released Fee Land, upon receipt by the Mortgagee of an
Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED that
the Mortgagee shall
have no liability thereunder and all costs and expenses (including reasonable
attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i)
if no Event of Default has occurred and is continuing and (ii) if the
Mortgagor shall acquire Released Fee Land, then simultaneously with the
acquisition thereof, the Mortgagor shall have the right to encumber such fee
simple title with a mortgage (such mortgage and any refinancing thereof
permitted by the Indenture is hereinafter referred to as an "After-Acquired
Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be
subordinated to the lien of the After-Acquired Fee Mortgage on the Released
Fee Land (and to the lien of other Superior Mortgages which shall become a
lien thereon in accordance with the terms thereof), provided the following
conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee
Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee
simple title at the time of the acquisition and (B) satisfies the
criteria set forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers
fee simple title to the Leased Land or any part thereof, such
After-Acquired Fee Mortgage contains provisions binding on the holder of
the After-Acquired Fee Mortgage and its successors and assigns confirming
the provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire
Released Fee Land shall be used for purposes of Restoration; and
<PAGE>
(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstandi, the subordination of this Mortgage
to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land
shall not be self-operative but shall be effective only upon the execution and
delivery by the Mortgagee of an instrument in writing effecting such
subordination. The Mortgagee shall deliver such instrument of subordination
on the following conditions: (x) the Mortgagee shall have received an
Officers' Certificate confirming that the conditions of (i)
through (vi) of paragraph (a) have been satisfied, together with a true and
correct copy of the After-Acquired Fee Mortgage and all other instruments
securing the indebtedness evidenced thereby and (y) the instrument of
subordination shall specifically state that this Mortgage is being
subordinated not with respect to the lien of this Mortgage on the Ground Lease
or on the leasehold estate created thereby, but only with respect
to the fee simple title to the Leased Land or applicable part thereof and only
if and to the extent that the After-Acquired Fee Mortgage being subordinated
to is subject and subordinate to the Ground Lease and the leasehold estate
created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever
used herein, means any one of following events (including any applicable
notice requirement and any period of grace as specified in this Section 3.01)
(whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest on the Note when such
interest becomes due and payable and continuance of such default for a
period of 10 days after there has been given a written notice to the
Mortgagor specifying such default and stating that such notice is a
"Notice of Default" hereunder; or
(b) default in the payment of the principal of any Note at its
Maturity; or
<PAGE>
(c) an "Event of Default" as defined in Section 3.01 of the
Guaranty Mortgage shall occur; or
(d) default in the payment of any other sum due under the Note or
this Mortgage and the continuance of such default for a period of 10 days
after there has been given to the Mortgagor a written notice specifying
such default and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(e) default in the performance, or breach, of any covenant of the
Mortgagor in this Mortgage (other than a covenant a default in the
performance or breach of which is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
30 days after there has been given to the Mortgagor a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder, unless
(i) the default or breach is of such a nature that is curable but not
susceptible of being cured with due diligence within such 30-day period
(for reasons other than the lack of funds), (ii) the Mortgagor delivers
an Officers' Certificate to the Mortgagee within such 30-day period
stating (A) the applicability of the provisions of Clause (i) to such
default or breach, (B) the Mortgagor's intention to remedy such default
or breach with reasonable diligence and (C) the steps which the Mortgagor
has undertaken to remedy such default or breach and (iii) the Mortgagor
delivers to the Mortgagee additional Officers' Certificates every 30 days
thereafter updating the information contained in the certificate
described in Clause (ii), in which case such 30 day period shall be
extended for such further period of time as may reasonably be required to
cure the same, provided that the Mortgagor is then proceeding and
thereafter continues to proceed to cure the same with reasonable
diligence; or
(f) an "Event of Default" as defined in Section 7.01 of the
Indenture, shall occur; or
(g) default by the Mortgagor under any of the terms of any Ground
Lease which shall not be fully cured or waived prior to the expiration of
any grace period contained in such Ground Lease, unless prior to the
expiration of such grace period, the Mortgagor gives the Mortgagee an
Officers' Certificate, an Opinion of Counsel and a true copy of the
Injunction referred to below, which Certificate and Opinion state that
(i) a court of competent jurisdiction has issued an injunction (which is
in force and effect and has not been modified or reversed on appeal)
tolling or staying
<PAGE>
the expiration of the grace period set forth in such Ground Lease with
respect to such default, (ii) such injunction specifically provides that
in addition to the tolling or stay describe in (i) above, such tolling or
stay also applies to the Mortgagee for purposes of determining the
duration and expiration of the periods during which the Mortgagee may
exercise its rights under such Ground Lease (including without
limitation, periods to cure lessee defaults and delivering a guarantee
and the period during which the Mortgagee may elect to enter into a new
lease thereunder), (iii) such injunction further provides that the
tolling or stay under (i) and (ii) shall be effective until such time
that the Mortgagee is personally served with notice of the expiration of
such injunction and (iv) the Mortgagee is named as a party in any action
or proceeding involving such injunction and therefore entitled to notice
of any modification or termination thereof; and, if such injunction is
issued, then so long as such injunction remains in force and effect and
the preceding provisions of this Section 3.01(g) have been complied with,
the grace period referred to in the third line of this subparagraph (g)
shall be deemed to mean the grace period after giving effect to any such
tolling or stay in (i) above; or
(h) default by the Mortgagor under any of the terms of any Superior
Mortgage which default results in the acceleration of the maturity of
such Superior Mortgage and which shall not be fully cured or waived prior
to the expiration of any grace period contained in such Superior
Mortgage, unless prior to the expiration of such grace period, the
Mortgagor gives the Mortgagee an Officers' Certificate and an Opinion of
Counsel and a true copy of the injunction referred to below, which
Certificate and Opinion shall state (i) that a court of competent
jurisdiction has issued an injunction (which is in force and effect and
has not been modified or reversed on appeal) tolling or staying the
expiration of the grace period set forth in such Superior Mortgage with
respect to such default and (ii) the Mortgagee is named a party in any
action or proceeding relating to such injunction and therefore is
entitled to notice of any modification or termination thereof; and if
such injunction is issued, then so long as such injunction remains in
force and effect, and the preceding provisions of this Section 3.01(h)
have been complied with, the grace period referred to in the third line
of this subparagraph (h) shall be deemed to mean the grace period after
giving effect to any such tolling or stay; or
<PAGE>
(i) any modification, amendment or supplement of any Ground Lease
without the prior written consent of the Mortgage; or
(j) any modification, amendment or supplement of any Superior
Mortgage without the prior written consent of the Mortgagee, except to the
extent that such modification, amendment or supplement is permitted by
Section 5.22(b)(i) hereof; or
(k) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a
period of 60 days after there has been given a written notice to the
Mortgagor specifying that such notice is a "Notice of Default" hereunder;
or
(l) any representation or warranty of the Mortgagor set forth in
this Mortgage or in any notice, certificate, demand or request delivered
to the Mortgagee pursuant to this Mortgage shall prove to be incorrect as
of the time when made and the facts constituting such incorrectness
impairs the Mortgagee's security and such impairment continues for a
period of 30 days after there has been given to the Mortgagor a written
notice specifying that such notice is a "Notice of Default" hereunder,
unless (i) such impairment is curable, but not susceptible of cure within
such 30-day period (for reasons other than lack of funds), (ii) the
Mortgagor gives an Officers' Certificate to the Mortgagee within such
30-day period stating (A) the applicability of the provisions of (i) to
such impairment, (B) the Mortgagor's intention to remedy the same with
reasonable diligence and (C) the steps which the Mortgagor has undertaken
to remedy such default or breach and (iii) the Mortgagor delivers to the
Mortgagee additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate described in (ii),
in which case such 30-day period shall be extended for such further period
of time as may reasonably be required to cure
the same, provided that the Mortgagor is then proceeding and thereafter
continues to proceed to cure the same with reasonable diligence.
Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and
is continuing, then the Mortgagee may declare the Outstanding Amount of the
Note to be due and payable immediately, by a notice in writing to the
Mortgagor and upon any such declaration such principal shall become
immediately due and payable.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any
moneys received by the Mortgagee pursuant to
<PAGE>
the provisions of this Article Three (including moneys received by the Trustee
after any action or act by the Mortgagee under Section 3.10) shall be applied
by the Mortgagee in accordance with the provisions of Section 7.06 of the
Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this
Mortgage and such proceeding has been discontinued or abandoned for any reason
or has been determined adversely to the Mortgagee, then and in every such case
the Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such
proceeding had been instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission
of the Mortgagee to exercise any right or remedy accruing upon an Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy
given by this Article Three by law to the Mortgagee may be exercised, from
time to time, and as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect the indebtedness secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including
reasonable attorneys' fees and expenses, incurred by the Mortgagee in
connection therewith, together with interest at the rate then payable on the
Note, from the date of payment less the net amount received by the Mortgagee
or the Trustee, as their interests may appear under any title insurance
policy, and, until paid, all such expenses, together with interest as
aforesaid, shall be a lien on the Trust Estate.
<PAGE>
Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time
insist upon, plead, claim or take the benefit or advantage of, any
appraisement, valuation, stay, extension or redemption law now or hereafter in
force, in order to prevent or hinder the enforcement of this Mortgage or the
absolute sale of the Trust Estate, or any part hereof, or the possession
thereof by any purchaser at any sale under this Article Three; and the
Mortgagor, for itself and all who may claim under it, so far as it or they now
or hereafter may lawfully do so, hereby waives the benefit of all such laws.
The Mortgagor, for itself and all who may claim under it, waives, to the extent
that it may lawfully do so, all right to have the property in the Trust Estate
marshalled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate
as an entirety.
If any law in this Section 3.08 referred to and now in force, of
which the Mortgagor or its successor or successors might take advantage
despite this Section 3.08, shall hereafter be repealed or cease to be in
force, such law shall not thereafter be deemed to constitute any part of the
contract herein contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence
of an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate
(and the books and papers of the Mortgagor), and to hold, operate and manage
the Trust Estate (including the making of all needful repairs, and such
alterations, additions and improvements as the Mortgagee shall deem wise) and
to receive the rents, issues, tolls, profits, revenues and other income
thereof, and, after deducting the costs and expenses of entering, taking
possession, holding, operating and managing the Trust Estate, as well as
payments for taxes, insurance and other proper charges upon the Trust Estate
and reasonable compensation to itself, its agents and counsel, to apply the
same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's
rights under this Section 3.09 shall be subject to the provisions of the New
Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon
the Note and under any of the terms of this Mortgage shall have been paid and
all defaults hereunder shall have been made good, the Mortgagee shall
surrender possession to the Mortgagor.
<PAGE>
Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an
Event of Default shall occur and be continuing, the Mortgagee, with or without
entry, in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the
Mortgagee may determine, to the highest bidder at public auction at such
place and at such time (which sale may be adjourned by the Mortgagee from
time to time in its discretion by announcement at the time and place
fixed for such sale, without further notice) and upon such terms as the
Mortgagee may fix and briefly specify in a notice of sale to be published
as required by law; or
(b)proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in
this Mortgage or in aid of the execution of any power granted in this
Mortgage or for the foreclosure of this Mortgage or for the enforcement
of any other legal, equitable or other remedy, as the Mortgagee, being
advised by counsel, shall deem most effectual to protect and enforce any
of the rights of the Mortgagee; the failure to join tenants shall not be
asserted as a defense to any foreclosure or proceeding to enforce the
rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust
Estate, whether made under the power of sale hereby given or pursuant to
judicial proceedings, to the extent permitted by law:
(a) the principal of and accrued interest on the Note, if not
previously due, shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt
of any required prior approvals of the New Jersey Casino Control
Commission, the Mortgagee may bid for and purchase the property offered
for sale, and upon compliance with the terms of sale may hold, retain and
possess and dispose of such property, without further accountability, and
may, in paying the purchase money therefor, delivery any notes or claims
for interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and
such notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon,
<PAGE>
shall be returned to the holders thereof after being appropriately
stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and instrument of
assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and
lawful attorney of the Mortgagor, in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold; and for that purpose it may execute all
necessary deeds, bills of sale and instruments of assignment and
transfer, and may substitute one or more persons, firms or corporations
with like power, the Mortgagor hereby ratifying and confirming all that
its attorney or such substitute or substitutes shall lawfully do by
virtue hereof; but if so requested by the Mortgagee or by any purchaser,
the Mortgagor shall ratify and confirm any such sale or transfer by
executing and delivering to the Mortgagee or to such purchaser or
purchasers all proper deeds, bills of sale, instruments of assignment and
transfer and releases as may be designated in any such request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of, in and to
the property so sold shall be divested and such sale shall be a perpetual
bar both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor,
its successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such
sale shall be a sufficient discharge to the purchaser or purchasers at
such sale for his or their purchase money and such purchaser or
purchasers and his or their assigns or personal representatives shall
not, after paying such purchase money and receiving such receipt, be
obliged to see to the application of such purchase money, or be in
anywise answerable for any loss, misapplication or non-application
thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default
and commencement of judicial proceedings by the Mortgagee to enforce any right
under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security
for the Note or the solvency of the
<PAGE>
Mortgagor, to the appointment of a receiver of the Trust Estate, and of the
rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER,
that the Mortgagee's rights under this Section 3.12 shall be subject to the
provisions of the New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days'
prior written notice to the Mortgagor (or such shorter period or without
notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee
shall have power to institute and maintain such proceedings as it may deem
necessary and appropriate to prevent any impairment of the Trust Estate by any
acts which may be unlawful or in violation of this Mortgage and to protect its
interests in the Trust Estate and in the rents, issues, profits, revenues and
other income arising therefrom, including power to institute and maintain
proceedings to restrain the enforcement of or compliance with any 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 the security hereunder or be materially prejudicial to the interests of
the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the contrary, following an Event of Default
and the taking of possession of the Trust Estate or any part thereof by the
Mortgagee and/or the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized, in addition
to the rights and powers of the Mortgagee and such receiver set forth
elsewhere in this Mortgage, to retain one or more experienced operators of
hotels and/or casinos to manage the Casino-Hotel, PROVIDED that
any such operator shall have all necessary legal qualifications, including all
Permits, to manage the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to
the Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation
or combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the
<PAGE>
successor entity formed by such consolidation or into which the Mortgagor is
combined or to which such conveyance or transfer is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Mortgagor
under this Mortgage with the same effect as if such successor entity had been
named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or
transfer of the Trust Estate substantially as an entirety, unless such
conveyance or transfer is in compliance with the provisions of Article Ten of
the Indenture, shall have the effect of releasing the Person named as "the
Mortgagor" in the first paragraph of this instrument or any successor entity
which shall theretofore have become such in the manner prescribed in such
Article Ten from its liability as obligor or maker of the Note.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as
otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor
shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or
otherwise transfer all or any part of the Trust Estate or any interest therein
(including without limitation any interest in the Ground Leases). Without
limiting the generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground Leases from
its ownership of the buildings constituting the Casino-Hotel or any part
thereof.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Mortgagor will duly and punctually pay the principal of (and premium, if any)
and interest on the Note in accordance with the terms of the Note and this
Mortgage.
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants
and agrees to comply with all of the terms and conditions set forth in any
FF&E Financing Agreements before the expiration of any applicable notice and
cure periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS.
(a) The Mortgagor will not create, incur, suffer or permit to be
created or incurred or to exist any mortgage, lien, charge or encumbrance on
or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances,
(ii) liens on the Trust Estate in connection with indebtedness permitted by
clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture,
and (iii) a building contract or a notice of intention filed by a
<PAGE>
mechanic, materialman or laborer under the New Jersey lien law. Without
limiting the generality of the foregoing sentence but notwithstanding the
provisions of the foregoing sentence, the Mortgagor shall not be deemed to
have breached the provisions of the foregoing sentence by virtue of the
existence of a lien for Impositions or mechanics liens so long as the
Mortgagor is in good faith contesting the validity of the same in accordance
with the provisions of Section 5.09 to the extent that the matters described
in (i) and (ii) do not constitute a default under any Ground Lease or Superior
Mortgage.
(b) Mortgagee acknowledges that, contemporaneously with the
execution and delivery of this Mortgage, it has assigned this Mortgage to the
Trustee and that the Trustee is also the mortgagee under the Guaranty
Mortgage, which Guaranty Mortgage creates a lien upon the same Trust Estate
PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and
agrees that whenever it is provided in the Guaranty Mortgage that the
Mortgagor shall deliver any notice or document, or is require to make any
payment thereunder, the delivery of such notice or document or the making of
such payment pursuant to the terms of the Guaranty Mortgage shall also
constitute the delivery of such notice or document or the making of such
payment in satisfaction of the terms, conditions and provisions of this
Mortgage to the same extent as the same constitutes satisfaction of the terms,
conditions and provisions of the Guaranty Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on behalf of the
Mortgagor, (a) to appear in and defend any action or proceeding brought with
respect to the Trust Estate or any part thereof and (b) upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgage), to commence any action or
proceeding to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The
Mortgagor represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to execute and deliver this Mortgage, and
all corporate action on its part necessary for the valid execution and
delivery of this Mortgage has been duly and effectively taken;
<PAGE>
(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the
Mortgage Documents, any Working Capital Facility Lien and Existing
Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than
the lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has
been given to or by the lessee, (iii) the Mortgagor has delivered true
and correct copies of the Ground Leases and all modifications, amendments
and supplements thereto, and (iv) each of the Ground Leases is in full
force and effect and has not been modified, amended or supplemented,
except as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to
execute this Mortgage and to grant, bargain, sell, alien, convey, assign,
transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as
provided herein (including without limitation with respect to the
Operating Assets and the Ground Leases, without the consent of any third
party, other than governmental authorities but any applicable or
necessary consent or approval of any such governmental authority has been
given or waived at or prior to the execution and delivery of this
Mortgage), and this Mortgage constitutes a valid second mortgage lien and
second priority security interest in the Trust Estate PARI PASSU with the
lien of the Guaranty Mortgage, subject only to Working Capital Facility
Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend (x)
the title to Trust Estate (including without limitation, its leasehold estates
under the lessee's interests in the Ground Leases) (subject to Permitted
Encumbrances) and (y) the priority of the lien of this
<PAGE>
Mortgage (subject to Permitted Encumbrances other than Restricted
Encumbrances), against the claims and demands of all persons whomsoever, at
the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will,
as provided in Section 5.13, from time to time subject its right, title an
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments
of further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded,
registered and filed, and will execute and file such financing statements and
cause to be issued and filed such continuation statements, all in such manner
and in such places as may be required by law or as requested by the
Mortgagee to fully preserve and protect the rights of the Mortgagee as a
secured party under the Uniform Commercial Code to all property comprising the
Trust Estate (to the extent a grant of a security interest therein is governed
by the Uniform Commercial Code) and to perfect, preserve and protect the lien
of this Mortgage as a valid mortgage lien of record and a valid security
interest on the Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all
expenses incident to the execution and delivery of this Mortgage, and any
instrument of further assurance, and all federal, state, county and municipal
stamp taxes and other taxes, duties, mposts, assessments and charges arising
out of or in connection with the execution and delivery of the Note, this
Mortgage, any financing statement or continuation statement with respect to
the personal property constituting part of the Trust Estate or any instrument
of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF
PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS.
The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to contests,
pay or cause to be paid promptly (or when installments of the same shall
become due and payable, if, by law or by agreement or arrangement with the
applicable governmental agency or authority, the same may be paid in
installments) before any fine, penalty, interest or cost may be added for
nonpayment (but no later than when the same are payable by the Mortgagor
dpursuant to any Superior Instrument
<PAGE>
Requirement), all taxes (including, without limitation, real estate taxes,
personal or other property taxes and all sales, value added, use and
similar taxes), assessments (including, without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed
prior to the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
profits or revenue tax upon the income of the Mortgagee, the Trustee or any
Noteholder nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholder nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed n substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Note;
(b) except for such property which the Mortgagor may dispose of or
replace pursuant to Section 2.02, maintain and keep all its properties used
or useful in the conduct of its business (other than obsolete equipment),
including, without limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition, except for
reasonable wear and use, and make or cause to be made all such needful and
proper repairs, renewals and replacements thereto consistent with the
standards of other casino-hotels in Atlantic City, New Jersey;
<PAGE>
(c) occupy and continuously operate the Casino-Hotel and keep the
Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to contests,
the Mortgagor at its sole expense will timely (1) comply with all Legal
Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if the failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the foregoing, the
Mortgagor represents and warrants that at the time of the execution of this
Mortgage, the Mortgagor is in compliance with the requirements of clauses
(1), (2) and (3);
(e) in the event of the passage after the date of this
Mortgage of any law of the State of New Jersey, or any other governmental
entity, changing in any way the laws now in force for the
taxation of mortgages, or debts secured thereby, for state or local
purposes, or the manner of the operation of any such taxes, so as to affect
the interest of the Mortgagee, then and in such event, the Mortgagor shall
bear and pay the full amount of such taxes, provided that if for any reason
payment by the Mortgagor of any such new or additional taxes would be
unlawful or if the payment thereof would constitute usury or render the
indebtedness secured hereby wholly or partially usurious under any of the
terms or provisions of the Note, or this Mortgage, or otherwise, the
Mortgagee may, at the Mortgagee's option, declare the whole sum
secured by this Mortgage, with interest thereon, to be due and payable 90
days after notice of election thereof has been given by the Mortgagee, or
the Mortgagee may, at the Mortgagee's option, pay that amount or portion of
such taxes as renders the loan or
<PAGE>
indebtedness secured hereby unlawful or usurious, in which event the
Mortgagor shall concurrently therewith pay the remaining lawful and
nonusurious portion or balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole
expense, contest by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part
of any Imposition or lien therefor or any Legal Requirement or Insurance
Requirement or the application of
any instrument of record affecting the Trust Estate or any part thereof or any
claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and
may withhold payment of the same pending such proceedings if permitted by law,
or make payment under protest, or defer compliance with any such Legal
Requirement, any such Insurance Requirement or the terms of any such
instrument, and the same shall not be a Default hereunder, provided that
(a) in the case of any Impositions or lien therefor or any claims of
mechanics, materialmen, suppliers or vendors or lien therefor, such
proceedings shall suspend the collection thereof from each of the Mortgagor,
the Mortgagee, the Trustee, the Noteholder and the Trust Estate, (b) neither
the Trust Estate nor any interest therein would be in any danger of being
sold, forfeited, or lost, (c) such action would not result in or constitute a
default under any Ground Lease or Superior Mortgage, (d) in the case of a
Legal Requirement, neither the Noteholder nor the Mortgagee shall be in any
danger of any civil or any criminal liability, and the failure of the
Mortgagor to comply with such Legal Requirement shall not affect the
continuance in good standing of any Permit or result in the suspension,
termination, non-renewal or material adverse modification of any permit, and
(e) in the case of an Insurance Requirement, the failure of the Mortgagor to
comply therewith shall not affect the validity of any insurance required to be
maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the
generality of the first sentence of Section 5.03 and notwithstanding the
provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed,
either by payment, or bonding or otherwise, all claims and demands of
mechanics, materialmen, laborers, and others which, if unpaid, might result
in, or permit the creation of, a lien on the Premises and/or Trust Estate or
any part thereof, or on the revenues, rents, issues, income and profits
arising therefrom and in general will do or cause to be done everything
necessary so that the lien hereof shall be fully preserved, at the cost of the
Mortgagor, without expense to the Mortgagee.
<PAGE>
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable
properties, in amounts at all times sufficient to prevent the Mortgagor
from becoming a coinsurer within the terms of the applicable policies,
but in any event such insurance shall be maintained in such insurable
amounts not less than the greatest of the following (hereinafter referred
to as the "Insurance Amount"): (i) 100% of the then full insurable value
of such insurable properties, the term "full insurable value" to mean the
actual replacement cost (excluding the costs of foundation, footing,
excavation, paving, landscaping and other similar, non-insurable
improvements) determined from time to time (but not less frequently than
once in any 36 calendar months), by an Architect, contractor, appraiser,
or an Insurer, (ii) the then Outstanding Amount of any First Mortgage
Debt, including the Note or (iii) the amount required to be maintained
pursuant to the Superior Instrument Requirements;
[(2) war risk insurance as and when such insurance is obtainable
from the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then
be so obtainable;]
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the
cost of such insurance, for personal injury and property damage with
respect to any one occurrence, which may be under an umbrella policy.
Anything contained in this clause (3) to the contrary notwithstanding,
the Superior Instrument Requirements with respect to the kinds and amount
of insurance described in this clause (3) shall be satisfied by the
Mortgagor;
<PAGE>
(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already
covered by other policies of insurance maintained by the Mortgagor) on or
about such insurable properties;
(5) business interruption insurance covering not less than [12]
months of loss, provided that, following [19__], at any time that the
Mortgagor is renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates
determined by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable
size in the boardwalk area of Atlantic City, New Jersey and (ii) required
to be maintained pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1),
(2), (6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, [$100,000] with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
[$1,000,000]), (ii) the Mortgagor shall be permitted to maintain a deductible
with respect to the insurance policies described in clause (3) in an amount not
to exceed the amount of deductible as is customarily maintained by
casino-hotels of similar size in Atlantic City, New Jersey, (iii) the
Mortgagor shall not reduce its insurance coverage for the matters described in
clause (3) (which for purposes of this paragraph means a reduction in single
limits or an increase in deductible) unless and until the Mortgagor delivers
to the Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained atrates determined
by the Mortgagor to be reasonable for such coverage, (x) the amount of the
proposed reduction, (y)
<PAGE>
the premium for the existing and the proposed reduced coverage, and (z) that
the proposed deductible satisfied the criteria set forth in this clause (iii),
and (iv) the Mortgagor shall be permitted to maintain a deductible with
respect to the insurance policies described in clause (5) in the forms of and
in an amount not to exceed the amount of deductible as is customarily
maintained by casino-hotels of similar size in Atlantic City, New Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant
to Subsection (a) of this Section 5.11 shall, (1) except in the case of
workers' compensation insurance, name as insureds the Mortgagee, the Mortgagor
and to the extent required by the Superior Instrument Requirements, the
Lessors and the holders of the Superior Mortgages, (2) provide that all
insurance proceeds for losses, except in the case of public liability insurance
and workers' compensation insurance or as otherwise provided in Subsections
(d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or
such other party as is required to receive such proceeds under a Superior
Mortgage, (3) include effective waivers (whether under the terms of any such
policy or otherwise) by the insurer of all claims for insurance premiums
against all lost payees and named insureds (other than the Mortgagor) and all
rights of subrogation against any named insured, (4) except in the case of
public liability and workers' compensation insurance, provide that any losses
shall be payable notwithstanding (i) any act, failure to act, negligence of,
or violation or breach of warranties, declarations or conditions contained in
such policy by the Mortgagor or the Mortgagee or any other named insured or
loss payee (including, without limitation, with respect to the Released Fee
Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation
or use of the insurable properties for purposes more hazardous than
permitted by the terms of the policy, (iii) any foreclosure or other
proceeding or notice of sale relating to the insurable properties or (iv) any
change in the title to or ownership or possession of the insurable properties,
(5) contain a non-contributory mortgagee clause in favor of the Mortgagee,
and (6) provide that if all or any part of such policy is cancelled,
terminated or expires, the insurer will forthwith give notice thereof to each
named insured an loss payee and that no cancellation, reduction in amount
or material change in coverage thereof shall be effective until at least
30 days after receipt by each named insured and loss payee of written notice
thereof.
(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate
originals of all insurance policies that the Mortgagor is required to maintain
pursuant to this Section 5.11 and (2) within 30 days after each reduction in
insurance required to be maintained by the Mortgagor
<PAGE>
hereunder, an Officers' Certificate setting forth the articulars as to all
such insurance policies and certifying that the same comply with the
requirements of this Section 5.11, that all premiums or installments thereof
then due thereon have been paid and that the same are in full force and
effect. The Mortgagee shall not be responsible for effecting or renewing any
insurance or for the responsibility or solvency of the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x) results in
damage, loss or destruction in an amount in excess of [$5,000,000] to any
buildings or improvements on the Premises and/or any Tangible Personal
Property or (y) pursuant to any Superior Instrument Requirement, would require
the deposit of insurance proceeds with the Depositary, or action or proceeding
with respect thereto. Whenever the Superior Instrument Requirements require
or permit the selection of the Depositary by the Mortgagor, the Mortgagor
shall select the Insurance Trustee as the Depositary. Within 30 days after
any Casualty which results in any damage, loss or destruction in an amount
in excess of [$10,000,000] to any buildings or improvements of the Premises
and/or any Tangible Personal Property, the Mortgagor shall deliver to the
Mortgagee a certificate of an Architect stating whether, in such Architect's
opinion, applicable Legal Requirements permit the Restoration of such
buildings and improvements for the same uses and to the same size and quality
in all material respects, as existed immediately prior to the Casualty (and if
such certificate states the Legal Requirements do not permit such
Restoration, such certificate shall describe the manner closest approximating
such criteria to which the buildings and improvements could be so restored and
shall be accompanied by a Certificate of Appraised Value dated not more than
10 days prior to delivery setting forth the Appraised Value immediately prior
to the Casualty and the estimated Appraised Value immediately after the
Restoration). If the Mortgagor is required to deliver such Certificates of
Appraised Value and if based on such Certificates of Appraised Value
immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of
(i) 66 2/3% of the Appraised Value immediately after such Restoration or
(ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately
prior to such Casualty divided by the Appraised Value immediately prior to the
Casualty multiplied by the Appraised Value immediately after such Restoration,
then the proceeds of any insurance shall, at the election of Mortgagee,
either be applied to Restoration as set forth in Subsections (e), (h) and (i)
below) or paid and delivered to the Mortgagee to the extent of the then
Outstanding Amount of the Notes and any other interest or other sums due
<PAGE>
hereunder or thereunder to be applied to the satisfaction of the Mortgage to
the extent proceeds are available for such purpose and provided that no
additional sums are due to the Trustee or the Noteholders under the Notes or
the Indenture, the balance of any net insurance proceeds shall be paid to the
Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of
Appraised Values indicates that the Outstanding Amount of First Mortgage Debt
immediately after such Restoration exceeds the greater of the two amounts
determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance
will be made available for Restoration (subject to paragraphs, (e), (h) and
(i) below) if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least [$100,000,000], to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as
additions to capital in an amount equal to the Outstanding Amount of First
Mortgage Debt in excess of the Appraised Value necessary to be paid down so
that the Outstanding Amount of First Mortgage Debt will not exceed either of
the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED
that such commitment may only be released if, upon an Appraisal at any time
following completion of such Restoration, the aggregate Outstanding Amount of
the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value.
(e) Subject to the provisions of Subsection (d) above, in case a
Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of [$10,000,000], the net insurance proceeds shall be paid by
the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements
provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is [$10,000,000] or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to the
Insurance Trustee (or other Depositary required by the Superior Instrument
Requirements, provided that such Depositary holds such proceeds in trust for
purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable promptness under
the circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair, replacement
or rebuilding of the damage or destruction resulting from the Casualty (all of
which restoration, repair, replacement or rebuilding are referred to as
<PAGE>
the "Restoration") in accordance with the plans and specifications submitted
to the Insurance Trustee, in conformance with all Legal Requirements and
Superior Instrument Requirements, and in accordance with the further
provisions of this Subsection (e), regardless of the extent of any such
Casualty and whether or not net insurance proceeds, if any, shall be available
or, if available, shall be sufficient, for the purpose of the Restoration
(provided, however, that if the Mortgagor does not receive any net insurance
proceeds within 30 days after any Casualty because the adjustment of the loss
has not yet occurred, then the obligation of the Mortgagor to commence such
Restoration shall be deferred until such proceeds are made available to the
Mortgagor, provided that (i) Mortgagor diligently and continuously adjusts such
loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an
Officers' Certificate within such 30-day period requesting the extension of
such period, estimating the date on which such proceeds will be available and
describing the Mortgagor's efforts to adjust such loss and certifying that
such extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach has
been waived) and (iii) the Mortgagor delivers to the Mortgagee additional
Officers' Certificates every 30 days thereafter updating the information
contained in the certificate described in Clause (ii)). All Restoration
work shall be performed in accordance with the applicable provisions of
Section 5.12 and in conformance with all Superior Instrument Requirements,
Legal Requirements and Insurance Requirements and, prior to commencing any
Restoration, the Mortgagor shall obtain all Permits necessary in connection
therewith, and shall obtain, and keep in full force and effect until the
completion of such Restoration, such additional insurance as the Insurance
Trustee and Superior Instrument Requirements may require. The plans and
specifications for the Restoration shall be accompanied by a certificate of
the Mortgagor and an Opinion of Counsel to the effect that upon the
completion of the Restoration pursuant to the plans and specifications the
Premises, and all buildings and improvements, thereon will comply with all
superior Instrument Requirements, Legal Requirements and Insurance
Requirements. Notwithstanding anything in this Section 5.11 to the contrary,
if such Casualty is in an amount less than [$5,000,000], the Mortgagor shall
not be required to perform and complete such Restoration (unless the
performance and completion of the Restoration is necessary in order for the
Mortgagor to be in compliance with any term, provision or condition of
<PAGE>
this Mortgage (other than this Section 5.11(e)) or any Superior Instrument
Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designate by Mortgagor (to the extent the Mortgagor is
permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds) and
shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or
to make payment for, the Restoration, after the Insurance Trustee deducts
therefrom the amount of any reasonable costs and expenses incurred in
connection with the performance of its obligations under this Section 5.11.
The Insurance Trustee shall make such payments not more frequently than once
every 30 days upon the written request of the Mortgagor (unless more frequent
payments are required by Superior Instrument Requirements), by paying to the
Mortgagor or the persons named in the certificate described in Clause (6)
of this Subsection (e) the respective amounts stated in such certificate from
time to time as the Restoration progresses, provided the Mortgagor has complied
with the requirements of this Subsection (e) and such payment is permitted by
an applicable Superior Instrument Requirements. The Mortgagor's written
request shall be accompanied by (i) the certificate described in Clause (6) of
this Subsection (e) and (ii) a title company or official search, or other
evidence reasonably acceptable to the Insurance Trustee, showing that there
have not been filed
with respect to the Premises, any vendor's, contractor's mechanic's, laborer's
or materialman's statutory or similar lien which has not been discharged of
record (or bonded against or secured by other security) or any other
encumbrance irrespective of its priority (other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate, countersigned by the Architect in
charge of the Restoration with respect to the matters described in (i) and (v)
below, (B) be dated not more than 10 days prior to such request and (C) set
forth (in addition to any other requirements contained in any applicable
Superior Instrument Requirements) that:
<PAGE>
(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen, engineers,
architects or other persons who have rendered services or furnished or
contracted to deliver materials for the Restoration therein specified,
and the names and addresses of such persons, a brief description of such
services and materials and the several amounts so paid or due to each of
such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net insurance
proceeds, and that the sum then requested does not exceed the value of
the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in such certificate to be due for services or
materials, and except for amounts in dispute and/or customary retainages,
there is no outstanding indebtedness known to the person signing such
certificate, after due inquiry, which is then due for labor, wages,
materials, supplies or services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if such
estimated cost does exceed such insurance proceeds such certificate shall
state the amount of any such deficiency. If the certificate states that
such deficiency will exist, the Mortgagor shall deliver the amount of such
deficiency in cash or cash equivalent to the Insurance Trustee
simultaneously with the delivery of such certificate, which amount shall
be deemed insurance proceeds for purposes of this Section 5.11(e); and
<PAGE>
(7) If net insurance proceeds shall be insufficient to pay the
entire cost of the Restoration, then, after completion of the
Restoration, the Mortgagor shall pay the deficiency. If all or any
part of the net insurance proceeds are not used for the restoration in
accordance with this Subsection (e) (because such proceeds exceed the
amount required to complete the Restoration), then upon completion of the
Restoration in accordance with this Subsection (e), such amount not so
used, if held by the Insurance Trustee, shall be paid to the Mortgagor
(if permitted by Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is
continuing, all net business interruption insurance proceeds shall be paid to
the Mortgagor, to be segregated from the other funds of Mortgagor and held
in trust by Mortgagor for the following purposes and in the following order of
priority: (i) for the payment of Impositions and amounts due under the Ground
Leases and Superior Mortgages; (ii) for debt service for the estimated period
of Restoration (for purposes of this Section 5.11(f), interest and principal
payments due on any payment date under the Note will deemed to accrue in equal
daily installments beginning the day after the immediately preceding payment
date and ending on such payment date); and (iii) for any expense incurred in
connection with the operation or business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to be
maintained pursuant to this Section 5.11, unless the same are permitted by
Superior Instrument Requirements and the Mortgagee is included therein as
a named insured, with loss payable to the Mortgagee and the Insurance
Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately
notify the Mortgagee whenever any such separate insurance is taken out and
shall promptly deliver to the Mortgagee a duplicate original of the policy of
such insurance, a copy thereof certified by the insurer or a certificate
thereof.
(h) Insurance claims by reason of damage or destruction to any
portion of the Trust Estate may adjusted by the Mortgagor, but the
Mortgagee shall have the right (but not the obligation) to join the
Mortgagor in adjusting, and approving the adjustment of, any such loss
except in the event of a loss where the amount of insurance reasonably
anticipated to be received with respect to such loss is less than [Five
Million Dollars ($5,000,000)], and the Mortgagor shall assist the
Mortgagee in any such adjustment at the request of the Mortgagee. If the
Mortgagee at its election as aforesaid joins the Mortgagor in any
adjustment process,
<PAGE>
then the Mortgagee's approval of the adjustment shall not be unreasonably
withheld;
(i) Notwithstanding anything contained herein to the contrary, if an
Event of Default shall have occurred and be continuing, the Mortgagee may, at
its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee
any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the
case may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit
or make any demolition, alteration or improvement of any building included in
the Trust Estate or any new construction on any part of the Trust Estate,
except in conformity with and subject to the limitations hereinafter in this
Section 5.12 set forth.
Unless an Event of Default shall have occurred and be continuing,
the Mortgagor shall have the right at all times to make or permit such
alterations, improvements or new constructions, structural or otherwise
(herein sometimes called collectively "alterations"), of or on the Trust
Estate, to be made in all cases subject to the following conditions:
(a) no alteration shall be undertaken or carried out except in
conformity with all Superior Instrument Requirements, Legal Requirements
and Insurance Requirements;
(b) if the estimated cost of any alteration, together with other
alterations that constitute a single construction plan or project
(whether or not accomplished in several stages or procedures), exceeds
[$5,000,000], the building or buildings, as so improved or altered, upon
completion of the work shall be of a value not less than the value of
such building or buildings immediately prior to the making of such
alterations;
(c) any alteration which is structural in nature or involves an
estimated cost of more than [$5,000,000] shall be conducted under the
supervision of an Architect, and no such alteration shall be undertaken
until 10 days after there shall have been filed with the Mortgagee
detailed plans and specifications and cost estimates therefor, stating
that such plans and specification conform to all, prepared and approved
in writing by such Architect and accompanied by a certificate of such
Architect stating that such plans and specifications conform to all
applicable provisions of this Section 5.12;
<PAGE>
(d) no alteration involving an estimated cost of more than
[$5,000,000] shall be undertaken until the Mortgagor has furnished
to the Mortgagee, at the Mortgagor's sole cost and expense, a surety
bond or bonds, covering performance, and labor and material payments with
respect to the work to be so performed, naming the Mortgagee as obligee,
issued by a responsible surety company, authorized to do business in the
state of New Jersey, in a form generally and customarily used by such
surety in an amount equal to the estimated cost of construction of the
work covered by the plans and specifications therefor, guaranteed and
conditioned upon the performance and completion of such construction,
substantially in conformity with the such plans and specifications and
within a reasonable time, subject to delays by fire, strikes, lock-out,
acts of God, inability to obtain labor or materials, governmental
restrictions, enemy action, civil commotion or unavoidable Casualty or
other similar causes beyond the control of the Mortgagor, free and clear
of all liens, claims and liabilities for the cost of such alterations.
In the event such surety bond or bonds shall be unobtainable the
Mortgagor shall deliver to the Mortgagee security by cash, letter of
credit or other guarantee, affording substantially the same
protection as would such bond or bonds;
(e) all work done in connection with any alterations shall be done
promptly and in good and workmanlike manner. The work in connection with
any alteration shall be prosecuted with reasonable dispatch, delays due
to fire, strikes, lockouts, acts of God, inability to obtain labor or
materials, governmental restrictions, enemy action, civil commotion or
unavoidable casualty or similar causes beyond the control of the
Mortgagor excepted;
(f) if the estimated cost of alterations exceed [$5,000,000], the
Mortgagor shall have delivered to the Mortgagee (A) prior to the
commencement of such alterations, additions or improvements copies of all
Permits required for the commencement of such work together with a
certificate of the Architect or an Opinion of Counsel to the effect that
all Permits required for the commencement of such alterations have been
obtained; and (B) within a reasonable period of time after the completion
of the alterations, copies of all Permits required in connection with the
completion thereof, together with either an Opinion of Counsel or a
certificate of the Architect that all such Permits have been so obtained
by the Mortgagor and that the Mortgagor has complied with all the
requirements of this Section 5.12;
<PAGE>
(g) no alterations of any kind shall be made to any building which
shall change the use or reduce the size or quality of the building in any
material respect; and
(h) no alterations costing in excess of [$5,000,000], together with
other alterations that constitute a single construction plan or project
(whether or not accomplished in several stages or procedures), shall be
made to any building if such alterations are not expected to be completed
at least 120 days prior to the maturity date of the Note (except if such
alterations are required in order to comply with Legal Requirements or
Superior Instrument Requirements).
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d), enter into
any Lease, or renew, modify, extend, terminate, or amend any Lease,
except in the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection
of, any rental payments under any Lease more than one year in advance
of the respective periods in respect of which they are to accrue,
except that, in connection with the execution and delivery of any Lease
or of any amendment to any Lease, rental payments thereunder may be
collected and received in advance in an amount not in excess of three
months' rent and/or a security deposit may be required thereunder in an
amount not exceeding one year's rent;
(c) collaterally assign, transfer or hypothecate (other than
to the Mortgagee hereunder, to the mortgagee under the Guaranty Mortgage
or to the holder of any Working Capital Facility Lien) any rental payment
under any Lease whether then due or to accrue in the future, the interest
of the Mortgagor as landlord under any Lease or the rents, issues or
profits of the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any
Lease unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder
shall be subject and subordinate to the rights of the Mortgagee
under this Mortgage, the mortgagee under the Guaranty Mortgage and
the holders of any Superior Mortgage,
<PAGE>
(2) the Lease may be assigned by the landlord thereunder
to the Mortgagee,
(3) the rights and remedies of the tenant in respect of
any obligations of the landlord thereunder shall be nonrecourse as
to any assets of the landlord other than its equity in the building
in which the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee under any new lease entered
into in the event of a termination of a Ground Lease;
(e) modify any Lease with respect to the matters described in
clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate
of the Mortgagor) for a term of not less than 3 nor more than 10 years, the
Mortgagee shall deliver a non-disturbance and attornment agreement
substantially in the form of Schedule 4 hereto, following receipt of a
certificate of a leasing broker (who is not an Affiliate of the Mortgagor or
the broker involved in such transaction) experienced with respect to leases of
commercial space in the Atlantic City area stating that the rent under the
Lease is not less than fair market rent and that the other terms of the Lease
are fair and reasonable in the commercial leasing market. The Mortgagor
shall, upon demand, reimburse the Mortgagee for any costs and expenses
(including reasonable attorney's fees) incurred by the Mortgagee in
connection with the preparation. review and delivery of such non-disturbance
and attornment agreements.
Promptly after the execution and delivery hereof,
the Mortgagor will cause the lessee under each Lease now in effect and promptly
after each Lease is executed or becomes effective after the date of the
execution and delivery hereof, the Mortgagor will cause the lessee under each
such Lease, to be duly notified in writing (unless the substance and effect of
such notice shall be contained in such Lease) of the subjection of the
owner's interest, as lessor, in and to such Lease to the lien of this
Mortgage and of the name and address of the Mortgagee. Each such notice shall
state that the lease of such lessee is a Lease as herein defined. If a new
Mortgagee is at any time appointed hereunder or the address of the Mortgagee
shall at any time be changed, the Mortgagor will cause each lessee under each
Lease to be promptly notified in writing of the name address of such new
Mortgagee or the new address of the Mortgagee. The Mortgagor will use
reasonable efforts (but shall not be obligated to ncur any expenditure other
than DE MINIMIS
<PAGE>
amounts) to obtain from each lessee under each Lease to whomany notice is sent
pursuant to this paragraph an acknowledgment of receipt of such notice, and
the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of
each such acknowledgment of receipt which it is able to obtain. The Mortgagee
shall not be responsible for securing or causing the Mortgagor to secure any
such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject
to Article Four, the Mortgagor will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence as a
corporation, and its rights (both statutory and under its articles of
incorporation) and franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The
Mortgagor will keep proper books of record and account in accordance with
Section 12.05 of the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Note, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Note.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The
Mortgagor covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law or any
other law which would prohibit or forgive the Mortgagor from paying all or any
portion of the obligations evidenced by the Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may otherwise
affect the covenants or the performance of this Mortgage; and the Mortgagor
(to the extent that it may lawfully do so) 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 Mortgagee, but
<PAGE>
will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN.
(a) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Taking affecting the Trust
Estate. If the Taking (i) is estimated to result in an award of more than
[$5,000,000] or (ii) the Taking would interfere with or adversely affect
the operation of the Casino-Hotel in accordance with Legal Requirements then
within 30 days after any such Taking, the Mortgagor shall deliver to the
Mortgagee a certificate of an Architect stating whether, in such Architect's
opinion, applicable Legal Requirements permit the Restoration of any buildings
and improvements for the same uses and the same size and quality in all
material respects as existed immediately prior to the Taking (and if such
certificate states that Legal Requirements do not permit such Restoration,
such certificate shall describe the manner closest approximating such criteria
to which the buildings and improvements could be so restored and shall be
accompanied by a Certificate of Appraised Value dated not more than 10 days
prior to delivery setting forth the Appraised Value immediately prior to the
Taking and the estimated Appraised Value immediately after the permitted
Restoration). If the Mortgagor is required to deliver such Certificates of
Appraised Value and if based on such Certificates of Appraised Value
immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of
(i) 66-2/3% of the Appraised Value immediately after such Restoration or
(ii) the quotient of the Outstanding Amount of the First Mortgage Debt
immediately prior to such Taking divided by the Appraised Value immediately
prior to the Taking multiplied by the Appraised Value immediately after such
Restoration, then the Taking shall be deemed a Taking of "the whole or
substantially all of the Premises." Notwithstanding the foregoing sentence,
if such Certificates of Appraised Value indicate that the Outstanding Amount of
First Mortgage Debt immediately after such Restoration exceeds the greater of
the two amounts determined pursuant to subclauses (i) and (ii) above, the
Taking will not be deemed a Taking of "the whole or substantially all of the
Premises", if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least [$100,000,000], to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as
additions to capital in an amount equal to the Outstanding Amount of First
Mortgage Debt in excess of the Appraised Value
<PAGE>
necessary to be paid down so that the Outstanding Amount of First Mortgage
Debt will not exceed either of the two amounts determined pursuant to such
clauses (i) and (ii), PROVIDED that such commitment may only be released if,
upon an Appraisal at any time following completion of such Restoration, the
aggregate Outstanding Amount of the First Mortgage Debt does not exceed
66-2/3% of the Appraised Value.
(b) If at any time there shall occur a Taking of less than the whole
or substantially all of the Premises and the award or awards resulting
therefrom payable to the Mortgagor (and not to any Lessor or the holder of any
Superior Mortgage) (after there shall have been first deducted the fees and
expenses incurred in connection with the termination, settlement and
collection of such award or awards, including but not limited to reasonable
counsel fees and expenses, hereinafter referred to as "Settlement Costs")
(i) shall not exceed the sum of [$10,000,000] (except to the extent
that the Insurance trustee or a Depositary is required to hold such amount
pursuant to a Superior Instrument Requirement), the entire amount of such
award shall be paid to the Mortgagor; and (ii) if such award is [$10,000,000]
or more, the entire amount of such award shall be paid to the Insurance Trustee
(or other Depositary required by a Superior Mortgage, provided that such
Depositary holds such award in trust for purposes of paying the cost of
Restoration). In either event, such awards shall be applied to the cost of
demolition, repair, Restoration and replacement of the Trust Estate to as
nearly practicable to their uses, value and condition immediately prior to the
Taking (except to the extent otherwise provided by Superior Instrument
Requirements). The Mortgagor shall promptly commence and with due diligence
perform that Restoration in accordance with clauses (3), (4) and (7) of
Section 5.11(e) (after substituting the words "Taking" of "Casualty" and
"award" for "not insurance proceeds"), at no cost to the Mortgagee. All claims
or suits arising out of any Taking may be settled by the Mortgagor, except that
the Mortgagee shall have the right (but not the obligation) to participate in
such claim or suit, and not the obligation) to participate in such claim or
suit, and to approve settlement thereof (and notwithstanding anything in the
Ground Leases to the contrary, the Mortgagor shall not agree to any settlement
or compromise of the amount of any such claim or suit), except a claim or suit
where the amount reasonably anticipated to be received by the Mortgagor is
less than $5,000,000. If the Mortgagee at its election as aforesaid joins
such claim or suit, the Mortgagee's approval of such settlement shall not be
unreasonably withheld. The Insurance Trustee shall promptly pay such sums as
are received by it from such Taking from time to time in accordance with the
procedures set forth in clauses (5) and (6) of Section 5.11(e) (after
substituting the words
<PAGE>
"Taking" for "Casualty" and "award" for "net insurance proceeds").
(c) If at any time there shall occur a Taking of the whole or
substantially all of the Premises, then the award payable to the Mortgagor
shall not be applied to Restoration but shall instead be paid and delivered
to the Trustee (subject to the rights of the Lessors under the Superior Leases
and the holders of any Superior Mortgages) to the extent of the then
Outstanding Amount of the Note and any other interest or other sums due
hereunder or thereunder to be applied to the satisfaction of this Mortgage
to the extent proceeds are available for such purpose and provided that no
additional sums are due the Trustee or the Noteholder under the Note or the
Indenture, the balance of any award shall be paid to the Mortgagor.
(d) Notwithstanding anything contained herein to the contrary, if
an Event of Default shall have occurred and is continuing, the Mortgagee may,
at its option, (A) refrain from paying to the Mortgagor or the Insurance
Trustee any award or (B) instruct the Insurance Trustee to pay to the
Mortgagee any award then held by the Insurance Trustee, as the case may be.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause to
be done all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor
shall at all times fully perform and comply with all agreements, covenants,
terms and conditions imposed upon or assumed by it as lessee under each of the
Ground Leases (including without limitation the covenant to pay rent and all
taxes, assessments and other charges mentioned therein) prior to the
expiration of any notice and/or cure period provided in each such Ground
Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of
default by the lessee thereunder, Mortgagee may rely thereon and take any
action the Mortgagee deems necessary in its sole discretion to prevent or to
cure any default by the Mortgagor in the performance of or compliance with any
of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as lessee under each of the Ground Leases, even though the
existence of such default or the nature thereof be questioned or denied by the
Mortgagor or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers'
Certificate, Opinion of Counsel and a copy of the injunction, all as described
in Section 3.01(g), the Mortgagee shall not take any such action unless and
until the Mortgagor and/or the Mortgagee no longer has the benefit
<PAGE>
of any tolling or stay referred to in Section 3.01(g). Without limiting the
generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to
the Mortgagee, and agrees that the Mortgagee shall have, the absolute and
immediate right to enter in and upon the Premises or any part thereof to such
extent and as often as the Mortgagee, in its sole discretion, deems necessary
or desirable for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. Subject to the preceding and
without limiting the Mortgagee's other remedies under this Mortgage, the
Mortgagee may pay and expend such sums of money as the Mortgagee in its sole
discretion deems necessary for any such purpose, and the Mortgagor hereby
agrees to pay to the Mortgagee, immediately and without demand, all such sums
so paid and expended by the Mortgagee, together with interest thereon from the
date of each such payment at the highest rate of interest set forth in the
Note. All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i)it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and that
it will not without the express written consent of the Mortgagee modify,
change, supplement, alter or amend such Ground Leases either orally or in
writing and, as further security for the repayment of the indebtedness
secured hereby and for the performance of the covenants herein and in
such Ground Leases contained, the Mortgagor hereby assigns to the
Mortgagee all of its rights, privileges and prerogatives as lessee under
such Ground Leases to terminate, cancel, modify, change, supplement,
alter or amend such Ground Leases, and any such termination, cancellation,
modification, change, supplement, alteration or amendment of such Ground
Leases without the prior written consent thereto by Mortgagee shall be
void and of no force and effect. Unless (1) an Event of Default has
occurred and is continuing and (2) either (A) there has been an
acceleration of maturity of the Note pursuant to Section 3.02 hereof or
(B) the Mortgagee exercises its rights under Section 3.09 hereof, the
Mortgagee shall have no right to terminate, cancel, modify, change,
supplement, alter or amend the Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of the
Mortgagor's obligations under such Ground Leases, pursuant to such Ground
Leases or otherwise, shall release the Mortgagor from any of its
obligations under this Mortgage,
<PAGE>
including its obligations with respect to the payment of rent as
provided for in such Ground Leases and the performance of all of the
terms, provisions, covenants, conditions and agreements contained in such
Ground Leases, to be kept, performed and complied with by the lessee
therein;
(iii) unless the Mortgagee shall otherwise expressly consent in
writing, the fee title to the Leased Land, the Mortgagor's interest in
the improvements on the Leased Land and the leasehold estates shall not
merge by and shall always remain separate and distinct, notwithstanding
the union of such estates either in the Lessor or in the lessee, or in a
third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in
writing of any request made by the Mortgagor, as lessee under each of the
Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any arbitration
proceedings, as well as all proceedings thereunder. In addition, the
Mortgagor shall promptly deliver to the Mortgagee a copy of the
determination of the arbitrators in each such arbitration proceeding. The
Mortgagee shall have the right to participate in such arbitration
proceedings in association with the Mortgagor or on its own behalf as an
interested party in accordance with the terms of the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such election to
the Lessor or (B) the Mortgagor acquires fee simple title or any other
estate, title or interest in the Leased Land, the Mortgagor shall
promptly notify the Mortgagee of such acquisition and, on written request
by the Mortgagee, shall cause to be executed and recorded all such other
and further assurances or other instruments in writing as may, in the
opinion of the Mortgagee, be required or desirable to carry out the
intent and meaning of clause (x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease by
any Lessor or any
<PAGE>
trustee arising from or in connection with any case, proceeding or other
action commenced or pending by or against any Lessor under the Code or
any comparable provision contained in any present or future federal,
state, local, foreign or other statute, law, rule or regulation, the
Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor
hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights
as lessee under Section 365(h) of the Code or any comparable provision
contained in any present or future federal, state, local, foreign or
other statute, law, rule or regulation ("Comparable Provision") and (B)
covenants that it shall not elect to treat any Ground Lease as terminated
pursuant to Section 365(h) of the Code or any Comparable Provision
without the prior written consent of the Mortgagee and (C) agrees that
any such election by the Mortgagor without such consent shall be null and
void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to the
Mortgagee all of the Mortgagor's claims and rights to the payment of
damages arising from any rejection by Lessor of any Ground lease under
the Code or any Comparable Provision. The Mortgagee shall have the right
to proceed in its own name or in the name of the Mortgagor in respect of
any claim, suit, action or proceeding relating to the rejection of any
Ground Lease, including, without limitation, the right to file and
prosecute, in cooperation with the Mortgagor, any proofs of claim,
complaints, motions, applications notices and other documents, in any
case in respect of Lessor under the Code or any Comparable Provision.
This assignment constitutes a present, irrevocable and unconditional
assignment of the foregoing claims, rights and remedies, and shall
continue in effect until all of the indebtedness and obligations secured
by this Mortgage shall have been satisfied and discharged in full. Any
amounts received by the Mortgagee in damages arising out of the rejection
of any Ground Lease as aforesaid shall be applied first to all reasonable
costs and expenses of the Mortgagee (including, without limitation,
reasonable attorneys' fees) incurred in connection with the exercise of
any of its rights or remedies under this Section 5.21, and thereafter as
provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or all
of the Ground Leases the Mortgagor shall give the Mortgagee not less than
10 days' prior notice of the
<PAGE>
date on which the Mortgagor shall apply to the Bankruptcy Court or
other judicial body with appropriate jurisdiction for authority to
reject the lease. The Mortgagee shall have the right, but not the
obligation, to serve upon the Mortgagor within such 10 day period a
notice stating that (a) the Mortgagee demands that the Mortgagor
assume and assign such Ground Lease(s) to the Mortgagee pursuant to
Section 365 of the Code or any Comparable Provision and (b) the Mortgagee
covenants to cure or provide adequate assurance of prompt cure of all
defaults and provide adequate assurance of future performance under such
Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice
described in the preceding sentence, the Mortgagor shall not seek to
reject such Ground Lease(s) and shall comply with the demand provided for
in clause (a) of the preceding sentence within 30 days after the notice
shall have been given subject to the performance by the Mortgagee of the
covenant provided for in clause (b) of the preceding sentence. Effective
upon the entry of an order for relief in respect of the Mortgagor
under Chapter 7 of the Code or Any Comparable Provision the Mortgagor
hereby assigns and transfers to the Mortgagee a non-exclusive right to
apply to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
(x) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other communications or notices
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Ground Leases and shall promptly notify the Mortgagor of any default
under any Ground lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all of
the rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed net
rent, taxes and assessments, payable under the Ground Leases have been paid to
the extent they were due and payable to the date hereof and that the Mortgagor
has not received notice of its failure to pay any
<PAGE>
other amounts payable under the Ground Leases which have not been cured.
(d) If both the Lessor's and lessee's estates under any of the
Ground Leases or any portion thereof shall at any time become vested in one
owner, this Mortgage and the lien created hereby shall nevertheless not be
merged, extinguished, destroyed or terminated by application of the doctrine of
merger and, in such event, Mortgagee shall continue to have all of the rights
and privileges of the a leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease
shall be terminated prior to the natural expiration of its term due to default
by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee
or its designee shall acquire from the Lessor a new lease of the Leased land
or any portion thereof, the Mortgagor shall have no right, title or interest
in or to such lease or the leasehold estate created thereby, or the options
therein contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as mortgagor under the Superior Mortgages prior
to the expiration of any notice and/or cure period provided in each such
Superior Mortgage. If a notice of default has been given by the holder of any
Superior Mortgage and the maturity of the indebtedness secured by such
Superior Mortgage has been accelerated as a result thereof, the Mortgagee may
rely thereon and take any action the Mortgagee deems necessary in its sole
discretion to prevent or to cure any default by the Mortgagor in the
performance of or compliance with any of the agreements, covenants, terms or
conditions imposed upon or assumed by the Mortgagor as mortgagor under each of
the Superior Mortgages even though the existence of such default or the nature
thereof may be questioned or denied by the Mortgagor or by any party on behalf
of the Mortgagor provided that if the Mortgagor has heretofore taken such
actions as described in Section 3.01(h), the Mortgagee shall not take any such
action unless and until the Mortgagor and/or the Mortgagee no longer has the
benefit of any such tolling or stay referred to in Section 3.01(h). Without
limiting the generality of Section 3.09 hereof, the Mortgagor hereby
<PAGE>
expressly grants to the Mortgagee, and agrees that upon such acceleration the
Mortgagee shall have, the absolute and immediate right to enter in and upon
the Premises or any part thereof to such extent and as often as the Mortgagee,
in its sole discretion, deems necessary for the purpose permitted by the
immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money
as the Mortgagee in its sole discretion deems necessary for any such
purpose and (ii) in its sole discretion prepay any Superior Mortgage, and
the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without
demand, all such sums referred to in (i) and (ii) above so paid and expended
by the Mortgagee, together with interest thereon from the date of each such
payment at the rate of interest set forth in the Note. All sums so paid and
expended by the Mortgagee and the interest thereon shall be added to and be
secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first obtaining the
written consent of the Mortgagee in each instance: (A) modify any of the
terms, covenants or conditions of any Superior Mortgage, and without
limiting the foregoing, the Mortgagor shall not, without satisfying such
conditions, enter into or obtain any agreement whereby the holder of any
Superior Mortgage waives, postpones, extends, reduces or modifies the
payment of the installment of principal or interest or any other item or
amount now required to be paid under the terms of any Superior Mortgage
or modifies any other provision thereof, or (B) acquire or permit or
suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or
any interest therein. Notwithstanding anything in clause (A) to the
contrary, the Mortgagor shall have the right to amend, supplement or
modify any Superior Mortgage, if (x) the then outstanding principal
balance of the indebtedness secured by such Superior Mortgage is not
increased thereby, and (y) in the case of any After-Acquired Fee
Mortgage, such amendment, supplement or agreement does not increase the
property covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each Superior
Mortgage, the note secured thereby and any other instrument evidencing or
securing the indebtedness owing to any holder of any Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an
<PAGE>
estoppel certificate or letter addressed to the Mortgagee from holders of
the Superior Mortgages, such certificate or letter to be in such form as
the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any default
under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions
of the Trust Estate shall be subject and subordinate to any Existing
Encumbrances and any mortgage, assignment, security agreement, financing
statement or other lien securing any Working Capital Facility (the "Working
Capital Facility Lien") encumbering Mortgagor's interest in the affected
portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be self-
operative with respect to Existing Encumbrances and shall be self-operative
with respect to any Working Capital Facility Lien, and no further instrument
shall be required to give effect to such subordination. Mortgagee shall,
however, from time to time, execute instruments in form and substance
reasonably satisfactory to the holder of the Working Capital Facility Lien,
confirming such subordination and agreeing to such other matters reasonably
required by the holder of the Working Capital Facility Lien which do not, in
the aggregate, materially adversely reduce or impair the rights of Trustee
under the Mortgage, and Mortgagor and others may rely conclusively thereon,
provided that Mortgagee shall have no liability thereunder and all costs and
expenses (including reasonable attorneys' fees) shall be paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing
Encumbrances. The provisions of this Section 5.22(d) shall be self-operative,
and no further instrument shall be required to give effect to such
subordination.
Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County, New
Jersey Clerk's Office prior to the recordation of the Guaranty Mortgage, the
lien of this Mortgage ranks PARI PASSU with, and not senior to, the lien
reated by the Guaranty Mortgage.
<PAGE>
ARTICLE SIX
MISCELLANEOUS
Section 6.01. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
Section 6.02. MODIFICATION. This Mortgage is subject to
"modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and this
Mortgage shall have the benefit of the lien priority provisions of such
statute. Such modification may include, without limitation, a change in the
interest rate, maturity date or other terms and conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY
OF THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to
be duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey
corporation
ATTEST:______________________
By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
ATTEST:______________________
By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
<PAGE>
Exhibit E
Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
<PAGE>
NA932380094 - ASSIGNMENT OF RENTS
(RIH SENIOR PROMISSORY NOTE)
GD&C DRAFT DATED 10/17/93
===============================================================================
ASSIGNMENT
OF LEASES AND RENTS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignee
Dated as of _________________, 1994
==============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having
its principal office at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation,
having its principal office at c/o Resorts International, Inc.,
1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to
secure: (i) the obligations of Assignor under a promissory note
dated as of the date hereof made by Assignor to Assignee in the
principal amount of $125,000,000 (as the same may be amended or
restated from time to time, the "RIH SENIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Senior Promissory
Note dated as of the date hereof, between Assignor, as mortgagor,
and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used
and not otherwise defined herein shall have the meanings ascribed
to those terms in the Mortgage); and (ii) the performance and
observance of all of the provisions herein contained;
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages and other Existing Encumbrances),
all leases or occupancy agreements wherein it is lessor concerning
or affecting the use or occupancy of the certain real property
owned or leased by Assignor, which real property is described on
SCHEDULE 1 hereto and which real property, together with all
buildings and improvements erected thereon, is hereinafter
collectively referred to as the "PROPERTY", or any part thereof,
now existing or which may be executed at any time in the future,
and all amendments, extensions and renewals of such leases or
occupancy agreements, and any of them, all of which are
collectively referred to as the "LEASES", all rents and other
income which may now or hereafter be or become due or owing under
the Leases, and any of them, and any and all payments derived from
or relating to the Leases to which Assignor is entitled, including
but not limited to (a) claims for the recovery of damages done to
the Property, (b) claims for damages resulting from acts of
insolvency or acts of bankruptcy or otherwise, and (c) lump sum
payments for the
<PAGE>
cancellation of Leases or the waiver of any
obligation or term thereof prior to the expiration date;
PROVIDED, HOWEVER, that no Excepted Property is conveyed
hereby; it being intended hereby to establish a present and
complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the Leases and all the rents,
payments and other income arising thereunder; PROVIDED, HOWEVER,
that Assignor is hereby granted a license by Assignee to (i) collect
all of such rents, payments and other income herein assigned which
may become due during the life of this Assignment and (ii) enter
into, renew, modify, extend, terminate, amend, collectively
assign, transfer or hypothecate any or all of the Leases, in
accordance with the provisions of Sections 4.04 and 5.13 of the
Mortgage, each until an Event of Default under the Mortgage (an
"EVENT OF DEFAULT") shall have occurred and be continuing. Upon
the occurrence of an Event of Default, Assignor agrees to deposit
with Assignee upon demand such of the Leases and the rents payable
thereunder as may from time to time be designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to demand, collect, receive and give receipts and
complete acquittance for any and all other rents and other
amounts herein assigned which may be or become due and payable
under the Leases, and at its discretion to file any claim or take
any other action or proceeding and make any settlement of any
claims, either in its own name or in the name of Assignor or
otherwise, which Assignee may deem necessary or desirable in order
to collect and enforce the payment of any and all rents and other
amounts herein assigned. No right shall be exercised by Assignee
under this paragraph until an Event of Default has occurred. All
lessees under the Leases are hereby expressly authorized and
directed, after the occurrence, and during the continuance, of an
Event of Default, to pay all rents and other sums herein assigned
to Assignee or such nominee as Assignee may designate in writing
delivered to and received by such lessees, who thereafter are
expressly relieved of any and all duty, liability or obligation to
Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Assignment and to collect the rents and other sums assigned
hereunder. Assignee shall be under no obligation to exercise any
of the rights or to press any of the claims assigned to it
hereunder, or to perform or carry out any of the obligations of
Assignor under any of the Leases, and does not assume any of the
liabilities in connection with or arising or growing out of the
covenants and agreements of Assignor in the Leases. It is further
2
<PAGE>
understood that this Assignment shall not operate to place
responsibility for the control, care, management or repair of
Assignor's estates or interests in and to the Property, or parts
thereof, upon Assignee, nor shall it operate to make Assignee
liable for the carrying out of any of the terms and conditions of
any of the Leases, or for any waste to Assignor's estates or
interests in and to the Property by any lessee or sublessee of
Assignor under any leases, or by any occupant of the Property, or
by any party whatsoever or for any dangerous or defective condition
of the Property or for any negligence in the management, upkeep,
repair or control of Assignor's estates or interests in and to the
Property resulting in loss or injury or death to any lessee,
licensee, employee or stranger thereat. No right shall be
exercised by Assignee under this paragraph until an Event of
Default has occurred.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
Nothing herein contained is intended to limit or reduce the rights
of Assignee or the obligations of Assignor set forth in the
Mortgage, but rather all of the terms, provisions and conditions
of this Assignment are in addition to and in supplement of such
rights and obligations. If any provision contained in this
Assignment is in conflict with, or inconsistent with, any
provision in the Mortgage, the provisions contained in the
Mortgage shall govern and control.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this
Assignment shall be null and void with respect to those Leases (the
"RELEASED LEASES") which cover exclusively the portion of the
Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Leases shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of a portion of the
Property as aforesaid to confirm any reversion of Assignee's
right, title and interest in the Released Leases effectuated in
accordance with this paragraph, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 or 2.06 of the
Mortgage (as the case may be), provided that Assignee shall have
no liability thereunder and all costs and expenses shall be paid by
Assignor.
3
<PAGE>
Assignee acknowledges that (i) contemporaneously with the execution
and delivery of this Assignment, it has assigned this Assignment to
State Street Bank and Trust Company of Connecticut, National
Association ("Trustee"), as trustee under an Indenture of even
date herewith among Assignor, Assignee and Trustee (the
"Indenture"), and (ii) that the Trustee is also the assignee
under an Assignment of Leases and Rents dated as of the date
hereof from Assignor to Trustee securing the obligations of
Assignor in respect of the Guaranty under and as defined in the
Indenture (the "Other Assignment"), which assignment creates a lien
on the Leases and rents and income due and owing thereunder PARI
PASSU with the lien of this Assignment. Assignee further
acknowledges and agrees that whenever it is provided in the Other
Assignment that the Assignor shall deliver any notice or document,
or is require to make any payment thereunder, the delivery of such
notice or document or the making of such payment pursuant to the
terms of such Other Assignment shall also constitute the delivery
of such notice or document or the making of such payment in
satisfaction of the terms, conditions and provisions of this
Assignment to the same extent as the same constitutes satisfaction
of the terms, conditions and provisions of the Other Assignment.
Upon the termination of the Mortgage and the payment in full of the
obligations secured thereby, this Assignment shall be and become
null and void, and all estate, right, title and interest of
Assignee in and to the Leases shall revert to Assignor and
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statement filed in connection
herewith and execute and deliver to Assignor all such instruments
as may be appropriate to evidence such discharge and satisfaction
of this Assignment (provided that Assignee shall have no liability
hereunder or thereunder and all costs and expenses shall be paid by
Assignor); otherwise, this Assignment shall remain in full force
and effect as herein provided, shall inure to the benefit of
Assignee and its successors and assigns, and shall be binding
upon Assignor and its successors and assigns, and any subsequent
holder of Assignor's right, title and interest and estate in and to
the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain
4
<PAGE>
Intercreditor Agreement dated as of the date hereof among Assignor, Assignee,
Fidelity Management and Trust Company, as trustee, Trustee and The Chase
Manhattan Bank (National Association), as trustee (and such other parties that
may from time to time become a party thereto).
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
RESORTS INTERNATIONAL HOTEL,
FINANCING, INC., a Delaware
corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared _____________,
who, being by me duly sworn on his oath, deposes and makes proof to
my satisfaction, that he is the (Asst.) Secretary of RESORTS
INTERNATIONAL HOTEL, INC., the corporation named in the within
instrument; that ______________ is the (Vice) President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the
corporation named in the within instrument; that ____________ is
the Vice President of said corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
__________________________
[Name]
Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
7
<PAGE>
Exhibit F
Mortgage Securing Guaranty of Senior Mortgage
Notes between Resorts International Hotel,
Inc. and State Street Bank and Trust
Company of Connecticut, National Association
<PAGE>
NA932230075 - GUARANTY MORTGAGE
SENIOR NOTES
GD&C DRAFT DATED 10/18/93
MORTGAGE SECURING GUARANTY
OF SENIOR MORTGAGE NOTES
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING GUARANTY
OF SENIOR MORTGAGE NOTES
------------------------
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association having an address at 750 Main Street, Suite 1114 Hartford,
Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain
Indenture dated as of even date herewith (the "Indenture") among Mortgagor,
Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of
the payments of principal and interest due on the 11% Senior Mortgage Notes due
2003 in an aggregate principal amount of $125,000,000, issued pursuant to the
provisions of the Indenture (defined therein, and hereinafter collectively
referred to herein, as the "Notes"), in accordance with the terms and conditions
of Article Fourth of the Indenture; and performance and observance of all of the
provisions herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and
confirmed unto Mortgagee and its successors hereunder and assigns forever, all
of its right, title and interest in, to and under any of the following described
property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause as
fully as if set forth in this Granting Clause at length.
<PAGE>
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the "Ground
Leases") particularly described in Schedule 2, which Schedule is hereby made a
part of, and deemed to be described in, this Granting Clause as fully as if set
forth in this Granting Clause at length, which Ground Leases cover the real
property described in Schedule 2 (the "Leased Land") and in and to any and all
modifications, extensions and renewals of the Ground Leases and all options set
forth therein, together with (i) all credits, deposits, privileges and rights of
the Mortgagor as lessee under the Ground Leases, now or at any time existing,
(ii) the leaseholds and the leasehold estates created by the Ground Leases and
(iii) all of the estates, rights, titles, claims or demands whatsoever of
Mortgagor, either in law or in equity, in possession or in expectancy, of, in
and to the Ground Leases and the Leased Land, together with (x) any and all
other, further or additional title, estates, interests or rights which may at
anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or any other
greater estate to the Leased Land pursuant to the Ground Leases, or otherwise,
the lien of this Mortgage shall attach, extend to, cover and be a lien upon such
fee simple title or other greater estate and thereupon the lien of this Mortgage
shall be prior to the lien of any mortgage or deed of trust placed on such
acquired title, estate, interest or right subsequent to the date of this
Mortgage and (y) any right to possession or statutory term of years derived
from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S.
Bankruptcy Code (the "Code") or any comparable provision contained in any
present or future federal, state, local, foreign or other statute, law, rule or
regulation.
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and proceeds
of the property subjected or required to be subjected to the lien of this
Mortgage, including, without limitation, the property described in Granting
Clauses First, Second, and Sixth (such property is hereinafter collectively
referred to as the "Premises") and all the estate, right, title and interest of
every nature whatsoever of the Mortgagor in and to the same and every part
thereof. The collective metes and bounds description of the Owned Land and the
Leased Land is set forth in annexed Schedule 3.
2
<PAGE>
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the date of
execution of this Mortgage or hereafter entered into by the Mortgagor, if any,
including extensions, renewals or amendments of all of the same, and the
immediate and continuing right as security in accordance with an Assignment of
Leases and Rents of even date herewith between Mortgagor and Mortgagee, and,
after the occurrence of an Event of Default, to make claim for, collect, receive
and receipt for (and to apply the same as provided herein) any and all rents,
income, revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof, whether
payable as rent, insurance proceeds, condemnation awards, security or otherwise
and whether payable prior to or subsequent to the maturity date of the Notes, to
receive and give notices and consents thereunder, to bring actions and
proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any Lease,
including the commencement, conduct and consummation of any proceedings at law
or in equity as shall be permitted by any provision of any Lease, and to do any
and all things which the Mortgagor or any lessor is or may become entitled to do
under the Leases; provided, that the assignment made by this granting Clause
Fourth shall not impair or diminish any obligation of the Mortgagor under the
Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting Clause
Third, the Mortgagor's rights, privileges and franchises in and to the
following, to the extent of the Mortgagor's interest therein and thereto and to
the extent assignable (collectively, "Operating Assets"):
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including guaranties
and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties and
other items of
3
<PAGE>
intangible personal property relating to the ownership or operation of the
Casino-Hotel, including, without limitation, (1) telephone and other
communication numbers, (2) all software licensing agreements as are
required to operate computer software systems at the Casino-Hotel, all
transferable proprietary interest in software required to operate the
computer systems at the Casino Hotel and books and records relating to the
software programs, and (3) lessee's interest under leases of Tangible
Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor
or which have been assigned to the Mortgagor, for the design and
construction, and for the equipping and furnishing, of the Casino-Hotel,
including architect's agreements, engineering agreements, construction
contracts, consulting agreements and agreements or purchase orders for all
items of Tangible Personal Property and payment and performance bonds in
favor of the Mortgagor in connection with the Trust Estate (and all
warranties and guaranties thereunder and warranties and guaranties of any
subcontractor and bond issued in connection with the work to be performed
by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other articles of
tangible personal property which are, or are to be located on, or used
in connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the operation
thereof;
(iii) all cards, dice, gaming chips and placques, tokens,
chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles,
roulette balls and other consumable supplies and items to be used in
connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether
4
<PAGE>
in use or held in reserve storage for future use, in connection with
the operation of the Casino-Hotel, which are on hand or on order
whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind
and nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on any
of the Owned Land, including without limitation, accounting supplies,
guest supplies, forms, printing, stationery, food and beverage stock,
bar supplies, laundry supplies and brochures to existing purchase
orders;
(vi) all sets and scenery, costumes, props and other items
of tangible personal property on hand or on order for use in the
production of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by
the architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to
time;
(h) any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high roller"
lists; and
(j) all of the goodwill in connection with the operation of the
Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on
5
<PAGE>
which such facilities are shared are not detrimental to the operations of the
Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular
operation of the Casino-Hotel would not be materially impaired upon the
separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair or
diminish any obligation of the Mortgagor with respect to the Operating Assets,
nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures and
articles of personal property now or hereafter attached to or contained in and
used in connection with such buildings and improvements, including, but not
limited to, all apparatus, furniture, furnishings, machinery, motors, elevators,
fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and hot water
boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath
tubs, water closets, gas and electrical fixtures, awnings, shades, screens,
blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and
other furnishings, and all plumbing, heating, lighting, cooking, laundry,
ventilating, incinerating, air-conditioning and sprinkler equipment or other
fire prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or articles in
substitution therefor, whether or not the same are or shall be attached to the
Owned Land, the Leased Land or to any such buildings and improvements thereon,
in any manner, and to the extent the grant of a security interest in any portion
of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is
hereby deemed to be as well a security agreement under the Uniform Commercial
Code for the purpose of creating hereby a security interest in all of the
Mortgagor's right, title and interest in and to such property, securing the
obligations secured hereby, for the benefit of the Mortgagee; and
(b) All of the Mortgagor's right, title and interest in and to (i)
the Leased Land, if the Mortgagor acquires the fee simple title to the Leased
Land or any part thereof (subject to the provisions Section 2.06 hereof), (ii)
all air rights and rights to maintain supporting columns
6
<PAGE>
and all rights to construct and maintain bridges, and to create private rights
of way over streets now or hereafter owned or enjoyed by the Mortgagor and
appurtenant to the Owned Land or Leased Land, and (iii) all right, title and
interest of Mortgagor as grantee or licensee in and to the following to the
extent necessary for the use and enjoyment of the Owned Land or the Leased Land:
(A) all those plots, pieces or parcels of land and air rights, more particularly
described on Schedule 5, attached hereto and made a part hereof (the "Bridge
Easement Parcels"), with respect to which Mortgagor has easements, licenses or
other rights of possession or use pursuant to these certain easement and license
agreements more particularly described on Schedule 5 (the "Bridge Easements"),
(B) all those plots, pieces or parcels of land and air rights, more particularly
described on Schedule 6 attached hereto and made a part hereof (the "Elevator
Easement Parcels"), with respect to which Mortgagor has easements, licenses or
other rights of possession or use pursuant to those certain license agreements
more particularly described on Schedule 6 (the "Elevator Easements"), and; (C)
all that plot, piece or parcel of land and air rights more particularly
described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around
Easement Parcel") with respect to which Mortgagor has easements, licenses, or
other rights of possession or use pursuant to that certain easement more
particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge
Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement
Parcel are collectively referred to herein as the "Easement Parcels"; and the
Bridge Easements, the Elevator Easements and the Turn-Around Easement are
collectively referred to as the "Easements"), together with all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining to such estates, it being the intention hereof that all
property, interests, rights and privileges and franchises pertaining to the
Premises (other than Excepted Property) shall be as fully embraced within and
subjected to the lien hereof as if such property were specifically described
herein.
* * *
TOGETHER with all of the Mortgagor's right, title and interest in and
to all mineral and water rights and any title or reversion, in and to the beds
of the ways, streets, avenues and alleys adjoining the Premises to the center
line thereof and in and to all strips, gaps and gores adjoining the premises on
all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to and
singular the tenements, hereditaments, easements, appurtenances, passages, water
courses, riparian rights, other rights, liberties and privileges thereof or in
7
<PAGE>
any way appertaining to the Premises, including any other claim at law or in
equity as well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore or
hereafter to be made to the present and all subsequent owners of the Trust
Estate for any taking by eminent domain, either permanent or temporary, of all
or any part of the Trust Estate or any easement or appurtenances thereof,
including severance and consequential damage and change in grade of streets, all
in accordance with and subject to the provisions of the Superior Instrument
Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any insurance
policies described in Section 5.11, and the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Trust Estate or otherwise, all in accordance with and subject to
the provisions of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted property,
rights, title, interest, privileges and franchises, the Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating
Assets, Easements, properties, options, credits, deposits, rights, privileges
and franchises of every kind and description, real, personal or mixed, granted
hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or
covenanted so to be, together with all the appurtenances thereto appertaining
(the Premises, Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its successors
and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and,
after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and
the Noteholder as set forth in that certain Intercreditor Agreement dated as of
the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust
Company ("Fidelity"), as trustee under that certain note purchase agreement
dated as of the date hereof among Fidelity, RIH and RIHF, and
8
<PAGE>
U.S. Trust Company of California, N.A. ("U.S. Trust"), as trustee under that
certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF
(and such other parties that may from time to time become a party thereto).
BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of
the Noteholders without any priority of any of the Notes over any other of the
Notes.
UPON CONDITION that, until the happening of an Event of Default and
subject to the provisions of Article Two, the Mortgagor shall be permitted to
possess and use the Trust Estate, and to receive and use the rents, issues,
profits, revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to
be held and applied by the Mortgagee, subject to the further covenants,
conditions and trusts hereinafter set forth, and the Mortgagor does hereby
covenant and agree to and with the Mortgagee, for the Ratable Benefit of the
Noteholders as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall
be made in accordance with generally accepted accounting principles
consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Mortgage as a whole and not to any particular
Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
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"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section
2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (I.E., a Member in good standing of
the American Institute of Real Estate Appraisers) who is (i) of recognized
standing among appraisers of properties similar to the Casino-Hotel and (ii)
experienced in the appraisals of properties of a similar size and scope to that
of the Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section
1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01
of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture, fixtures and
equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which
results in damage, loss or destruction to any buildings or improvements on the
Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of
the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of Default
or an event which, after notice or lapse of time or both, would become an Event
of Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds
or a condemnation award is paid to be held in trust for restoration pursuant to
the provisions of a Ground Lease or Superior Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event
of Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
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(1) subject to the provisions of the Assignment of Leases and Rents,
any cash held by the Mortgagor from rents, issues, profits, revenues and
other proceeds of the Trust Estate to the extent that such cash may be, but
has not been, distributed or paid out in accordance with the Services
Agreement or in accordance with the provisions of Section 12.07 the
Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior
Mortgage secured by or imposing a lien on all or a portion of the Trust Estate
on a parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any
Tangible Personal Property and other items constituting Operating Assets, such
as computer software, which are financed, purchased or leased by the Mortgagor,
provided that, except as set forth on Schedule 3, the principal amount of the
indebtedness secured by such lien shall not exceed eighty-five (85%) percent of
the cost to the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
"GUARANTY" has the meaning set forth in Article Fourteen of the
Indenture.
"HOTEL" means that portion of the Casino-Hotel not included within the
Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
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"INDENTURE" means that certain Indenture - 11% Senior Mortgage Notes
due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and Mortgagee, as trustee, as it may from time to time be supplemented, modified
or amended by one or more trust indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Mortgagor
or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or
of such other obligor and (c) is not connected with the Mortgagor or such other
obligor or any Affiliate of the Mortgagor or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions. Whenever it is herein provided that any Independent Person's
opinion or certificate shall be furnished to the Mortgagee, such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof. A Person who is performing or
who has performed services as an independent contractor to any specified Person
shall not be considered not Independent merely by reason of the fact that such
Person is or has performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy
covering or applicable to the Trust Estate or any part thereof, all requirements
of the issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Trust Estate or any
part thereof or any use or condition of the Trust Estate or any other part
thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects,
any bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected by the
Mortgagor authorized to issue insurance in the State of New Jersey with an A.M.
Best rating as high or higher than the rating of insurance companies insuring
other casino-hotels in Atlantic City, New Jersey.
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"LEASE" means each lease or sublease demising all or any portion of
the Owned Land, the Leased Land or the buildings or improvements thereon and
made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces
in any building or buildings which constitute a part of the Trust Estate,
including every agreement relating thereto or entered into in connection
therewith and every guaranty of the performance and observance of the covenants,
conditions and agreements to be performed by the lessee under any such lease.
Notwithstanding the foregoing, the term "Lease" shall not include any transient
room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements (including,
without limitation, the New Jersey Environment Cleanup Responsibility Act and
the New Jersey Spill Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, of governments, federal, state and municipal (including, without
limitation, the New Jersey Department of Environmental Protection, the Atlantic
City Bureau of Investigations, Division of Protection, the Atlantic City Bureau
of Investigations, Division of Gaming Enforcement of the State of New Jersey,
and the Casino Control Commission of the State of New Jersey), foreseen or
unforeseen, ordinary or extraordinary, which now is or at any time hereafter
becomes applicable to the Trust Estate or any part thereof, or any of the
adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling
facility or any other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Notes means the date on which
the principal of such Notes becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration or
prepayment or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
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to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDERS" has the meaning set forth in Section 1.01 of the
Indenture.
"NOTE MORTGAGE" means that certain Mortgage Securing RIH Senior
Promissory Note dated as of the date hereof from Mortgagor to RIHF, which
secures the RIH Senior Promissory Note (as defined in the Indenture), the lien
of which shall be PARI PASSU with the lien of this Mortgage.
"NOTES" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of
the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires
that an Officers' Certificate be signed also by an Architect or an Accountant or
other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Mortgage) be an employee of the
Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise
specifically provided in this Mortgage, such counsel may rely, as to any state
of facts not personally known to such counsel and relating to such opinions, on
an Officers' Certificate to the extent not rejected by the Trustee and its
counsel (which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list
title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material portion
of the Premises whether held by the Mortgagor or any other Person
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(which may be temporary or permanent) (including, without limitation, those
required for the use of the Casino-Hotel as a licensed casino facility), in
accordance with all applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet due
and payable or if due and payable are not delinquent to the extent that any
fine, penalty, interest or cost may be added for nonpayment thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien; and
(9) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
any other entity or government or any agency or political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RATABLE BENEFIT" has the meaning stated in Section 1.01 of the
Indenture.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made in
accordance with Section 5.13 of this Mortgage.
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"RIHF" shall mean Resorts International Hotel Financing, Inc., a
Delaware corporation.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"STATED MATURITY" when used with respect to a note means the date
specified in such note as the fixed date on which the principal of such note is
due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms,
conditions and provisions of (i) the Ground Leases with respect to the Leased
Land; and (ii) Superior Mortgages with respect to the portion of the Trust
Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility
Lien and any After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of
the whole or any part of the Premises, by a competent authority, for any public
or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause
Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the Granting
Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of
the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section
5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice (including,
without limitation, a notice of default), consent, waiver or other document
provided or permitted by this Mortgage to be made upon, given or furnished to,
or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be
deemed given when either (i) delivered by hand or
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(ii) two days after sending by registered or certified mail, postage prepaid,
addressed as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
State Street Bank and Trust Company
of Connecticut, National Association
[Address]
[City, State]
Attention: ________________
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any
party may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE.
Whenever several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such Officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Officer or Officers of the Mortgagor stating that
the information with respect to such factual matters is in the possession of the
Mortgagor, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. If appropriate to
the matter being opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of creditors and
the availability of equitable remedies.
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Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor shall
deliver any document as a condition of the granting of such application, or as
evidence of the Mortgagor's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Mortgagor to have such application granted or to
the sufficiency of such certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Mortgagor to the Mortgagee to take any action
under any provision of this Mortgage, the Mortgagor shall furnish to the
Mortgagee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Mortgage relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Mortgage
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Mortgage shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such condition
or covenant has been complied with; and
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(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each case
named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged, released
nor any of its provisions waived except by agreement in writing executed by the
Mortgagor and the Mortgagee and in accordance with the provisions of this
Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this
Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in
the Guaranty, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns, any benefit or any legal or
equitable right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the
provisions of this Mortgage and the provisions of the Indenture shall be
inconsistent, the provisions of the Indenture shall govern.
Section 1.12. [Reserved]
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is
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subject to and shall be enforced in compliance with the provisions of the New
Jersey Casino Control Act.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause
to be paid, or there shall otherwise be paid, to the Mortgagee all amounts
required to be paid by the Mortgagor pursuant to the Guaranty, or the Note
Mortgage and the Notes, and the conditions precedent for the Indenture to cease,
determine and become null and void in accordance with Section 5.01 of the
Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge
this Mortgage, and execute and deliver to the Mortgagor all such instruments as
may be necessary, required or appropriate to evidence such discharge and
satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject in
each instance to the giving of any notice and the expiration of any grace period
provided for in Section 3.01 as a condition to such Default making it an Event
of Default, unless the Trust Indenture Act requires otherwise, in which case the
Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an event
which does not materially diminish the value of the Mortgagee's interest in the
Trust Estate shall not be deemed an "impairment of security", as that phrase is
used in this Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE.
So long as there shall have been no demand for payment under the Guaranty
pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and
permitted, with power freely and without let or hindrance on the part of the
Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to
possess, use, manage, operate and enjoy the Trust Estate and every part thereof
and to collect, receive, use, invest and dispose of the rents, issues, tolls,
profits, revenues and other income from the Trust Estate or any part hereof, to
use, consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
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Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to
time, unless an Event of Default shall have occurred and be continuing, without
any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right
to pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to
the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
The Mortgagee shall, from time to time, promptly execute any written
instrument in form satisfactory to it to confirm the propriety of any action
taken by the Mortgagor under this Section 2.02, provided that the conditions set
forth in Section 2.02 of the Note Mortgage have been satisfied.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any
provisions contained in this Mortgage or
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the Indenture to the contrary, including, without limitation, the provisions of
Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the
Mortgagor acquires Tangible Personal Property and other items constituting
operating assets, such as computer software subject to any FF&E Financing
Agreement, or becomes the lessee under a lease for any of the same and if the
document evidencing such FF&E Financing Agreement prohibits subordinate liens or
the provisions of any such lease prohibits any assignment thereof by the lessee,
and if any such prohibition is customary with respect to similar transactions of
the lender or lessor, as the case may be, then the property so purchased or the
lessee's interest in the lease, as the case may be, shall be deemed to be
Excepted Property. If any such FF&E Financing Agreement permits subordinate
liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the
Mortgagor's expense, such documents as the holder of such FF&E Financing
Agreement may reasonably request to evidence the subordination of the lien of
this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part of the Released Fee Land (the land to be so conveyed is hereinafter
referred to as the "Released Land"), free from the lien of the Mortgage,
provided that the conditions set forth in Section 2.05(a) of the Note Mortgage
have been satisfied.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.05,
provided, that the Mortgagee shall have no liability thereunder and all costs
and expenses (including reasonable attorneys' fees) shall be paid by the
Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be
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continuing, to have an Affiliate exercise such options(s) or for the Mortgagor
to exercise such options(s) on behalf of an Affiliate and in connection
therewith to cause fee simple title to the Leased Land or any part thereof to be
conveyed to an Affiliate of the Mortgagor (provided that no portion of the
purchase price of the Leased Land or part thereof is paid by Mortgagor), free
from the lien of this Mortgage (the land to be so conveyed is hereinafter
referred to as the "Released Fee Land"), provided that the Mortgagor furnishes
the Mortgagee with the following:
(i) an Officers' Certificate requesting the release of the
Released Fee Land from the Trust Estate and stating that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain all
Permits and in order to comply with the provisions of all material
contracts to which the Mortgagor is a party or by which the Mortgagor is
bound, (B) such Affiliate has received all Permits necessary to own the
Released Fee Land (including without limitation all approvals required by
the Casino Control Commission of the State of New Jersey), (C) there has
been delivered to the Mortgagor and the Mortgagee a true copy of an
instrument executed by such Affiliate stating that (i) such Affiliate may
only engage in the activity of owning the Released Fee Land and (ii) such
Affiliate shall not convey the Released Fee Land to another Affiliate of
the Mortgagor, unless such other Affiliate executes and delivers to the
Mortgagor and the Mortgagee, the instruments that would have been required
to be delivered pursuant to clause (C) if the Mortgagor conveyed the
Released Fee Land to such other Affiliate (provided that this restriction
shall only be effective until such time as this Mortgage shall be satisfied
of record) and (D) the deed conveying the Released Fee Land to such
Affiliate shall state that such conveyance is made subject to the terms,
provisions and conditions of the applicable Ground Lease and that the fee
and leasehold interests in the Released Fee Land shall not merge by reason
of the Mortgagor and/or any Affiliate owning both the leasehold and fee
estate therein, and that such estates shall always remain separate and
distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to which
the Mortgagor is a party or by which it is bound to own the Released Fee
Land and (B) the instruments described in clause (C) of subparagraph (i)
were duly executed by and are binding upon such Affiliate; and
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(iii) an endorsement to the Original Policy, confirming that
no merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, and agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgago's compliance with this Section 2.06, PROVIDED
that the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if
no Event of Default has occurred and is continuing and (ii) if the Mortgagor
shall acquire Released Fee Land, then simultaneously with the acquisition
thereof, the Mortgagor shall have the right to encumber such fee simple title
with a mortgage (such mortgage and any refinancing thereof permitted by the
Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The
lien of this Mortgage on the Released Fee Land shall be subordinated to the lien
of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of
other Superior Mortgages which shall become a lien thereon in accordance with
the terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
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(ii) the indebtedness secured by the After-Acquired Fee Mortgage
(A) does not exceed 75% of the cost to the Mortgagor of such fee simple
title at the time of the acquisition and (B) satisfies the criteria set
forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers
fee simple title to the Leased Land or any part thereof, such
After-Acquired Fee Mortgage contains provisions binding on the holder of
the After-Acquired Fee Mortgage and its successors and assigns confirming
the provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire Released
Fee Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstanding, the subordination of this Mortgage to
any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall
not be self-operative but shall be effective only upon the execution and
delivery by the Mortgagee of an instrument in writing effecting such
subordination. The Mortgagee shall deliver such instrument of subordination on
the following conditions: (x) the Mortgagee shall have received an Officers'
Certificate confirming that the conditions of (i) through (vi) of paragraph (a)
have been satisfied, together with a true and correct copy of the After-Acquired
Fee Mortgage and all other instruments securing the indebtedness evidenced
thereby and (y) the instrument of subordination shall specifically state that
this Mortgage is being subordinated not with respect to the lien of this
Mortgage on the Ground Lease or on the leasehold estate created thereby, but
only with respect to the fee simple title to the Leased Land or applicable part
thereof and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
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ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default by the Mortgagor under the Guaranty and continuance
of such default for a period of 10 days after there has been given a
written notice to the Mortgagor specifying such default and stating that
such notice is a "Notice of Default" hereunder; or
(b) an "Event of Default," as defined in Section 3.01 of the
Note Mortgage, shall occur; or
(c) default in the performance, or breach, of any of the
provisions of Article Four and the continuance of such default or breach
for a period of 60 days after there has been given a written notice to the
Mortgagor specifying that such notice is a "Notice of Default" hereunder;
or
(d) any representation or warranty of the Mortgagor set forth in
this Mortgage shall prove to be incorrect as of the time when made and the
facts constituting such incorrectness impairs the Mortgagee's security and
such impairment continues for a period of 30 days, unless such impairment
is curable, but not susceptible of cure within such 30-day period (for
reasons other than lack of funds), provided that the conditions set forth
in Section 3.01(l) of the Note Mortgage have been satisfied.
Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default
occurs and is continuing, and the Mortgagee has declared the Outstanding Amount
of the Note to be due and payable immediately pursuant to Section 3.02 of the
Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty
to be due and payable immediately.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any
moneys received by the Mortgagee pursuant to the provisions of this Article
Three (including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the
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Mortgagee in accordance with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this Mortgage
and such proceeding has been discontinued or abandoned for any reason or has
been determined adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such proceeding
had been instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect under the Guaranty secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, then, to the extent it has not already done so pursuant to the terms
of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all
expenses, including reasonable attorneys' fees and expenses, incurred by the
Mortgagee in connection therewith, together with interest at the rate then
payable on the Notes, from the date of payment less the net amount received by
the Mortgagee or the Trustee, as their interests may appear under any title
insurance policy, and, until paid, all such expenses, together with interest as
aforesaid, shall be a lien on the Trust Estate.
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Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time insist
upon, plead, claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law now or hereafter in force, in order
to prevent or hinder the enforcement of this Mortgage or the absolute sale of
the Trust Estate, or any part hereof, or the possession thereof by any purchaser
at any sale under this Article Three; and the Mortgagor, for itself and all who
may claim under it, so far as it or they now or hereafter may lawfully do so,
hereby waives the benefit of all such laws. The Mortgagor, for itself and all
who may claim under it, waives, to the extent that it may lawfully do so, all
right to have the property in the Trust Estate marshalled upon any foreclosure
hereof, and agrees that any court having jurisdiction to foreclose this Mortgage
may order the sale of the Trust Estate as an entirety.
If any law in this Section 3.08 referred to and now in force, of which
the Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence
of an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
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Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event
of Default shall occur and be continuing, the Mortgagee, with or without entry,
in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee
may determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Mortgage or in
aid of the execution of any power granted in this Mortgage or for the
foreclosure of this Mortgage or for the enforcement of any other legal,
equitable or other remedy, as the Mortgagee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of the
Mortgagee; the failure to join tenants shall not be asserted as a defense
to any foreclosure or proceeding to enforce the rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust
Estate, whether made under the power of sale hereby given or pursuant to
judicial proceedings, to the extent permitted by law:
(a) all obligations owing under the Guaranty, if not previously
due, shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt of
any required prior approvals of the New Jersey Casino Control Commission,
the Mortgagee may bid for and purchase the property offered for sale, and
upon compliance with the terms of sale may hold, retain and possess and
dispose of such property, without further accountability, and may, in
paying the purchase money therefor, delivery any notes or claims for
interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned to the
holders
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thereof after being appropriately stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and instrument of
assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and
lawful attorney of the Mortgagor, in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold; and for that purpose it may execute all
necessary deeds, bills of sale and instruments of assignment and transfer,
and may substitute one or more persons, firms or corporations with like
power, the Mortgagor hereby ratifying and confirming all that its attorney
or such substitute or substitutes shall lawfully do by virtue hereof; but
if so requested by the Mortgagee or by any purchaser, the Mortgagor shall
ratify and confirm any such sale or transfer by executing and delivering to
the Mortgagee or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment and transfer and releases as may be
designated in any such request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of, in and to the
property so sold shall be divested and such sale shall be a perpetual bar
both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such
sale shall be a sufficient discharge to the purchaser or purchasers at such
sale for his or their purchase money and such purchaser or purchasers and
his or their assigns or personal representatives shall not, after paying
such purchase money and receiving such receipt, be obliged to see to the
application of such purchase money, or be in anywise answerable for any
loss, misapplication or non-application thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default
and commencement of judicial proceedings by the Mortgagee to enforce any right
under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security for
the Guaranty or the solvency of the Mortgagor, to
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the appointment of a receiver of the Trust Estate, and of the rents, issues,
profits, revenues and other income thereof, PROVIDED, HOWEVER, that the
Mortgagee's rights under this Section 3.12 shall be subject to the provisions of
the New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have
power to institute and maintain such proceedings as it may deem necessary and
appropriate to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its interests in the
Trust Estate and in the rents, issues, profits, revenues and other income
arising therefrom, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any 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 the security
hereunder or be materially prejudicial to the interests of the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the contrary, following an Event of Default
and the taking of possession of the Trust Estate or any part thereof by the
Mortgagee and/or the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized, in addition to
the rights and powers of the Mortgagee and such receiver set forth elsewhere in
this Mortgage, to retain one or more experienced operators of hotels and/or
casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have
all necessary legal qualifications, including all Permits, to manage the
Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the
Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation
or combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the successor entity
formed
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by such consolidation or into which the Mortgagor is combined or to which such
conveyance or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Mortgagor under this Mortgage with the
same effect as if such successor entity had been named as the Mortgagor herein;
PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate
substantially as an entirety, unless such conveyance or transfer is in
compliance with the provisions of Article Ten of the Indenture, shall have the
effect of releasing the Person named as "the Mortgagor" in the first paragraph
of this instrument or any successor entity which shall theretofore have become
such in the manner prescribed in such Article Ten from its liability as
guarantor.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as
otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor
shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or
otherwise transfer all or any part of the Trust Estate or any interest therein
(including without limitation any interest in the Ground Leases). Without
limiting the generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground Leases from its
ownership of the buildings constituting the Casino-Hotel or any part thereof.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. [Reserved]
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing Agreements before the expiration of any applicable notice and cure
periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create,
incur, suffer or permit to be created or incurred or to exist any mortgage,
lien, charge or encumbrance on or pledge of any of the Trust Estate, other than
(i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with
indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section
12.08(a) of the Indenture, and (iii) a building contract or a notice of
intention filed by a mechanic, materialman or laborer under the New Jersey lien
law. Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the Mortgagor shall
not be deemed to have breached the provisions of the foregoing sentence by
virtue of the
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existence of a lien for Impositions or mechanics liens so long as the Mortgagor
is in good faith contesting the validity of the same in accordance with the
provisions of Section 5.09 to the extent that the matters described in (i) and
(ii) do not constitute a default under any Ground Lease or Superior Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on behalf of the
Mortgagor, (a) to appear in and defend any action or proceeding brought with
respect to the Trust Estate or any part thereof and (b) upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgage), to commence any action or
proceeding to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor
represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to execute and deliver this Mortgage, and all
corporate action on its part necessary for the valid execution and delivery
of this Mortgage has been duly and effectively taken;
(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the Mortgage
Documents, any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than the
lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has been
given to or by the lessee, (iii) the Mortgagor has delivered true and
correct copies of the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in full
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force and effect and has not been modified, amended or supplemented, except
as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to execute
this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer,
hypothecate, pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the Operating Assets
and the Ground Leases, without the consent of any third party, other than
governmental authorities but any applicable or necessary consent or
approval of any such governmental authority has been given or waived at or
prior to the execution and delivery of this Mortgage), and this Mortgage
constitutes a valid second mortgage lien and second priority security
interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage,
subject only to Working Capital Facility Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend (x) the
title to Trust Estate (including without limitation, its leasehold estates under
the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances)
and (y) the priority of the lien of this Mortgage (subject to Permitted
Encumbrances other than Restricted Encumbrances), against the claims and demands
of all persons whomsoever, at the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as
provided in Section 5.13, from time to time subject its right, title and
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments of
further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, and will execute and file such financing statements and cause to be
issued and filed such continuation statements, all in such manner and in such
places as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party under the
Uniform Commercial Code to all property comprising the Trust Estate (to the
extent a grant of a security interest therein is governed by the Uniform
Commercial Code) and to perfect, preserve and protect the lien
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of this Mortgage as a valid mortgage lien of record and a valid security
interest on the Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all expenses
incident to the execution and delivery of this Mortgage, and any instrument of
further assurance, and all federal, state, county and municipal stamp taxes and
other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Mortgage, any financing
statement or continuation statement with respect to the personal property
constituting part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH
LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to
contests, pay or cause to be paid promptly (or when installments of the
same shall become due and payable, if, by law or by agreement or
arrangement with the applicable governmental agency or authority, the same
may be paid in installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are payable by the
Mortgagor pursuant to any Superior Instrument Requirement), all taxes
(including, without limitation, real estate taxes, personal or other
property taxes and all sales, value added, use and similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
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profits or revenue tax upon the income of the Mortgagee, the Trustee or the
Noteholders nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholders nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed in substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Guaranty;
(b) except for such property which the Mortgagor may dispose of
or replace pursuant to Section 2.02, maintain and keep all its properties
used or useful in the conduct of its business (other than obsolete
equipment), including, without limitation, the Casino-Hotel and all
Tangible Personal Property, in such good repair, working order and
condition, except for reasonable wear and use, and make or cause to be made
all such needful and proper repairs, renewals and replacements thereto
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey;
(c) occupy and continuously operate the Casino-Hotel and keep
the Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to
contests, the Mortgagor at its sole expense will timely (1) comply with all
Legal Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if
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the failure to comply with the same would impair the Mortgagee's security
hereunder. Without limiting the generality of the foregoing, the Mortgagor
represents and warrants that at the time of the execution of this Mortgage,
the Mortgagor is in compliance with the requirements of clauses (1), (2)
and (3);
(e) in the event of the passage after the date of this Mortgage
of any law of the State of New Jersey, or any other governmental entity,
changing in any way the laws now in force for the taxation of mortgages, or
debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of the Mortgagee,
then and in such event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for any reason payment by the Mortgagor of any
such new or additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured hereby wholly or
partially usurious under any of the terms or provisions of the Note, or
this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option,
declare the whole sum secured by this Mortgage, with interest thereon, to
be due and payable 90 days after notice of election thereof has been given
by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that
amount or portion of such taxes as renders the loan or indebtedness secured
hereby unlawful or usurious, in which event the Mortgagor shall
concurrently therewith pay the remaining lawful and nonusurious portion or
balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole
expense, contest by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part
of any Imposition or lien therefor or any Legal Requirement or Insurance
Requirement or the application of any instrument of record affecting the Trust
Estate or any part thereof or any claims of mechanics, materialmen, suppliers,
or vendors or lien therefore, and may withhold payment of the same pending such
proceedings if permitted by law, or make payment under protest, or defer
compliance with any such Legal Requirement, any such Insurance Requirement or
the terms of any such instrument, and the same shall not be a Default hereunder,
provided that (a) in the case of any Impositions or lien therefor or any claims
of mechanics, materialmen, suppliers or vendors or lien therefor, such
proceedings shall suspend the collection thereof from each of the Mortgagor, the
Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the
Trust Estate nor any interest therein would be in any danger of being sold,
forfeited, or lost, (c) such action
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would not result in or constitute a default under any Ground Lease or Superior
Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor
the Mortgagee shall be in any danger of any civil or any criminal liability, and
the failure of the Mortgagor to comply with such Legal Requirement shall not
affect the continuance in good standing of any Permit or result in the
suspension, termination, non-renewal or material adverse modification of any
permit, and (e) in the case of an Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the
generality of the first sentence of Section 5.03 and notwithstanding the
provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed,
either by payment, or bonding or otherwise, all claims and demands of mechanics,
materialmen, laborers, and others which, if unpaid, might result in, or permit
the creation of, a lien on the Premises and/or Trust Estate or any part thereof,
or on the revenues, rents, issues, income and profits arising therefrom and in
general will do or cause to be done everything necessary so that the lien hereof
shall be fully preserved, at the cost of the Mortgagor, without expense to the
Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable properties,
in amounts at all times sufficient to prevent the Mortgagor from becoming a
coinsurer within the terms of the applicable policies, but in any event
such insurance shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the "Insurance
Amount"): (i) 100% of the then full insurable value of such insurable
properties, the term "full insurable value" to mean the actual replacement
cost (excluding the costs of foundation, footing, excavation, paving,
landscaping and other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36 calendar months),
by an Architect, contractor, appraiser, or an Insurer,
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(ii) the then Outstanding Amount of any First Mortgage Debt, including the
Notes or (iii) the amount required to be maintained pursuant to the
Superior Instrument Requirements;
[(2) war risk insurance as and when such insurance is obtainable from
the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then be
so obtainable;]
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the cost
of such insurance, for personal injury and property damage with respect to
any one occurrence, which may be under an umbrella policy. Anything
contained in this clause (3) to the contrary notwithstanding, the Superior
Instrument Requirements with respect to the kinds and amount of insurance
described in this clause (3) shall be satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already covered
by other policies of insurance maintained by the Mortgagor) on or about
such insurable properties;
(5) business interruption insurance covering not less than [12]
months of loss, provided that, following [19__], at any time that the
Mortgagor is renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates determined
by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable size
in the boardwalk area of Atlantic City, New Jersey and
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(ii) required to be maintained pursuant to the Superior Instrument
Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1), (2),
(6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, [$100,000] with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
[$1,000,000]), (ii) the Mortgagor shall be permitted to maintain a deductible
with respect to the insurance policies described in clause (3) in an amount not
to exceed the amount of deductible as is customarily maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not
reduce its insurance coverage for the matters described in clause (3) (which for
purposes of this paragraph means a reduction in single limits or an increase in
deductible) unless and until the Mortgagor delivers to the Mortgagee an
Officers' Certificate certifying (w) that the coverage the Mortgagor was
theretofore maintaining cannot be maintained at rates determined by the
Mortgagor to be reasonable for such coverage, (x) the amount of the proposed
reduction, (y) the premium for the existing and the proposed reduced coverage,
and (z) that the proposed deductible satisfied the criteria set forth in this
clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible
with respect to the insurance policies described in clause (5) in the forms of
and in an amount not to exceed the amount of deductible as is customarily
maintained by casino-hotels of similar size in Atlantic City, New Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of workers'
compensation insurance, name as insureds the Mortgagee, the Mortgagor and to the
extent required by the Superior Instrument Requirements, the Lessors and the
holders of the Superior Mortgages, (2) provide that all insurance proceeds for
losses, except in the case of public liability insurance and workers'
compensation insurance or as otherwise provided in Subsections (d), (e) and (f)
of this Section 5.11, be payable solely to the Mortgagee or such other party as
is required to receive such proceeds under a Superior Mortgage, (3) include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all lost payees and
named insureds (other than the Mortgagor) and all rights of subrogation against
any named insured, (4) except in the case of public liability and
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workers' compensation insurance, provide that any losses shall be payable
notwithstanding (i) any act, failure to act, negligence of, or violation or
breach of warranties, declarations or conditions contained in such policy by the
Mortgagor or the Mortgagee or any other named insured or loss payee (including,
without limitation, with respect to the Released Fee Land, the holders of any
After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable
properties for purposes more hazardous than permitted by the terms of the
policy, (iii) any foreclosure or other proceeding or notice of sale relating to
the insurable properties or (iv) any change in the title to or ownership or
possession of the insurable properties, (5) contain a non-contributory mortgagee
clause in favor of the Mortgagee, and (6) provide that if all or any part of
such policy is cancelled, terminated or expires, the insurer will forthwith give
notice thereof to each named insured an loss payee and that no cancellation,
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by each named insured and loss payee of
written notice thereof.
(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate
originals of all insurance policies that the Mortgagor is required to maintain
pursuant to this Section 5.11 and (2) within 30 days after each reduction in
insurance required to be maintained by the Mortgagor hereunder, an Officers'
Certificate setting forth the particulars as to all such insurance policies and
certifying that the same comply with the requirements of this Section 5.11, that
all premiums or installments thereof then due thereon have been paid and that
the same are in full force and effect. The Mortgagee shall not be responsible
for effecting or renewing any insurance or for the responsibility or solvency of
the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x) results in
damage, loss or destruction in an amount in excess of [$5,000,000] to any
buildings or improvements on the Premises and/or any Tangible Personal Property
or (y) pursuant to any Superior Instrument Requirement, would require the
deposit of insurance proceeds with the Depositary, or action or proceeding with
respect thereto. Whenever the Superior Instrument Requirements require or
permit the selection of the Depositary by the Mortgagor, the Mortgagor shall
select the Insurance Trustee as the Depositary. Within 30 days after any
Casualty which results in any damage, loss or destruction in an amount in excess
of [$10,000,000] to any buildings or improvements of the Premises and/or any
Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a
certificate of an Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit
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the Restoration of such buildings and improvements for the same uses and to the
same size and quality in all material respects, as existed immediately prior to
the Casualty (and if such certificate states the Legal Requirements do not
permit such Restoration, such certificate shall describe the manner closest
approximating such criteria to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of Appraised Value dated not
more than 10 days prior to delivery setting forth the Appraised Value
immediately prior to the Casualty and the estimated Appraised Value immediately
after the Restoration). If the Mortgagor is required to deliver such
Certificates of Appraised Value and if based on such Certificates of Appraised
Value immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of (i)
66 2/3% of the Appraised Value immediately after such Restoration or (ii) the
quotient of the Outstanding Amount of First Mortgage Debt immediately prior to
such Casualty divided by the Appraised Value immediately prior to the Casualty
multiplied by the Appraised Value immediately after such Restoration, then the
proceeds of any insurance shall, at the election of Mortgagee, either be applied
to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and
delivered to the Mortgagee to the extent of the then Outstanding Amount of the
Note and any other interest or other sums due hereunder or thereunder to be
applied to the satisfaction of the Mortgage to the extent proceeds are available
for such purpose and provided that no additional sums are due to the Trustee or
the Noteholder under the Indenture, the balance of any net insurance proceeds
shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such
Certificates of Appraised Values indicates that the Outstanding Amount of First
Mortgage Debt immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of
insurance will be made available for Restoration (subject to paragraphs, (e),
(h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least [$100,000,000], to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as additions
to capital in an amount equal to the Outstanding Amount of First Mortgage Debt
in excess of the Appraised Value necessary to be paid down so that the
Outstanding Amount of First Mortgage Debt will not exceed either of the two
amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such
commitment may only be released if, upon an Appraisal at any time following
completion of such Restoration, the aggregate Outstanding Amount of the First
Mortgage Debt does not exceed 66-2/3% of the Appraised Value.
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(e) Subject to the provisions of Subsection (d) above, in case a
Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of [$10,000,000], the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is [$10,000,000] or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to
the Insurance Trustee (or other Depositary required by the Superior
Instrument Requirements, provided that such Depositary holds such proceeds
in trust for purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable promptness under the
circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair,
replacement or rebuilding of the damage or destruction resulting from the
Casualty (all of which restoration, repair, replacement or rebuilding are
referred to as the "Restoration") in accordance with the plans and
specifications submitted to the Insurance Trustee, in conformance with all
Legal Requirements and Superior Instrument Requirements, and in accordance
with the further provisions of this Subsection (e), regardless of the
extent of any such Casualty and whether or not net insurance proceeds, if
any, shall be available or, if available, shall be sufficient, for the
purpose of the Restoration (provided, however, that if the Mortgagor does
not receive any net insurance proceeds within 30 days after any Casualty
because the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration shall be deferred
until such proceeds are made available to the Mortgagor, provided that (i)
Mortgagor diligently and continuously adjusts such loss with the Insurer,
(ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate
within such 30-day period requesting the extension of such period,
estimating the date on which such proceeds will be available and describing
the Mortgagor's efforts to adjust such loss and certifying that such
extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach
has been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter updating the
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information contained in the certificate described in Clause (ii)). All
Restoration work shall be performed in accordance with the applicable
provisions of Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements and, prior to
commencing any Restoration, the Mortgagor shall obtain all Permits
necessary in connection therewith, and shall obtain, and keep in full force
and effect until the completion of such Restoration, such additional
insurance as the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration shall be
accompanied by a certificate of the Mortgagor and an Opinion of Counsel to
the effect that upon the completion of the Restoration pursuant to the
plans and specifications the Premises, and all buildings and improvements,
thereon will comply with all superior Instrument Requirements, Legal
Requirements and Insurance Requirements. Notwithstanding anything in this
Section 5.11 to the contrary, if such Casualty is in an amount less than
[$5,000,000], the Mortgagor shall not be required to perform and complete
such Restoration (unless the performance and completion of the Restoration
is necessary in order for the Mortgagor to be in compliance with any term,
provision or condition of this Mortgage (other than this Section 5.11(e))
or any Superior Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designate by Mortgagor (to the extent the Mortgagor
is permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds)
and shall be paid by the Insurance Trustee in reimburse the Mortgagor for,
or to make payment for, the Restoration, after the Insurance Trustee
deducts therefrom the amount of any reasonable costs and expenses incurred
in connection with the performance of its obligations under this Section
5.11. The Insurance Trustee shall make such payments not more frequently
than once every 30 days upon the written request of the Mortgagor (unless
more frequent payments are required by Superior Instrument Requirements),
by paying to the Mortgagor or the persons named in the certificate
described in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate
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from time to time as the Restoration progresses, provided the Mortgagor has
complied with the requirements of this Subsection (e) and such payment is
permitted by an applicable Superior Instrument Requirements. The
Mortgagor's written request shall be accompanied by (i) the certificate
described in Clause (6) of this Subsection (e) and (ii) a title company or
official search, or other evidence reasonably acceptable to the Insurance
Trustee, showing that there have not been filed with respect to the
Premises, any vendor's, contractor's mechanic's, laborer's or materialman's
statutory or similar lien which has not been discharged of record (or
bonded against or secured by other security) or any other encumbrance
irrespective of its priority (other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate, countersigned by the Architect in
charge of the Restoration with respect to the matters described in (i) and
(v) below, (B) be dated not more than 10 days prior to such request and (C)
set forth (in addition to any other requirements contained in any
applicable Superior Instrument Requirements) that:
(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance
Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered services or
furnished or contracted to deliver materials for the Restoration
therein specified, and the names and addresses of such persons, a
brief description of such services and materials and the several
amounts so paid or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net
insurance proceeds, and that the sum then requested does not exceed
the value of the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in
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such certificate to be due for services or materials, and except for
amounts in dispute and/or customary retainages, there is no
outstanding indebtedness known to the person signing such certificate,
after due inquiry, which is then due for labor, wages, materials,
supplies or services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if
such estimated cost does exceed such insurance proceeds such
certificate shall state the amount of any such deficiency. If the
certificate states that such deficiency will exist, the Mortgagor
shall deliver the amount of such deficiency in cash or cash equivalent
to the Insurance Trustee simultaneously with the delivery of such
certificate, which amount shall be deemed insurance proceeds for
purposes of this Section 5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the entire
cost of the Restoration, then, after completion of the Restoration, the
Mortgagor shall pay the deficiency. If all or any part of the net
insurance proceeds are not used for the restoration in accordance with this
Subsection (e) (because such proceeds exceed the amount required to
complete the Restoration), then upon completion of the Restoration in
accordance with this Subsection (e), such amount not so used, if held by
the Insurance Trustee, shall be paid to the Mortgagor (if permitted by
Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is continuing,
all net business interruption insurance proceeds shall be paid to the Mortgagor,
to be segregated from the other funds of Mortgagor and held in trust by
Mortgagor for the following purposes and in the following order of priority:
(i) for the payment of Impositions and amounts due under the Ground Leases and
Superior Mortgages; (ii) for debt service for the estimated period of
Restoration (for purposes of this Section 5.11(f), interest and principal
payments due on any payment date under the Notes will deemed to accrue in equal
daily installments beginning the day after the immediately preceding payment
date and ending on such payment date); and (iii) for any expense incurred in
connection with the operation or business of the Casino-Hotel.
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(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to be maintained
pursuant to this Section 5.11, unless the same are permitted by Superior
Instrument Requirements and the Mortgagee is included therein as a named
insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant
to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall promptly deliver to
the Mortgagee a duplicate original of the policy of such insurance, a copy
thereof certified by the insurer or a certificate thereof.
(h) Insurance claims by reason of damage or destruction to any
portion of the Trust Estate may adjusted by the Mortgagor, but the Mortgagee
shall have the right (but not the obligation) to join the Mortgagor in
adjusting, and approving the adjustment of, any such loss except in the event of
a loss where the amount of insurance reasonably anticipated to be received with
respect to such loss is less than [Five Million Dollars ($5,000,000)], and the
Mortgagor shall assist the Mortgagee in any such adjustment at the request of
the Mortgagee. If the Mortgagee at its election as aforesaid joins the
Mortgagor in any adjustment process, then the Mortgagee's approval of the
adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary, if an
Event of Default shall have occurred and be continuing, the Mortgagee may, at
its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee
any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case
may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or
make any demolition, alteration or improvement of any building included in the
Trust Estate or any new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in this Section 5.12
set forth.
Unless an Event of Default shall have occurred and be continuing, the
Mortgagor shall have the right at all times to make or permit such alterations,
improvements or new constructions, structural or otherwise (herein sometimes
called collectively "alterations"), of or on the Trust Estate, to be made in all
cases subject to the conditions set forth in Section 5.12 of the Note Mortgage.
Section 5.13. LEASES. The Mortgagor shall not:
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(a) subject to the provisions of Section 5.13(d), enter into any
Lease, or renew, modify, extend, terminate, or amend any Lease, except in
the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection of,
any rental payments under any Lease more than one year in advance of the
respective periods in respect of which they are to accrue, except that, in
connection with the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected and received in
advance in an amount not in excess of three months' rent and/or a security
deposit may be required thereunder in an amount not exceeding one year's
rent;
(c) collaterally assign, transfer or hypothecate (other than to
the Mortgagee hereunder, to the mortgagee under the Note Mortgage or to the
holder of any Working Capital Facility Lien) any rental payment under any
Lease whether then due or to accrue in the future, the interest of the
Mortgagor as landlord under any Lease or the rents, issues or profits of
the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any
Lease unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder
shall be subject and subordinate to the rights of the Mortgagee under
this Mortgage, the mortgagee under the Note Mortgage and the holders
of any Superior Mortgage,
(2) the Lease may be assigned by the landlord thereunder to
the Mortgagee,
(3) the rights and remedies of the tenant in respect of any
obligations of the landlord thereunder shall be nonrecourse as to any
assets of the landlord other than its equity in the building in which
the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee under any new lease entered
into in the event of a termination of a Ground Lease;
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(e) modify any Lease with respect to the matters described in
clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate of
the Mortgagor) for a term of not less than 3 nor more than 10 years, the
Mortgagee shall deliver a non-disturbance and attornment agreement substantially
in the form of Schedule 4 hereto, following receipt of a certificate of a
leasing broker (who is not an Affiliate of the Mortgagor or the broker involved
in such transaction) experienced with respect to leases of commercial space in
the Atlantic City area stating that the rent under the Lease is not less than
fair market rent and that the other terms of the Lease are fair and reasonable
in the commercial leasing market. The Mortgagor shall, upon demand, reimburse
the Mortgagee for any costs and expenses (including reasonable attorney's fees)
incurred by the Mortgagee in connection with the preparation, review and
delivery of such non-disturbance and attornment agreements.
Promptly after the execution and delivery hereof, the Mortgagor will
cause the lessee under each Lease now in effect and promptly after each Lease is
executed or becomes effective after the date of the execution and delivery
hereof, the Mortgagor will cause the lessee under each such Lease, to be duly
notified in writing (unless the substance and effect of such notice shall be
contained in such Lease) of the subjection of the owner's interest, as lessor,
in and to such Lease to the lien of this Mortgage and of the name and address of
the Mortgagee. Each such notice shall state that the lease of such lessee is a
Lease as herein defined. If a new Mortgagee is at any time appointed hereunder
or the address of the Mortgagee shall at any time be changed, the Mortgagor will
cause each lessee under each Lease to be promptly notified in writing of the
name address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur any
expenditure other than DE MINIMIS amounts) to obtain from each lessee under each
Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of
receipt of such notice, and the Mortgagor will promptly deliver to the
Mortgagee, upon request, a copy of each such acknowledgment of receipt which it
is able to obtain. The Mortgagee shall not be responsible for securing or
causing the Mortgagor to secure any such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
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Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to
Article Four, the Mortgagor will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation, and
its rights (both statutory and under its articles of incorporation) and
franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor
will keep proper books of record and account in accordance with Section 12.05 of
the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Notes, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Guaranty.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law or any other law which
would prohibit or forgive the Mortgagor from paying all or any portion of the
obligations under the Guaranty as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect the covenants or
the performance of this Mortgage; and the Mortgagor (to the extent that it may
lawfully do so) 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 Mortgagee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the
provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any
Taking affecting the Trust Estate.
Section 5.21. GROUND LEASES.
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<PAGE>
(a) The Mortgagor covenants and agrees that it will do or cause to be
done all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall
at all times fully perform and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all taxes,
assessments and other charges mentioned therein) prior to the expiration of any
notice and/or cure period provided in each such Ground Lease. Upon receipt by
the Mortgagee from a Lessor of any written notice of default by the lessee
thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems
necessary in its sole discretion to prevent or to cure any default by the
Mortgagor in the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the Mortgagor as
lessee under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by the Mortgagor or by any
party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore
delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a
copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall
not take any such action unless and until the Mortgagor and/or the Mortgagee no
longer has the benefit of any tolling or stay referred to in Section 3.01(g).
Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby
expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any part
thereof to such extent and as often as the Mortgagee, in its sole discretion,
deems necessary or desirable for the purpose permitted by the immediately
preceding sentence, subject only to applicable Legal Requirements. Subject to
the preceding and without limiting the Mortgagee's other remedies under this
Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee
in its sole discretion deems necessary for any such purpose, and the Mortgagor
hereby agrees to pay to the Mortgagee, immediately and without demand, all such
sums so paid and expended by the Mortgagee, together with interest thereon from
the date of each such payment at the highest rate of interest set forth in the
Notes. All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and that
it will not without the express written consent of the Mortgagee modify,
change,
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<PAGE>
supplement, alter or amend such Ground Leases either orally or in writing
and, as further security for the repayment of the indebtedness secured
hereby and for the performance of the covenants herein and in such Ground
Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its
rights, privileges and prerogatives as lessee under such Ground Leases to
terminate, cancel, modify, change, supplement, alter or amend such Ground
Leases, and any such termination, cancellation, modification, change,
supplement, alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing and
(2) either (A) there has been an acceleration of maturity of the Notes
pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee
exercises its rights under Section 3.09 hereof, the Mortgagee shall have no
right to terminate, cancel, modify, change, supplement, alter or amend the
Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of the
Mortgagor's obligations under such Ground Leases, pursuant to such Ground
Leases or otherwise, shall release the Mortgagor from any of its
obligations under this Mortgage, including its obligations with respect to
the payment of rent as provided for in such Ground Leases and the
performance of all of the terms, provisions, covenants, conditions and
agreements contained in such Ground Leases, to be kept, performed and
complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest in
the improvements on the Leased Land and the leasehold estates shall not
merge by and shall always remain separate and distinct, notwithstanding the
union of such estates either in the Lessor or in the lessee, or in a third
party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in writing
of any request made by the Mortgagor, as lessee under each of the Ground
Leases, or any of the Lessors, for arbitration proceedings pursuant to the
Ground Leases and of the institution of any arbitration proceedings, as
well as all proceedings thereunder. In addition, the Mortgagor shall
promptly deliver to the Mortgagee a copy of the determination of the
arbitrators in each such arbitration proceeding. The Mortgagee shall have
the right to participate in such arbitration proceedings in association
with the Mortgagor
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or on its own behalf as an interested party in accordance with the terms of
the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the Mortgagor
shall deliver a copy of its election to exercise such option within 5 days
after the Mortgagor has delivered notice of such election to the Lessor or
(B) the Mortgagor acquires fee simple title or any other estate, title or
interest in the Leased Land, the Mortgagor shall promptly notify the
Mortgagee of such acquisition and, on written request by the Mortgagee,
shall cause to be executed and recorded all such other and further
assurances or other instruments in writing as may, in the opinion of the
Mortgagee, be required or desirable to carry out the intent and meaning of
clause (x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease by
any Lessor or any trustee arising from or in connection with any case,
proceeding or other action commenced or pending by or against any Lessor
under the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation, the Mortgagor shall give notice thereof to the Mortgagee. The
Mortgagor hereby (A) assigns to the Mortgagee any and all of the
Mortgagor's rights as lessee under Section 365(h) of the Code or any
comparable provision contained in any present or future federal, state,
local, foreign or other statute, law, rule or regulation ("Comparable
Provision") and (B) covenants that it shall not elect to treat any Ground
Lease as terminated pursuant to Section 365(h) of the Code or any
Comparable Provision without the prior written consent of the Mortgagee and
(C) agrees that any such election by the Mortgagor without such consent
shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to the
Mortgagee all of the Mortgagor's claims and rights to the payment of
damages arising from any rejection by Lessor of any Ground lease under the
Code or any Comparable Provision. The Mortgagee shall have the right to
proceed in its own name or in the name of the Mortgagor in respect of any
claim, suit, action or proceeding relating to the rejection of
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<PAGE>
any Ground Lease, including, without limitation, the right to file and
prosecute, in cooperation with the Mortgagor, any proofs of claim,
complaints, motions, applications notices and other documents, in any case
in respect of Lessor under the Code or any Comparable Provision. This
assignment constitutes a present, irrevocable and unconditional assignment
of the foregoing claims, rights and remedies, and shall continue in effect
until all of the indebtedness and obligations secured by this Mortgage
shall have been satisfied and discharged in full. Any amounts received by
the Mortgagee in damages arising out of the rejection of any Ground Lease
as aforesaid shall be applied first to all reasonable costs and expenses of
the Mortgagee (including, without limitation, reasonable attorneys' fees)
incurred in connection with the exercise of any of its rights or remedies
under this Section 5.21, and thereafter as provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor, as
lessee under the Ground Leases, shall determine to reject any or all of the
Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days'
prior notice of the date on which the Mortgagor shall apply to the
Bankruptcy Court or other judicial body with appropriate jurisdiction for
authority to reject the lease. The Mortgagee shall have the right, but not
the obligation, to serve upon the Mortgagor within such 10 day period a
notice stating that (a) the Mortgagee demands that the Mortgagor assume and
assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the
Code or any Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s). If
the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a) of the
preceding sentence within 30 days after the notice shall have been given
subject to the performance by the Mortgagee of the covenant provided for in
clause (b) of the preceding sentence. Effective upon the entry of an order
for relief in respect of the Mortgagor under Chapter 7 of the Code or Any
Comparable Provision the Mortgagor hereby assigns and transfers to the
Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other
judicial body with appropriate jurisdiction for an order extending the
period during which the Ground Lease may be rejected or assumed;
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(x) the Mortgagor shall promptly give to the Mortgagee copies of
(A) all notices of default or (B) any other communications or notices with
respect to events which relate to the possible impairment of the security
of this Mortgage, which it shall give or receive under the Ground Leases
and shall promptly notify the Mortgagor of any default under any Ground
lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all of the
rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed net
rent, taxes and assessments, payable under the Ground Leases have been paid to
the extent they were due and payable to the date hereof and that the Mortgagor
has not received notice of its failure to pay any other amounts payable under
the Ground Leases which have not been cured.
(d) If both the Lessor's and lessee's estates under any of the Ground
Leases or any portion thereof shall at any time become vested in one owner, this
Mortgage and the lien created hereby shall nevertheless not be merged,
extinguished, destroyed or terminated by application of the doctrine of merger
and, in such event, Mortgagee shall continue to have all of the rights and
privileges of the a leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease shall
be terminated prior to the natural expiration of its term due to default by the
lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its
designee shall acquire from the Lessor a new lease of the Leased land or any
portion thereof, the Mortgagor shall have no right, title or interest in or to
such lease or the leasehold estate created thereby, or the options therein
contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
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(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to
the expiration of any notice and/or cure period provided in each such Superior
Mortgage. If a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior Mortgage
has been accelerated as a result thereof, the Mortgagee may rely thereon and
take any action the Mortgagee deems necessary in its sole discretion to prevent
or to cure any default by the Mortgagor in the performance of or compliance with
any of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as mortgagor under each of the Superior Mortgages even though the
existence of such default or the nature thereof may be questioned or denied by
the Mortgagor or by any party on behalf of the Mortgagor provided that if the
Mortgagor has heretofore taken such actions as described in Section 3.01(h), the
Mortgagee shall not take any such action unless and until the Mortgagor and/or
the Mortgagee no longer has the benefit of any such tolling or stay referred to
in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the
Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such
acceleration the Mortgagee shall have, the absolute and immediate right to enter
in and upon the Premises or any part thereof to such extent and as often as the
Mortgagee, in its sole discretion, deems necessary for the purpose permitted by
the immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money as the
Mortgagee in its sole discretion deems necessary for any such purpose and (ii)
in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby
agrees to pay to the Mortgagee, immediately and without demand, all such sums
referred to in (i) and (ii) above so paid and expended by the Mortgagee,
together with interest thereon from the date of each such payment at the rate of
interest set forth in the Note. All sums so paid and expended by the Mortgagee
and the interest thereon shall be added to and be secured by the lien of this
Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first satisfying the
conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A)
modify any of the terms, covenants or conditions of any Superior Mortgage,
and without limiting the foregoing, the Mortgagor shall not, without
satisfying such conditions, enter into or obtain any agreement whereby the
holder of any Superior Mortgage waives, postpones, extends, reduces or
modifies the payment of the installment of principal or interest or
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<PAGE>
any other item or amount now required to be paid under the terms of any
Superior Mortgage or modifies any other provision thereof, or (B) acquire
or permit or suffer any Affiliate of the Mortgagor to acquire any Superior
Mortgage or any interest therein. Notwithstanding anything in clause (A)
to the contrary, the Mortgagor shall have the right to amend, supplement or
modify any Superior Mortgage, if (x) the then outstanding principal balance
of the indebtedness secured by such Superior Mortgage is not increased
thereby, and (y) in the case of any After-Acquired Fee Mortgage, such
amendment, supplement or agreement does not increase the property covered
thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each Superior
Mortgage, the note secured thereby and any other instrument evidencing or
securing the indebtedness owing to any holder of any Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to obtain
an estoppel certificate or letter addressed to the Mortgagee from holders
of the Superior Mortgages, such certificate or letter to be in such form as
the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication with
respect to events which relate to the possible impairment of the security
of this Mortgage, which it shall give or receive under the Superior
Mortgages and shall promptly notify the Mortgagor of any default under any
Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing Encumbrances
and any mortgage, assignment, security agreement, financing statement or other
lien securing any Working Capital Facility (the "Working Capital Facility Lien")
encumbering Mortgagor's interest in the affected portions of the Trust Estate or
any part thereof.
The foregoing provisions of this Section 5.22(c) shall be
self-operative with respect to Existing Encumbrances and shall be self-operative
with respect to any Working Capital Facility Lien, and no further instrument
shall be required to give effect to such subordination. Mortgagee shall,
however, from time to time, execute instruments in form
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<PAGE>
and substance reasonably satisfactory to the holder of the Working Capital
Facility Lien, confirming such subordination and agreeing to such other matters
reasonably required by the holder of the Working Capital Facility Lien which do
not, in the aggregate, materially adversely reduce or impair the rights of
Trustee under the Mortgage, and Mortgagor and others may rely conclusively
thereon, provided that Mortgagee shall have no liability thereunder and all
costs and expenses (including reasonable attorneys' fees) shall be paid by
Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing Encumbrances.
The provisions of this Section 5.22(d) shall be self-operative, and no further
instrument shall be required to give effect to such subordination.
Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey
Clerk's Office after the recordation of the Note Mortgage, the lien of this
Mortgage ranks pari passu with, and not junior to, the lien created by the Note
Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges
that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien
upon the Trust Estate which is PARI PASSU with the lien of this Mortgage.
Mortgagee further acknowledges and agrees that whenever it is provided in the
Note Mortgage that the Mortgagor shall deliver any notice or document, or is
required to make any payment thereunder, the delivery of such notice or document
or the making of such payment pursuant to the terms of the Note Mortgage shall
also constitute the delivery of such notice or document or the making of such
payment in satisfaction of the terms, conditions and provisions of this Mortgage
to the same extent as the same constitutes satisfaction of the terms, conditions
and provisions of the Note Mortgage.
Section 6.02. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
Section 6.03. MODIFICATION. This Mortgage is subject to
"modification" within the meaning of N.J.S.A. 46:9-
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8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority
provisions of such statute. Such modification may include, without limitation,
a change in the interest rate, maturity date or other terms and conditions of
this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF
THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be
duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
59
<PAGE>
Exhibit G
Intercreditor Agreement Terms
<PAGE>
Exhibit G
Outline of Material Terms of the
Intercreditor Agreement
for
Resorts International, Inc.
Subject Credit Senior Secured Loan due July 15, 2002 (the
Facilities "Senior Facility");
Senior Mortgage Notes due [March] 15,
2003 (the "Senior Mortgage Notes");
Junior Mortgage Notes due June 15, 2004
(the "Junior Mortgage Notes"); and
Any other credit facilities which may be
required by the Indentures for the
Senior Facility, the Senior Mortgage
Notes or the Junior Mortgage Notes to be
included in the Intercreditor Agreement
(the "Additional Facilities," and
together with the Senior Facility, the
Senior Mortgage Notes and the Junior
Mortgage Notes, the "Credit Facilities")
Creditor Parties Senior Facility Trustee;
Senior Mortgage Note Trustee;
Junior Mortgage Note Trustee; and any
lenders (or trustees or agents on behalf
of any lenders) which provide Additional
Facilities (collectively, the
"Trustees") Each Creditor Party, by its
execution of the Intercreditor Agreement
(whether directly or through its trustee
or agent), acknowledges the making of
the other Credit Facilities and the
intended uses of proceeds thereof and
waives any right to object to any
contemporaneous or existing Credit
Facility as having constituted a
fraudulent conveyance.
Classification of Initial Designations:Credit Facilities
Class 1 Facilities: Senior Facility,
all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
<PAGE>
Class 2 Facilities: Senior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Class 3 Facilities: Junior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Subsequent Designations - as indicated
on the signature page(s) to be executed
by the lenders (or any trustees or
agents on behalf of any lenders) which
provide Additional Facilities and
consented to by all other parties at
such time.
Borrower Parties Resorts International Hotel Financing,
Inc. ("RIHF"), as borrower under the
Secured Facilities;
Resorts International Hotel, Inc.
("RIH") as guarantor under the Secured
Facilities and issuer of the secured
intercompany notes to RIHF collaterally
assigned to each respective Trustee;
Resorts International, Inc. ("RII"), as
guarantor under the Senior Facility and
issuer of any intercompany notes which
may be issued to RIH; and
[GRI, Inc. ("GRI", and together with
RIHF, RIH and RII, the "Borrower
Parties") as guarantor under the Senior
Facility and issuer of any intercompany
notes which may be issued to RIH.]1*
The Borrower Parties will execute the
Intercreditor Agreement principally for
the purposes of (i) acknowledging the
relative rights of and relationships
among the Secured Facilities established
therein and (ii) agreeing not to take
any actions, including making any
payments, inconsistent therewith.
- -------------------
* Subject to discussion on structure
2
<PAGE>
Relative Priorities Liens:
Notwithstanding the time of filing,
recording or perfecting of the Security
Documents (which will be defined to
include the Mortgages and other liens
and encumbrances):
Each Lien created on behalf of a Class 1
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 1 Facility and (ii) senior
to any Lien created on behalf of any
Class 2 Facility or Class 3 Facility.
Each Lien created on behalf of a Class 2
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 2 Facility, (ii) senior to
any Lien created on behalf of any Class
3 Facility and (iii) junior to any Lien
created on behalf of any Class 1
Facility.
Each Lien created on behalf of a Class 3
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 3 Facility, and (ii) junior
to any Lien created on behalf of any
Class 1 Facility or Class 2 Facility.
Subrogation To be waived by all guarantors.
Mortgage Default Each Class 3 Creditor shall notify each
Cure Provisions Class 2 Creditor and each Class 1
Creditor of any Default or Event of
Default under its respective Class 3
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 1
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 3
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 2 Creditor shall notify each
Class 1 Creditor and each Class 3
Creditor of any Default or Event of
3
<PAGE>
Default under its respective Class 2
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 1 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 2
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 1 Creditor shall notify each
Class 2 Creditor and each Class 3
Creditor of any Default or Event of
Default under its respective Class 1
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 1
Facility or the Mortgage or other
Security Documents securing its
facility.
In addition, each Trustee will be
obligated to notify all other Trustees
prior to exercising any remedies with
respect to any shared collateral.
Application of Proceeds from dispositions of
Proceeds collateral, insurance proceeds,
condemnation awards and similar amounts
will be applied in accordance with
relative priorities of Liens.
Representations and Each party to the Intercreditor
Warranties Agreement will make appropriate
representations, including those
relating to its corporate existence,
power and authority, as well as to the
validity and enforceability of the
Intercreditor Agreement.
Amendments Intercreditor Agreement may not be
amended except pursuant to a writing
executed by all parties thereto.
Amendments for the sole purpose of
adding permitted parties may be executed
by the Trustees without the consent of
4
<PAGE>
the creditors for whom they serve if all
conditions precedent to the incurrence
of such indebtedness have been
satisfied. Amendments to sections [ ]
and [ ] may be executed by the
Trustees only with the approval of 100%
of the creditors for whom they serve and
amendments to sections [ ] and [ ]
may be executed by the Trustees only
with the approval of 66 2/3% of the
creditors for whom they serve.
Third Party Each party to the Intercreditor
Beneficiarie Agreement will acknowledge that such
agreement is being entered into for the
benefit of the lenders under the Credit
Facilities and their respective
successors and assigns, each of whom is
a direct intended third-party
beneficiary.
Certain Specific performance; no waivers;
Miscellaneous cooperation and further assurances.
Provisions
Governing Law New York
<PAGE>
[GD&C Draft--12/30/93]
[NA932820.031]
--------------------------------------------
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
Issuer,
RESORTS INTERNATIONAL HOTEL, INC.,
Guarantor,
and
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Trustee
--------------------------------------------
I N D E N T U R E
Dated as of [ ], 1994
--------------------------------------------
11.375% JUNIOR MORTGAGE NOTES DUE 2004
<PAGE>
CROSS-REFERENCE TABLE
SECTION OF TRUST INDENTURE ACT OF 1939 SECTION OF INDENTURE
- -------------------------------------- --------------------
310(a)(1) . . . . . . . . . . . . . . . . . . . . 8.08; 8.09
(a)(2) . . . . . . . . . . . . . . . . . . . . 8.09
(a)(3) . . . . . . . . . . . . . . . . . . . . 8.14(b)
(a)(4) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b). . . . . . . . . . . . . . . . . . . . . . 8.08
(c). . . . . . . . . . . . . . . . . . . . . . Not Applicable
311(a). . . . . . . . . . . . . . . . . . . . . . 8.13
(b). . . . . . . . . . . . . . . . . . . . . . 8.13
(c). . . . . . . . . . . . . . . . . . . . . . Not Applicable
312(a). . . . . . . . . . . . . . . . . . . . . . 9.01; 9.02(a)
(b). . . . . . . . . . . . . . . . . . . . . . 9.02(b)
(c). . . . . . . . . . . . . . . . . . . . . . 9.02(c)
313(a). . . . . . . . . . . . . . . . . . . . . . 9.03(a)
(b). . . . . . . . . . . . . . . . . . . . . . 9.03(a)
(c). . . . . . . . . . . . . . . . . . . . . . 9.03(a)
(d). . . . . . . . . . . . . . . . . . . . . . 9.03(b)
314(a). . . . . . . . . . . . . . . . . . . . . . 9.04
(b). . . . . . . . . . . . . . . . . . . . . . 6.02
(c)(1) . . . . . . . . . . . . . . . . . . . . 1.06
(c)(2) . . . . . . . . . . . . . . . . . . . . 1.06
(c)(3) . . . . . . . . . . . . . . . . . . . . 9.04(c); 12.07(i)
(d). . . . . . . . . . . . . . . . . . . . . . 6.02
(e). . . . . . . . . . . . . . . . . . . . . . 1.06
(f). . . . . . . . . . . . . . . . . . . . . . Not Applicable
315(a). . . . . . . . . . . . . . . . . . . . . . 8.01(a)
(b). . . . . . . . . . . . . . . . . . . . . . 8.02
(c). . . . . . . . . . . . . . . . . . . . . . 8.01(b)
(d). . . . . . . . . . . . . . . . . . . . . . 8.01(c)
(e). . . . . . . . . . . . . . . . . . . . . . 7.14
316(a)(l)(A). . . . . . . . . . . . . . . . . . . 7.12(b)
(a)(l)(B). . . . . . . . . . . . . . . . . . . 7.13
(a)(2) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b). . . . . . . . . . . . . . . . . . . . . . 7.08
317(a)(l) . . . . . . . . . . . . . . . . . . . . 7.03
(a)(2) . . . . . . . . . . . . . . . . . . . . 7.04
(b). . . . . . . . . . . . . . . . . . . . . . 12.03
318(a). . . . . . . . . . . . . . . . . . . . . . 1.07
---------------------
Note: This Cross-Reference Table shall not be deemed, for any
purpose, to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
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ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . . 16
Section 1.03. Notices, etc., to Trustee, RIH and the
Company. . . . . . . . . . . . . . . . . . . . . . 17
Section 1.04. Notices to Noteholders; Waiver.. . . . . . . . . . . 18
Section 1.05. Form and Contents of Documents Delivered
to Trustee.. . . . . . . . . . . . . . . . . . . . . 19
Section 1.06. Compliance Certificates and Opinions.. . . . . . . . 20
Section 1.07. Conflict with Trust Indenture Act. . . . . . . . . . 21
Section 1.08. Effect of Headings and Table of Contents.. . . . . . 21
Section 1.09. Successors and Assigns.. . . . . . . . . . . . . . . 21
Section 1.10. Separability Clause. . . . . . . . . . . . . . . . . 21
Section 1.11. Benefits of Indenture. . . . . . . . . . . . . . . . 21
Section 1.12. Governing Law. . . . . . . . . . . . . . . . . . . . 21
Section 1.13. Casino Control Act.. . . . . . . . . . . . . . . . . 22
Section 1.14. General Application. . . . . . . . . . . . . . . . . 22
ARTICLE TWO
NOTE FORM
Section 2.01. Form Generally.. . . . . . . . . . . . . . . . . . . 22
Section 2.02. Form of Notes. . . . . . . . . . . . . . . . . . . . 23
Section 2.03. Form of Trustee's Certificate of
Authentication.. . . . . . . . . . . . . . . . . . . 29
(i)
<PAGE>
PAGE
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Section 2.04. Form of the Guaranty.. . . . . . . . . . . . . . . . 29
ARTICLE THREE
THE NOTE
Section 3.01. General Title. . . . . . . . . . . . . . . . . . . . 30
Section 3.02. Form and Denominations.. . . . . . . . . . . . . . . 30
Section 3.03. Execution, Authentication, Delivery and
Dating . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.04. Temporary Notes. . . . . . . . . . . . . . . . . . . 31
Section 3.05. Registration, Transfer and Exchange. . . . . . . . . 31
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Notes. . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.07. Payment of Interest on Notes; Interest
Rights Preserved.. . . . . . . . . . . . . . . . . . 33
Section 3.08. Persons Deemed Owners. . . . . . . . . . . . . . . . 34
Section 3.09. Cancellation.. . . . . . . . . . . . . . . . . . . . 35
Section 3.10. Term and Form. . . . . . . . . . . . . . . . . . . . 35
Section 3.11. Payment of Interest in Additional Notes. . . . . . . 36
Section 3.12. Exchangeability. . . . . . . . . . . . . . . . . . . 37
Section 3.13. Redemption . . . . . . . . . . . . . . . . . . . . . 37
Section 3.14. Authentication and Delivery of Original
Issue. . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE FOUR
GUARANTY
Section 4.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.02. Execution and Delivery of Guaranty . . . . . . . . . 39
Section 4.03 Mortgage Securing Guaranty . . . . . . . . . . . . . 39
(ii)
<PAGE>
PAGE
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ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. Payment of Indebtedness; Satisfaction and
Discharge of Indenture . . . . . . . . . . . . . . . 40
Section 5.02. Application of Deposited Money . . . . . . . . . . . 41
Section 5.03. Repayment to the Company . . . . . . . . . . . . . . 42
ARTICLE SIX
SECURITY
Section 6.01. Assignment Agreement . . . . . . . . . . . . . . . . 42
Section 6.02. Recording, Etc.. . . . . . . . . . . . . . . . . . . 43
Section 6.03. Custody of Mortgage Documents. . . . . . . . . . . . 45
Section 6.04. Suits to Protect the Trust Estate and
Mortgage Documents . . . . . . . . . . . . . . . . . 45
ARTICLE SEVEN
REMEDIES
Section 7.01. Events of Default. . . . . . . . . . . . . . . . . . 46
Section 7.02. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . 50
Section 7.03. Covenant to Pay Trustee Amounts Due on Notes
and Right of Trustee to Judgment . . . . . . . . . . 51
Section 7.04. Trustee May File Proofs of Claim . . . . . . . . . . 52
Section 7.05. Trustee May Enforce Claims Without
Possession of Notes. . . . . . . . . . . . . . . . . 52
Section 7.06. Application of Money Collected . . . . . . . . . . . 53
Section 7.07. Limitation on Suits. . . . . . . . . . . . . . . . . 53
Section 7.08. Unconditional Right of Noteholders to
Receive Principal and Interest . . . . . . . . . . . 54
Section 7.09. Restoration of Rights and Remedies . . . . . . . . . 54
(iii)
<PAGE>
PAGE
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Section 7.10. Rights and Remedies Cumulative . . . . . . . . . . . 55
Section 7.11. Delay or Omission Not Waiver . . . . . . . . . . . . 55
Section 7.12. Other Rights . . . . . . . . . . . . . . . . . . . . 55
Section 7.13. Waiver of Past Defaults. . . . . . . . . . . . . . . 56
Section 7.14. Undertaking for Costs. . . . . . . . . . . . . . . . 56
Section 7.15. Enforcement. . . . . . . . . . . . . . . . . . . . . 57
Section 7.16. Management of Casino-Hotel . . . . . . . . . . . . . 57
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. Certain Duties and Responsibilities. . . . . . . . . 58
Section 8.02. Notice of Defaults . . . . . . . . . . . . . . . . . 59
Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . . . 59
Section 8.04. Not Responsible for Recitals or Issuance
of Notes or Application of Proceeds. . . . . . . . . 61
Section 8.05. May Hold Notes . . . . . . . . . . . . . . . . . . . 61
Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . . . 62
Section 8.07. Compensation and Reimbursement . . . . . . . . . . . 62
Section 8.08. Disqualification; Conflicting Interests. . . . . . . 63
Section 8.09. Corporate Trustee Required; Eligibility. . . . . . . 63
Section 8.10. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . 63
Section 8.11. Acceptance of Appointment by Successor . . . . . . . 65
Section 8.12. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . 65
Section 8.13. Preferential Collection of Claims Against
Company. . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.14. Co-trustees and Separate Trustees. . . . . . . . . . 66
(iv)
<PAGE>
PAGE
----
Section 8.15. Appointment of Authenticating Agent. . . . . . . . . 68
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 9.01. Company to Furnish Trustee Semi-Annual
Lists of Noteholders . . . . . . . . . . . . . . . . 69
Section 9.02. Preservation of Information;
Communications to Noteholders. . . . . . . . . . . . 69
Section 9.03. Reports by Trustee . . . . . . . . . . . . . . . . . 70
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 10.01. Consolidation, Merger, Conveyance or
Transfer Only on Certain Terms . . . . . . . . . . . 72
Section 10.02. Successor Entity Substituted . . . . . . . . . . . . 73
Section 10.03. Successor Management of Casino-Hotel . . . . . . . . 74
Section 10.04. Limitation on Sales of Trust Estate. . . . . . . . . 74
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. Without Consent of Noteholders . . . . . . . . . . . 74
Section 11.02. With Consent of Noteholders. . . . . . . . . . . . . 75
Section 11.03. Execution of Amendments and Supplements. . . . . . . 77
Section 11.04. Effect of Amendment or Supplement. . . . . . . . . . 77
Section 11.05. Conformity with Trust Indenture Act. . . . . . . . . 77
Section 11.06. Reference in Notes to Amendment or
Supplement . . . . . . . . . . . . . . . . . . . . . 78
(v)
<PAGE>
ARTICLE TWELVE
COVENANTS
Section 12.01. Payment of Principal and Interest. . . . . . . . . . 78
Section 12.02. Maintenance of Office or Agency. . . . . . . . . . . 79
Section 12.03. Money for Security Payments to Be Held in
Trust. . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.04. Corporate Existence. . . . . . . . . . . . . . . . . 81
Section 12.05. To Keep Books; Inspection by Trustee . . . . . . . . 81
Section 12.06. Reports and Compliance Certificates. . . . . . . . . 81
Section 12.07. Limitation on Dividends and Restricted
Payments . . . . . . . . . . . . . . . . . . . . . . 83
Section 12.08. Limitation on Additional Indebtedness and
Issuance of Notes. . . . . . . . . . . . . . . . . . 85
Section 12.09. Limitation on Repayment of Subordinated
Indebtedness . . . . . . . . . . . . . . . . . . . . 86
Section 12.10. Limitation on Certain Transactions . . . . . . . . . 86
Section 12.11. Restriction of Activities. . . . . . . . . . . . . . 86
Section 12.12. Limitation on Subsidiaries; Consolidated
Group. . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.13. Limitations on Liens . . . . . . . . . . . . . . . . 88
Section 12.14. Compliance with Laws . . . . . . . . . . . . . . . . 88
Section 12.15. Payment of Taxes and Other Claims. . . . . . . . . . 88
Section 12.16. Maintenance of Properties. . . . . . . . . . . . . . 89
Section 12.17. Insurance . . . . . . . . . . . . . . . . . . . . . 89
Section 12.18 Waiver of Stay, Extension or Usury Laws. . . . . . . 89
Section 12.19. Appointment to Fill a Vacancy in Office
of Trustee . . . . . . . . . . . . . . . . . . . . . 90
Section 12.20 Validity of Liens. . . . . . . . . . . . . . . . . . 90
(vi)
<PAGE>
PAGE
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Section 12.21. Transactions with Stockholders and
Affiliates . . . . . . . . . . . . . . . . . . . . . 91
Section 12.22. Limitation on Open Market Purchases. . . . . . . . . 91
ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. General Applicability of Article . . . . . . . . . . 91
Section 13.02. Election to Redeem; Notice to Trustee. . . . . . . . 91
Section 13.03. Selection by Trustee of Notes to Be
Redeemed . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.04. Notice of Redemption . . . . . . . . . . . . . . . . 92
Section 13.05. Deposit of Redemption Price. . . . . . . . . . . . . 92
Section 13.06. Notes Payable on Redemption Date . . . . . . . . . . 93
Section 13.07. Notes Redeemed in Part . . . . . . . . . . . . . . . 93
Section 13.08. Redemption Pursuant to Casino Control
Act. . . . . . . . . . . . . . . . . . . . . . . . . 93
(vii)
<PAGE>
TABLE OF EXHIBITS
EXHIBITS DOCUMENT
- -------- --------
Exhibit A RIH Junior Promissory Note
Exhibit B Assignment Agreement from Resorts
International Hotel Financing, Inc.
Exhibit C Subordination Provisions
Exhibit D Mortgage securing RIH Junior Promissory Note
between Resorts International Hotel, Inc. and
Resorts International Hotel Financing, Inc.
Exhibit E Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
Exhibit F Mortgage securing Guaranty of Junior Mortgage
Notes between Resorts International Hotel,
Inc. and U.S. Trust Company of California, N.A.,
as Trustee
Exhibit G Intercreditor Agreement Terms
(vii)
<PAGE>
INDENTURE
THIS INDENTURE dated as of [ ], 1994, among Resorts International
Hotel Financing, Inc., a Delaware corporation (the "Company"), Resorts
International Hotel, Inc., a New Jersey corporation ("RIH"), and U.S. Trust
Company of California, N.A., a national banking association, as
trustee (together with its successors as such trustee, the "Trustee").
PRELIMINARY STATEMENT
The capitalized terms used in this Indenture which are not otherwise
defined herein have the meanings set forth in Article I.
The Company has duly authorized the creation, execution and delivery of
its 11.375% Junior Mortgage Notes due 2004 (the "Notes"), issuable in
accordance with the terms hereof, and RIH has duly authorized the guaranty of
the Company's obligations under this Indenture, and, to secure the Notes and to
provide therefor, each of the Company and RIH has duly authorized the execution
and delivery of this Indenture.
Each $1,000 principal amount of the Notes will be issued with one share
of Resorts International, Inc.'s Class B Redeemable Common Stock (the "Class B
Common Stock") (each $1,000 principal amount of the Notes and share of Class B
Common Stock are referred to collectively herein as a "Unit"). Each Note may
not be transfered separately from the share(s) of Class B Common Stock issued
in respect of such Note.
All things have been done which are necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee
hereunder and duly issued by the Company, the valid obligations of the Company,
and to constitute this Indenture a valid agreement of the Company and RIH, in
accordance with the terms of the Notes and this Indenture.
THEREFORE, for and in consideration of the premises and the purchase or
acceptance of the Notes by the Holders thereof, RIH and the Company do hereby
covenant and agree to and with the Trustee, for the Ratable Benefit of all
Holders of the Notes thereto appertaining, as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as well as
the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for
shall be made, in accordance with GAAP consistently applied; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"ACCOUNTANT" means a Person engaged in the practice of accounting
who (except as otherwise expressly provided in this Indenture) may
be employed by or affiliated with the Company or RIH.
"ACT" when used with respect to any Noteholder or Noteholders has
the meaning stated in Section 1.02(a).
"ADDITIONAL NOTES" means additional 11.375% Junior Mortgage Notes
due 2004 issued in payment of interest accrued on outstanding Notes
pursuant to Section 3.11.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, and, with
respect to any specified natural Person, any other Person having a
relationship by blood, marriage or adoption not more remote than
first cousin with such specified Person. For purposes of this
definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms
2
<PAGE>
"controlling" and "controlled" have meanings correlative to the
foregoing; PROVIDED, HOWEVER, that, except as may be required under
the TIA, the term "Affiliate" shall not include, with respect to
the Company or RIH, any of Fidelity Management & Research Company,
TCW Special Credits or funds or accounts managed or advised by
either of them.
"AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured
by an After-Acquired Fee Mortgage.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section
2.07 of the Mortgage.
"ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of
the date hereof, providing for the assignment of the RIH Junior
Promissory Note and other Mortgage Documents to the Trustee by the
Company, and acknowledgment thereof by RIH, a copy of which is
attached hereto as Exhibit B.
"ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and
Rents dated as of the date hereof, from RIH to the Company securing
the RIH Junior Promissory Note, a copy of which is attached hereto
as Exhibit E.
"AUTHENTICATING AGENT" means any Person named as Authenticating
Agent for the Notes in accordance with the provisions of this
Indenture until a successor Authenticating Agent becomes such
pursuant thereto, and thereafter Authenticating Agent shall mean
such successor.
"AUTHORIZED SIGNATURE" means the signatures of the chairman of the
board, the president or a Vice President and of the treasurer, an
assistant treasurer, the controller, an assistant controller, the
secretary or an assistant secretary of the Company or RIH, as the
case may be.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person,
any lease of any property (whether real, personal or mixed) by such
Person as lessee which, in conformity with GAAP consistently
applied, is accounted for as a capitalized lease on the balance
sheet of such Person.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture,
fixtures and equipment at any time contained therein.
3
<PAGE>
"CASINO CONTROL ACT" means the New Jersey Casino Control Act and
the regulations promulgated thereunder, as amended.
"CASINO CONTROL COMMISSION" means the New Jersey Casino Control
Commission, as from time to time constituted, or if at any time
after the execution of this Indenture such Commission is not
existing and performing the duties theretofore assigned to it,
then the body performing such duties at such time.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act
of 1934, or if at any time after the execution of this instrument
such Commission is not existing and performing the duties
theretofore assigned to it under the TIA, then the body
performing such duties at such time.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor entity shall have
become such pursuant to the applicable provisions of this
Indenture, and thereafter, except to the extent otherwise
contemplated by Section 10.02, "Company" shall mean such
successor entity exclusively.
"COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean,
respectively, a written consent, order or request signed with an
Authorized Signature and delivered to the Trustee.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, an amount equal to the sum of (i) the consolidated net
income (or loss) of such Person for such period determined in
accordance with GAAP consistently applied, excluding interest
income, interest expense and gains or losses from extraordinary or
nonrecurring items, plus (ii) all amounts deducted in computing such
consolidated net income (or loss) in respect of depreciation and
amortization, plus (iii) non-cash charges arising from the reduction
of CRDA Deposits to market value, minus (iv) taxes based upon or
measured by income which are payable in cash, minus (v) CRDA
Deposits.
"CONSOLIDATED INTEREST CHARGES" means, with respect to any Person
for any period, the consolidated interest expense (not including
the non-cash amortization of discount on the original issuance of
(a) the RIH Promissory Note, (b) any intercompany indebtedness
of RIH issued in connection with Indebtedness represented by the Junior
4
<PAGE>
Mortgage Facility and (c) any intercompany indebtedness of
RIH issued in connection with Indebtedness represented by the
Working Capital Facility), whether payable in cash or in-kind (and
with respect to RIH, including, without limitation, the interest
paid or accrued (without duplication) on (i) the RIH
Promissory Note, (ii) any intercompany indebtedness of RIH issued
in connection with Indebtedness represented by the Junior Mortgage
Facility and (iii) any intercompany indebtedness of RIH issued in
connection with Indebtedness represented by the Working Capital
Facility), without deduction for interest income (other than cash interest
income received from RII in payment of its interest cost
on any Working Capital Facility), in each case for such Person
and its consolidated Subsidiaries for such period
determined in accordance with GAAP consistently applied.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH
and its consolidated Subsidiaries for the immediately preceding
four consecutive fiscal quarters to (b) Consolidated Interest
Charges of RIH and its consolidated Subsidiaries for such period.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, an amount equal to consolidated net income (or loss) of
such Person for such period determined in accordance with GAAP
consistently applied, minus (a) federal and state taxes based upon
or measured by income which are payable in cash, plus (b) non-cash
charges arising from federal and state taxes based upon or measured
by income.
"CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the
Casino Reinvestment Development Authority in an amount equal to
1.25% of RIH's gross revenue in order to satisfy its investment
obligation pursuant to the Casino Control Act, and (b) the amounts
invested in qualified investments in lieu of any of the quarterly
deposits (or portion thereof) referred to in clause (a) above.
"CRDA DISPUTE" means the dispute existing on the date hereof
between RIH and the New Jersey Casino Reinvestment Development
Authority regarding CRDA Deposits and New Jersey Casino
Reinvestment Authority Notes, which dispute involves an amount
of approximately $30,000,000.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both,
would become an Event of Default.
"DEFAULTED INTEREST" has the meaning stated in Section 3.07.
5
<PAGE>
"EFFECTIVE DATE" means the date on which the prepackaged plan of
reorganization of RII and GRI becomes effective.
"EVENT OF DEFAULT" has the meaning stated in Section 7.01. An
Event of Default shall "exist" if an Event of Default shall have
occurred and be continuing.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
"FAIR MARKET VALUE" of any Notes means (a) the average of the
closing sales price of the Notes for the 30 trading days
immediately prior to the date of determination of such value on
the largest national securities exchange on which such Notes shall
have traded on such trading days, or (b) if no such sales of such
Notes occurred during such 30-day period or if the Notes are not so
listed but are traded in the over-the-counter market with
quotations available in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), the average of the
means between the "bid" and "asked" prices on such national
securities exchange or as quoted on NASDAQ, as the case may be,
during such 30-day period, or (c) if the Notes are not traded on a
national securities exchange or quoted on NASDAQ, the fair market
value of such Notes as of the date of determination as determined
by agreement of two nationally recognized Independent investment
banking firms, one to be chosen by the Company and the other by the
Holder of the Notes being valued, with the costs of each such firm
being the responsibility of the Person selecting such firm. If
such firms cannot agree upon such fair market value, such firms
shall select a third nationally recognized Independent investment
banking firm, which shall determine such fair market value, the
costs of such third firm being shared equally by the Company and
such Holder.
"F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01
of the Mortgage.
"GAAP" means United States generally accepted accounting
principles.
"GRI" means GGRI, Inc., a Delaware corporation.
"GROUND LEASES" has the meaning stated in Granting Clause Second of
the Mortgage.
"GUARANTY" means the guaranty contained in Article Four.
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"GUARANTY MORTGAGE" means the Mortgage securing Guaranty of Junior
Mortgage Notes dated as of the date hereof, between RIH, as
mortgagor, and the Trustee, as mortgagee, securing the Guaranty,
a copy of which is attached hereto as Exhibit F.
"HOTEL" means that portion of the Casino-Hotel not included within
the Casino.
"INDEBTEDNESS" means, as applied to any Person, without
duplication, any indebtedness, exclusive of deferred taxes,
(a) in respect of borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to
a portion thereof); (b) evidenced by bonds, notes, debentures or
similar instruments or letters of credit; (c) representing the
balance deferred and unpaid of the purchase price of any property,
if and to the extent such indebtedness would appear as a liability
upon a balance sheet of such Person prepared in accordance with
GAAP (but excluding trade accounts payable arising in the ordinary
course of business that are not overdue by more than 90 days or are
being contested by such Person in good faith); (d) any Capitalized
Lease Obligations (other than, with respect to RIH or the Company,
the Ground Leases) of such Person; and (e) Indebtedness of others
guaranteed by such Person, including, without limitation, every
obligation of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or
to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness, (ii) to purchase
property, securities or services for the purpose of assuring the
holder of such Indebtedness of the payment of such Indebtedness, or
(iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; PROVIDED,
HOWEVER, that the guaranty by any Person shall not include
endorsements by such Person for collection or deposit, in either
case in the ordinary course of business. The term "INDEBTEDNESS"
does not include: (1) any of the types of indebtedness described in
clauses (a) through (e) above (inclusive) owed by the Company to
RIH or any of their Subsidiaries, by RIH to the Company or any of
their Subsidiaries or by any such Subsidiary to RIH, the Company or
any other such Subsidiary (including, without limitation, the RIH
Promissory Note and the RIH Junior Promissory Note); (2) the
Guaranty, the Junior Guaranty, the Senior Guaranty and the Working
Capital Facility Guaranty; (3) matters relating to the CRDA
Dispute, New Jersey Casino Reinvestment Development Authority
Notes or CRDA Deposits; and (4) any payments made by the Company
or RIH under the RII Management Agreement, the RII Tax Sharing
Agreement or the Services Agreement.
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"INDENTURE" means this instrument as originally executed or as it
may from time to time be supplemented, modified or amended by one
or more indentures or other instruments supplemental hereto entered
into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified
Person means such a Person who (a) is in fact independent, (b) does not
have any direct financial interest or any material indirect financial
interest in the Company or in any other obligor upon the Notes or
in any Affiliate of the Company or of such other obligor and (c) is
not connected with the Company or such other obligor or any
Affiliate of the Company or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate
shall be furnished to the Trustee, such Person shall be appointed
by a Company Order, and such opinion or certificate shall state
that the signer has read this definition and that the signer is
Independent within the meaning hereof. A Person who is performing
or who has performed services as an independent contractor to any
specified Person shall not be considered not Independent merely by
reason of the fact that such Person is or has performed such
services.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated
as of the date hereof, among the Trustee, the trustee under the
Senior Mortgage Note Indenture and such other parties that may
from time to time become a party thereto, which shall incorporate
the terms set forth in Exhibit G.
"INTEREST PAYMENT DATE" means the date on which an installment of
interest on the Notes is due and payable.
"JUNIOR GUARANTY" means the Guaranty and any other guaranty of the
Junior Mortgage Facility by RIH.
"JUNIOR MORTGAGE FACILITY" means the Notes and any secured or
unsecured facility or facilities entered into by RIH or the
Company providing for the making of loans to RIH or the Company
on a revolving or term basis, or the issuance of notes, debentures
or bonds by RIH or the Company, as such agreement, indenture or
instrument may be amended, supplemented or modified from time to
time, or any refinancing thereof, in an aggregate principal amount
up to $35,000,000 plus additional notes, debentures or bonds issued
in payment of interest accrued on outstanding notes, debentures or
bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if
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any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of
the Mortgage and the Guaranty Mortgage. The term "Junior Mortgage
Facility" does not include the Junior Guaranty.
"LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the
Mortgage.
"MATURITY" when used with respect to any Note means the date on
which the principal (or any portion thereof) of such Note becomes
due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration or call for
redemption or otherwise.
"MORTGAGE" means the Mortgage securing the RIH Junior Promissory
Note dated as of the date hereof, between the Company, as successor
mortgagee, and RIH, as mortgagor.
"MORTGAGE DEBT" means, at any point in time, the RIH
Promissory Note, the RIH Junior Promissory Note and any secured
Indebtedness outstanding under any Working Capital Facility.
"MORTGAGE DOCUMENTS" means (a) the Mortgage, the Guaranty Mortgage,
the RIH Junior Promissory Note, the Assignment of Leases and Rents
and any other security document to which either RIH or the Company
is a party relating to the Notes, which is executed and delivered
pursuant to or in connection with the Mortgage, the Guaranty
Mortgage or the Assignment Agreement, and (b) any mortgage, deed
of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of
operating assets and any other security document to which either
RIH or the Company is a party relating to the Junior Mortgage
Facility.
"NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a).
"NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall
mean bonds issued by the Casino Reinvestment Development Authority,
a public authority created under the Casino Control Act.
"NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in
connection with the acquisition, purchase, improvement or
development of property or assets (other than the Trust Estate)
used by the Company, RIH or any Subsidiary of RIH or the Company to
engage in the casino business, the hotel business or related or
ancillary business or purpose and which is secured only by such
assets and without recourse to RIH, the Company or any Subsidiary
of RIH or the Company or the Trust Estate for such indebtedness.
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"NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is
registered in the Note Register.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
stated in Section 3.05.
"NOTES" has the meaning stated in the Preliminary Statement of this
instrument and more particularly includes any Note authenticated
and delivered hereunder, including, without limitation, any
Additional Notes. The term "Notes" does not include the
Guaranty.
"OFFICER" of the Company or RIH means any Person authorized to
execute an Authorized Signature.
"OFFICERS' CERTIFICATE" delivered by the Company or RIH means a
certificate signed with an Authorized Signature and delivered to
the Trustee. Whenever this Indenture requires that an Officers'
Certificate be signed also by an Accountant or other expert, such
Accountant or other expert may (except as otherwise expressly
provided in this Indenture) be in the general employ of the
Company or RIH.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Indenture) be an
employee of the Company or RIH. Unless otherwise specifically
provided in this Indenture, such counsel may rely as to any
statement of facts not personally known to such counsel and
relating to such opinion on an Officers' Certificate, to the
extent not rejected by the Trustee and its counsel (which
rejection shall not be unreasonably given).
"OUTSTANDING" when used with respect to Notes means, as of the date
of determination, all Notes theretofore authenticated and delivered
under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying
Agent in trust for the Holders of such Notes;
(c) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered under this Indenture; and
(d) Notes alleged to have been destroyed, lost or stolen which
have been paid as provided in Section 3.06;
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PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of Notes Outstanding have given any
request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor
upon the Notes or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be outstanding. In
determining whether the Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice,
consent or waiver, only Notes which the Trustee actually knows
to be so owned shall be so disregarded.
"OUTSTANDING AMOUNT" of any Indebtedness at any time means the
principal amount outstanding of such Indebtedness at such time.
"PAYING AGENT" means any Person now or hereafter authorized by the
Company to pay the principal of or interest on any Notes on behalf
of the Company.
"PERMITS" has the meaning stated in Section 1.01 of the Mortgage.
"PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or any other entity or government or any agency or
political subdivision thereof.
"PLACE OF PAYMENT" when used with respect to the Notes means a city
or any political subdivision thereof in which the Company is by
this Indenture required to maintain an office or agency for the
payment of the principal of or interest on the Notes.
"PLAN" means the Plan of Reorganization of RII and GRI dated [ ],
1994.
"PREDECESSOR NOTES" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for purposes of this
definition, any Note authenticated and delivered under Section 3.06
in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the lost, destroyed or stolen Note.
"PREMISES" has the meaning stated in Granting Clause Third of the
Mortgage.
"RATABLE BENEFIT" means, for any class or classes of Indebtedness
at any time, in proportion to the total Outstanding Amount of such
class or classes held by each holder thereof at such time.
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Outstanding Amount of such class or classes held by each holder
thereof at such time.
"REDEMPTION DATE" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to this
Indenture.
"REDEMPTION PRICE" when used with respect to any Note to be
redeemed means the price at which it is to be redeemed pursuant
to this Indenture. It does not include installments of interest
due on or before the Redemption Date.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Notes means the date specified in the
provisions of this Indenture.
"RESPONSIBLE OFFICER" means any Vice President, any Assistant Vice
President or any other officer of assistant officer of the Trustee assigned
by the Trustee to administer its corporate trust matters.
"RESTRICTED PAYMENT" means (a) any declaration or payment of any
dividend or the making of any distribution to holders of capital
stock of RIH or the Company or any Subsidiary of RIH or the Company
in respect of such capital stock (other than to RIH or the Company
or a direct or indirect wholly owned Subsidiary of RIH or the
Company), (b) any purchase, redemption or other acquisition or
retirement for value of any capital stock (or warrants, rights or
options to acquire any capital stock or Indebtedness convertible
into or exchangeable for any capital stock) of RIH or the Company
or any Subsidiary of RIH or the Company (other than purchases,
redemptions, acquisitions or retirement solely from RIH or the
Company or a direct or indirect wholly owned Subsidiary of RIH or
the Company); PROVIDED, HOWEVER, that any such purchase, redemption
or other acquisition or retirement that is required by the Casino
Control Commission or under the Casino Control Act shall not
constitute a Restricted Payment. The term "Restricted Payment"
also shall not include any loan or advance to RII of all or any
portion of the proceeds of the Indebtedness represented by the
Working Capital Facility.
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"RIH" means the person named as "RIH" in the first paragraph of
this instrument until a successor entity shall have become such
pursuant to the applicable provisions of the Indenture, and
thereafter, except to the extent otherwise contemplated by
Section 10.02, "RIH" shall mean such successor entity
exclusively.
"RIH JUNIOR PROMISSORY NOTE" means the secured junior promissory
note, dated the date hereof, made by RIH in the principal amount of
$35,000,000, plus any additional junior promissory notes issued in
connection with the payment of interest accrued on outstanding
Notes payable to the order of the Company, a copy of which is
attached hereto as Exhibit A.
"RIH SALE" means (a) a consolidation, combination or merger
involving RIH and any other Person, (b) a sale, assignment,
conveyance or transfer or RIH's interest in the Trust Estate,
substantially as an entirety, to any other Person or group of
Persons in one transaction or a series of related transactions, or
(c) any transaction as a result of which RIH ceases to be a direct
or indirect wholly owned Subsidiary of RII; PROVIDED, HOWEVER, that
any of the transactions described in clauses (a), (b) and (c) above
shall not constitute an RIH Sale if the other party or parties to
the transaction consists of only one or more of the following
Persons: the Company or any wholly owned direct or indirect
subsidiary of RIH or the Company; PROVIDED, FURTHER, HOWEVER, that
notwithstanding any other provision of this definition, if the
primary effect of any of the aforesaid transactions is the
redemption of the Notes, then such transaction shall not be
considered to be an RIH Sale.
"RIH PROMISSORY NOTE" means the secured promissory note,
amended and restated as of the date hereof, made by RIH in the
principal amount of $125,000,000 payable to the order of the
Company, a copy of which is attached to the Senior Mortgage Note
Indenture as Exhibit A.
"RIHF SENIOR FACILITY" means the senior secured note facility
contemplated by the purchase agreement dated as of the date
hereof, among the Company, RIH, RII and funds managed by Fidelity
Management and Research Company, which allows the Company to borrow
up to $20,000,000 in aggregate principal amount through the
issuance of RIHF Senior Facility Notes. The term "RIHF Senior
Facility" does not include the Working Capital Facility Guaranty.
"RIHF SENIOR FACILITY NOTES" means, collectively, the notes
executed and delivered by the Company under the RIHF Senior
Facility.
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"RII" means Resorts International, Inc., a Delaware corporation.
"RII MANAGEMENT CONTRACT" means the Management Contract dated as of
the date hereof, between RII and RIH pursuant to which RII provides
certain management services to RIH for an annual fee of 3% of the
gross revenues of RIH.
"RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated
as of the date hereof between RII and RIH pursuant to which (i) RIH
will not make any payments to RII or any other Affiliate in respect
of taxes, other than to reimburse RII for any cash payments
actually made by RII in respect of any federal, state or local
income or alternative minimum taxes arising from the earnings or
operations of RIH; PROVIDED, HOWEVER, that RIH shall not be
required to reimburse RII for cash payments in respect of
federal, state or local income or alternative minimum taxes that
would not have been owed but for the reduction, if any, of the
amount of the consolidated net operating loss carryforwards or
consolidated current losses of the affiliated group of which RII
is a common parent which resulted from the inclusion in the
consolidated return filed for such group for any taxable year
ending after the Effective Date of the income of any entity other
than RIH, other than income directly attributable to the
consummation of the Plan, including but not limited to the
transfer of the stock of RIB (as defined in the Plan) and the
assets of the U.S. Paradise Island Subsidiaries (as defined in the
Plan), and (ii) RIH will be entitled to any refund (plus the
interest thereon) of any taxes for which RIH is required to
reimburse RII.
"SENIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of
Leases and Rents dated as of the date hereof, from RIH to the
Company securing the RIH Promissory Note.
"SENIOR GUARANTY" means the guaranty of the 11% Senior Mortgage
Notes due 2003 by RIH contained in Article Four of the Senior
Mortgage Note Indenture.
"SENIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty
of Senior Mortgage Notes dated as of the date hereof, between RIH,
as mortgagor, and State Street Bank and Trust Company of
Connecticut, N.A., as mortgagee.
"SENIOR MORTGAGE" means the Mortgage securing the RIH
Promissory Note dated as of the date hereof, between the Company,
as successor mortgagee, and RIH, as mortgagor.
"SENIOR MORTGAGE DOCUMENTS" means the Senior Mortgage, the Senior
Guaranty Mortgage, the RIH
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Promissory Note, the Senior Assignment of Leases and Rents and any
other security document to which either RIH or the Company is
a party relating to the Senior Mortgage Notes, which is executed
and delivered pursuant to or in connection with the Senior Mortgage,
the Senior Guaranty Mortgage or the Senior Assignment Agreement.
"SENIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of
the date hereof, among the Company, RIH and State Street Bank and
Trust Company of Connecticut, N.A., as trustee, pursuant to which
the Senior Mortgage Notes were issued, as originally executed or as
it may from time to time be supplemented, modified or amended by
one or more indentures or other instruments supplemental thereto
entered pursuant to the applicable provisions thereof.
"SENIOR MORTGAGE NOTES" means the 11% Mortgage Notes due
2003 of the Company issued pursuant to the Senior Mortgage Note
Indenture.
"SERVICES AGREEMENT" means the Services Agreement dated as of
September 17, 1992, between RII, RIH and The Griffin Group, Inc.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on
Notes means a date fixed by the Trustee pursuant to Section 3.07.
"STATED MATURITY" when used with respect to any Note means the date
specified in such Note as the fixed date on which the principal of
such Note is due and payable.
"SUBSIDIARY" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly,
by such Person or one or more Subsidiaries of such Person.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of
1939, as amended.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this
Indenture, and thereafter Trustee shall mean such successor
Trustee.
"TRUST ESTATE" has the meaning stated in the Granting Clauses to
the Mortgage.
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"VICE PRESIDENT" when used with respect to the Company, RIH or the
Trustee means any vice president, whether or not designated by a
number or a word added to the title.
"WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the
RIHF Senior Facility Notes issued thereunder) and any other secured
or unsecured facility or facilities entered into by RIH and/or the Company
providing for the making of working capital loans to RIH or
the Company (with RII [and GRI] as a guarantor[s] thereunder) on a
revolving or term basis, or the issuance of notes, debentures or
bonds by RIH, the Company or RII, as such agreement may be amended,
supplemented or modified from time to time, or any refinancing
thereof, in an aggregate principal amount up to $20,000,000;
PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if any, securing the Working
Capital Facility may be senior to the lien of the Mortgage, the
Guaranty Mortgage, the Senior Mortgage and the Senior Guaranty
Mortgage. The term "Working Capital Facility" does not include
the Working Capital Facility Guaranty.
"WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage,
deed of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of operating
assets and any other security document to which either RIH or the
Company is a party relating to the Working Capital Facility.
"WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the
Working Capital Facility by RIH, including, without limitation,
the guaranty of the RIHF Senior Facility Notes.
Section 1.02. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Noteholders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Noteholders signing such instrument
or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in
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favor of the Company and (subject to Section 8.01(c)) in favor of the
Trustee, if made in the manner provided in this Section 1.02.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness
of such execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds,certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) The fact and date of execution of any such instrument or writing
and the authority of any Person executing the same may also be
proved in any other manner which the Trustee deems sufficient; and
the Trustee may in any instance require further proof with respect
to any of the matters referred to in this Section 1.02.
(d) The ownership of Notes shall be proved by the Note Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind every
future Holder of the same Note and the Holder of every Note issued
upon the transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Note.
(f) The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holder of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this
Indenture to be given or taken by holders of Notes. With regard
to any record date set pursuant to this Section 1.02(f) the holders
of Outstanding Notes on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to give or take
the relevant action, whether or not such Persons remain holders
after such record date.
(g) Until a waiver or consent becomes effective, such a waiver or
consent by a Holder is a continuing waiver or consent by the Holder
and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note, even if
notation of the waiver or consent is not made on any Note.
However, any such Holder or
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subsequent Holder may, until such waiver or consent becomes effective,
revoke the waiver or consent as to his Note or portion of his Note.
Such revocation shall be effective only if the Trustee receives the notice
of such revocation before the date on which the waiver or consent has
become effective.
Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH AND THE COMPANY.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with, the Company,
RIH or the Trustee shall be deemed given when either (i) delivered
by hand or (ii) two days after sending by registered or certified
mail, postage prepaid, in either case, addressed as follows:
To the Company:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
To RIH:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
To the Trustee:
U.S. Trust Company of California, N.A.
555 S. Flower Street
Suite 2700
Los Angeles, California 90071
Attn.: Corporate Trust Department
To Casino Control Commission:
New Jersey Casino Control Commission
Arcade Building
Tenessee Avenue & Boardwalk
Atlantic City, New Jersey 08401
Attn.: Chairman
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To Director of Division of Gaming Enforcement:
New Jersey Division of Gaming Enforcement
140 E. Front Street
CN 047
Trenton, New Jersey 08625
Attn.: Director
(b) By notice to the Company, RIH and/or the Trustee, Casino
Control Commission and/or Director of Division of Gaming Enforcement,
given as provided above, any party may designate additional or substitute
addresses for such notices, which, notwithstanding Section 1.03(a),
shall be deemed given when received.
Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER.
Where this Indenture provides for notice to Noteholders of any
event, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder of such Notes, at the address of
such Holder as it appears in the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for
the provision of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular
Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by Noteholders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impracticable to give such
notice by mail, then such notification may be given by any other
method that the Trustee shall consider to be reasonable and shall
be deemed to be a sufficient giving of such notice for every
purpose hereunder.
Section 1.05. FORM AND CONTENTS OF
DOCUMENTS DELIVERED TO TRUSTEE.
Whenever several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or
give an opinion with respect to
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some matters and one or more other such Persons as to such matters in
one or several documents.
Any certificate or opinion of an Officer of the Company or of RIH
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an Officer
or Officers of the Company or RIH stating that the information with
respect to such factual matters is in the possession of the Company
or RIH, unless such counsel knows that the certificate or opinion
or representations with respect to such matters are erroneous. If
appropriate to the matter being opined upon and to the extent not
prohibited by the TIA, any Opinion of Counsel may be subject to
rights of creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Company
or RIH shall deliver any document as a condition of the granting of
such application, or as evidence of the Company's or RIH's compliance
with any term hereof, it is intended that the truth and accuracy, at the
time of the granting of such application or at the effective date of such
certificate or report (as the case may be), of the facts and opinions
stated in such document shall in such case be conditions precedent
to the right of the Company or RIH to have such application granted
or to the sufficiency of such certificate or report.
Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company or RIH to the
Trustee to take any action under any provision of this Indenture or
any Mortgage Document, the Company or RIH shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture or such Mortgage Document relating
to the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent,
if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such
documents is specifically
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required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture or any Mortgage
Document shall include:
(a) a statement that each individual signing such certificate
or opinion has read such condition or covenant and the definitions
herein relating thereto;
(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 each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
condition or covenant has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.07. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof or of the Mortgage Documents or the
Assignment Agreement limits, qualifies or conflicts with another
provision hereof or of the Mortgage Documents or the Assignment
Agreement which is required to be included herein or therein by
any of the provisions of the TIA, such required provision shall
control.
Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and in the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 1.09. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company or
RIH shall, subject to Section 10.02, bind its successors and
assigns, whether so expressed or not.
Section 1.10. SEPARABILITY CLAUSE.
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
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provisions shall not in any way be affected or impaired thereby.
Section 1.11. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person other than the parties hereto and their
successors hereunder, any separate trustee or co-trustee appointed
under Section 8.14 and the Holders of Notes, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.12. GOVERNING LAW.
This Indenture and each Note shall be deemed to be a contract under
the laws of the State of New York and shall be construed in
accordance with and governed by the internal laws of the State of
New York.
Section 1.13. CASINO CONTROL ACT.
Each of the provisions of this Indenture is subject to and shall be
enforced in compliance with the provisions of the Casino Control
Act, unless such provisions are in conflict with the TIA, in which case
the TIA shall control.
Section 1.14. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject
in each instance to the giving of any notice and the expiration of
any grace period provided for in Section 7.01 as a condition to
such Default becoming an Event of Default, unless the TIA requires
otherwise, in which case the TIA shall control.
(b) For the purposes of this Indenture, it is understood that an
event which does not materially diminish the value of the
Trustee's interest in the Trust Estate shall not be deemed an
impairment of security, as that phrase is used in this Indenture.
(c) This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company, other than the Mortgage and
the Guaranty Mortgage. Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.
(d) In the event of a conflict between any provision of this
Indenture and any provision of a Mortgage Document, the provision
of this Indenture shall prevail.
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ARTICLE TWO
NOTE FORM
Section 2.01. FORM GENERALLY.
The Notes and the Trustee's certificate of authentication shall be
substantially in the forms set forth in this Article Two, with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and
may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange, or as may,
consistently herewith, be determined by the officers executing
such Notes as evidenced by their execution thereof. Any portion of
the text of any Note may be set forth on the reverse thereof.
The definitive Notes shall be printed, lithographed or engraved or
produced by any combination of these methods or produced in any
other manner permitted by the rules of any securities exchange on
which the Notes may be listed, all as determined by the officers
executing such Notes as evidenced by their execution thereof.
Section 2.02. FORM OF NOTES.
The form of the Notes shall be substantially as follows:
[FACE OF NOTES]
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
11.375% Junior Mortgage Note
due 2004
THIS NOTE HAS BEEN ISSUED AS PART OF A UNIT WITH A
NUMBER OF SHARES OF CLASS B STOCK OF RESORTS
INTERNATIONAL, INC. SUCH THAT ONE SHARE OF CLASS B
STOCK HAS BEEN ISSUED IN RESPECT OF EACH $1,000
PRINCIPAL AMOUNT OF NOTES. THIS NOTE MAY NOT BE
TRANSFERRED SEPARATELY FROM THE SHARES OF CLASS B STOCK
ISSUED IN RESPECT OF THIS NOTE.
No. $
------------- -------------
Resorts International Hotel Financing, Inc., a Delaware corporation
(hereinafter called the "Company", which term includes any
successor entity under the Indenture referred to on the reverse),
for value received, hereby promises to pay to______________, or registered
assigns, on December 15, 2004 the sum of _____________ Dollars (or so much
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thereof as shall not have been paid upon prior redemption) and to
pay interest (computed on the basis of a 360-day year of twelve
30-day months based on the actual number of days elapsed) thereon
from [ ], 1994 [the Effective Date], or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, semi-annually at June 15 and December 15 in each year
(commencing December 15, 1994), at the rate of 11.375% per annum,
until the principal hereof is paid or made available for payment.
Interest also shall accrue on Additional Notes (as defined below)
at such rates from and including the date of issuance thereof until
the principal amount thereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in said Indenture,
be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date. Any such interest not so punctually paid
or duly provided for (including by issuance of Additional Notes in
lieu of cash interest payment) shall forthwith cease to be payable
to the Holder on such Regular Record Date, and may be paid to the
Person in whose name this Note (or one or more Predecessor Notes)
is registered at the close of business on a Special Record Date for
the payment of such defaulted interest to be fixed by the Trustee,
notice thereof being given to Noteholders not less than ten days
prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed and upon
such notice as may be required by such exchange, all as more fully
provided in said Indenture. The principal of and interest on this
Note shall be payable at the corporate trust office of the Trustee,
as defined on the reverse, or at an office or agency of the Company
in the Borough of Manhattan, City and State of New York. All such
payments shall be made in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts, or by check or, at the option
of the Company, on any Interest Payment Date, if Consolidated Cash
Flow of RIH and its consolidated Subsidiaries for the period of
four fiscal quarters ended on the last day of the last quarter
ended prior to such Interest Payment Date was less than
$35,000,000, all or any portion of such interest may be paid in
additional Notes in a principal amount equal to the amount of
accrued interest so paid ("Additional Notes"), PROVIDED, HOWEVER,
that Additional Notes shall be issued in minimum denominations of
$100 (but not fractions thereof) in a principal amount equal to
such interest payment, or portion thereof, which the Company
elects to so pay. The Company shall pay cash in lieu of issuing
any fractional Additional Notes. The issuance of such Additional
Notes shall constitute
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full payment of interest in respect of which such Additional
Notes are issued in the principal amount so issued.
All interest payments made in Additional Notes must be made PRO
RATA in respect of all outstanding Notes, on the basis of the
respective dollar amounts of accrued and unpaid interest on such
Notes. The Additional Notes shall be issued as Units such that one
share of Class B Common Stock shall be issued in respect of each
$1,000 principal amount of Additional Notes. The Additional Notes
may not be transferred separately from the shares of Class B Common
Stock issued in respect of such Additional Notes. All interest
payments made in cash (other than cash
payments made in lieu of issuance of fractional Additional Notes)
shall be made PRO RATA in respect of all outstanding Notes, on the
basis of the respective dollar amounts of accrued and unpaid
interest on such Notes. The Company may deliver any such
interest payment to the Paying Agent or may mail any such
interest payment to a Holder at the Holder's registered address.
"Consolidated Cash Flow" means, with respect to any period, an
amount equal to the sum of (i) the consolidated net income (or
loss) of RIH for such period determined in accordance with GAAP
consistently applied, excluding interest income, interest expense
and gains or losses from extraordinary or nonrecurring items, plus
(ii) all amounts deducted in computing such consolidated net income
(or loss) in respect of depreciation and amortization, plus (iii)
non-cash charges arising from the reduction of CRDA Deposits to
market value, minus (iv) taxes based upon or measured by income
which are payable in cash, minus (v) CRDA Deposits.
Unless the certificate of authentication hereon has been executed
by the Trustee or the Authenticating Agent by manual signature,
this Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the Company has caused this Note to be
executed.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Dated: By:
----------------- -------------------------
Attest:
-----------------
[BACK OF NOTES]
This Note is one of a duly authorized issue of Notes of the Company
designated as "11.375% Junior Mortgage Notes due 2004" (the
"Notes"), issued under an Indenture dated as of __________ __,
1994 (the "Indenture"), among the Company, Resorts International
Hotel, Inc., a New Jersey corporation, as guarantor ("RIH"), and
U.S. Trust Company of California, N.A., a national
banking association, as Trustee (the "Trustee", which term
includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is
hereby made for a description of the nature and extent of the
security, the respective rights thereunder of the Holders of the
Notes, the Trustee and the Company and the terms upon which the
Notes are, and are to be, authenticated and delivered. Payment of
principal and interest (including interest on overdue principal)
and performance of all obligations under the Indenture is
guaranteed by RIH (the "Guaranty"). The Notes are secured by an
assignment of one or more secured junior promissory notes of RIH,
which owns and operates the property known as Merv Griffin's
Resorts Casino Hotel, and of a mortgage on the Trust Estate made
by RIH (the "Mortgage"). Additionally, the Guaranty is secured by
a separate direct mortgage of the Trust Estate made by RIH to the
Trustee (the "Guaranty Mortgage"). All terms in this Note defined
in the Indenture shall have the same meaning herein as therein.
The lien of the Mortgage is pari passu with the lien of the
Guaranty Mortgage and junior to the lien securing payment of the
RIHF Senior Facility Notes, the lien, if any, securing any other
secured Working Capital Facility, the lien (if any) securing the
Working Capital Facility Guaranty, to the lien securing payment of
the Senior Mortgage Notes and to the lien securing the Senior
Mortgage Guaranty.
The Notes may be redeemed at the option of the Company, as a whole
or from time to time in part, on or after
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the fifth anniversary of the Effective Date on notice as provided in
the Indenture, at par together with interest accrued and unpaid thereon
to the date fixed for redemption. In the event of an RIH Sale, all the
Notes shall be redeemed by the Company, whether such RIH Sale occurs before,
on or after the fifth anniversary of the Effective Date, at par
together with interest, if any, accrued and unpaid thereon to the
Redemption Date; PROVIDED, HOWEVER, that such obligation of the
Company to redeem the Notes in the event of a proposed RIH Sale
shall cease to exist if the Holders of not less than 66-2/3% in
Outstanding Amount of the Outstanding Notes have consented to such
proposed RIH Sale.
Notwithstanding the foregoing, each Holder by accepting a Note
agrees that if the Casino Control Commission does not waive the
qualification requirement as to the Holder (whether the record
owner or beneficial owner) of this Note and requires that the
Holder be qualified under the Casino Control Act, then, in such
event, the Holder must qualify under the Casino Control Act. If
the Holder does not so qualify, the Holder must dispose of its
interest in this Note, within 30 days after the Company's receipt
of notice of such finding, or the Company may repurchase this Note
at the lower of the Holder's original cost and the Fair Market
Value of this Note, plus accrued interest thereon to the date of
such repurchase. Commencing on the date the Casino Control
Commission serves notice upon either RIH or the Company that
any Holder is disqualified, it shall be unlawfull for any such
disqualified Holder: (i) to receive any dividends or interest upon
this Note; (ii) to exercise, directly or through any trustee or
nominee, any right conferred by this Note; or (iii) to receive any
remuneration in any form from either the Company or RIH for services
rendered or otherwise.
It is provided in the Indenture that Notes of a denomination larger
than $1,000 may be redeemed in part ($1,000 or a multiple thereof)
and that upon any partial redemption of any such Note the same
shall be surrendered in exchange for one or more new Notes in
authorized form for the unredeemed portion of principal. Notes
(or portions thereof as aforesaid) for whose redemption and payment
provision is made in accordance with the Indenture shall thereupon
cease to be entitled to the lien of the Indenture and the Mortgage
and shall cease to bear interest from and after the date fixed for
redemption.
If an Event of Default shall occur, the principal of the Notes and
all accrued and unpaid interest thereon may become or be declared due and
payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereto and the modification
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of the rights and obligations of the Company and the rights of the Holders
of the Notes under the Indenture at any time by the Company with the
consent of the Holders of a majority or 66-2/3%, as the case may
be, in aggregate Outstanding Amount of the Notes at the time
Outstanding affected by such modification. The Indenture also
contains provisions permitting the Holders of specified percentages
in Outstanding Amount of Notes at the time Outstanding on behalf of
the Holders of all the Notes to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of
any Note issued upon the transfer hereof or in exchange hereof or
in lieu hereof, in respect of anything done or offered to be done
by the Trustee in the Company in reliance thereon, whether or not
notation of such action is made upon this Note.
The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holders of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by the
Indenture to be given or taken by holders of Notes. With regard
to any such record date, the holders of Outstanding Notes on such
record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action,
whether or not such Persons remain holders after such record date.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal
of and interest on this Note at the times, places and rates, and in
the coin or currency, or, in the case of interest payments, by
issuance of Additional Notes in lieu of cash interest payment,
herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable on the Note Register
of the Company, upon surrender of this Note for transfer at the
corporate trust office of the Trustee, or at an office or agency
of the Company in the Borough of Manhattan, City and State of New
York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
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<PAGE>
The Notes are issuable only as registered Notes without coupons in
denominations of $1,000 and integral multiples thereof, except that
Additional Notes may be in denominations of $100 and integral
multiples of $100. As provided in the Indenture, and subject to
certain limitations therein set forth, Notes are exchangeable for a
like aggregate principal amount of Notes of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any transfer or exchange
hereinbefore referred to, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is
registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or
not this Note be overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary.
Section 2.03. FORM OF TRUSTEE'S
CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
U.S. Trust Company of California, N.A.
as Trustee
By:
-------------------------
Authorized Signature
Section 2.04. FORM OF THE GUARANTY.
The form of the Guaranty of RIH shall be substantially as follows
and shall appear on the reverse of each Note:
GUARANTY OF
RESORTS INTERNATIONAL HOTEL, INC.
For value received, Resorts International Hotel, Inc., a New Jersey
corporation, hereby unconditionally guarantees, as more fully set
forth in Article Four of the Indenture, to the Holder of this Note
the payment of the principal of and interest on this Note in the amounts
and at the time when due and interest on the overdue principal and
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interest, if any, of this Note, if lawful, and the payment or performance
of all other obligations of the Company to the Holder or the Trustee,
all in accordance with and subject to the terms and limitations of
this Note and Article Four of the Indenture, the foregoing Guaranty
being a guaranty of payment and not of collectibility and being absolute
and in no way conditional or contingent. This Guaranty will not become
effective until the Trustee or the Authenticating Agent signs the certificate
of authentication on such Note. As more fully described in the
Indenture, this Guaranty is secured by a mortgage of the Trust
Estate made by RIH to the Trustee.
RESORTS INTERNATIONAL HOTEL,
INC.
Dated: By:
----------------- ----------------------------
Attest:
-----------------
ARTICLE THREE
THE NOTES
Section 3.01. GENERAL TITLE.
The general title of the Notes shall be "11.375% Junior Mortgage
Notes due 2004".
Section 3.02. FORM AND DENOMINATIONS.
The form of the Notes shall be as provided by the provisions of
this Indenture.
The Notes shall be issuable only in registered form and in such
denominations as shall be provided in the provisions of this
Indenture. The Notes shall be of the denominations of $1,000 and
any integral multiple thereof except that Additional Notes may be
in denominations of $100 and integral multiples of $100.
Section 3.03. EXECUTION, AUTHENTICATION,
DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its
chairman of the board, vice chairman of the board, its president,
or one of its Vice Presidents and attested to by an Officer of the
Company other than an Officer who has executed the Notes.The signature
of any of these Persons on the Notes
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may be manual or facsimile. Notes bearing the manual or facsimile signatures
of individuals who were at any time Officers of the Company shall
bind the Company, notwithstanding that such individuals or any of
them shall have ceased to be such prior to the authentication and
delivery of such Notes.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication and the Trustee shall
authenticate and deliver such Notes as in this Indenture provided
and not otherwise. All Notes shall be dated the date of their
authentication.
No Note shall be secured by, or be entitled to any lien, right or
benefit under, this Indenture or be valid or obligatory for any
purpose, unless there appears on such Note a certificate of
authentication substantially in the form provided for herein,
executed by the Trustee or the Authenticating Agent by manual
signature, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 3.04. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Request the Trustee shall authenticate
and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any
denomination, substantially of the tenor of the definitive Notes
in lieu of which they are issued, in registered form, without
coupons, with provision for registration as to principal and with
such appropriate insertions, omissions, substitutions and other
variations as the Officers executing such Notes may determine, as
evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive
Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be
exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company in a Place of Payment
therefor, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Notes, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Notes of authorized denominations. Until so exchanged, temporary
Outstanding Notes shall in all respects be entitled to the security
and benefits of this Indenture.
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Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE.
The Company shall cause to be kept at one of the offices or
agencies maintained by the Company as provided in Section 12.02 a
register (herein sometimes referred to as the "Note Register") in
which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Notes and
registration of transfers of Notes entitled to be registered or
transferred as herein provided. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers
of Notes as herein provided.
Upon surrender for transfer of any Note at the office or agency of
the Company in a Place of Payment therefor, the Company shall
execute and, upon request of the Company, the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees,
one or more new Notes of any authorized denominations and of a like
aggregate principal amount. The Trustee has no obligation to determine that
any Note has been properly transferred and may conclusively rely on
instructions given to the Company pursuant to this Section 3.05.
All Notes surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly canceled by the Trustee and
thereafter disposed of as directed by a Company Request.
All Notes issued upon any transfer or exchange of Notes shall be
the valid obligations of the Company, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as
the Notes surrendered upon such transfer or exchange.
Every Note presented or surrendered for transfer, exchange or
discharge from registration shall (if so required by the Company
or the Note Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company
and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration, discharge
from registration, transfer or exchange of Notes, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Notes, other than exchanges under Section 3.04 or 11.06
not involving any transfer.
The Company shall not be required (i) to issue, transfer or exchange
any Note during a period beginning at the
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opening of business 15 days before the day of the mailing of a notice of
redemption of Notes under Section 13.04 and ending at the close of business on
the day of such mailing, or (ii) to transfer or exchange any Note so
selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
Section 3.06. MUTILATED, DESTROYED,
LOST AND STOLEN NOTES.
If (a) any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Note and (b) there is
delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a new Note of like tenor
and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 3.06, the
Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith.
Every new Note issued pursuant to this Section 3.06 in lieu of any
destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the security and benefits
of this Indenture equally and ratably with all other Notes.
The provisions of this Section 3.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or
stolen Notes.
Section 3.07. PAYMENT OF INTEREST ON
NOTES; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Note (or
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one or more Predecessor Notes) is registered at the close of business
on the Regular Record Date for such interest specified in the provisions of
this Indenture.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date ("Defaulted
Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date solely by virtue of such Holder having
been such Holder; and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in subsection
(a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest on the Notes to the Persons in whose names such
Notes (or their respective Predecessor Notes) are registered
at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee
in writing of the amount of Defaulted Interest proposed to be
paid on each Note and the date of the proposed payment (which
date shall be such as will enable the Trustee to comply with
the next sentence hereof), and at the same time the Company
shall deposit with the Trustee an amount of money equal to,
or Additional Notes having a principal amount equal to, the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money or Additional Notes when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as provided in this
subsection (a) and not to be deemed part of the Trust
Estate. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall
be not more than 15 nor less than ten days prior to the date
of the proposed payment and not less than ten days after the
receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of a Note
at his address as it appears in the Note Register not less
than ten days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered on such Special Record
Date and shall no longer be payable pursuant to subsection
(b) of this Section 3.07.
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(b) The Company may make payment of any Defaulted Interest
on the Notes in any other lawful manner not inconsistent with
the requirements of any securities exchange in which the Notes
may be listed and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this subsection (b), such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.07, each Note
delivered under this Indenture upon transfer of or in exchange for
or in lieu of any other Note shall carry all the rights to interest
accrued and unpaid, and to accrue, which were carried by such other
Note.
Section 3.08. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Note is registered
as the owner of such Note for the purpose of receiving payment of
principal of, and interest on, such Note and for all other purposes
whatsoever whether or not such Note be overdue, and, to the extent
permitted by law, neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
Section 3.09. CANCELLATION.
All Notes surrendered for payment, redemption, transfer, exchange
or conversion, if surrendered to the Trustee, shall be promptly
canceled by it, and, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee and, if not already
canceled, shall be promptly canceled by it. The Company shall
deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Notes so delivered shall
be promptly canceled by the Trustee. No Note shall be
authenticated in lieu of or in exchange for any Note canceled as
provided in this Section 3.09, except as expressly provided by this
Indenture. All canceled Notes held by the Trustee shall be
disposed of as directed by a Company Request.
Section 3.10. TERM AND FORM.
The Stated Maturity of the Notes shall be December 15, 2004. The
aggregate principal amount of Notes that may be authenticated,
delivered and outstanding is limited to $35,000,000, plus
Additional Notes, if any, issued by the Company pursuant to the
terms hereof. The Notes shall bear interest from [ ], 1994 [the
Effective Date] or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, payable semi-
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annually on June 15 and December 15 of each year, commencing
December 15, 1994. The Notes shall bear interest at the rate of
11.375% per annum until the principal thereof shall become due and
payable, and at the rate of 14.375% per annum on any overdue
principal and, to the extent permitted by law, overdue interest.
Interest shall be computed on the basis of a 360-day year of twelve
30-day months based on the actual number of days elapsed.
The principal and the Redemption Price of the Notes and interest on
the Notes on each Interest Payment Date shall be payable at a Place
of Payment, and, in addition to any other lawful means of such
payment, may be paid by check payable to the order of the
Noteholder.
The Regular Record Date referred to in Section 3.07 for the payment
of the interest on the Notes payable, and punctually paid or duly
provided for, on any Interest Payment Date shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date.
Section 3.11. PAYMENT OF INTEREST IN ADDITIONAL NOTES
(a) Notwithstanding any other provision of this Indenture or the
Notes, the Company, at its option and in its sole discretion, on
any Interest Payment Date, if Consolidated Cash Flow of RIH and its
consolidated Subsidiaries for the period of four consecutive fiscal
quarters of RIH ended on the last day of the last quarter ended
prior to such Interest Payment Date was less than $35,000,000, may
pay all or any portion of interest accrued on the Outstanding Notes
(including without limitation any Additional Notes previously
issued to pay interest) in Additional Notes. The Additional Notes
shall have a principal amount equal to the amount of such interest
payment, or portion thereof, which the Company elects to so pay.
The Company shall pay cash in lieu of issuing any fractional Additional
Notes. The issuance of such Additional Notes shall constitute full
payment of interest in respect of which such Additional Notes are
issued in the principal amount so issued.
(b) All interest payments made in Additional Notes pursuant to
Section 3.11(a) shall be made PRO RATA in respect
of all outstanding Notes, on the basis of the respective dollar amounts
of accrued and unpaid interest on such Notes. All interest
payments made in cash (other than cash payments made in lieu of
issuance of fractional Additional Notes) shall be so made PRO RATA
in respect of all outstanding Notes, on the basis of the respective
dollar amounts of accrued and unpaid interest on such Notes.
(c) Prior to the issuance of any Additional Notes, a Trust Officer of
the Trustee and any Paying Agent shall have
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received an Officers' Certificate from the Company at least five Business
Days prior to the relevant Regular Record Date stating that the Company will
pay such interest in Additional Notes, together with a resolution of
the Board of Directors authorizing the issuance of the appropriate
principal amount of Additional Notes. On or before the date that
is three Business Days following the relevant Regular Record Date,
the Company will deliver an Officers' Certificate to the Trustee
demonstrating the computation of the principal amount of Additional
Notes issuable to the Holders and an Opinion of Counsel that the
issuance of such Additional Notes is in compliance with all federal
securities laws, and that such Additional Notes will be binding
obligations of the Company, enforceable according to their terms.
(d) THE ADDITIONAL NOTES SHALL BE ISSUED AS UNITS SUCH THAT
ONE SHARE OF CLASS B STOCK SHALL BE ISSUED IN RESPECT OF EACH
$1,000 PRINCIPAL AMOUNT OF ADDITIONAL NOTES. THE ADDITIONAL
NOTES MAY NOT BE TRANSFERRED SEPARATELY FROM THE SHARES OF
CLASS B COMMON STOCK ISSUED IN RESPECT OF SUCH ADDITIONAL NOTES.
Section 3.12. EXCHANGEABILITY.
Subject to Section 3.05, all Notes and Additional Notes shall be
fully interchangeable with other Notes and Additional Notes, and,
upon surrender at the office or agency of the Company in a Place of
Payment therefor, all Notes shall be exchangeable for other Notes
of a different authorized denomination or denominations, as
requested by the Holder surrendering the same. The Company will
execute, and the Trustee shall authenticate and deliver, Notes
whenever the same are required for any such exchange.
Section 3.13. REDEMPTION.
The Company may, at its option, redeem, in accordance with Article
Thirteen, all or from time to time any part of the Notes on or
after the fifth anniversary of the Effective Date, at par
together, in each case, with interest, if any, accrued and unpaid
thereon to the Redemption Date. In the event of an RIH Sale, all
Notes shall be redeemed by the Company, whether such RIH Sale occurs
before, on or after the fifth anniversary of the Effective Date, at par
together with interest, if any, accrued and unpaid thereon to the
Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company
to redeem the Notes in the event of a proposed RIH Sale shall cease to
exist if the Holders of not less than 66-2/3% in Outstanding Amount
of the Outstanding Notes have consented to such proposed RIH Sale.
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Section 3.14. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE.
Forthwith upon the execution and delivery of this Indenture, Notes
up to an aggregate principal amount of $35,000,000 may be executed
by the Company and delivered to the Trustee for authentication, and
shall thereupon be authenticated and delivered by the Trustee upon
Company Order, without any further action by the Company.
ARTICLE FOUR
GUARANTY
Section 4.01. GUARANTY.
RIH hereby guarantees (such guaranty to be referred to herein as
the "Guaranty") to each Holder 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 hereunder or
thereunder, that: (a) the principal of and interest on the Notes
will be promptly paid in the amounts and at the times when due,
whether at the maturity or Interest Payment Date, by acceleration,
call for redemption or otherwise, and interest on the overdue
principal, if any, of the Notes, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will
be promptly paid in full or performed, all in accordance with the
terms hereof and thereof; and (b) in case of any extension of time
of payment or renewal of any Notes or payment or performance of any
of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension
or renewal, whether at Stated Maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed
for whatever reason, RIH will be obligated to pay the same
immediately. RIH hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of
the Notes with respect to any provisions hereof or thereof, any
releases of collateral, any delays in obtaining or realizing upon or
failures to obtain or realize upon collateral, the recovery of
any judgment against the Company, any action to enforce the same or
any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. This Guaranty is a
guaranty of payment and not of collectibility, and is secured by
the Guaranty Mortgage, as described therein. RIH hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event
of insolvency or bankruptcy of the Company, any right to
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require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Guaranty
will not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture. If any
Noteholder or the Trustee is required by any court or otherwise to
return to either RIH or the Company, or any custodian, trustee,
liquidator or other similar official acting in relation to either
RIH or the Company, any amount paid by either RIH or the Company to
the Trustee or such Noteholder, this Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and
effect. RIH agrees that it shall not be entitled to, and hereby
irrevocably waives, any right of subrogation in relation to the
Company in respect of any obligations guaranteed hereby. RIH
further agrees that, as between RIH, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Section 7.02 for the purposes of this Guaranty, notwithstanding
any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of such
obligations as provided in Section 7.02, such obligations
(whether or not due and payable) shall forthwith become due and
payable by RIH for the purpose of this Guaranty.
Section 4.02. EXECUTION AND DELIVERY OF GUARANTY.
To evidence its Guaranty set forth in Section 4.01, RIH hereby
agrees to execute its Guaranty substantially in the form set forth
in Section 2.04, to be endorsed on each Note authenticated and
delivered by the Trustee and that this Indenture shall be executed
on behalf of RIH by an Authorized Signature.
RIH hereby agrees that its Guaranty set forth in Section 4.01 shall
remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guaranty; PROVIDED,
HOWEVER, that the Trustee or the Authenticating Agent has
signed the certificate of authentication on such Note.
If an Officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates a Note on which a Guaranty
is endorsed, the Guaranty shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of RIH.
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Section 4.03 MORTGAGE SECURING GUARANTY.
In order to secure the due and punctual payment of all amounts
which may ever become owing under the Guaranty, when and as the
same shall be due and payable, and performance of all other
obligations of RIH to the Holders or the Trustee under the
Guaranty, according to the terms hereof, RIH has mortgaged and
encumbered all of its right, title and interest in and to the Trust
Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has
the full right, power and authority to grant, bargain, sell,
release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm the property constituting the Trust Estate, in the
manner and form done, or intended to be done, in the Guaranty
Mortgage, free and clear of all liens, pledges, charges and
encumbrances, whatsoever, except for the items described in
clauses (a) through (d) (inclusive) of Section 12.13, and (a) will
forever warrant and defend the title to the same against the claims
of all Persons whatsoever in accordance with the terms of the
Guaranty Mortgage, (b) will execute, acknowledge and deliver to
the Trustee such further instruments as the Trustee may require or
request, and (c) will do or cause to be done all such acts and
things as may be reasonably necessary or proper, or as may be
required by the Trustee (other than obtaining a loan title
insurance policy or title policy endorsement pertaining to the
Guaranty Mortgage), to assure and confirm to the Trustee its
interest in the Trust Estate and the right, title and interest in
and to the Guaranty Mortgage, so as to render the same available
for the security and benefit of this Guaranty secured thereby,
according to the intent and purposes herein expressed. The
Guaranty Mortgage creates and vests in the Trustee a direct and
valid lien, which lien is pari passu with the lien of the Mortgage
and junior to the liens securing payment of the RIHF Senior
Facility Notes, any other secured Working Capital Facility, the
Working Capital Facility Guaranty, the Senior Mortgage Notes and
the Senior Guaranty. To the extent that any security interest in
the Trust Estate or the Guaranty Mortgage is deemed to be granted
and to be governed by the Uniform Commercial Code, the Guaranty
Mortgage is deemed to be a security agreement.
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. PAYMENT OF INDEBTEDNESS;
SATISFACTION AND DISCHARGE OF INDENTURE.
Whenever the following conditions exist, namely:
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(a) all Notes theretofore authenticated and delivered have been
canceled by the Trustee or delivered to the Trustee for cancellation,
excluding, however,
(1) Notes for the payment of which money has theretofore been
deposited in trust with the Trustee or a Paying Agent (other than the
Company) or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust as provided in
Section 12.03,
(2) Notes alleged to have been destroyed, lost or stolen which
have been replaced or paid as provided in Section 3.06, except for any
such Note which, prior to the satisfaction and discharge of this
Indenture, has been presented to the Trustee with a claim of ownership
and enforceability by the Holder thereof and where enforceability has
not been determined adversely against such Holder by a court of
competent jurisdiction, and
(3) other than any Notes excluded by clauses (1) and (2) of this
Section 5.01(a), Notes which have become due and payable, Notes which
will become due and payable at their Stated Maturity within one year
and Notes which have been or are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name and at the expense
of the Company, provided the Company, in the case of such Notes, has
deposited or caused to be deposited with the Trustee in trust for the
purpose an amount sufficient to pay and discharge the entire
indebtedness on such Notes for principal and interest to the date of
maturity thereof in the case of Notes which have become due and
payable or to the Stated Maturity or Redemption Date, as the case may
be;
(b) the Company or RIH has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company or RIH has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each of which shall state that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with;
then this Indenture and the lien, rights and interests created hereby shall
cease, terminate and become null and void (except as to any surviving rights of
transfer or exchange of Notes herein or therein provided for and any right to
receive payments of principal and interest as provided in
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Section 5.01(a)(3)) and the Trustee and each co-trustee and
separate trustee, if any, then acting as such hereunder shall,
at the expense of the Company, execute and deliver a
termination statement prepared by the Company in form reasonably satisfactory
to the Trustee and such instruments of satisfaction and discharge as may
be necessary and pay, assign, transfer and deliver to the Company or upon
Company Order all cash, securities and other personal property then held by it
hereunder, other than pursuant to Section 5.01(a)(3).
In the absence of satisfaction of all of the above conditions, the
payment of all Outstanding Notes shall not render this Indenture inoperative.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 8.07 shall survive.
Section 5.02. APPLICATION OF DEPOSITED MONEY.
Money deposited with the Trustee pursuant to Section 5.01 shall
constitute a separate trust fund for the benefit of the Persons entitled
thereto. Subject to the provisions of Section 12.03, such money shall be
applied by the Trustee to the payment (either directly or through any Paying
Agent, as the Trustee may determine) to the Persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with the
Trustee.
Section 5.03. REPAYMENT TO THE COMPANY.
The Trustee and any Paying Agent shall promptly pay to the Company
upon request any excess money or securities held by them at any time. Any
money (or, with respect to interest to be paid in Additional Notes, such
Additional Notes) deposited with the Trustee or any Paying Agent, or then
held by the Company, in Trustee or any Paying Agent, or then held by the
Company, in trust, for the payment of the principal of, or interest on,
any Note and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Company on its
request, or (if then held by the Company) shall be discharged from such
trust, unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property law, and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with regard to such money (or Additional Notes), and all liability
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of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may at the expense
of the Company cause to be published once, in a newspaper published
in the English language, customarily published on each business day and
of general circulation in the City of New York, State of New York, or
mailed to each such Holder, or both, notice that such money (or
Additional Notes) remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of
such publication or mailing, as the case may be, any unclaimed
balance of such money then remaining will be paid to the Company.
ARTICLE SIX
SECURITY
Section 6.01. ASSIGNMENT AGREEMENT.
In order to secure the due and punctual payment of the principal of
and interest on the Notes, when and as the same shall be due and payable,
whether at Maturity or at an Interest Payment Date, by acceleration, call for
redemption or otherwise, of the Notes and performance of all other obligations
of the Company to the Holders or the Trustee under this Indenture, according to
the terms hereof, the Company has made an assignment of all of its right, title
and interest in and to the Mortgage Documents (other than the Guaranty Mortgage)
to the Trustee pursuant to the Assignment Agreement. RIH has the full right,
power and authority to grant, bargain, sell, release, convey, hypothecate,
assign, mortgage, pledge, transfer and confirm the property constituting the
Trust Estate, in the manner and form done, or intended to be done, in the
Mortgage Documents, and the Company has the full right, power and authority to
grant, bargain, sell, release, re-convey, assign, transfer and confirm,
absolutely, all of its right, title and interest in and to the Mortgage
Documents, in each case free and clear of all liens, pledges, charges and
encumbrances, whatsoever, except for the items described in clauses (a) through
(d) (inclusive) of Section 12.13, and (a) each will forever warrant and defend
the title to the same against the claims of all persons whatsoever in accordance
with the terms of the Mortgage Documents and the Assignment Agreement, (b) each
will execute, acknowledge and deliver to the Trustee such further assignments,
transfers, assurances or other instruments as the Trustee may require or
request, and (c) each will do or cause to be done all such acts and things as
may be reasonably necessary or proper, or as may be required by the Trustee, to
assure and confirm to the Trustee its interest in the Trust Estate and the
right, title and interest in and to the Mortgage Documents, so as to render the
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same available for the security and benefit of this Indenture and of the Notes
secured hereby, according to the intent and purposes herein expressed. The
Mortgage Documents (other than the Guaranty Mortgage) and the Assignment
Agreement together create and vest in the Trustee a direct and valid lien, which
is pari passu with the Guaranty Mortgage, junior to the liens securing payment
of the RIHF Senior Facility Notes, any other secured Working Capital Facility,
the Working Capital Facility Guaranty, the Senior Mortgage Notes and the Senior
Guaranty on the property constituting the Trust Estate and the interest in the
Mortgage Documents which they purport to create. To the extent that any
security interest in the Trust Estate or the Mortgage Documents are deemed to be
granted and to be governed by the Uniform Commercial Code, the Mortgage and the
Assignment Agreement are deemed to be security agreements.
Section 6.02. RECORDING, ETC.
The Company will cause, at its own expense, the Assignment Agreement,
the Mortgage Documents, this Indenture and all amendments or supplements
thereto, 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 in order fully to preserve and protect the lien of the Mortgage Documents
and the Assignment Agreement on all parts of the Trust Estate and the Mortgage
Documents and the interest in the RIH Junior Promissory Note and to effectuate
and preserve the security of the Noteholders and all rights of the Trustee.
The Company shall furnish to the Trustee:
(a) promptly after the execution and delivery of this Indenture or
other instrument of further assurance or amendment, including any
supplemental indenture, an Opinion or Opinions of Counsel either (1)
stating that, in the opinion of such counsel, this Indenture, the Mortgage
Documents and the assignment to the Trustee of the Mortgage Documents
intended to be made by the Assignment Agreement and all other instruments
of further assurance or amendment have been properly recorded, registered
and filed to the extent necessary to make effective the liens intended to
be created by the Mortgage Documents and the Assignment Agreement, 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 the
Mortgage Documents and the Assignment Agreement 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
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been executed and filed that are necessary fully to preserve and protect
the rights of the Noteholders and the Trustee hereunder and under the
Mortgage Documents and the Assignment Agreement, or (2) stating that, in
the opinion of such counsel, no such action is necessary to make such liens
and assignments effective; and
(b) within 60 days after June 30 in each year beginning with the year
1995, an Opinion or Opinions of Counsel, dated as of such date, either (1)
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 all supplemental indentures, financing
statements, continuation statements or other instruments of further
assurance as is necessary to maintain the liens of the Mortgage Documents
and the assignment of the Mortgage Documents to the Trustee made by the
Assignment Agreement 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 Noteholders and the Trustee
hereunder and under the Mortgage Documents and the Assignment Agreement, or
(2) stating that, in the opinion of such counsel, no such action is
necessary to maintain such liens and assignments.
The Company and RIH shall cause TIA SECTION 314(d) relating to the
release of property from the liens of the Mortgage to be complied with. Any
certificate or opinion required by TIA SECTION 314(d) may be made by an Officer
of the Company or RIH, unless otherwise required by TIA SECTION 314(d).
Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS.
The Trustee shall hold in its possession the Mortgage Documents,
except as it from time to time may be required for actions, suits or proceedings
relating to the Mortgage Documents or for the purpose of enforcing or realizing
upon any right or value thereby represented. The Trustee may, from time to
time, in its sole discretion, for the purpose of convenient location of the
Mortgage Documents, appoint one or more agents to hold physical custody, for the
account of the Trustee, of the Mortgage Documents.
Section 6.04. SUITS TO PROTECT THE TRUST
ESTATE AND MORTGAGE DOCUMENTS.
Upon five days' prior written notice to the Company (or such shorter
period or without notice if deemed necessary and appropriate by the Trustee),
the Trustee shall have the
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power, but not the obligation, to institute and to maintain such suits and
proceedings as it may deem necessary or appropriate
to prevent any impairment of the Trust Estate by any acts which may be
unlawful or in violation of the Mortgage Documents, the Assignment
Agreement or this Indenture, and such suits and proceedings as the Trustee
may deem necessary or appropriate to preserve or protect its interest and
the interests of the Noteholders in the Trust Estate and the Mortgage Documents
and the principal, interest, issues, profits, rents, revenues and other income
arising therefrom (including 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 result in an impairment of security hereunder or be
materially prejudicial to the interests of the Noteholders or of the Trustee).
The Trustee shall also have authority to exercise any rights or powers conferred
on the Trustee as the holder of the Note.
ARTICLE SEVEN
REMEDIES
Section 7.01. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", whenever used herein, means any one of the
following events (including any applicable notice requirement and any period of
grace as specified in this Section 7.01) (whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Note when such
interest becomes due and payable and continuance of such default (the
deposit with the Trustee pursuant to Section 3.07 of funds or Additional
Notes sufficient to make such interest payment in full being deemed to cure
any such default for the purposes hereof) for a period of ten days; or
(b) default in the payment of all or any portion of the principal
of any Note at its Maturity; or
(c) default in the performance or breach of any covenant of the
Company or RIH in this Indenture (other than a covenant a default in the
performance or breach of which is elsewhere in this Section 7.01
specifically dealt with), the Assignment Agreement or any of the
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Mortgage Documents and continuance of such default or breach for a
period of 30 days (or such shorter or longer cure period, if any, as
may be specified in respect of such default or breach in the Assignment
Agreement or the applicable Mortgage Document, as the case may be), and
(other than with respect to Sections 12.07, 12.08, 12.09, 12.10, 12.11,
12.12, 12.13 or 12.21) after there has been given (i) to the Company by
the Trustee or (ii) to the Company and the Trustee by the Holders of at
least 25% in Outstanding Amount of the Outstanding Notes, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; PROVIDED,
HOWEVER, that, if such default or breach is of a covenant set forth in
Section 12.02, 12.04, 12.05, 12.11, 12.13 or 12.21, and if such default or
breach is of such a nature that is curable but is not susceptible of being
cured with due diligence within such 30-day period (or such shorter or
longer cure period) (for reasons other than lack of funds), then such
period shall be extended for such further period of time as may reasonably
be required to cure such default or breach, so long as (i) RIH delivers an
Officers' Certificate to the Trustee within such period stating (A) the
applicability of the provisions of this proviso to such default or breach,
(B) the Company's or RIH's intention to remedy such default or breach with
reasonable diligence and (C) the steps which the Company or RIH has
undertaken to remedy such default or breach, and (ii) RIH delivers to the
Trustee additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate described in clause
(i) above, in which case such period shall be extended for such further
period of time as may reasonably be required to cure such default or
breach, provided that the Company or RIH is then proceeding and
thereafter continues to proceed to cure such default or breach with
reasonable diligence; PROVIDED FURTHER, HOWEVER, that such additional
period of time shall not in any case exceed 60 days; or
(d) a proceeding or case shall be commenced, without the application
or consent of the Company or RIH, in any court of competent jurisdiction,
seeking (i) its liquidation, reorganization, dissolution or winding-up, or
the composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Company or RIH
or of all or any substantial part of its assets, or (iii) similar relief in
respect of the Company or RIH under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing
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shall be entered and continue unstayed and in effect, for a period
of 60 consecutive days; or
(e) the commencement by the Company or RIH of a voluntary case under
the federal bankruptcy laws or any other applicable federal or state law,
or the consent or acquiescence by any of them to the filing of any such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or other similar
official) of the Company or RIH or any substantial part of any of their
property, or the making by any of them of an assignment for the benefit of
creditors, or the taking of action by the Company or RIH in furtherance of
any such action; or
(f) the revocation, suspension or involuntary loss of any Permit
which results in the cessation of a substantial portion of the operations
of the Casino-Hotel for a period of more than 90 consecutive days; or
(g) (i) a default by the Company, RIH or any of their Subsidiaries
under any Indebtedness (other than the Indebtedness represented by the
Working Capital Facility and the Junior Mortgage Facility) in an aggregate
principal amount in excess of $5,000,000, which default results in the
acceleration of the maturity of any such Indebtedness under the evidence of
indebtedness, indenture or other instrument governing such Indebtedness;
provided, however, that, if such default under such evidence of
indebtedness, indenture or other instrument shall be cured by the obligor,
or be waived by the holders of such Indebtedness, in each case as may be
permitted by such evidence of indebtedness, indenture or other instrument
and in each case resulting in rescission of such acceleration thereunder,
then the Event of Default hereunder by reason of such default shall be
deemed likewise to have been thereupon cured or waived; or (ii) a default
by the Company, RIH or any of their Subsidiaries under any Indebtedness
represented by the Working Capital Facility or the Junior Mortgage
Facility, the effect of which default (after the expiration of any
applicable notice or grace periods) is to permit the holder or holders of
any such Indebtedness represented by the Working Capital Facility or the
Junior Mortgage Facility in an aggregate principal amount in excess of
$5,000,000 (or a trustee or agent on behalf of such holder or holders) to
cause the acceleration of the maturity of such Indebtedness represented by
the Working Capital Facility or the Junior Mortgage Facility under the
evidence of indebtedness, indenture or other instrument governing such
Indebtedness; provided, however, that if such default under such evidence
of indebtedness, indenture or other instrument shall be
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cured by the obligor, or be waived by the holders of such Indebtedness,
in each case as may be permitted by such evidence of indebtedness,
indenture or other instrument and, if such default resulted in the
acceleration of the maturity of such Indebtedness, such acceleration
shall have been rescinded thereunder, then the Event of Default hereunder
by reason of such default shall be deemed likewise to have been thereupon
cured or waived; or (iii) the existence of a final judgment of a court of
competent jurisdiction in an amount in excess of $3,000,000 against the
Company, RIH or the Trust Estate, which judgment has not been satisfied
or otherwise provided for, for a period of 30 days (during which execution
shall not be effectively stayed) following the date on which such judgment
becomes a lien against the Trust Estate or any
part thereof (unless the lawsuit in question was commenced without
effective service of process upon either the Company or RIH in which case
such 30-day period shall not commence until the Company or RIH receives
notice of such final judgment); or (iv) the existence of a final judgment
of a court of competent jurisdiction in an amount in excess of $15,000,000
against the Company, RIH or the Trust Estate, which judgment has not been
satisfied or otherwise provided for, for a period of 60 days (during which
execution shall not be effectively stayed) following the date of such final
judgment; or (v) the existence of a final judgment of a court of competent
jurisdiction, regardless of amount, against the Company, RIH or the Trust
Estate, which judgment has not been satisfied or otherwise provided for,
for a period of 60 days (during which execution shall not be effectively
stayed) following the date of such final judgment, if such judgment, by
itself or upon recordation or other action of the judgment creditor,
imposes or would impose a lien on the Trust Estate or any part thereof
senior to the lien of the Mortgage; or
(h) default in the performance, or breach, of any covenant of the
Company or RIH in Article Ten; or
(i) the existence of a judgment of a court of competent jurisdiction
in an amount in excess of $3,000,000 against RIH regarding the CRDA
Dispute, which judgment has not been stayed, satisfied or otherwise
provided for, for a period of 30 days (during which execution shall not be
effectively stayed) (unless the lawsuit in question was commenced without
effective service of process upon RIH in which case such 30-day period
shall not commence until RIH receives notice of such final judgment); or
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(j) if RII fails to pay or discharge or cause to be paid or
discharged, within 30 days before the same shall become delinquent, all
taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of
Default or Default shall be deemed to exist hereunder with respect to any
tax liability not paid or discharged by RII if and to the extent that the
amount, applicability or validity of such tax liabilities is being
contested in good faith by appropriate proceedings if adequate reserves
therefor have been established in accordance with GAAP; provided further,
however, that this clause (j) shall not apply to amounts due with respect
to any period during which neither the Company, RIH nor any of their
Subsidiaries is included in RII's consolidated group for federal income tax
purposes.
No action, event, claim, liability or judgment regarding the CRDA
Dispute shall constitute a Default or an Event of Default under this
Section 7.01 unless and until a judgment shall have been entered against
RIH which constitutes an Event of Default pursuant to clause (i) of this
Section 7.01.
Section 7.02. ACCELERATION OF MATURITY;
RESCISSION AND ANNULMENT.
If an Event of Default (other than one referred to in clause (d) or
(e) of Section 7.01) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes
Outstanding may declare the Outstanding Amount of all the Notes and all accrued
interest to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee, if given by any Noteholders), and upon any such
declaration such Outstanding Amount shall become immediately due and payable.
If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs,
then the Outstanding Amount of all the Notes shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company.
At any time after such a declaration of acceleration has been made,
but before any judgment or decree for payment of money due on any Notes has been
obtained by the Trustee as hereinafter provided in this Article Seven, the
Holders of a majority in Outstanding Amount of the Notes may, by written notice
to the Company and the Trustee, rescind and annul such declaration and its
consequences if:
(a) the Company has deposited with the Trustee a sum sufficient to
pay:
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(1) all overdue installments of interest on all Notes,
(2) the principal of any Notes which have become due otherwise
than by such declaration of acceleration and interest thereon at the
rate or rates prescribed therefor in the Notes, and
(3) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(b) all Events of Default, other than the non-payment of the
Outstanding Amount of Notes which have become due solely by such
declaration of acceleration, have been cured, or have been waived as
provided in Section 7.13.
No such rescission and annulment shall affect any subsequent default
or impair any right consequent thereon.
Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON
NOTES AND RIGHT OF TRUSTEE TO JUDGMENT.
The Company covenants that, if:
(a) default is made in the payment of any interest upon any Note
when such interest becomes due and payable and such default continues
for a period of 10 days (the deposit with the Trustee during such 10 day
period pursuant to Section 3.07 of funds or Additional Notes (if
permitted hereby) sufficient to make such interest payment in full
being deemed to cure any such default for the purposes hereof), or
(b) default is made in the payment of the principal of any
Note at its Maturity,
then, upon demand of the Trustee, the Company will pay to the Trustee for the
benefit of the Holders of such Notes, the whole amount then due and payable on
such Notes for principal and interest, with interest at the rate prescribed
therefor in the Notes on overdue principal and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel. If the Company fails to pay
such amounts forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled to sue for and recover judgment
against the Company, RIH and any other obligor on the Notes for the whole amount
so due and unpaid. The Trustee shall be entitled to institute such suit either
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before, after or during the pendency of any proceedings for the enforcement of
this Indenture or of the Mortgage Documents or of the Assignment Agreement, but
only after the occurrence of an Event of Default.
Subject to the Intercreditor Agreement, in the case of a foreclosure
of the Mortgage and a sale of the Trust Estate and application of the proceeds
as provided in Section 7.06, the Trustee, in its own name and as trustee of an
express trust, shall be entitled to enforce payment of, and to receive, all
amounts then remaining due and unpaid upon the Notes, for the benefit of the
Holders thereof, and shall be entitled to recover judgment for any portion of
the same remaining unpaid, with interest as aforesaid. No recovery of any such
judgment upon any property of the Company shall affect or impair the security
provided by this Indenture and the Assignment Agreement or the lien of the
Mortgage upon the Trust Estate or any rights, powers or remedies of the Holders
of the Notes.
Section 7.04. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or RIH or any other obligor upon the
Notes or the property of the Company or RIH or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal (or any portion
thereof) of the Notes shall then be due and payable, as therein expressed or by
declaration or otherwise, and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Outstanding Notes and to file
such 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 of the Noteholders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Trustee, and in the event that the
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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 8.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or compensation affecting the Notes
or the rights of any Holder thereof, or to authorize the Trustee to vote on the
claim of any Noteholder in any such proceeding.
Section 7.05. TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture, the Notes, the
Assignment Agreement or the Mortgage Documents may be prosecuted and enforced by
the Trustee without the possession of any of the Notes or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the Ratable Benefit of the Holders of the Notes in respect
of which such judgment has been recovered.
Section 7.06. APPLICATION OF MONEY COLLECTED.
Subject to the Intercreditor Agreement, any money collected by the
Trustee pursuant to this Article Seven or pursuant to Article Three or Section
5.11 or 5.20 of the Mortgage which is not required to be paid to the Mortgagor
thereunder shall be applied in the following order, at the date or dates fixed
by the Trustee and upon such date interest shall cease to accrue, and, in case
of the distribution of such money on account of principal upon presentation
of the Notes, and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
(a) FIRST: To the payment of all amounts due the Trustee under
Section 8.07;
(b) SECOND: To the payment of the whole amount then due upon the
Outstanding Notes, for principal and interest, in respect of which or for
the benefit of which such money has been collected, with interest (to the
extent that such interest has been collected by the Trustee or a sum
sufficient therefor has been so collected and payment thereof is legally
enforceable at the respective rate or rates prescribed therefor in the
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Notes) on overdue principal; and in case such proceeds shall be
insufficient to pay in full the whole amount so due and unpaid upon such
Notes, then first, payment of accrued but unpaid interest (with interest
thereon as aforesaid), and second, to outstanding principal, in each case,
ratably according to the aggregate amount so due; and
(c) THIRD: To the payment of the remainder, if any, to the
Company or to whomever may be lawfully entitled to receive the same or as
a court of competent jurisdiction may direct.
Section 7.07. LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute any
proceeding, judicial or otherwise, under or with respect to this Indenture, the
Assignment Agreement or the Mortgage Documents, or for the appointment of a
receiver or trustee or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in Outstanding Amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holder of a
majority in Outstanding Amount of the Outstanding Notes;
it being understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Indenture, the Assignment
Agreement or the Mortgage Documents, to affect, disturb or
prejudice the right of any other Holders of Notes, or to obtain
or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, the Assignment
Agreement or the Mortgage Documents,
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except in the manner herein and therein provided and for the Ratable
Benefit of all Notes.
Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS
TO RECEIVE PRINCIPAL AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note on the Stated Maturity or
Interest Payment Dates expressed in such Note (or, in the case of redemption,
on the Redemption Date) and to institute suit for the enforcement of any such
payment and such rights shall not be impaired without the consent of such
Holder.
Section 7.09. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Indenture, the Assignment Agreement
or the Mortgage Documents and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee
or to such Noteholder, then and in every such case the Company, the Trustee
and the Noteholders shall, subject to any determination in such proceeding,
be restored to their former positions hereunder, and thereafter all rights
and remedies of the Trustee and the Noteholders shall continue as though
no such proceeding had been instituted.
Section 7.10. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the Trustee or
to the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 7.11. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon an Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article Seven or by
law to the Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the Noteholders, as
the case may be.
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Section 7.12. OTHER RIGHTS.
Subject to Section 8.03(e), the Holders of a majority in Outstanding
Amount of the Outstanding Notes shall have the right, during the continuance
of an Event of Default,
(a) to require the Trustee to proceed to enforce this Indenture,
either by judicial proceedings for the enforcement of the payment of the
Notes by the foreclosure of the Mortgage and exercise of any remedies under
the Mortgage Documents and the Assignment Agreement and the sale of the
Trust Estate or otherwise or, at the election of the Trustee, by the
exercise of the power of entry and/or sale conferred by the Mortgage; and
(b) to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee hereunder, provided that
(1) such direction shall not be in conflict with any rule of law
or this Indenture or any applicable Mortgage Document or the
Assignment Agreement;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) the Trustee shall not be required to determine if any
action so directed would be unjustly prejudicial to the Holders
not taking part in such direction.
Section 7.13. WAIVER OF PAST DEFAULTS.
Before any judgment or decree for payment of money due has been
obtained by the Trustee as provided in this Article Seven, the Holders of not
less than 66-2/3% in Outstanding Amount of the Outstanding Notes may, by Act of
such Noteholders delivered to the Trustee and the Company, on behalf of the
Holders of all the Notes waive any past Default hereunder and its consequences,
except a Default
(a) in the payment of the principal of or interest on any Note, or
(b) in respect of a covenant or provision hereof which under Article
Eleven cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
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Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right subsequent thereon.
Section 7.14. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, the Assignment Agreement or the Mortgage Documents, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claim or defense made by
such party litigant; but the provisions of this Section 7.14 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Noteholders, or group of Noteholders, holding in the aggregate more than 10% in
Outstanding Amount of the Outstanding Notes, or to any suit instituted by any
Noteholder for the enforcement of the payment of the principal of or interest on
any Note on or after the Stated Maturity expressed in such Note (or, in the case
of redemption, on or after the Redemption Date) or the relevant Interest Payment
Date.
Section 7.15. ENFORCEMENT.
In case an Event of Default shall occur and be continuing, the
Trustee, in it discretion may, subject to the provisions of Section 7.12,
proceed to protect and enforce its rights and the rights of the Noteholders
under this Indenture by a suit, action or proceeding in equity or at law or
otherwise, whether for the specific performance of any covenant or agreement
contained in this Indenture or in aid of the execution of any power granted in
this Indenture or for the enforcement of any other legal, equitable or other
remedy, as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Noteholders
hereunder.
In case an Event of Default shall occur and be continuing under the
Mortgage, the Trustee, as assignee of the Mortgage Documents, in its discretion
may, subject to the provisions of Section 7.12, proceed to enforce its rights
under the Mortgage Documents and the Assignment Agreement.
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Section 7.16. MANAGEMENT OF CASINO-HOTEL.
Notwithstanding any provision of this Article Seven to the contrary,
(a) following an Event of Default under the Mortgage and the taking
of possession of the Trust Estate by the Trustee and/or the appointment of
a receiver of the Trust Estate or any part thereof, the Trustee or any such
receiver shall be authorized, in addition to the rights and power of the
Trustee and such receiver set forth elsewhere in this Indenture, the
Assignment Agreement and the Mortgage Documents, to retain one or more
experienced operators of hotels and/or casinos to manage and operate
the Casino-Hotel on behalf of the Noteholders, provided that any such
operator shall have all necessary legal qualifications, including all
Permits, to manage the Casino-Hotel; and
(b) no Noteholder shall have any right to take possession of, operate
or manage all or any portion of the Casino-Hotel, individually or as a
member of a group, unless such Noteholder shall have all necessary legal
qualifications, including all Permits, to do so and shall otherwise be
qualified to be retained to manage the Casino-Hotel under subsection (a) of
this Section 7.16.
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and the Mortgage
Documents, and no implied covenants or obligations shall be read into
this Indenture and the Mortgage Documents against the Trustee; and
(2) 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 expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture or the
Mortgage Documents; but in the case of any such certificates or opinions
which by any provision hereof or thereof are specifically required to be
furnished to the Trustee, the Trustee shall be
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under a duty to examine the same to determine whether or not they conform
to the requirements of this Indenture and the Mortgage Documents.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture or the Mortgage Documents, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(c) No provision of this Indenture or any Mortgage Document shall
be construed to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct,
except that
(1) this Section 8.01(c) shall not be construed to limit the effect
of Section 8.01(a);
(2) the Trustee shall not be liable for any error of judgment made
in good faith by it, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in Outstanding Amount of the
Outstanding Notes relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture or any
Mortgage Document; and
(4) no provision of this Indenture or the Mortgage Documents
shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture or the Mortgage Documents relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to
the provisions of this Section 8.01.
Section 8.02. NOTICE OF DEFAULTS.
Within 45 days after the occurrence of any Default hereunder of which
a Responsible Officer of the
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Trustee has actual knowledge, the Trustee shall transmit by mail to all
Holders of Notes as their names and addresses appear in the Note Register,
notice of such Default hereunder known to the Trustee, unless such
Default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the
case of a default in the payment of the principal of or interest on any Note,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the best interests of the Noteholders.
Section 8.03. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 8.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by the Trustee 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 or any of the Mortgage
Documents at the request or direction
of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Trustee reasonable security or
indemnity reasonably satisfactory to the Trustee against the costs,
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expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) 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, direction, consent, order,
bond, debenture, other evidence of indebtedness or other paper or 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 RIH, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(h) the Trustee shall not be deemed to have knowledge of and shall
not be required to take any action with respect to any event of Default
(other than an Event of default described in Sections 7.01(a) and (b) or
any event which would, with the giving of notice or the passage of time
or both, constitute an Event of Default, unless the Trustee shall have
actual knowledge of such event or shall have been notified in writing of
such event by Noteholders holding in the aggregate more than 25% in
Outstanding Amount of the Outstanding Notes;
(i) subject to Section 8.01(c), the Trustee shall not be personally
liable, in case of entry by it upon the Trust Estate, for debts contracted
or liabilities or damages incurred in the management or operation of the
Trust Estate; and
(j) in addition to and not in limitation of its other powers
hereunder, the Trustee shall have such power and authority as may be
necessary to enter into and accept delivery of any document as may be
necessary to effect on behalf of the Holders of the Notes the
subordination of the indebtedness in respect of the Notes to any secured
Working Capital Facility (in accordance with the provisions of the
Mortgage), and upon written request of the Company, the Trustee shall enter
into such agreements on behalf of the holders of the Notes.
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Section 8.04. NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS.
The recitals contained herein and in the Notes, except in a
certificate of authentication on the Notes, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representation as to the validity or sufficiency of this
Indenture, the Notes or the Mortgage Documents. The Trustee shall not be
accountable for the use or application by the Company of Notes or the proceeds
thereof or of any money paid to the Company or by a Company Order under any
provision hereof.
Section 8.05. MAY HOLD NOTES.
The Trustee, any Paying Agent, Note Registrar, Authenticating Agent or
any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Notes and, subject to Sections 8.08 and 8.13, if
operative, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent
or such other agent.
Section 8.06. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 8.07. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder and under the Mortgage Documents
(which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein and in the Mortgage
Documents, to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
the Trustee's negligence or bad faith; and
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(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this Indenture or the trust created hereunder or the
performance of its duties hereunder, including the reasonable costs and
expenses of defending itself against or investigaing any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder (including reasonable attorneys' fees and
expenses).
As security for the performance of the obligations of the Company and
RIH under this Section 8.07, the Trustee shall be secured under this Indenture
and the Mortgage Documents by a lien prior to the Mortgage upon all property
and funds held or collected by the Trustee, and for the payment of such
compensation, expenses, reimbursements and indemnity the Trustee shall
have the right to use and apply any money held by it pursuant hereto.
Notwithstanding the satisfaction of this Indenture, the obligations
of the Company and RIH under this Section 8.07 shall survive.
Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The Trustee
shall comply with TIA SECTION 310(b) including the second sentence
of TIA SECTION 310(b)(9).
Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the law of the United States of
America or of any state, authorized under such laws to exercise corporate trust
powers, having (or in the case of a corporation included in a bank holding
company system, the related bank holding company having) a combined capital and
surplus of at least $100,000,000, subject to supervision or examination by
federal or state authority. In addition, if the Trustee is a corporation
included in a bank holding company system, the Trustee, independently of such
bank holding company, shall meet the capital requirements of TIA
SECTION 310(a)(2). The Trustee shall comply with 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
certificates of interest or participation in other securities of the Company are
outstanding, if the requirements for such exclusion set forth in TIA
SECTION 310(b)(1) are met. If such
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corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of such supervising or examining authority,
then for the purposes of this Section 8.09, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 8.09, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article Eight.
Section 8.10. RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article Eight shall become effective until
the acceptance of appointment by the successor Trustee under Section 8.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in Outstanding Amount of the Outstanding Notes, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 8.08 after written
request therefor by the Company or by any Noteholder who is a bona fide
Holder of a Note, or
(2) the Trustee shall cease to be eligible under Section 8.09 and
shall fail to resign after written request therefor by the Company or by
any Noteholder who is a bona fide Holder of a Note, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (i) the Company by a Company Order may remove the
Trustee, or (ii) subject to Section 7.14, any Noteholder who is a bona fide
Holder of a Note may, on behalf
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of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Company, by a Company Order, shall promptly appoint a successor Trustee.
In case all or substantially all of the Trust Estate shall be in the possession
of a receiver or trustee lawfully appointed, such receiver or trustee, by
written instrument, may similarly appoint a successor to fill such vacancy
until a new Trustee shall be so appointed by the Noteholders. If, within one
year after such resignation, removal or incapacity or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in Outstanding Amount of the Outstanding Notes delivered to the
Company and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede the successor Trustee appointed by the Company or by such
receiver or trustee. If no successor Trustee shall have been so appointed by
the Company or the Noteholders and accepted appointment in the manner
hereinafter provided, subject to Section 7.14, any Noteholder who is a bona fide
Holder of a Note may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give written notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to each
Noteholder by mailing such notice by first-class mail, postage prepaid, to each
Noteholder as such Noteholder's name and address appears in the Note Register;
provided, however, that failure of the Company to give such notice shall not
affect the resignation or removal of such Trustee. Each notice shall include
the name of the successor Trustee and the address of its principal corporate
trust office.
Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall became effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the estates, properties,
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument conveying and transferring to
such successor Trustee all the estates,
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properties, rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder, subject nevertheless
to its lien, if any, provided for in Section 8.07. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such estates, properties, rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article Eight.
Section 8.12. MERGER, CONVERSION, CONSOLIDATION
OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article Eight, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.
Section 8.13. PREFERENTIAL COLLECTION
OF CLAIMS AGAINST COMPANY.
The Trustee will comply with TIA SECTION 311(a). A Trustee who has
resigned or been removed shall be subject to TIA SECTION 311(a) to the extent
indicated.
Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES.
At any time or times, for the purpose of meeting the legal
requirements of the TIA or of any jurisdiction in which any of the Trust Estate
may at the time be located or in which it shall be necessary or desirable for
the Trustee to act, the Company and the Trustee shall have power to appoint,
and, upon the written request of the Trustee or of the Holders of at least 25%
in Outstanding Amount of the Notes Outstanding, the Company shall for such
purpose join with the Trustee in the execution, delivery and performance of all
instruments and
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agreements necessary or proper to appoint, one or more Persons
approved by the Trustee either to act as co-trustee, jointly with the Trustee,
of all or any part of the Mortgage Documents or of the Trust Estate covered by
such Mortgage Documents, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section 8.14. If the Company does not join in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default has occurred and is continuing, the Trustee alone shall
have power to make such appointment.
Should any written instrument from the Company be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Company within three business days of such request.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) the Notes shall be authenticated and delivered, and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised
solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed
by the Trustee or by the Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee
or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Trustee
shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee;
(c) the Trustee, at any time, by an instrument in writing executed by
it may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section 8.14. A successor to any co-trustee
or
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separate trustee so resigned or removed may be appointed in the manner
provided in this Section 8.14;
(d) the Trustee, or any other such trustee hereunder, shall not be
personally liable by reason of any act or omission of any co-trustee or
separate trustee hereunder, and no co-trustee or separate trustee hereunder
shall be personally liable by reason of any act or omission of the Trustee,
or any other such trustee hereunder;
(e) any Act of Noteholders delivered to the Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee; and
(f) any co-trustee or separate trustee appointed hereunder shall be
entitled to compensation and indemnification from the Company under Section
8.07 hereunder and shall be entitled to all such other rights and
protections afforded the Trustee hereunder.
Section 8.15. APPOINTMENT OF AUTHENTICATING AGENT.
Upon the request of the Company, the Trustee shall appoint an
Authenticating Agent with power to act on its behalf and subject to its
direction in the authentication and delivery of the Notes designated for such
authentication by the Company and containing provisions therein for such
authentication in connection with transfers and exchanges under Sections 3.04,
3.05, 3.06 and 13.07, as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by those Sections to
authenticate and deliver such Notes. For all purposes of this Indenture, the
authentication and delivery of Notes by the Authenticating Agent pursuant to
this Section 8.15 shall be deemed to be the authentication and delivery of Notes
"by the Trustee". Such Authenticating Agent shall at all times be a bank or
trust company having its principal office in the Borough of Manhattan, City and
State of New York, and shall at all times be a corporation organized and doing
business under the laws of the United States or of any State with a combined
capital and surplus of at least $50,000,000 and authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authority. If such corporation publishes reports of condition
at least annually pursuant to law or the requirements of such authority, then
for the purposes of this Section 8.15 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be
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consolidated, or any corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation succeeding to the corporate trust business of any Authenticating
Agent, shall be the successor of the Authenticating Agent hereunder,
if such successor corporation is otherwise eligible under this Section 8.15,
without the execution or filing of any further act on the part of
the parties hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section 8.15, the
Trustee shall promptly appoint a successor Authenticating Agent, and shall give
written notice of such appointment to the Company.
The Company agrees to pay to the Authenticating Agent from time to
time reasonable compensation for its services. The provisions of
Sections 3.10, 8.04 and 8.05 shall be applicable to any Authenticating Agent.
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS
BY TRUSTEE
Section 9.01. COMPANY TO FURNISH TRUSTEE
SEMI-ANNUAL LISTS OF NOTEHOLDERS.
The Company will furnish or cause to be furnished to the Trustee
semi-annually, not less than 45 days nor more than 60 days after each date
(month and day) specified as a semi-annual Interest Payment Date for the Notes
(whether or not any Notes are then Outstanding), and at such other times as the
Trustee may request in writing, within 60 days after receipt by the Company of
any such request, a list in such form as the Trustee may reasonably require
containing all the information in the possession or control of the Company, or
any of its Paying Agents other than the Trustee, as to the names and addresses
of the Holders of Notes, obtained since the date as of which the next previous
list, if any, was furnished, excluding from any such list the names and
addresses received by the Trustee in its capacity as Note Registrar. Any such
list may be dated as of a date not more than 15 days prior to
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the time such information is furnished and need not include
information received after such date.
Section 9.02. PRESERVATION OF INFORMATION;
COMMUNICATIONS TO NOTEHOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Notes (1) contained in the
most recent list furnished to the Trustee as provided in Section 9.01, (2)
received by the Trustee in the capacity of Paying Agent (if so acting)
hereunder or (3) received by the Trustee in its capacity as Note Registrar.
The Trustee may destroy any list furnished or provided in Section 9.01 upon
receipt of a new list so furnished.
(b) Holders may communicate pursuant to TIA SECTION 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Note Registrar and any other Person shall have
the protection of TIA SECTION 312(c).
(c) Every Holder of Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any Paying Agent shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders of Notes in
accordance with Section 9.02(b), regardless of the source from which information
was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 9.02(b).
Section 9.03. REPORTS BY TRUSTEE.
(a) Within 60 days after each May 15 beginning with May 15, 1995, the
Trustee shall transmit to each Noteholder a report dated as of such May 15 that
complies with TIA SECTION 313(a). The Trustee shall also comply with TIA
SECTION 313(b) and SECTION 313(c).
(b) A copy of each such report shall, at the time of such
transmission to Noteholders, be filed by the Trustee with any stock exchange on
which the Notes are listed and also with the Commission. The Company will
notify the Trustee when the Notes are listed on any stock exchange.
(c) The Trustee will provide the Casino Control Commission and the
Director of the Division of Gaming Enforcement of New Jersey with:
(1) copies of all notices, reports and other written communications
which the Trustee gives to Noteholders;
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(2) a list of Noteholders promptly after the original issuance of the
Notes and a list of Noteholders annually on December 1 of each year,
or such other time as requested by the Casino Control Commission or
Director of the Division of Gaming Enforcement;
(3) notice of any Event of Default under this Indenture actually
known by the Trustee or of any event, occurrence or condition actually
known by the Trustee which, with the giving of notice or lapse of time
or both would constitute an Event of Default under this Indenture
(including the Guaranty), the RIH Junior Promissory Note or the
Mortgage Documents (as such term is defined in such instruments),
any acceleration of the Indebtedness evidenced or secured hereby or
thereby, the institution of any legal actions or proceedings before
any court or governmental authority in respect of this Indenture
(including the Guaranty) or the Mortgage Documents, the entering
into or taking possession of any property constituting the Trust
Estate and any rescission, annulment or waiver in respect of an
Event of Default under any instruments described in this
clause (3);
(4) notice of the removal or resignation of the Trustee;
(5) notice of any transfer or assignment of rights under this
Indenture (including the Guaranty) (but not in respect of the Notes) or the
Mortgage Documents after a Responsible Officer of the Trustee becomes aware
of the same; and
(6) a copy of any amendment to the Notes, this Indenture (including
the Guaranty) or the Mortgage Documents immediately;
PROVIDED, HOWEVER, that the Trustee shall not be liable to any Person (other
than the Casino Control Commission and the Director of the Division of
Gaming Enforcement of New Jersey) for any failure to provide any of the
above-mentioned documents to the Casino Control Commission and the Director
of the Division of Gaming Enforcement of New Jersey.
The notice specified in Section 9.03(c) above shall be in writing and, except
as set forth below, shall be given immediately after the Trustee has
actual knowledge of any circumstances requiring such notice. In the case of any
notice in respect of any Default or Event of Default under any instrument
described in Section 9.03(c), such notice shall be accompanied by a copy of
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any notice from the Holders of Notes, or a representative thereof or the
Trustee, to the defaulting Person and, if accompanied by any such notice to the
defaulting Person, shall be given simultaneously with the giving of any such
notice to the defaulting Person. In the case of any legal actions or
proceedings, such notice shall be accompanied by a copy of the complaint or
other initial pleading or document.
The Trustee and its Responsible Officers shall cooperate with the
Casino Control Commission and the Director of the Division of Gaming
Enforcement of New Jersey in order to provide such Commission and Director
with information and documentation relevant to compliance with Section 9.03(c)
above and as otherwise required by the Casino Control Act.
The expiration date of the current gaming Permit held by RIH is
February 26, 1994. Subsequent gaming Permits held by RIH are scheduled to
expire every two years on February 26th, commencing February 26, 1996 unless
and until the Trustee is advised otherwise. RIH will advise the Trustee of
any change in such expiration date within five business days of knowledge
thereof.
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE
OR TRANSFER ONLY ON CERTAIN TERMS.
Neither the Company nor RIH shall consolidate, combine or merge with
or into any other Person or permit any other Person to consolidate, combine or
merge with or into the Company or RIH, as the case may be; and neither the
Company with respect to its assets nor RIH with respect to the Trust Estate
shall sell, assign, convey or transfer its interest in such assets or the Trust
Estate, as the case may be, substantially as an entirety (and notwithstanding
anything to the contrary contained herein (including the proviso at the end of
this sentence), but subject to the provisions of the Mortgage regarding
dispositions of the Trust Estate, neither the Company with respect to its assets
nor RIH with respect to the Trust Estate may sell, assign, convey or transfer
such assets or the Trust Estate, as the case may be, other than substantially as
an entirety) to any other Person or group of Persons in one transaction or a
series of related transactions, or permit any other Person or group of Persons
to convey or transfer all or substantially all of its assets, subject to
liabilities other than DE MINIMIS liabilities, to
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the Company or RIH; and the Company and RIH shall not transfer,
convey, sell or otherwise dispose of to any
other Person, or issue to any Person, any equity interest in the Company or RIH,
as the case may be (each of the aforesaid transactions described in this Section
10.01 is referred to herein as a "Combination Transaction"); PROVIDED, HOWEVER,
that (i) the Company may engage in a Combination Transaction in which the only
other party or parties is RIH or a direct or indirect wholly owned Subsidiary of
the Company or RIH, and (ii) the Company or RIH may engage in any other
Combination Transaction (either independently or at the same time as other
Combination Transactions), subject to the following with respect to each such
Combination Transaction:
(a) the conditions set forth in Section 10.03 are satisfied;
(b) in the event the Company or RIH shall consolidate, combine or
merge with or into another Person or sell, assign, convey or transfer its
interest in its assets or in the Trust Estate, as the case may be,
substantially as an entirety (but not less than
substantially as an entirety) to another Person in one transaction or a
series of related transactions, the entity which is formed by or survives
such consolidation, combination or merger or the Person to which such
assets or the Trust Estate are conveyed or transferred:
(1) shall be organized and existing under the laws of the United
States of America, any state thereof, or the District of Columbia;
(2) shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form reasonably satisfactory
to the Trustee, the performance and observance
of every covenant, obligation and condition of this Indenture to be
performed or observed by the Company or RIH, whichever the case may
be;
(3) shall expressly assume, by an instrument executed and
delivered to the Trustee, in form reasonably satisfactory to the
Trustee, the due and punctual performance of every covenant,
obligation and condition of the Mortgage Documents and Assignment
Agreement to be performed by the Company or RIH, whichever the case
may be; and
(4) immediately after and giving effect to such transaction
could incur at least $1.00 of additional Indebtedness under Section
12.08;
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(c) immediately after giving effect to such transaction, no Event of
Default, or Default hereunder or under the Mortgage shall have occurred and
be continuing;
(d) such Combination Transaction shall be on such terms as shall not
impair the lien and security and priority hereof or of the Mortgage
Documents or of the Assignment Agreement and the rights and powers of the
Trustee and the Holders of the Notes hereunder and thereunder; and
(e) the Company or RIH, as the case may be, shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each of
which shall state that such Combination Transaction and such supplemental
indenture comply with this Article Ten and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Section 10.02. SUCCESSOR ENTITY SUBSTITUTED.
Upon any consolidation, combination or merger or any conveyance or
transfer of an interest in the assets of the Company or in the Trust Estate
permitted by Section 10.01, the successor entity formed by such consolidation or
into which the Company or RIH is combined or to which such conveyance or
transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, and shall be bound by every obligation and liability
of, the Company or RIH, whichever the case may be, under this Indenture with the
same effect as if such successor entity had been named as the Company or RIH
herein; PROVIDED, HOWEVER, that no such consolidation or combination involving
the Company or RIH, unless such transaction is in compliance with the provisions
of this Article Ten, shall have the effect of releasing the Person named as "the
Company" or "RIH", as the case may be, in the first paragraph of this
instrument, or any successor entity which shall theretofore have become such in
the manner prescribed in this Article Ten, from its liability as obligor and
maker on the RIH Junior Promissory Note or any of the Notes.
Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL.
Neither the Company nor RIH shall engage in any Combination
Transaction unless, immediately following such Combination Transaction, (a) RIH
(or any successor entity) shall be eligible for and shall meet all relevant
Legal Requirements, including holding all permits, required for the normal
operation of the business of owning and operating the Casino-Hotel, and (b) RIH
(or any successor entity) shall be controlled by a Person that is, or shall
retain to manage the
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Casino-Hotel one or more Persons that are, experienced in
the operation and management of casino-hotels.
Section 10.04. LIMITATION ON SALES OF TRUST ESTATE.
Except as otherwise expressly permitted by the Mortgage and this
Indenture, neither the Company nor RIH shall sell, assign, lease, sublease,
hypothecate, pledge, mortgage or otherwise transfer all or any part of the
assets of the Company or the Trust Estate or any interest therein (including,
without limitation, any interest in the Ground Leases). Without limiting the
generality of the foregoing, RIH shall not separate, or attempt to separate, its
ownership of its interest in the Ground Leases from the ownership of the
buildings constituting the Casino-Hotel or any part thereof.
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS.
Without the consent of the Holders of any Notes, the parties hereto
may from time to time amend or supplement this Indenture, the Assignment
Agreement, the Notes or the Mortgage Documents, as long as the form of such
amendment or supplement is satisfactory to the Trustee, for any of the
following purposes:
(a) to correct or amplify the description of the Trust
Estate or better to assure, convey and confirm unto the Trustee the
assignment of the Mortgage Documents; or
(b) to add additional conditions, limitations and restrictions
thereafter to be observed to the conditions, limitations and restrictions
on the authorized amount, terms of issue, authentication and delivery of
Notes as herein set forth; or
(c) to comply with Article Ten; or
(d) to add to the covenants of the Company for the benefit of the
Holders of all Notes or to surrender any right or power herein conferred
upon the Company; or
(e) to cure any ambiguity, defect or inconsistency in any of the
enumerated documents, provided such action shall not adversely affect the
interests of the Holders of the Notes; or
(f) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to
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effect the qualification of this Indenture under the TIA or under
any similar federal statute hereafter enacted, and to add to this
Indenture such other provisions as may be expressly permitted by the TIA,
EXCLUDING, HOWEVER, the provisions referred
to in TIA SECTION 316(a)(2) as in effect at the date as of which
this instrument was executed or any corresponding provision in any similar
federal statute hereafter enacted; or
(g) to effectuate any subordination contemplated in Section 8.03(i);
or
(h) to comply with the requirements of the Casino Control Act.
The terms of any such enumerated document entered into pursuant to
this Section 11.01 shall be subject to prior approval of the Casino Control
Commission in consultation with the New Jersey Division of Gaming Enforcement.
Section 11.02. WITH CONSENT OF NOTEHOLDERS.
With the consent of the Holders of not less than 66-2/3% in Outstanding Amount
of the Notes then Outstanding, by Act of such Holders delivered to the Company
and the Trustee, the parties hereto may amend or supplement this Indenture, the
Mortgage Documents, the Assignment Agreement or the Notes, provided that the
form of such amendment or supplement is reasonably satisfactory to the Trustee.
The Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding
may waive compliance by the Company or RIH with any provision of this
Indenture, the Mortgage Documents, the Assignment Agreement or the Notes,
except a default in the payment of principal of or interest on any Note,
without notice to any Noteholder. Notwithstanding
the foregoing, no modification, waiver, consent or amendment to the Notes or
this Indenture shall permit the redemption of the Notes prior to the fifth
anniversary of the Effective Date (other than pursuant to an RIH Sale) unless
the same also shall have ben approved by the holders of 66-2/3% in Outstanding
Amount (as such term is defined in the Senior Mortgage Note Indenture) of the
Senior Mortgage Notes then Outstanding (as such terms are defined in the Senior
Mortgage Note Indenture). Without the consent of the Holder of each
Outstanding Note affected thereby, an amendment, supplement or waiver,
including a waiver pursuant to Section 7.13, may not:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal amount
thereof or the interest thereon or the amount payable upon the redemption
thereof, or change any Place of Payment where, or the coin or currency in
which, any Note, or the interest thereon, is payable, or
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impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date); or
(b) reduce the percentage in Outstanding Amount of the Outstanding
Notes, the consent of whose Holders is required for any amendment,
supplement or waiver; or
(c) modify or alter the provisions of the proviso to the definition
of the term Outstanding; or
(d) modify any of the provisions of this Section or Section
7.13, except to increase any percentage provided thereby or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Note affected thereby; or
(e) permit the creation of any lien ranking prior to the lien of the
Mortgage (except for such liens expressly permitted pursuant to Section
12.13).
In determining whether to execute any amendment or supplement, subject
to Sections 11.02(a) through (e), the Trustee may in its discretion determine
whether or not any Notes would be affected by any such amendment or supplement
and any such determination shall be conclusive upon the Holders of all Notes,
whether theretofore or thereafter authenticated and delivered hereafter. The
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such Act shall approve the substance
thereof.
In connection with any amendment, supplement or waiver under this
Indenture, the Company or RIH may, but shall not be obligated to, offer to any
Holder who consents to such amendment, supplement or waiver, or to all Holders,
at the discretion of the Company or RIH, consideration for such Holder's consent
to such amendment, supplement or waiver. The terms of any such enumerated
document entered into pursuant to this Section 11.02 shall be subject to the
prior approval of the Casino Control Commission in consultation with New Jersey
Division of Gaming Enforcement.
Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS.
In executing, or accepting the additional trusts created by, any
amendment or supplement permitted by this Article or the modification thereby of
the trusts already created by this Indenture, the Trustee shall be entitled to
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receive from the Company, and, subject to Section 8.01(c), shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution
of such amendment or supplement is authorized or permitted by this Indenture.
The Trustee may, but shall not, except to the extent required in the case of
a supplemental indenture entered into under Section 11.01(e), be obligated
to, enter into any such amendment or supplement which affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise.
Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT.
Upon the execution of any amendment or supplement under this Article,
every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the TIA and Casino Control Act as then in effect.
Section 11.06. REFERENCE IN NOTES TO
AMENDMENT OR SUPPLEMENT.
In the absence of a direction from the Company, Notes authenticated
and delivered after the execution of any amendment
or supplement pursuant to this Article may, and if required by the Trustee
shall, bear a notation in form approved by the Trustee as to any matter provided
for in such amendment or supplement. If the Company shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Company,
to any such amendment or supplement may be prepared and executed by the Company
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
ARTICLE TWELVE
COVENANTS
Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay or cause to be paid the
principal of and interest on each of the Notes at the place or places, at the
respective times and in the manner provided in the Notes and this Indenture.
Each installment of interest on the Notes may be paid by mailing checks for such
interest payable to or upon the written order of (or, with respect to interest
to be paid in Additional Notes, such
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Additional Notes) the Holders of Notes entitled thereto, to such address and in
such name as they shall appear on the Note Register. Any installment of
principal and interest shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Company or a Subsidiary of the Company
or any Affiliate thereof) holds on that date money in immediately available
funds designated exclusively for and sufficient to pay the installment (or, with
respect to interest to be paid in Additional Notes, such Additional Notes)
and the Trustee and/or the Paying Agent has not received instructions from
the Company not to make such payment or is not prohibited from making such
payment to the Noteholders pursuant to the terms of this Indenture.
The Company shall pay interest (including post-petition interest in
any proceeding under any applicable bankruptcy law) to the extent legally
permitted on overdue principal at the rate set forth in the Notes; and it shall
pay interest (including post-petition interest in any proceeding under any
applicable bankruptcy law) on unpaid interest otherwise payable under the first
clause of this sentence at the same rate to the extent legally permitted.
Section 12.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain, in the Borough of Manhattan, the City of
New York, State of New York, an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company initially
appoints the Trustee as its agent for presentation or surrender of Notes for
payment or registration, transfer or exchange. The Trustee (or its corporate
parent) will maintain an office in the Borough of Manhattan, the City of New
York, State of New York, for such purposes.
The Company may from time to time designate one or more other offices
or agencies (in or outside the City of New York, State of New York) where the
Notes may be presented or surrendered for any or all such purposes, and may from
time to time rescind such designations; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York, State of New York, for such purposes as stated in this Section
12.02. The Company will give prompt written notice to the Trustee of any such
designation and any change in the location of any such office or agency.
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If at any time the Company shall fail to maintain such an office or
agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may
be made or served at the principal corporate trust office of the
Trustee, and the Company hereby appoints the Trustee its agent to
receive all such presentations, surrenders, notices and demands.
Section 12.03. MONEY FOR SECURITY
PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of, or interest on, any of the
Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum, sufficient to pay the principal or interest so becoming due until
such sums shall be paid or issued to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of such action or any
failure so to act.
The Company will, on or before each due date of the principal of or
interest on, any Notes, deposit with a Paying Agent a sum in same day funds (or,
with respect to interest to be paid in Additional Notes, such Additional Notes),
sufficient to pay the principal or interest so becoming due, such sum, as the
case may be, to be held in trust for the benefit of the Persons entitled to such
principal or interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums received by it as such agent for the payment of
the principal of or interest on Notes (whether such sums have been paid
to it by the Company or by any other obligor on the Notes) in trust
for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;
(b) promptly give the Trustee notice of any failure by the Company
(or any other obligor upon the Notes) to make any payment of the principal
of, or interest on, the Notes when the same shall be due and payable; and
(c) at any time during the continuance of any such failure, upon the
written request of the Trustee,
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forthwith pay to the Trustee all sums so held in trust by such Paying
Agent.
Any money (or, with respect to interest to be paid in Additional
Notes, such Additional Notes) deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, or
interest on, any Note and remaining unclaimed for two years after such principal
or interest has become due and payable shall be paid to the Company on its
request, or (if then held by the Company) shall be discharged from such trust,
unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
regard to such money (or Additional Notes), and all liability of the Company as
trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each business day and of general
circulation in the City of New York, State of New York, or mailed to each such
Holder, or both, notice that such money (or Additional Notes) remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, as the case may be, any unclaimed
balance of such money then remaining will be paid to the Company.
Section 12.04. CORPORATE EXISTENCE.
Subject to Article Ten, each of the Company and RIH 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 existence of each of its Subsidiaries
in accordance with the respective organizational documents of the Company, RIH
and each such Subsidiary and the rights (charter and statutory), licenses,
permits, approvals and governmental franchises of it and each of its
Subsidiaries necessary to the conduct of its and their respective businesses,
including, without limitation, all licenses, permits, approvals and franchises
necessary to assure the continued operation of RIH's gaming operations at
the Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned
subsidiary of RIH may consolidate with, merge into or
transfer or distribute all or part of its properties and assets to RIH or the
Company or as otherwise provided in Section 10.01.
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Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE.
The Company and RIH will each keep proper books of record and account,
in which full and correct entries shall be made of all material dealings or
transactions of or in relation to the Notes and the properties, business and
affairs of the Company and RIH in accordance with GAAP. The Company and RIH
will at any and all times, upon the written request of the Trustee and at the
expense of RIH, permit the Trustee by its representatives to inspect the
Casino-Hotel and the books of account, records, reports and other papers of the
Company and RIH, and to make copies and extracts therefrom, and will afford and
procure a reasonable opportunity to make any such inspection (provided that the
Company and RIH shall have received reasonable advance notice of such inspection
and that any such inspection shall not unreasonably interfere with the business
operations of the Company and RIH). The Company and RIH will furnish to the
Trustee any and all information as the Trustee may reasonably request with
respect to the performance by the Company and RIH of their covenants in this
indenture.
Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES.
(a) RIH shall furnish or cause to be furnished to the Trustee, within
105 days after each fiscal year of RIH: (i) a copy of annual audited financial
statements of RIH prepared in conformity with GAAP, accompanied by a report of
Ernst & Young or of another firm of independent certified public accountants of
recognized national standing selected by RIH (the "National Accountants"),
together with a certificate from such National Accountants stating that their
audit examination has included a review of the terms of this Indenture and that
the National Accountants have not become aware of any Event of Default or that a
Default has occurred and is continuing, and if they have become aware of any
such Event of Default or Default, describing it; PROVIDED, HOWEVER, that the
National Accountants shall not be liable to any Person for any failure to
discover any Event of Default or Default in connection with such review; and
(ii) a copy of annual unaudited financial statements of RIH, including notes to
such financial statements and corresponding management's discussion and
analysis, in form and substance comparable to that which would be required to be
filed with the Commission in an Annual Report on Form 10-K under the
Exchange Act, prepared in the same manner as the audited financial
statements referred to in clause (i) of this Section 12.06(a), signed
by a proper accounting officer of RIH. RIH, contemporaneously with
the furnishing of such audited financial statements to the Trustee
under clause (i) of this Section 12.06(a), shall mail copies of such
audited financial statements to the Holders (which need not include the
certificate referred to in such clause (i)).
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(b) RIH shall furnish or cause to be furnished to the Trustee, within
60 days after each quarter of each fiscal year of RIH, except the final quarter
of such fiscal year, a copy of unaudited financial statements of RIH prepared on
a consistent basis with the audited financial statements referred to in clause
(i) of Section 12.06(a), signed by a proper accounting officer of RIH and
consisting of at least a balance sheet as at the close of such quarter and
statements of operations and cash flow for such quarter and for the period from
the beginning of such fiscal year to the close of such quarter, including notes
to such financial statements and corresponding management's discussion and
analysis, in form and substance comparable to that which would be required to be
filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange
Act. RIH, contemporaneously with the furnishing of such unaudited financial
statements to the Trustee under this Section 12.06(b), shall mail copies of such
unaudited financial statements to the Holders (which need not be signed by a
proper accounting officer of RIH).
(c) RIH shall furnish or cause to be furnished to the Trustee,
contemporaneously with the furnishing of a copy of the annual financial
statements and of the quarterly financial statements referred to in Section
12.06(a) and Section 12.06(b), an Officers' Certificate dated the date of such
annual financial statement or such quarterly financial statements to the effect
that no Default or Event of Default has occurred and is continuing, or, if there
is any such Default or Event of Default, describing it and the steps, if any,
being taken to cure it.
(d) RIH shall furnish or cause to be furnished to the Trustee,
copies of each filing and report made by RIH or the Company with the Commission
pursuant to the reporting and filing requirements of Section 13 or 15(d) of the
Exchange Act, within 15 days after RIH or the Company, as applicable, is
required to file the same.
(e) RIH agrees that, if RIH becomes exempt from the Commission
reporting and filing requirements of Section 13 or 15(d) of the Exchange Act,
RIH shall prepare such periodic reports as it would otherwise have been required
to file with the Commission and (i) at its own expense, cause all such periodic
reports to be filed with the Commission, the Trustee and any exchange
upon which the Notes then are listed, in each case on the date when such
periodic report would have been required to be filed with the Commission under
Section 13 or 15(d) of the Exchange Act, if either of such provisions were
applicable, and (ii) keep copies of such periodic reports available at its
office and promptly provide any Person who so requests with a copy of any such
periodic report, at the Company's expense.
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(f) Each of the Company and RIH shall comply with the provisions of
SECTION 314(a) of the Trust Indenture Act.
(g) The Company shall deliver to the Trustee, promptly upon becoming
aware of any Default or Event of Default (but in no event later than five
business days thereafter) in the performance of any covenant or agreement of the
Company contained in this Indenture or any of the Mortgage Documents, an
Officers' Certificate specifying with particularity such event.
Section 12.07. LIMITATION ON DIVIDENDS
AND RESTRICTED PAYMENTS.
(a) The Company hereby covenants that, on and after the date of this
Indenture, it will not, directly or indirectly, make, or permit any Subsidiary
of the Company to make, any Restricted Payment.
(b) RIH hereby covenants that, on or after the date of this Indenture,
it will not, directly or indirectly, make, or permit any Subsidiary of RIH to
make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's
Consolidated Interest Coverage Ratio, as certified to the Trustee by an
Officers' Certificate, calculated at the time of the declaration of the dividend
or distribution is equal to or exceeds two, then RIH may declare and pay cash
dividends or make cash distributions in respect of any class of capital stock of
RIH in an amount not to exceed in the aggregate with any other such cash
dividends or distributions declared or made from and after the date hereof, 50
percent of RIH's Consolidated Net Income from and after the date hereof; and
(ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the
Trustee by an Officer's Certificate, calculated at the time of the declaration
of the dividend or distribution is equal to or exceeds two; and (2) RIH has cash
in excess of the amount required to pay interest on the Notes and the Junior
Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may
declare and pay cash dividends or make cash distributions in respect of any
class of capital stock of RIH in an amount not to exceed such excess cash
amount.
(c) The Company and RIH will not, and will not permit any of their
respective Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction of any kind on the ability of
any Subsidiary of RIH or the Company: (i) to pay dividends or make any other
distribution on the capital stock of such Subsidiary that is owned by RIH, the
Company or a wholly owned Subsidiary of the Company or RIH, as applicable; (ii)
to pay any Indebtedness owed by such Subsidiary to RIH, the Company or any
wholly owned Subsidiary of the Company or RIH, as
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applicable; (iii) to make loans or advances to RIH, the Company or any wholly
owned Subsidiary of the Company or RIH, as applicable; or (iv) to transfer any
of its property or assets to the Company, RIH or any wholly owned Subsidiary of
the Company or RIH, as applicable, except (A) any restrictions existing on or
prior to the date hereof, or in connection with agreements in effect, or entered
into, on the date hereof, or any permitted amendments, renewals, refundings,
refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and
conditions of any such amendments, renewals, refundings, refinancings or
extensions are no more restrictive with respect to the matters set forth
in clauses (i) through (iv) of this Section 12.07(c) than the agreements
being amended, refunded, renewed, refinanced or extended; (B) any restrictions
or encumbrances existing or arising pursuant to the terms of Indebtedness
of a Person outstanding at the time such Person becomes a Subsidiary
of the Company or RIH and not incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary of the Company
or RIH or any permitted amendments, renewals, refinancings or extensions
thereof; PROVIDED, HOWEVER, that the terms and conditions of any such
amendments, renewals, refundings, refinancings or extensions are no more
restrictive with respect to the matters set forth in clauses (i) through (iv) of
this Section 12.07(c) than the agreements being amended, renewed, refunded,
refinanced or extended; (c) encumbrances or restrictions existing under or by
reason of applicable law or regulation (including, without limitation, the
Casino Control Act) or this Indenture; (d) customary provisions restricting
assignment of contracts or subletting or assignment of any lease governing a
leasehold interest of any Subsidiary of the Company or RIH; or (e) net worth
maintenance requirements imposed by any governmental authority.
Section 12.08. LIMITATION ON ADDITIONAL
INDEBTEDNESS AND ISSUANCE OF NOTES.
(a) The Company and RIH shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to,
including, without limitation, through any merger or consolidation to which
the Company, RIH or any of their respective Subsidiaries is a party
or through any other acquisition of any such Subsidiary
(collectively, "incur"), or have outstanding, any Indebtedness other than,
without duplication, the following:
(i) the Notes and the Senior Mortgage Notes;
(ii) Indebtedness represented by the Junior Mortgage Facility;
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(iii) Indebtedness represented by the Working Capital Facility;
(iv) Indebtedness represented by Capitalized Lease Obligations in an
amount not in excess of $5,000,000 in the aggregate at any time
outstanding;
(v) Indebtedness represented by F,F&E Financing Agreements in an
amount not in excess of $10,000,000 in the aggregate at any time
outstanding;
(vi) unsecured Indebtedness in an amount not in excess of $5,000,000
in the aggregate at any time outstanding that is subordinated and junior to
the Notes at least to the extent set forth in the Subordination Provisions
attached hereto as Exhibit C and which Indebtedness does not have any
requirements for amortization payments, mandatory redemption or sinking
fund payments prior to the stated maturity of the Notes and does not
provide for the payment of interest in cash at any time when the most
recent installment of interest on the Notes was not paid in cash;
(vii) Non-Recourse Indebtedness in an amount not in excess of
$25,000,000 in the aggregate at any time outstanding;
(viii) After-Acquired Fee Mortgage Debt in an amount not in
excess of $3,000,000 in the aggregate at any time outstanding; and
(ix) Intercompany advances between RIH, the Company or any of their
direct or indirect Subsidiaries on the one hand, and RII, on the other
hand, in an aggregate amount not to exceed $1,000,000.
(b) The Company and RIH shall not permit any of their respective
Subsidiaries to issue (other than to the Company, RIH or a direct or indirect
wholly owned Subsidiary of the Company or RIH) any capital stock which has
voting rights or has a preference as to any distribution over its common stock.
Section 12.09. LIMITATION ON REPAYMENT
OF SUBORDINATED INDEBTEDNESS.
Neither the Company nor RIH shall, and neither the Company nor RIH
shall permit any Subsidiary to, directly or indirectly, purchase, redeem,
defease (including, but not limited to, in-substance or legal defeasance) or
otherwise acquire or retire for value prior to the stated maturity of,
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or prior to any scheduled mandatory redemption or sinking fund payment with
respect to (collectively, to "repay" or a "repayment"), the principal of
any Indebtedness of the Company, RIH or any Subsidiary of the Company or
RIH which is subordinated (whether pursuant to its terms or by operation
of law) in right of payment to the Notes.
Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS.
Each of the Company and RIH covenants that it will not, and will not
permit any Subsidiary to, repurchase any Notes in the open market if an Event of
Default shall have occurred and shall be continuing hereunder, under the Senior
Mortgage Note Indenture or under the Senior Facility Note Indenture.
Section 12.11. RESTRICTION OF ACTIVITIES.
(a) RIH shall not, on or after the date of execution of this
Indenture, until the date that is 91 days after the payment in full by the
Company of the principal of (and interest, if any, on) all Outstanding Notes,
engage in any business or investment activities other than those necessary for,
incident to, connected with or arising out of acquiring, financing, owning and
operating the Casino-Hotel or additional hotels or casinos or related or
ancillary businesses.
(b) Neither the Company nor RIH shall make any loans to any
Affiliate or any other Person other than (i) Indebtedness of the type described
in clause (ix) of Section 12.08(a), and (ii) loans to RII from the proceeds of
the Indebtedness represented by the Working Capital Facility; PROVIDED,
HOWEVER, that RIH shall have the right to make loans to employees of RIH
actively involved in the operation of the Casino-Hotel or to engage in credit
transactions in the operation of the Casino-Hotel, if such loans or credit
transactions are in the ordinary course of business of operating a casino-hotel.
(c) The Company shall not engage in any business (and shall not have
any Subsidiaries) other than (i) to collect principal, interest (and any
interest on overdue principal and interest) and other amounts under any
intercompany notes or guaranties made to the order of or otherwise in favor of
the Company, (ii) to preserve its rights under this Indenture and the Mortgage
Documents and otherwise to comply with its obligations thereunder and under the
Notes, (iii) to do or cause to be done all things necessary or appropriate to
protect the Trust Estate, (iv) to preserve its rights under the Senior Mortgage
Indenture and the Senior Mortgage Documents and otherwise to comply with its
obligations thereunder and under the Senior Mortgage Notes,
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(v) to issue Indebtedness represented by the Working Capital
Facility, (vi) to preserve its rights under the Working Capital
Facility and otherwise comply with its obligations under the Working
Capital Facility, (vii) to incur any other Indebtedness permitted under
this Indenture, (viii) to do all such acts and deeds necessary in
connection with the Junior Mortgage Facility and the documents and
instruments relating thereto and the Working Capital Facility and
the documents and instruments relating thereto, (ix) to declare, issue and pay
dividends on, or make any redemptions or repurchases of, the Company's capital
stock as contemplated by its Certificate of Incorporation (to the extent
permitted hereby) and otherwise to comply with and perform the provisions of its
Certificate of Incorporation and By-laws, and (x) to do such further acts and
deeds to effectuate any of the matters listed in the foregoing clauses of this
Section 12.11(c).
Section 12.12. LIMITATION ON SUBSIDIARIES;
CONSOLIDATED GROUP.
The Company and RIH shall not have any Subsidiaries except the
Subsidiaries existing on the date of this Indenture and Subsidiaries acquired by
the Company or RIH in transactions not prohibited by the other provisions of
this Indenture which are and shall at all times be wholly owned (directly or
indirectly) by the Company or RIH.
Section 12.13. LIMITATIONS ON LIENS.
Neither the Company nor RIH will create, incur, suffer to exist or
permit to be created or incurred any mortgage, lien, charge or encumbrance on or
pledge of the Mortgage Documents or any of the Trust Estate, other than (a) the
lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the
Trust Estate in connection with Indebtedness permitted by clauses (i), (ii),
(iii), (iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on the
Trust Estate, and (d) a notice of intention or building contract filed by a
mechanic, materialman or laborer under the New Jersey lien law. Without
limiting the generality of the previous sentence, but notwithstanding the
provisions of such sentence, RIH shall not be deemed to have breached such
provisions by virtue of the existence of liens for Impositions (as defined in
the Mortgage) or mechanics' liens so long as RIH is in good faith
contesting the validity of such liens in accordance with
the provisions of Section 5.09 of the Mortgage.
Section 12.14. COMPLIANCE WITH LAWS.
Each of the Company and RIH shall comply, and shall cause
each of its Subsidiaries to comply, with the Casino Control Act and
all other applicable statutes (including,
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without limitation, ERISA), rules, regulations, orders and
restrictions of the United States of America, states and municipalities, and of
any governmental department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing in respect of the conduct of its
business and the ownership of its properties and assets, including, without
limitation, the Trust Estate, except such as are being contested in good faith
by appropriate proceedings in accordance with the Mortgage Documents (to the
extent applicable) and except for such non-compliances as will not in the
aggregate have a material adverse effect on the business, properties, operations
or financial condition of the Company, RIH or their respective Subsidiaries.
Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company or RIH shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes, assessments
and governmental charges levied or imposed upon the Company, RIH or any of their
respective Subsidiaries or upon the Trust Estate or any portion thereof or upon
the income, profits or property of the Company, RIH or any of their respective
Subsidiaries, and (b) all lawful claims for labor, materials and supplies which,
if unpaid, will by law become a Lien upon the Trust Estate or upon any other
property of the Company, RIH or any of their respective Subsidiaries; PROVIDED,
HOWEVER, that the Company and RIH shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessments, charge or claim the
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings in accordance with the Mortgage Documents (to the extent
applicable) if adequate reserves therefor have been established in accordance
with GAAP.
Section 12.16. MAINTENANCE OF PROPERTIES.
Each of the Company and RIH shall cause the Trust Estate and all other
properties (other than obsolete equipment) owned by or leased to it or any of
its Subsidiaries, and used or useful in the conduct of its business or the
business of the Company, RIH or such Subsidiary to be maintained and kept in
good condition, repair and working order, except for reasonable wear and use,
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as required by the Mortgage Documents
or, to the extent not governed by the Mortgage Documents, as in the reasonable
judgment of the Board of Directors of RII may be necessary so that
the business carried on in connection therewith may be properly
and advantageously conducted at all times.
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<PAGE>
Section 12.17. INSURANCE.
Each of the Company and RIH shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable insurers,
appropriate insurance on each of their respective properties and businesses
against liabilities, casualties, risks and contingencies of the type and in
amounts required by the Mortgage Documents or, to the extent not governed by the
Mortgage Documents, as customarily maintained by corporations and other entities
engaged in the same or similar businesses and similarly situated; PROVIDED,
HOWEVER, that any such insurer shall be qualified to do business in the
jurisdiction where the insured property is located.
Section 12.18 WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each of the Company and RIH covenants (to the extent that it may
lawfully do so) that it will not, and will not cause or permit any of its
Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit
or advantage of, any stay or extension law or any usury law or other law that
would prohibit or forgive the Company or RIH from paying all or any portion of
the principal of, or premium, if any, and interest on the Notes or the RIH
Junior Promissory Note or the Guaranty as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture or the RIH Junior Promissory Note or the Guaranty;
and (to the extent that it may lawfully do so) the Company and RIH hereby
expressly waive all benefit or advantage of any such law, and covenant that they
will not hinder, delay or impede the execution of any power granted to the
Trustee herein and in the Mortgage Documents, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 12.19. APPOINTMENT TO FILL A
VACANCY IN OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 8.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
Section 12.20 VALIDITY OF LIENS.
Each of the Company and RIH represents and warrants that it has, and
covenants that it shall continue to have, full corporate power and lawful
authority to grant, release, convey, assign, transfer, mortgage, pledge,
hypothecate and otherwise create the lien on the Trust Estate; and the Company
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and RIH shall warrant, preserve and defend the interest of the Trustee in and to
the Trust Estate against the claims of all Persons, except as otherwise
expressly permitted by the Mortgage Documents or this Indenture, and will take
all action necessary to maintain and preserve the lien on the Trust Estate
contemplated therein.
Section 12.21. TRANSACTIONS WITH
STOCKHOLDERS AND AFFILIATES.
Each of the Company and RIH covenants that it shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, enter into or permit
to exist any transaction (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company or RIH or with any Affiliate of any such holder, unless
(a) such transaction is upon fair and reasonable terms which are no less
favorable to the Company or such Subsidiary, as the case may be, than would be
available in an arm's-length transaction with an unrelated person and (b) if
over $250,000, such transaction is determined in the good faith judgment of a
majority of the members of the Board of Directors of either (i) RII, so long as
RII owns directly or indirectly a majority of the outstanding capital stock of
RIH, directly or indirectly, or (ii) RIH, to be in the best interests of the
Company, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this
provision shall not apply to (A) any agreements, documents, instruments or
transactions entered into in connection with the RIHF Senior Facility Notes, (B)
the Services Agreement, (C) the RII Management Contract, or (D) the RII Tax
Sharing Agreement.
Section 12.22. LIMITATION ON OPEN MARKET PURCHASES
The Company and RIH shall not, and shall not permit any of their
respective Subsidiaries to, purchase or otherwise acquire (other
than pursuant to Article Thirteen) any Notes unless all interest
accrued on the Notes and payable on the Interest Payment Date
immediately preceding the date of such repurchase was paid solely
in cash and not in Additional Notes.
ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. GENERAL APPLICABILITY OF ARTICLE.
Notes which are redeemable before their Stated Maturity shall be
redeemable in accordance with their terms and in accordance with this Article.
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Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes shall be evidenced by
a Company Order. Redemption of any Notes shall not take place earlier than 15
days after the corporate action taken to authorize the redemption. In case of
any redemption at the election of the Company of less than all the Outstanding
Notes, the Company shall, at least 60 days prior to the Redemption Date fixed by
the Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of Notes
to be redeemed.
Section 13.03. SELECTION BY TRUSTEE
OF NOTES TO BE REDEEMED.
If less than all the Outstanding Notes are to be redeemed, the
particular Notes to be redeemed shall be selected by a random, automated
selection process or PRO RATA, as deemed appropriate by the Trustee, not more
than 60 days prior to the Redemption Date by the Trustee from the Outstanding
Notes which have not previously been called for redemption, and such selection
method may provide for the selection for redemption of portions (equal to the
greater of $1,000 and the smallest authorized denomination of the Notes of such
series, or a multiple thereof) of the principal of Notes of a denomination
larger than $1,000.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note which has been or is to be redeemed.
Section 13.04. NOTICE OF REDEMPTION.
Notice of redemption shall be given by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the Company
by first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Notes of such series to be
redeemed, at his address appearing in the Note Register.
Any notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives the notice. In any case, failure to duly give notice by mail,
or any defect in
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the notice to the Holder of any Notes designated for redemption in
whole or in part, shall not affect the validity of the proceedings for the
redemption of any other Notes.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the principal amount of Notes to be redeemed, and, if less than
all outstanding Notes are to be redeemed, the identification (and, in the
case of partial redemption, the respective principal amounts) of the Notes
to be redeemed;
(d) that on the Redemption Date, the Redemption Price of each of the
Notes to be redeemed will become due and payable and that the interest
thereon shall cease to accrue from and after such date; and
(e) the place or places where the Notes to be redeemed are to be
surrendered for payment of the Redemption Price.
Section 13.05. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 12.03) an amount of
money sufficient to pay the Redemption Price of all the Notes which are to be
redeemed on that date. Such money shall be held in trust for the benefit of the
Persons entitled to such Redemption Price and shall not be deemed to be part of
the Trust Estate.
Section 13.06. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price. Installments of interest due on or prior to the Redemption
Date shall be payable to the Holders of the Notes registered as such on the
relevant Record Dates according to the terms of such Notes and the provisions of
Section 3.07.
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If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate prescribed therefor in the Note.
Section 13.07. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by the Holder thereof or his attorney
duly authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note, without service charge, a
new Note or Notes of any authorized denomination or denominations as requested
by such Holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT.
Notwithstanding the provisions of this Article Thirteen, if the Casino
Control Commission does not waive the qualification requirements as to any
Noteholder (whether the record owner or beneficial owner) and requires that such
Noteholder be qualified under the Casino Control Act, then, in such event, such
Noteholder must qualify under such Act. If a Noteholder does not so qualify,
the Noteholder must dispose of its interest in the Notes, within 30 days after
the Company's receipt of notice of such finding, or the Company may repurchase
such Notes at the lower of the Outstanding Amount and the Fair Market Value of
such Notes, plus accrued interest to the date of such repurchase. Commencing
on the date the Casino Control Commission serves notice upon either RIH or the
Company that any Holder is disqualified, it shall be unlawful for any such
disqualified Holder: (i) to receive any dividends or interest upon this Note;
(ii) to exercise, directly or through any trustee or nominee, any right
conferred by this Note; or (iii) to receive any remuneration in any form from
either the Company or RIH for services rendered or otherwise.
------------------------------
This instrument may be executed in any number of counterparts or with
counterpart signatures, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest: By:
------------------- ------------------------------
Name:
Title:
RESORTS INTERNATIONAL HOTEL, INC.
Attest: By:
------------------- ------------------------------
Name:
Title:
U.S. TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
Attest: By:
------------------- ------------------------------
Name:
Title:
95
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on __________, 1993, _______________ personally came before
me, and he acknowledged under oath, to my satisfaction, that: (a) he is the
______________ of Resorts International Hotel Financing, Inc., the corporation
named in this document; (b) he is the attesting witness to the signing of this
document by the proper corporate officer who is _______________ of Resorts
International Hotel Financing Inc.; (c) this document was signed and delivered
by the corporation as its voluntary act duly authorized by a proper resolution
of its Board of Directors; (d) he knows the proper seal of the corporation which
was affixed to this document; and (e) he signed this proof to attest to the
truth of these facts.
-------------------------
Signed and sworn to
before me on _________, 1993.
- ----------------------
Notary Public of the
State of New York
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ________, 1993, ________________ personally came before
me, and this person acknowledged under oath, to my satisfaction, that: (a) this
person is the __________________________ of Resorts International Hotel, Inc.,
the corporation named in this document; (b) this person is the attesting witness
to the signing of this document by the proper corporate officer who is
______________________, the __________________________ of Resorts International
Hotel, Inc.; (c) this document was signed and delivered by the corporation by
its voluntary act duly authorized by a proper resolution of its Board of
Directors; (d) this person knows the proper seal of the corporation which was
affixed to this document; and (e) this person signed this proof to attest to the
truth of these facts.
--------------------
Signed and sworn to
before me on _________, 1993.
- -------------------------
Notary Public
[seal]
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ________, 1993, ________________ personally came before
me, and this person acknowledged under oath, to my satisfaction, that: (a) this
person is the __________________________ of U.S. Trust Company of California,
N.A., a national banking association named in this document; (b) this
person is the attesting witness to the signing of this document by the proper
corporate officer who is ______________________, the __________________________
of U.S. Trust Company of California, N.A., a national banking association;
(c) this document was signed and delivered by the corporation by its voluntary
act duly authorized by a proper resolution of its Board of Directors; (d) this
person knows the proper seal of the corporation which was affixed to this
document; and (e) this person signed this proof to attest to the truth of these
facts.
-------------------------
Signed and sworn to
before me on _________, 1993.
- -------------------------
Notary Public
[seal]
<PAGE>
Exhibit A
RIH Senior Promissory Note
<PAGE>
EXHIBIT A
AMENDED AND RESTATED SECURED PROMISSORY NOTE
$35,000,000 [ ], 1994
WHEREAS, in partial repayment of certain inter-company debt owed by
Resorts International Hotel, Inc., a New Jersey corporation
("RIH"), to Resorts International, Inc., a Delaware corporation ("RII"), RIH has
issued to RII a promissory note on the date hereof in the principal
amount of $35,000,000 (as the same may be amended or restated from
time to time, the "Note"), which Note is secured by a Mortgage
Securing RIH Junior Promissory Note dated as of the date hereof (the
"Mortgage"), by RIH, as Mortgagor, which Mortgage encumbers certain real
property owned or leased by
RIH together with all buildings and improvements erected thereon
(collectively, the "Property"); and
WHEREAS, RII has transferred the Note and the Mortgage to RIHF in
exchange for 11.375% Junior Mortgage Notes due 2004 (the "Junior
Notes") in an aggregate principal amount of $35,000,000, which
Junior Notes were issued pursuant to that certain Indenture dated
as of even date herewith (the "Indenture") among RIHF, as issuer,
RIH, as guarantor, and U.S. Trust Company of California, N. A., as trustee
(the "Trustee"); and
WHEREAS, RIHF has requested RIH to amend and restate the Note;
NOW, THEREFORE, RIH agrees to amend and restate the Note as
follows:
RIH, for value received hereby promises to pay to the order of RIHF
(RIHF and any subsequent holder of this Note being herein referred
to as the "Payee"), the principal sum of Thirty-Five Million
Dollars ($35,000,000), or such other principal sum as shall be
outstanding hereunder, on December 15, 2004 (the "Maturity Date") in
accordance with the provisions hereof, with interest on such
principal sum from time to time outstanding, computed from
[ ], 1994 [the Effective Date], in semi-annual installments of
interest on June 15 and December 15 of each year, commencing
initially on December 15, 1994, at a rate of 11.375% per annum on
the
<PAGE>
unpaid balance hereof, until the principal hereof is paid in
full. Payments of principal and interest on this Note shall be
made at [address of the Payee], or at such other
address as the Payee may designate in writing. Interest will be
computed on the basis of a 360-day year of twelve 30-day months based
on the actual number of days elapsed. Principal and interest shall
be paid in money of the United States that at the time of payment
is legal tender for public and private debts. The principal sum of
this Note shall be increased from time to time if any Additional
Notes (as defined in the Indenture) are issued under the Indenture
as of the date of their original issuance by the principal amount
of such Additional Notes.
l.(a) This Note shall be prepaid (i) in connection with, but only
to the extent of, any redemption of the Junior Notes of RIHF issued
pursuant to the Indenture (all prepayments of this Note are
hereinafter referred to as "Prepayments"), and/or (ii) by the
surrender to the Trustee of the principal amount of any Junior
Notes purchased or otherwise acquired by RIH or the Company (as
defined in the Indenture) other than pursuant to the redemption
provisions of the Junior Notes for cancellation in accordance with
the provisions of the Junior Notes or the Indenture (it being
expressly understood that the same Junior Notes shall reduce the
principal amount of this Note only once). Each Prepayment under
clause (i) above shall be made at the time that payment is required
or permitted to be made by the Company to the Trustee under the
Indenture in respect of any redemption of Junior Notes. Each
Prepayment under clause (ii) above shall be deemed to be made at
the time of surrender of such Junior Notes for cancellation. Each
Prepayment of this Note pursuant to clause (i) above shall be in an
amount equal to the aggregate amount paid to holders of Junior
Notes on account of the redemption thereof (other than interest),
together with accrued and unpaid interest on the amount of the
reduction in the principal amount of this Note as a result of such
Prepayment. The principal amount of this Note shall be reduced as
a result of such prepayment in an amount equal to the aggregate
principal amount of the Junior Notes so redeemed or surrendered.
(b)Except as set forth in Section 1(a), this Note may not be prepaid
in whole or in part.
2.RIH shall pay interest on overdue principal and prepayment
premium at the rate of 14.375% per annum.
3.This Note is secured by the Mortgage on the Property.
2
<PAGE>
4.If (i) RIH defaults in the payment of interest when
the same becomes due and payable and the default continues for a
period of ten days following receipt of a notice from the Payee or
the Trustee specifying such default and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder;
(ii) RIH defaults in the payment of the principal or any part
thereof when the same becomes due and payable at Maturity (as
defined in the Mortgage); (iii) there shall occur any other Event
of Default under the Mortgage or any other Note (as defined in the
Mortgage); or (iv) there shall occur any other Event of Default
under the Indenture, then on the happening of any such event, the
Payee may declare the entire Outstanding Amount (as defined in the
Indenture) of this Note and all accrued and unpaid interest thereon
and all sums due under Section 5 of this Note and the Mortgage
(collectively, the "Debt") to become immediately due and payable.
5. RIH hereby waives presentment and demand for payment, notice of
dishonor, protest and notice of protest of this Note and agrees to
pay all costs of collection when incurred, including reasonable
attorneys' fees, which costs may be added to the amount due under
this Note and be receivable therewith, and to perform and comply
with each of the terms, covenants and provisions contained in this
Note and the Mortgage on the part of RIH to be observed or
performed. Except as expressly provided herein, no release of
any security for the principal sum due under this Note or extension
of time for payment of this Note, or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note or
the Mortgage shall release, discharge, modify, change or affect the
liability of RIH under this Note or the Mortgage.
6. RIH covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury,
stay or extension law or any other law which would prohibit or
forgive RIH from paying all or any portion of the interest on this
Note, wherever enacted, now or at any time hereafter in force, or
which may otherwise affect the covenants or the performance of this
Note or the Mortgage; and RIH (to the extent that it may lawfully
do so) 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 Payee, but will
suffer and permit the execution of every such power as though no
such law had been enacted.
7. This Note shall be deemed to be a contract under the laws of the
State of New York and shall be construed
3
<PAGE>
in accordance with and
governed by the internal laws of the State of New York.
8. This Note may not be changed or terminated orally, but only by an
agreement in writing signed by the party against whom enforcement
of such change or termination is sought.
9. RIH shall not claim any credit or deduction from the interest or
principal due hereunder by reason of payment of any tax assessed
upon the Property.
10. Whenever the provisions of this Note and the provisions of the
Indenture shall be inconsistent, the provisions of the Indenture
shall govern.
11. This Note is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act. This note shall not be
transferred, assigned or amended without prior approval of the New Jersey Casino
Control Commission.
12. Whenever used herein, the singular number shall include the
plural, the plural the singular, and the words "Payee" and "RIH"
shall include their respective successors and assigns.
IN WITNESS WHEREOF, RIH has duly executed this Note as of the day
and year first above written.
RESORTS INTERNATIONAL HOTEL, INC.
By: ________________________
Name:
Title:
4
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this [ ] day of [ ], 1994, before
me, the subscriber, a Notary public of the State of New York,
personally appeared [ ], [ ] of RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation, and he
acknowledged that he signed, sealed and delivered the same as his
voluntary act and deed and the act and deed of said RESORTS
INTERNATIONAL HOTEL, INC., and that he received a true copy of
the within instrument on behalf of said corporation.
_____________________________________
Notary Public of the State of New York
[Seal]
5
<PAGE>
Exhibit B
Assignment Agreement from Resorts
International Hotel Financing, Inc.
<PAGE>
NA932810098 - JUNIOR MORTGAGE ASSIGNMENT
GD&C DRAFT DATED 12/17/93
==============================================================================
ASSIGNMENT OF AGREEMENTS
________________
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignor,
TO
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
a national banking association,
as Assignee
Dated as of _________________, 1994
===============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware
corporation ("ASSIGNOR"), having an address at c/o Resorts
International, Inc., 1133 Boardwalk, Atlantic City, New Jersey
08401, to U. S. TRUST COMPANY OF CALIFORNIA, N.A.
a national banking association, having an address at
555 South Flower Street, Suite 2780 Los Angeles, California 90071,
in its capacity as Trustee ("ASSIGNEE"), under that certain Indenture
dated as of
even date herewith (the "INDENTURE") among Assignor, Assignee and
Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR").
WITNESSETH:
WHEREAS, in partial repayment of certain inter-company debt owed by
Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"),
Mortgagor has issued to RII a promissory note on the date hereof in the
principal amount of $35,000,000 (as the same may be amended or
restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof (the "MORTGAGE"), which Mortgage encumbers
certain real property owned or leased by Mortgagor as more
specifically described on SCHEDULE 1 hereto together with all
buildings and improvements erected thereon (collectively, the
"PROPERTY"); and
WHEREAS, RII has transferred the RIH Junior Promissory Note and the
Mortgage to Assignor in exchange for 11.375% Junior Mortgage Notes
due 2004 (the "NOTES") in an aggregate principal amount of
$35,000,000, which Notes were issued pursuant to the Indenture;
and
WHEREAS, as further security for the obligations of Mortgagor under
the RIH Junior Promissory Note, Mortgagor has executed and
delivered (i) an Assignment of Operating Assets and (ii) an
Assignment of Leases and Rents, each in favor of Assignor (as
assignee of RII) and each dated as of the
date hereof (said Assignments and the Mortgage collectively
referred to herein as the "RIH JUNIOR PROMISSORY NOTE MORTGAGE
DOCUMENTS"), pursuant to which Mortgagor granted
<PAGE>
a security interest in specified personal property, assigned certain other
rights and assigned all right, title and interest of Mortgagor in
leases and rents to Assignor, all as security for the performance
and observance of obligations of Mortgagor under the RIH Junior
Promissory Note; and
WHEREAS, the rights and obligations of the Assignee hereunder are
subject to the terms set forth in that certain Intercreditor
Agreement dated as of the date hereof among Assignor, Assignee,
Mortgagor, Fidelity Management and Trust Company, as trustee, and
State Street Bank and Trust Company of Connecticut, National
Association, as trustee (and such other parties that may from
time to time become a party thereto); and
WHEREAS, in order to secure payment of the Notes and all other
payments due to the holder(s) from time to time of the Notes
(collectively, the "HOLDERS") or the Trustee under the Indenture,
Assignor has agreed to execute this Assignment and to be bound by
its terms;
NOW, THEREFORE, THIS ASSIGNMENT
FURTHER WITNESSETH:
That Assignor in consideration of the purchase of the Notes by the
Holders, Ten Dollars ($10.00) lawful money of the United States of
America duly paid to Assignor by Assignee at or before the
execution and delivery of these presents and for other good and
valuable consideration, the receipt of which are hereby
acknowledged, does hereby sell, assign and transfer unto
Assignee and unto its successors and to its assigns forever, for
its benefit and for the benefit of the Holders, and does hereby
grant to Assignee a security interest in and to all of Assignor's
estate, right, title and interest in, to and under any and all of
the following described property, rights and interests
(collectively, the "ASSIGNED PROPERTIES"):
GRANTING CLAUSE FIRST
All right, title and interest of Assignor in and to the RIH Junior
Promissory Note, including all renewals, extensions, modifications
and replacements of the same, and without limiting the generality
of the foregoing, the present, continuing and future right to make
claim for, collect or cause to be collected, receive or cause to be
received directly from Mortgagor thereunder, all payments of
principal, interest and other sums of money payable thereunder.
GRANTING CLAUSE SECOND
All right, title and interest of Assignor in and to
the RIH Junior Promissory Note Mortgage Documents, including
2
<PAGE>
all extensions, renewals, modifications, supplements and replacements
of the same.
TO HAVE AND TO HOLD all said properties, rights and
interests unto Assignee and its successors and assigns forever.
THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and
covenants with Assignee as follows:
ARTICLE ONE
PARTICULAR COVENANTS OF ASSIGNOR
Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents,
warrants and covenants that it is duly authorized to enter into
this Assignment, and to grant and convey a lien on and security
interest in the Assigned Properties to Assignee in the manner and
to the extent herein set forth and that all action on its part
required for the execution and delivery of this Assignment has
been duly and effectively taken.
Section 1.02. FURTHER ACTION REQUIRED.
(a) Assignor covenants that it will, from time to time, execute and
deliver such further instruments and take such further actions as
may be required to carry out the purposes of this Assignment.
(b) Assignor hereby appoints Assignee as its lawful attorney-in-fact
(such power being coupled with an interest) in the name of Assignor
or Assignee or both to execute any instruments or to take any
actions to enforce all rights, powers and remedies of Assignor
under or pursuant to the Assigned Properties.
(c) Nothing contained herein shall limit the rights of Assignee
contained in the Mortgage or the Indenture.
(d) Until this Assignment is discharged in accordance with Section 5.01
hereof, no amendment, waiver, modification, discharge, release,
enforcement or satisfaction by Assignor of any of the rights or
remedies under the Assigned Properties shall be effective without
the prior consent and approval of Assignee, and Assignor shall have
no power or authority to take any such action without such consent
and approval.
ARTICLE TWO
OBLIGATIONS TO ASSIGNEE
Section 2.01. CONTINUING OBLIGATIONS.
3
<PAGE>
(a) Assignee shall have no obligation, duty or liability with
respect to the Assigned Properties or any of them (other than
those specifically assumed in its capacity as Trustee pursuant to
the Indenture).
(b) Assignor shall at all times remain liable to observe and perform
all of its covenants and obligations, if any, under the Assigned
Properties, and does hereby agree to indemnify and hold harmless
Assignee, its successors and assigns, from any liability, loss,
damage or expense it or they may incur under the Assigned
Properties or by reason of this Assignment.
ARTICLE THREE
PAYMENTS
Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due
and to become due under or pursuant to the Assigned Properties
shall be paid by Mortgagor directly to Assignee at the address set
forth in Section 6.02 hereof. Neither Assignor nor Assignee shall
have the right, without Mortgagor's prior written consent, to
instruct Mortgagor to pay Revenues to Assignor or in any manner or
to any party other than directly to Assignee.
Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins
in the execution of this Assignment to acknowledge (a) the
assignment by Assignor to Assignee of Assignor's right, title and
interest in, to and under the Assigned Properties, (b) Mortgagor's
agreement to make payment of all Revenues under the Assigned
Properties directly to Assignee at the address set forth in this
Assignment, and (c) the right of Assignee to exercise or enforce in
its own name, in the name of Assignor, or both, all of the rights,
powers and remedies of Assignor in, to and under the Assigned
Properties.
Section 3.03. REVENUES. As used herein, the term "REVENUES" shall
mean (a) all amounts paid or payable by Mortgagor under the RIH
Junior Promissory Note or the RIH Junior Promissory Note Mortgage
Documents, and (b) the net proceeds realized upon or as a result of
the enforcement of any mortgage lien or security interest granted
under the Assigned Properties or this Assignment or upon or as a
result of the exercise of any right or remedy under the Assigned
Properties or this Assignment.
Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor
hereby acknowledges, that Mortgagor may rely exclusively on
Assignee's directive that Assignee is entitled to take action
under this Assignment.
4
<PAGE>
ARTICLE FOUR
DEFAULT PROVISIONS AND REMEDIES
Section 4.01. ENFORCEMENT OF REMEDIES.
(a) Upon the occurrence of any default under the
Indenture or the Assigned Properties, or any of them (each, a
"DEFAULT"), not cured within the applicable grace period after the
applicable notice provision, if any, has been satisfied (each
called an "EVENT OF DEFAULT"), Assignee may, at its option, (i)
proceed directly to protect and enforce its rights and the rights
of any Holders under this Assignment or pursuant to the Assigned
Properties, or any one of them, by such suits, actions or special
proceedings in equity or at law, or by proceedings in the office of
any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein, or in
the Assigned Properties, or any of them, or in aid of execution of
any power granted herein or pursuant to the Assigned Properties, or
any one of them, or for the enforcement of any proper legal or
equitable remedy, including, without limitation, foreclosure of
the Mortgage and/or the sale of the collateral or part thereof
secured thereby at such foreclosure sale, subject to statutory and
other legal requirements, as Assignee shall deem most effective to
protect and enforce such rights, and Assignor hereby appoints
Assignee as its lawful attorney-in-fact (such power being coupled
with an interest) in the name of Assignor or Assignee or both to
effectuate such foreclosure and/or sale of such collateral or part
thereof; or (ii) instruct, direct and cause Assignor to effectuate
the foregoing on behalf of and for the benefit of Assignee and the
Holders, it being further understood that Mortgagor joins in the
execution of this Assignment in order to acknowledge its agreement
to promptly and duly execute and deliver any and all documents and
take any and all actions required by Assignee in order to permit
Assignee to foreclose and/or sell such collateral or part thereof,
and obtain the benefits of this Assignment, as aforesaid.
(b) Upon the occurrence of any Event of Default, Assignee shall be
entitled to sue for, enforce payment of and receive any and all
amounts then and at any time remaining due from Assignor or
Mortgagor for principal and interest on the RIH Junior Promissory
Note, or other sums due under the RIH Junior Promissory Note
Mortgage Documents, as the case may be, or otherwise under any of
the provisions of the Assigned Properties, or any of them, with
interest on overdue payments of such principal, at the rate set
forth in the RIH Junior Promissory Note, from the date of Default
to the date of such payment, together with any and all fees, costs
and expenses of collection (including reasonable attorneys' fees
and court costs), subject to statutory and other legal
requirements.
5
<PAGE>
(c) Regardless of the occurrence of an Event of Default, upon five
days' written notice to Mortgagor (or such shorter period or
without notice if deemed necessary and appropriate by Assignee),
Assignee may institute and maintain or cause in the name of
Assignor or Assignee or both to be instituted and maintained such
suits and proceedings as it may be advised by its counsel shall be
necessary and appropriate to prevent any impairment of the Assigned
Properties, or any of them, and to protect its interests in the
Assigned Properties, and in the rents, issues, rights, revenues
and other income arising therefrom, including power to institute
and maintain proceedings to restrain the enforcement or compliance
with any 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 the
security hereunder or would be materially prejudicial to the
interests of Assignee.
(d) Nothing contained in this Article Four is intended to grant
Assignee any greater remedies and rights than those allowed to
Assignor in the respective Assigned Properties. In the event of
any conflict between the remedies and rights contained in any of
the Assigned Properties and the remedies and rights contained in
this Article Four, then the remedies and rights set forth in the
applicable Assigned Property shall govern.
ARTICLE FIVE
DISCHARGE OF ASSIGNMENT
Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or
cause to be paid, or there shall otherwise be paid, to Assignee
and/or the Holders' all amounts required to be paid by Assignor
pursuant to the Indenture and the Notes, and the conditions
precedent for the Indenture shall cease, determine and become
null and void in accordance with Section 5.01 of the Indenture,
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statements filed in connection
herewith and execute and deliver to Assignor and to Mortgagor all
such instruments as may be appropriate to evidence such discharge
and satisfaction of said lien or liens, and Assignee shall pay over
or deliver to Assignor all other moneys and securities held by it
pursuant to this Assignment, which are not required for the payment
of (a) principal and redemption price, if applicable, of and
interest on, the Notes, and (b) all other amounts required to be
paid by Assignor pursuant to the Indenture and the Notes.
6
<PAGE>
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the
covenants, stipulations, obligations and agreements contained in
this Assignment shall be binding upon and inure to the benefit of
Assignor, Assignee and Mortgagor (to the extent applicable to
Mortgagor) and their respective successors and assigns.
Section 6.02. NOTICES.
(a) Any request, notice, demand, authorization, direction, request or
other instrument authorized or required by this Assignment to be
given to or filed with Assignor, Assignee or Mortgagor
(collectively, "NOTICES") shall be deemed given when either (i)
delivered by hand or (ii) five days after sending by registered or
certified mail, postage prepaid, in either case addressed as follows:
If to Assignor, at:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Assignee, at:
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
555 South Flower Street
Suite 2780
Los Angeles, California 90071
Attention: Corporate Trust Department
If to Mortgagor, at:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to Mortgagor, Assignor and/or Assignee, given as
provided above, any party may designate additional or substitute
addresses for Notices, which shall, notwithstanding Section
6.02(a), be deemed given with received.
Section 6.03. PARTIAL INVALIDITY. In case any one
or more of the provisions of this Assignment shall for any
7
<PAGE>
reason be held to be illegal or invalid, such illegality or
invalidity shall not affect any other provision of this
Assignment, but this Assignment shall be construed and
enforced at the time as if such illegal or invalid
provisions had not been contained herein or therein, nor shall such
illegality or invalidity or any application thereof affect any
legal and valid application herein or thereof from time to time.
Section 6.04. APPLICABLE LAW. This Assignment shall be governed
by and construed under the internal laws of the State of New
Jersey, without giving effect to the principles of conflicts of
law.
Section 6.05. NO AMENDMENT. For so long as the Notes shall remain
outstanding, the Assigned Properties may not be modified, amended
or terminated except in accordance with the provisions of the
Indenture or the Assigned Properties.
Section 6.07. CASINO CONTROL ACT. Each of the provisions of this
Assignment is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act. This Agreement
shall not be transferred, assigned or amended without prior approval
of the New Jersey Casino Control Commission.
IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed
this Assignment Agreement as of the date first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest:
_________________________________ By:_______________________________
President
RESORTS INTERNATIONAL HOTEL, INC.
Attest:
_________________________________ By:_______________________________
President
8
<PAGE>
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Attest:
___________________________________ By:_________________________________
Title
9
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of U.S. TRUST COMPANY OF CALIFORNIA, N.A., the
corporation named in the within instrument; that
__________________ is the Vice President of said Corporation;
that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of
directors of the said corporation; that deponent well knows the
corporate seal of said corporation; and that the seal affixed to
said instrument is the proper corporate seal and was thereto
affixed and said instrument signed and delivered by said Vice
President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
10
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation named
in the within instrument; that ____________ is the Vice President of said
Corporation; that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of directors of
the said corporation; that deponent well knows the corporate seal
of said corporation; and that the seal affixed to said instrument
is the proper corporate seal and was thereto affixed and said
instrument signed and delivered by said Vice President as and for
the voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
11
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation
named in the within instrument; that ______________ is the Vice
President of said corporation; that the execution, as well as the
making of this instrument, has been duly authorized by a proper
resolution of the board of directors of the said corporation; that
deponent well knows the corporate seal of said corporation; and
that the seal affixed to said instrument is the proper corporate
seal and was thereto affixed and said instrument signed and
delivered by said Vice President as and for the voluntary act and
deed of said corporation. In presence of deponent who thereupon
subscribed his name thereto as attesting witness; and deponent
signed this proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
12
<PAGE>
EXHIBIT C
SUBORDINATION PROVISIONS
<PAGE>
EXHIBIT C
SUBORDINATION PROVISIONS
A. SUBORDINATION. Anything herein to the contrary notwithstanding,
Subordinated Debt, including principal, premium, if any, and interest, shall be
subordinate and junior to the extent set forth in subparagraphs (i) to (v),
inclusive, below, to all Senior Indebtedness.
(i) If the Company (as defined in this Exhibit C) shall default in
the payment of any principal of or interest on any Senior Indebtedness when
the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration of acceleration or otherwise, then, unless
and until such default shall have been remedied by payment in full in cash
or waived or shall have ceased to exist or all amounts then due and payable
in respect of Senior Indebtedness shall have been paid in full or provision
shall have been made for such payment in cash, no holder of the
Subordinated Debt shall accept or receive any direct or indirect payment
(in cash, property, by set-off or otherwise) of or on account of any
Subordinated Debt.
(ii) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Company, and in the
event of any proceedings for voluntary liquidation, dissolution or other
winding up of the Company, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Indebtedness shall first be paid in
full in cash, or such payment shall have been provided for in cash, before
any payment of or on account of principal or interest is made by the
Company upon the Subordinated Debt.
(iii) In any of the proceedings referred to in subparagraph (ii)
above, any payment or distribution of any kind or character, whether in
cash, property, stock or obligations, which may be payable or deliverable
by the Company in respect of the Subordinated Debt shall be paid or
delivered directly to the holders of Senior Indebtedness (or to a banking
institution selected by the court or Person making the payment or delivery
or designated by any holder of Senior Indebtedness) for application in
payment thereof in accordance with the priorities then existing among such
holders, unless and
<PAGE>
until all principal of and interest on all Senior Indebtedness shall have
been paid in full in cash or such payment shall have been provided for;
PROVIDED, HOWEVER, that no such delivery shall be made to holders of Senior
Indebtedness of stock or obligations which are issued pursuant to
reorganization proceedings or dissolution or liquidation proceedings, or
upon any merger, consolidation, sale, lease, transfer or other disposal not
prohibited by the provisions of the Subordinated Debt, by the Company, as
reorganized, or by the corporation succeeding to the Company or acquiring
its property and assets, if such stock or obligations are subordinate and
junior (whether by law or agreement) at least to the extent provided in
this Section ___ to the payment of all Senior Indebtedness then outstanding
and to the payment of any stock or obligations which are issued in exchange
or substitution for any Senior Indebtedness then outstanding.
(iv) Upon the occurrence and continuance of any Default Subordination
Event (other than under circumstances when the terms of subparagraph (ii)
above are applicable), no holder of the Subordinated Debt shall accept or
receive any direct or indirect payment (in cash, property, by set-off or
otherwise) of or on account of any indebtedness in respect of the
Subordinated Debt during the Applicable Stand-Still Period; PROVIDED,
HOWEVER, that in the case of any payment on or in respect of any
Subordinated Debt which would (in the absence of any such Default
Subordination Event) have been due and payable on any date (a "Scheduled
Payment Date") during such Applicable Stand-Still Period, the provisions of
this subparagraph (iv) shall not prevent such payment (a "Scheduled
Payment") on or after the date (the "Deferred Maturity Date") immediately
following the termination of such Applicable Stand-Still Period.
Notwithstanding the foregoing provisions of this subparagraph (iv), the
failure by the Company to make a Scheduled Payment on a Scheduled Payment
Date during an Applicable Stand-Still Period shall nevertheless constitute
an Event of Default.
(v) If any payment or distribution of any character, whether in cash,
securities or other property, shall be received by any holder of
Subordinated Debt in contravention of any of the terms of this Section ___
and before all the Senior Indebtedness shall have been paid in full, such
payment or distribution shall be received in trust for the benefit of the
holders of the Senior Indebtedness at the time outstanding in accordance
with the priorities then existing among such holders, and shall forthwith
be paid over or delivered and transferred to the holders of Senior
Indebtedness.
<PAGE>
B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions of this
Section ___ are for the purpose of defining the relative rights of the holders
of Senior Indebtedness on the one hand, and the holders of the Subordinated Debt
on the other hand, against the Company and its property; and nothing herein
shall impair, as between the Company and the holders of the Subordinated Debt,
the obligation of the Company, which is unconditional and absolute, to pay to
the holders thereof the principal thereof and premium, if any, and interest
thereon in accordance with their terms and the provisions hereof, nor shall
anything herein prevent the holders of the Subordinated Debt from exercising all
remedies otherwise permitted by applicable law or hereunder upon default
hereunder or under the Subordinated Debt (including, without limitation, the
right to demand payment and sue for performance hereof and of the Subordinated
Debt and to accelerate the maturity thereof as provided in Section ___), subject
to the rights, if any, under this Section ___ of holders of Senior Indebtedness
to receive cash, property, stock or obligations otherwise payable or deliverable
by the Company to the holders of the Subordinated Debt; PROVIDED, HOWEVER, that
upon the commencement and during the continuance of an Applicable Stand-Still
Period the holders of the Subordinated Debt, to the extent they are otherwise
entitled to do so, will not accelerate the maturity of the Subordinated Debt or
pursue any other remedy to enforce payment thereof or initiate any bankruptcy or
insolvency proceeding relative to the Company unless and until the earlier of
(i) the end of such Applicable Stand-Still Period and (ii) the acceleration of
the Senior Indebtedness related to such Applicable Stand-Still Period.
C. Subrogation. Upon payment in full of Senior Indebtedness, the
holders of the Subordinated Debt shall be subrogated to the rights of the
holders of the Senior Indebtedness to receive payments or distributions of
assets of the Company made on Senior Indebtedness until the principal of and
premium, if any, and interest on the Subordinated Debt shall be paid in full,
and, for the purposes of such subrogation, no payments to the holders of Senior
Indebtedness of any cash, property, stock or obligations to which the holders of
the Subordinated Debt would be entitled except for the provisions of
subparagraph (iii) of Section A above shall, as between the Company, its
creditors (other than the holders of the Senior Indebtedness) and the holders of
the Subordinated Debt, be deemed to be a payment by the Company to or on account
of the Senior Indebtedness.
D. DEFINITIONS.
"DEFAULT SUBORDINATION EVENT" means the existence of all of the
following: (i) an event of default shall have occurred and be continuing in
respect of the Senior
<PAGE>
Indebtedness, (ii) the holders of the Subordinated Debt shall have received a
notice from or on behalf of any holder of Senior Indebtedness specifying that
such event of default has occurred and is continuing and that such notice
constitutes a "Default Subordination Notice", and (iii) no other Default
Subordination Notice shall have been delivered by or on behalf of any holder of
Senior Indebtedness within the 365-day period immediately preceding the giving
of such notice.
The "APPLICABLE STAND-STILL PERIOD" relating to any Default
Subordination Event shall be deemed to continue until the event of default under
the Senior Indebtedness giving rise thereto shall have been cured (by payment or
otherwise) or waived or a period of 180 days shall have elapsed from the giving
of the Default Subordination Notice relating thereto, in any such case whichever
shall be the shorter period.
"SENIOR INDEBTEDNESS" shall mean and include all obligations (whether
now outstanding or hereafter incurred), for the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise, including, without
limitation, principal, interest, premium, fees, expenses and indemnities,
whether now owing or hereafter incurred (including any interest accruing
subsequent to the commencement of a proceeding described in Section 7.04,
regardless of whether the claims of holders of such payment obligations for such
interest are allowed in any such proceeding).
<PAGE>
NA932810086 - NOTE MORTGAGE
RIH JUNIOR PROMISSORY NOTE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING
RIH JUNIOR PROMISSORY NOTE
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
a Delaware corporation,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING
RIH JUNIOR PROMISSORY NOTE
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation
("RIHF"), having an address at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or
assigns which shall than be the Noteholder (as hereinafter defined),
being referred to herein as "Mortgagee").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to
Mortgagor and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and in order to
secure (i) the payment of the principal amount (and premium, if any)
of the secured junior promissory note by Mortgagor to Mortgagee in the
principal amount of $35,000,000 as amended and restated the date hereof
(hereinafter collectively referred to as the "Note"), in lawful money of the
United States, to be paid in accordance with the provisions thereof (and all
renewals, extensions, and modifications thereof) all of which are hereby made
an integral part hereof as though set forth at length herein; (ii) payment of
interest (including interest on all overdue principal and premium, if
any) becoming due under the provisions of the Note; (iii) payment by
Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee
pursuant to any term or provision of this Mortgage; (iv) performance
of each covenant, term, condition and agreement of Mortgagor herein or
in the Note contained; (v) all costs and expenses, including reasonable
counsel fees and expenses as provided in Section 3.07, which may arise
in respect of the Note and this Mortgage or of the obligations secured
hereby; and (vi) performance and observance of all of the provisions
herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released,
conveyed and confirmed unto Mortgagee and its successors hereunder and
assigns forever, all of its right, title and interest in, to and under
any of the following described property:
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GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and
franchises particularly described in annexed Schedule 1 (the "Owned
Land") which Schedule is hereby made a part of, and deemed to be
described in, this Granting Clause as fully as if set forth in this
Granting Clause at length.
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the
"Ground Leases") particularly described in Schedule 2, which Schedule
is hereby made a part of, and deemed to be described in, this Granting
Clause as fully as if set forth in this Granting Clause at length,
which Ground Leases cover the real property described in such Schedule
2 (the "Leased Land") and in and to any and all modifications,
extensions and renewals of the Ground Leases and all options set forth
therein, together with (i) all credits, deposits, privileges and rights
of the Mortgagor as lessee under the Ground Leases, now or at any time
existing, (ii) the leaseholds and the leasehold estates created by the
Ground Leases and (iii) all of the estates, rights, titles, claims or
demands whatsoever of Mortgagor, either in law or in equity, in
possession or in expectancy, of, in and to the Ground Leases and the
Leased Land, together with (x) any and all other, further or additional
title, estates, interests or rights which may at anytime be acquired by
the Mortgagor in or to the Leased Land, and the Mortgagor expressly
agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or
any other greater estate to the Leased Land pursuant to the Ground
Leases, or otherwise, the lien of this Mortgage shall attach, extend
to, cover and be a lien upon such fee simple title or other greater
estate and thereupon the lien of this Mortgage shall be prior to the
lien of any mortgage or deed of trust placed on such acquired title,
estate, interest or right subsequent to the date of this Mortgage
(except as otherwise provided herein) and (y) any right to possession
or statutory term of years derived from, or incident to, the Ground
Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the
"Code") or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation.
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GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and
proceeds of the property subjected or required to be subjected to the
lien of this Mortgage, including, without limitation, the property
described in Granting Clauses First, Second, and Sixth (such property
is hereinafter collectively referred to as the "Premises") and all the
estate, right, title and interest of every nature whatsoever of the
Mortgagor in and to the same and every part thereof. The collective
metes and bounds description of the Owned Land and the Leased Land is
set forth in annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the
date of execution of this Mortgage or hereafter entered into by the
Mortgagor, if any, including extensions, renewals or amendments of all
of the same, and the immediate and continuing right as security in
accordance with an Assignment of Leases and Rents of even date herewith
between Mortgagor and Mortgagee, and, after the occurrence of an Event
of Default, to make claim for, collect, receive and receipt for (and
to apply the same as provided herein) any and all rents, income,
revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof,
whether payable as rent, insurance proceeds, condemnation awards,
security or otherwise and whether payable prior to or subsequent to the
maturity date of the Note, to receive and give notices and consents
thereunder, to bring actions and proceedings thereunder or for the
enforcement thereof, to make waivers and agreements, to take such
action upon the happening of a default under any Lease, including the
commencement, conduct and consummation of any proceedings at law or in
equity as shall be permitted by any provision of any Lease, and to do
any and all things which the Mortgagor or any lessor is or may become
entitled to do under the Leases; provided, that the assignment made by
this granting Clause Fourth shall not impair or diminish any obligation
of the Mortgagor under the Leases, or shall any such obligation be
imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting
Clause Third, the Mortgagor's rights, privileges and franchises in and
to the following, to the extent of the Mortgagor's interest therein and
thereto and to the extent assignable (collectively, "Operating Assets"):
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(a) bookings and receipts for the use of guest rooms,
banquet facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including
guaranties and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks,
trade names, service marks, service names, logos, copyrights,
warranties and other items of intangible personal property relating
to the ownership or operation of the Casino-Hotel, including, without
limitation, (1) telephone and other communication numbers, (2) all
software licensing agreements as are required to operate computer
software systems at the Casino-Hotel, all transferable proprietary
interest in software required to operate the computer systems at the
Casino Hotel and books and records relating to the software programs,
and (3) lessee's interest under leases of Tangible Personal Property;
(e) all agreements entered into by or on behalf of the
Mortgagor or which have been assigned to the Mortgagor, for the design
and construction, and for the equipping and furnishing, of the
Casino-Hotel, including architect's agreements, engineering agreements,
construction contracts, consulting agreements and agreements or
purchase orders for all items of Tangible Personal Property and payment
and performance bonds in favor of the Mortgagor in connection with the
Trust Estate (and all warranties and guaranties thereunder and
warranties and guaranties of any subcontractor and bond issued in
connection with the work to be performed by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other articles of
tangible personal property which are, or are to be located on, or
used in connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six wheels, located or to be located in the Casino-Hotel, and all
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furnishings and equipment to be used in connection with the
operation thereof;
(iii) all cards, dice, gaming chips and placques,
tokens, chip racks, dealing shoes, dice cups, dice sticks,
layouts, paddles, roulette balls and other consumable supplies
and items to be used in connection with the gaming operations of
the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether in use or held in reserve storage
for future use, in connection with the operation of the
Casino-Hotel, which are on hand or on order whether stored on-site
or off-site;
(v) all consumables and operating supplies of every
kind and nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on
any of the Owned Land, including without limitation, accounting
supplies, guest supplies, forms, printing, stationery, food and
beverage stock, bar supplies, laundry supplies and brochures to
existing purchase orders;
(vi) all sets and scenery, costumes, props and other
items of tangible personal property on hand or on order for use
in the production of shows in the showroom of the Casino-Hotel;
and
(vii) all cars, limousines, vans, buses, trucks and
other vehicles owned or leased by the Mortgagor for use in
Casino-Hotel operations, together with all equipment, parts and
supplies used to service, repair, maintain and equip the
foregoing;
(g) all drawings, designs, plans and specifications prepared
by the architects, interior designers, landscape designers and any
other consultants for the development of the Premises, as amended from
time to time;
(h) any administrative and judicial proceedings initiated by
the Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of
such proceedings;
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high
roller" lists; and
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(j) all of the goodwill in connection with the operation of
the Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding
anything contained in this Mortgage to the contrary, the Mortgagor may
share facilities, operations and employees with any other hotel owned
by any Affiliate of the Mortgagor provided that (i) such sharing of
facilities is permitted by all applicable Legal Requirements, (ii)
terms on which such facilities are shared are not detrimental to the
operations of the Casino-Hotel or the financial condition of the
Mortgagor and (iii) the regular operation of the Casino-Hotel would
not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair
or diminish any obligation of the Mortgagor with respect to the
Operating Assets, nor shall any such obligation be imposed on the
Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and
to all buildings and improvements of every kind and description now or
hereafter erected or placed on the Owned Land and/or the Leased Land
and all fixtures and articles of personal property now or hereafter
attached to or contained in and used in connection with such buildings
and improvements, including, but not limited to, all apparatus,
furniture, furnishings, machinery, motors, elevators, fittings,
radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and
hot water boilers, lighting and power plants, pipes, plumbing,
radiators, sinks, bath tubs, water closets, gas and electrical
fixtures, awnings, shades, screens, blinds, dishwashers, freezers,
vacuum cleaning systems, office equipment and other furnishings, and
all plumbing, heating, lighting, cooking, laundry, ventilating,
incinerating, air-conditioning and sprinkler equipment or other fire
prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or
articles in substitution therefor, whether or not the same are or shall
be attached to the Owned Land, the Leased Land or to any such buildings
and improvements thereon, in any manner; and
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(b) All of the Mortgagor's right, title and interest in
and to (i) the Leased Land, if the Mortgagor acquires the fee simple
title to the Leased Land or any part thereof (subject to the
provisions of Section 2.06 hereof), (ii) all air rights and rights to
maintain supporting columns and all rights to construct and
maintain bridges, and to create private rights of way over
streets now or hereafter owned or enjoyed by the Mortgagor and
appurtenant to the Owned Land or Leased Land, and (iii) all right,
title and interest of Mortgagor as grantee or licensee in and to
the following to the extent necessary for the use and enjoyment of
the Owned Land or the Leased Land: (A) all those plots, pieces or
parcels of land and air rights, more particularly described on
Schedule 5, attached hereto and made a part hereof (the "Bridge
Easement Parcels"), with respect to which Mortgagor has easements,
licenses or other rights of possession or use pursuant to these
certain easement and license agreements more particularly
described on Schedule 5 (the "Bridge Easements"), (B) all those
plots, pieces or parcels of land and air rights, more particularly
described on Schedule 6 attached hereto and made a part hereof (the
"Elevator Easement Parcels"), with respect to which Mortgagor has
easements, licenses or other rights of possession or use pursuant
to those certain license agreements more particularly described on
Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece
or parcel of land and air rights more particularly described on
Schedule 7 attached hereto and made a part hereof (the
"Turn-Around Easement Parcel") with respect to which Mortgagor
has easements, licenses, or other rights of possession or use
pursuant to that certain easement more particularly described on
Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement
Parcels, the Elevator Easement Parcels and the Turn-Around
Easement Parcel are collectively referred to herein as the
"Easement Parcels"; and the Bridge Easements, the Elevator
Easements and the Turn-Around Easement are collectively referred
to as the "Easements"), together with all rights of way,
privileges, liberties, tenements, hereditaments and
appurtenances belonging or in any way appertaining to such
estates, it being the intention hereof that all property,
interests, rights and privileges and franchises pertaining to the
Premises (other than Excepted Property) shall be as fully embraced
within and subjected to the lien hereof as if such property were
specifically described herein.
To the extent the grant of a security interest in
any portion of the Trust Estate is governed by the Uniform
Commercial Code, this Mortgage is hereby deemed to be as well
a security agreement under the Uniform Commercial Code for the
purpose of creating hereby a security interest in all of the
Mortgagor's right, title and interest in and to such property,
securing the obligations secured hereby, for the benefit of
the Mortgagee;
* * *
TOGETHER with all of the Mortgagor's right, title and interest
in and to all mineral and water rights and any title or reversion, in
and to the beds of the ways, streets, avenues and alleys adjoining
the Premises to the center line
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thereof and in and to all strips, gaps and gores adjoining the premises
on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and
interest to and singular the tenements, hereditaments, easements,
appurtenances, passages, water courses, riparian rights, other
rights, liberties and privileges thereof or in any way appertaining
to the Premises, including any other claim at law or in equity as
well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore
or hereafter to be made to the present and all subsequent owners of
the Trust Estate for any taking by eminent domain, either permanent
or temporary, of all or any part of the Trust Estate or any
easement or appurtenances thereof, including severance and
consequential damage and change in grade of streets, all in
accordance with and subject to the provisions of the Superior
Instrument Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on
any insurance policies described in Section 5.11, and the right to
receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Trust Estate
or otherwise, all in accordance with and subject to the provisions
of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted
property, rights, title, interest, privileges and franchises, the
Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases,
Operating Assets, Easements, properties, options, credits, deposits,
rights, privileges and franchises of every kind and description, real,
personal or mixed, granted hereby, bargained, sold, aliened, assigned,
transferred, hypothecated, pledged, released, conveyed, mortgaged, or
confirmed as aforesaid, or intended, agreed or covenanted so to be,
together with all the appurtenances thereto appertaining (the Premises,
Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being
herein collectively called the "Trust Estate") unto the Mortgagee and
its successors and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing
Encumbrances and, after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the
Mortgagee and the Noteholder as set forth in that certain
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Intercreditor Agreement dated as of the date hereof among RIH, RIHF,
Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee
under that certain note purchase agreement dated as of the date hereof
among Fidelity, RIH and RIHF, and State Street Bank and Trust Company
of Connecticut, National Association ("State Street"), as trustee under
that certain indenture dated as of the date hereof among State Street,
RIH and RIHF (and such other parties that may from time to time become
a party thereto).
BUT IN TRUST, NEVERTHELESS, for the benefit and security of
the Noteholder.
UPON CONDITION that, until the happening of an Event of
Default and subject to the provisions of Article Two, the Mortgagor
shall be permitted to possess and use the Trust Estate, and to receive
and use the rents, issues, profits, revenues and other income of the
Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust
Estate is to be held and applied by the Mortgagee, subject to the
further covenants, conditions and trusts hereinafter set forth, and the
Mortgagor does hereby covenant and agree to and with the Mortgagee,
for the benefit of the holder of the Note as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this
Mortgage, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural
as well as the singular;
(b) all accounting terms not otherwise defined herein have
the meanings assigned to them, and all computations herein
provided for shall be made in accordance with generally accepted
accounting principles consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Mortgage as a whole and not
to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
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"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in
Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good
standing of the American Institute of Real Estate Appraisers) who is
(i) of recognized standing among appraisers of properties similar to
the Casino-Hotel and (ii) experienced in the appraisals of properties
of a similar size and scope to that of the Casino-Hotel, selected by
the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in
Section 1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in
Section 1.01 of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for
gaming and related activities.
"CASINO-HOTEL" means the casino and hotel complex and
ancillary structures and facilities located on the Premises and
furniture, fixtures and equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature
which results in damage, loss or destruction to any buildings or
improvements on the Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section
10.01 of the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both,
would become an Event of Default.
"DEPOSITARY" means an Independent entity to which insurance
proceeds or a condemnation award is paid to be held in trust for
restoration pursuant to the provisions of a Ground Lease or Superior
Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01.
An Event of Default shall "exist" if an Event of Default shall have
occurred and be continuing.
"EXCEPTED PROPERTY" means:
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(1) subject to the provisions of the Assignment of Leases
and Rents, any cash held by the Mortgagor from rents, issues, profits,
revenues and other proceeds of the Trust Estate to the extent that such
cash may be, but has not been, distributed or paid out in accordance
with the Services Agreement or in accordance with the provisions of
Section 12.07 the Indenture;
(2) all personal property owned by lessees under Leases and
the personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to
the provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a
security interest in which is prohibited by the New Jersey Casino
Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated
thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in
Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a
Superior Mortgage secured by or imposing a lien on all or a portion of
the Trust Estate on a parity with or senior to the lien of this
Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon
any Tangible Personal Property and other items constituting Operating
Assets, such as computer software, which are financed, purchased or
leased by the Mortgagor, provided that, except as set forth on
Schedule 3, the principal amount of the indebtedness secured by
such lien shall not exceed eighty-five (85%) percent of the cost to
the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause
Second.
"GUARANTY MORTGAGE" means that certain Mortgage Securing
Guaranty of Junior Mortgage Notes dated as of the date hereof from
Mortgagor to U.S. Trust Company of California, N.A., a
national banking association, which secures the Notes (as defined in
the Indenture), the lien of which shall be PARI PASSU with the lien of
this Mortgage.
"HOTEL" means that portion of the Casino-Hotel not included
within the Casino.
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"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11.375% Junior
Mortgage Notes due 2004, dated as of even date herewith among the
Mortgagor, RIHF, as issuer, and U.S. Trust Company of California,
N.A., as trustee, as it may from time to time be
supplemented, modified or amended by one or more trust indentures
or other instruments supplemental thereto entered into pursuant to
the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person
means such a Person who (a) is in fact independent, (b) does not have
any direct financial interest or any material indirect financial
interest in the Mortgagor or in any other obligor upon the Note
or in any Affiliate of the Mortgagor or of such other obligor and
(c) is not connected with the Mortgagor or such other obligor or
any Affiliate of the Mortgagor or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate
shall be furnished to the Mortgagee, such opinion or certificate
shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof. A Person who is
performing or who has performed services as an independent
contractor to any specified Person shall not be considered not
Independent merely by reason of the fact that such Person is or has
performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section
5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance
policy covering or applicable to the Trust Estate or any part thereof,
all requirements of the issuer of any such policy, and all orders,
rules, regulations and other requirements of the National Board of
Fire Underwriters (or any other body exercising similar functions)
applicable to or affecting the Trust Estate or any part thereof or
any use or condition of the Trust Estate or any other part thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so
elects, any bank, trust company or insurance company with net worth in
excess of $100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected
by the Mortgagor authorized to issue insurance in the State of New
Jersey with an A.M. Best rating as high or higher than the rating of
insurance companies insuring other casino-hotels in Atlantic City,
New Jersey.
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"LEASE" means each lease or sublease demising all or any
portion of the Owned Land, the Leased Land or the buildings or
improvements thereon and made by the Mortgagor as lessor or sublessor,
as the case may be, or any spaces in any building or buildings which
constitute a part of the Trust Estate, including every agreement
relating thereto or entered into in connection therewith and every
guaranty of the performance and observance of the covenants,
conditions and agreements to be performed by the lessee under any
such lease. Notwithstanding the foregoing, the term "Lease" shall
not include any transient room rentals.
"LEASED LAND" has the meaning stated in Granting Clause
Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements (including, without limitation, the New Jersey
Environment Cleanup Responsibility Act and the New Jersey Spill
Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies,
officials and officers, of governments, federal, state and
municipal (including, without limitation, the New Jersey
Department of Environmental Protection, the Atlantic City Bureau
of Investigations, Division of Protection, the Atlantic City Bureau
of Investigations, Division of Gaming Enforcement of the State of
New Jersey, and the Casino Control Commission of the State of New
Jersey), foreseen or unforeseen, ordinary or extraordinary, which
now is or at any time hereafter becomes applicable to the Trust
Estate or any part thereof, or any of the adjoining sidewalks, or
the use of the Casino-Hotel as a gaming or gambling facility or any
other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Note means the date
on which the principal of such Note becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration or prepayment or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section
1.01 of the Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the
first paragraph of this instrument until a successor entity shall have
become such pursuant to the applicable provisions of this Mortgage,
and thereafter, except to the extent otherwise contemplated by
Section 4.02, "Mortgagor" shall mean such successor entity exclusively.
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"NOTEHOLDER" shall mean the holder or holders of the Note.
"NOTE" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an
officer of the Mortgagor and delivered to the Mortgagee. Whenever this
Mortgage requires that an Officers' Certificate be signed also by
an Architect or an Accountant or other expert, such Architect,
Accountant or other expert may (except as otherwise expressly
provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause
Fifth.
"OPINION OF Counsel" means a written opinion of counsel who
may (except as otherwise expressly provided in this Mortgage) be an
employee of the Mortgagor or an employee of an Affiliate of the
Mortgagor. Unless otherwise specifically provided in this Mortgage,
such counsel may rely, as to any state of facts not personally known
to such counsel and relating to such opinions, on an Officers'
Certificate to the extent not rejected by the Trustee and its counsel
(which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued
by [list title insurance companies], pursuant to Title Commitment No.
____________ redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01
of the Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of
compliance, certificates of operation, certificates of occupancy and
permits required for the lawful ownership, occupancy, operation and use
of all or a material portion of the Premises whether held by the
Mortgagor or any other Person (which may be temporary or permanent)
(including, without limitation, those required for the use of the
Casino-Hotel as a licensed casino facility), in accordance with all
applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges
not yet due and payable or if due and payable are not delinquent
to the extent that any fine, penalty, interest or cost may be
added for nonpayment thereof;
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(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights
granted as provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of
the Indenture;
(8) any Working Capital Facility Lien;
(9) liens created by the Senior Mortgage Documents; and
(10) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or any other entity or government or any agency or
political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made
in accordance with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing,
Inc., a Delaware corporation.
"SENIOR GUARANTY MORTGAGE" has the meaning set forth in
Section 1.01 of the Indenture.
"SENIOR MORTGAGE" has the meaning set forth in Section 1.01
of the Indenture.
"SENIOR MORTGAGE DOCUMENTS" has the meaning set forth in
Section 1.01 of the Indenture.
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"SERVICES AGREEMENT" has the meaning set forth in Section
1.01 of the Indenture.
"SETTLEMENT COSTS" has the meaning stated in Section 5.20.
"STATED MATURITY" when used with respect to a note means the
date specified in such note as the fixed date on which the principal of
such note is due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable
terms, conditions and provisions of (i) the Ground Leases with respect
to the Leased Land; and (ii) Superior Mortgages with respect to the
portion of the Trust Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage,
the Senior Guaranty Mortgage, any Working Capital Facility Lien and any
After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent
domain of the whole or any part of the Premises, by a competent
authority, or any public or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in
Granting Clause Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the
first paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the
Granting Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01
of the Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section
1.01 of the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in
Section 5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Mortgage to
be made upon, given or furnished to, or filed with, the Mortgagor
or the Mortgagee (collectively, "Notices") shall be deemed given
when either (i) delivered by hand or (ii) two days after sending by
registered or certified mail, postage prepaid, addressed as
follows:
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To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to the Mortgagor, the Mortgagee and the
Trustee, any party may designate additional or substitute address for
Notices which, notwithstanding Subsection (a) above, shall be deemed
given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO
MORTGAGEE. Whenever several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one
or more other such Persons as to such matters in one or several
documents.
Any certificate or opinion of an Officer of the Mortgagor
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such
Officer knows that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of,
or representations by, an Officer or Officers of the Mortgagor
stating that the information with respect to such factual matters
is in the possession of the Mortgagor, unless such counsel knows
that the certificate or opinion or representations with respect to
such matters are erroneous. If appropriate to the matter being
opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of
creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Mortgage, they may, but
need not, be consolidated and form one instrument.
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Whenever in this Mortgage, in connection with any application
or certificate or report to the Mortgagee, it is provided that the
Mortgagor shall deliver any document as a condition of the
granting of such application, or as evidence of the Mortgagor's
compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the
effective date of such certificate or report (as the case may be),
of the facts and opinions stated in such document shall in such
case be conditions precedent to the right of the Mortgagor to have
such application granted or to the sufficiency of such certificate
or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon
any application or request by the Mortgagor to the Mortgagee to take
any action under any provision of this Mortgage, the Mortgagor
shall furnish to the Mortgagee an Officers' Certificate stating
that all conditions precedent, if any, provided for in this
Mortgage relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied
with, except that in the case of any such application or request as
to which the furnishing of such documents is specifically required
by any provision of this Mortgage relating to such particular
application or request, no additional certificate or opinion need
be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Mortgage shall include:
(a) a statement that each individual signing
such certificate or opinion has read such condition
or covenant and the definitions herein relating
thereto;
(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 each
such individual, he has made such examination or
investigation as is necessary to enable him to
express an informed opinion as to whether or not
such condition or covenant has been complied with; and
(d) a statement as to whether, in the
opinion of each such individual, such condition
or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section
headings herein are for convenience only and shall not affect the
construction hereof.
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Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit
of the parties hereto and of the respective successors and assigns of
the parties hereto to the same effect as if each such successor or
assign were in each case named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged,
released nor any of its provisions waived except by agreement in writing
executed by the Mortgagor and the Mortgagee and in accordance with
the provisions of this Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in
this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this
Mortgage, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns, any benefit or
any legal or equitable right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed
to be a contract under the laws of the State of New Jersey and shall be
construed in accordance with and governed by the laws of the State
of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever
the provisions of this Mortgage and the provisions of the Indenture
shall be inconsistent, the provisions of the Indenture shall
govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
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proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
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indemnity against such risk or liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT.
Each provision of this Mortgage is subject to and shall be enforced in
compliance with the provisions of the New Jersey Casino Control Act. This
Mortgage shall not be transferred, assigned or amended without prior approval
of the New Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall
pay or cause to be paid, or there shall otherwise be paid, to the
Mortgagee all amounts required to be paid by the Mortgagor
pursuant to the Note, and the conditions precedent for the
Indenture to cease, determine and become null and void in
accordance with Section 5.01 of the Indenture shall have occurred,
the Mortgagee shall promptly cancel and discharge this Mortgage,
and execute and deliver to the Mortgagor all such instruments as
may be necessary, required or appropriate to evidence such
discharge and satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be
subject in each instance to the giving of any notice and the expiration
of any grace period provided for in Section 3.01 as a condition to
such Default making it an Event of Default, unless the Trust
Indenture Act requires otherwise, in which case the Trust
Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that
an event which does not materially diminish the value of the
Mortgagee's interest in the Trust Estate shall not be deemed an
"impairment of security", as that phrase is used in this Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE.
So long as there shall have been no acceleration of maturity of the Note under
Section 3.02, the Mortgagor shall be suffered and permitted, with power freely
and without let or hindrance on the part of the Mortgagee, subject to
the provisions of this Mortgage and the Guaranty Mortgage, to possess, use,
manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust
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and settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time
to time, unless an Event of Default shall have occurred and be continuing,
without any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right
to pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to
the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
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Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions
contained in this Mortgage or the Indenture to the contrary, including, without
limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles
Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and
other items constituting operating assets, such as computer software subject to
any FF&E Financing Agreement, or becomes the lessee under a lease for any of the
same and if the document evidencing such FF&E Financing Agreement prohibits
subordinate liens or the provisions of any such lease prohibits any assignment
thereof by the lessee, and if any such prohibition is customary with respect to
similar transactions of the lender or lessor, as the case may be, then the
property so purchased or the lessee's interest in the lease, as the case may be,
shall be deemed to be Excepted Property. If any such FF&E Financing Agreement
permits subordinate liens then the Mortgagee agrees to execute and deliver to
the Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination of
the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part of the Released Fee Land (the land to be so conveyed is hereinafter
referred to as the "Released Land"), free from the lien of the Mortgage,
provided that:
(i) the Mortgagor furnishes the Mortgagee with an Officers'
Certificate requesting the release of such property from the Trust Estate
and stating (w) so long as the Released Land is owned or used by an
Affiliate of the Mortgagor, the Released Land shall not be operated in a
manner in competition with the operation of the Casino-Hotel as a casino,
(x) that no permanent structures have been constructed on the Released
Land, (y) that the Mortgagor is not required to hold the Released Land in
order to maintain all Permits and in order to comply with the provisions of
all material contracts to which the Mortgagor is a party or by which the
Mortgagor is bound and either (A) the Mortgagor has made adequate provision
to maintain all Permits and to comply with such contractual requirements
by: (1) owning and using the
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balance of the Trust Estate; (2) acquiring fee title to any real property
that would enable Mortgagor to maintain all Permits and satisfy such
contractual requirements; or (3) acquiring a Qualified Leasehold Interest
in real property that would enable the Mortgagor to maintain such Permits
and satisfy such contractual requirements; or (B) neither the requirements
of such Permits nor such contracts require the Mortgagor to own the
Released Land or use or operate any land in the manner in which the
Released Land is intended to be used; or (C) such requirements have been
waived, and (z) that such conveyance will not materially interfere with the
operation of the Casino-Hotel;
(ii) the Mortgagor delivers to the Mortgagee an Opinion of
Counsel to the effect that the Mortgagor is not required to own and use the
Released Land in order to maintain in good standing all Permits or by the
provisions of any material contract to which the Mortgagor is a party or by
which it is bound to own and use the Released Land;
(iii) the Mortgagor delivers to the Mortgagee, if applicable, an
endorsement to the Original Policy in accordance with Section 2.05(d);
(iv) the Mortgagor delivers to the Mortgagee an executed
counterpart of the instruments of conveyance in recordable form, which
shall contain a covenant prohibiting the use of the Released Land by any
Affiliate of the Mortgagor (A) as a casino or (B) in a manner in
competition with the operation of the Casino-Hotel as a casino prior to the
latest Stated Maturity Date of the Note; and
(v) in the case of a conveyance or release described in (A) or
(B) above, if the Released Land is being conveyed to an Affiliate of the
Mortgagor, the cash consideration received by the Mortgagor for the
Released Land shall not be less than the product of the Release Price
multiplied by the area (in square feet) of the Released Land.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.05
and, if applicable, Section 2.05 of the Guaranty Mortgage,
PROVIDED, that the Mortgagee shall have no liability thereunder and all costs
and expenses (including reasonable attorneys' fees) shall be paid by the
Mortgagor.
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Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be continuing, to have
an Affiliate exercise such options(s) or for the Mortgagor to exercise such
options(s) on behalf of an Affiliate and in connection therewith to cause fee
simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with
the following:
(i) an Officers' Certificate requesting the release of the
Released Fee Land from the Trust Estate and stating that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain all
Permits and in order to comply with the provisions of all material
contracts to which the Mortgagor is a party or by which the Mortgagor is
bound, (B) such Affiliate has received all Permits necessary to own the
Released Fee Land (including without limitation all approvals required by
the Casino Control Commission of the State of New Jersey), (C) there has
been delivered to the Mortgagor and the Mortgagee a true copy of an
instrument executed by such Affiliate stating that (i) such Affiliate may
only engage in the activity of owning the Released Fee Land and (ii) such
Affiliate shall not convey the Released Fee Land to another Affiliate of
the Mortgagor, unless such other Affiliate executes and delivers to the
Mortgagor and the Mortgagee, the instruments that would have been required
to be delivered pursuant to clause (C) if the Mortgagor conveyed the
Released Fee Land to such other Affiliate (provided that this restriction
shall only be effective until such time as this Mortgage shall be satisfied
of record) and (D) the deed conveying the Released Fee Land to such
Affiliate shall state that such conveyance is made subject to the terms,
provisions and conditions of the applicable Ground Lease and that the fee
and leasehold interests in the Released Fee Land shall not merge by reason
of the Mortgagor and/or any Affiliate owning both the leasehold and fee
estate therein, and that such estates shall always remain separate and
distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to which
the
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Mortgagor is a party or by which it is bound to own the Released Fee Land
and (B) the instruments described in clause (C) of subparagraph (i) were
duly executed by and are binding upon such Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, and agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED
that the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
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Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if
no Event of Default has occurred and is continuing and (ii) if the Mortgagor
shall acquire Released Fee Land, then simultaneously with the acquisition
thereof, the Mortgagor shall have the right to encumber such fee simple title
with a mortgage (such mortgage and any refinancing thereof permitted by the
Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The
lien of this Mortgage on the Released Fee Land shall be subordinated to the lien
of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of
other Superior Mortgages which shall become a lien thereon in accordance with
the terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee Mortgage
(A) does not exceed 75% of the cost to the Mortgagor of such fee simple
title at the time of the acquisition and (B) satisfies the criteria set
forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers fee
simple title to the Leased Land or any part thereof, such After-Acquired
Fee Mortgage contains provisions binding on the holder of the
After-Acquired Fee Mortgage and its successors and assigns confirming the
provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire Released
Fee Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstanding, the subordination of this Mortgage to
any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall
not be
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self-operative but shall be effective only upon the execution and delivery by
the Mortgagee of an instrument in writing effecting such subordination. The
Mortgagee shall deliver such instrument of subordination on the following
conditions: (x) the Mortgagee shall have received an Officers' Certificate
confirming that the conditions of (i) through (vi) of paragraph (a) have been
satisfied, together with a true and correct copy of the After- Acquired Fee
Mortgage and all other instruments securing the indebtedness evidenced thereby
and (y) the instrument of subordination shall specifically state that this
Mortgage is being subordinated not with respect to the lien of this Mortgage on
the Ground Lease or on the leasehold estate created thereby, but only with
respect to the fee simple title to the Leased Land or applicable part thereof
and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of any interest on the Note when such
interest becomes due and payable and continuance of such default for a
period of 10 days after there has been given a written notice to the
Mortgagor specifying such default and stating that such notice is a "Notice
of Default" hereunder; or
(b) default in the payment of the principal of any Note at its
Maturity; or
(c) an "Event of Default" as defined in Section 3.01 of the Guaranty
Mortgage shall occur; or
(d) default in the payment of any other sum due under the Note or
this Mortgage and the continuance of such default for a period of 10 days
after there has been given to the Mortgagor a written notice specifying
such default and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(e) default in the performance, or breach, of any covenant of the
Mortgagor in this Mortgage (other than a
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covenant a default in the performance or breach of which is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 30 days after there has been given to the Mortgagor
a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder,
unless (i) the default or breach is of such a nature that is curable but
not susceptible of being cured with due diligence within such 30-day period
(for reasons other than the lack of funds), (ii) the Mortgagor delivers an
Officers' Certificate to the Mortgagee within such 30-day period stating
(A) the applicability of the provisions of Clause (i) to such default or
breach, (B) the Mortgagor's intention to remedy such default or breach with
reasonable diligence and (C) the steps which the Mortgagor has undertaken
to remedy such default or breach and (iii) the Mortgagor delivers to the
Mortgagee additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate described in Clause
(ii), in which case such 30 day period shall be extended for such further
period of time as may reasonably be required to cure the same, provided
that the Mortgagor is then proceeding and thereafter continues to proceed
to cure the same with reasonable diligence; or
(f) an "Event of Default" as defined in Section 7.01 of the
Indenture, shall occur; or
(g) default by the Mortgagor under any of the terms of any Ground
Lease which shall not be fully cured or waived prior to the expiration of
any grace period contained in such Ground Lease, unless prior to the
expiration of such grace period, the Mortgagor gives the Mortgagee an
Officers' Certificate, an Opinion of Counsel and a true copy of the
Injunction referred to below, which Certificate and Opinion state that (i)
a court of competent jurisdiction has issued an injunction (which is in
force and effect and has not been modified or reversed on appeal) tolling
or staying the expiration of the grace period set forth in such Ground
Lease with respect to such default, (ii) such injunction specifically
provides that in addition to the tolling or stay describe in (i) above,
such tolling or stay also applies to the Mortgagee for purposes of
determining the duration and expiration of the periods during which the
Mortgagee may exercise its rights under such Ground Lease (including
without limitation, periods to cure lessee defaults and delivering a
guarantee and the period during which the Mortgagee may elect to enter into
a new lease thereunder), (iii) such injunction further provides that the
tolling or stay under (i) and (ii) shall be effective until such time that
the Mortgagee is personally served
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with notice of the expiration of such injunction and (iv) the Mortgagee is
named as a party in any action or proceeding involving such injunction and
therefore entitled to notice of any modification or termination thereof;
and, if such injunction is issued, then so long as such injunction remains
in force and effect and the preceding provisions of this Section 3.01(g)
have been complied with, the grace period referred to in the third line of
this subparagraph (g) shall be deemed to mean the grace period after giving
effect to any such tolling or stay in (i) above; or
(h) default by the Mortgagor under any of the terms of any Superior
Mortgage which default results in the acceleration of the maturity of such
Superior Mortgage and which shall not be fully cured or waived prior to the
expiration of any grace period contained in such Superior Mortgage, unless
prior to the expiration of such grace period, the Mortgagor gives the
Mortgagee an Officers' Certificate and an Opinion of Counsel and a true
copy of the injunction referred to below, which Certificate and Opinion
shall state (i) that a court of competent jurisdiction has issued an
injunction (which is in force and effect and has not been modified or
reversed on appeal) tolling or staying the expiration of the grace period
set forth in such Superior Mortgage with respect to such default and (ii)
the Mortgagee is named a party in any action or proceeding relating to such
injunction and therefore is entitled to notice of any modification or
termination thereof; and if such injunction is issued, then so long as such
injunction remains in force and effect, and the preceding provisions of
this Section 3.01(h) have been complied with, the grace period referred to
in the third line of this subparagraph (h) shall be deemed to mean the
grace period after giving effect to any such tolling or stay; or
(i) any modification, amendment or supplement of any Ground Lease
without the prior written consent of the Mortgage; or
(j) any modification, amendment or supplement of any Superior
Mortgage without the prior written consent of the Mortgagee, except to the
extent that such modification, amendment or supplement is permitted by
Section 5.22(b)(i) hereof; or
(k) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a period
of 60 days after there has been given a written notice to the Mortgagor
specifying that such notice is a "Notice of Default" hereunder; or
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(l) any representation or warranty of the Mortgagor set forth in this
Mortgage or in any notice, certificate, demand or request delivered to the
Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the
time when made and the facts constituting such incorrectness impairs the
Mortgagee's security and such impairment continues for a period of 30 days
after there has been given to the Mortgagor a written notice specifying
that such notice is a "Notice of Default" hereunder, unless (i) such
impairment is curable, but not susceptible of cure within such 30-day
period (for reasons other than lack of funds), (ii) the Mortgagor gives an
Officers' Certificate to the Mortgagee within such 30-day period stating
(A) the applicability of the provisions of (i) to such impairment, (B) the
Mortgagor's intention to remedy the same with reasonable diligence and (C)
the steps which the Mortgagor has undertaken to remedy such default or
breach and (iii) the Mortgagor delivers to the Mortgagee additional
Officers' Certificates every 30 days thereafter updating the information
contained in the certificate described in (ii), in which case such 30-day
period shall be extended for such further period of time as may reasonably
be required to cure the same, provided that the Mortgagor is then
proceeding and thereafter continues to proceed to cure the same with
reasonable diligence.
Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is
continuing, then the Mortgagee may declare the Outstanding Amount of the Note to
be due and payable immediately, by a notice in writing to the Mortgagor and upon
any such declaration such principal shall become immediately due and payable.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys
received by the Mortgagee pursuant to the provisions of this Article Three
(including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance
with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this Mortgage
and such proceeding has been discontinued or abandoned for any reason or has
been determined adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such proceeding
had been instituted.
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Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect the indebtedness secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including
reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection
therewith, together with interest at the rate then payable on the Note, from the
date of payment less the net amount received by the Mortgagee or the Trustee, as
their interests may appear under any title insurance policy, and, until paid,
all such expenses, together with interest as aforesaid, shall be a lien on the
Trust Estate.
Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time insist
upon, plead, claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law now or hereafter in force, in order
to prevent or hinder the enforcement of this Mortgage or the absolute sale of
the Trust Estate, or any part hereof, or the possession thereof by any purchaser
at any sale under this Article Three; and the Mortgagor, for itself and all who
may claim under it, so far as it or they now or hereafter may lawfully do so,
hereby waives the benefit of all such laws. The Mortgagor, for itself and all
who may claim under it, waives, to the extent that it may lawfully do so, all
right to have the property in the Trust Estate marshalled upon any foreclosure
hereof, and agrees that any court having jurisdiction to foreclose this Mortgage
may order the sale of the Trust Estate as an entirety.
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If any law in this Section 3.08 referred to and now in force, of which
the Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of
an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event
of Default shall occur and be continuing, the Mortgagee, with or without entry,
in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee
may determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Mortgage or in
aid of the execution of any power granted in this Mortgage or for the
foreclosure of this
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Mortgage or for the enforcement of any other legal,
equitable or other remedy, as the Mortgagee,
being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Mortgagee; the
failure to join tenants shall not be asserted as a defense to
any foreclosure or proceeding to enforce the rights of the
Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of
the Trust Estate, whether made under the power of sale hereby given or
pursuant to judicial proceedings, to the extent permitted by law:
(a) the principal of and accrued interest on the Note, if
not previously due, shall at once become and be immediately
due and payable;
(b) subject to the provisions of Section 3.14 and the
receipt of any required prior approvals of the New Jersey Casino Control
Commission, the Mortgagee may bid for and purchase the property offered for
sale, and upon compliance with the terms of sale may hold, retain and
possess and dispose of such property, without further accountability,
and may, in paying the purchase money therefor, delivery any notes or
claims for interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned
to the holders thereof after being appropriately stamped to
show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and
instrument of assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true
and lawful attorney of the Mortgagor, in its name and stead,
to make all necessary deeds, bills of sale and instruments of
assignment and transfer of the property thus sold; and for
that purpose it may execute all necessary deeds, bills of
sale and instruments of assignment and transfer, and may
substitute one or more persons, firms or corporations with
like power, the Mortgagor hereby ratifying and confirming all
that its attorney or such substitute or substitutes shall
lawfully do by virtue hereof; but if so requested by the
Mortgagee or by any purchaser, the Mortgagor shall ratify and
confirm any such sale or transfer by executing and delivering
to the Mortgagee or to such purchaser or purchasers all proper
deeds, bills of sale, instruments
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of assignment and transfer and releases as may be designated in any such
request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of,
in and to the property so sold shall be divested and such sale
shall be a perpetual bar both at law and in equity against the
Mortgagor, its successors and assigns, and against any and all
persons claiming or who may claim the property sold or any
part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making
such sale shall be a sufficient discharge to the purchaser or
purchasers at such sale for his or their purchase money and
such purchaser or purchasers and his or their assigns or
personal representatives shall not, after paying such
purchase money and receiving such receipt, be obliged to see
to the application of such purchase money, or be in anywise
answerable for any loss, misapplication or non-application
thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of
Default and commencement of judicial proceedings by the Mortgagee
to enforce any right under this Mortgage, the Mortgagee shall be
entitled, as against the Mortgagor, without notice or demand and
without regard to the adequacy of the security for the Note or the
solvency of the Mortgagor, to the appointment of a receiver of the
Trust Estate, and of the rents, issues, profits, revenues and other
income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights
under this Section 3.12 shall be subject to the provisions of the
New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon
5 days' prior written notice to the Mortgagor (or such shorter
period or without notice if deemed necessary and appropriate by the
Mortgagee), the Mortgagee shall have power to institute and
maintain such proceedings as it may deem necessary and appropriate
to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its
interests in the Trust Estate and in the rents, issues, profits,
revenues and other income arising therefrom, including power to
institute and maintain proceedings to restrain the enforcement of
or compliance with any 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 the
security hereunder or be materially prejudicial to the interests of
the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the
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contrary, following an Event of Default and the taking of possession
of the Trust Estate or any part thereof by the Mortgagee and/or
the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized,
in addition to the rights and powers of the Mortgagee and such
receiver set forth elsewhere in this Mortgage, to retain one or
more experienced operators of hotels and/or casinos to manage the
Casino-Hotel, PROVIDED that any such operator shall have all
necessary legal qualifications, including all Permits, to manage
the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR
TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with
all provisions applicable to the Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any
consolidation or combination or any conveyance or transfer of
the Trust Estate or any portion thereof in accordance with Section
10.01 of the Indenture, the successor entity formed by such
consolidation or into which the Mortgagor is combined or to which
such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the
Mortgagor under this Mortgage with the same effect as if such
successor entity had been named as the Mortgagor herein; PROVIDED,
HOWEVER, that no such conveyance or transfer of the Trust Estate
substantially as an entirety, unless such conveyance or transfer is
in compliance with the provisions of Article Ten of the Indenture,
shall have the effect of releasing the Person named as "the
Mortgagor" in the first paragraph of this instrument or any
successor entity which shall theretofore have become such in the
manner prescribed in such Article Ten from its liability as obligor
or maker of the Note.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE.
Except as otherwise expressly permitted by this Mortgage or the
Indenture, the Mortgagor shall not sell, assign, lease, sublease,
hypothecate, pledge, mortgage or otherwise transfer all or any part
of the Trust Estate or any interest therein (including without
limitation any interest in the Ground Leases). Without limiting the
generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground
Leases from its ownership of the buildings constituting the Casino-Hotel
or any part thereof.
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ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Mortgagor will duly and punctually pay the principal of (and
premium, if any) and interest on the Note in accordance with the
terms of the Note and this Mortgage.
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants
and agrees to comply with all of the terms and conditions set forth
in any FF&E Financing Agreements before the expiration of any
applicable notice and cure periods contained in the FF&E Financing
Agreements.
Section 5.03. LIMITATIONS ON LIENS.
(a) The Mortgagor will not create, incur, suffer or permit to be
created or incurred or to exist any mortgage, lien, charge or
encumbrance on or pledge of any of the Trust Estate, other than
(i) Permitted Encumbrances, (ii) liens on the Trust Estate in
connection with indebtedness permitted by clauses (i), (ii),
(iii), (iv) or (v) of Section 12.08(a) of the Indenture, and
(iii) a building contract or a notice of intention filed by a
mechanic, materialman or laborer under the New Jersey lien law.
Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the
Mortgagor shall not be deemed to have breached the provisions of
the foregoing sentence by virtue of the existence of a lien for
Impositions or mechanics liens so long as the Mortgagor is in good
faith contesting the validity of the same in accordance with the
provisions of Section 5.09 to the extent that the matters described
in (i) and (ii) do not constitute a default under any Ground Lease
or Superior Mortgage.
(b) Mortgagee acknowledges that, contemporaneously with the
execution and delivery of this Mortgage, it has assigned this
Mortgage to the Trustee and that the Trustee is also the mortgagee
under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon
the same Trust Estate pari passu with the lien of this Mortgage.
Mortgagee further acknowledges and agrees that whenever it is
provided in the Guaranty Mortgage that the Mortgagor shall deliver
any notice or document, or is require to make any payment
thereunder, the delivery of such notice or document or the making
of such payment pursuant to the terms of the Guaranty Mortgage
shall also constitute the delivery of such notice or document or
the making of such payment in satisfaction of the terms, conditions
and provisions of this Mortgage to the same extent as the same
constitutes satisfaction of the terms, conditions and provisions
of the Guaranty Mortgage.
Section 5.04. [Reserved]
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Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on
behalf of the Mortgagor, (a) to appear in and defend any action or
proceeding brought with respect to the Trust Estate or any part
thereof and (b) upon 5 days' prior written notice to the Mortgagor
(or such shorter period or without notice if deemed necessary and
appropriate by the Mortgage), to commence any action or proceeding
to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The
Mortgagor represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of
New Jersey and all other applicable laws to execute and deliver
this Mortgage, and all corporate action on its part necessary
for the valid execution and delivery of this Mortgage has been
duly and effectively taken;
(b) it is the lawful owner and is lawfully seized
and possessed of the Owned Land and all buildings and
improvements thereon, free and clear of all liens, charges or
encumbrances, other than the lien of the Mortgage Documents,
any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable
title to the leasehold interests and leasehold estates
under the Ground Leases and to the Ground Leases, subject
to no lien, encumbrance or charge other than the lien of
the Mortgage Documents, any Working Capital Facility Lien
and Existing Encumbrances;
(d)(i) the Ground Leases are valid and subsisting demises of
the Leased Land for the terms therein set forth, (ii) there
are no defaults thereunder by any Lessor or the lessee as to
which written notice has been given to or by the lessee,
(iii) the Mortgagor has delivered true and correct copies of
the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in
full force and effect and has not been modified, amended or
supplemented, except as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no
lien, encumbrance or charge, other than the lien of the
Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to
execute this Mortgage and to grant, bargain, sell, alien,
convey, assign, transfer, hypothecate,
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pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the
Operating Assets and the Ground Leases, without the consent of
any third party, other than governmental authorities but any
applicable or necessary consent or approval of any such governmental
authority has been given or waived at or prior to the
execution and delivery of this Mortgage), and this Mortgage
constitutes a valid third mortgage lien and third priority
security interest in the Trust Estate PARI PASSU with the
lien of the Guaranty Mortgage, subject only to Working
Capital Facility Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend
(x) the title to Trust Estate (including without limitation, its
leasehold estates under the lessee's interests in the Ground
Leases) (subject to Permitted Encumbrances) and (y) the priority
of the lien of this Mortgage (subject to Permitted Encumbrances
other than Restricted Encumbrances), against the claims and
demands of all persons whomsoever, at the Mortgagor's sole cost
and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will,
as provided in Section 5.13, from time to time subject its right,
title and interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments
of further assurance, including all financing statements and
continuation statements covering security interests in personal
property, to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, and will execute
and file such financing statements and cause to be issued and filed
such continuation statements, all in such manner and in such places
as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party
under the Uniform Commercial Code to all property comprising the
Trust Estate (to the extent a grant of a security interest therein
is governed by the Uniform Commercial Code) and to perfect,
preserve and protect the lien of this Mortgage as a valid
mortgage lien of record and a valid security interest on the
Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all
expenses incident to the execution and delivery of this Mortgage,
and any instrument of further assurance, and all federal, state,
county and municipal stamp taxes and other taxes, duties, imposts,
assessments and charges arising out of or in connection with the
execution and delivery of the Note, this Mortgage, any financing
statement or continuation statement with respect to the personal
property constituting
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part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF
PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE
REQUIREMENTS. The Mortgagor will:
(a)subject to the provisions of Section 5.09 relating to
contests, pay or cause to be paid promptly (or when
installments of the same shall become due and payable, if,
by law or by agreement or arrangement with the applicable
governmental agency or authority, the same may be paid in
installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are
payable by the Mortgagor pursuant to any Superior Instrument
Requirement), all taxes (including, without limitation, real
estate taxes, personal or other property taxes and all sales,
value added, use and similar taxes), assessments (including,
without limitation, all assessments for public improvements
or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to
the satisfaction of this Mortgage), water, sewer or other
rents, rates and charges, excises, levies, license fees,
permit fees, inspection fees and other authorization fees and
other charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of
every character (including all interest, additions to tax and
penalties thereon), that may be assessed, levied, confirmed or
imposed on or in respect of or be a lien upon (1) the Trust
Estate (including without limitation the Leased Land) or any
part thereof or any rent therefrom or any estate, right or
interest therein, or (2) any acquisition, occupancy, use,
leasing, or possession of or activity conducted on the real
property or any part thereof included in the Trust Estate or
any gross receipts thereof or of the rent therefrom (all of
the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any
other provision of this Mortgage, the Mortgagor shall not be
required to pay any income, profits or revenue tax upon the
income of the Mortgagee, the Trustee or any Noteholder nor
any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee,
the Trustee or the Noteholder nor any interest, additions to
tax or penalties in respect thereof, unless such tax is
imposed, levied or assessed in substitution for any
Impositions that the Mortgagor is required to pay pursuant
to this Section 5.08. The Mortgagor will deliver to the
Mortgagee official receipts or other proof evidencing
payments of any Impositions in accordance with the
requirements of this Section 5.08. The Mortgagor shall
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not be entitled to any credit for taxes or assessments paid
against the Note;
(b) except for such property which the Mortgagor may dispose
of or replace pursuant to Section 2.02, maintain and keep all
its properties used or useful in the conduct of its business
(other than obsolete equipment), including, without
limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition,
except for reasonable wear and use, and make or cause to be
made all such needful and proper repairs, renewals and
replacements thereto consistent with the standards of other
casino-hotels in Atlantic City, New Jersey;
(c) occupy and continuously operate the Casino-Hotel and
keep the Casino-Hotel supplied with Tangible Personal
Property, all in a manner consistent with the standards of
other casino-hotels in Atlantic City, New Jersey (provided
that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section
3.01(f));
(d) subject to the provisions of Section 5.09 relating to
contests, the Mortgagor at its sole expense will timely
(1) comply with all Legal Requirements and Insurance
Requirements, whether or not compliance therewith shall
require structural changes in the buildings and improvements
included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof,
(2) procure, maintain and comply with all permits and other
authorizations required for (i) the use of the Casino as a
gaming and gambling facility, (ii) the on-premises consumption
of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made,
and for the proper erection, installation, operation and
maintenance of the improvements or any part thereof, and
(3) comply with any instruments of record at the time in
force affecting the Trust Estate or any part thereof, if the
failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the
foregoing, the Mortgagor represents and warrants that at the
time of the execution of this Mortgage, the Mortgagor is in
compliance with the requirements of clauses (1), (2) and (3);
(e) in the event of the passage after the date of this
Mortgage of any law of the State of New Jersey, or any other
governmental entity, changing in any way the laws now in force
for the taxation of mortgages, or debts secured thereby, for
state or local purposes, or the manner of the operation of
any such taxes, so as to affect the interest of the
Mortgagee, then and in such
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event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for
any reason payment by the Mortgagor of any such new or
additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured
hereby wholly or partially usurious under any of the terms or
provisions of the Note, or this Mortgage, or otherwise, the
Mortgagee may, at the Mortgagee's option, declare the whole
sum secured by this Mortgage, with interest thereon, to be
due and payable 90 days after notice of election thereof has
been given by the Mortgagee, or the Mortgagee may, at the
Mortgagee's option, pay that amount or portion of such taxes
as renders the loan or indebtedness secured hereby unlawful or
usurious, in which event the Mortgagor shall concurrently
therewith pay the remaining lawful and nonusurious portion or
balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may,
at its sole expense, contest by appropriate legal proceedings
conducted in good faith and with due diligence, the amount or validity
or application, in whole or in part of any Imposition or lien
therefor or any Legal Requirement or Insurance Requirement or the
application of any instrument of record affecting the Trust Estate
or any part thereof or any claims of mechanics, materialmen,
suppliers, or vendors or lien therefore, and may withhold payment
of the same pending such proceedings if permitted by law, or make
payment under protest, or defer compliance with any such Legal
Requirement, any such Insurance Requirement or the terms of any
such instrument, and the same shall not be a Default hereunder,
provided that (a) in the case of any Impositions or lien therefor
or any claims of mechanics, materialmen, suppliers or vendors or
lien therefor, such proceedings shall suspend the collection
thereof from each of the Mortgagor, the Mortgagee, the Trustee,
the Noteholder and the Trust Estate, (b) neither the Trust Estate
nor any interest therein would be in any danger of being sold,
forfeited, or lost, (c) such action would not result in or
constitute a default under any Ground Lease or Superior Mortgage,
(d) in the case of a Legal Requirement, neither the Noteholder nor
the Mortgagee shall be in any danger of any civil or any criminal
liability, and the failure of the Mortgagor to comply with such
Legal Requirement shall not affect the continuance in good
standing of any Permit or result in the suspension, termination,
non-renewal or material adverse modification of any permit, and
(e) in the case of an Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any
insurance required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without
limiting the generality of the first sentence of Section 5.03 and
notwithstanding the provisions of Section 5.03(a)(ii), the
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Mortgagor will cause to be removed, either by payment, or bonding
or otherwise, all claims and demands of mechanics, materialmen,
laborers, and others which, if unpaid, might result in, or permit
the creation of, a lien on the Premises and/or Trust Estate or any
part thereof, or on the revenues, rents, issues, income and profits
arising therefrom and in general will do or cause to be done
everything necessary so that the lien hereof shall be fully
preserved, at the cost of the Mortgagor, without expense to the
Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage
by fire, lightning, and other risks from time to time included
under "all-risk" policies and against loss or damage by
sprinkler leakage, water damage, collapse, malicious
mischief and explosion in respect of any steam and pressure
boiler and similar apparatus located on such insurable
properties, in amounts at all times sufficient to prevent
the Mortgagor from becoming a coinsurer within the terms of
the applicable policies, but in any event such insurance
shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the
"Insurance Amount"): (i) 100% of the then full insurable value
of such insurable properties, the term "full insurable value"
to mean the actual replacement cost (excluding the costs of
foundation, footing, excavation, paving, landscaping and
other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36
calendar months), by an Architect, contractor, appraiser, or
an Insurer, (ii) the amount required to be maintained pursuant
to the Superior Instrument Requirements;
(2) war risk insurance as and when such insurance is obtainable
from the United States of America or any agency thereof as
promptly as reasonably practicable after the same becomes so
obtainable, in an amount not less than the Insurance Amount,
or in such lesser amount as may then be so obtainable;
(3) public liability, including personal injury and property
damage and comprehensive general liability connected with the
possession, use, leasing, operation or condition of such
insurable properties in such amounts as, in the Mortgagor's
judgment, are prudent, considering the cost of such insurance,
for personal injury and
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property damage with respect to any one occurrence, which may
be under an umbrella policy. Anything contained in this clause
(3) to the contrary notwithstanding, the Superior Instrument Requirements
with respect to the kinds and amount of insurance described in
this clause (3) shall be satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to
any work (to the extent the risks to be covered thereby are
not already covered by other policies of insurance maintained
by the Mortgagor) on or about such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time
that the Mortgagor is renewing any policy for such insurance
or taking out any new or replacement such policy covering a
period of less than 12 months, the Mortgagor shall deliver to
the Mortgagee an Officers' Certificate certifying that the
period of coverage to be maintained by the Mortgagor under
such policy is the maximum that can be maintained at rates
determined by the Mortgagor to be reasonable for such
coverage;
(6) to the extent available, flood insurance in an amount not
less than the Insurance Amount, or such lesser amount as may
then be so obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time
customarily insured against by persons owning or using
casino-hotels of comparable size in the boardwalk area of
Atlantic City, New Jersey and (ii) required to be maintained
pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to
maintain a deductible with respect to the insurance policies
described in clauses (1), (2), (6) and (7) in an amount not to
exceed (x) for the twelve month period commencing the date hereof,
$100,000 with respect to the insurance policies described in
clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels
of a similar size and value in Atlantic City, New Jersey (but in no
event more than $1,000,000), (ii) the Mortgagor shall be
permitted to maintain a $200,000 self insured
retention under the general liability policy described in
clause (3) and a deductible with respect to the other insurance
policies described in clause (3) in an amount not to exceed the
amount of deductible as is customarily maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the Mortgagor
shall not reduce its insurance coverage for the matters described
in clause (3) (which for purposes of
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this paragraph means a reduction in single limits or an increase
in deductible) unless and until the Mortgagor delivers to the
Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained at rates
determined by the Mortgagor to be reasonable for such coverage,
(x) the amount of the proposed reduction, (y) the premium for the
existing and the proposed reduced coverage, and (z) that the
proposed deductible satisfied the criteria set forth in this clause (iii), and
(iv) the Mortgagor shall be permitted to maintain a deductible with
respect to the insurance policies described in clause (5) in the
forms of and in an amount not to exceed the amount of deductible as
is customarily maintained by casino-hotels of similar size in
Atlantic City, New Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of
workers' compensation insurance, name as additional insureds the Mortgagee
and, to the extent required by the Superior Instrument
Requirements, the Lessors and the holders of the Superior
Mortgages, (2) provide that all insurance proceeds for losses,
except in the case of public liability insurance and workers'
compensation insurance or as otherwise provided in Subsections
(d), (e) and (f) of this Section 5.11, be payable solely to the
Mortgagee or such other party as is required to receive such
proceeds under a Superior Mortgage, (3) except in the case of workers'
compensation, include effective waivers
(whether under the terms of any such policy or otherwise) by the
insurer of all claims for insurance premiums against all lost
payees and named insureds (other than the Mortgagor) and all
rights of subrogation against any named insured, (4) except in the
case of public liability and workers' compensation insurance,
provide that any losses shall be payable notwithstanding (i) any
act, failure to act, negligence of, or violation or breach of
warranties, declarations or conditions contained in such policy by
the Mortgagor or the Mortgagee or any other named insured or loss
payee (including, without limitation, with respect to the Released
Fee Land, the holders of any After-Acquired Fee Mortgages), (ii)
the occupation or use of the insurable properties for purposes more
hazardous than permitted by the terms of the policy, (iii) any
foreclosure or other proceeding or notice of sale relating to the
insurable properties or (iv) any change in the title to or
ownership or possession of the insurable properties, (5) contain
a non-contributory mortgagee clause in favor of the Mortgagee, and
(6) provide that if all or any part of such policy is cancelled,
terminated or expires, the insurer will forthwith give notice
thereof to each named insured an loss payee and that no
cancellation, reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by
each named insured and loss payee of written notice thereof.
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(c) The Mortgagor will deliver to the Mortgagee, (1)
duplicate originals of all insurance policies that the Mortgagor is
required to maintain pursuant to this Section 5.11 and (2) within
30 days after each reduction in insurance required to be maintained
by the Mortgagor hereunder, an Officers' Certificate setting forth
the particulars as to all such insurance policies and certifying
that the same comply with the requirements of this Section 5.11,
that all premiums or installments thereof then due thereon have
been paid and that the same are in full force and effect. The
Mortgagee shall not be responsible for effecting or renewing any
insurance or for the responsibility or solvency of the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x)
results in damage, loss or destruction in an amount in excess of
$5,000,000 to any buildings or improvements on the Premises
and/or any Tangible Personal Property or (y) pursuant to any
Superior Instrument Requirement, would require the deposit of
insurance proceeds with the Depositary, or action or proceeding
with respect thereto. Whenever the Superior Instrument
Requirements require or permit the selection of the Depositary
by the Mortgagor, the Mortgagor shall select the Insurance Trustee
as the Depositary. Within 30 days after any Casualty which results
in any damage, loss or destruction in an amount in excess of
$10,000,000 to any buildings or improvements of the Premises
and/or any Tangible Personal Property, the Mortgagor shall deliver
to the Mortgagee a certificate of an Architect stating whether, in
such Architect's opinion, applicable Legal Requirements permit the
Restoration of such buildings and improvements for the same uses
and to the same size and quality in all material respects, as
existed immediately prior to the Casualty (and if such certificate
states the Legal Requirements do not permit such Restoration, such
certificate shall describe the manner closest approximating such
criteria to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of Appraised
Value dated not more than 10 days prior to delivery setting forth
the Appraised Value immediately prior to the Casualty and the
estimated Appraised Value immediately after the Restoration). If
the Mortgagor is required to deliver such Certificates of Appraised
Value and if based on such Certificates of Appraised Value
immediately after Restoration, the aggregate Outstanding Amount
of First Mortgage Debt immediately after such Restoration shall
exceed the greater of (i) 66 2/3% of the Appraised Value
immediately after such Restoration or (ii) the quotient of the
Outstanding Amount of First Mortgage Debt immediately prior to such
Casualty divided by the Appraised Value immediately prior to the
Casualty multiplied by the Appraised Value immediately after such
Restoration, then the proceeds of any insurance shall, at the
election of Mortgagee, either be applied to Restoration as set
forth in Subsections (e), (h) and (i)
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below) or paid and delivered to the Mortgagee to the extent of the then
Outstanding Amount of the Notes and any other interest or other sums due
hereunder or thereunder to be applied to the satisfaction of the Mortgage to
the extent proceeds are available for such purpose and provided
that no additional sums are due to the Trustee or the Noteholders
under the Notes or the Indenture, the balance of any net insurance
proceeds shall be paid to the Mortgagor. Notwithstanding the
foregoing sentence, if such Certificates of Appraised Values
indicates that the Outstanding Amount of First Mortgage Debt
immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the
proceeds of insurance will be made available for Restoration
(subject to paragraphs, (e), (h) and (i) below) if the Mortgagor
obtains an irrevocable commitment from a nationally recognized
financial institution having a combined capital and surplus of at
least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor
as additions to capital in an amount equal to the Outstanding
Amount of First Mortgage Debt in excess of the Appraised Value
necessary to be paid down so that the Outstanding Amount of First
Mortgage Debt will not exceed either of the two amounts determined
pursuant to such clauses (i) and (ii), PROVIDED that such commitment
may only be released if, upon an Appraisal at any time following
completion of such Restoration, the aggregate Outstanding Amount of
the First Mortgage Debt does not exceed 66-2/3% of the Appraised
Value.
(e) Subject to the provisions of Subsection (d) above,
in case a Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined)
does not exceed the sum of $10,000,000, the net insurance proceeds
shall be paid by the Mortgagee to the Mortgagor (unless the
Superior Instrument Requirements provide that the same shall
be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more
or if the Superior Instrument Requirements provide that the same shall
be paid to the Depositary, the net insurance proceeds shall
be paid by the Mortgagee to the Insurance Trustee (or other
Depositary required by the Superior Instrument Requirements,
provided that such Depositary holds such proceeds in trust for
purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable
promptness under the circumstances and thereafter with due
diligence proceed to perform and complete in a good and
workmanlike manner the restoration, repair, replacement or
rebuilding of the damage or destruction
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resulting from the Casualty (all of which restoration, repair, replacement
or rebuilding are referred to as the "Restoration") in accordance with
the plans and specifications submitted to the Insurance Trustee, in
conformance with all Legal Requirements and Superior
Instrument Requirements, and in accordance with the further
provisions of this Subsection (e), regardless of the extent of
any such Casualty and whether or not net insurance proceeds,
if any, shall be available or, if available, shall be
sufficient, for the purpose of the Restoration (provided,
however, that if the Mortgagor does not receive any net
insurance proceeds within 30 days after any Casualty because
the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration
shall be deferred until such proceeds are made available to
the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an
Officers' Certificate certifying that the Mortgagor is diligently and
continuously adjusting such loss with the Insurer, (ii) the
Mortgagor delivers to the Mortgagee an Officers' Certificate
within such 30-day period requesting the extension of such
period, estimating the date on which such proceeds will be
available and describing the Mortgagor's efforts to adjust
such loss and certifying that such extension does not
constitute a default or a breach of any of the provisions of
any of the Ground Leases (or if so, such default or breach has
been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate
described in Clause (ii)). All Restoration work shall be
performed in accordance with the applicable provisions of
Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements
and, prior to commencing any Restoration, the Mortgagor shall
obtain all Permits necessary in connection therewith, and
shall obtain, and keep in full force and effect until the
completion of such Restoration, such additional insurance as
the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration
shall be accompanied by a certificate of the Mortgagor and an
Opinion of Counsel to the effect that upon the completion of
the Restoration pursuant to the plans and specifications the
Premises, and all buildings and improvements, thereon will
comply with all superior Instrument Requirements, Legal
Requirements and Insurance Requirements. Notwithstanding
anything in this Section 5.11 to the contrary, if such
Casualty is in an amount less than $5,000,000, the
Mortgagor shall not be required to perform and complete such
Restoration (unless the performance and completion of the
Restoration is necessary in order for the Mortgagor to be in
compliance with any term, provision or condition of this
Mortgage
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(other than this Section 5.11(e)) or any Superior
Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall
be held by the Mortgagor in trust for the purpose of paying
the cost of the Restoration, except as otherwise provided
herein;
(5) Any net insurance proceeds that the Insurance
Trustee holds pursuant to this Subsection (e), shall be deposited
in an interest-bearing investment reasonably designate by Mortgagor
(to the extent the Mortgagor is permitted to designate such
investment under the Superior Instrument Requirements) (and
the interest thereon shall be added to such proceeds) and
shall be paid by the Insurance Trustee in reimburse the
Mortgagor for, or to make payment for, the Restoration,
after the Insurance Trustee deducts therefrom the amount of
any reasonable costs and expenses incurred in connection with
the performance of its obligations under this Section 5.11.
The Insurance Trustee shall make such payments not more
frequently than once every 30 days upon the written request
of the Mortgagor (unless more frequent payments are required
by Superior Instrument Requirements), by paying to the
Mortgagor or the persons named in the certificate described
in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate from time to time as the
Restoration progresses, provided the Mortgagor has complied
with the requirements of this Subsection (e) and such payment
is permitted by an applicable Superior Instrument
Requirements. The Mortgagor's written request shall be
accompanied by (i) the certificate described in Clause (6) of
this Subsection (e) and (ii) a title company or official
search, or other evidence reasonably acceptable to the
Insurance Trustee, showing that there have not been filed
with respect to the Premises, any vendor's, contractor's
mechanic's, laborer's or materialman's statutory or similar
lien which has not been discharged of record (or bonded
against or secured by other security) or any other
encumbrance irrespective of its priority (other than
Permitted Encumbrances).
(6) The certificate required by Clause (5) of this
Subsection (e) shall (A) be an Officers' Certificate,
countersigned by the Architect in charge of the Restoration with
respect to the matters described in (i) and (v) below, (B) be dated
not more than 10 days prior to such request and (C) set forth (in
addition to any other requirements contained in any
applicable Superior Instrument Requirements) that:
(i) all of the Restoration work theretofore performed
is in substantial compliance with the
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plans and specifications theretofore submitted to the Insurance
Trustee and in compliance with all Superior Instrument Requirements,
Legal Requirements and Insurance Requirements;
(ii) the sum then requested either has been paid by the
Mortgagor or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered
services or furnished or contracted to deliver materials
for the Restoration therein specified, and the names and
addresses of such persons, a brief description of such
services and materials and the several amounts so paid
or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the
basis in any pervious or then pending request for the
withdrawal of net insurance proceeds, and that the sum
then requested does not exceed the value of the services
and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to
Subclause (ii) of this Clause (6) in such certificate
to be due for services or materials, and except for
amounts in dispute and/or customary retainages, there
is no outstanding indebtedness known to the person
signing such certificate, after due inquiry, which is
then due for labor, wages, materials, supplies or
services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons
signing such certificate, of the Restoration in order
to complete the same does not exceed the net insurance
proceeds remaining in the hands of Insurance Trustee
after payment of the sum requested in such certificate
or if such estimated cost does exceed such insurance
proceeds such certificate shall state the amount of any
such deficiency. If the certificate states that such
deficiency will exist, the Mortgagor shall deliver the
amount of such deficiency in cash or cash equivalent to
the Insurance Trustee simultaneously with the delivery
of such certificate, which amount shall be deemed
insurance proceeds for purposes of this Section
5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the
entire cost of the Restoration, then, after completion of the
Restoration, the Mortgagor shall pay the deficiency. If all
or any part of the net insurance proceeds are not used for
the restoration in accordance
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with this Subsection (e) (because such proceeds exceed the amount
required to complete the Restoration), then upon completion of the
Restoration in accordance with this Subsection (e), such
amount not so used, if held by the Insurance Trustee, shall
be paid to the Mortgagor (if permitted by Superior Instrument
Requirements).
(f) Provided that no Event of Default has occurred and is continuing,
all net business interruption insurance proceeds shall be paid to
the Mortgagor, to be segregated from the other funds of Mortgagor
and held in trust by Mortgagor for the following purposes and in
the following order of priority: (i) for the payment of Impositions
and amounts due under the Ground Leases and Superior Mortgages;
(ii) for debt service for the estimated period of Restoration (for
purposes of this Section 5.11(f), interest and principal payments
due on any payment date under the Note will deemed to accrue in
equal daily installments beginning the day after the immediately
preceding payment date and ending on such payment date); and (iii)
for any expense incurred in connection with the operation or
business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to
be maintained pursuant to this Section 5.11, unless the same are
permitted by Superior Instrument Requirements and the Mortgagee is
included therein as a named insured, with loss payable to the
Mortgagee and the Insurance Trustee pursuant to Section 5.11(b)
hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall
promptly deliver to the Mortgagee a duplicate original of the
policy of such insurance, a copy thereof certified by the insurer
or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance
claims by reason of damage or destruction to any
portion of the Trust Estate may be adjusted by the Mortgagor, but the
Mortgagee shall have the right (but not the obligation) to join the
Mortgagor in adjusting, and approving the adjustment of, any such
loss except in the event of a loss where the amount of insurance
reasonably anticipated to be received with respect to such loss is
less than Five Million Dollars ($5,000,000), and the Mortgagor
shall assist the Mortgagee in any such adjustment at the request of
the Mortgagee. If the Mortgagee at its election as aforesaid joins
the Mortgagor in any adjustment process, then the Mortgagee's
approval of the adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary,
if an Event of Default shall have occurred and be continuing, the
Mortgagee may, at its option, (A) refrain from paying to the
Mortgagor or the Insurance Trustee any net insurance proceeds or
(B) instruct the Insurance Trustee to
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pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee,
as the case may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not
authorize, permit or make any demolition, alteration or
improvement of any building included in the Trust Estate or any
new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in
this Section 5.12 set forth.
Unless an Event of Default shall have occurred and be continuing,
the Mortgagor shall have the right at all times to make or permit
such alterations, improvements or new constructions, structural or
otherwise (herein sometimes called collectively "alterations"), of
or on the Trust Estate, to be made in all cases subject to the
following conditions:
(a) no alteration shall be undertaken or carried out except in
conformity with all Superior Instrument Requirements, Legal
Requirements and Insurance Requirements;
(b) if the estimated cost of any alteration, together with other
alterations that constitute a single construction plan or
project (whether or not accomplished in several stages or
procedures), exceeds $5,000,000, the building or buildings,
as so improved or altered, upon completion of the work shall
be of a value not less than the value of such building or
buildings immediately prior to the making of such
alterations;
(c) any alteration which is structural in nature or involves an
estimated cost of more than $5,000,000 shall be conducted
under the supervision of an Architect, and no such alteration
shall be undertaken until 10 days after there shall have been
filed with the Mortgagee detailed plans and specifications and
cost estimates therefor, stating that such plans and
specification conform to all, prepared and approved in
writing by such Architect and accompanied by a certificate of
such Architect stating that such plans and specifications
conform to all applicable provisions of this Section 5.12;
(d) no alteration involving an estimated cost of more than
$5,000,000 shall be undertaken until the Mortgagor has
furnished to the Mortgagee, at the Mortgagor's sole cost and
expense, a surety bond or bonds, covering performance, and
labor and material payments with respect to the work to be so
performed, naming the Mortgagee as obligee, issued by a
responsible surety company, authorized to do business in the
state of New Jersey, in a form generally and customarily used
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by such surety in an amount equal to the estimated cost of
construction of the work covered by the plans and
specifications therefor, guaranteed and conditioned upon
the performance and completion of such construction,
substantially in conformity with the such plans and
specifications and within a reasonable time, subject to
delays by fire, strikes, lock-out, acts of God, inability to
obtain labor or materials, governmental restrictions, enemy
action, civil commotion or unavoidable Casualty or other
similar causes beyond the control of the Mortgagor, free and
clear of all liens, claims and liabilities for the cost of
such alterations. In the event such surety bond or bonds
shall be unobtainable the Mortgagor shall deliver to the
Mortgagee security by cash, letter of credit or other
guarantee, affording substantially the same protection as
would such bond or bonds;
(e) all work done in connection with any alterations
shall be done promptly and in good and workmanlike manner.
The work in connection with any alteration shall be prosecuted with
reasonable dispatch, delays due to fire, strikes, lockouts,
acts of God, inability to obtain labor or materials,
governmental restrictions, enemy action, civil commotion or
unavoidable casualty or similar causes beyond the control of
the Mortgagor excepted;
(f) if the estimated cost of alterations exceed $5,000,000, the
Mortgagor shall have delivered to the Mortgagee (A) prior to
the commencement of such alterations, additions or
improvements copies of all Permits required for the
commencement of such work together with a certificate of the
Architect or an Opinion of Counsel to the effect that all
Permits required for the commencement of such alterations
have been obtained; and (B) within a reasonable period of
time after the completion of the alterations, copies of all
Permits required in connection with the completion thereof,
together with either an Opinion of Counsel or a certificate
of the Architect that all such Permits have been so obtained
by the Mortgagor and that the Mortgagor has complied with all
the requirements of this Section 5.12;
(g) no alterations of any kind shall be made to any building
which shall change the use or reduce the size or quality of
the building in any material respect; and
(h) no alterations costing in excess of
$5,000,000, together with other alterations that
constitute a single construction plan or project (whether or
not accomplished in several stages or procedures), shall be
made to any building if such alterations are not
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expected to be completed at least 120 days prior to the maturity
date of the Note (except if such alterations are required in
order to comply with Legal Requirements or Superior Instrument
Requirements).
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d),
enter into any Lease, or renew, modify, extend, terminate, or
amend any Lease, except in the ordinary course of business
of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or
collection of, any rental payments under any Lease more than
one year in advance of the respective periods in respect of
which they are to accrue, except that, in connection with
the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected
and received in advance in an amount not in excess of three months'
rent and/or a security deposit may be required thereunder in an
amount not exceeding one year's rent;
(c) collaterally assign, transfer or hypothecate
(other than to the Mortgagee hereunder, to the mortgagee under the
Guaranty Mortgage or to the holder of any Working Capital
Facility Lien) any rental payment under any Lease whether
then due or to accrue in the future, the interest of the
Mortgagor as landlord under any Lease or the rents, issues or
profits of the Trust Estate;
(d) after the date hereof, enter into any Lease,
or renew any Lease unless such Lease contains terms to the
effect as follows:
(1) the Lease and the rights of the tenants
thereunder shall be subject and subordinate to the
rights of the Mortgagee under this Mortgage, the
mortgagee under the Guaranty Mortgage and the holders
of any Superior Mortgage,
(2) the Lease may be assigned by the
landlord thereunder to the Mortgagee,
(3) the rights and remedies of the tenant in
respect of any obligations of the landlord thereunder
shall be nonrecourse as to any assets of the landlord
other than its equity in the building in which the
leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee
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under any new lease entered into in the event of a termination
of a Ground Lease;
(e) modify any Lease with respect to the matters described
in clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than
with any Affiliate of the Mortgagor) for a term of not
less than 3 nor more than 10 years, the Mortgagee shall deliver a
non-disturbance and attornment agreement substantially in the form of
Schedule 4 hereto, following receipt of a certificate of a leasing broker
(who is not an Affiliate of the Mortgagor or the broker involved in such
transaction) experienced with respect to leases of commercial space in the
Atlantic City area stating that the rent under the Lease is not less than
fair market rent and that the other terms of the Lease are fair and
reasonable in the commercial leasing market. The Mortgagor shall, upon
demand, reimburse the Mortgagee for any costs and expenses (including
reasonable attorney's fees) incurred by the Mortgagee in connection with
the preparation, review and delivery of such non-disturbance and attornment
agreements.
Promptly after the execution and delivery hereof, the Mortgagor
will cause the lessee under each Lease now in effect and promptly after
each Lease is executed or becomes effective after the date of the execution
and delivery hereof, the Mortgagor will cause the lessee under each such.
Lease, to be duly notified in writing (unless the substance and effect of
such notice shall be contained in such Lease) of the subjection of the
owner's interest, as lessor, in and to such Lease to the lien of this
Mortgage and of the name and address of the Mortgagee. Each such notice
shall state that the lease of such lessee is a Lease as herein defined.
If a new Mortgagee is at any time appointed hereunder or the address
of the Mortgagee shall at any time be changed, the Mortgagor will cause
each lessee under each Lease to be promptly notified in writing of the name
address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur
any expenditure other than de minimis amounts) to obtain from each lessee
under each Lease to whom any notice is sent pursuant to this paragraph an
acknowledgment of receipt of such notice, and the Mortgagor will promptly
deliver to the Mortgagee, upon request, a copy of each such acknowledgment
of receipt which it is able to obtain. The Mortgagee shall not be
responsible for securing or causing the Mortgagor to secure any such
acknowledgment.
Nothing contained in this Section 5.13 shall limit the
provisions of Section 4.04 hereof.
Section 5.14. [Reserved]
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Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject
to Article Four, the Mortgagor will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence
as a corporation, and its rights (both statutory and under its
articles of incorporation) and franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The
Mortgagor will keep proper books of record and account in accordance
with Section 12.05 of the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall
fail to perform any of its covenants in this Mortgage and
such failure shall continue for 10 days following notice
thereof given by the Mortgagee (or at any time, without
notice, in case of emergency), the Mortgagee may (but is not
obligated to), at any time and from time to time, take any
action or make advances, to effect performance of any such
covenant on behalf of the Mortgagor; and all moneys so used
or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith,
together with interest on all of the same at the rate of
interest set forth in the Note, shall be repaid by the
Mortgagor upon demand and such advances shall be secured
under this Mortgage prior to the Note.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The
Mortgagor covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury, stay
or extension law or any other law which would prohibit or forgive the
Mortgagor from paying all or any portion of the obligations evidenced
by the Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may otherwise affect the covenants
or the performance of this Mortgage; and the Mortgagor (to the extent
that it may lawfully do so) 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
Mortgagee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN.
(a) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Taking affecting the Trust
Estate. If the Taking (i) is estimated to result in an award of more
than [$5,000,000] or (ii) the Taking would interfere with or adversely
affect the operation of the Casino-Hotel in accordance with Legal
Requirements then within 30 days after any such Taking, the Mortgagor
shall
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deliver to the Mortgagee a certificate of an Architect stating
whether, in such Architect's opinion, applicable Legal Requirements
permit the Restoration of any buildings and improvements for the same
uses and the same size and quality in all material respects as existed
immediately prior to the Taking (and if such certificate states that
Legal Requirements do not permit such Restoration, such certificate
shall describe the manner closest approximating such criteria to which
the buildings and improvements could be so restored and shall be
accompanied by a Certificate of Appraised Value dated not more than 10
days prior to delivery setting forth the Appraised Value immediately
prior to the Taking and the estimated Appraised Value immediately
after the permitted Restoration). If the Mortgagor is required to
deliver such Certificates of Appraised Value and if based on such
Certificates of Appraised Value immediately after Restoration, the
aggregate Outstanding Amount of First Mortgage Debt immediately after
such Restoration shall exceed the greater of (i) 66-2/3% of the
Appraised Value immediately after such Restoration or (ii) the
quotient of the Outstanding Amount of the First Mortgage Debt
immediately prior to such Taking divided by the Appraised Value
immediately prior to the Taking multiplied by the Appraised Value
immediately after such Restoration, then the Taking shall be deemed a
Taking of "the whole or substantially all of the Premises."
Notwithstanding the foregoing sentence, if such Certificates of
Appraised Value indicate that the Outstanding Amount of First Mortgage
Debt immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the
Taking will not be deemed a Taking of "the whole or substantially all
of the Premises", if the Mortgagor obtains an irrevocable commitment
from a nationally recognized financial institution having a combined
capital and surplus of at least [$100,000,000], to supply, upon an
acceleration under this Mortgage as a result of an Event of Default,
funds to the Mortgagor as additions to capital in an amount equal to
the Outstanding Amount of First Mortgage Debt in excess of the
Appraised Value necessary to be paid down so that the Outstanding
Amount of First Mortgage Debt will not exceed either of the two
amounts determined pursuant to such clauses (i) and (ii), PROVIDED
that such commitment may only be released if, upon an Appraisal at any
time following completion of such Restoration, the aggregate
Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3%
of the Appraised Value.
(b) If at any time there shall occur a Taking of less than the
whole or substantially all of the Premises and the award or
awards resulting therefrom payable to the Mortgagor (and not
to any Lessor or the holder of any Superior Mortgage) (after
there shall have been first deducted the fees and expenses
incurred in connection with the termination, settlement and
collection of such award or awards, including but not
limited to reasonable counsel fees and expenses,
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hereinafter referred to as "Settlement Costs") (i) shall not exceed
the sum of [$10,000,000] (except to the extent that the Insurance
trustee or a Depositary is required to hold such amount pursuant to a
Superior Instrument Requirement), the entire amount of such award
shall be paid to the Mortgagor; and (ii) if such award is
[$10,000,000] or more, the entire amount of such award shall be paid
to the Insurance Trustee (or other Depositary required by a Superior
Mortgage, provided that such Depositary holds such award in trust for
purposes of paying the cost of Restoration). In either event, such
awards shall be applied to the cost of demolition, repair, Restoration
and replacement of the Trust Estate to as nearly practicable to their
uses, value and condition immediately prior to the Taking (except to
the extent otherwise provided by Superior Instrument Requirements).
The Mortgagor shall promptly commence and with due diligence perform
that Restoration in accordance with clauses (3), (4) and (7) of
Section 5.11(e) (after substituting the words "Taking" of "Casualty"
and "award" for "not insurance proceeds"), at no cost to the
Mortgagee. All claims or suits arising out of any Taking may be
settled by the Mortgagor, except that the Mortgagee shall have the
right (but not the obligation) to participate in such claim or suit,
and not the obligation) to participate in such claim or suit, and to
approve settlement thereof (and notwithstanding anything in the Ground
Leases to the contrary, the Mortgagor shall not agree to any
settlement or compromise of the amount of any such claim or suit),
except a claim or suit where the amount reasonably anticipated to be
received by the Mortgagor is less than $5,000,000. If the Mortgagee
at its election as aforesaid joins such claim or suit, the Mortgagee's
approval of such settlement shall not be unreasonably withheld. The
Insurance Trustee shall promptly pay such sums as are received by it
from such Taking from time to time in accordance with the procedures
set forth in clauses (5) and (6) of Section 5.11(e) (after
substituting the words "Taking" for "Casualty" and "award" for "net
insurance proceeds").
(c) If at any time there shall occur a Taking of the whole or
substantially all of the Premises, then the award payable to the
Mortgagor shall not be applied to Restoration but shall instead be
paid and delivered to the Trustee (subject to the rights of the
Lessors under the Superior Leases and the holders of any Superior
Mortgages) to the extent of the then Outstanding Amount of the Note
and any other interest or other sums due hereunder or thereunder to be
applied to the satisfaction of this Mortgage to the extent proceeds
are available for such purpose and provided that no additional sums
are due the Trustee or the Noteholder under the Note or the Indenture,
the balance of any award shall be paid to the Mortgagor.
(d) Notwithstanding anything contained herein to the contrary,
if an Event of Default shall have occurred and
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is continuing, the Mortgagee may, at its option, (A) refrain from
paying to the Mortgagor or the Insurance Trustee any award or
(B) instruct the Insurance Trustee to pay to the Mortgagee any
award then held by the Insurance Trustee, as the case may be.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause
to be done all things necessary to preserve and keep unimpaired the
rights of the Mortgagor, as lessee under the Ground Lease, and to
prevent any termination, surrender, cancellation, forfeiture or
impairment thereof. The Mortgagor shall at all times fully perform
and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all
taxes, assessments and other charges mentioned therein) prior to the
expiration of any notice and/or cure period provided in each such
Ground Lease. Upon receipt by the Mortgagee from a Lessor of any
written notice of default by the lessee thereunder, Mortgagee may rely
thereon and take any action the Mortgagee deems necessary in its sole
discretion to prevent or to cure any default by the Mortgagor in the
performance of or compliance with any of the agreements, covenants,
terms or conditions imposed upon or assumed by the Mortgagor as lessee
under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by the Mortgagor
or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers'
Certificate, Opinion of Counsel and a copy of the injunction, all as
described in Section 3.01(g), the Mortgagee shall not take any such
action unless and until the Mortgagor and/or the Mortgagee no longer
has the benefit of any tolling or stay referred to in Section 3.01(g).
Without limiting the generality of Section 3.09 hereof, the Mortgagor
hereby expressly grants to the Mortgagee, and agrees that the
Mortgagee shall have, the absolute and immediate right to enter in and
upon the Premises or any part thereof to such extent and as often as
the Mortgagee, in its sole discretion, deems necessary or desirable
for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. Subject to the
preceding and without limiting the Mortgagee's other remedies under
this Mortgage, the Mortgagee may pay and expend such sums of money as
the Mortgagee in its sole discretion deems necessary for any such
purpose, and the Mortgagor hereby agrees to pay to the Mortgagee,
immediately and without demand, all such sums so paid and expended by
the Mortgagee, together with interest thereon from the date of each
such payment at the highest rate of interest set forth in the Note.
All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this
Mortgage.
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(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and
that it will not without the express written consent of the Mortgagee
modify, change, supplement, alter or amend such Ground Leases either
orally or in writing and, as further security for the repayment of the
indebtedness secured hereby and for the performance of the covenants
herein and in such Ground Leases contained, the Mortgagor hereby
assigns to the Mortgagee all of its rights, privileges and
prerogatives as lessee under such Ground Leases to terminate, cancel,
modify, change, supplement, alter or amend such Ground Leases, and any
such termination, cancellation, modification, change, supplement,
alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing
and (2) either (A) there has been an acceleration of maturity of the
Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises
its rights under Section 3.09 hereof, the Mortgagee shall have no
right to terminate, cancel, modify, change, supplement, alter or amend
the Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of
the Mortgagor's obligations under such Ground Leases, pursuant to such
Ground Leases or otherwise, shall release the Mortgagor from any of
its obligations under this Mortgage, including its obligations with
respect to the payment of rent as provided for in such Ground Leases
and the performance of all of the terms, provisions, covenants,
conditions and agreements contained in such Ground Leases, to be kept,
performed and complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest
in the improvements on the Leased Land and the leasehold estates shall
not merge by and shall always remain separate and distinct,
notwithstanding the union of such estates either in the Lessor or in
the lessee, or in a third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in
writing of any request made by the Mortgagor, as lessee under each of
the Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any
arbitration proceedings, as well as all proceedings thereunder. In
addition, the Mortgagor shall promptly
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deliver to the Mortgagee a copy of the determination of the
arbitrators in each such arbitration proceeding. The Mortgagee shall
have the right to participate in such arbitration proceedings in
association with the Mortgagor or on its own behalf as an interested
party in accordance with the terms of the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of
any Ground Lease to any mortgage deed of trust or other lien of the
fee interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option
under any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such
election to the Lessor or (B) the Mortgagor acquires fee simple title
or any other estate, title or interest in the Leased Land, the
Mortgagor shall promptly notify the Mortgagee of such acquisition and
shall cause to be executed and
recorded all such other and further assurances or other instruments in
writing as may be required by law or, in the opinion of the Mortgagee, be
reasonably desirable to carry out the intent and meaning of clause (x) of
Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease
by any Lessor or any trustee arising from or in connection with any
case, proceeding or other action commenced or pending by or against
any Lessor under the Code or any comparable provision contained in any
present or future federal, state, local, foreign or other statute,
law, rule or regulation, the Mortgagor shall give notice thereof to
the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any
and all of the Mortgagor's rights as lessee under Section 365(h) of
the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation ("Comparable Provision") and (B) covenants that it shall
not elect to treat any Ground Lease as terminated pursuant to Section
365(h) of the Code or any Comparable Provision without the prior
written consent of the Mortgagee and (C) agrees that any such election
by the Mortgagor without such consent shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to
the Mortgagee all of the Mortgagor's claims and rights to the payment
of damages arising from any rejection by Lessor of any Ground lease
under the Code or any Comparable Provision. The Mortgagee shall have
the right to proceed in its own name or in
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the name of the Mortgagor in respect of any claim, suit, action or
proceeding relating to the rejection of any Ground Lease, including,
without limitation, the right to file and prosecute, in cooperation
with the Mortgagor, any proofs of claim, complaints, motions,
applications notices and other documents, in any case in respect of
Lessor under the Code or any Comparable Provision. This assignment
constitutes a present, irrevocable and unconditional assignment of the
foregoing claims, rights and remedies, and shall continue in effect
until all of the indebtedness and obligations secured by this Mortgage
shall have been satisfied and discharged in full. Any amounts
received by the Mortgagee in damages arising out of the rejection of
any Ground Lease as aforesaid shall be applied first to all reasonable
costs and expenses of the Mortgagee (including, without limitation,
reasonable attorneys' fees) incurred in connection with the exercise
of any of its rights or remedies under this Section 5.21, and
thereafter as provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or
all of the Ground Leases the Mortgagor shall give the Mortgagee not
less than 10 days' prior notice of the date on which the Mortgagor
shall apply to the Bankruptcy Court or other judicial body with
appropriate jurisdiction for authority to reject the lease. The
Mortgagee shall have the right, but not the obligation, to serve upon
the Mortgagor within such 10 day period a notice stating that (a) the
Mortgagee demands that the Mortgagor assume and assign such Ground
Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any
Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s).
If the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a)
of the preceding sentence within 30 days after the notice shall have
been given subject to the performance by the Mortgagee of the covenant
provided for in clause (b) of the preceding sentence. Effective upon
the entry of an order for relief in respect of the Mortgagor under
Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby
assigns and transfers to the Mortgagee a non-exclusive right to apply
to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
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(x) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other communications or
notices with respect to events which relate to the possible impairment
of the security of this Mortgage, which it shall give or receive under
the Ground Leases and shall promptly notify the Mortgagor of any
default under any Ground lease on the part of the Lessor or the
Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the
Lessor under each Ground Lease, to the end that the Mortgagor may
enjoy all of the rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed
net rent, taxes and assessments, payable under the Ground Leases have
been paid to the extent they were due and payable to the date hereof
and that the Mortgagor has not received notice of its failure to pay
any other amounts payable under the Ground Leases which have not been
cured.
(d) If both the Lessor's and lessee's estates under any of the
Ground Leases or any portion thereof shall at any time become vested
in one owner, this Mortgage and the lien created hereby shall
nevertheless not be merged, extinguished, destroyed or terminated by
application of the doctrine of merger and, in such event, Mortgagee
shall continue to have all of the rights and privileges of the a
leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease
shall be terminated prior to the natural expiration of its term due to
default by the lessee thereunder, and if pursuant to such Ground
Lease, the Mortgagee or its designee shall acquire from the Lessor a
new lease of the Leased land or any portion thereof, the Mortgagor
shall have no right, title or interest in or to such lease or the
leasehold estate created thereby, or the options therein contained.
(f) Any leases for parking purposes hereafter entered into by
the Mortgagor as lessee shall contain provisions permitting the
assignment of the same to the Mortgagee and the Trustee and permitting
assignment without the lessor's consent if this Mortgage is
foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements,
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covenants, terms and conditions imposed upon or assumed by it as
mortgagor under the Superior Mortgages prior to the expiration of any
notice and/or cure period provided in each such Superior Mortgage. If
a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior
Mortgage has been accelerated as a result thereof, the Mortgagee may
rely thereon and take any action the Mortgagee deems necessary in its
sole discretion to prevent or to cure any default by the Mortgagor in
the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the
Mortgagor as mortgagor under each of the Superior Mortgages even
though the existence of such default or the nature thereof may be
questioned or denied by the Mortgagor or by any party on behalf of the
Mortgagor provided that if the Mortgagor has heretofore taken such
actions as described in Section 3.01(h), the Mortgagee shall not take
any such action unless and until the Mortgagor and/or the Mortgagee no
longer has the benefit of any such tolling or stay referred to in
Section 3.01(h). Without limiting the generality of Section 3.09
hereof, the Mortgagor hereby expressly grants to the Mortgagee, and
agrees that upon such acceleration the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any
part thereof to such extent and as often as the Mortgagee, in its sole
discretion, deems necessary for the purpose permitted by the
immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money
as the Mortgagee in its sole discretion deems necessary for any such
purpose and (ii) in its sole discretion prepay any Superior Mortgage,
and the Mortgagor hereby agrees to pay to the Mortgagee, immediately
and without demand, all such sums referred to in (i) and (ii) above so
paid and expended by the Mortgagee, together with interest thereon
from the date of each such payment at the rate of interest set forth
in the Note. All sums so paid and expended by the Mortgagee and the
interest thereon shall be added to and be secured by the lien of this
Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first obtaining the
written consent of the Mortgagee in each instance: (A) modify any of
the terms, covenants or conditions of any Superior Mortgage, and
without limiting the foregoing, the Mortgagor shall not, without
satisfying such conditions, enter into or obtain any agreement whereby
the holder of any Superior Mortgage waives, postpones, extends,
reduces or modifies the payment of the installment of principal or
interest or any other item or amount now required to be paid under the
terms of any Superior Mortgage or modifies any other provision
thereof, or (B) acquire or permit or suffer any Affiliate of the
Mortgagor to acquire any Superior
64
<PAGE>
Mortgage or any interest therein. Notwithstanding anything in clause
(A) to the contrary, the Mortgagor shall have the right to amend,
supplement or modify any Superior Mortgage, if (x) the then
outstanding principal balance of the indebtedness secured by such
Superior Mortgage is not increased thereby, and (y) in the case of any
After-Acquired Fee Mortgage, such amendment, supplement or agreement
does not increase the property covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each
Superior Mortgage, the note secured thereby and any other instrument
evidencing or securing the indebtedness owing to any holder of any
Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an estoppel certificate or letter addressed to the Mortgagee
from holders of the Superior Mortgages, such certificate or letter to
be in such form as the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any
default under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified
portions of the Trust Estate shall be subject and subordinate to any
Existing Encumbrances, to the liens created by the Senior Mortgage
Documents and any mortgage, assignment, security agreement, financing
statement or other lien securing any Working Capital Facility (the
"Working Capital Facility Lien") encumbering Mortgagor's interest in
the affected portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be
self-operative with respect to the liens created by the Senior
Mortgage Documents and any Working Capital Facility Lien, and no
further instrument shall be required to give effect to such
subordination. Mortgagee shall, however, from time to time, execute
instruments in form and substance reasonably satisfactory to the
holder of the liens created by the Senior Mortgage Documents and the
holder of the Working Capital Facility Lien, confirming such
subordination and agreeing to such other matters reasonably required
by the holders of such liens which do not, in the aggregate,
65
<PAGE>
materially adversely reduce or impair the rights of Trustee under the
Mortgage, and Mortgagor and others may rely conclusively thereon,
provided that Mortgagee shall have no liability thereunder and all
costs and expenses (including reasonable attorneys' fees) shall be
paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions
of the Trust Estate shall be subject and subordinate to any Existing
Encumbrances. The provisions of this Section 5.22(d) shall be
self-operative, and no further instrument shall be required to give
effect to such subordination.
Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County,
New Jersey Clerk's Office prior to the recordation of the Guaranty
Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not
senior to, the lien created by the Guaranty Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. COUNTERPARTS. This instrument may be executed in
any number of counterparts, each of which as executed shall be deemed
to be an original, but all such counterparts shall constitute one and
the same instrument.
Section 6.02. MODIFICATION. This Mortgage is subject to
modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and
this Mortgage shall have the benefit of the lien priority provisions
of such statute. Such modification may include, without limitation, a
change in the interest rate, maturity date or other terms and
conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE
COPY OF THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
66
<PAGE>
ATTEST:______________________ By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
ATTEST:______________________ By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
67
<PAGE>
Exhibit E
Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
<PAGE>
NA932810100 - ASSIGNMENT OF RENTS
(RIH JUNIOR PROMISSORY NOTE)
GD&C DRAFT DATED 12/17/93
=============================================================================
ASSIGNMENT
OF LEASES AND RENTS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignee
Dated as of _________________, 1994
==========================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having
its principal office at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation,
having its principal office at c/o Resorts International, Inc.,
1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to
secure: (i) the obligations of Assignor under a promissory note
dated as of the date hereof made by Assignor to Assignee in the
principal amount of $35,000,000 (as the same may be amended or
restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof, between Assignor, as mortgagor,
and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used
and not otherwise defined herein shall have the meanings ascribed
to those terms in the Mortgage); and (ii) the performance and
observance of all of the provisions herein contained;
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages and other Existing Encumbrances),
all leases or occupancy agreements wherein it is lessor concerning
or affecting the use or occupancy of the certain real property
owned or leased by Assignor, which real property is described on
SCHEDULE 1 hereto and which real property, together with all
buildings and improvements erected thereon, is hereinafter
collectively referred to as the "PROPERTY", or any part thereof,
now existing or which may be executed at any time in the future,
and all amendments, extensions and renewals of such leases or
occupancy agreements, and any of them, all of which are
collectively referred to as the "LEASES", all rents and other
income which may now or hereafter be or become due or owing under
the Leases, and any of them, and any and all payments derived from
or relating to the Leases to which Assignor is entitled, including
but not limited to (a) claims for the recovery of damages done to
the Property, (b) claims for damages resulting from acts of
insolvency or acts of bankruptcy or otherwise, and (c) lump sum
payments for the
<PAGE>
cancellation of Leases or the waiver of any
obligation or term thereof prior to the expiration date;
PROVIDED, HOWEVER, that no Excepted Property is conveyed
hereby; it being intended hereby to establish a present and
complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the Leases and all the rents,
payments and other income arising thereunder; PROVIDED, HOWEVER,
that Assignor is hereby granted a license by Assignee to (i) collect
all of such rents, payments and other income herein assigned which
may become due during the life of this Assignment and (ii) enter
into, renew, modify, extend, terminate, amend, collectively
assign, transfer or hypothecate any or all of the Leases, in
accordance with the provisions of Sections 4.04 and 5.13 of the
Mortgage, each until an Event of Default under the Mortgage (an
"EVENT OF DEFAULT") shall have occurred and be continuing. Upon
the occurrence of an Event of Default, Assignor agrees to deposit
with Assignee upon demand such of the Leases and the rents payable
thereunder as may from time to time be designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to demand, collect, receive and give receipts and
complete acquittance for any and all other rents and other
amounts herein assigned which may be or become due and payable
under the Leases, and at its discretion to file any claim or take
any other action or proceeding and make any settlement of any
claims, either in its own name or in the name of Assignor or
otherwise, which Assignee may deem necessary or desirable in order
to collect and enforce the payment of any and all rents and other
amounts herein assigned. No right shall be exercised by Assignee
under this paragraph until an Event of Default has occurred. All
lessees under the Leases are hereby expressly authorized and
directed, after the occurrence, and during the continuance, of an
Event of Default, to pay all rents and other sums herein assigned
to Assignee or such nominee as Assignee may designate in writing
delivered to and received by such lessees, who thereafter are
expressly relieved of any and all duty, liability or obligation to
Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Assignment and to collect the rents and other sums assigned
hereunder. Assignee shall be under no obligation to exercise any
of the rights or to press any of the claims assigned to it
hereunder, or to perform or carry out any of the obligations of
Assignor under any of the Leases, and does not assume any of the
liabilities in connection with or arising or growing out of the
covenants and agreements of Assignor in the Leases. It is further
2
<PAGE>
understood that this Assignment shall not operate to place
responsibility for the control, care, management or repair of
Assignor's estates or interests in and to the Property, or parts
thereof, upon Assignee, nor shall it operate to make Assignee
liable for the carrying out of any of the terms and conditions of
any of the Leases, or for any waste to Assignor's estates or
interests in and to the Property by any lessee or sublessee of
Assignor under any leases, or by any occupant of the Property, or
by any party whatsoever or for any dangerous or defective condition
of the Property or for any negligence in the management, upkeep,
repair or control of Assignor's estates or interests in and to the
Property resulting in loss or injury or death to any lessee,
licensee, employee or stranger thereat. No right shall be
exercised by Assignee under this paragraph until an Event of
Default has occurred.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
Nothing herein contained is intended to limit or reduce the rights
of Assignee or the obligations of Assignor set forth in the
Mortgage, but rather all of the terms, provisions and conditions
of this Assignment are in addition to and in supplement of such
rights and obligations. If any provision contained in this
Assignment is in conflict with, or inconsistent with, any
provision in the Mortgage, the provisions contained in the
Mortgage shall govern and control.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this
Assignment shall be null and void with respect to those Leases (the
"RELEASED LEASES") which cover exclusively the portion of the
Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Leases shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of a portion of the
Property as aforesaid to confirm any reversion of Assignee's
right, title and interest in the Released Leases effectuated in
accordance with this paragraph, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 or 2.06 of the
Mortgage (as the case may be), provided that Assignee shall have
no liability thereunder and all costs and expenses shall be paid by
Assignor.
3
<PAGE>
Assignee acknowledges that (i) contemporaneously with the execution
and delivery of this Assignment, it has assigned this Assignment to U.S. Trust
Company of California, N.A. ("Trustee"), as trustee under an Indenture
of even date herewith among Assignor, Assignee and Trustee (the
"Indenture"), and (ii) that the Trustee is also the assignee under
an Assignment of Leases and Rents dated as of the date hereof from
Assignor to Trustee securing the obligations of Assignor in respect
of the Guaranty under and as defined in the Indenture (the "Other
Assignment"), which assignment creates a lien on the Leases and
rents and income due and owing thereunder PARI PASSU with the lien
of this Assignment. Assignee further acknowledges and agrees that
whenever it is provided in the Other Assignment that the Assignor
shall deliver any notice or document, or is require to make any
payment thereunder, the delivery of such notice or document or the
making of such payment pursuant to the terms of such Other
Assignment shall also constitute the delivery of such notice or
document or the making of such payment in satisfaction of the
terms, conditions and provisions of this Assignment to the same
extent as the same constitutes satisfaction of the terms,
conditions and provisions of the Other Assignment.
Upon the termination of the Mortgage and the payment in full of the
obligations secured thereby, this Assignment shall be and become
null and void, and all estate, right, title and interest of
Assignee in and to the Leases shall revert to Assignor and
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statement filed in connection
herewith and execute and deliver to Assignor all such instruments
as may be appropriate to evidence such discharge and satisfaction
of this Assignment (provided that Assignee shall have no liability
hereunder or thereunder and all costs and expenses shall be paid by
Assignor); otherwise, this Assignment shall remain in full force
and effect as herein provided, shall inure to the benefit of
Assignee and its successors and assigns, and shall be binding
upon Assignor and its successors and assigns, and any subsequent
holder of Assignor's right, title and interest and estate in and to
the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without the prior approval of
the New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain Intercreditor Agreement dated
as of the date hereof among
4
<PAGE>
Assignor, Assignee, Fidelity Management and Trust Company,
as trustee, Trustee and State Street Bank and Trust
Company of Connecticut, National Association, as trustee (and
such other parties that may from time to time become a party
thereto).
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
RESORTS INTERNATIONAL HOTEL,
FINANCING, INC., a Delaware
corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared _____________,
who, being by me duly sworn on his oath, deposes and makes proof to
my satisfaction, that he is the (Asst.) Secretary of RESORTS
INTERNATIONAL HOTEL, INC., the corporation named in the within
instrument; that ______________ is the (Vice) President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the
corporation named in the within instrument; that ____________ is
the Vice President of said corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
__________________________
[Name]
Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
7
<PAGE>
Exhibit F
Mortgage securing Guaranty of Junior
Mortgage Notes between Resorts International
Hotel, Inc. and U.S. Trust Company of
California, N.A.
<PAGE>
------------------------------------
: NA932810097 - GUARANTY MORTGAGE :
: JUNIOR NOTES :
: GD&C DRAFT DATED 12/17/93 :
------------------------------------
MORTGAGE SECURING GUARANTY
OF JUNIOR MORTGAGE NOTES
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
U.S. Trust Company of California, N.A.,
a national banking association,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING GUARANTY
OF JUNIOR MORTGAGE NOTES
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and U.S.
Trust Company of California, N.A., a national banking association having an
address at 555 South Flower Street, Suite 2780, Los Angeles, California
90071 ("Mortgagee"), in its capacity as Trustee under that
certain Indenture dated as of even date herewith (the "Indenture") among
Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the
payments of principal and interest due on the 11.375% Junior Mortgage Notes due
2004 in an aggregate principal amount of $35,000,000, issued pursuant to the
provisions of the Indenture (defined therein, and hereinafter collectively
referred to herein, as the "Notes"), in accordance with the terms and conditions
of Article Fourth of the Indenture; and performance and observance of all of the
provisions herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and
confirmed unto Mortgagee and its successors hereunder and assigns forever, all
of its right, title and interest in, to and under any of the following described
property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause as
fully as if set forth in this Granting Clause at length.
<PAGE>
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and franchises of
the Mortgagor as lessee in those certain leases (the "Ground Leases")
particularly described in Schedule 2, which Schedule is hereby made a part of,
and deemed to be described in, this Granting Clause as fully as if set forth in
this Granting Clause at length, which Ground Leases cover the real property
described in Schedule 2 (the "Leased Land") and in and to any and all
modifications, extensions and renewals of the Ground Leases and all options set
forth therein, together with (i) all credits, deposits, privileges and rights of
the Mortgagor as lessee under the Ground Leases, now or at any time existing,
(ii) the leaseholds and the leasehold estates created by the Ground Leases and
(iii) all of the estates, rights, titles, claims or demands whatsoever of
Mortgagor, either in law or in equity, in possession or in expectancy, of, in
and to the Ground Leases and the Leased Land, together with (x) any and all
other, further or additional title, estates, interests or rights which may at
anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or any other
greater estate to the Leased Land pursuant to the Ground Leases, or otherwise,
the lien of this Mortgage shall attach, extend to, cover and be a lien upon such
fee simple title or other greater estate and thereupon the lien of this Mortgage
shall be prior to the lien of any mortgage or deed of trust placed on such
acquired title, estate, interest or right subsequent to the date of this
Mortgage (except as otherwise provided herein) and (y) any right to possession
or statutory term of years derived from, or incident to, the Ground Leases
pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any
comparable provision contained in any present or future federal, state, local,
foreign or other statute, law, rule or regulation.
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and proceeds of
the property subjected or required to be subjected to the lien of this Mortgage,
including, without limitation, the property described in Granting Clauses First,
Second, and Sixth (such property is hereinafter collectively referred to as the
"Premises") and all the estate, right, title and interest of every nature
whatsoever of the Mortgagor in and to the same and every part thereof. The
collective
2
<PAGE>
metes and bounds description of the Owned Land and the Leased Land is set forth
in annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the date of execution
of this Mortgage or hereafter entered into by the Mortgagor, if any, including
extensions, renewals or amendments of all of the same, and the immediate and
continuing right as security in accordance with an Assignment of Leases and
Rents of even date herewith between Mortgagor and Mortgagee, and, after the
occurrence of an Event of Default, to make claim for, collect, receive and
receipt for (and to apply the same as provided herein) any and all rents,
income, revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof, whether
payable as rent, insurance proceeds, condemnation awards, security or otherwise
and whether payable prior to or subsequent to the maturity date of the Notes, to
receive and give notices and consents thereunder, to bring actions and
proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any Lease,
including the commencement, conduct and consummation of any proceedings at law
or in equity as shall be permitted by any provision of any Lease, and to do any
and all things which the Mortgagor or any lessor is or may become entitled to do
under the Leases; provided, that the assignment made by this granting Clause
Fourth shall not impair or diminish any obligation of the Mortgagor under the
Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting Clause Third,
the Mortgagor's rights, privileges and franchises in and to the following, to
the extent of the Mortgagor's interest therein and thereto and to the extent
assignable (collectively, "Operating Assets"):
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including guaranties
and warranties relating thereto;
(c) the Permits;
3
<PAGE>
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties and
other items of intangible personal property relating to the ownership or
operation of the Casino-Hotel, including, without limitation, (1) telephone
and other communication numbers, (2) all software licensing agreements as
are required to operate computer software systems at the Casino-Hotel, all
transferable proprietary interest in software required to operate the
computer systems at the Casino Hotel and books and records relating to the
software programs, and (3) lessee's interest under leases of Tangible
Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor or
which have been assigned to the Mortgagor, for the design and construction,
and for the equipping and furnishing, of the Casino-Hotel, including
architect's agreements, engineering agreements, construction contracts,
consulting agreements and agreements or purchase orders for all items of
Tangible Personal Property and payment and performance bonds in favor of
the Mortgagor in connection with the Trust Estate (and all warranties and
guaranties thereunder and warranties and guaranties of any subcontractor
and bond issued in connection with the work to be performed by any
subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery, apparatus,
appliances, fixtures and fittings and other articles of tangible
personal property which are, or are to be located on, or used in
connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap tables,
blackjack tables, roulette tables, baccarat tables, and big six
wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the operation
thereof;
(iii) all cards, dice, gaming chips and placques, tokens, chip
racks, dealing shoes, dice cups, dice sticks, layouts, paddles,
roulette balls and other consumable supplies and items to be used
4
<PAGE>
in connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils, silverware
and uniforms, whether in use or held in reserve storage for future
use, in connection with the operation of the Casino-Hotel, which are
on hand or on order whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind and
nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on any
of the Owned Land, including without limitation, accounting supplies,
guest supplies, forms, printing, stationery, food and beverage stock,
bar supplies, laundry supplies and brochures to existing purchase
orders;
(vi) all sets and scenery, costumes, props and other items of
tangible personal property on hand or on order for use in the
production of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by the
architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to
time;
(h) any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
(i) any customer lists utilized by the Mortgagor, including lists of
transient guests and restaurant and bar patrons and "high roller" lists;
and
(j) all of the goodwill in connection with the operation of the
Premises.
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The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on which such facilities are shared
are not detrimental to the operations of the Casino-Hotel or the financial
condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel
would not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair or
diminish any obligation of the Mortgagor with respect to the Operating Assets,
nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures and
articles of personal property now or hereafter attached to or contained in and
used in connection with such buildings and improvements, including, but not
limited to, all apparatus, furniture, furnishings, machinery, motors, elevators,
fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and hot water
boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath
tubs, water closets, gas and electrical fixtures, awnings, shades, screens,
blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and
other furnishings, and all plumbing, heating, lighting, cooking, laundry,
ventilating, incinerating, air-conditioning and sprinkler equipment or other
fire prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or articles in
substitution therefor, whether or not the same are or shall be attached to the
Owned Land, the Leased Land or to any such buildings and improvements thereon,
in any manner; and
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(b) All of the Mortgagor's right, title and interest in and to (i) the
Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land
or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all
air rights and rights to maintain supporting columns and all rights to construct
and maintain bridges, and to create private rights of way over streets now or
hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or
Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or
licensee in and to the following to the extent necessary for the use and
enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or
parcels of land and air rights, more particularly described on Schedule 5,
attached hereto and made a part hereof (the "Bridge Easement Parcels"), with
respect to which Mortgagor has easements, licenses or other rights of possession
or use pursuant to these certain easement and license agreements more
particularly described on Schedule 5 (the "Bridge Easements"), (B) all those
plots, pieces or parcels of land and air rights, more particularly described on
Schedule 6 attached hereto and made a part hereof (the "Elevator Easement
Parcels"), with respect to which Mortgagor has easements, licenses or other
rights of possession or use pursuant to those certain license agreements more
particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all
that plot, piece or parcel of land and air rights more particularly described on
Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement
Parcel") with respect to which Mortgagor has easements, licenses, or other
rights of possession or use pursuant to that certain easement more particularly
described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement
Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are
collectively referred to herein as the "Easement Parcels"; and the Bridge
Easements, the Elevator Easements and the Turn-Around Easement are collectively
referred to as the "Easements"), together with all rights of way, privileges,
liberties, tenements, hereditaments and appurtenances belonging or in any way
appertaining to such estates, it being the intention hereof that all property,
interests, rights and privileges and franchises pertaining to the Premises
(other than Excepted Property) shall be as fully embraced within and subjected
to the lien hereof as if such property were specifically described herein.
To the extent the grant of a security interest in any portion of the Trust
Estate is governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be as well a security agreement under the Uniform Commercial Code
for the purpose of creating hereby a security interest in all of the Mortgagor's
right, title and interest in and to such property, securing the obligations
secured hereby, for the benefit of the Mortgagee;
* * *
TOGETHER with all of the Mortgagor's right, title and interest in and to
all mineral and water rights and any title or reversion, in and to the beds of
the ways, streets,
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avenues and alleys adjoining the Premises to the center line thereof and in and
to all strips, gaps and gores adjoining the premises on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to and
singular the tenements, hereditaments, easements, appurtenances, passages, water
courses, riparian rights, other rights, liberties and privileges thereof or in
any way appertaining to the Premises, including any other claim at law or in
equity as well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore or hereafter to
be made to the present and all subsequent owners of the Trust Estate for any
taking by eminent domain, either permanent or temporary, of all or any part of
the Trust Estate or any easement or appurtenances thereof, including severance
and consequential damage and change in grade of streets, all in accordance with
and subject to the provisions of the Superior Instrument Requirements and
Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any insurance
policies described in Section 5.11, and the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Trust Estate or otherwise, all in accordance with and subject to
the provisions of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted property, rights,
title, interest, privileges and franchises, the Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating
Assets, Easements, properties, options, credits, deposits, rights, privileges
and franchises of every kind and description, real, personal or mixed, granted
hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or
covenanted so to be, together with all the appurtenances thereto appertaining
(the Premises, Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its successors
and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after
the date hereof, to Permitted Encumbrances.
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SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the
Noteholder as set forth in that certain Intercreditor Agreement dated as of the
date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company
("Fidelity"), as trustee under that certain note purchase agreement dated as of
the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust
Company of Connecticut, National Association ("State Street"), as trustee under
that certain indenture dated as of the date hereof among State Street, RIH and
RIHF (and such other parties that may from time to time become a party thereto).
BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the
Noteholders without any priority of any of the Notes over any other of the
Notes.
UPON CONDITION that, until the happening of an Event of Default and subject
to the provisions of Article Two, the Mortgagor shall be permitted to possess
and use the Trust Estate, and to receive and use the rents, issues, profits,
revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be
held and applied by the Mortgagee, subject to the further covenants, conditions
and trusts hereinafter set forth, and the Mortgagor does hereby covenant and
agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall
be made in accordance with generally accepted accounting principles
consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Mortgage
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as a whole and not to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the
American Institute of Real Estate Appraisers) who is (i) of recognized standing
among appraisers of properties similar to the Casino-Hotel and (ii) experienced
in the appraisals of properties of a similar size and scope to that of the
Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of
the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of
the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming and related
activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary structures
and facilities located on the Premises and furniture, fixtures and equipment at
any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which results
in damage, loss or destruction to any buildings or improvements on the Premises
and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the
Indenture.
"DEFAULT" means the occurrence and continuance of an Event of Default or an
event which, after notice or lapse of time or both, would become an Event of
Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds or a
condemnation award is paid to be held in trust for restoration pursuant to the
provisions of a Ground Lease or Superior Mortgage.
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"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of
Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
(1) subject to the provisions of the Assignment of Leases and Rents,
any cash held by the Mortgagor from rents, issues, profits, revenues and
other proceeds of the Trust Estate to the extent that such cash may be, but
has not been, distributed or paid out in accordance with the Services
Agreement or in accordance with the provisions of Section 12.07 of the
Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage
secured by or imposing a lien on all or a portion of the Trust Estate on a
parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible
Personal Property and other items constituting Operating Assets, such as
computer software, which are financed, purchased or leased by the Mortgagor,
provided that, except as set forth on Schedule 3, the principal amount of the
indebtedness secured by such lien shall not exceed eighty-five (85%) percent of
the cost to the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
"GUARANTY" has the meaning set forth in Article Fourteen of the Indenture.
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"HOTEL" means that portion of the Casino-Hotel not included within the
Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes
due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and Mortgagee, as trustee, as it may from time to time be supplemented, modified
or amended by one or more trust indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means such a
Person who (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in the Mortgagor or in any
other obligor upon the Notes or in any Affiliate of the Mortgagor or of such
other obligor and (c) is not connected with the Mortgagor or such other obligor
or any Affiliate of the Mortgagor or such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is herein provided that any Independent Person's opinion
or certificate shall be furnished to the Mortgagee, such opinion or certificate
shall state that the signer has read this definition and that the signer is
Independent within the meaning thereof. A Person who is performing or who has
performed services as an independent contractor to any specified Person shall
not be considered not Independent merely by reason of the fact that such Person
is or has performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy covering
or applicable to the Trust Estate or any part thereof, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Trust Estate or any
part thereof or any use or condition of the Trust Estate or any other part
thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any
bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
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"INSURER" means an insurance company or companies selected by the Mortgagor
authorized to issue insurance in the State of New Jersey with an A.M. Best
rating as high or higher than the rating of insurance companies insuring other
casino-hotels in Atlantic City, New Jersey.
"LEASE" means each lease or sublease demising all or any portion of the
Owned Land, the Leased Land or the buildings or improvements thereon and made by
the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any
building or buildings which constitute a part of the Trust Estate, including
every agreement relating thereto or entered into in connection therewith and
every guaranty of the performance and observance of the covenants, conditions
and agreements to be performed by the lessee under any such lease.
Notwithstanding the foregoing, the term "Lease" shall not include any transient
room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements (including, without limitation, the
New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill
Compensation and Control Act of 1976) of all governments, departments,
commissions, boards, courts, authorities, agencies, officials and officers, of
governments, federal, state and municipal (including, without limitation, the
New Jersey Department of Environmental Protection, the Atlantic City Bureau of
Investigations, Division of Protection, the Atlantic City Bureau of
Investigations, Division of Gaming Enforcement of the State of New Jersey, and
the Casino Control Commission of the State of New Jersey), foreseen or
unforeseen, ordinary or extraordinary, which now is or at any time hereafter
becomes applicable to the Trust Estate or any part thereof, or any of the
adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling
facility or any other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Notes means the date on which the
principal of such Notes becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration or prepayment
or otherwise.
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"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture.
"NOTE MORTGAGE" means that certain Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH
Junior Promissory Note (as defined in the Indenture), the lien of which shall be
pari passu with the lien of this Mortgage.
"NOTES" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of the
Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that
an Officers' Certificate be signed also by an Architect or an Accountant or
other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may (except as
otherwise expressly provided in this Mortgage) be an employee of the Mortgagor
or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically
provided in this Mortgage, such counsel may rely, as to any state of facts not
personally known to such counsel and relating to such opinions, on an Officers'
Certificate to the extent not rejected by the Trustee and its counsel (which
rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list
title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
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"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material portion
of the Premises whether held by the Mortgagor or any other Person (which may be
temporary or permanent) (including, without limitation, those required for the
use of the Casino-Hotel as a licensed casino facility), in accordance with all
applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet due
and payable or if due and payable are not delinquent to the extent that any
fine, penalty, interest or cost may be added for nonpayment thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien;
(9) liens created by the Senior Mortgage Documents; and
(10) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or any
other entity or government or any agency or political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture.
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"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance
with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware
corporation.
"SENIOR GUARANTY MORTGAGE" has the meaning stated in Section 1.01 of the
Indenture.
"SENIOR MORTGAGE" has the meaning stated in Section 1.01 of the Indenture.
"SENIOR MORTGAGE DOCUMENTS" has the meaning stated in Section 1.01 of the
Indenture.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"STATED MATURITY" when used with respect to a note means the date specified
in such note as the fixed date on which the principal of such note is due and
payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions
and provisions of (i) the Ground Leases with respect to the Leased Land; and
(ii) Superior Mortgages with respect to the portion of the Trust Estate
encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior
Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee
Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of the
whole or any part of the Premises, by a competent authority, for any public or
quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause
Fifth.
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"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of
the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the Granting
Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c)
of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice (including,
without limitation, a notice of default), consent, waiver or other document
provided or permitted by this Mortgage to be made upon, given or furnished to,
or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be
deemed given when either (i) delivered by hand or (ii) two days after sending by
registered or certified mail, postage prepaid, addressed as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
U.S. Trust Company of California, N.A.
555 South Flower Street, Suite 2780
Los Angeles, California 90071
Attention: Corporate Trust Department
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party
may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE.
Whenever several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified
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by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Officer or Officers of the Mortgagor stating that
the information with respect to such factual matters is in the possession of the
Mortgagor, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. If appropriate to
the matter being opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of creditors and
the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor shall
deliver any document as a condition of the granting of such application, or as
evidence of the Mortgagor's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Mortgagor to have such application granted or to
the sufficiency of such certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application
or request by the Mortgagor to the Mortgagee to take any action under any
provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Mortgage relating to the proposed action have been complied with and
an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except
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that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Mortgage
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Mortgage shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture,
this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each case
named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged, released nor
any of its provisions waived except by agreement in writing executed by the
Mortgagor and the Mortgagee and in accordance with the provisions of this
Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of
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the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the
Guaranty, express or implied, shall give to any Person, other than the parties
hereto and their successors and assigns, any benefit or any legal or equitable
right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions
of this Mortgage and the provisions of the Indenture shall be inconsistent, the
provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
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(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
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Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Mortgage shall
not be transferred, assigned or amended without the prior approval of the New
Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to
be paid, or there shall otherwise be paid, to the Mortgagee all amounts required
to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and
the Notes, and the conditions precedent for the Indenture to cease, determine
and become null and void in accordance with Section 5.01 of the Indenture shall
have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage,
and execute and deliver to the Mortgagor all such instruments as may be
necessary, required or appropriate to evidence such discharge and satisfaction
of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject in each
instance to the giving of any notice and the expiration of any grace period
provided for in Section 3.01 as a condition to such Default making it an Event
of Default, unless the Trust Indenture Act requires otherwise, in which case the
Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an event
which does not materially diminish the value of the Mortgagee's interest in the
Trust Estate
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shall not be deemed an "impairment of security", as that phrase is used in this
Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So
long as there shall have been no demand for payment under the Guaranty pursuant
to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted,
with power freely and without let or hindrance on the part of the Mortgagee,
subject to the provisions of this Mortgage and the Note Mortgage, to possess,
use, manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to
time, unless an Event of Default shall have occurred and be continuing, without
any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when,
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in the Mortgagor's reasonable opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right to
pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to the
exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
The Mortgagee shall, from time to time, promptly execute any written
instrument in form satisfactory to it to confirm the propriety of any action
taken by the Mortgagor under this Section 2.02, provided that the conditions set
forth in Section 2.02 of the Note Mortgage have been satisfied.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions
contained in this Mortgage or the Indenture to the contrary, including, without
limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles
Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and
other items constituting operating assets, such as computer software subject to
any FF&E Financing Agreement, or becomes the lessee under a lease for any of the
same and if the document evidencing such FF&E Financing Agreement prohibits
subordinate liens or the provisions of any such lease prohibits any assignment
thereof by the lessee, and if any such prohibition is customary with respect to
similar transactions of the lender or lessor, as the case may be, then the
property so purchased or the lessee's interest in the lease, as the case may be,
shall be deemed to be Excepted Property. If any such FF&E Financing Agreement
permits subordinate liens then the Mortgagee agrees to execute and deliver to
the Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination of
the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and
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from time to time, unless an Event of Default shall have occurred and be
continuing, to convey all or any part of the Released Fee Land (the land to be
so conveyed is hereinafter referred to as the "Released Land"), free from the
lien of the Mortgage, provided that the conditions set forth in Section 2.05(a)
of the Note Mortgage have been satisfied.
(b) The Mortgagee shall, from time to time, promptly execute any written
instrument in form reasonably satisfactory to the prospective purchaser to
confirm the release of the Released Fee Land, upon receipt by the Mortgagee of
an Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the Mortgagor's compliance with this Section 2.05 and, if
applicable, Section 2.05 of the Note Mortgage, provided, that
the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be continuing, to have
an Affiliate exercise such options(s) or for the Mortgagor to exercise such
options(s) on behalf of an Affiliate and in connection therewith to cause fee
simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with
the following:
(i) an Officers' Certificate requesting the release of the Released
Fee Land from the Trust Estate and stating that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain all Permits and
in order to comply with the provisions of all material contracts to which
the Mortgagor is a party or by which the Mortgagor is bound, (B) such
Affiliate has received all Permits necessary to own the Released Fee Land
(including without limitation all approvals required by the Casino Control
Commission of the State of New Jersey), (C) there has been delivered to the
Mortgagor and the Mortgagee a true copy of an instrument executed by such
Affiliate stating that (i) such Affiliate may only engage in the activity
of owning the Released Fee Land and (ii) such Affiliate shall not convey
the Released Fee Land to another Affiliate of the Mortgagor,
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unless such other Affiliate executes and delivers to the Mortgagor and the
Mortgagee, the instruments that would have been required to be delivered
pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to
such other Affiliate (provided that this restriction shall only be
effective until such time as this Mortgage shall be satisfied of record)
and (D) the deed conveying the Released Fee Land to such Affiliate shall
state that such conveyance is made subject to the terms, provisions and
conditions of the applicable Ground Lease and that the fee and leasehold
interests in the Released Fee Land shall not merge by reason of the
Mortgagor and/or any Affiliate owning both the leasehold and fee estate
therein, and that such estates shall always remain separate and distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain in good standing
all Permits or by the provisions of any material contract to which the
Mortgagor is a party or by which it is bound to own the Released Fee Land
and (B) the instruments described in clause (C) of subparagraph (i) were
duly executed by and are binding upon such Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, an agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any written
instrument in form reasonably satisfactory to the prospective purchaser to
confirm the release of the Released Fee Land, upon receipt by the Mortgagee of
an Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the
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Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall
have no liability thereunder and all costs and expenses (including reasonable
attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if no
Event of Default has occurred and is continuing and (ii) if the Mortgagor shall
acquire Released Fee Land, then simultaneously with the acquisition thereof, the
Mortgagor shall have the right to encumber such fee simple title with a mortgage
(such mortgage and any refinancing thereof permitted by the Indenture is
hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this
Mortgage on the Released Fee Land shall be subordinated to the lien of the
After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other
Superior Mortgages which shall become a lien thereon in accordance with the
terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple title to
such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee Mortgage (A)
does not exceed 75% of the cost to the Mortgagor of such fee simple title
at the time of the acquisition and (B) satisfies the criteria set forth in
Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers fee
simple title to the Leased Land or any part thereof, such After-Acquired
Fee Mortgage contains provisions binding on the holder of the
After-Acquired Fee Mortgage and its successors and assigns confirming the
provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an Affiliate of
the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents shall
contain a provision binding upon the holder of such After-Acquired Fee
Mortgage and other loan documents that all insurance proceeds in the event
of a Casualty and awards for Takings of less than the entire Released Fee
Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate
requesting such subordination and
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certifying that the requirements of (i) through (v) above have been
satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this Mortgage
to the contrary notwithstanding, the subordination of this Mortgage to any
After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not
be self-operative but shall be effective only upon the execution and delivery by
the Mortgagee of an instrument in writing effecting such subordination. The
Mortgagee shall deliver such instrument of subordination on the following
conditions: (x) the Mortgagee shall have received an Officers' Certificate
confirming that the conditions of (i) through (vi) of paragraph (a) have been
satisfied, together with a true and correct copy of the After-Acquired Fee
Mortgage and all other instruments securing the indebtedness evidenced thereby
and (y) the instrument of subordination shall specifically state that this
Mortgage is being subordinated not with respect to the lien of this Mortgage on
the Ground Lease or on the leasehold estate created thereby, but only with
respect to the fee simple title to the Leased Land or applicable part thereof
and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default by the Mortgagor under the Guaranty and continuance of
such default for a period of 10 days after there has been given a written
notice to the Mortgagor specifying such default and stating that such
notice is a "Notice of Default" hereunder; or
(b) an "Event of Default," as defined in Section 3.01 of the Note
Mortgage, shall occur; or
(c) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a period
of 60 days after there has been given a written notice to the Mortgagor
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specifying that such notice is a "Notice of Default" hereunder; or
(d) any representation or warranty of the Mortgagor set forth in this
Mortgage shall prove to be incorrect as of the time when made and the facts
constituting such incorrectness impairs the Mortgagee's security and such
impairment continues for a period of 30 days, unless such impairment is
curable, but not susceptible of cure within such 30-day period (for reasons
other than lack of funds), provided that the conditions set forth in
Section 3.01(l) of the Note Mortgage have been satisfied.
Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs
and is continuing, and the Mortgagee has declared the Outstanding Amount of the
Note to be due and payable immediately pursuant to Section 3.02 of the Note
Mortgage, then the Mortgagee may declare all obligations under the Guaranty to
be due and payable immediately.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys
received by the Mortgagee pursuant to the provisions of this Article Three
(including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance
with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has
instituted any proceeding to enforce any right or remedy under this Mortgage and
such proceeding has been discontinued or abandoned for any reason or has been
determined adversely to the Mortgagee, then and in every such case the Mortgagor
and the Mortgagee shall, subject to any determination in such proceeding, be
restored to its former position hereunder, and thereafter all rights and
remedies of the Mortgagee shall continue as though no such proceeding had been
instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Mortgagee is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
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Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be
commenced (including, without limitation, an action to foreclose this Mortgage
or to collect under the Guaranty secured hereby) to which action or proceeding
the Mortgagee is made or becomes a party, or in which it becomes necessary in
the opinion of the Mortgagee to defend or uphold the lien of this Mortgage,
then, to the extent it has not already done so pursuant to the terms of Section
3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses,
including reasonable attorneys' fees and expenses, incurred by the Mortgagee in
connection therewith, together with interest at the rate then payable on the
Notes, from the date of payment less the net amount received by the Mortgagee or
the Trustee, as their interests may appear under any title insurance policy,
and, until paid, all such expenses, together with interest as aforesaid, shall
be a lien on the Trust Estate.
Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent
that it may lawfully so agree, the Mortgagor will not at any time insist upon,
plead, claim or take the benefit or advantage of, any appraisement, valuation,
stay, extension or redemption law now or hereafter in force, in order to prevent
or hinder the enforcement of this Mortgage or the absolute sale of the Trust
Estate, or any part hereof, or the possession thereof by any purchaser at any
sale under this Article Three; and the Mortgagor, for itself and all who may
claim under it, so far as it or they now or hereafter may lawfully do so, hereby
waives the benefit of all such laws. The Mortgagor, for itself and all who may
claim under it, waives, to the extent that it may lawfully do so, all right to
have the property in the Trust Estate marshalled upon any foreclosure hereof,
and agrees that any court having jurisdiction to foreclose this Mortgage may
order the sale of the Trust Estate as an entirety.
If any law in this Section 3.08 referred to and now in force, of which the
Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the
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contract herein contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an
Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of
Default shall occur and be continuing, the Mortgagee, with or without entry, in
its discretion may:
(a) sell, subject to any mandatory requirements of applicable law,
the Trust Estate as an entirety, or in such parcels, as the Mortgagee may
determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this Mortgage by
sale pursuant to judicial proceedings or by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Mortgage or in aid of the execution
of any power granted in this Mortgage or for the foreclosure of this
Mortgage or for the enforcement of any other legal, equitable or other
remedy, as the Mortgagee, being advised by counsel, shall deem most
effectual to protect
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and enforce any of the rights of the Mortgagee; the failure to join tenants
shall not be asserted as a defense to any foreclosure or proceeding to
enforce the rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate,
whether made under the power of sale hereby given or pursuant to judicial
proceedings, to the extent permitted by law:
(a) all obligations owing under the Guaranty, if not previously due,
shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt of any
required prior approvals of the New Jersey Casino Control Commission, the
Mortgagee may bid for and purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain and possess and dispose
of such property, without further accountability, and may, in paying the
purchase money therefor, delivery any notes or claims for interest thereon
in lieu of cash to the amount which shall, upon distribution of the net
proceeds of such sale, be payable thereon, and such notes or claims for
interest thereon, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the holders thereof after
being appropriately stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or purchasers
a good and sufficient deed, bill of sale and instrument of assignment and
transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and lawful
attorney of the Mortgagor, in its name and stead, to make all necessary
deeds, bills of sale and instruments of assignment and transfer of the
property thus sold; and for that purpose it may execute all necessary
deeds, bills of sale and instruments of assignment and transfer, and may
substitute one or more persons, firms or corporations with like power, the
Mortgagor hereby ratifying and confirming all that its attorney or such
substitute or substitutes shall lawfully do by virtue hereof; but if so
requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify
and confirm any such sale or transfer by executing and delivering to the
Mortgagee or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment and transfer and releases as may be
designated in any such request;
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(e) all right, title, interest, claim and demand whatsoever, either
at law or in equity or otherwise, of the Mortgagor of, in and to the
property so sold shall be divested and such sale shall be a perpetual bar
both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such sale
shall be a sufficient discharge to the purchaser or purchasers at such sale
for his or their purchase money and such purchaser or purchasers and his or
their assigns or personal representatives shall not, after paying such
purchase money and receiving such receipt, be obliged to see to the
application of such purchase money, or be in anywise answerable for any
loss, misapplication or non-application thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and
commencement of judicial proceedings by the Mortgagee to enforce any right under
this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security for
the Guaranty or the solvency of the Mortgagor, to the appointment of a receiver
of the Trust Estate, and of the rents, issues, profits, revenues and other
income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this
Section 3.12 shall be subject to the provisions of the New Jersey Casino Control
Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have
power to institute and maintain such proceedings as it may deem necessary and
appropriate to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its interests in the
Trust Estate and in the rents, issues, profits, revenues and other income
arising therefrom, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any 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 the security
hereunder or be materially prejudicial to the interests of the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision
of this Article Three to the
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contrary, following an Event of Default and the taking of possession of the
Trust Estate or any part thereof by the Mortgagee and/or the appointment of
receiver of the Trust Estate or any part thereof, the Mortgagee or any such
receiver shall be authorized, in addition to the rights and powers of the
Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one
or more experienced operators of hotels and/or casinos to manage the
Casino-Hotel, PROVIDED that any such operator shall have all necessary legal
qualifications, including all Permits, to manage the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the
Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or
combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the successor entity
formed by such consolidation or into which the Mortgagor is combined or to which
such conveyance or transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Mortgagor under this Mortgage
with the same effect as if such successor entity had been named as the Mortgagor
herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust
Estate substantially as an entirety, unless such conveyance or transfer is in
compliance with the provisions of Article Ten of the Indenture, shall have the
effect of releasing the Person named as "the Mortgagor" in the first paragraph
of this instrument or any successor entity which shall theretofore have become
such in the manner prescribed in such Article Ten from its liability as
guarantor.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise
expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not
sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise
transfer all or any part of the Trust Estate or any interest therein (including
without limitation any interest in the Ground Leases). Without limiting the
generality of the foregoing, the Mortgagor shall not separate, or attempt to
separate, its ownership of its interest in the Ground Leases from its ownership
of the buildings constituting the Casino-Hotel or any part thereof.
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ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. [Reserved]
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing Agreements before the expiration of any applicable notice and cure
periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur,
suffer or permit to be created or incurred or to exist any mortgage, lien,
charge or encumbrance on or pledge of any of the Trust Estate, other than (i)
Permitted Encumbrances, (ii) liens on the Trust Estate in connection with
indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section
12.08(a) of the Indenture, and (iii) a building contract or a notice of
intention filed by a mechanic, materialman or laborer under the New Jersey lien
law. Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the Mortgagor shall
not be deemed to have breached the provisions of the foregoing sentence by
virtue of the existence of a lien for Impositions or mechanics liens so long as
the Mortgagor is in good faith contesting the validity of the same in accordance
with the provisions of Section 5.09 to the extent that the matters described in
(i) and (ii) do not constitute a default under any Ground Lease or Superior
Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges
the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a)
to appear in and defend any action or proceeding brought with respect to the
Trust Estate or any part thereof and (b) upon 5 days' prior written notice to
the Mortgagor (or such shorter period or without notice if deemed necessary and
appropriate by the Mortgage), to commence any action or proceeding to protect
the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor
represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to
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execute and deliver this Mortgage, and all corporate action on its part
necessary for the valid execution and delivery of this Mortgage has been
duly and effectively taken;
(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the Mortgage
Documents, any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than the
lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has been
given to or by the lessee, (iii) the Mortgagor has delivered true and
correct copies of the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in full force
and effect and has not been modified, amended or supplemented, except as
described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to execute
this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer,
hypothecate, pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the Operating Assets
and the Ground Leases, without the consent of any third party, other than
governmental authorities but any applicable or necessary consent or
approval of any such governmental authority has been given or waived at or
prior to the execution and delivery of this Mortgage), and this Mortgage
constitutes a valid third mortgage lien and third priority security
interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage,
subject only to Working Capital Facility Liens and Existing Encumbrances.
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The Mortgagor hereby does and will forever warrant and defend (x) the title
to Trust Estate (including without limitation, its leasehold estates under the
lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and
(y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances
other than Restricted Encumbrances), against the claims and demands of all
persons whomsoever, at the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as
provided in Section 5.13, from time to time subject its right, title and
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments of
further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, and will execute and file such financing statements and cause to be
issued and filed such continuation statements, all in such manner and in such
places as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party under the
Uniform Commercial Code to all property comprising the Trust Estate (to the
extent a grant of a security interest therein is governed by the Uniform
Commercial Code) and to perfect, preserve and protect the lien of this Mortgage
as a valid mortgage lien of record and a valid security interest on the Trust
Estate subject to Permitted Encumbrances (other than Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all expenses
incident to the execution and delivery of this Mortgage, and any instrument of
further assurance, and all federal, state, county and municipal stamp taxes and
other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Mortgage, any financing
statement or continuation statement with respect to the personal property
constituting part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL
REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to contests,
pay or cause to be paid promptly (or when installments of the same shall
become due and payable, if, by law or by agreement or arrangement with the
applicable governmental agency or authority, the same
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may be paid in installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are payable by the
Mortgagor pursuant to any Superior Instrument Requirement), all taxes
(including, without limitation, real estate taxes, personal or other
property taxes and all sales, value added, use and similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
profits or revenue tax upon the income of the Mortgagee, the Trustee or the
Noteholders nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholders nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed in substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Guaranty;
(b) except for such property which the Mortgagor may dispose of or
replace pursuant to Section 2.02, maintain and keep all its properties used
or useful in the conduct of its business (other than obsolete equipment),
including, without limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition, except for
reasonable wear and use, and make or cause to be made all
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such needful and proper repairs, renewals and replacements thereto
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey;
(c) occupy and continuously operate the Casino-Hotel and keep the
Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to contests,
the Mortgagor at its sole expense will timely (1) comply with all Legal
Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if the failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the foregoing, the
Mortgagor represents and warrants that at the time of the execution of this
Mortgage, the Mortgagor is in compliance with the requirements of clauses
(1), (2) and (3);
(e) in the event of the passage after the date of this Mortgage of
any law of the State of New Jersey, or any other governmental entity,
changing in any way the laws now in force for the taxation of mortgages, or
debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of the Mortgagee,
then and in such event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for any reason payment by the Mortgagor of any
such new or additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured hereby wholly or
partially usurious under any of the terms or provisions of the Note, or
this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option,
declare the whole sum secured by this Mortgage, with interest
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thereon, to be due and payable 90 days after notice of election thereof has
been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's
option, pay that amount or portion of such taxes as renders the loan or
indebtedness secured hereby unlawful or usurious, in which event the
Mortgagor shall concurrently therewith pay the remaining lawful and
nonusurious portion or balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense,
contest by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part of any
Imposition or lien therefor or any Legal Requirement or Insurance Requirement or
the application of any instrument of record affecting the Trust Estate or any
part thereof or any claims of mechanics, materialmen, suppliers, or vendors or
lien therefore, and may withhold payment of the same pending such proceedings if
permitted by law, or make payment under protest, or defer compliance with any
such Legal Requirement, any such Insurance Requirement or the terms of any such
instrument, and the same shall not be a Default hereunder, provided that (a) in
the case of any Impositions or lien therefor or any claims of mechanics,
materialmen, suppliers or vendors or lien therefor, such proceedings shall
suspend the collection thereof from each of the Mortgagor, the Mortgagee, the
Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor
any interest therein would be in any danger of being sold, forfeited, or lost,
(c) such action would not result in or constitute a default under any Ground
Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the
Noteholders nor the Mortgagee shall be in any danger of any civil or any
criminal liability, and the failure of the Mortgagor to comply with such Legal
Requirement shall not affect the continuance in good standing of any Permit or
result in the suspension, termination, non-renewal or material adverse
modification of any permit, and (e) in the case of an Insurance Requirement, the
failure of the Mortgagor to comply therewith shall not affect the validity of
any insurance required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality
of the first sentence of Section 5.03 and notwithstanding the provisions of
Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment,
or bonding or otherwise, all claims and demands of mechanics, materialmen,
laborers, and others which, if unpaid, might result in, or permit the creation
of, a lien on the Premises and/or Trust Estate or any part thereof, or on the
revenues, rents, issues, income and profits arising therefrom and in general
will do or cause to be done everything necessary so
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that the lien hereof shall be fully preserved, at the cost of the Mortgagor,
without expense to the Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable properties,
in amounts at all times sufficient to prevent the Mortgagor from becoming a
coinsurer within the terms of the applicable policies, but in any event
such insurance shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the "Insurance
Amount"): (i) 100% of the then full insurable value of such insurable
properties, the term "full insurable value" to mean the actual replacement
cost (excluding the costs of foundation, footing, excavation, paving,
landscaping and other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36 calendar months),
by an Architect, contractor, appraiser, or an Insurer, or (ii)
the amount required to be maintained pursuant to the Superior Instrument
Requirements;
(2) war risk insurance as and when such insurance is obtainable from
the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then be
so obtainable;
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the cost
of such insurance, for personal injury and property damage with respect to
any one occurrence, which may be under an umbrella policy. Anything
contained in this clause (3) to the contrary notwithstanding, the Superior
Instrument Requirements with respect to the
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kinds and amount of insurance described in this clause (3) shall be
satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already covered
by other policies of insurance maintained by the Mortgagor) on or about
such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time that the
Mortgagor is renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates determined
by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable size
in the boardwalk area of Atlantic City, New Jersey and (ii) required to be
maintained pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1), (2),
(6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, $100,000 with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
$1,000,000), (ii) the Mortgagor shall be permitted to maintain a
$200,000 self insured retention under the general liability policy
described in clause (3) and a deductible with respect
to the other insurance policies described in clause (3) in an amount not
to exceed the amount of deductible as is customarily maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not
reduce its insurance coverage for the matters described in clause (3) (which for
purposes of this paragraph means a reduction in single limits or an increase in
deductible) unless and until the Mortgagor
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delivers to the Mortgagee an Officers' Certificate certifying (w) that the
coverage the Mortgagor was theretofore maintaining cannot be maintained at rates
determined by the Mortgagor to be reasonable for such coverage, (x) the amount
of the proposed reduction, (y) the premium for the existing and the proposed
reduced coverage, and (z) that the proposed deductible satisfied the criteria
set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to
maintain a deductible with respect to the insurance policies described in clause
(5) in the forms of and in an amount not to exceed the amount of deductible as
is customarily maintained by casino-hotels of similar size in Atlantic City, New
Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of workers'
compensation insurance, name as additional insureds the Mortgagee, in both
its individual and fiduciary capacities, and, to the extent
required by the Superior Instrument Requirements, the Lessors and the
holders of the Superior Mortgages, (2) provide that all insurance proceeds for
losses, except in the case of public liability insurance and workers'
compensation insurance or as otherwise provided in Subsections (d), (e) and (f)
of this Section 5.11, be payable solely to the Mortgagee or such other party as
is required to receive such proceeds under a Superior Mortgage, (3)
except in the case of workers' compensation, include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all lost payees and
named insureds (other than the Mortgagor) and all rights of subrogation against
any named insured, (4) except in the case of public liability and workers'
compensation insurance, provide that any losses shall be payable notwithstanding
(i) any act, failure to act, negligence of, or violation or breach of
warranties, declarations or conditions contained in such policy by the Mortgagor
or the Mortgagee or any other named insured or loss payee (including, without
limitation, with respect to the Released Fee Land, the holders of any
After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable
properties for purposes more hazardous than permitted by the terms of the
policy, (iii) any foreclosure or other proceeding or notice of sale relating to
the insurable properties or (iv) any change in the title to or ownership or
possession of the insurable properties, (5) contain a non-contributory mortgagee
clause in favor of the Mortgagee, and (6) provide that if all or any part of
such policy is cancelled, terminated or expires, the insurer will forthwith give
notice thereof to each named insured and loss payee and that no cancellation,
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by each named insured and loss payee of
written notice thereof.
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(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals
of all insurance policies that the Mortgagor is required to maintain pursuant to
this Section 5.11 and (2) within 30 days after each reduction in insurance
required to be maintained by the Mortgagor hereunder, an Officers' Certificate
setting forth the particulars as to all such insurance policies and certifying
that the same comply with the requirements of this Section 5.11, that all
premiums or installments thereof then due thereon have been paid and that the
same are in full force and effect. The Mortgagee shall not be responsible for
effecting or renewing any insurance or for the responsibility or solvency of the
insurers.
(d) The Mortgagor shall give written notice to the Mortgagee immediately
upon obtaining knowledge of any Casualty which (x) results in damage, loss or
destruction in an amount in excess of [$5,000,000] to any buildings or
improvements on the Premises and/or any Tangible Personal Property or (y)
pursuant to any Superior Instrument Requirement, would require the deposit of
insurance proceeds with the Depositary, or action or proceeding with respect
thereto. Whenever the Superior Instrument Requirements require or permit the
selection of the Depositary by the Mortgagor, the Mortgagor shall select the
Insurance Trustee as the Depositary. Within 30 days after any Casualty which
results in any damage, loss or destruction in an amount in excess of
$10,000,000 to any buildings or improvements of the Premises and/or any
Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a
certificate of an Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit the Restoration of such buildings and
improvements for the same uses and to the same size and quality in all material
respects, as existed immediately prior to the Casualty (and if such certificate
states the Legal Requirements do not permit such Restoration, such certificate
shall describe the manner closest approximating such criteria to which the
buildings and improvements could be so restored and shall be accompanied by a
Certificate of Appraised Value dated not more than 10 days prior to delivery
setting forth the Appraised Value immediately prior to the Casualty and the
estimated Appraised Value immediately after the Restoration). If the Mortgagor
is required to deliver such Certificates of Appraised Value and if based on such
Certificates of Appraised Value immediately after Restoration, the aggregate
Outstanding Amount of First Mortgage Debt immediately after such Restoration
shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after
such Restoration or (ii) the quotient of the Outstanding Amount of First
Mortgage Debt immediately prior to such Casualty divided by the Appraised Value
immediately prior to the Casualty multiplied by the Appraised Value immediately
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after such Restoration, then the proceeds of any insurance shall, at the
election of Mortgagee, either be applied to Restoration as set forth in
Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to
the extent of the then Outstanding Amount of the Note and any other interest or
other sums due hereunder or thereunder to be applied to the satisfaction of the
Mortgage to the extent proceeds are available for such purpose and provided that
no additional sums are due to the Trustee or the Noteholder under the Indenture,
the balance of any net insurance proceeds shall be paid to the Mortgagor.
Notwithstanding the foregoing sentence, if such Certificates of Appraised Values
indicates that the Outstanding Amount of First Mortgage Debt immediately after
such Restoration exceeds the greater of the two amounts determined pursuant to
subclauses (i) and (ii) above, the proceeds of insurance will be made available
for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor
obtains an irrevocable commitment from a nationally recognized financial
institution having a combined capital and surplus of at least $100,000,000, to
supply, upon an acceleration under this Mortgage as a result of an Event of
Default, funds to the Mortgagor as additions to capital in an amount equal to
the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value
necessary to be paid down so that the Outstanding Amount of First Mortgage Debt
will not exceed either of the two amounts determined pursuant to such clauses
(i) and (ii), PROVIDED that such commitment may only be released if, upon an
Appraisal at any time following completion of such Restoration, the aggregate
Outstanding Amount of the First Mortgage Debt does not exceed 66-
2/3% of the Appraised Value.
(e) Subject to the provisions of Subsection (d) above, in case a Casualty
occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of $10,000,000, the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to
the Insurance Trustee (or other Depositary required by the Superior
Instrument Requirements, provided that such Depositary holds such proceeds
in trust for purposes of paying the costs of Restoration);
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(3) the Mortgagor shall commence with reasonable promptness under the
circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair,
replacement or rebuilding of the damage or destruction resulting from the
Casualty (all of which restoration, repair, replacement or rebuilding are
referred to as the "Restoration") in accordance with the plans and
specifications submitted to the Insurance Trustee, in conformance with all
Legal Requirements and Superior Instrument Requirements, and in accordance
with the further provisions of this Subsection (e), regardless of the
extent of any such Casualty and whether or not net insurance proceeds, if
any, shall be available or, if available, shall be sufficient, for the
purpose of the Restoration (provided, however, that if the Mortgagor does
not receive any net insurance proceeds within 30 days after any Casualty
because the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration shall be deferred
until such proceeds are made available to the Mortgagor, provided that (i)
Mortgagor delivers to the Mortgagee an Officers' Certificate
certifying that the Mortgagor is diligently and continuously
adjusting such loss with the Insurer, (ii) the Mortgagor
delivers to the Mortgagee an Officers' Certificate
within such 30-day period requesting the extension of such period,
estimating the date on which such proceeds will be available and describing
the Mortgagor's efforts to adjust such loss and certifying that such
extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach
has been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter updating the
information contained in the certificate described in Clause (ii)). All
Restoration work shall be performed in accordance with the applicable
provisions of Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements and, prior to
commencing any Restoration, the Mortgagor shall obtain all Permits
necessary in connection therewith, and shall obtain, and keep in full force
and effect until the completion of such Restoration, such additional
insurance as the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration shall be
accompanied by a certificate of the Mortgagor and an Opinion of Counsel to
the effect that upon the completion of the Restoration pursuant to the
plans and specifications the Premises, and all buildings and improvements,
thereon will comply with all superior Instrument Requirements, Legal
Requirements and Insurance
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Requirements. Notwithstanding anything in this Section 5.11 to the
contrary, if such Casualty is in an amount less than $5,000,000, the
Mortgagor shall not be required to perform and complete such Restoration
(unless the performance and completion of the Restoration is necessary in
order for the Mortgagor to be in compliance with any term, provision or
condition of this Mortgage (other than this Section 5.11(e)) or any
Superior Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designated by Mortgagor (to the extent the Mortgagor
is permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds)
and shall be paid by the Insurance Trustee to reimburse the Mortgagor for,
or to make payment for, the Restoration, after the Insurance Trustee
deducts therefrom the amount of any reasonable costs and expenses incurred
in connection with the performance of its obligations under this Section
5.11. The Insurance Trustee shall make such payments not more frequently
than once every 30 days upon the written request of the Mortgagor (unless
more frequent payments are required by Superior Instrument Requirements),
by paying to the Mortgagor or the persons named in the certificate
described in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate from time to time as the Restoration progresses,
provided the Mortgagor has complied with the requirements of this
Subsection (e) and such payment is permitted by an applicable Superior
Instrument Requirements. The Mortgagor's written request shall be
accompanied by (i) the certificate described in Clause (6) of this
Subsection (e) and (ii) a title company or official search, or other
evidence reasonably acceptable to the Insurance Trustee, showing that there
have not been filed with respect to the Premises, any vendor's,
contractor's, mechanic's, laborer's or materialman's statutory or similar
lien which has not been discharged of record (or bonded against or secured
by other security) or any other encumbrance irrespective of its priority
(other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate,
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countersigned by the Architect in charge of the Restoration with respect to
the matters described in (i) and (v) below, (B) be dated not more than 10
days prior to such request and (C) set forth (in addition to any other
requirements contained in any applicable Superior Instrument Requirements)
that:
(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance
Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered services or
furnished or contracted to deliver materials for the Restoration
therein specified, and the names and addresses of such persons, a
brief description of such services and materials and the several
amounts so paid or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net
insurance proceeds, and that the sum then requested does not exceed
the value of the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in such certificate to be due for services or
materials, and except for amounts in dispute and/or customary
retainages, there is no outstanding indebtedness known to the person
signing such certificate, after due inquiry, which is then due for
labor, wages, materials, supplies or services in connection with such
Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if
such estimated cost does exceed such insurance proceeds such
certificate shall state the amount of any such deficiency. If the
certificate states that such deficiency will exist, the Mortgagor
shall deliver the amount of
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such deficiency in cash or cash equivalent to the Insurance Trustee
simultaneously with the delivery of such certificate, which amount
shall be deemed insurance proceeds for purposes of this Section
5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the entire
cost of the Restoration, then, after completion of the Restoration, the
Mortgagor shall pay the deficiency. If all or any part of the net
insurance proceeds are not used for the Restoration in accordance with this
Subsection (e) (because such proceeds exceed the amount required to
complete the Restoration), then upon completion of the Restoration in
accordance with this Subsection (e), such amount not so used, if held by
the Insurance Trustee, shall be paid to the Mortgagor (if permitted by
Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is continuing, all
net business interruption insurance proceeds shall be paid to the Mortgagor, to
be segregated from the other funds of Mortgagor and held in trust by Mortgagor
for the following purposes and in the following order of priority: (i) for the
payment of Impositions and amounts due under the Ground Leases and Superior
Mortgages; (ii) for debt service for the estimated period of Restoration (for
purposes of this Section 5.11(f), interest and principal payments due on any
payment date under the Notes will deemed to accrue in equal daily installments
beginning the day after the immediately preceding payment date and ending on
such payment date); and (iii) for any expense incurred in connection with the
operation or business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent in
form or contributing in the event of loss with that required to be maintained
pursuant to this Section 5.11, unless the same are permitted by Superior
Instrument Requirements and the Mortgagee is included therein as a named
insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant
to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall promptly deliver to
the Mortgagee a duplicate original of the policy of such insurance, a copy
thereof certified by the insurer or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance
claims by reason of damage or destruction to any portion of the Trust
Estate may adjusted by the Mortgagor, but the Mortgagee shall have the
right (but not the obligation) to join the Mortgagor in adjusting, and approving
the adjustment of, any such loss except in the event of a loss where the amount
of insurance reasonably anticipated
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to be received with respect to such loss is less than Five Million Dollars
($5,000,000), and the Mortgagor shall assist the Mortgagee in any such
adjustment at the request of the Mortgagee. If the Mortgagee at its election as
aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's
approval of the adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary, if an Event
of Default shall have occurred and be continuing, the Mortgagee may, at its
option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any
net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case
may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or
make any demolition, alteration or improvement of any building included in the
Trust Estate or any new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in this Section 5.12
set forth.
Unless an Event of Default shall have occurred and be continuing, the
Mortgagor shall have the right at all times to make or permit such alterations,
improvements or new constructions, structural or otherwise (herein sometimes
called collectively "alterations"), of or on the Trust Estate, to be made in all
cases subject to the conditions set forth in Section 5.12 of the Note Mortgage.
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d), enter into any
Lease, or renew, modify, extend, terminate, or amend any Lease, except in
the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection of, any
rental payments under any Lease more than one year in advance of the
respective periods in respect of which they are to accrue, except that, in
connection with the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected and received in
advance in an amount not in excess of three months' rent and/or a security
deposit may be required thereunder in an amount not exceeding one year's
rent;
(c) collaterally assign, transfer or hypothecate (other than to the
Mortgagee hereunder, to
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the mortgagee under the Note Mortgage or to the holder of any Working
Capital Facility Lien) any rental payment under any Lease whether then due
or to accrue in the future, the interest of the Mortgagor as landlord under
any Lease or the rents, issues or profits of the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any Lease
unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder shall be
subject and subordinate to the rights of the Mortgagee under this
Mortgage, the mortgagee under the Note Mortgage and the holders of any
Superior Mortgage,
(2) the Lease may be assigned by the landlord thereunder to the
Mortgagee,
(3) the rights and remedies of the tenant in respect of any
obligations of the landlord thereunder shall be nonrecourse as to any
assets of the landlord other than its equity in the building in which
the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and subordinate to
the rights of the lessee under any new lease entered into in the event
of a termination of a Ground Lease;
(e) modify any Lease with respect to the matters described in clauses
(1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate of the
Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee
shall deliver a non-disturbance and attornment agreement substantially in the
form of Schedule 4 hereto, following receipt of a certificate of a leasing
broker (who is not an Affiliate of the Mortgagor or the broker involved in such
transaction) experienced with respect to leases of commercial space in the
Atlantic City area stating that the rent under the Lease is not less than fair
market rent and that the other terms of the Lease are fair and reasonable in the
commercial leasing market. The Mortgagor shall, upon demand, reimburse the
Mortgagee for any costs and expenses (including reasonable attorney's fees)
incurred by the Mortgagee in connection with the preparation, review and
delivery of such non-disturbance and attornment agreements.
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Promptly after the execution and delivery hereof, the Mortgagor will cause
the lessee under each Lease now in effect and promptly after each Lease is
executed or becomes effective after the date of the execution and delivery
hereof, the Mortgagor will cause the lessee under each such Lease, to be duly
notified in writing (unless the substance and effect of such notice shall be
contained in such Lease) of the subjection of the owner's interest, as lessor,
in and to such Lease to the lien of this Mortgage and of the name and address of
the Mortgagee. Each such notice shall state that the lease of such lessee is a
Lease as herein defined. If a new Mortgagee is at any time appointed hereunder
or the address of the Mortgagee shall at any time be changed, the Mortgagor will
cause each lessee under each Lease to be promptly notified in writing of the
name and address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur any
expenditure other than de minimis amounts) to obtain from each lessee under each
Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of
receipt of such notice, and the Mortgagor will promptly deliver to the
Mortgagee, upon request, a copy of each such acknowledgment of receipt which it
is able to obtain. The Mortgagee shall not be responsible for securing or
causing the Mortgagor to secure any such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to
Article Four, the Mortgagor will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation, and
its rights (both statutory and under its articles of incorporation) and
franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will
keep proper books of record and account in accordance with Section 12.05 of the
Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
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expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Notes, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Guaranty.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law or any other law which
would prohibit or forgive the Mortgagor from paying all or any portion of the
obligations under the Guaranty as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect the covenants or
the performance of this Mortgage; and the Mortgagor (to the extent that it may
lawfully do so) 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 Mortgagee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions
of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking
affecting the Trust Estate.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause to be done
all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall
at all times fully perform and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all taxes,
assessments and other charges mentioned therein) prior to the expiration of any
notice and/or cure period provided in each such Ground Lease. Upon receipt by
the Mortgagee from a Lessor of any written notice of default by the lessee
thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems
necessary in its sole discretion to prevent or to cure any default by the
Mortgagor in the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the Mortgagor as
lessee under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by
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the Mortgagor or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate,
Opinion of Counsel and a copy of the injunction, all as described in Section
3.01(g), the Mortgagee shall not take any such action unless and until the
Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay
referred to in Section 3.01(g). Without limiting the generality of Section 3.09
hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that
the Mortgagee shall have, the absolute and immediate right to enter in and upon
the Premises or any part thereof to such extent and as often as the Mortgagee,
in its sole discretion, deems necessary or desirable for the purpose permitted
by the immediately preceding sentence, subject only to applicable Legal
Requirements. Subject to the preceding and without limiting the Mortgagee's
other remedies under this Mortgage, the Mortgagee may pay and expend such sums
of money as the Mortgagee in its sole discretion deems necessary for any such
purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately
and without demand, all such sums so paid and expended by the Mortgagee,
together with interest thereon from the date of each such payment at the highest
rate of interest set forth in the Notes. All sums so paid and expended by the
Mortgagee, and the interest thereon, shall be added to and be secured by the
lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and
that it will not without the express written consent of the Mortgagee
modify, change, supplement, alter or amend such Ground Leases either
orally or in writing and, as further security for the repayment of the
indebtedness secured hereby and for the performance of the covenants
herein and in such Ground Leases contained, the Mortgagor hereby
assigns to the Mortgagee all of its rights, privileges and
prerogatives as lessee under such Ground Leases to terminate, cancel,
modify, change, supplement, alter or amend such Ground Leases, and any
such termination, cancellation, modification, change, supplement,
alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing
and (2) either (A) there has been an acceleration of maturity of the
Notes pursuant to Section 3.02 of the Note Mortgage or (B) the
Mortgagee exercises its rights under Section 3.09 hereof, the
Mortgagee shall have no right to terminate, cancel, modify, change,
supplement, alter or amend the Ground Leases;
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(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of
the Mortgagor's obligations under such Ground Leases, pursuant to such
Ground Leases or otherwise, shall release the Mortgagor from any of
its obligations under this Mortgage, including its obligations with
respect to the payment of rent as provided for in such Ground Leases
and the performance of all of the terms, provisions, covenants,
conditions and agreements contained in such Ground Leases, to be kept,
performed and complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest
in the improvements on the Leased Land and the leasehold estates shall
not merge by and shall always remain separate and distinct,
notwithstanding the union of such estates either in the Lessor or in
the lessee, or in a third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in
writing of any request made by the Mortgagor, as lessee under each of
the Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any
arbitration proceedings, as well as all proceedings thereunder. In
addition, the Mortgagor shall promptly deliver to the Mortgagee a copy
of the determination of the arbitrators in each such arbitration
proceeding. The Mortgagee shall have the right to participate in such
arbitration proceedings in association with the Mortgagor or on its
own behalf as an interested party in accordance with the terms of the
Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such
election to the Lessor or (B) the Mortgagor acquires fee simple title
or any other estate, title or interest in the Leased Land, the
Mortgagor shall promptly notify the Mortgagee of such acquisition and
shall cause to be executed and recorded all such other and further
assurances or other instruments in writing as may be required by law
or, in the opinion of the Mortgagee, be reasonably
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desirable to carry out the intent and meaning of clause
(x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease
by any Lessor or any trustee arising from or in connection with any
case, proceeding or other action commenced or pending by or against
any Lessor under the Code or any comparable provision contained in any
present or future federal, state, local, foreign or other statute,
law, rule or regulation, the Mortgagor shall give notice thereof to
the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any
and all of the Mortgagor's rights as lessee under Section 365(h) of
the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation ("Comparable Provision") and (B) covenants that it shall
not elect to treat any Ground Lease as terminated pursuant to Section
365(h) of the Code or any Comparable Provision without the prior
written consent of the Mortgagee and (C) agrees that any such election
by the Mortgagor without such consent shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to
the Mortgagee all of the Mortgagor's claims and rights to the payment
of damages arising from any rejection by Lessor of any Ground lease
under the Code or any Comparable Provision. The Mortgagee shall have
the right to proceed in its own name or in the name of the Mortgagor
in respect of any claim, suit, action or proceeding relating to the
rejection of any Ground Lease, including, without limitation, the
right to file and prosecute, in cooperation with the Mortgagor, any
proofs of claim, complaints, motions, applications notices and other
documents, in any case in respect of Lessor under the Code or any
Comparable Provision. This assignment constitutes a present,
irrevocable and unconditional assignment of the foregoing claims,
rights and remedies, and shall continue in effect until all of the
indebtedness and obligations secured by this Mortgage shall have been
satisfied and discharged in full. Any amounts received by the
Mortgagee in damages arising out of the rejection of any Ground Lease
as aforesaid shall be applied first to all reasonable costs and
expenses of the Mortgagee (including, without limitation, reasonable
attorneys' fees) incurred in connection with the exercise of any of
its rights or remedies under this Section 5.21, and thereafter as
provided in Section 3.03 hereof;
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(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or
all of the Ground Leases the Mortgagor shall give the Mortgagee not
less than 10 days' prior notice of the date on which the Mortgagor
shall apply to the Bankruptcy Court or other judicial body with
appropriate jurisdiction for authority to reject the lease. The
Mortgagee shall have the right, but not the obligation, to serve upon
the Mortgagor within such 10 day period a notice stating that (a) the
Mortgagee demands that the Mortgagor assume and assign such Ground
Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any
Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s).
If the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a)
of the preceding sentence within 30 days after the notice shall have
been given subject to the performance by the Mortgagee of the covenant
provided for in clause (b) of the preceding sentence. Effective upon
the entry of an order for relief in respect of the Mortgagor under
Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby
assigns and transfers to the Mortgagee a non-exclusive right to apply
to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
(x) the Mortgagor shall promptly give to the Mortgagee copies of
(A) all notices of default or (B) any other communications or notices
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Ground Leases and shall promptly notify the Mortgagor of any default
under any Ground Lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all
of the rights granted to it under the Ground Leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any
portion thereof to or from an Affiliate.
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(c) The Mortgagor hereby represents and warrants that all fixed net rent,
taxes and assessments, payable under the Ground Leases have been paid to the
extent they were due and payable to the date hereof and that the Mortgagor has
not received notice of its failure to pay any other amounts payable under the
Ground Leases which have not been cured.
(d) If both the Lessor's and Lessee's estates under any of the Ground
Leases or any portion thereof shall at any time become vested in one owner, this
Mortgage and the lien created hereby shall nevertheless not be merged,
extinguished, destroyed or terminated by application of the doctrine of merger
and, in such event, Mortgagee shall continue to have all of the rights and
privileges of the leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease shall be
terminated prior to the natural expiration of its term due to default by the
Lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its
designee shall acquire from the Lessor a new lease of the Leased land or any
portion thereof, the Mortgagor shall have no right, title or interest in or to
such lease or the leasehold estate created thereby, or the options therein
contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times fully
perform and comply with all agreements, covenants, terms and conditions imposed
upon or assumed by it as mortgagor under the Superior Mortgages prior to the
expiration of any notice and/or cure period provided in each such Superior
Mortgage. If a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior Mortgage
has been accelerated as a result thereof, the Mortgagee may rely thereon and
take any action the Mortgagee deems necessary in its sole discretion to prevent
or to cure any default by the Mortgagor in the performance of or compliance with
any of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as mortgagor under each of the Superior Mortgages even though the
existence of such default or the nature thereof may be questioned or denied by
the Mortgagor or by any party on behalf of the Mortgagor provided that if the
Mortgagor has heretofore taken such actions as
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described in Section 3.01(h), the Mortgagee shall not take any such action
unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of
any such tolling or stay referred to in Section 3.01(h). Without limiting the
generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the
Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any part
thereof to such extent and as often as the Mortgagee, in its sole discretion,
deems necessary for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. The Mortgagee may (i) pay and
expend such sums of money as the Mortgagee in its sole discretion deems
necessary for any such purpose and (ii) in its sole discretion prepay any
Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee,
immediately and without demand, all such sums referred to in (i) and (ii) above
so paid and expended by the Mortgagee, together with interest thereon from the
date of each such payment at the rate of interest set forth in the Note. All
sums so paid and expended by the Mortgagee and the interest thereon shall be
added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first satisfying the
conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A)
modify any of the terms, covenants or conditions of any Superior
Mortgage, and without limiting the foregoing, the Mortgagor shall not,
without satisfying such conditions, enter into or obtain any agreement
whereby the holder of any Superior Mortgage waives, postpones,
extends, reduces or modifies the payment of the installment of
principal or interest or any other item or amount now required to be
paid under the terms of any Superior Mortgage or modifies any other
provision thereof, or (B) acquire or permit or suffer any Affiliate of
the Mortgagor to acquire any Superior Mortgage or any interest
therein. Notwithstanding anything in clause (A) to the contrary, the
Mortgagor shall have the right to amend, supplement or modify any
Superior Mortgage, if (x) the then outstanding principal balance of
the indebtedness secured by such Superior Mortgage is not increased
thereby, and (y) in the case of any After-Acquired Fee Mortgage, such
amendment, supplement or agreement does not increase the property
covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the Mortgagor under each
Superior Mortgage, the note secured thereby and any other instrument
evidencing or
59
<PAGE>
securing the indebtedness owing to any holder of any Superior
Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an estoppel certificate or letter addressed to the Mortgagee
from holders of the Superior Mortgages, such certificate or letter to
be in such form as the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any
default under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions of the
Trust Estate shall be subject and subordinate to any Existing Encumbrances, the
liens created by the Senior Mortgage Documents and any mortgage, assignment,
security agreement, financing statement or other lien securing any Working
Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's
interest in the affected portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be self-operative
with respect to the liens created by the Senior Mortgage Note Documents and any
Working Capital Facility Lien, and no further instrument shall be required to
give effect to such subordination. Mortgagee shall, however, from time to time,
execute instruments in form and substance reasonably satisfactory to the holder
of the Working Capital Facility Lien, confirming such subordination and agreeing
to such other matters reasonably required by the holder of the liens created by
the Senior Mortgage Documents and the holders of such liens which do not, in the
aggregate, materially adversely reduce or impair the rights of Trustee under the
Mortgage, and Mortgagor and others may rely conclusively thereon, provided that
Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of the
Trust Estate shall be subject and subordinate to any Existing Encumbrances. The
provisions of this Section 5.22(d) shall be self-operative, and no further
instrument shall be required to give effect to such subordination.
60
<PAGE>
Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding
recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office
after the recordation of the Note Mortgage, the lien of this Mortgage ranks PARI
PASSU with, and not junior to, the lien created by the Note Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it
is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon
the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee
further acknowledges and agrees that whenever it is provided in the Note
Mortgage that the Mortgagor shall deliver any notice or document, or is required
to make any payment thereunder, the delivery of such notice or document or the
making of such payment pursuant to the terms of the Note Mortgage shall also
constitute the delivery of such notice or document or the making of such payment
in satisfaction of the terms, conditions and provisions of this Mortgage to the
same extent as the same constitutes satisfaction of the terms, conditions and
provisions of the Note Mortgage.
Section 6.02. COUNTERPARTS. This instrument may be executed in any number
of counterparts, each of which as executed shall be deemed to be an original,
but all such counterparts shall constitute one and the same instrument.
Section 6.03. MODIFICATION. This Mortgage is subject to "modification"
within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have
the benefit of the lien priority provisions of such statute. Such modification
may include, without limitation, a change in the interest rate, maturity date or
other terms and conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS
MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly
executed and attested, all as of the day and year first above written.
61
<PAGE>
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
62
<PAGE>
Exhibit G
Intercreditor Agreement Terms
<PAGE>
Exhibit G
Outline of Material Terms of the
Intercreditor Agreement
for
Resorts International, Inc.
Subject Credit Senior Secured Loan due July 15, 2002 (the
Facilities "Senior Facility");
Senior Mortgage Notes due [March] 15,
2003 (the "Senior Mortgage Notes");
Junior Mortgage Notes due June 15, 2004
(the "Junior Mortgage Notes"); and
Any other credit facilities which may be
required by the Indentures for the
Senior Facility, the Senior Mortgage
Notes or the Junior Mortgage Notes to be
included in the Intercreditor Agreement
(the "Additional Facilities," and
together with the Senior Facility, the
Senior Mortgage Notes and the Junior
Mortgage Notes, the "Credit Facilities")
Creditor Parties Senior Facility Trustee;
Senior Mortgage Note Trustee;
Junior Mortgage Note Trustee; and any
lenders (or trustees or agents on behalf
of any lenders) which provide Additional
Facilities (collectively, the
"Trustees") Each Creditor Party, by its
execution of the Intercreditor Agreement
(whether directly or through its trustee
or agent), acknowledges the making of
the other Credit Facilities and the
intended uses of proceeds thereof and
waives any right to object to any
contemporaneous or existing Credit
Facility as having constituted a
fraudulent conveyance.
Classification of Initial Designations:Credit Facilities
Class 1 Facilities: Senior Facility,
all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
<PAGE>
Class 2 Facilities: Senior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Class 3 Facilities: Junior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Subsequent Designations - as indicated
on the signature page(s) to be executed
by the lenders (or any trustees or
agents on behalf of any lenders) which
provide Additional Facilities and
consented to by all other parties at
such time.
Borrower Parties Resorts International Hotel Financing,
Inc. ("RIHF"), as borrower under the
Secured Facilities;
Resorts International Hotel, Inc.
("RIH") as guarantor under the Secured
Facilities and issuer of the secured
intercompany notes to RIHF collaterally
assigned to each respective Trustee;
Resorts International, Inc. ("RII"), as
guarantor under the Senior Facility and
issuer of any intercompany notes which
may be issued to RIH; and
[GRI, Inc. ("GRI", and together with
RIHF, RIH and RII, the "Borrower
Parties") as guarantor under the Senior
Facility and issuer of any intercompany
notes which may be issued to RIH.]1*
The Borrower Parties will execute the
Intercreditor Agreement principally for
the purposes of (i) acknowledging the
relative rights of and relationships
among the Secured Facilities established
therein and (ii) agreeing not to take
any actions, including making any
payments, inconsistent therewith.
- -------------------
* Subject to discussion on structure
2
<PAGE>
Relative Priorities Liens:
Notwithstanding the time of filing,
recording or perfecting of the Security
Documents (which will be defined to
include the Mortgages and other liens
and encumbrances):
Each Lien created on behalf of a Class 1
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 1 Facility and (ii) senior
to any Lien created on behalf of any
Class 2 Facility or Class 3 Facility.
Each Lien created on behalf of a Class 2
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 2 Facility, (ii) senior to
any Lien created on behalf of any Class
3 Facility and (iii) junior to any Lien
created on behalf of any Class 1
Facility.
Each Lien created on behalf of a Class 3
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 3 Facility, and (ii) junior
to any Lien created on behalf of any
Class 1 Facility or Class 2 Facility.
Subrogation To be waived by all guarantors.
Mortgage Default Each Class 3 Creditor shall notify each
Cure Provisions Class 2 Creditor and each Class 1
Creditor of any Default or Event of
Default under its respective Class 3
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 1
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 3
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 2 Creditor shall notify each
Class 1 Creditor and each Class 3
Creditor of any Default or Event of
3
<PAGE>
Default under its respective Class 2
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 1 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 2
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 1 Creditor shall notify each
Class 2 Creditor and each Class 3
Creditor of any Default or Event of
Default under its respective Class 1
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 1
Facility or the Mortgage or other
Security Documents securing its
facility.
In addition, each Trustee will be
obligated to notify all other Trustees
prior to exercising any remedies with
respect to any shared collateral.
Application of Proceeds from dispositions of
Proceeds collateral, insurance proceeds,
condemnation awards and similar amounts
will be applied in accordance with
relative priorities of Liens.
Representations and Each party to the Intercreditor
Warranties Agreement will make appropriate
representations, including those
relating to its corporate existence,
power and authority, as well as to the
validity and enforceability of the
Intercreditor Agreement.
Amendments Intercreditor Agreement may not be
amended except pursuant to a writing
executed by all parties thereto.
Amendments for the sole purpose of
adding permitted parties may be executed
by the Trustees without the consent of
4
<PAGE>
the creditors for whom they serve if all
conditions precedent to the incurrence
of such indebtedness have been
satisfied. Amendments to sections [ ]
and [ ] may be executed by the
Trustees only with the approval of 100%
of the creditors for whom they serve and
amendments to sections [ ] and [ ]
may be executed by the Trustees only
with the approval of 66 2/3% of the
creditors for whom they serve.
Third Party Each party to the Intercreditor
Beneficiarie Agreement will acknowledge that such
agreement is being entered into for the
benefit of the lenders under the Credit
Facilities and their respective
successors and assigns, each of whom is
a direct intended third-party
beneficiary.
Certain Specific performance; no waivers;
Miscellaneous cooperation and further assurances.
Provisions
Governing Law New York
<PAGE>
NA932230075 - GUARANTY MORTGAGE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING GUARANTY
OF MORTGAGE NOTES
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING GUARANTY
OF MORTGAGE NOTES
-----------------
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association having an address at 750 Main Street, Suite 1114 Hartford,
Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain
Indenture dated as of even date herewith (the "Indenture") among Mortgagor,
Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor
of the payments of principal and interest due on the 11% Mortgage Notes due
2003 in an aggregate principal amount of $125,000,000, issued pursuant to the
provisions of the Indenture (defined therein, and hereinafter collectively
referred to herein, as the "Notes"), in accordance with the terms and
conditions of Article Fourth of the Indenture; and performance and observance
of all of the provisions herein contained, Mortgagor has executed and delivered
this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released,
conveyed and confirmed unto Mortgagee and its successors hereunder and assigns
forever, all of its right, title and interest in, to and under any of the
following described property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause
as fully as if set forth in this Granting Clause at length.
<PAGE>
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the "Ground
Leases") particularly described in Schedule 2, which Schedule is hereby made a
part of, and deemed to be described in, this Granting Clause as fully as if set
forth in this Granting Clause at length, which Ground Leases cover the real
property described in Schedule 2 (the "Leased Land") and in and to any and all
modifications, extensions and renewals of the Ground Leases and all options set
<PAGE>
NA932010185 - MORTGAGE
SECURING RIH PROMISSORY NOTE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING
RIH PROMISSORY NOTE
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
a Delaware corporation,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING
RIH PROMISSORY NOTE
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having
an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City,
New Jersey 08401 (RIHF, or its successors or assigns which shall than be the
Noteholder (as hereinafter defined), being referred to herein as "Mortgagee").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to (i) the payment of the
principal amount (and premium, if any) of the secured promissory note
by Mortgagor to Mortgagee in the principal amount of $125,000,000 as amended
and restated the date hereof (hereinafter
collectively referred to as the "Note"), in lawful money of the United States,
to be paid in accordance with the provisions thereof (and all renewals,
extensions, and modifications thereof) all of which are hereby made an
integral part hereof as though set forth at length herein; (ii) payment of
interest (including interest on all overdue principal and premium,
if any) becoming due under the provisions of the Note; (iii) payment
by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee
pursuant to any term or provision of this Mortgage; (iv) performance of each
covenant, term, condition and agreement of Mortgagor herein or in the Note
contained; (v) all costs and expenses, including reasonable counsel fees and
expenses as provided in Section 3.07, which may arise in respect of the Note
and this Mortgage or of the obligations secured hereby; and (vi) performance
and observance of all of the provisions herein contained, Mortgagor has
executed and delivered this Mortgage and has bargained, sold, aliened,
mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and
its successors hereunder and assigns forever, all of its right, title and
interest in, to and under any of the following described property:
<PAGE>
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause
as fully as if set forth in this Granting Clause at length.
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the "Ground
Leases") particularly described in Schedule 2, which Schedule is hereby made
a part of, and deemed to be described in, this Granting Clause as fully
as if set forth in this Granting Clause at length, which Ground Leases
cover the real property described in such Schedule 2 (the "Leased Land")
and in and to any and all modifications, extensions andrenewals
of the Ground Leases and all options set forth therein, together with (i) all
credits, deposits, privileges and rights of the Mortgagor as lessee under the
Ground Leases, now or at any time existing, (ii) the leaseholds and the
leasehold estates created by the Ground Leases and (iii) all of the estates,
rights, titles, claims or demands whatsoever of Mortgagor, either in law
or in equity, in possession or in expectancy, of, in and to the Ground
Leases and the Leased Land, together with (x) any and all other, further
or additional title, estates, interests or rights which may at anytime be
acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to
payment in full of all indebtedness secured hereby, acquire fee simple
title or any other greater estate to the Leased Land pursuant to
the Ground Leases, or otherwise, the lien of this Mortgage shall attach,
extend to, cover and be a lien upon such fee simple title or other
greater estate and thereupon the lien of this Mortgage shall be prior
to the lien of any mortgage or deed of trust placed on such acquired
title, estate, interest or right subsequent to the date of this Mortgage
and (y) any right to possession or statutory term of years derived from,
or incident to, the Ground Leases pursuant to Section 365(h) of
the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in
any present or future federal, state, local, foreign or other statute, law,
rule or regulation.
3
<PAGE>
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and
proceeds of the property subjected or required to be subjected to the lien
of this Mortgage, including, without limitation, the property described in
Granting Clauses First, Second, and Sixth (such property is hereinafter
collectively referred to as the "Premises") and all the estate, right,
title and interest of every nature whatsoever of the Mortgagor in and
to the same and every part thereof. The collective metes and bounds
description of the Owned Land and the Leased Land is set forth in
annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the
date of execution of this Mortgage or hereafter entered into by
the Mortgagor, if any, including extensions, renewals or amendments
of all of the same, and the immediate and continuing right as
security in accordance with an Assignment of Leases and Rents of even date
herewith between Mortgagor and Mortgagee, and, after the occurrence of an
Event of Default, to make claim for, collect, receive and receipt for (and to
apply the same as provided herein) any and all rents, income, revenues,
issues, profits, security and other sums of money payable or receivable
thereunder or pursuant thereto, and all proceeds thereof, whether payable
as rent, insurance proceeds, condemnation awards, security or
otherwise and whether payable prior to or subsequent to the maturity date of
the Note, to receive and give notices and consents thereunder, to bring actions
and proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any
Lease, including the commencement, conduct and consummation of any
proceedings at law or in equity as shall be permitted by any provision
of any Lease, and to do any and all things which the Mortgagor
or any lessor is or may become entitled to do under the Leases;
provided, that the assignment made by this granting Clause Fourth
shall not impair or diminish any obligation of the Mortgagor
under the Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of
Granting Clause Third, the Mortgagor's rights, privileges and
franchises in and to the following, to the extent of the
Mortgagor's interest therein and thereto and to the extent assignable
(collectively, "Operating Assets"):
4
<PAGE>
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including
guaranties and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties
and other items of intangible personal property relating to the
ownership or operation of the Casino-Hotel, including, without
limitation, (1) telephone and other communication numbers, (2) all
software licensing agreements as are required to operate computer software
systems at the Casino-Hotel, all transferable proprietary interest in software
required to operate the computer systems at the Casino Hotel and books
and records relating to the software programs, and (3) lessee's
interest under leases of Tangible Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor or
which have been assigned to the Mortgagor, for the design and construction,
and for the equipping and furnishing, of the Casino-Hotel, including
architect's agreements, engineering agreements, construction contracts,
consulting agreements and agreements or purchase orders for all items
of Tangible Personal Property and payment and performance bonds in
favor of the Mortgagor in connection with the Trust Estate (and all
warranties and guaranties thereunder and warranties and guaranties of any
subcontractor and bond issued in connection with the work to be
performed by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances,
fixtures and fittings and other articles of tangible personal property
which are, or are to be located on, or used in connection with the
operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six
5
<PAGE>
wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the
operation thereof;
(iii) all cards, dice, gaming chips and placques, tokens,
chip racks, dealing shoes, dice cups, dice sticks, layouts,
paddles, roulette balls and other consumable supplies and items to be
used in connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether in use or held in reserve storage
for future use, in connection with the operation of the Casino-Hotel,
which are on hand or on order whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind and
nature for use in all of the operating departments of the Casino-Hotel,
or in the improvements now or hereafter located on any of the Owned
Land, including without limitation, accounting supplies, guest
supplies, forms, printing, stationery, food and beverage stock, bar
supplies, laundry supplies and brochures to existing purchase orders;
(vi) all sets and scenery, costumes, props and other items of
tangible personal property on hand or on order for use in the production
of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by
the architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to time;
(h)any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
6
<PAGE>
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high
roller" lists; and
(j) all of the goodwill in connection with the operation of
the Premises.
<PAGE>
NA932280131 - MORTGAGE ASSIGNMENT
GD&C DRAFT DATED 12/17/93
==============================================================================
ASSIGNMENT OF AGREEMENTS
________________
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignor,
TO
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Assignee
Dated as of _________________, 1994
==============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware
corporation ("ASSIGNOR"), having an address at c/o Resorts
International, Inc., 1133 Boardwalk, Atlantic City, New Jersey
08401, to STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association,
having an address at 750 Main Street, Suite 1114, Hartford, Connecticut
06103, in its capacity as Trustee ("Assignee"), under that certain Indenture
dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and
Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR").
WITNESSETH:
WHEREAS, in partial repayment of certain inter-company debt owed by
Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"),
Mortgagor has issued to RII a secured promissory note on the date hereof in
the principal amount of $125,000,000 (as the same may be amended or
restated from time to time, the "RIH PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Promissory Note of even date
(the "MORTGAGE"), which Mortgage encumbers certain real property owned or
leased by Mortgagor as more specifically described on SCHEDULE 1 hereto
together with all buildings and improvements erected thereon (collectively,
the "PROPERTY"); and
WHEREAS, RII has transferred the RIH Promissory Note and the
Mortgage to Assignor in exchange for 11% Mortgage Notes due 2003 (the "NOTES")
in an aggregate principal amount of $125,000,000, which Notes were issued
pursuant to the Indenture; and
WHEREAS, as further security for the obligations of Mortgagor under
the RIH Promissory Note, Mortgagor has executed and delivered (i) an Assignment
of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor
of Assignor (as assignee of RII) and each dated as of the date hereof
(said Assignments and the Mortgage collectively referred to herein as the
"RIH PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted
<PAGE>
a security interest in specified personal property, assigned certain other
rights and assigned all right, title and interest of Mortgagor in
leases and rents to Assignor, all as security for the performance
and observance of obligations of Mortgagor under the RIH Promissory Note;
and
WHEREAS, the rights and obligations of the Assignee hereunder are
subject to the terms set forth in that certain Intercreditor
Agreement dated as of the date hereof among Assignor, Assignee,
Mortgagor, Fidelity Management and Trust Company, as trustee, and
U.S. Trust Company of California, N.A., as trustee (and
such other parties that may from time to time become a party
thereto); and
WHEREAS, in order to secure payment of the Notes and all other
payments due to the holder(s) from time to time of the Notes
(collectively, the "HOLDERS") or the Trustee under the Indenture,
Assignor has agreed to execute this Assignment and to be bound by
its terms;
NOW, THEREFORE, THIS ASSIGNMENT
FURTHER WITNESSETH:
That Assignor in consideration of the purchase of the Notes by the
Holders, Ten Dollars ($10.00) lawful money of the United States of
America duly paid to Assignor by Assignee at or before the
execution and delivery of these presents and for other good and
valuable consideration, the receipt of which are hereby
acknowledged, does hereby sell, assign and transfer unto
Assignee and unto its successors and to its assigns forever, for
its benefit and for the benefit of the Holders, and does hereby
grant to Assignee a security interest in and to all of Assignor's
estate, right, title and interest in, to and under any and all of
the following described property, rights and interests
(collectively, the "ASSIGNED PROPERTIES"):
GRANTING CLAUSE FIRST
All right, title and interest of Assignor in and to the RIH
Promissory Note, including all renewals, extensions, modifications
and replacements of the same, and without limiting the generality
of the foregoing, the present, continuing and future right to make
claim for, collect or cause to be collected, receive or cause to be
received directly from Mortgagor thereunder, all payments of
principal, interest and other sums of money payable thereunder.
GRANTING CLAUSE SECOND
All right, title and interest of Assignor in and to the RIH
Promissory Note Mortgage Documents, including all extensions,
renewals, modifications, supplements and replacements of the same.
2
<PAGE>
TO HAVE AND TO HOLD all said properties, rights and interests unto
Assignee and its successors and assigns forever.
THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and
covenants with Assignee as follows:
ARTICLE ONE
PARTICULAR COVENANTS OF ASSIGNOR
Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents,
warrants and covenants that it is duly authorized to enter into
this Assignment, and to grant and convey a lien on and security
interest in the Assigned Properties to Assignee in the manner and
to the extent herein set forth and that all action on its part
required for the execution and delivery of this Assignment has
been duly and effectively taken.
Section 1.02. FURTHER ACTION REQUIRED.
(a) Assignor covenants that it will, from time to time, execute and
deliver such further instruments and take such further actions as
may be required to carry out the purposes of this Assignment.
(b) Assignor hereby appoints Assignee as its lawful attorney-in-fact
(such power being coupled with an interest) in the name of Assignor
or Assignee or both to execute any instruments or to take any
actions to enforce all rights, powers and remedies of Assignor
under or pursuant to the Assigned Properties.
(c) Nothing contained herein shall limit the rights of Assignee
contained in the Mortgage or the Indenture.
(d) Until this Assignment is discharged in accordance with Section
5.01 hereof, no amendment, waiver, modification, discharge, release,
enforcement or satisfaction by Assignor of any of the rights or
remedies under the Assigned Properties shall be effective without
the prior consent and approval of Assignee, and Assignor shall have
no power or authority to take any such action without such consent
and approval.
ARTICLE TWO
OBLIGATIONS TO ASSIGNEE
Section 2.01. CONTINUING OBLIGATIONS.
(a) Assignee shall have no obligation, duty or liability with
respect to the Assigned Properties or any of
3
<PAGE>
them (other than those specifically assumed in its capacity as Trustee
pursuant to the Indenture).
(b) Assignor shall at all times remain liable to observe and perform
all of its covenants and obligations, if any, under the Assigned
Properties, and does hereby agree to indemnify and hold harmless
Assignee, its successors and assigns, from any liability, loss,
damage or expense it or they may incur under the Assigned
Properties or by reason of this Assignment.
ARTICLE THREE
PAYMENTS
Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due
and to become due under or pursuant to the Assigned Properties
shall be paid by Mortgagor directly to Assignee at the address set
forth in Section 6.02 hereof. Neither Assignor nor Assignee shall
have the right, without Mortgagor's prior written consent, to
instruct Mortgagor to pay Revenues to Assignor or in any manner or
to any party other than directly to Assignee.
Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins
in the execution of this Assignment to acknowledge (a) the
assignment by Assignor to Assignee of Assignor's right, title and
interest in, to and under the Assigned Properties, (b) Mortgagor's
agreement to make payment of all Revenues under the Assigned
Properties directly to Assignee at the address set forth in this
Assignment, and (c) the right of Assignee to exercise or enforce in
its own name, in the name of Assignor, or both, all of the rights,
powers and remedies of Assignor in, to and under the Assigned
Properties.
Section 3.03. REVENUES. As used herein, the term "REVENUES" shall
mean (a) all amounts paid or payable by Mortgagor under the RIH
Promissory Note or the RIH Promissory Note Mortgage
Documents, and (b) the net proceeds realized upon or as a result of
the enforcement of any mortgage lien or security interest granted
under the Assigned Properties or this Assignment or upon or as a
result of the exercise of any right or remedy under the Assigned
Properties or this Assignment.
Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor
hereby acknowledges, that Mortgagor may rely exclusively on
Assignee's directive that Assignee is entitled to take action
under this Assignment.
4
<PAGE>
ARTICLE FOUR
DEFAULT PROVISIONS AND REMEDIES
Section 4.01. ENFORCEMENT OF REMEDIES.
(a) Upon the occurrence of any default under the
Indenture or the Assigned Properties, or any of them (each, a
"DEFAULT"), not cured within the applicable grace period after the
applicable notice provision, if any, has been satisfied (each
called an "EVENT OF DEFAULT"), Assignee may, at its option, (i)
proceed directly to protect and enforce its rights and the rights
of any Holders under this Assignment or pursuant to the Assigned
Properties, or any one of them, by such suits, actions or special
proceedings in equity or at law, or by proceedings in the office of
any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein, or in
the Assigned Properties, or any of them, or in aid of execution of
any power granted herein or pursuant to the Assigned Properties, or
any one of them, or for the enforcement of any proper legal or
equitable remedy, including, without limitation, foreclosure of
the Mortgage and/or the sale of the collateral or part thereof
secured thereby at such foreclosure sale, subject to statutory and
other legal requirements, as Assignee shall deem most effective to
protect and enforce such rights, and Assignor hereby appoints
Assignee as its lawful attorney-in-fact (such power being coupled
with an interest) in the name of Assignor or Assignee or both to
effectuate such foreclosure and/or sale of such collateral or part
thereof; or (ii) instruct, direct and cause Assignor to effectuate
the foregoing on behalf of and for the benefit of Assignee and the
Holders, it being further understood that Mortgagor joins in the
execution of this Assignment in order to acknowledge its agreement
to promptly and duly execute and deliver any and all documents and
take any and all actions required by Assignee in order to permit
Assignee to foreclose and/or sell such collateral or part thereof,
and obtain the benefits of this Assignment, as aforesaid.
(b) Upon the occurrence of any Event of Default, Assignee shall be
entitled to sue for, enforce payment of and receive any and all
amounts then and at any time remaining due from Assignor or
Mortgagor for principal and interest on the RIH Promissory
Note, or other sums due under the RIH Promissory Note Mortgage
Documents, as the case may be, or otherwise under any of the
provisions of the Assigned Properties, or any of them, with interest
interest on overdue payments of such principal, at the rate set
forth in the RIH Promissory Note, from the date of Default
to the date of such payment, together with any and all fees, costs
and expenses of collection (including reasonable attorneys' fees
and court costs), subject to statutory and other legal
requirements.
5
<PAGE>
(c) Regardless of the occurrence of an Event of Default, upon five
days' written notice to Mortgagor (or such shorter period or
without notice if deemed necessary and appropriate by Assignee),
Assignee may institute and maintain or cause in the name of
Assignor or Assignee or both to be instituted and maintained such
suits and proceedings as it may be advised by its counsel shall be
necessary and appropriate to prevent any impairment of the Assigned
Properties, or any of them, and to protect its interests in the
Assigned Properties, and in the rents, issues, rights, revenues
and other income arising therefrom, including power to institute
and maintain proceedings to restrain the enforcement or compliance
with any 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 the
security hereunder or would be materially prejudicial to the
interests of Assignee.
(d) Nothing contained in this Article Four is intended to grant
Assignee any greater remedies and rights than those allowed to
Assignor in the respective Assigned Properties. In the event of
any conflict between the remedies and rights contained in any of
the Assigned Properties and the remedies and rights contained in
this Article Four, then the remedies and rights set forth in the
applicable Assigned Property shall govern.
ARTICLE FIVE
DISCHARGE OF ASSIGNMENT
Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or
cause to be paid, or there shall otherwise be paid, to Assignee
and/or the Holders' all amounts required to be paid by Assignor
pursuant to the Indenture and the Notes, and the conditions
precedent for the Indenture shall cease, determine and become
null and void in accordance with Section 5.01 of the Indenture,
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statements filed in connection
herewith and execute and deliver to Assignor and to Mortgagor all
such instruments as may be appropriate to evidence such discharge
and satisfaction of said lien or liens, and Assignee shall pay over
or deliver to Assignor all other moneys and securities held by it
pursuant to this Assignment, which are not required for the payment
of (a) principal and redemption price, if applicable, of and
interest on, the Notes, and (b) all other amounts required to be
paid by Assignor pursuant to the Indenture and the Notes.
6
<PAGE>
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the
covenants, stipulations, obligations and agreements contained in
this Assignment shall be binding upon and inure to the benefit of
Assignor, Assignee and Mortgagor (to the extent applicable to
Mortgagor) and their respective successors and assigns.
Section 6.02. NOTICES.
(a) Any request, notice, demand, authorization, direction, request
or other instrument authorized or required by this Assignment to be
given to or filed with Assignor, Assignee or Mortgagor
(collectively, "NOTICES") shall be deemed given when either (i)
delivered by hand or (ii) five days after sending by registered or
certified mail, postage prepaid, in either case addressed as
follows:
If to Assignor, at:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Assignee, at:
State Street Bank and Trust Company of
Connecticut, National Association
750 Main Street
Suite 1114
Hartford, Connecticut 06103
Attention: Corporate Trust Department
If to Mortgagor, at:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to Mortgagor, Assignor and/or Assignee, given as
provided above, any party may designate additional or substitute
addresses for Notices, which shall, notwithstanding Section
6.02(a), be deemed given with received.
Section 6.03. PARTIAL INVALIDITY. In case any one or more of the
provisions of this Assignment shall for any reason be held to be
illegal or invalid, such illegality or
7
<PAGE>
invalidity shall not affect any other provision of this Assignment, but this
Assignment shall be construed and enforced at the time as if such illegal or
invalid provisions had not been contained herein or therein, nor shall such
illegality or invalidity or any application thereof affect any legal and valid
application herein or thereof from time to time.
Section 6.04. APPLICABLE LAW. This Assignment shall be governed
by and construed under the internal laws of the State of New
Jersey, without giving effect to the principles of conflicts of
law.
Section 6.05. NO AMENDMENT. For so long as the Notes shall remain
outstanding, the Assigned Properties may not be modified, amended
or terminated except in accordance with the provisions of the
Indenture or the Assigned Properties.
Section 6.07. CASINO CONTROL ACT. Each of the provisions of this
Assignment is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act. This Agreement shall not
be transferred, assigned or amended without prior approval of the New Jersey
Casino Control Commission.
IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed
this Assignment Agreement as of the date first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest:
_________________________________________ By:_____________________________
President
RESORTS INTERNATIONAL HOTEL, INC.
Attest:
_________________________________________ By:______________________________
President
8
<PAGE>
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION
Attest:
_______________________________________ By:______________________________
Title
9
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel Financing, Inc., the
corporation named in the within instrument; that
__________________ is the Vice President of said Corporation;
that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of
directors of the said corporation; that deponent well knows the
corporate seal of said corporation; and that the seal affixed to
said instrument is the proper corporate seal and was thereto
affixed and said instrument signed and delivered by said Vice
President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
10
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, the corporation named in the within
instrument; that ____________ is the Vice President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
11
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation
named in the within instrument; that ______________ is the Vice
President of said corporation; that the execution, as well as the
making of this instrument, has been duly authorized by a proper
resolution of the board of directors of the said corporation; that
deponent well knows the corporate seal of said corporation; and
that the seal affixed to said instrument is the proper corporate
seal and was thereto affixed and said instrument signed and
delivered by said Vice President as and for the voluntary act and
deed of said corporation. In presence of deponent who thereupon
subscribed his name thereto as attesting witness; and deponent
signed this proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
12
<PAGE>
NA932380094 - ASSIGNMENT OF RENTS
(RIH PROMISSORY NOTE)
GD&C DRAFT DATED 12/17/93
===============================================================================
ASSIGNMENT
OF LEASES AND RENTS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignee
Dated as of _________________, 1994
==============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having
its principal office at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation,
having its principal office at c/o Resorts International, Inc.,
1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to
secure: (i) the obligations of Assignor under a secured promissory note
dated as of the date hereof made by Assignor to Assignee in the
principal amount of $125,000,000 (as the same may be amended or
restated from time to time, the "RIH PROMISSORY NOTE"), which note is secured
by a Mortgage Securing RIH Promissory Note dated as of the date hereof,
between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE";
capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to those terms in the Mortgage); and (ii) the performance and
observance of all of the provisions herein contained;
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages and other Existing Encumbrances),
all leases or occupancy agreements wherein it is lessor concerning
or affecting the use or occupancy of the certain real property
owned or leased by Assignor, which real property is described on
SCHEDULE 1 hereto and which real property, together with all
buildings and improvements erected thereon, is hereinafter
collectively referred to as the "PROPERTY", or any part thereof,
now existing or which may be executed at any time in the future,
and all amendments, extensions and renewals of such leases or
occupancy agreements, and any of them, all of which are
collectively referred to as the "LEASES", all rents and other
income which may now or hereafter be or become due or owing under
the Leases, and any of them, and any and all payments derived from
or relating to the Leases to which Assignor is entitled, including
but not limited to (a) claims for the recovery of damages done to
the Property, (b) claims for damages resulting from acts of
insolvency or acts of bankruptcy or otherwise, and (c) lump sum
payments for the
<PAGE>
cancellation of Leases or the waiver of any
obligation or term thereof prior to the expiration date;
PROVIDED, HOWEVER, that no Excepted Property is conveyed
hereby; it being intended hereby to establish a present and
complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the Leases and all the rents,
payments and other income arising thereunder; PROVIDED, HOWEVER,
that Assignor is hereby granted a license by Assignee to (i) collect
all of such rents, payments and other income herein assigned which
may become due during the life of this Assignment and (ii) enter
into, renew, modify, extend, terminate, amend, collectively
assign, transfer or hypothecate any or all of the Leases, in
accordance with the provisions of Sections 4.04 and 5.13 of the
Mortgage, each until an Event of Default under the Mortgage (an
"EVENT OF DEFAULT") shall have occurred and be continuing. Upon
the occurrence of an Event of Default, Assignor agrees to deposit
with Assignee upon demand such of the Leases and the rents payable
thereunder as may from time to time be designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to demand, collect, receive and give receipts and
complete acquittance for any and all other rents and other
amounts herein assigned which may be or become due and payable
under the Leases, and at its discretion to file any claim or take
any other action or proceeding and make any settlement of any
claims, either in its own name or in the name of Assignor or
otherwise, which Assignee may deem necessary or desirable in order
to collect and enforce the payment of any and all rents and other
amounts herein assigned. No right shall be exercised by Assignee
under this paragraph until an Event of Default has occurred. All
lessees under the Leases are hereby expressly authorized and
directed, after the occurrence, and during the continuance, of an
Event of Default, to pay all rents and other sums herein assigned
to Assignee or such nominee as Assignee may designate in writing
delivered to and received by such lessees, who thereafter are
expressly relieved of any and all duty, liability or obligation to
Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Assignment and to collect the rents and other sums assigned
hereunder. Assignee shall be under no obligation to exercise any
of the rights or to press any of the claims assigned to it
hereunder, or to perform or carry out any of the obligations of
Assignor under any of the Leases, and does not assume any of the
liabilities in connection with or arising or growing out of the
covenants and agreements of Assignor in the Leases. It is further
2
<PAGE>
understood that this Assignment shall not operate to place
responsibility for the control, care, management or repair of
Assignor's estates or interests in and to the Property, or parts
thereof, upon Assignee, nor shall it operate to make Assignee
liable for the carrying out of any of the terms and conditions of
any of the Leases, or for any waste to Assignor's estates or
interests in and to the Property by any lessee or sublessee of
Assignor under any leases, or by any occupant of the Property, or
by any party whatsoever or for any dangerous or defective condition
of the Property or for any negligence in the management, upkeep,
repair or control of Assignor's estates or interests in and to the
Property resulting in loss or injury or death to any lessee,
licensee, employee or stranger thereat. No right shall be
exercised by Assignee under this paragraph until an Event of
Default has occurred.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
Nothing herein contained is intended to limit or reduce the rights
of Assignee or the obligations of Assignor set forth in the
Mortgage, but rather all of the terms, provisions and conditions
of this Assignment are in addition to and in supplement of such
rights and obligations. If any provision contained in this
Assignment is in conflict with, or inconsistent with, any
provision in the Mortgage, the provisions contained in the
Mortgage shall govern and control.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this
Assignment shall be null and void with respect to those Leases (the
"RELEASED LEASES") which cover exclusively the portion of the
Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Leases shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of a portion of the
Property as aforesaid to confirm any reversion of Assignee's
right, title and interest in the Released Leases effectuated in
accordance with this paragraph, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 or 2.06 of the
Mortgage (as the case may be), provided that Assignee shall have
no liability thereunder and all costs and expenses shall be paid by
Assignor.
3
<PAGE>
Assignee acknowledges that (i) contemporaneously with the execution
and delivery of this Assignment, it has assigned this Assignment to
State Street Bank and Trust Company of Connecticut, National
Association ("Trustee"), as trustee under an Indenture of even
date herewith among Assignor, Assignee and Trustee (the
"Indenture"), and (ii) that the Trustee is also the assignee
under an Assignment of Leases and Rents dated as of the date
hereof from Assignor to Trustee securing the obligations of
Assignor in respect of the Guaranty under and as defined in the
Indenture (the "Other Assignment"), which assignment creates a lien
on the Leases and rents and income due and owing thereunder PARI
PASSU with the lien of this Assignment. Assignee further
acknowledges and agrees that whenever it is provided in the Other
Assignment that the Assignor shall deliver any notice or document,
or is required to make any payment thereunder, the delivery of such
notice or document or the making of such payment pursuant to the
terms of such Other Assignment shall also constitute the delivery
of such notice or document or the making of such payment in
satisfaction of the terms, conditions and provisions of this
Assignment to the same extent as the same constitutes satisfaction
of the terms, conditions and provisions of the Other Assignment.
Upon the termination of the Mortgage and the payment in full of the
obligations secured thereby, this Assignment shall be and become
null and void, and all estate, right, title and interest of
Assignee in and to the Leases shall revert to Assignor and
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statement filed in connection
herewith and execute and deliver to Assignor all such instruments
as may be appropriate to evidence such discharge and satisfaction
of this Assignment (provided that Assignee shall have no liability
hereunder or thereunder and all costs and expenses shall be paid by
Assignor); otherwise, this Assignment shall remain in full force
and effect as herein provided, shall inure to the benefit of
Assignee and its successors and assigns, and shall be binding
upon Assignor and its successors and assigns, and any subsequent
holder of Assignor's right, title and interest and estate in and to
the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without prior approval of the
New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain
4
<PAGE>
Intercreditor Agreement dated as of the date hereof among Assignor, Assignee,
Fidelity Management and Trust Company, as trustee, Trustee and U.S.
Trust Company of California, N.A., as trustee (and such other parties that
may from time to time become a party thereto).
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
RESORTS INTERNATIONAL HOTEL,
FINANCING, INC., a Delaware
corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared _____________,
who, being by me duly sworn on his oath, deposes and makes proof to
my satisfaction, that he is the (Asst.) Secretary of RESORTS
INTERNATIONAL HOTEL, INC., the corporation named in the within
instrument; that ______________ is the (Vice) President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the
corporation named in the within instrument; that ____________ is
the Vice President of said corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
__________________________
[Name]
Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
7
<PAGE>
NA932040103 - ASSIGNMENT OF RENTS
(GUARANTY)
GD&C DRAFT DATED 12/17/93
- -----------------------------------------------------------------------------
ASSIGNMENT
OF LEASES AND RENTS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Assignee
Dated as of _________________, 1994
- -----------------------------------------------------------------------------
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation
("ASSIGNOR"), having an address at c/o Resorts International,
Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 to STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, a national banking association ("ASSIGNEE"), having
an address at 750 Main Street Suite 1114 Hartford Connecticut 06103,
in its capacity as Trustee under that certain Indenture dated as of
even date herewith (the "INDENTURE"), among Assignor, Assignee and
Resorts International Hotel Financing, Inc., a Delaware corporation
("RIHF").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in order to
secure: (i) Assignor's guarantee of the payments of principal and
interest due on the 11% Mortgage Notes due 2003 in an aggregate
principal amount of $125,000,000, issued by RIHF
pursuant to the provisions of the Indenture and of the
performance of certain of RIHF's obligations, all in accordance
with the terms and provisions of Article Fourteen of the Indenture;
and (ii) the performance and observance of all of the provisions
herein contained (capitalized terms used and not otherwise defined
herein shall have the respective meanings ascribed to those terms
in that certain Mortgage Securing Guaranty of Mortgage Notes
dated as of even date herewith, between Assignor, as mortgagor, and
Assignee, as mortgagee (the "MORTGAGE"));
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages and other Existing Encumbrances),
all leases or occupancy agreements wherein it is lessor concerning
or affecting the use or occupancy of certain real property owned or
leased by Assignor, which real property is described on SCHEDULE 1
hereto and which real property, together with all buildings and
improvements erected thereon, is hereinafter collectively referred
to as the "PROPERTY", or any part thereof, now existing or which
may be executed at any time in the future, and all amendments,
extensions and renewals of such leases or occupancy agreements,
and any of them, all of which are collectively referred to as the
"LEASES", all rents and other income which may now or hereafter
be or become due or owing under the Leases, and any of them, and
any and all payments
<PAGE>
derived from or relating to the Leases to which Assignor is
entitled, including but not limited to (a) claims for the
recovery of damages done to the Property, (b) claims for
damages resulting from acts of insolvency or acts of bankruptcy or
otherwise, and (c) lump sum payments for the cancellation of Leases
or the waiver of any obligation or term thereof prior to the
expiration date; PROVIDED, HOWEVER, that no Excepted Property is
conveyed hereby; it being intended hereby to establish a present
and complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the Leases and all the rents,
payments and other income arising thereunder; PROVIDED, HOWEVER,
that Assignor is hereby granted a license by Assignee to (i) collect
all of such rents, payments and other income herein assigned which
may become due during the life of this Assignment and (ii) enter
into, renew, modify, extend, terminate, amend, collectively
assign, transfer or hypothecate any or all of the Leases, in
accordance with the provisions of Sections 4.04 and 5.13 of the
Mortgage, each until an Event of Default under the Mortgage (an
"EVENT OF DEFAULT") shall have occurred and be continuing. Upon
the occurrence of an Event of Default, Assignor agrees to deposit
with Assignee upon demand such of the Leases and the rents payable
thereunder as may from time to time be designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to demand, collect, receive and give receipts and
complete acquittance for any and all other rents and other
amounts herein assigned which may be or become due and payable
under the Leases, and at its discretion to file any claim or take
any other action or proceeding and make any settlement of any
claims, either in its own name or in the name of Assignor or
otherwise, which Assignee may deem necessary or desirable in order
to collect and enforce the payment of any and all rents and other
amounts herein assigned. No right shall be exercised by Assignee
under this paragraph until an Event of Default has occurred. All
lessees under the Leases are hereby expressly authorized and
directed, after the occurrence, and during the continuance, of an
Event of Default, to pay all rents and other sums herein assigned
to Assignee or such nominee as Assignee may designate in writing
delivered to and received by such lessees, who thereafter are
expressly relieved of any and all duty, liability or obligation to
Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Assignment and to collect the rents and other sums assigned
hereunder. Assignee shall be under no obligation to exercise any
of the rights or to press any of
2
<PAGE>
the claims assigned to it hereunder, or to perform or carry out
any of the obligations of Assignor under any of the Leases,
and does not assume any of the liabilities in connection
with or arising or growing out of the covenants and
agreements of Assignor in the Leases. It is further
understood that this Assignment shall not operate to place
responsibility for the control, care, management or repair of
Assignor's estates or interests in and to the Property, or parts
thereof, upon Assignee, nor shall it operate to make Assignee
liable for the carrying out of any of the terms and conditions of
any of the Leases, or for any waste to Assignor's estates or
interests in and to the Property by any lessee or sublessee of
Assignor under any leases, or by any occupant of the Property, or
by any party whatsoever or for any dangerous or defective condition
of the Property or for any negligence in the management, upkeep,
repair or control of Assignor's estates or interests in and to the
Property resulting in loss or injury or death to any lessee,
licensee, employee or stranger thereat. No right shall be
exercised by Assignee under this paragraph until an Event of
Default has occurred.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
Nothing herein contained is intended to limit or reduce the rights
of Assignee or the obligations of Assignor set forth in the
Mortgage, but rather all of the terms, provisions and conditions
of this Assignment are in addition to and in supplement of such
rights and obligations. If any provision contained in this
Assignment is in conflict with, or inconsistent with, any
provision in the Mortgage, the provisions contained in the
Mortgage shall govern and control.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this
Assignment shall be null and void with respect to those Leases (the
"RELEASED LEASES") which cover exclusively the portion of the
Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Leases shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of a portion of the
Property as aforesaid to confirm any reversion of Assignee's
right, title and interest in the Released Leases effectuated in
accordance with this paragraph, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
3
<PAGE>
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 or 2.06 of the
Mortgage (as the case may be), provided that Assignee shall have
no liability thereunder and all costs and expenses shall be paid by
Assignor.
Upon the termination of the Mortgage and the payment in full of
the obligations secured thereby, this Assignment shall be and become
null and void, and all estate, right, title and interest of
Assignee in and to the Leases shall revert to Assignor and
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statement filed in connection
herewith and execute and deliver to Assignor all such instruments
as may be appropriate to evidence such discharge and satisfaction
of this Assignment (provided that Assignee shall have no liability
hereunder or thereunder and all costs and expenses shall be paid by
Assignor); otherwise, this Assignment shall remain in full force
and effect as herein provided, shall inure to the benefit of
Assignee and its successors and assigns, and shall be binding
upon Assignor and its successors and assigns, and any subsequent
holder of Assignor's right, title and interest and estate in and to
the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without the prior approval
of the New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain Intercreditor Agreement dated
as of the date hereof among Assignor, RIHF, Assignee, Fidelity
Management and Trust Company, as trustee, and U.S. Trust Company of
California, N.A., as trustee (and such other parties
that may from time to time become a party thereto).
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the (Asst.)
Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation
named in the within instrument; that _________________ is the
(Vice) President of said Corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me,
the subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, the corporation named in the within
instrument; that ____________ is the Vice President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
__________________________
[Name]
Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
7
<PAGE>
NA932810103 - ASSIGNMENT OF ASSETS
(RIH JUNIOR PROMISSORY NOTE)
GD&C DRAFT DATED 12/17/93
- -------------------------------------------------------------------------
ASSIGNMENT
OF OPERATING ASSETS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignee
Dated as of _________________, 1994
- -----------------------------------------------------------------------------
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF OPERATING ASSETS
THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having
its principal office at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey ("ASSIGNOR"), to RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation,
having its principal office at c/o Resorts International, Inc.,
1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to
secure: (i) the obligations of Assignor under a promissory note
dated as of the date hereof made by Assignor to Assignee in the
principal amount of $35,000,000 (as the same may be amended or
restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof, between Assignor, as mortgagor,
and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used
and not otherwise defined herein shall have the meanings ascribed
to those terms in the Mortgage) which mortgage encumbers certain
real property owned or leased by Assignor and described on SCHEDULE
1 hereto together with all buildings and improvements erected
thereon (collectively, the "PROPERTY"); and (ii) the performance
and observance of all of the provisions herein contained;
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages), all of Mortgagor's right, title
and interest in and to the Operating Assets (other than Excepted
Property), now existing or hereafter acquired (including without
limitation, to the extent assignable, with respect to the bookings,
contracts, Permits, leases, licenses and agreements constituting a
part of the Operating Assets (collectively, the "OPERATING
AGREEMENTS"), all Operating Agreements now existing or which may
be executed at any time in the future, and all amendments,
extensions and renewals of the Operating Agreements, and any of
them, and all rents and other income which may now or hereafter be
or become receivable under the Operating Agreements, and any of
them); it being intended hereby to establish a present and
complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the Operating Agreements and
all the Income (as hereinafter
<PAGE>
defined) arising thereunder; PROVIDED, HOWEVER, that Assignor
is hereby granted a license by Assignee so long as there
neither shall have been an acceleration of maturity
of the Note pursuant to Section 3.02 of the Mortgage nor
an exercise by the Mortgagee of its rights under Section 3.09 of the
Mortgage (either being hereinafter referred to as an "ACCELERATION
EVENT"), to (a) possess, use, manage, operate, enjoy and, subject to
and in accordance with the terms of the Mortgage, dispose of the
Operating Assets or any part thereof and to collect, receive, use,
invest and dispose of the rents, issues, tolls, profits, revenues
and other income therefrom (collectively, the "INCOME"), (b) use,
consume and dispose of any consumables, goods, wares and
merchandise in the ordinary course of business of operating the
Casino-Hotel and (c) adjust and settle all matters relating to choses
in action, leases and contracts. Upon the occurrence of an
Acceleration Event, Assignor agrees to deposit with Assignee upon
demand such of the Operating Agreements, Operating Assets and
receipts and revenues therefrom as may from time to time be
designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to possess, use, manage and enjoy the Operating Assets
or any part thereof and to collect, receive, use, invest, dispose
of and give complete acquittance for any and all Income herein
assigned which may be or become due and payable under the
Operating Agreements, to use, consume and dispose of any
consumable goods, wares and merchandise and to adjust and settle
all matters relating to choses in action, leases and contracts, and
at its discretion to file any claim or take any other action or
proceeding and make any settlement of any claims, either in its
own name or in the name of Assignor or otherwise, which Assignee
may deem necessary or desirable in order to collect and enforce the
rights herein assigned. No rights shall be exercised by Assignee
under this paragraph until an Acceleration Event has occurred. All
parties to the Operating Agreements are hereby expressly authorized
and directed, after the occurrence of an Acceleration Event, to pay
all amounts payable to Assignor thereunder to Assignee or such
nominee as Assignee may designate in writing delivered to and
received by such parties, who thereafter are expressly relieved of
any and all duty, liability or obligation to Assignor in respect of
all payments so made.
Assignee acknowledges that (i) contemporaneously with the execution
and delivery of this Assignment, it has assigned this Assignment to
The Chase Manhattan Bank (National Association) ("Trustee"), as
trustee under an Indenture of even date herewith among Assignor,
Assignee and Trustee (the
2
<PAGE>
"Indenture"), and (ii) that the Trustee is also
the assignee under an Assignment of Operating Assets dated
as of the date hereof from Assignor to Trustee securing the
obligations of Assignor in respect of the Guaranty under and as
defined in the Indenture (the "Other Assignment"), which assignment
creates a lien on the Operating Agreements, Operating Assets and
receipts and revenues therefrom PARI PASSU with the lien of this
Assignment. Assignee further acknowledges and agrees that whenever
it is provided in the Other Assignment that the Assignor shall
deliver any notice or document, or is require to make any payment
thereunder, the delivery of such notice or document or the making
of such payment pursuant to the terms of such Other Assignment
shall also constitute the delivery of such notice or document or
the making of such payment in satisfaction of the terms, conditions
and provisions of this Assignment to the same extent as the same
constitutes satisfaction of the terms, conditions and provisions of
the Other Assignment.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Agreement, to collect all Income and to exercise all other
rights provided for hereunder. Assignee shall be under no
obligation to press any of the rights or claims assigned to it
hereunder, or to perform or carry out any of the obligations of
Assignor under any of the Operating Agreements and does not assume
any of the liabilities in connection with or arising or growing out
of the covenants and agreements of Assignor in the Operating
Agreements. It is further understood that this Assignment shall
not operate to place responsibility for the control, care,
management or repair of Assignor's estates or interests in and to
the Operating Assets, or parts thereof, upon Assignee, nor shall it
operate to make Assignee liable for the carrying out of any of the
terms and conditions of any of the Operating Agreements, or for any
negligence in the management, upkeep, repair or control of
Assignor's estates or interests in and to the Operating Assets
resulting in loss or injury or death to any lessee, licensee,
employee or stranger thereat. No rights shall be exercised by
Assignee under this paragraph until an Acceleration Event has
occurred.
For purposes of this Assignment, the term "OPERATING ASSETS" shall
exclude (i) any Tangible Personal Property, and (ii) other items
constituting Operating Assets or leases, which are Excepted
Property.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
3
<PAGE>
IT IS AGREED that, to the extent the grant of a security interest
in the Operating Assets is governed by the provisions of the
Uniform Commercial Code, this Assignment is hereby agreed to be a
"Security Agreement" under such Code, and Assignor hereby grants to
Assignee a security interest in the Operating Assets. Assignor
shall at any time and from time to time execute and deliver such
additional security agreements, financing statements and
continuation statements, and shall take all such actions, as may
be necessary to perfect Assignee's interest under this Assignment
as a secured party under the Uniform Commercial Code.
IT IS FURTHER AGREED that the rights and benefits created hereunder
supplement and are not in substitution for the liens created by the
Mortgage with respect to the Operating Assets and that nothing
contained herein shall limit or affect the rights of Assignee
under the Mortgage.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 of the Mortgage (other than
(i) the release of the fee interest in and to the Leased Land or any
portion thereof, or (ii) if the Mortgagor obtains a Qualified
Leasehold Interest with respect to such portion of the Property),
this Assignment shall be null and void with respect to those
Operating Assets (the "RELEASED ASSETS") which theretofore have
exclusively been used by Assignor with respect to the portion of
the Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Assets shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of such portion of the
Property to confirm any reversion of Assignee's right, title and
interest in the Released Assets effectuated pursuant to the
immediately preceding sentence, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 of the Mortgage,
provided that Assignee shall have no liability thereunder and all
costs and expenses shall be paid by Assignor.
Upon the termination of the Mortgage Documents and the payment in
full of the principal sum, interest and other Indebtedness secured
thereby, this Assignment shall be and become null and void, and all
estate, right, title and interest of Assignee in and to the
Operating Assets shall revert to Assignor and Assignee shall
promptly cancel and discharge of record this Assignment and any
financing
4
<PAGE>
statement filed in connection herewith and execute and
deliver to Assignor all such instruments as may be appropriate to
evidence such discharge and satisfaction of this Assignment
(provided that Assignee shall have no liability hereunder or
thereunder and all costs and expenses shall be paid by Assignor);
otherwise, this Assignment shall remain in full force and effect as
herein provided, shall inure to the benefit of Assignee and its
successors and assigns, and shall be binding upon Assignor and its
successors and assigns, and any subsequent holder of Assignor's
right, title, interest and estate in and to the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without the prior approval of
the New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain Intercreditor Agreement dated
as of the date hereof among Assignor, Assignee, Fidelity Management
and Trust Company, as trustee, State Street Bank and Trust Company
of Connecticut, National Association, as trustee, and The Chase
Manhattan Bank (National Association), as trustee (and such other
parties that may from time to time become a party thereto).
5
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have caused this
Assignment to be duly executed, all as of the date first above
set forth.
WITNESSES: ASSIGNOR:
RESORTS INTERNATIONAL HOTEL, INC.
_____________________________ By:_________________________
Name:
Title:
ASSIGNEE:
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
_______________________________ By:_________________________
Name:
Title:
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared ____________,
who, being by me duly sworn on his oath, deposes and makes proof to
my satisfaction, that he is the (Asst.) Secretary of RESORTS
INTERNATIONAL HOTEL, INC., the corporation named in the within
instrument; that ____________ is the (Vice) President of said
Corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
7
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the
corporation named in the within instrument; that ____________ is
the Vice President of said corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
__________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________
8
<PAGE>
NA932380087 - ASSIGNMENT OF ASSETS
(GUARANTY)
GD&C DRAFT DATED 12/17/93
============================================================================
ASSIGNMENT
OF OPERATING ASSETS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Assignee
Dated as of _________________, 1994
===========================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF OPERATING ASSETS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation
("ASSIGNOR"), having an address at c/o Resorts International,
Inc. 1133 Boardwalk, Atlantic City, New Jersey 08401, to STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, a national banking association ("ASSIGNEE"), having
an address at 750 Main Street, Suite 1114, Hartford, Connecticut 06103,
in its capacity as Trustee under that certain Indenture dated
as of even date herewith (the "INDENTURE"), among Assignor,
Assignee and Resorts International Hotel Financing, Inc.,
a Delaware corporation ("RIHF").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in order to
secure: (i) Assignor's guarantee of the payments of principal and
interest due on the 11% Mortgage Notes due 2003 in an
aggregate principal amount of $125,000,000, issued by RIHF
pursuant to the provisions of the Indenture and of the
performance of certain of RIHF's obligations, all in accordance
with the terms and provisions of Article Fourteen of the Indenture;
and (ii) the performance and observance of all of the provisions
herein contained (capitalized terms used and not otherwise defined
herein shall have the respective meanings ascribed to those terms
in that certain Mortgage Securing Guaranty of Mortgage Notes
dated as of even date herewith, between Assignor, as mortgagor, and
Assignee, as mortgagee (the "MORTGAGE"));
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages), all of Mortgagor's right, title
and interest in and to the Operating Assets (other than Excepted
Property), now existing or hereafter acquired (including without
limitation, to the extent assignable, with respect to the bookings,
contracts, Permits, leases, licenses and agreements constituting a
part of the Operating Assets (collectively, the "OPERATING
AGREEMENTS"), all Operating Agreements now existing or which may
be executed at any time in the future, and all amendments,
extensions and renewals of the Operating Agreements, and any of
them, and all rents and other income which may now or hereafter be
or become receivable under the Operating Agreements, and any of
them); it being intended hereby to establish a present and
complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the
<PAGE>
Operating Agreements and all the Income (as hereinafter defined)
arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby
granted a license by Assignee so long as there neither shall
have been an acceleration of maturity of the Note pursuant to
Section 3.02 of the Mortgage nor an exercise by the Mortgagee
of its rights under Section 3.09 of the Mortgage (either being
hereinafter referred to as an "ACCELERATION EVENT"), to
(a) possess, use, manage, operate, enjoy and, subject to
and in accordance with the terms of the Mortgage, dispose of the
Operating Assets or any part thereof and to collect, receive, use,
invest and dispose of the rents, issues, tolls, profits, revenues
and other income therefrom (collectively, the "INCOME"), (b) use,
consume and dispose of any consumables, goods, wares and
merchandise in the ordinary course of business of operating the
Casino-Hotel and (c) adjust and settle all matters relating to choses
in action, leases and contracts. Upon the occurrence of an
Acceleration Event, Assignor agrees to deposit with Assignee upon
demand such of the Operating Agreements, Operating Assets and
receipts and revenues therefrom as may from time to time be
designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to possess, use, manage and enjoy the Operating Assets
or any part thereof and to collect, receive, use, invest, dispose
of and give complete acquittance for any and all Income herein
assigned which may be or become due and payable under the
Operating Agreements, to use, consume and dispose of any
consumable goods, wares and merchandise and to adjust and settle
all matters relating to choses in action, leases and contracts, and
at its discretion to file any claim or take any other action or
proceeding and make any settlement of any claims, either in its
own name or in the name of Assignor or otherwise, which Assignee
may deem necessary or desirable in order to collect and enforce the
rights herein assigned. No rights shall be exercised by Assignee
under this paragraph until an Acceleration Event has occurred. All
parties to the Operating Agreements are hereby expressly authorized
and directed, after the occurrence of an Acceleration Event, to pay
all amounts payable to Assignor thereunder to Assignee or such
nominee as Assignee may designate in writing delivered to and
received by such parties, who thereafter are expressly relieved of
any and all duty, liability or obligation to Assignor in respect of
all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Agreement, to collect all Income and to exercise all other
rights provided for hereunder. Assignee
2
<PAGE>
shall be under no obligation to press any of the rights or
claims assigned to it hereunder, or to perform or carry out
any of the obligations of Assignor under any of the Operating
Agreements and does not assume any of the liabilities in
connection with or arising or growing out of the covenants
and agreements of Assignor in the Operating Agreements.
It is further understood that this Assignment shall
not operate to place responsibility for the control, care,
management or repair of Assignor's estates or interests in and to
the Operating Assets, or parts thereof, upon Assignee, nor shall it
operate to make Assignee liable for the carrying out of any of the
terms and conditions of any of the Operating Agreements, or for any
negligence in the management, upkeep, repair or control of
Assignor's estates or interests in and to the Operating Assets
resulting in loss or injury or death to any lessee, licensee,
employee or stranger thereat. No rights shall be exercised by
Assignee under this paragraph until an Acceleration Event has
occurred.
For purposes of this Assignment, the term "OPERATING ASSETS" shall
exclude (i) any Tangible Personal Property, and (ii) other items
constituting Operating Assets or leases, which are Excepted
Property.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
IT IS AGREED that, to the extent the grant of a security interest
in the Operating Assets is governed by the provisions of the
Uniform Commercial Code, this Assignment is hereby agreed to be a
"Security Agreement" under such Code, and Assignor hereby grants to
Assignee a security interest in the Operating Assets. Assignor
shall at any time and from time to time execute and deliver such
additional security agreements, financing statements and
continuation statements, and shall take all such actions, as may
be necessary to perfect Assignee's interest under this Assignment
as a secured party under the Uniform Commercial Code.
IT IS FURTHER AGREED that the rights and benefits created hereunder
supplement and are not in substitution for the liens created by the
Mortgage with respect to the Operating Assets and that nothing
contained herein shall limit or affect the rights of Assignee
under the Mortgage.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 of the Mortgage (other than
(i) the release of the fee interest in and to the Leased Land or any
portion thereof, or (ii) if the Mortgagor obtains a Qualified
Leasehold Interest with respect
3
<PAGE>
to such portion of the Property), this Assignment shall be null and
void with respect to those Operating Assets (the "RELEASED
ASSETS") which theretofore have exclusively been used by
Assignor with respect to the portion of the Property so released
(and no other portion of the Property) and all estate, right,
title and interest of Assignee in and to the
Released Assets shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of such portion of the
Property to confirm any reversion of Assignee's right, title and
interest in the Released Assets effectuated pursuant to the
immediately preceding sentence, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 of the Mortgage,
provided that Assignee shall have no liability thereunder and all
costs and expenses shall be paid by Assignor.
Upon the termination of the Mortgage Documents and the payment in
full of the principal sum, interest and other Indebtedness secured
thereby, this Assignment shall be and become null and void, and all
estate, right, title and interest of Assignee in and to the
Operating Assets shall revert to Assignor and Assignee shall
promptly cancel and discharge of record this Assignment and any
financing statement filed in connection herewith and execute and
deliver to Assignor all such instruments as may be appropriate to
evidence such discharge and satisfaction of this Assignment
(provided that Assignee shall have no liability hereunder or
thereunder and all costs and expenses shall be paid by Assignor);
otherwise, this Assignment shall remain in full force and effect as
herein provided, shall inure to the benefit of Assignee and its
successors and assigns, and shall be binding upon Assignor and its
successors and assigns, and any subsequent holder of Assignor's
right, title, interest and estate in and to the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without the prior approval
of the New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain Intercreditor Agreement dated
as of the date hereof among Assignor, RIHF, Assignee, Fidelity
Management and Trust
4
<PAGE>
Company, as trustee, and State Street Bank and Trust Company of
Connecticut (National Association), as trustee (and such other
parties that may from time to time become a party thereto).
5
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have
caused this Assignment to be duly executed, all as of the date
first above set forth.
WITNESSES: ASSIGNOR:
RESORTS INTERNATIONAL HOTEL, INC.
__________________________________ By:_________________________
Name:
Title:
ASSIGNEE:
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION
__________________________________ By:_________________________
Name:
Title:
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the (Asst.)
Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation
named in the within instrument; that ____________ is the (Vice)
President of said Corporation; that the execution, as well as the
making of this instrument, has been duly authorized by a proper
resolution of the board of directors of the said corporation; that
deponent well knows the corporate seal of said corporation; and
that the seal affixed to said instrument is the proper corporate
seal and was thereto affixed and said instrument signed and
delivered by said Vice President as and for the voluntary act and
deed of said corporation. In presence of deponent who thereupon
subscribed his name thereto as attesting witness; and deponent
signed this proof to attest to the truth of these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, the corporation named in the within
instrument; that ____________ is the Vice President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
_________________________
[Name]
Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
8
<PAGE>
------------------------------------
: NA932810097 - GUARANTY MORTGAGE :
: JUNIOR NOTES :
: GD&C DRAFT DATED 12/17/93 :
------------------------------------
MORTGAGE SECURING GUARANTY
OF JUNIOR MORTGAGE NOTES
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
U.S. Trust Company of California, N.A.,
a national banking association,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING GUARANTY
OF JUNIOR MORTGAGE NOTES
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and U.S.
Trust Company of California, N.A., a national banking association having an
address at 555 South Flower Street, Suite 2780, Los Angeles, California
90071 ("Mortgagee"), in its capacity as Trustee under that
certain Indenture dated as of even date herewith (the "Indenture") among
Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the
payments of principal and interest due on the 11.375% Junior Mortgage Notes due
2004 in an aggregate principal amount of $35,000,000, issued pursuant to the
provisions of the Indenture (defined therein, and hereinafter collectively
referred to herein, as the "Notes"), in accordance with the terms and conditions
of Article Fourth of the Indenture; and performance and observance of all of the
provisions herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and
confirmed unto Mortgagee and its successors hereunder and assigns forever, all
of its right, title and interest in, to and under any of the following described
property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause as
fully as if set forth in this Granting Clause at length.
<PAGE>
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and franchises of
the Mortgagor as lessee in those certain leases (the "Ground Leases")
particularly described in Schedule 2, which Schedule is hereby made a part of,
and deemed to be described in, this Granting Clause as fully as if set forth in
this Granting Clause at length, which Ground Leases cover the real property
described in Schedule 2 (the "Leased Land") and in and to any and all
modifications, extensions and renewals of the Ground Leases and all options set
forth therein, together with (i) all credits, deposits, privileges and rights of
the Mortgagor as lessee under the Ground Leases, now or at any time existing,
(ii) the leaseholds and the leasehold estates created by the Ground Leases and
(iii) all of the estates, rights, titles, claims or demands whatsoever of
Mortgagor, either in law or in equity, in possession or in expectancy, of, in
and to the Ground Leases and the Leased Land, together with (x) any and all
other, further or additional title, estates, interests or rights which may at
anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or any other
greater estate to the Leased Land pursuant to the Ground Leases, or otherwise,
the lien of this Mortgage shall attach, extend to, cover and be a lien upon such
fee simple title or other greater estate and thereupon the lien of this Mortgage
shall be prior to the lien of any mortgage or deed of trust placed on such
acquired title, estate, interest or right subsequent to the date of this
Mortgage (except as otherwise provided herein) and (y) any right to possession
or statutory term of years derived from, or incident to, the Ground Leases
pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any
comparable provision contained in any present or future federal, state, local,
foreign or other statute, law, rule or regulation.
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and proceeds of
the property subjected or required to be subjected to the lien of this Mortgage,
including, without limitation, the property described in Granting Clauses First,
Second, and Sixth (such property is hereinafter collectively referred to as the
"Premises") and all the estate, right, title and interest of every nature
whatsoever of the Mortgagor in and to the same and every part thereof. The
collective
2
<PAGE>
metes and bounds description of the Owned Land and the Leased Land is set forth
in annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the date of execution
of this Mortgage or hereafter entered into by the Mortgagor, if any, including
extensions, renewals or amendments of all of the same, and the immediate and
continuing right as security in accordance with an Assignment of Leases and
Rents of even date herewith between Mortgagor and Mortgagee, and, after the
occurrence of an Event of Default, to make claim for, collect, receive and
receipt for (and to apply the same as provided herein) any and all rents,
income, revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof, whether
payable as rent, insurance proceeds, condemnation awards, security or otherwise
and whether payable prior to or subsequent to the maturity date of the Notes, to
receive and give notices and consents thereunder, to bring actions and
proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any Lease,
including the commencement, conduct and consummation of any proceedings at law
or in equity as shall be permitted by any provision of any Lease, and to do any
and all things which the Mortgagor or any lessor is or may become entitled to do
under the Leases; provided, that the assignment made by this granting Clause
Fourth shall not impair or diminish any obligation of the Mortgagor under the
Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting Clause Third,
the Mortgagor's rights, privileges and franchises in and to the following, to
the extent of the Mortgagor's interest therein and thereto and to the extent
assignable (collectively, "Operating Assets"):
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including guaranties
and warranties relating thereto;
(c) the Permits;
3
<PAGE>
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties and
other items of intangible personal property relating to the ownership or
operation of the Casino-Hotel, including, without limitation, (1) telephone
and other communication numbers, (2) all software licensing agreements as
are required to operate computer software systems at the Casino-Hotel, all
transferable proprietary interest in software required to operate the
computer systems at the Casino Hotel and books and records relating to the
software programs, and (3) lessee's interest under leases of Tangible
Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor or
which have been assigned to the Mortgagor, for the design and construction,
and for the equipping and furnishing, of the Casino-Hotel, including
architect's agreements, engineering agreements, construction contracts,
consulting agreements and agreements or purchase orders for all items of
Tangible Personal Property and payment and performance bonds in favor of
the Mortgagor in connection with the Trust Estate (and all warranties and
guaranties thereunder and warranties and guaranties of any subcontractor
and bond issued in connection with the work to be performed by any
subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery, apparatus,
appliances, fixtures and fittings and other articles of tangible
personal property which are, or are to be located on, or used in
connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap tables,
blackjack tables, roulette tables, baccarat tables, and big six
wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the operation
thereof;
(iii) all cards, dice, gaming chips and placques, tokens, chip
racks, dealing shoes, dice cups, dice sticks, layouts, paddles,
roulette balls and other consumable supplies and items to be used
4
<PAGE>
in connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils, silverware
and uniforms, whether in use or held in reserve storage for future
use, in connection with the operation of the Casino-Hotel, which are
on hand or on order whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind and
nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on any
of the Owned Land, including without limitation, accounting supplies,
guest supplies, forms, printing, stationery, food and beverage stock,
bar supplies, laundry supplies and brochures to existing purchase
orders;
(vi) all sets and scenery, costumes, props and other items of
tangible personal property on hand or on order for use in the
production of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by the
architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to
time;
(h) any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
(i) any customer lists utilized by the Mortgagor, including lists of
transient guests and restaurant and bar patrons and "high roller" lists;
and
(j) all of the goodwill in connection with the operation of the
Premises.
5
<PAGE>
The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on which such facilities are shared
are not detrimental to the operations of the Casino-Hotel or the financial
condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel
would not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair or
diminish any obligation of the Mortgagor with respect to the Operating Assets,
nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures and
articles of personal property now or hereafter attached to or contained in and
used in connection with such buildings and improvements, including, but not
limited to, all apparatus, furniture, furnishings, machinery, motors, elevators,
fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and hot water
boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath
tubs, water closets, gas and electrical fixtures, awnings, shades, screens,
blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and
other furnishings, and all plumbing, heating, lighting, cooking, laundry,
ventilating, incinerating, air-conditioning and sprinkler equipment or other
fire prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or articles in
substitution therefor, whether or not the same are or shall be attached to the
Owned Land, the Leased Land or to any such buildings and improvements thereon,
in any manner; and
6
<PAGE>
(b) All of the Mortgagor's right, title and interest in and to (i) the
Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land
or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all
air rights and rights to maintain supporting columns and all rights to construct
and maintain bridges, and to create private rights of way over streets now or
hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or
Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or
licensee in and to the following to the extent necessary for the use and
enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or
parcels of land and air rights, more particularly described on Schedule 5,
attached hereto and made a part hereof (the "Bridge Easement Parcels"), with
respect to which Mortgagor has easements, licenses or other rights of possession
or use pursuant to these certain easement and license agreements more
particularly described on Schedule 5 (the "Bridge Easements"), (B) all those
plots, pieces or parcels of land and air rights, more particularly described on
Schedule 6 attached hereto and made a part hereof (the "Elevator Easement
Parcels"), with respect to which Mortgagor has easements, licenses or other
rights of possession or use pursuant to those certain license agreements more
particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all
that plot, piece or parcel of land and air rights more particularly described on
Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement
Parcel") with respect to which Mortgagor has easements, licenses, or other
rights of possession or use pursuant to that certain easement more particularly
described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement
Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are
collectively referred to herein as the "Easement Parcels"; and the Bridge
Easements, the Elevator Easements and the Turn-Around Easement are collectively
referred to as the "Easements"), together with all rights of way, privileges,
liberties, tenements, hereditaments and appurtenances belonging or in any way
appertaining to such estates, it being the intention hereof that all property,
interests, rights and privileges and franchises pertaining to the Premises
(other than Excepted Property) shall be as fully embraced within and subjected
to the lien hereof as if such property were specifically described herein.
To the extent the grant of a security interest in any portion of the Trust
Estate is governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be as well a security agreement under the Uniform Commercial Code
for the purpose of creating hereby a security interest in all of the Mortgagor's
right, title and interest in and to such property, securing the obligations
secured hereby, for the benefit of the Mortgagee;
* * *
TOGETHER with all of the Mortgagor's right, title and interest in and to
all mineral and water rights and any title or reversion, in and to the beds of
the ways, streets,
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avenues and alleys adjoining the Premises to the center line thereof and in and
to all strips, gaps and gores adjoining the premises on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to and
singular the tenements, hereditaments, easements, appurtenances, passages, water
courses, riparian rights, other rights, liberties and privileges thereof or in
any way appertaining to the Premises, including any other claim at law or in
equity as well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore or hereafter to
be made to the present and all subsequent owners of the Trust Estate for any
taking by eminent domain, either permanent or temporary, of all or any part of
the Trust Estate or any easement or appurtenances thereof, including severance
and consequential damage and change in grade of streets, all in accordance with
and subject to the provisions of the Superior Instrument Requirements and
Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any insurance
policies described in Section 5.11, and the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Trust Estate or otherwise, all in accordance with and subject to
the provisions of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted property, rights,
title, interest, privileges and franchises, the Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating
Assets, Easements, properties, options, credits, deposits, rights, privileges
and franchises of every kind and description, real, personal or mixed, granted
hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or
covenanted so to be, together with all the appurtenances thereto appertaining
(the Premises, Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its successors
and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after
the date hereof, to Permitted Encumbrances.
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SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the
Noteholder as set forth in that certain Intercreditor Agreement dated as of the
date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company
("Fidelity"), as trustee under that certain note purchase agreement dated as of
the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust
Company of Connecticut, National Association ("State Street"), as trustee under
that certain indenture dated as of the date hereof among State Street, RIH and
RIHF (and such other parties that may from time to time become a party thereto).
BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the
Noteholders without any priority of any of the Notes over any other of the
Notes.
UPON CONDITION that, until the happening of an Event of Default and subject
to the provisions of Article Two, the Mortgagor shall be permitted to possess
and use the Trust Estate, and to receive and use the rents, issues, profits,
revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be
held and applied by the Mortgagee, subject to the further covenants, conditions
and trusts hereinafter set forth, and the Mortgagor does hereby covenant and
agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall
be made in accordance with generally accepted accounting principles
consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Mortgage
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as a whole and not to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the
American Institute of Real Estate Appraisers) who is (i) of recognized standing
among appraisers of properties similar to the Casino-Hotel and (ii) experienced
in the appraisals of properties of a similar size and scope to that of the
Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of
the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of
the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming and related
activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary structures
and facilities located on the Premises and furniture, fixtures and equipment at
any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which results
in damage, loss or destruction to any buildings or improvements on the Premises
and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the
Indenture.
"DEFAULT" means the occurrence and continuance of an Event of Default or an
event which, after notice or lapse of time or both, would become an Event of
Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds or a
condemnation award is paid to be held in trust for restoration pursuant to the
provisions of a Ground Lease or Superior Mortgage.
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"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of
Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
(1) subject to the provisions of the Assignment of Leases and Rents,
any cash held by the Mortgagor from rents, issues, profits, revenues and
other proceeds of the Trust Estate to the extent that such cash may be, but
has not been, distributed or paid out in accordance with the Services
Agreement or in accordance with the provisions of Section 12.07 of the
Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage
secured by or imposing a lien on all or a portion of the Trust Estate on a
parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible
Personal Property and other items constituting Operating Assets, such as
computer software, which are financed, purchased or leased by the Mortgagor,
provided that, except as set forth on Schedule 3, the principal amount of the
indebtedness secured by such lien shall not exceed eighty-five (85%) percent of
the cost to the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
"GUARANTY" has the meaning set forth in Article Fourteen of the Indenture.
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"HOTEL" means that portion of the Casino-Hotel not included within the
Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes
due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and Mortgagee, as trustee, as it may from time to time be supplemented, modified
or amended by one or more trust indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means such a
Person who (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in the Mortgagor or in any
other obligor upon the Notes or in any Affiliate of the Mortgagor or of such
other obligor and (c) is not connected with the Mortgagor or such other obligor
or any Affiliate of the Mortgagor or such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is herein provided that any Independent Person's opinion
or certificate shall be furnished to the Mortgagee, such opinion or certificate
shall state that the signer has read this definition and that the signer is
Independent within the meaning thereof. A Person who is performing or who has
performed services as an independent contractor to any specified Person shall
not be considered not Independent merely by reason of the fact that such Person
is or has performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy covering
or applicable to the Trust Estate or any part thereof, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Trust Estate or any
part thereof or any use or condition of the Trust Estate or any other part
thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any
bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
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"INSURER" means an insurance company or companies selected by the Mortgagor
authorized to issue insurance in the State of New Jersey with an A.M. Best
rating as high or higher than the rating of insurance companies insuring other
casino-hotels in Atlantic City, New Jersey.
"LEASE" means each lease or sublease demising all or any portion of the
Owned Land, the Leased Land or the buildings or improvements thereon and made by
the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any
building or buildings which constitute a part of the Trust Estate, including
every agreement relating thereto or entered into in connection therewith and
every guaranty of the performance and observance of the covenants, conditions
and agreements to be performed by the lessee under any such lease.
Notwithstanding the foregoing, the term "Lease" shall not include any transient
room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements (including, without limitation, the
New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill
Compensation and Control Act of 1976) of all governments, departments,
commissions, boards, courts, authorities, agencies, officials and officers, of
governments, federal, state and municipal (including, without limitation, the
New Jersey Department of Environmental Protection, the Atlantic City Bureau of
Investigations, Division of Protection, the Atlantic City Bureau of
Investigations, Division of Gaming Enforcement of the State of New Jersey, and
the Casino Control Commission of the State of New Jersey), foreseen or
unforeseen, ordinary or extraordinary, which now is or at any time hereafter
becomes applicable to the Trust Estate or any part thereof, or any of the
adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling
facility or any other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Notes means the date on which the
principal of such Notes becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration or prepayment
or otherwise.
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"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture.
"NOTE MORTGAGE" means that certain Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH
Junior Promissory Note (as defined in the Indenture), the lien of which shall be
pari passu with the lien of this Mortgage.
"NOTES" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of the
Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that
an Officers' Certificate be signed also by an Architect or an Accountant or
other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may (except as
otherwise expressly provided in this Mortgage) be an employee of the Mortgagor
or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically
provided in this Mortgage, such counsel may rely, as to any state of facts not
personally known to such counsel and relating to such opinions, on an Officers'
Certificate to the extent not rejected by the Trustee and its counsel (which
rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list
title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
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"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material portion
of the Premises whether held by the Mortgagor or any other Person (which may be
temporary or permanent) (including, without limitation, those required for the
use of the Casino-Hotel as a licensed casino facility), in accordance with all
applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet due
and payable or if due and payable are not delinquent to the extent that any
fine, penalty, interest or cost may be added for nonpayment thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien;
(9) liens created by the Senior Mortgage Documents; and
(10) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or any
other entity or government or any agency or political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture.
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"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance
with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware
corporation.
"SENIOR GUARANTY MORTGAGE" has the meaning stated in Section 1.01 of the
Indenture.
"SENIOR MORTGAGE" has the meaning stated in Section 1.01 of the Indenture.
"SENIOR MORTGAGE DOCUMENTS" has the meaning stated in Section 1.01 of the
Indenture.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"STATED MATURITY" when used with respect to a note means the date specified
in such note as the fixed date on which the principal of such note is due and
payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions
and provisions of (i) the Ground Leases with respect to the Leased Land; and
(ii) Superior Mortgages with respect to the portion of the Trust Estate
encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior
Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee
Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of the
whole or any part of the Premises, by a competent authority, for any public or
quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause
Fifth.
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"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of
the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the Granting
Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c)
of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice (including,
without limitation, a notice of default), consent, waiver or other document
provided or permitted by this Mortgage to be made upon, given or furnished to,
or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be
deemed given when either (i) delivered by hand or (ii) two days after sending by
registered or certified mail, postage prepaid, addressed as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
U.S. Trust Company of California, N.A.
555 South Flower Street, Suite 2780
Los Angeles, California 90071
Attention: Corporate Trust Department
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party
may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE.
Whenever several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified
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by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Officer or Officers of the Mortgagor stating that
the information with respect to such factual matters is in the possession of the
Mortgagor, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. If appropriate to
the matter being opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of creditors and
the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor shall
deliver any document as a condition of the granting of such application, or as
evidence of the Mortgagor's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Mortgagor to have such application granted or to
the sufficiency of such certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application
or request by the Mortgagor to the Mortgagee to take any action under any
provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Mortgage relating to the proposed action have been complied with and
an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except
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that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Mortgage
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Mortgage shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture,
this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each case
named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged, released nor
any of its provisions waived except by agreement in writing executed by the
Mortgagor and the Mortgagee and in accordance with the provisions of this
Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of
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the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the
Guaranty, express or implied, shall give to any Person, other than the parties
hereto and their successors and assigns, any benefit or any legal or equitable
right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions
of this Mortgage and the provisions of the Indenture shall be inconsistent, the
provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
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(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
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Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Mortgage shall
not be transferred, assigned or amended without the prior approval of the New
Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to
be paid, or there shall otherwise be paid, to the Mortgagee all amounts required
to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and
the Notes, and the conditions precedent for the Indenture to cease, determine
and become null and void in accordance with Section 5.01 of the Indenture shall
have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage,
and execute and deliver to the Mortgagor all such instruments as may be
necessary, required or appropriate to evidence such discharge and satisfaction
of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject in each
instance to the giving of any notice and the expiration of any grace period
provided for in Section 3.01 as a condition to such Default making it an Event
of Default, unless the Trust Indenture Act requires otherwise, in which case the
Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an event
which does not materially diminish the value of the Mortgagee's interest in the
Trust Estate
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shall not be deemed an "impairment of security", as that phrase is used in this
Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So
long as there shall have been no demand for payment under the Guaranty pursuant
to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted,
with power freely and without let or hindrance on the part of the Mortgagee,
subject to the provisions of this Mortgage and the Note Mortgage, to possess,
use, manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to
time, unless an Event of Default shall have occurred and be continuing, without
any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when,
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in the Mortgagor's reasonable opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right to
pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to the
exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
The Mortgagee shall, from time to time, promptly execute any written
instrument in form satisfactory to it to confirm the propriety of any action
taken by the Mortgagor under this Section 2.02, provided that the conditions set
forth in Section 2.02 of the Note Mortgage have been satisfied.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions
contained in this Mortgage or the Indenture to the contrary, including, without
limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles
Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and
other items constituting operating assets, such as computer software subject to
any FF&E Financing Agreement, or becomes the lessee under a lease for any of the
same and if the document evidencing such FF&E Financing Agreement prohibits
subordinate liens or the provisions of any such lease prohibits any assignment
thereof by the lessee, and if any such prohibition is customary with respect to
similar transactions of the lender or lessor, as the case may be, then the
property so purchased or the lessee's interest in the lease, as the case may be,
shall be deemed to be Excepted Property. If any such FF&E Financing Agreement
permits subordinate liens then the Mortgagee agrees to execute and deliver to
the Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination of
the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and
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from time to time, unless an Event of Default shall have occurred and be
continuing, to convey all or any part of the Released Fee Land (the land to be
so conveyed is hereinafter referred to as the "Released Land"), free from the
lien of the Mortgage, provided that the conditions set forth in Section 2.05(a)
of the Note Mortgage have been satisfied.
(b) The Mortgagee shall, from time to time, promptly execute any written
instrument in form reasonably satisfactory to the prospective purchaser to
confirm the release of the Released Fee Land, upon receipt by the Mortgagee of
an Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the Mortgagor's compliance with this Section 2.05 and, if
applicable, Section 2.05 of the Note Mortgage, provided, that
the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be continuing, to have
an Affiliate exercise such options(s) or for the Mortgagor to exercise such
options(s) on behalf of an Affiliate and in connection therewith to cause fee
simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with
the following:
(i) an Officers' Certificate requesting the release of the Released
Fee Land from the Trust Estate and stating that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain all Permits and
in order to comply with the provisions of all material contracts to which
the Mortgagor is a party or by which the Mortgagor is bound, (B) such
Affiliate has received all Permits necessary to own the Released Fee Land
(including without limitation all approvals required by the Casino Control
Commission of the State of New Jersey), (C) there has been delivered to the
Mortgagor and the Mortgagee a true copy of an instrument executed by such
Affiliate stating that (i) such Affiliate may only engage in the activity
of owning the Released Fee Land and (ii) such Affiliate shall not convey
the Released Fee Land to another Affiliate of the Mortgagor,
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unless such other Affiliate executes and delivers to the Mortgagor and the
Mortgagee, the instruments that would have been required to be delivered
pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to
such other Affiliate (provided that this restriction shall only be
effective until such time as this Mortgage shall be satisfied of record)
and (D) the deed conveying the Released Fee Land to such Affiliate shall
state that such conveyance is made subject to the terms, provisions and
conditions of the applicable Ground Lease and that the fee and leasehold
interests in the Released Fee Land shall not merge by reason of the
Mortgagor and/or any Affiliate owning both the leasehold and fee estate
therein, and that such estates shall always remain separate and distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain in good standing
all Permits or by the provisions of any material contract to which the
Mortgagor is a party or by which it is bound to own the Released Fee Land
and (B) the instruments described in clause (C) of subparagraph (i) were
duly executed by and are binding upon such Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, an agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any written
instrument in form reasonably satisfactory to the prospective purchaser to
confirm the release of the Released Fee Land, upon receipt by the Mortgagee of
an Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the
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Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall
have no liability thereunder and all costs and expenses (including reasonable
attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if no
Event of Default has occurred and is continuing and (ii) if the Mortgagor shall
acquire Released Fee Land, then simultaneously with the acquisition thereof, the
Mortgagor shall have the right to encumber such fee simple title with a mortgage
(such mortgage and any refinancing thereof permitted by the Indenture is
hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this
Mortgage on the Released Fee Land shall be subordinated to the lien of the
After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other
Superior Mortgages which shall become a lien thereon in accordance with the
terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple title to
such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee Mortgage (A)
does not exceed 75% of the cost to the Mortgagor of such fee simple title
at the time of the acquisition and (B) satisfies the criteria set forth in
Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers fee
simple title to the Leased Land or any part thereof, such After-Acquired
Fee Mortgage contains provisions binding on the holder of the
After-Acquired Fee Mortgage and its successors and assigns confirming the
provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an Affiliate of
the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents shall
contain a provision binding upon the holder of such After-Acquired Fee
Mortgage and other loan documents that all insurance proceeds in the event
of a Casualty and awards for Takings of less than the entire Released Fee
Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate
requesting such subordination and
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certifying that the requirements of (i) through (v) above have been
satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this Mortgage
to the contrary notwithstanding, the subordination of this Mortgage to any
After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not
be self-operative but shall be effective only upon the execution and delivery by
the Mortgagee of an instrument in writing effecting such subordination. The
Mortgagee shall deliver such instrument of subordination on the following
conditions: (x) the Mortgagee shall have received an Officers' Certificate
confirming that the conditions of (i) through (vi) of paragraph (a) have been
satisfied, together with a true and correct copy of the After-Acquired Fee
Mortgage and all other instruments securing the indebtedness evidenced thereby
and (y) the instrument of subordination shall specifically state that this
Mortgage is being subordinated not with respect to the lien of this Mortgage on
the Ground Lease or on the leasehold estate created thereby, but only with
respect to the fee simple title to the Leased Land or applicable part thereof
and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default by the Mortgagor under the Guaranty and continuance of
such default for a period of 10 days after there has been given a written
notice to the Mortgagor specifying such default and stating that such
notice is a "Notice of Default" hereunder; or
(b) an "Event of Default," as defined in Section 3.01 of the Note
Mortgage, shall occur; or
(c) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a period
of 60 days after there has been given a written notice to the Mortgagor
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specifying that such notice is a "Notice of Default" hereunder; or
(d) any representation or warranty of the Mortgagor set forth in this
Mortgage shall prove to be incorrect as of the time when made and the facts
constituting such incorrectness impairs the Mortgagee's security and such
impairment continues for a period of 30 days, unless such impairment is
curable, but not susceptible of cure within such 30-day period (for reasons
other than lack of funds), provided that the conditions set forth in
Section 3.01(l) of the Note Mortgage have been satisfied.
Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs
and is continuing, and the Mortgagee has declared the Outstanding Amount of the
Note to be due and payable immediately pursuant to Section 3.02 of the Note
Mortgage, then the Mortgagee may declare all obligations under the Guaranty to
be due and payable immediately.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys
received by the Mortgagee pursuant to the provisions of this Article Three
(including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance
with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has
instituted any proceeding to enforce any right or remedy under this Mortgage and
such proceeding has been discontinued or abandoned for any reason or has been
determined adversely to the Mortgagee, then and in every such case the Mortgagor
and the Mortgagee shall, subject to any determination in such proceeding, be
restored to its former position hereunder, and thereafter all rights and
remedies of the Mortgagee shall continue as though no such proceeding had been
instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Mortgagee is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
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Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be
commenced (including, without limitation, an action to foreclose this Mortgage
or to collect under the Guaranty secured hereby) to which action or proceeding
the Mortgagee is made or becomes a party, or in which it becomes necessary in
the opinion of the Mortgagee to defend or uphold the lien of this Mortgage,
then, to the extent it has not already done so pursuant to the terms of Section
3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses,
including reasonable attorneys' fees and expenses, incurred by the Mortgagee in
connection therewith, together with interest at the rate then payable on the
Notes, from the date of payment less the net amount received by the Mortgagee or
the Trustee, as their interests may appear under any title insurance policy,
and, until paid, all such expenses, together with interest as aforesaid, shall
be a lien on the Trust Estate.
Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent
that it may lawfully so agree, the Mortgagor will not at any time insist upon,
plead, claim or take the benefit or advantage of, any appraisement, valuation,
stay, extension or redemption law now or hereafter in force, in order to prevent
or hinder the enforcement of this Mortgage or the absolute sale of the Trust
Estate, or any part hereof, or the possession thereof by any purchaser at any
sale under this Article Three; and the Mortgagor, for itself and all who may
claim under it, so far as it or they now or hereafter may lawfully do so, hereby
waives the benefit of all such laws. The Mortgagor, for itself and all who may
claim under it, waives, to the extent that it may lawfully do so, all right to
have the property in the Trust Estate marshalled upon any foreclosure hereof,
and agrees that any court having jurisdiction to foreclose this Mortgage may
order the sale of the Trust Estate as an entirety.
If any law in this Section 3.08 referred to and now in force, of which the
Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the
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contract herein contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an
Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of
Default shall occur and be continuing, the Mortgagee, with or without entry, in
its discretion may:
(a) sell, subject to any mandatory requirements of applicable law,
the Trust Estate as an entirety, or in such parcels, as the Mortgagee may
determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this Mortgage by
sale pursuant to judicial proceedings or by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Mortgage or in aid of the execution
of any power granted in this Mortgage or for the foreclosure of this
Mortgage or for the enforcement of any other legal, equitable or other
remedy, as the Mortgagee, being advised by counsel, shall deem most
effectual to protect
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and enforce any of the rights of the Mortgagee; the failure to join tenants
shall not be asserted as a defense to any foreclosure or proceeding to
enforce the rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate,
whether made under the power of sale hereby given or pursuant to judicial
proceedings, to the extent permitted by law:
(a) all obligations owing under the Guaranty, if not previously due,
shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt of any
required prior approvals of the New Jersey Casino Control Commission, the
Mortgagee may bid for and purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain and possess and dispose
of such property, without further accountability, and may, in paying the
purchase money therefor, delivery any notes or claims for interest thereon
in lieu of cash to the amount which shall, upon distribution of the net
proceeds of such sale, be payable thereon, and such notes or claims for
interest thereon, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the holders thereof after
being appropriately stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or purchasers
a good and sufficient deed, bill of sale and instrument of assignment and
transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and lawful
attorney of the Mortgagor, in its name and stead, to make all necessary
deeds, bills of sale and instruments of assignment and transfer of the
property thus sold; and for that purpose it may execute all necessary
deeds, bills of sale and instruments of assignment and transfer, and may
substitute one or more persons, firms or corporations with like power, the
Mortgagor hereby ratifying and confirming all that its attorney or such
substitute or substitutes shall lawfully do by virtue hereof; but if so
requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify
and confirm any such sale or transfer by executing and delivering to the
Mortgagee or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment and transfer and releases as may be
designated in any such request;
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(e) all right, title, interest, claim and demand whatsoever, either
at law or in equity or otherwise, of the Mortgagor of, in and to the
property so sold shall be divested and such sale shall be a perpetual bar
both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such sale
shall be a sufficient discharge to the purchaser or purchasers at such sale
for his or their purchase money and such purchaser or purchasers and his or
their assigns or personal representatives shall not, after paying such
purchase money and receiving such receipt, be obliged to see to the
application of such purchase money, or be in anywise answerable for any
loss, misapplication or non-application thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and
commencement of judicial proceedings by the Mortgagee to enforce any right under
this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security for
the Guaranty or the solvency of the Mortgagor, to the appointment of a receiver
of the Trust Estate, and of the rents, issues, profits, revenues and other
income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this
Section 3.12 shall be subject to the provisions of the New Jersey Casino Control
Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have
power to institute and maintain such proceedings as it may deem necessary and
appropriate to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its interests in the
Trust Estate and in the rents, issues, profits, revenues and other income
arising therefrom, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any 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 the security
hereunder or be materially prejudicial to the interests of the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision
of this Article Three to the
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contrary, following an Event of Default and the taking of possession of the
Trust Estate or any part thereof by the Mortgagee and/or the appointment of
receiver of the Trust Estate or any part thereof, the Mortgagee or any such
receiver shall be authorized, in addition to the rights and powers of the
Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one
or more experienced operators of hotels and/or casinos to manage the
Casino-Hotel, PROVIDED that any such operator shall have all necessary legal
qualifications, including all Permits, to manage the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the
Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or
combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the successor entity
formed by such consolidation or into which the Mortgagor is combined or to which
such conveyance or transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Mortgagor under this Mortgage
with the same effect as if such successor entity had been named as the Mortgagor
herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust
Estate substantially as an entirety, unless such conveyance or transfer is in
compliance with the provisions of Article Ten of the Indenture, shall have the
effect of releasing the Person named as "the Mortgagor" in the first paragraph
of this instrument or any successor entity which shall theretofore have become
such in the manner prescribed in such Article Ten from its liability as
guarantor.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise
expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not
sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise
transfer all or any part of the Trust Estate or any interest therein (including
without limitation any interest in the Ground Leases). Without limiting the
generality of the foregoing, the Mortgagor shall not separate, or attempt to
separate, its ownership of its interest in the Ground Leases from its ownership
of the buildings constituting the Casino-Hotel or any part thereof.
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ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. [Reserved]
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing Agreements before the expiration of any applicable notice and cure
periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur,
suffer or permit to be created or incurred or to exist any mortgage, lien,
charge or encumbrance on or pledge of any of the Trust Estate, other than (i)
Permitted Encumbrances, (ii) liens on the Trust Estate in connection with
indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section
12.08(a) of the Indenture, and (iii) a building contract or a notice of
intention filed by a mechanic, materialman or laborer under the New Jersey lien
law. Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the Mortgagor shall
not be deemed to have breached the provisions of the foregoing sentence by
virtue of the existence of a lien for Impositions or mechanics liens so long as
the Mortgagor is in good faith contesting the validity of the same in accordance
with the provisions of Section 5.09 to the extent that the matters described in
(i) and (ii) do not constitute a default under any Ground Lease or Superior
Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges
the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a)
to appear in and defend any action or proceeding brought with respect to the
Trust Estate or any part thereof and (b) upon 5 days' prior written notice to
the Mortgagor (or such shorter period or without notice if deemed necessary and
appropriate by the Mortgage), to commence any action or proceeding to protect
the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor
represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to
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execute and deliver this Mortgage, and all corporate action on its part
necessary for the valid execution and delivery of this Mortgage has been
duly and effectively taken;
(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the Mortgage
Documents, any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than the
lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has been
given to or by the lessee, (iii) the Mortgagor has delivered true and
correct copies of the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in full force
and effect and has not been modified, amended or supplemented, except as
described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to execute
this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer,
hypothecate, pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the Operating Assets
and the Ground Leases, without the consent of any third party, other than
governmental authorities but any applicable or necessary consent or
approval of any such governmental authority has been given or waived at or
prior to the execution and delivery of this Mortgage), and this Mortgage
constitutes a valid third mortgage lien and third priority security
interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage,
subject only to Working Capital Facility Liens and Existing Encumbrances.
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The Mortgagor hereby does and will forever warrant and defend (x) the title
to Trust Estate (including without limitation, its leasehold estates under the
lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and
(y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances
other than Restricted Encumbrances), against the claims and demands of all
persons whomsoever, at the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as
provided in Section 5.13, from time to time subject its right, title and
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments of
further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, and will execute and file such financing statements and cause to be
issued and filed such continuation statements, all in such manner and in such
places as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party under the
Uniform Commercial Code to all property comprising the Trust Estate (to the
extent a grant of a security interest therein is governed by the Uniform
Commercial Code) and to perfect, preserve and protect the lien of this Mortgage
as a valid mortgage lien of record and a valid security interest on the Trust
Estate subject to Permitted Encumbrances (other than Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all expenses
incident to the execution and delivery of this Mortgage, and any instrument of
further assurance, and all federal, state, county and municipal stamp taxes and
other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Mortgage, any financing
statement or continuation statement with respect to the personal property
constituting part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL
REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to contests,
pay or cause to be paid promptly (or when installments of the same shall
become due and payable, if, by law or by agreement or arrangement with the
applicable governmental agency or authority, the same
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may be paid in installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are payable by the
Mortgagor pursuant to any Superior Instrument Requirement), all taxes
(including, without limitation, real estate taxes, personal or other
property taxes and all sales, value added, use and similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
profits or revenue tax upon the income of the Mortgagee, the Trustee or the
Noteholders nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholders nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed in substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Guaranty;
(b) except for such property which the Mortgagor may dispose of or
replace pursuant to Section 2.02, maintain and keep all its properties used
or useful in the conduct of its business (other than obsolete equipment),
including, without limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition, except for
reasonable wear and use, and make or cause to be made all
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such needful and proper repairs, renewals and replacements thereto
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey;
(c) occupy and continuously operate the Casino-Hotel and keep the
Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to contests,
the Mortgagor at its sole expense will timely (1) comply with all Legal
Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if the failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the foregoing, the
Mortgagor represents and warrants that at the time of the execution of this
Mortgage, the Mortgagor is in compliance with the requirements of clauses
(1), (2) and (3);
(e) in the event of the passage after the date of this Mortgage of
any law of the State of New Jersey, or any other governmental entity,
changing in any way the laws now in force for the taxation of mortgages, or
debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of the Mortgagee,
then and in such event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for any reason payment by the Mortgagor of any
such new or additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured hereby wholly or
partially usurious under any of the terms or provisions of the Note, or
this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option,
declare the whole sum secured by this Mortgage, with interest
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thereon, to be due and payable 90 days after notice of election thereof has
been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's
option, pay that amount or portion of such taxes as renders the loan or
indebtedness secured hereby unlawful or usurious, in which event the
Mortgagor shall concurrently therewith pay the remaining lawful and
nonusurious portion or balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense,
contest by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part of any
Imposition or lien therefor or any Legal Requirement or Insurance Requirement or
the application of any instrument of record affecting the Trust Estate or any
part thereof or any claims of mechanics, materialmen, suppliers, or vendors or
lien therefore, and may withhold payment of the same pending such proceedings if
permitted by law, or make payment under protest, or defer compliance with any
such Legal Requirement, any such Insurance Requirement or the terms of any such
instrument, and the same shall not be a Default hereunder, provided that (a) in
the case of any Impositions or lien therefor or any claims of mechanics,
materialmen, suppliers or vendors or lien therefor, such proceedings shall
suspend the collection thereof from each of the Mortgagor, the Mortgagee, the
Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor
any interest therein would be in any danger of being sold, forfeited, or lost,
(c) such action would not result in or constitute a default under any Ground
Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the
Noteholders nor the Mortgagee shall be in any danger of any civil or any
criminal liability, and the failure of the Mortgagor to comply with such Legal
Requirement shall not affect the continuance in good standing of any Permit or
result in the suspension, termination, non-renewal or material adverse
modification of any permit, and (e) in the case of an Insurance Requirement, the
failure of the Mortgagor to comply therewith shall not affect the validity of
any insurance required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality
of the first sentence of Section 5.03 and notwithstanding the provisions of
Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment,
or bonding or otherwise, all claims and demands of mechanics, materialmen,
laborers, and others which, if unpaid, might result in, or permit the creation
of, a lien on the Premises and/or Trust Estate or any part thereof, or on the
revenues, rents, issues, income and profits arising therefrom and in general
will do or cause to be done everything necessary so
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that the lien hereof shall be fully preserved, at the cost of the Mortgagor,
without expense to the Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable properties,
in amounts at all times sufficient to prevent the Mortgagor from becoming a
coinsurer within the terms of the applicable policies, but in any event
such insurance shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the "Insurance
Amount"): (i) 100% of the then full insurable value of such insurable
properties, the term "full insurable value" to mean the actual replacement
cost (excluding the costs of foundation, footing, excavation, paving,
landscaping and other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36 calendar months),
by an Architect, contractor, appraiser, or an Insurer, or (ii)
the amount required to be maintained pursuant to the Superior Instrument
Requirements;
(2) war risk insurance as and when such insurance is obtainable from
the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then be
so obtainable;
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the cost
of such insurance, for personal injury and property damage with respect to
any one occurrence, which may be under an umbrella policy. Anything
contained in this clause (3) to the contrary notwithstanding, the Superior
Instrument Requirements with respect to the
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kinds and amount of insurance described in this clause (3) shall be
satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already covered
by other policies of insurance maintained by the Mortgagor) on or about
such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time that the
Mortgagor is renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates determined
by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable size
in the boardwalk area of Atlantic City, New Jersey and (ii) required to be
maintained pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1), (2),
(6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, $100,000 with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
$1,000,000), (ii) the Mortgagor shall be permitted to maintain a
$200,000 self insured retention under the general liability policy
described in clause (3) and a deductible with respect
to the other insurance policies described in clause (3) in an amount not
to exceed the amount of deductible as is customarily maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not
reduce its insurance coverage for the matters described in clause (3) (which for
purposes of this paragraph means a reduction in single limits or an increase in
deductible) unless and until the Mortgagor
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delivers to the Mortgagee an Officers' Certificate certifying (w) that the
coverage the Mortgagor was theretofore maintaining cannot be maintained at rates
determined by the Mortgagor to be reasonable for such coverage, (x) the amount
of the proposed reduction, (y) the premium for the existing and the proposed
reduced coverage, and (z) that the proposed deductible satisfied the criteria
set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to
maintain a deductible with respect to the insurance policies described in clause
(5) in the forms of and in an amount not to exceed the amount of deductible as
is customarily maintained by casino-hotels of similar size in Atlantic City, New
Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of workers'
compensation insurance, name as additional insureds the Mortgagee, in both
its individual and fiduciary capacities, and, to the extent
required by the Superior Instrument Requirements, the Lessors and the
holders of the Superior Mortgages, (2) provide that all insurance proceeds for
losses, except in the case of public liability insurance and workers'
compensation insurance or as otherwise provided in Subsections (d), (e) and (f)
of this Section 5.11, be payable solely to the Mortgagee or such other party as
is required to receive such proceeds under a Superior Mortgage, (3)
except in the case of workers' compensation, include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all lost payees and
named insureds (other than the Mortgagor) and all rights of subrogation against
any named insured, (4) except in the case of public liability and workers'
compensation insurance, provide that any losses shall be payable notwithstanding
(i) any act, failure to act, negligence of, or violation or breach of
warranties, declarations or conditions contained in such policy by the Mortgagor
or the Mortgagee or any other named insured or loss payee (including, without
limitation, with respect to the Released Fee Land, the holders of any
After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable
properties for purposes more hazardous than permitted by the terms of the
policy, (iii) any foreclosure or other proceeding or notice of sale relating to
the insurable properties or (iv) any change in the title to or ownership or
possession of the insurable properties, (5) contain a non-contributory mortgagee
clause in favor of the Mortgagee, and (6) provide that if all or any part of
such policy is cancelled, terminated or expires, the insurer will forthwith give
notice thereof to each named insured and loss payee and that no cancellation,
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by each named insured and loss payee of
written notice thereof.
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(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals
of all insurance policies that the Mortgagor is required to maintain pursuant to
this Section 5.11 and (2) within 30 days after each reduction in insurance
required to be maintained by the Mortgagor hereunder, an Officers' Certificate
setting forth the particulars as to all such insurance policies and certifying
that the same comply with the requirements of this Section 5.11, that all
premiums or installments thereof then due thereon have been paid and that the
same are in full force and effect. The Mortgagee shall not be responsible for
effecting or renewing any insurance or for the responsibility or solvency of the
insurers.
(d) The Mortgagor shall give written notice to the Mortgagee immediately
upon obtaining knowledge of any Casualty which (x) results in damage, loss or
destruction in an amount in excess of [$5,000,000] to any buildings or
improvements on the Premises and/or any Tangible Personal Property or (y)
pursuant to any Superior Instrument Requirement, would require the deposit of
insurance proceeds with the Depositary, or action or proceeding with respect
thereto. Whenever the Superior Instrument Requirements require or permit the
selection of the Depositary by the Mortgagor, the Mortgagor shall select the
Insurance Trustee as the Depositary. Within 30 days after any Casualty which
results in any damage, loss or destruction in an amount in excess of
$10,000,000 to any buildings or improvements of the Premises and/or any
Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a
certificate of an Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit the Restoration of such buildings and
improvements for the same uses and to the same size and quality in all material
respects, as existed immediately prior to the Casualty (and if such certificate
states the Legal Requirements do not permit such Restoration, such certificate
shall describe the manner closest approximating such criteria to which the
buildings and improvements could be so restored and shall be accompanied by a
Certificate of Appraised Value dated not more than 10 days prior to delivery
setting forth the Appraised Value immediately prior to the Casualty and the
estimated Appraised Value immediately after the Restoration). If the Mortgagor
is required to deliver such Certificates of Appraised Value and if based on such
Certificates of Appraised Value immediately after Restoration, the aggregate
Outstanding Amount of First Mortgage Debt immediately after such Restoration
shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after
such Restoration or (ii) the quotient of the Outstanding Amount of First
Mortgage Debt immediately prior to such Casualty divided by the Appraised Value
immediately prior to the Casualty multiplied by the Appraised Value immediately
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after such Restoration, then the proceeds of any insurance shall, at the
election of Mortgagee, either be applied to Restoration as set forth in
Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to
the extent of the then Outstanding Amount of the Note and any other interest or
other sums due hereunder or thereunder to be applied to the satisfaction of the
Mortgage to the extent proceeds are available for such purpose and provided that
no additional sums are due to the Trustee or the Noteholder under the Indenture,
the balance of any net insurance proceeds shall be paid to the Mortgagor.
Notwithstanding the foregoing sentence, if such Certificates of Appraised Values
indicates that the Outstanding Amount of First Mortgage Debt immediately after
such Restoration exceeds the greater of the two amounts determined pursuant to
subclauses (i) and (ii) above, the proceeds of insurance will be made available
for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor
obtains an irrevocable commitment from a nationally recognized financial
institution having a combined capital and surplus of at least $100,000,000, to
supply, upon an acceleration under this Mortgage as a result of an Event of
Default, funds to the Mortgagor as additions to capital in an amount equal to
the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value
necessary to be paid down so that the Outstanding Amount of First Mortgage Debt
will not exceed either of the two amounts determined pursuant to such clauses
(i) and (ii), PROVIDED that such commitment may only be released if, upon an
Appraisal at any time following completion of such Restoration, the aggregate
Outstanding Amount of the First Mortgage Debt does not exceed 66-
2/3% of the Appraised Value.
(e) Subject to the provisions of Subsection (d) above, in case a Casualty
occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of $10,000,000, the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to
the Insurance Trustee (or other Depositary required by the Superior
Instrument Requirements, provided that such Depositary holds such proceeds
in trust for purposes of paying the costs of Restoration);
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(3) the Mortgagor shall commence with reasonable promptness under the
circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair,
replacement or rebuilding of the damage or destruction resulting from the
Casualty (all of which restoration, repair, replacement or rebuilding are
referred to as the "Restoration") in accordance with the plans and
specifications submitted to the Insurance Trustee, in conformance with all
Legal Requirements and Superior Instrument Requirements, and in accordance
with the further provisions of this Subsection (e), regardless of the
extent of any such Casualty and whether or not net insurance proceeds, if
any, shall be available or, if available, shall be sufficient, for the
purpose of the Restoration (provided, however, that if the Mortgagor does
not receive any net insurance proceeds within 30 days after any Casualty
because the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration shall be deferred
until such proceeds are made available to the Mortgagor, provided that (i)
Mortgagor delivers to the Mortgagee an Officers' Certificate
certifying that the Mortgagor is diligently and continuously
adjusting such loss with the Insurer, (ii) the Mortgagor
delivers to the Mortgagee an Officers' Certificate
within such 30-day period requesting the extension of such period,
estimating the date on which such proceeds will be available and describing
the Mortgagor's efforts to adjust such loss and certifying that such
extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach
has been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter updating the
information contained in the certificate described in Clause (ii)). All
Restoration work shall be performed in accordance with the applicable
provisions of Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements and, prior to
commencing any Restoration, the Mortgagor shall obtain all Permits
necessary in connection therewith, and shall obtain, and keep in full force
and effect until the completion of such Restoration, such additional
insurance as the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration shall be
accompanied by a certificate of the Mortgagor and an Opinion of Counsel to
the effect that upon the completion of the Restoration pursuant to the
plans and specifications the Premises, and all buildings and improvements,
thereon will comply with all superior Instrument Requirements, Legal
Requirements and Insurance
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Requirements. Notwithstanding anything in this Section 5.11 to the
contrary, if such Casualty is in an amount less than $5,000,000, the
Mortgagor shall not be required to perform and complete such Restoration
(unless the performance and completion of the Restoration is necessary in
order for the Mortgagor to be in compliance with any term, provision or
condition of this Mortgage (other than this Section 5.11(e)) or any
Superior Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designated by Mortgagor (to the extent the Mortgagor
is permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds)
and shall be paid by the Insurance Trustee to reimburse the Mortgagor for,
or to make payment for, the Restoration, after the Insurance Trustee
deducts therefrom the amount of any reasonable costs and expenses incurred
in connection with the performance of its obligations under this Section
5.11. The Insurance Trustee shall make such payments not more frequently
than once every 30 days upon the written request of the Mortgagor (unless
more frequent payments are required by Superior Instrument Requirements),
by paying to the Mortgagor or the persons named in the certificate
described in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate from time to time as the Restoration progresses,
provided the Mortgagor has complied with the requirements of this
Subsection (e) and such payment is permitted by an applicable Superior
Instrument Requirements. The Mortgagor's written request shall be
accompanied by (i) the certificate described in Clause (6) of this
Subsection (e) and (ii) a title company or official search, or other
evidence reasonably acceptable to the Insurance Trustee, showing that there
have not been filed with respect to the Premises, any vendor's,
contractor's, mechanic's, laborer's or materialman's statutory or similar
lien which has not been discharged of record (or bonded against or secured
by other security) or any other encumbrance irrespective of its priority
(other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate,
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countersigned by the Architect in charge of the Restoration with respect to
the matters described in (i) and (v) below, (B) be dated not more than 10
days prior to such request and (C) set forth (in addition to any other
requirements contained in any applicable Superior Instrument Requirements)
that:
(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance
Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered services or
furnished or contracted to deliver materials for the Restoration
therein specified, and the names and addresses of such persons, a
brief description of such services and materials and the several
amounts so paid or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net
insurance proceeds, and that the sum then requested does not exceed
the value of the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in such certificate to be due for services or
materials, and except for amounts in dispute and/or customary
retainages, there is no outstanding indebtedness known to the person
signing such certificate, after due inquiry, which is then due for
labor, wages, materials, supplies or services in connection with such
Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if
such estimated cost does exceed such insurance proceeds such
certificate shall state the amount of any such deficiency. If the
certificate states that such deficiency will exist, the Mortgagor
shall deliver the amount of
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such deficiency in cash or cash equivalent to the Insurance Trustee
simultaneously with the delivery of such certificate, which amount
shall be deemed insurance proceeds for purposes of this Section
5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the entire
cost of the Restoration, then, after completion of the Restoration, the
Mortgagor shall pay the deficiency. If all or any part of the net
insurance proceeds are not used for the Restoration in accordance with this
Subsection (e) (because such proceeds exceed the amount required to
complete the Restoration), then upon completion of the Restoration in
accordance with this Subsection (e), such amount not so used, if held by
the Insurance Trustee, shall be paid to the Mortgagor (if permitted by
Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is continuing, all
net business interruption insurance proceeds shall be paid to the Mortgagor, to
be segregated from the other funds of Mortgagor and held in trust by Mortgagor
for the following purposes and in the following order of priority: (i) for the
payment of Impositions and amounts due under the Ground Leases and Superior
Mortgages; (ii) for debt service for the estimated period of Restoration (for
purposes of this Section 5.11(f), interest and principal payments due on any
payment date under the Notes will deemed to accrue in equal daily installments
beginning the day after the immediately preceding payment date and ending on
such payment date); and (iii) for any expense incurred in connection with the
operation or business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent in
form or contributing in the event of loss with that required to be maintained
pursuant to this Section 5.11, unless the same are permitted by Superior
Instrument Requirements and the Mortgagee is included therein as a named
insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant
to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall promptly deliver to
the Mortgagee a duplicate original of the policy of such insurance, a copy
thereof certified by the insurer or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance
claims by reason of damage or destruction to any portion of the Trust
Estate may adjusted by the Mortgagor, but the Mortgagee shall have the
right (but not the obligation) to join the Mortgagor in adjusting, and approving
the adjustment of, any such loss except in the event of a loss where the amount
of insurance reasonably anticipated
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to be received with respect to such loss is less than Five Million Dollars
($5,000,000), and the Mortgagor shall assist the Mortgagee in any such
adjustment at the request of the Mortgagee. If the Mortgagee at its election as
aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's
approval of the adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary, if an Event
of Default shall have occurred and be continuing, the Mortgagee may, at its
option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any
net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case
may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or
make any demolition, alteration or improvement of any building included in the
Trust Estate or any new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in this Section 5.12
set forth.
Unless an Event of Default shall have occurred and be continuing, the
Mortgagor shall have the right at all times to make or permit such alterations,
improvements or new constructions, structural or otherwise (herein sometimes
called collectively "alterations"), of or on the Trust Estate, to be made in all
cases subject to the conditions set forth in Section 5.12 of the Note Mortgage.
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d), enter into any
Lease, or renew, modify, extend, terminate, or amend any Lease, except in
the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection of, any
rental payments under any Lease more than one year in advance of the
respective periods in respect of which they are to accrue, except that, in
connection with the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected and received in
advance in an amount not in excess of three months' rent and/or a security
deposit may be required thereunder in an amount not exceeding one year's
rent;
(c) collaterally assign, transfer or hypothecate (other than to the
Mortgagee hereunder, to
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the mortgagee under the Note Mortgage or to the holder of any Working
Capital Facility Lien) any rental payment under any Lease whether then due
or to accrue in the future, the interest of the Mortgagor as landlord under
any Lease or the rents, issues or profits of the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any Lease
unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder shall be
subject and subordinate to the rights of the Mortgagee under this
Mortgage, the mortgagee under the Note Mortgage and the holders of any
Superior Mortgage,
(2) the Lease may be assigned by the landlord thereunder to the
Mortgagee,
(3) the rights and remedies of the tenant in respect of any
obligations of the landlord thereunder shall be nonrecourse as to any
assets of the landlord other than its equity in the building in which
the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and subordinate to
the rights of the lessee under any new lease entered into in the event
of a termination of a Ground Lease;
(e) modify any Lease with respect to the matters described in clauses
(1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate of the
Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee
shall deliver a non-disturbance and attornment agreement substantially in the
form of Schedule 4 hereto, following receipt of a certificate of a leasing
broker (who is not an Affiliate of the Mortgagor or the broker involved in such
transaction) experienced with respect to leases of commercial space in the
Atlantic City area stating that the rent under the Lease is not less than fair
market rent and that the other terms of the Lease are fair and reasonable in the
commercial leasing market. The Mortgagor shall, upon demand, reimburse the
Mortgagee for any costs and expenses (including reasonable attorney's fees)
incurred by the Mortgagee in connection with the preparation, review and
delivery of such non-disturbance and attornment agreements.
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Promptly after the execution and delivery hereof, the Mortgagor will cause
the lessee under each Lease now in effect and promptly after each Lease is
executed or becomes effective after the date of the execution and delivery
hereof, the Mortgagor will cause the lessee under each such Lease, to be duly
notified in writing (unless the substance and effect of such notice shall be
contained in such Lease) of the subjection of the owner's interest, as lessor,
in and to such Lease to the lien of this Mortgage and of the name and address of
the Mortgagee. Each such notice shall state that the lease of such lessee is a
Lease as herein defined. If a new Mortgagee is at any time appointed hereunder
or the address of the Mortgagee shall at any time be changed, the Mortgagor will
cause each lessee under each Lease to be promptly notified in writing of the
name and address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur any
expenditure other than de minimis amounts) to obtain from each lessee under each
Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of
receipt of such notice, and the Mortgagor will promptly deliver to the
Mortgagee, upon request, a copy of each such acknowledgment of receipt which it
is able to obtain. The Mortgagee shall not be responsible for securing or
causing the Mortgagor to secure any such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to
Article Four, the Mortgagor will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation, and
its rights (both statutory and under its articles of incorporation) and
franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will
keep proper books of record and account in accordance with Section 12.05 of the
Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
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expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Notes, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Guaranty.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law or any other law which
would prohibit or forgive the Mortgagor from paying all or any portion of the
obligations under the Guaranty as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect the covenants or
the performance of this Mortgage; and the Mortgagor (to the extent that it may
lawfully do so) 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 Mortgagee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions
of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking
affecting the Trust Estate.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause to be done
all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall
at all times fully perform and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all taxes,
assessments and other charges mentioned therein) prior to the expiration of any
notice and/or cure period provided in each such Ground Lease. Upon receipt by
the Mortgagee from a Lessor of any written notice of default by the lessee
thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems
necessary in its sole discretion to prevent or to cure any default by the
Mortgagor in the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the Mortgagor as
lessee under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by
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the Mortgagor or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate,
Opinion of Counsel and a copy of the injunction, all as described in Section
3.01(g), the Mortgagee shall not take any such action unless and until the
Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay
referred to in Section 3.01(g). Without limiting the generality of Section 3.09
hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that
the Mortgagee shall have, the absolute and immediate right to enter in and upon
the Premises or any part thereof to such extent and as often as the Mortgagee,
in its sole discretion, deems necessary or desirable for the purpose permitted
by the immediately preceding sentence, subject only to applicable Legal
Requirements. Subject to the preceding and without limiting the Mortgagee's
other remedies under this Mortgage, the Mortgagee may pay and expend such sums
of money as the Mortgagee in its sole discretion deems necessary for any such
purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately
and without demand, all such sums so paid and expended by the Mortgagee,
together with interest thereon from the date of each such payment at the highest
rate of interest set forth in the Notes. All sums so paid and expended by the
Mortgagee, and the interest thereon, shall be added to and be secured by the
lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and
that it will not without the express written consent of the Mortgagee
modify, change, supplement, alter or amend such Ground Leases either
orally or in writing and, as further security for the repayment of the
indebtedness secured hereby and for the performance of the covenants
herein and in such Ground Leases contained, the Mortgagor hereby
assigns to the Mortgagee all of its rights, privileges and
prerogatives as lessee under such Ground Leases to terminate, cancel,
modify, change, supplement, alter or amend such Ground Leases, and any
such termination, cancellation, modification, change, supplement,
alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing
and (2) either (A) there has been an acceleration of maturity of the
Notes pursuant to Section 3.02 of the Note Mortgage or (B) the
Mortgagee exercises its rights under Section 3.09 hereof, the
Mortgagee shall have no right to terminate, cancel, modify, change,
supplement, alter or amend the Ground Leases;
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(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of
the Mortgagor's obligations under such Ground Leases, pursuant to such
Ground Leases or otherwise, shall release the Mortgagor from any of
its obligations under this Mortgage, including its obligations with
respect to the payment of rent as provided for in such Ground Leases
and the performance of all of the terms, provisions, covenants,
conditions and agreements contained in such Ground Leases, to be kept,
performed and complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest
in the improvements on the Leased Land and the leasehold estates shall
not merge by and shall always remain separate and distinct,
notwithstanding the union of such estates either in the Lessor or in
the lessee, or in a third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in writing
of any request made by the Mortgagor, as lessee under each of the
Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any
arbitration proceedings, as well as all proceedings thereunder. In
addition, the Mortgagor shall promptly deliver to the Mortgagee a copy
of the determination of the arbitrators in each such arbitration
proceeding. The Mortgagee shall have the right to participate in such
arbitration proceedings in association with the Mortgagor or on its
own behalf as an interested party in accordance with the terms of the
Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such
election to the Lessor or (B) the Mortgagor acquires fee simple title
or any other estate, title or interest in the Leased Land, the
Mortgagor shall promptly notify the Mortgagee of such acquisition and
shall cause to be executed and recorded all such other and further
assurances or other instruments in writing as may be required by law
or, in the opinion of the Mortgagee, be reasonably
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desirable to carry out the intent and meaning of clause
(x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease
by any Lessor or any trustee arising from or in connection with any
case, proceeding or other action commenced or pending by or against
any Lessor under the Code or any comparable provision contained in any
present or future federal, state, local, foreign or other statute,
law, rule or regulation, the Mortgagor shall give notice thereof to
the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any
and all of the Mortgagor's rights as lessee under Section 365(h) of
the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation ("Comparable Provision") and (B) covenants that it shall
not elect to treat any Ground Lease as terminated pursuant to Section
365(h) of the Code or any Comparable Provision without the prior
written consent of the Mortgagee and (C) agrees that any such election
by the Mortgagor without such consent shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to
the Mortgagee all of the Mortgagor's claims and rights to the payment
of damages arising from any rejection by Lessor of any Ground lease
under the Code or any Comparable Provision. The Mortgagee shall have
the right to proceed in its own name or in the name of the Mortgagor
in respect of any claim, suit, action or proceeding relating to the
rejection of any Ground Lease, including, without limitation, the
right to file and prosecute, in cooperation with the Mortgagor, any
proofs of claim, complaints, motions, applications notices and other
documents, in any case in respect of Lessor under the Code or any
Comparable Provision. This assignment constitutes a present,
irrevocable and unconditional assignment of the foregoing claims,
rights and remedies, and shall continue in effect until all of the
indebtedness and obligations secured by this Mortgage shall have been
satisfied and discharged in full. Any amounts received by the
Mortgagee in damages arising out of the rejection of any Ground Lease
as aforesaid shall be applied first to all reasonable costs and
expenses of the Mortgagee (including, without limitation, reasonable
attorneys' fees) incurred in connection with the exercise of any of
its rights or remedies under this Section 5.21, and thereafter as
provided in Section 3.03 hereof;
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(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or
all of the Ground Leases the Mortgagor shall give the Mortgagee not
less than 10 days' prior notice of the date on which the Mortgagor
shall apply to the Bankruptcy Court or other judicial body with
appropriate jurisdiction for authority to reject the lease. The
Mortgagee shall have the right, but not the obligation, to serve upon
the Mortgagor within such 10 day period a notice stating that (a) the
Mortgagee demands that the Mortgagor assume and assign such Ground
Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any
Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s).
If the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a)
of the preceding sentence within 30 days after the notice shall have
been given subject to the performance by the Mortgagee of the covenant
provided for in clause (b) of the preceding sentence. Effective upon
the entry of an order for relief in respect of the Mortgagor under
Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby
assigns and transfers to the Mortgagee a non-exclusive right to apply
to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
(x) the Mortgagor shall promptly give to the Mortgagee copies of
(A) all notices of default or (B) any other communications or notices
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Ground Leases and shall promptly notify the Mortgagor of any default
under any Ground Lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all
of the rights granted to it under the Ground Leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any
portion thereof to or from an Affiliate.
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(c) The Mortgagor hereby represents and warrants that all fixed net rent,
taxes and assessments, payable under the Ground Leases have been paid to the
extent they were due and payable to the date hereof and that the Mortgagor has
not received notice of its failure to pay any other amounts payable under the
Ground Leases which have not been cured.
(d) If both the Lessor's and Lessee's estates under any of the Ground
Leases or any portion thereof shall at any time become vested in one owner, this
Mortgage and the lien created hereby shall nevertheless not be merged,
extinguished, destroyed or terminated by application of the doctrine of merger
and, in such event, Mortgagee shall continue to have all of the rights and
privileges of the leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease shall be
terminated prior to the natural expiration of its term due to default by the
Lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its
designee shall acquire from the Lessor a new lease of the Leased land or any
portion thereof, the Mortgagor shall have no right, title or interest in or to
such lease or the leasehold estate created thereby, or the options therein
contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times fully
perform and comply with all agreements, covenants, terms and conditions imposed
upon or assumed by it as mortgagor under the Superior Mortgages prior to the
expiration of any notice and/or cure period provided in each such Superior
Mortgage. If a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior Mortgage
has been accelerated as a result thereof, the Mortgagee may rely thereon and
take any action the Mortgagee deems necessary in its sole discretion to prevent
or to cure any default by the Mortgagor in the performance of or compliance with
any of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as mortgagor under each of the Superior Mortgages even though the
existence of such default or the nature thereof may be questioned or denied by
the Mortgagor or by any party on behalf of the Mortgagor provided that if the
Mortgagor has heretofore taken such actions as
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described in Section 3.01(h), the Mortgagee shall not take any such action
unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of
any such tolling or stay referred to in Section 3.01(h). Without limiting the
generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the
Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any part
thereof to such extent and as often as the Mortgagee, in its sole discretion,
deems necessary for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. The Mortgagee may (i) pay and
expend such sums of money as the Mortgagee in its sole discretion deems
necessary for any such purpose and (ii) in its sole discretion prepay any
Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee,
immediately and without demand, all such sums referred to in (i) and (ii) above
so paid and expended by the Mortgagee, together with interest thereon from the
date of each such payment at the rate of interest set forth in the Note. All
sums so paid and expended by the Mortgagee and the interest thereon shall be
added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first satisfying the
conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A)
modify any of the terms, covenants or conditions of any Superior
Mortgage, and without limiting the foregoing, the Mortgagor shall not,
without satisfying such conditions, enter into or obtain any agreement
whereby the holder of any Superior Mortgage waives, postpones,
extends, reduces or modifies the payment of the installment of
principal or interest or any other item or amount now required to be
paid under the terms of any Superior Mortgage or modifies any other
provision thereof, or (B) acquire or permit or suffer any Affiliate of
the Mortgagor to acquire any Superior Mortgage or any interest
therein. Notwithstanding anything in clause (A) to the contrary, the
Mortgagor shall have the right to amend, supplement or modify any
Superior Mortgage, if (x) the then outstanding principal balance of
the indebtedness secured by such Superior Mortgage is not increased
thereby, and (y) in the case of any After-Acquired Fee Mortgage, such
amendment, supplement or agreement does not increase the property
covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the Mortgagor under each
Superior Mortgage, the note secured thereby and any other instrument
evidencing or
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securing the indebtedness owing to any holder of any Superior
Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an estoppel certificate or letter addressed to the Mortgagee
from holders of the Superior Mortgages, such certificate or letter to
be in such form as the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any
default under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions of the
Trust Estate shall be subject and subordinate to any Existing Encumbrances, the
liens created by the Senior Mortgage Documents and any mortgage, assignment,
security agreement, financing statement or other lien securing any Working
Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's
interest in the affected portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be self-operative
with respect to the liens created by the Senior Mortgage Note Documents and any
Working Capital Facility Lien, and no further instrument shall be required to
give effect to such subordination. Mortgagee shall, however, from time to time,
execute instruments in form and substance reasonably satisfactory to the holder
of the Working Capital Facility Lien, confirming such subordination and agreeing
to such other matters reasonably required by the holder of the liens created by
the Senior Mortgage Documents and the holders of such liens which do not, in the
aggregate, materially adversely reduce or impair the rights of Trustee under the
Mortgage, and Mortgagor and others may rely conclusively thereon, provided that
Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of the
Trust Estate shall be subject and subordinate to any Existing Encumbrances. The
provisions of this Section 5.22(d) shall be self-operative, and no further
instrument shall be required to give effect to such subordination.
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Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding
recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office
after the recordation of the Note Mortgage, the lien of this Mortgage ranks PARI
PASSU with, and not junior to, the lien created by the Note Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it
is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon
the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee
further acknowledges and agrees that whenever it is provided in the Note
Mortgage that the Mortgagor shall deliver any notice or document, or is required
to make any payment thereunder, the delivery of such notice or document or the
making of such payment pursuant to the terms of the Note Mortgage shall also
constitute the delivery of such notice or document or the making of such payment
in satisfaction of the terms, conditions and provisions of this Mortgage to the
same extent as the same constitutes satisfaction of the terms, conditions and
provisions of the Note Mortgage.
Section 6.02. COUNTERPARTS. This instrument may be executed in any number
of counterparts, each of which as executed shall be deemed to be an original,
but all such counterparts shall constitute one and the same instrument.
Section 6.03. MODIFICATION. This Mortgage is subject to "modification"
within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have
the benefit of the lien priority provisions of such statute. Such modification
may include, without limitation, a change in the interest rate, maturity date or
other terms and conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS
MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly
executed and attested, all as of the day and year first above written.
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RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
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NA932810086 - NOTE MORTGAGE
RIH JUNIOR PROMISSORY NOTE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING
RIH JUNIOR PROMISSORY NOTE
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
a Delaware corporation,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING
RIH JUNIOR PROMISSORY NOTE
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation
("RIHF"), having an address at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or
assigns which shall than be the Noteholder (as hereinafter defined),
being referred to herein as "Mortgagee").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to
Mortgagor and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and in order to
secure (i) the payment of the principal amount (and premium, if any)
of the secured junior promissory note by Mortgagor to Mortgagee in the
principal amount of $35,000,000 as amended and restated the date hereof
(hereinafter collectively referred to as the "Note"), in lawful money of the
United States, to be paid in accordance with the provisions thereof (and all
renewals, extensions, and modifications thereof) all of which are hereby made
an integral part hereof as though set forth at length herein; (ii) payment of
interest (including interest on all overdue principal and premium, if
any) becoming due under the provisions of the Note; (iii) payment by
Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee
pursuant to any term or provision of this Mortgage; (iv) performance
of each covenant, term, condition and agreement of Mortgagor herein or
in the Note contained; (v) all costs and expenses, including reasonable
counsel fees and expenses as provided in Section 3.07, which may arise
in respect of the Note and this Mortgage or of the obligations secured
hereby; and (vi) performance and observance of all of the provisions
herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released,
conveyed and confirmed unto Mortgagee and its successors hereunder and
assigns forever, all of its right, title and interest in, to and under
any of the following described property:
<PAGE>
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and
franchises particularly described in annexed Schedule 1 (the "Owned
Land") which Schedule is hereby made a part of, and deemed to be
described in, this Granting Clause as fully as if set forth in this
Granting Clause at length.
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the
"Ground Leases") particularly described in Schedule 2, which Schedule
is hereby made a part of, and deemed to be described in, this Granting
Clause as fully as if set forth in this Granting Clause at length,
which Ground Leases cover the real property described in such Schedule
2 (the "Leased Land") and in and to any and all modifications,
extensions and renewals of the Ground Leases and all options set forth
therein, together with (i) all credits, deposits, privileges and rights
of the Mortgagor as lessee under the Ground Leases, now or at any time
existing, (ii) the leaseholds and the leasehold estates created by the
Ground Leases and (iii) all of the estates, rights, titles, claims or
demands whatsoever of Mortgagor, either in law or in equity, in
possession or in expectancy, of, in and to the Ground Leases and the
Leased Land, together with (x) any and all other, further or additional
title, estates, interests or rights which may at anytime be acquired by
the Mortgagor in or to the Leased Land, and the Mortgagor expressly
agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or
any other greater estate to the Leased Land pursuant to the Ground
Leases, or otherwise, the lien of this Mortgage shall attach, extend
to, cover and be a lien upon such fee simple title or other greater
estate and thereupon the lien of this Mortgage shall be prior to the
lien of any mortgage or deed of trust placed on such acquired title,
estate, interest or right subsequent to the date of this Mortgage
(except as otherwise provided herein) and (y) any right to possession
or statutory term of years derived from, or incident to, the Ground
Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the
"Code") or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation.
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<PAGE>
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and
proceeds of the property subjected or required to be subjected to the
lien of this Mortgage, including, without limitation, the property
described in Granting Clauses First, Second, and Sixth (such property
is hereinafter collectively referred to as the "Premises") and all the
estate, right, title and interest of every nature whatsoever of the
Mortgagor in and to the same and every part thereof. The collective
metes and bounds description of the Owned Land and the Leased Land is
set forth in annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the
date of execution of this Mortgage or hereafter entered into by the
Mortgagor, if any, including extensions, renewals or amendments of all
of the same, and the immediate and continuing right as security in
accordance with an Assignment of Leases and Rents of even date herewith
between Mortgagor and Mortgagee, and, after the occurrence of an Event
of Default, to make claim for, collect, receive and receipt for (and
to apply the same as provided herein) any and all rents, income,
revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof,
whether payable as rent, insurance proceeds, condemnation awards,
security or otherwise and whether payable prior to or subsequent to the
maturity date of the Note, to receive and give notices and consents
thereunder, to bring actions and proceedings thereunder or for the
enforcement thereof, to make waivers and agreements, to take such
action upon the happening of a default under any Lease, including the
commencement, conduct and consummation of any proceedings at law or in
equity as shall be permitted by any provision of any Lease, and to do
any and all things which the Mortgagor or any lessor is or may become
entitled to do under the Leases; provided, that the assignment made by
this granting Clause Fourth shall not impair or diminish any obligation
of the Mortgagor under the Leases, or shall any such obligation be
imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting
Clause Third, the Mortgagor's rights, privileges and franchises in and
to the following, to the extent of the Mortgagor's interest therein and
thereto and to the extent assignable (collectively, "Operating Assets"):
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<PAGE>
(a) bookings and receipts for the use of guest rooms,
banquet facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including
guaranties and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks,
trade names, service marks, service names, logos, copyrights,
warranties and other items of intangible personal property relating
to the ownership or operation of the Casino-Hotel, including, without
limitation, (1) telephone and other communication numbers, (2) all
software licensing agreements as are required to operate computer
software systems at the Casino-Hotel, all transferable proprietary
interest in software required to operate the computer systems at the
Casino Hotel and books and records relating to the software programs,
and (3) lessee's interest under leases of Tangible Personal Property;
(e) all agreements entered into by or on behalf of the
Mortgagor or which have been assigned to the Mortgagor, for the design
and construction, and for the equipping and furnishing, of the
Casino-Hotel, including architect's agreements, engineering agreements,
construction contracts, consulting agreements and agreements or
purchase orders for all items of Tangible Personal Property and payment
and performance bonds in favor of the Mortgagor in connection with the
Trust Estate (and all warranties and guaranties thereunder and
warranties and guaranties of any subcontractor and bond issued in
connection with the work to be performed by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other articles of
tangible personal property which are, or are to be located on, or
used in connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six wheels, located or to be located in the Casino-Hotel, and all
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<PAGE>
furnishings and equipment to be used in connection with the
operation thereof;
(iii) all cards, dice, gaming chips and placques,
tokens, chip racks, dealing shoes, dice cups, dice sticks,
layouts, paddles, roulette balls and other consumable supplies
and items to be used in connection with the gaming operations of
the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether in use or held in reserve storage
for future use, in connection with the operation of the
Casino-Hotel, which are on hand or on order whether stored on-site
or off-site;
(v) all consumables and operating supplies of every
kind and nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on
any of the Owned Land, including without limitation, accounting
supplies, guest supplies, forms, printing, stationery, food and
beverage stock, bar supplies, laundry supplies and brochures to
existing purchase orders;
(vi) all sets and scenery, costumes, props and other
items of tangible personal property on hand or on order for use
in the production of shows in the showroom of the Casino-Hotel;
and
(vii) all cars, limousines, vans, buses, trucks and
other vehicles owned or leased by the Mortgagor for use in
Casino-Hotel operations, together with all equipment, parts and
supplies used to service, repair, maintain and equip the
foregoing;
(g) all drawings, designs, plans and specifications prepared
by the architects, interior designers, landscape designers and any
other consultants for the development of the Premises, as amended from
time to time;
(h) any administrative and judicial proceedings initiated by
the Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of
such proceedings;
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high
roller" lists; and
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<PAGE>
(j) all of the goodwill in connection with the operation of
the Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding
anything contained in this Mortgage to the contrary, the Mortgagor may
share facilities, operations and employees with any other hotel owned
by any Affiliate of the Mortgagor provided that (i) such sharing of
facilities is permitted by all applicable Legal Requirements, (ii)
terms on which such facilities are shared are not detrimental to the
operations of the Casino-Hotel or the financial condition of the
Mortgagor and (iii) the regular operation of the Casino-Hotel would
not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair
or diminish any obligation of the Mortgagor with respect to the
Operating Assets, nor shall any such obligation be imposed on the
Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and
to all buildings and improvements of every kind and description now or
hereafter erected or placed on the Owned Land and/or the Leased Land
and all fixtures and articles of personal property now or hereafter
attached to or contained in and used in connection with such buildings
and improvements, including, but not limited to, all apparatus,
furniture, furnishings, machinery, motors, elevators, fittings,
radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and
hot water boilers, lighting and power plants, pipes, plumbing,
radiators, sinks, bath tubs, water closets, gas and electrical
fixtures, awnings, shades, screens, blinds, dishwashers, freezers,
vacuum cleaning systems, office equipment and other furnishings, and
all plumbing, heating, lighting, cooking, laundry, ventilating,
incinerating, air-conditioning and sprinkler equipment or other fire
prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or
articles in substitution therefor, whether or not the same are or shall
be attached to the Owned Land, the Leased Land or to any such buildings
and improvements thereon, in any manner; and
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<PAGE>
(b) All of the Mortgagor's right, title and interest in
and to (i) the Leased Land, if the Mortgagor acquires the fee simple
title to the Leased Land or any part thereof (subject to the
provisions of Section 2.06 hereof), (ii) all air rights and rights to
maintain supporting columns and all rights to construct and
maintain bridges, and to create private rights of way over
streets now or hereafter owned or enjoyed by the Mortgagor and
appurtenant to the Owned Land or Leased Land, and (iii) all right,
title and interest of Mortgagor as grantee or licensee in and to
the following to the extent necessary for the use and enjoyment of
the Owned Land or the Leased Land: (A) all those plots, pieces or
parcels of land and air rights, more particularly described on
Schedule 5, attached hereto and made a part hereof (the "Bridge
Easement Parcels"), with respect to which Mortgagor has easements,
licenses or other rights of possession or use pursuant to these
certain easement and license agreements more particularly
described on Schedule 5 (the "Bridge Easements"), (B) all those
plots, pieces or parcels of land and air rights, more particularly
described on Schedule 6 attached hereto and made a part hereof (the
"Elevator Easement Parcels"), with respect to which Mortgagor has
easements, licenses or other rights of possession or use pursuant
to those certain license agreements more particularly described on
Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece
or parcel of land and air rights more particularly described on
Schedule 7 attached hereto and made a part hereof (the
"Turn-Around Easement Parcel") with respect to which Mortgagor
has easements, licenses, or other rights of possession or use
pursuant to that certain easement more particularly described on
Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement
Parcels, the Elevator Easement Parcels and the Turn-Around
Easement Parcel are collectively referred to herein as the
"Easement Parcels"; and the Bridge Easements, the Elevator
Easements and the Turn-Around Easement are collectively referred
to as the "Easements"), together with all rights of way,
privileges, liberties, tenements, hereditaments and
appurtenances belonging or in any way appertaining to such
estates, it being the intention hereof that all property,
interests, rights and privileges and franchises pertaining to the
Premises (other than Excepted Property) shall be as fully embraced
within and subjected to the lien hereof as if such property were
specifically described herein.
To the extent the grant of a security interest in
any portion of the Trust Estate is governed by the Uniform
Commercial Code, this Mortgage is hereby deemed to be as well
a security agreement under the Uniform Commercial Code for the
purpose of creating hereby a security interest in all of the
Mortgagor's right, title and interest in and to such property,
securing the obligations secured hereby, for the benefit of
the Mortgagee;
* * *
TOGETHER with all of the Mortgagor's right, title and interest
in and to all mineral and water rights and any title or reversion, in
and to the beds of the ways, streets, avenues and alleys adjoining
the Premises to the center line
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<PAGE>
thereof and in and to all strips, gaps and gores adjoining the premises
on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and
interest to and singular the tenements, hereditaments, easements,
appurtenances, passages, water courses, riparian rights, other
rights, liberties and privileges thereof or in any way appertaining
to the Premises, including any other claim at law or in equity as
well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore
or hereafter to be made to the present and all subsequent owners of
the Trust Estate for any taking by eminent domain, either permanent
or temporary, of all or any part of the Trust Estate or any
easement or appurtenances thereof, including severance and
consequential damage and change in grade of streets, all in
accordance with and subject to the provisions of the Superior
Instrument Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on
any insurance policies described in Section 5.11, and the right to
receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Trust Estate
or otherwise, all in accordance with and subject to the provisions
of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted
property, rights, title, interest, privileges and franchises, the
Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases,
Operating Assets, Easements, properties, options, credits, deposits,
rights, privileges and franchises of every kind and description, real,
personal or mixed, granted hereby, bargained, sold, aliened, assigned,
transferred, hypothecated, pledged, released, conveyed, mortgaged, or
confirmed as aforesaid, or intended, agreed or covenanted so to be,
together with all the appurtenances thereto appertaining (the Premises,
Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being
herein collectively called the "Trust Estate") unto the Mortgagee and
its successors and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing
Encumbrances and, after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the
Mortgagee and the Noteholder as set forth in that certain
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Intercreditor Agreement dated as of the date hereof among RIH, RIHF,
Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee
under that certain note purchase agreement dated as of the date hereof
among Fidelity, RIH and RIHF, and State Street Bank and Trust Company
of Connecticut, National Association ("State Street"), as trustee under
that certain indenture dated as of the date hereof among State Street,
RIH and RIHF (and such other parties that may from time to time become
a party thereto).
BUT IN TRUST, NEVERTHELESS, for the benefit and security of
the Noteholder.
UPON CONDITION that, until the happening of an Event of
Default and subject to the provisions of Article Two, the Mortgagor
shall be permitted to possess and use the Trust Estate, and to receive
and use the rents, issues, profits, revenues and other income of the
Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust
Estate is to be held and applied by the Mortgagee, subject to the
further covenants, conditions and trusts hereinafter set forth, and the
Mortgagor does hereby covenant and agree to and with the Mortgagee,
for the benefit of the holder of the Note as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this
Mortgage, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural
as well as the singular;
(b) all accounting terms not otherwise defined herein have
the meanings assigned to them, and all computations herein
provided for shall be made in accordance with generally accepted
accounting principles consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Mortgage as a whole and not
to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
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<PAGE>
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in
Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good
standing of the American Institute of Real Estate Appraisers) who is
(i) of recognized standing among appraisers of properties similar to
the Casino-Hotel and (ii) experienced in the appraisals of properties
of a similar size and scope to that of the Casino-Hotel, selected by
the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in
Section 1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in
Section 1.01 of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for
gaming and related activities.
"CASINO-HOTEL" means the casino and hotel complex and
ancillary structures and facilities located on the Premises and
furniture, fixtures and equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature
which results in damage, loss or destruction to any buildings or
improvements on the Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section
10.01 of the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both,
would become an Event of Default.
"DEPOSITARY" means an Independent entity to which insurance
proceeds or a condemnation award is paid to be held in trust for
restoration pursuant to the provisions of a Ground Lease or Superior
Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01.
An Event of Default shall "exist" if an Event of Default shall have
occurred and be continuing.
"EXCEPTED PROPERTY" means:
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(1) subject to the provisions of the Assignment of Leases
and Rents, any cash held by the Mortgagor from rents, issues, profits,
revenues and other proceeds of the Trust Estate to the extent that such
cash may be, but has not been, distributed or paid out in accordance
with the Services Agreement or in accordance with the provisions of
Section 12.07 the Indenture;
(2) all personal property owned by lessees under Leases and
the personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to
the provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a
security interest in which is prohibited by the New Jersey Casino
Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated
thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in
Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a
Superior Mortgage secured by or imposing a lien on all or a portion of
the Trust Estate on a parity with or senior to the lien of this
Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon
any Tangible Personal Property and other items constituting Operating
Assets, such as computer software, which are financed, purchased or
leased by the Mortgagor, provided that, except as set forth on
Schedule 3, the principal amount of the indebtedness secured by
such lien shall not exceed eighty-five (85%) percent of the cost to
the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause
Second.
"GUARANTY MORTGAGE" means that certain Mortgage Securing
Guaranty of Junior Mortgage Notes dated as of the date hereof from
Mortgagor to U.S. Trust Company of California, N.A., a
national banking association, which secures the Notes (as defined in
the Indenture), the lien of which shall be PARI PASSU with the lien of
this Mortgage.
"HOTEL" means that portion of the Casino-Hotel not included
within the Casino.
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"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11.375% Junior
Mortgage Notes due 2004, dated as of even date herewith among the
Mortgagor, RIHF, as issuer, and U.S. Trust Company of California,
N.A., as trustee, as it may from time to time be
supplemented, modified or amended by one or more trust indentures
or other instruments supplemental thereto entered into pursuant to
the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person
means such a Person who (a) is in fact independent, (b) does not have
any direct financial interest or any material indirect financial
interest in the Mortgagor or in any other obligor upon the Note
or in any Affiliate of the Mortgagor or of such other obligor and
(c) is not connected with the Mortgagor or such other obligor or
any Affiliate of the Mortgagor or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate
shall be furnished to the Mortgagee, such opinion or certificate
shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof. A Person who is
performing or who has performed services as an independent
contractor to any specified Person shall not be considered not
Independent merely by reason of the fact that such Person is or has
performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section
5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance
policy covering or applicable to the Trust Estate or any part thereof,
all requirements of the issuer of any such policy, and all orders,
rules, regulations and other requirements of the National Board of
Fire Underwriters (or any other body exercising similar functions)
applicable to or affecting the Trust Estate or any part thereof or
any use or condition of the Trust Estate or any other part thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so
elects, any bank, trust company or insurance company with net worth in
excess of $100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected
by the Mortgagor authorized to issue insurance in the State of New
Jersey with an A.M. Best rating as high or higher than the rating of
insurance companies insuring other casino-hotels in Atlantic City,
New Jersey.
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"LEASE" means each lease or sublease demising all or any
portion of the Owned Land, the Leased Land or the buildings or
improvements thereon and made by the Mortgagor as lessor or sublessor,
as the case may be, or any spaces in any building or buildings which
constitute a part of the Trust Estate, including every agreement
relating thereto or entered into in connection therewith and every
guaranty of the performance and observance of the covenants,
conditions and agreements to be performed by the lessee under any
such lease. Notwithstanding the foregoing, the term "Lease" shall
not include any transient room rentals.
"LEASED LAND" has the meaning stated in Granting Clause
Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements (including, without limitation, the New Jersey
Environment Cleanup Responsibility Act and the New Jersey Spill
Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies,
officials and officers, of governments, federal, state and
municipal (including, without limitation, the New Jersey
Department of Environmental Protection, the Atlantic City Bureau
of Investigations, Division of Protection, the Atlantic City Bureau
of Investigations, Division of Gaming Enforcement of the State of
New Jersey, and the Casino Control Commission of the State of New
Jersey), foreseen or unforeseen, ordinary or extraordinary, which
now is or at any time hereafter becomes applicable to the Trust
Estate or any part thereof, or any of the adjoining sidewalks, or
the use of the Casino-Hotel as a gaming or gambling facility or any
other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Note means the date
on which the principal of such Note becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration or prepayment or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section
1.01 of the Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the
first paragraph of this instrument until a successor entity shall have
become such pursuant to the applicable provisions of this Mortgage,
and thereafter, except to the extent otherwise contemplated by
Section 4.02, "Mortgagor" shall mean such successor entity exclusively.
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"NOTEHOLDER" shall mean the holder or holders of the Note.
"NOTE" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an
officer of the Mortgagor and delivered to the Mortgagee. Whenever this
Mortgage requires that an Officers' Certificate be signed also by
an Architect or an Accountant or other expert, such Architect,
Accountant or other expert may (except as otherwise expressly
provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause
Fifth.
"OPINION OF Counsel" means a written opinion of counsel who
may (except as otherwise expressly provided in this Mortgage) be an
employee of the Mortgagor or an employee of an Affiliate of the
Mortgagor. Unless otherwise specifically provided in this Mortgage,
such counsel may rely, as to any state of facts not personally known
to such counsel and relating to such opinions, on an Officers'
Certificate to the extent not rejected by the Trustee and its counsel
(which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued
by [list title insurance companies], pursuant to Title Commitment No.
____________ redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01
of the Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of
compliance, certificates of operation, certificates of occupancy and
permits required for the lawful ownership, occupancy, operation and use
of all or a material portion of the Premises whether held by the
Mortgagor or any other Person (which may be temporary or permanent)
(including, without limitation, those required for the use of the
Casino-Hotel as a licensed casino facility), in accordance with all
applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges
not yet due and payable or if due and payable are not delinquent
to the extent that any fine, penalty, interest or cost may be
added for nonpayment thereof;
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(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights
granted as provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of
the Indenture;
(8) any Working Capital Facility Lien;
(9) liens created by the Senior Mortgage Documents; and
(10) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or any other entity or government or any agency or
political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made
in accordance with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing,
Inc., a Delaware corporation.
"SENIOR GUARANTY MORTGAGE" has the meaning set forth in
Section 1.01 of the Indenture.
"SENIOR MORTGAGE" has the meaning set forth in Section 1.01
of the Indenture.
"SENIOR MORTGAGE DOCUMENTS" has the meaning set forth in
Section 1.01 of the Indenture.
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"SERVICES AGREEMENT" has the meaning set forth in Section
1.01 of the Indenture.
"SETTLEMENT COSTS" has the meaning stated in Section 5.20.
"STATED MATURITY" when used with respect to a note means the
date specified in such note as the fixed date on which the principal of
such note is due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable
terms, conditions and provisions of (i) the Ground Leases with respect
to the Leased Land; and (ii) Superior Mortgages with respect to the
portion of the Trust Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage,
the Senior Guaranty Mortgage, any Working Capital Facility Lien and any
After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent
domain of the whole or any part of the Premises, by a competent
authority, or any public or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in
Granting Clause Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the
first paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the
Granting Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01
of the Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section
1.01 of the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in
Section 5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Mortgage to
be made upon, given or furnished to, or filed with, the Mortgagor
or the Mortgagee (collectively, "Notices") shall be deemed given
when either (i) delivered by hand or (ii) two days after sending by
registered or certified mail, postage prepaid, addressed as
follows:
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To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to the Mortgagor, the Mortgagee and the
Trustee, any party may designate additional or substitute address for
Notices which, notwithstanding Subsection (a) above, shall be deemed
given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO
MORTGAGEE. Whenever several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one
or more other such Persons as to such matters in one or several
documents.
Any certificate or opinion of an Officer of the Mortgagor
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such
Officer knows that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of,
or representations by, an Officer or Officers of the Mortgagor
stating that the information with respect to such factual matters
is in the possession of the Mortgagor, unless such counsel knows
that the certificate or opinion or representations with respect to
such matters are erroneous. If appropriate to the matter being
opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of
creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Mortgage, they may, but
need not, be consolidated and form one instrument.
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Whenever in this Mortgage, in connection with any application
or certificate or report to the Mortgagee, it is provided that the
Mortgagor shall deliver any document as a condition of the
granting of such application, or as evidence of the Mortgagor's
compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the
effective date of such certificate or report (as the case may be),
of the facts and opinions stated in such document shall in such
case be conditions precedent to the right of the Mortgagor to have
such application granted or to the sufficiency of such certificate
or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon
any application or request by the Mortgagor to the Mortgagee to take
any action under any provision of this Mortgage, the Mortgagor
shall furnish to the Mortgagee an Officers' Certificate stating
that all conditions precedent, if any, provided for in this
Mortgage relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied
with, except that in the case of any such application or request as
to which the furnishing of such documents is specifically required
by any provision of this Mortgage relating to such particular
application or request, no additional certificate or opinion need
be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Mortgage shall include:
(a) a statement that each individual signing
such certificate or opinion has read such condition
or covenant and the definitions herein relating
thereto;
(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 each
such individual, he has made such examination or
investigation as is necessary to enable him to
express an informed opinion as to whether or not
such condition or covenant has been complied with; and
(d) a statement as to whether, in the
opinion of each such individual, such condition
or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section
headings herein are for convenience only and shall not affect the
construction hereof.
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Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit
of the parties hereto and of the respective successors and assigns of
the parties hereto to the same effect as if each such successor or
assign were in each case named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged,
released nor any of its provisions waived except by agreement in writing
executed by the Mortgagor and the Mortgagee and in accordance with
the provisions of this Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in
this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this
Mortgage, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns, any benefit or
any legal or equitable right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed
to be a contract under the laws of the State of New Jersey and shall be
construed in accordance with and governed by the laws of the State
of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever
the provisions of this Mortgage and the provisions of the Indenture
shall be inconsistent, the provisions of the Indenture shall
govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
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proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
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indemnity against such risk or liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT.
Each provision of this Mortgage is subject to and shall be enforced in
compliance with the provisions of the New Jersey Casino Control Act. This
Mortgage shall not be transferred, assigned or amended without prior approval
of the New Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall
pay or cause to be paid, or there shall otherwise be paid, to the
Mortgagee all amounts required to be paid by the Mortgagor
pursuant to the Note, and the conditions precedent for the
Indenture to cease, determine and become null and void in
accordance with Section 5.01 of the Indenture shall have occurred,
the Mortgagee shall promptly cancel and discharge this Mortgage,
and execute and deliver to the Mortgagor all such instruments as
may be necessary, required or appropriate to evidence such
discharge and satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be
subject in each instance to the giving of any notice and the expiration
of any grace period provided for in Section 3.01 as a condition to
such Default making it an Event of Default, unless the Trust
Indenture Act requires otherwise, in which case the Trust
Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that
an event which does not materially diminish the value of the
Mortgagee's interest in the Trust Estate shall not be deemed an
"impairment of security", as that phrase is used in this Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE.
So long as there shall have been no acceleration of maturity of the Note under
Section 3.02, the Mortgagor shall be suffered and permitted, with power freely
and without let or hindrance on the part of the Mortgagee, subject to
the provisions of this Mortgage and the Guaranty Mortgage, to possess, use,
manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust
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and settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time
to time, unless an Event of Default shall have occurred and be continuing,
without any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right
to pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to
the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
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Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions
contained in this Mortgage or the Indenture to the contrary, including, without
limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles
Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and
other items constituting operating assets, such as computer software subject to
any FF&E Financing Agreement, or becomes the lessee under a lease for any of the
same and if the document evidencing such FF&E Financing Agreement prohibits
subordinate liens or the provisions of any such lease prohibits any assignment
thereof by the lessee, and if any such prohibition is customary with respect to
similar transactions of the lender or lessor, as the case may be, then the
property so purchased or the lessee's interest in the lease, as the case may be,
shall be deemed to be Excepted Property. If any such FF&E Financing Agreement
permits subordinate liens then the Mortgagee agrees to execute and deliver to
the Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination of
the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part of the Released Fee Land (the land to be so conveyed is hereinafter
referred to as the "Released Land"), free from the lien of the Mortgage,
provided that:
(i) the Mortgagor furnishes the Mortgagee with an Officers'
Certificate requesting the release of such property from the Trust Estate
and stating (w) so long as the Released Land is owned or used by an
Affiliate of the Mortgagor, the Released Land shall not be operated in a
manner in competition with the operation of the Casino-Hotel as a casino,
(x) that no permanent structures have been constructed on the Released
Land, (y) that the Mortgagor is not required to hold the Released Land in
order to maintain all Permits and in order to comply with the provisions of
all material contracts to which the Mortgagor is a party or by which the
Mortgagor is bound and either (A) the Mortgagor has made adequate provision
to maintain all Permits and to comply with such contractual requirements
by: (1) owning and using the
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balance of the Trust Estate; (2) acquiring fee title to any real property
that would enable Mortgagor to maintain all Permits and satisfy such
contractual requirements; or (3) acquiring a Qualified Leasehold Interest
in real property that would enable the Mortgagor to maintain such Permits
and satisfy such contractual requirements; or (B) neither the requirements
of such Permits nor such contracts require the Mortgagor to own the
Released Land or use or operate any land in the manner in which the
Released Land is intended to be used; or (C) such requirements have been
waived, and (z) that such conveyance will not materially interfere with the
operation of the Casino-Hotel;
(ii) the Mortgagor delivers to the Mortgagee an Opinion of
Counsel to the effect that the Mortgagor is not required to own and use the
Released Land in order to maintain in good standing all Permits or by the
provisions of any material contract to which the Mortgagor is a party or by
which it is bound to own and use the Released Land;
(iii) the Mortgagor delivers to the Mortgagee, if applicable, an
endorsement to the Original Policy in accordance with Section 2.05(d);
(iv) the Mortgagor delivers to the Mortgagee an executed
counterpart of the instruments of conveyance in recordable form, which
shall contain a covenant prohibiting the use of the Released Land by any
Affiliate of the Mortgagor (A) as a casino or (B) in a manner in
competition with the operation of the Casino-Hotel as a casino prior to the
latest Stated Maturity Date of the Note; and
(v) in the case of a conveyance or release described in (A) or
(B) above, if the Released Land is being conveyed to an Affiliate of the
Mortgagor, the cash consideration received by the Mortgagor for the
Released Land shall not be less than the product of the Release Price
multiplied by the area (in square feet) of the Released Land.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.05
and, if applicable, Section 2.05 of the Guaranty Mortgage,
PROVIDED, that the Mortgagee shall have no liability thereunder and all costs
and expenses (including reasonable attorneys' fees) shall be paid by the
Mortgagor.
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Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be continuing, to have
an Affiliate exercise such options(s) or for the Mortgagor to exercise such
options(s) on behalf of an Affiliate and in connection therewith to cause fee
simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with
the following:
(i) an Officers' Certificate requesting the release of the
Released Fee Land from the Trust Estate and stating that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain all
Permits and in order to comply with the provisions of all material
contracts to which the Mortgagor is a party or by which the Mortgagor is
bound, (B) such Affiliate has received all Permits necessary to own the
Released Fee Land (including without limitation all approvals required by
the Casino Control Commission of the State of New Jersey), (C) there has
been delivered to the Mortgagor and the Mortgagee a true copy of an
instrument executed by such Affiliate stating that (i) such Affiliate may
only engage in the activity of owning the Released Fee Land and (ii) such
Affiliate shall not convey the Released Fee Land to another Affiliate of
the Mortgagor, unless such other Affiliate executes and delivers to the
Mortgagor and the Mortgagee, the instruments that would have been required
to be delivered pursuant to clause (C) if the Mortgagor conveyed the
Released Fee Land to such other Affiliate (provided that this restriction
shall only be effective until such time as this Mortgage shall be satisfied
of record) and (D) the deed conveying the Released Fee Land to such
Affiliate shall state that such conveyance is made subject to the terms,
provisions and conditions of the applicable Ground Lease and that the fee
and leasehold interests in the Released Fee Land shall not merge by reason
of the Mortgagor and/or any Affiliate owning both the leasehold and fee
estate therein, and that such estates shall always remain separate and
distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to which
the
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Mortgagor is a party or by which it is bound to own the Released Fee Land
and (B) the instruments described in clause (C) of subparagraph (i) were
duly executed by and are binding upon such Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, and agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED
that the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
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Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if
no Event of Default has occurred and is continuing and (ii) if the Mortgagor
shall acquire Released Fee Land, then simultaneously with the acquisition
thereof, the Mortgagor shall have the right to encumber such fee simple title
with a mortgage (such mortgage and any refinancing thereof permitted by the
Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The
lien of this Mortgage on the Released Fee Land shall be subordinated to the lien
of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of
other Superior Mortgages which shall become a lien thereon in accordance with
the terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee Mortgage
(A) does not exceed 75% of the cost to the Mortgagor of such fee simple
title at the time of the acquisition and (B) satisfies the criteria set
forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers fee
simple title to the Leased Land or any part thereof, such After-Acquired
Fee Mortgage contains provisions binding on the holder of the
After-Acquired Fee Mortgage and its successors and assigns confirming the
provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire Released
Fee Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstanding, the subordination of this Mortgage to
any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall
not be
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self-operative but shall be effective only upon the execution and delivery by
the Mortgagee of an instrument in writing effecting such subordination. The
Mortgagee shall deliver such instrument of subordination on the following
conditions: (x) the Mortgagee shall have received an Officers' Certificate
confirming that the conditions of (i) through (vi) of paragraph (a) have been
satisfied, together with a true and correct copy of the After- Acquired Fee
Mortgage and all other instruments securing the indebtedness evidenced thereby
and (y) the instrument of subordination shall specifically state that this
Mortgage is being subordinated not with respect to the lien of this Mortgage on
the Ground Lease or on the leasehold estate created thereby, but only with
respect to the fee simple title to the Leased Land or applicable part thereof
and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of any interest on the Note when such
interest becomes due and payable and continuance of such default for a
period of 10 days after there has been given a written notice to the
Mortgagor specifying such default and stating that such notice is a "Notice
of Default" hereunder; or
(b) default in the payment of the principal of any Note at its
Maturity; or
(c) an "Event of Default" as defined in Section 3.01 of the Guaranty
Mortgage shall occur; or
(d) default in the payment of any other sum due under the Note or
this Mortgage and the continuance of such default for a period of 10 days
after there has been given to the Mortgagor a written notice specifying
such default and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(e) default in the performance, or breach, of any covenant of the
Mortgagor in this Mortgage (other than a
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covenant a default in the performance or breach of which is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 30 days after there has been given to the Mortgagor
a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder,
unless (i) the default or breach is of such a nature that is curable but
not susceptible of being cured with due diligence within such 30-day period
(for reasons other than the lack of funds), (ii) the Mortgagor delivers an
Officers' Certificate to the Mortgagee within such 30-day period stating
(A) the applicability of the provisions of Clause (i) to such default or
breach, (B) the Mortgagor's intention to remedy such default or breach with
reasonable diligence and (C) the steps which the Mortgagor has undertaken
to remedy such default or breach and (iii) the Mortgagor delivers to the
Mortgagee additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate described in Clause
(ii), in which case such 30 day period shall be extended for such further
period of time as may reasonably be required to cure the same, provided
that the Mortgagor is then proceeding and thereafter continues to proceed
to cure the same with reasonable diligence; or
(f) an "Event of Default" as defined in Section 7.01 of the
Indenture, shall occur; or
(g) default by the Mortgagor under any of the terms of any Ground
Lease which shall not be fully cured or waived prior to the expiration of
any grace period contained in such Ground Lease, unless prior to the
expiration of such grace period, the Mortgagor gives the Mortgagee an
Officers' Certificate, an Opinion of Counsel and a true copy of the
Injunction referred to below, which Certificate and Opinion state that (i)
a court of competent jurisdiction has issued an injunction (which is in
force and effect and has not been modified or reversed on appeal) tolling
or staying the expiration of the grace period set forth in such Ground
Lease with respect to such default, (ii) such injunction specifically
provides that in addition to the tolling or stay describe in (i) above,
such tolling or stay also applies to the Mortgagee for purposes of
determining the duration and expiration of the periods during which the
Mortgagee may exercise its rights under such Ground Lease (including
without limitation, periods to cure lessee defaults and delivering a
guarantee and the period during which the Mortgagee may elect to enter into
a new lease thereunder), (iii) such injunction further provides that the
tolling or stay under (i) and (ii) shall be effective until such time that
the Mortgagee is personally served
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with notice of the expiration of such injunction and (iv) the Mortgagee is
named as a party in any action or proceeding involving such injunction and
therefore entitled to notice of any modification or termination thereof;
and, if such injunction is issued, then so long as such injunction remains
in force and effect and the preceding provisions of this Section 3.01(g)
have been complied with, the grace period referred to in the third line of
this subparagraph (g) shall be deemed to mean the grace period after giving
effect to any such tolling or stay in (i) above; or
(h) default by the Mortgagor under any of the terms of any Superior
Mortgage which default results in the acceleration of the maturity of such
Superior Mortgage and which shall not be fully cured or waived prior to the
expiration of any grace period contained in such Superior Mortgage, unless
prior to the expiration of such grace period, the Mortgagor gives the
Mortgagee an Officers' Certificate and an Opinion of Counsel and a true
copy of the injunction referred to below, which Certificate and Opinion
shall state (i) that a court of competent jurisdiction has issued an
injunction (which is in force and effect and has not been modified or
reversed on appeal) tolling or staying the expiration of the grace period
set forth in such Superior Mortgage with respect to such default and (ii)
the Mortgagee is named a party in any action or proceeding relating to such
injunction and therefore is entitled to notice of any modification or
termination thereof; and if such injunction is issued, then so long as such
injunction remains in force and effect, and the preceding provisions of
this Section 3.01(h) have been complied with, the grace period referred to
in the third line of this subparagraph (h) shall be deemed to mean the
grace period after giving effect to any such tolling or stay; or
(i) any modification, amendment or supplement of any Ground Lease
without the prior written consent of the Mortgage; or
(j) any modification, amendment or supplement of any Superior
Mortgage without the prior written consent of the Mortgagee, except to the
extent that such modification, amendment or supplement is permitted by
Section 5.22(b)(i) hereof; or
(k) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a period
of 60 days after there has been given a written notice to the Mortgagor
specifying that such notice is a "Notice of Default" hereunder; or
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(l) any representation or warranty of the Mortgagor set forth in this
Mortgage or in any notice, certificate, demand or request delivered to the
Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the
time when made and the facts constituting such incorrectness impairs the
Mortgagee's security and such impairment continues for a period of 30 days
after there has been given to the Mortgagor a written notice specifying
that such notice is a "Notice of Default" hereunder, unless (i) such
impairment is curable, but not susceptible of cure within such 30-day
period (for reasons other than lack of funds), (ii) the Mortgagor gives an
Officers' Certificate to the Mortgagee within such 30-day period stating
(A) the applicability of the provisions of (i) to such impairment, (B) the
Mortgagor's intention to remedy the same with reasonable diligence and (C)
the steps which the Mortgagor has undertaken to remedy such default or
breach and (iii) the Mortgagor delivers to the Mortgagee additional
Officers' Certificates every 30 days thereafter updating the information
contained in the certificate described in (ii), in which case such 30-day
period shall be extended for such further period of time as may reasonably
be required to cure the same, provided that the Mortgagor is then
proceeding and thereafter continues to proceed to cure the same with
reasonable diligence.
Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is
continuing, then the Mortgagee may declare the Outstanding Amount of the Note to
be due and payable immediately, by a notice in writing to the Mortgagor and upon
any such declaration such principal shall become immediately due and payable.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys
received by the Mortgagee pursuant to the provisions of this Article Three
(including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance
with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this Mortgage
and such proceeding has been discontinued or abandoned for any reason or has
been determined adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such proceeding
had been instituted.
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Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect the indebtedness secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including
reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection
therewith, together with interest at the rate then payable on the Note, from the
date of payment less the net amount received by the Mortgagee or the Trustee, as
their interests may appear under any title insurance policy, and, until paid,
all such expenses, together with interest as aforesaid, shall be a lien on the
Trust Estate.
Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time insist
upon, plead, claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law now or hereafter in force, in order
to prevent or hinder the enforcement of this Mortgage or the absolute sale of
the Trust Estate, or any part hereof, or the possession thereof by any purchaser
at any sale under this Article Three; and the Mortgagor, for itself and all who
may claim under it, so far as it or they now or hereafter may lawfully do so,
hereby waives the benefit of all such laws. The Mortgagor, for itself and all
who may claim under it, waives, to the extent that it may lawfully do so, all
right to have the property in the Trust Estate marshalled upon any foreclosure
hereof, and agrees that any court having jurisdiction to foreclose this Mortgage
may order the sale of the Trust Estate as an entirety.
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If any law in this Section 3.08 referred to and now in force, of which
the Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of
an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event
of Default shall occur and be continuing, the Mortgagee, with or without entry,
in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee
may determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Mortgage or in
aid of the execution of any power granted in this Mortgage or for the
foreclosure of this
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Mortgage or for the enforcement of any other legal,
equitable or other remedy, as the Mortgagee,
being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Mortgagee; the
failure to join tenants shall not be asserted as a defense to
any foreclosure or proceeding to enforce the rights of the
Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of
the Trust Estate, whether made under the power of sale hereby given or
pursuant to judicial proceedings, to the extent permitted by law:
(a) the principal of and accrued interest on the Note, if
not previously due, shall at once become and be immediately
due and payable;
(b) subject to the provisions of Section 3.14 and the
receipt of any required prior approvals of the New Jersey Casino Control
Commission, the Mortgagee may bid for and purchase the property offered for
sale, and upon compliance with the terms of sale may hold, retain and
possess and dispose of such property, without further accountability,
and may, in paying the purchase money therefor, delivery any notes or
claims for interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned
to the holders thereof after being appropriately stamped to
show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and
instrument of assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true
and lawful attorney of the Mortgagor, in its name and stead,
to make all necessary deeds, bills of sale and instruments of
assignment and transfer of the property thus sold; and for
that purpose it may execute all necessary deeds, bills of
sale and instruments of assignment and transfer, and may
substitute one or more persons, firms or corporations with
like power, the Mortgagor hereby ratifying and confirming all
that its attorney or such substitute or substitutes shall
lawfully do by virtue hereof; but if so requested by the
Mortgagee or by any purchaser, the Mortgagor shall ratify and
confirm any such sale or transfer by executing and delivering
to the Mortgagee or to such purchaser or purchasers all proper
deeds, bills of sale, instruments
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of assignment and transfer and releases as may be designated in any such
request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of,
in and to the property so sold shall be divested and such sale
shall be a perpetual bar both at law and in equity against the
Mortgagor, its successors and assigns, and against any and all
persons claiming or who may claim the property sold or any
part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making
such sale shall be a sufficient discharge to the purchaser or
purchasers at such sale for his or their purchase money and
such purchaser or purchasers and his or their assigns or
personal representatives shall not, after paying such
purchase money and receiving such receipt, be obliged to see
to the application of such purchase money, or be in anywise
answerable for any loss, misapplication or non-application
thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of
Default and commencement of judicial proceedings by the Mortgagee
to enforce any right under this Mortgage, the Mortgagee shall be
entitled, as against the Mortgagor, without notice or demand and
without regard to the adequacy of the security for the Note or the
solvency of the Mortgagor, to the appointment of a receiver of the
Trust Estate, and of the rents, issues, profits, revenues and other
income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights
under this Section 3.12 shall be subject to the provisions of the
New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon
5 days' prior written notice to the Mortgagor (or such shorter
period or without notice if deemed necessary and appropriate by the
Mortgagee), the Mortgagee shall have power to institute and
maintain such proceedings as it may deem necessary and appropriate
to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its
interests in the Trust Estate and in the rents, issues, profits,
revenues and other income arising therefrom, including power to
institute and maintain proceedings to restrain the enforcement of
or compliance with any 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 the
security hereunder or be materially prejudicial to the interests of
the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the
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contrary, following an Event of Default and the taking of possession
of the Trust Estate or any part thereof by the Mortgagee and/or
the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized,
in addition to the rights and powers of the Mortgagee and such
receiver set forth elsewhere in this Mortgage, to retain one or
more experienced operators of hotels and/or casinos to manage the
Casino-Hotel, PROVIDED that any such operator shall have all
necessary legal qualifications, including all Permits, to manage
the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR
TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with
all provisions applicable to the Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any
consolidation or combination or any conveyance or transfer of
the Trust Estate or any portion thereof in accordance with Section
10.01 of the Indenture, the successor entity formed by such
consolidation or into which the Mortgagor is combined or to which
such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the
Mortgagor under this Mortgage with the same effect as if such
successor entity had been named as the Mortgagor herein; PROVIDED,
HOWEVER, that no such conveyance or transfer of the Trust Estate
substantially as an entirety, unless such conveyance or transfer is
in compliance with the provisions of Article Ten of the Indenture,
shall have the effect of releasing the Person named as "the
Mortgagor" in the first paragraph of this instrument or any
successor entity which shall theretofore have become such in the
manner prescribed in such Article Ten from its liability as obligor
or maker of the Note.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE.
Except as otherwise expressly permitted by this Mortgage or the
Indenture, the Mortgagor shall not sell, assign, lease, sublease,
hypothecate, pledge, mortgage or otherwise transfer all or any part
of the Trust Estate or any interest therein (including without
limitation any interest in the Ground Leases). Without limiting the
generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground
Leases from its ownership of the buildings constituting the Casino-Hotel
or any part thereof.
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ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Mortgagor will duly and punctually pay the principal of (and
premium, if any) and interest on the Note in accordance with the
terms of the Note and this Mortgage.
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants
and agrees to comply with all of the terms and conditions set forth
in any FF&E Financing Agreements before the expiration of any
applicable notice and cure periods contained in the FF&E Financing
Agreements.
Section 5.03. LIMITATIONS ON LIENS.
(a) The Mortgagor will not create, incur, suffer or permit to be
created or incurred or to exist any mortgage, lien, charge or
encumbrance on or pledge of any of the Trust Estate, other than
(i) Permitted Encumbrances, (ii) liens on the Trust Estate in
connection with indebtedness permitted by clauses (i), (ii),
(iii), (iv) or (v) of Section 12.08(a) of the Indenture, and
(iii) a building contract or a notice of intention filed by a
mechanic, materialman or laborer under the New Jersey lien law.
Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the
Mortgagor shall not be deemed to have breached the provisions of
the foregoing sentence by virtue of the existence of a lien for
Impositions or mechanics liens so long as the Mortgagor is in good
faith contesting the validity of the same in accordance with the
provisions of Section 5.09 to the extent that the matters described
in (i) and (ii) do not constitute a default under any Ground Lease
or Superior Mortgage.
(b) Mortgagee acknowledges that, contemporaneously with the
execution and delivery of this Mortgage, it has assigned this
Mortgage to the Trustee and that the Trustee is also the mortgagee
under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon
the same Trust Estate pari passu with the lien of this Mortgage.
Mortgagee further acknowledges and agrees that whenever it is
provided in the Guaranty Mortgage that the Mortgagor shall deliver
any notice or document, or is require to make any payment
thereunder, the delivery of such notice or document or the making
of such payment pursuant to the terms of the Guaranty Mortgage
shall also constitute the delivery of such notice or document or
the making of such payment in satisfaction of the terms, conditions
and provisions of this Mortgage to the same extent as the same
constitutes satisfaction of the terms, conditions and provisions
of the Guaranty Mortgage.
Section 5.04. [Reserved]
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Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on
behalf of the Mortgagor, (a) to appear in and defend any action or
proceeding brought with respect to the Trust Estate or any part
thereof and (b) upon 5 days' prior written notice to the Mortgagor
(or such shorter period or without notice if deemed necessary and
appropriate by the Mortgage), to commence any action or proceeding
to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The
Mortgagor represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of
New Jersey and all other applicable laws to execute and deliver
this Mortgage, and all corporate action on its part necessary
for the valid execution and delivery of this Mortgage has been
duly and effectively taken;
(b) it is the lawful owner and is lawfully seized
and possessed of the Owned Land and all buildings and
improvements thereon, free and clear of all liens, charges or
encumbrances, other than the lien of the Mortgage Documents,
any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable
title to the leasehold interests and leasehold estates
under the Ground Leases and to the Ground Leases, subject
to no lien, encumbrance or charge other than the lien of
the Mortgage Documents, any Working Capital Facility Lien
and Existing Encumbrances;
(d)(i) the Ground Leases are valid and subsisting demises of
the Leased Land for the terms therein set forth, (ii) there
are no defaults thereunder by any Lessor or the lessee as to
which written notice has been given to or by the lessee,
(iii) the Mortgagor has delivered true and correct copies of
the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in
full force and effect and has not been modified, amended or
supplemented, except as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no
lien, encumbrance or charge, other than the lien of the
Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to
execute this Mortgage and to grant, bargain, sell, alien,
convey, assign, transfer, hypothecate,
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pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the
Operating Assets and the Ground Leases, without the consent of
any third party, other than governmental authorities but any
applicable or necessary consent or approval of any such governmental
authority has been given or waived at or prior to the
execution and delivery of this Mortgage), and this Mortgage
constitutes a valid third mortgage lien and third priority
security interest in the Trust Estate PARI PASSU with the
lien of the Guaranty Mortgage, subject only to Working
Capital Facility Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend
(x) the title to Trust Estate (including without limitation, its
leasehold estates under the lessee's interests in the Ground
Leases) (subject to Permitted Encumbrances) and (y) the priority
of the lien of this Mortgage (subject to Permitted Encumbrances
other than Restricted Encumbrances), against the claims and
demands of all persons whomsoever, at the Mortgagor's sole cost
and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will,
as provided in Section 5.13, from time to time subject its right,
title and interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments
of further assurance, including all financing statements and
continuation statements covering security interests in personal
property, to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, and will execute
and file such financing statements and cause to be issued and filed
such continuation statements, all in such manner and in such places
as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party
under the Uniform Commercial Code to all property comprising the
Trust Estate (to the extent a grant of a security interest therein
is governed by the Uniform Commercial Code) and to perfect,
preserve and protect the lien of this Mortgage as a valid
mortgage lien of record and a valid security interest on the
Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all
expenses incident to the execution and delivery of this Mortgage,
and any instrument of further assurance, and all federal, state,
county and municipal stamp taxes and other taxes, duties, imposts,
assessments and charges arising out of or in connection with the
execution and delivery of the Note, this Mortgage, any financing
statement or continuation statement with respect to the personal
property constituting
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part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF
PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE
REQUIREMENTS. The Mortgagor will:
(a)subject to the provisions of Section 5.09 relating to
contests, pay or cause to be paid promptly (or when
installments of the same shall become due and payable, if,
by law or by agreement or arrangement with the applicable
governmental agency or authority, the same may be paid in
installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are
payable by the Mortgagor pursuant to any Superior Instrument
Requirement), all taxes (including, without limitation, real
estate taxes, personal or other property taxes and all sales,
value added, use and similar taxes), assessments (including,
without limitation, all assessments for public improvements
or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to
the satisfaction of this Mortgage), water, sewer or other
rents, rates and charges, excises, levies, license fees,
permit fees, inspection fees and other authorization fees and
other charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of
every character (including all interest, additions to tax and
penalties thereon), that may be assessed, levied, confirmed or
imposed on or in respect of or be a lien upon (1) the Trust
Estate (including without limitation the Leased Land) or any
part thereof or any rent therefrom or any estate, right or
interest therein, or (2) any acquisition, occupancy, use,
leasing, or possession of or activity conducted on the real
property or any part thereof included in the Trust Estate or
any gross receipts thereof or of the rent therefrom (all of
the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any
other provision of this Mortgage, the Mortgagor shall not be
required to pay any income, profits or revenue tax upon the
income of the Mortgagee, the Trustee or any Noteholder nor
any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee,
the Trustee or the Noteholder nor any interest, additions to
tax or penalties in respect thereof, unless such tax is
imposed, levied or assessed in substitution for any
Impositions that the Mortgagor is required to pay pursuant
to this Section 5.08. The Mortgagor will deliver to the
Mortgagee official receipts or other proof evidencing
payments of any Impositions in accordance with the
requirements of this Section 5.08. The Mortgagor shall
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not be entitled to any credit for taxes or assessments paid
against the Note;
(b) except for such property which the Mortgagor may dispose
of or replace pursuant to Section 2.02, maintain and keep all
its properties used or useful in the conduct of its business
(other than obsolete equipment), including, without
limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition,
except for reasonable wear and use, and make or cause to be
made all such needful and proper repairs, renewals and
replacements thereto consistent with the standards of other
casino-hotels in Atlantic City, New Jersey;
(c) occupy and continuously operate the Casino-Hotel and
keep the Casino-Hotel supplied with Tangible Personal
Property, all in a manner consistent with the standards of
other casino-hotels in Atlantic City, New Jersey (provided
that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section
3.01(f));
(d) subject to the provisions of Section 5.09 relating to
contests, the Mortgagor at its sole expense will timely
(1) comply with all Legal Requirements and Insurance
Requirements, whether or not compliance therewith shall
require structural changes in the buildings and improvements
included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof,
(2) procure, maintain and comply with all permits and other
authorizations required for (i) the use of the Casino as a
gaming and gambling facility, (ii) the on-premises consumption
of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made,
and for the proper erection, installation, operation and
maintenance of the improvements or any part thereof, and
(3) comply with any instruments of record at the time in
force affecting the Trust Estate or any part thereof, if the
failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the
foregoing, the Mortgagor represents and warrants that at the
time of the execution of this Mortgage, the Mortgagor is in
compliance with the requirements of clauses (1), (2) and (3);
(e) in the event of the passage after the date of this
Mortgage of any law of the State of New Jersey, or any other
governmental entity, changing in any way the laws now in force
for the taxation of mortgages, or debts secured thereby, for
state or local purposes, or the manner of the operation of
any such taxes, so as to affect the interest of the
Mortgagee, then and in such
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event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for
any reason payment by the Mortgagor of any such new or
additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured
hereby wholly or partially usurious under any of the terms or
provisions of the Note, or this Mortgage, or otherwise, the
Mortgagee may, at the Mortgagee's option, declare the whole
sum secured by this Mortgage, with interest thereon, to be
due and payable 90 days after notice of election thereof has
been given by the Mortgagee, or the Mortgagee may, at the
Mortgagee's option, pay that amount or portion of such taxes
as renders the loan or indebtedness secured hereby unlawful or
usurious, in which event the Mortgagor shall concurrently
therewith pay the remaining lawful and nonusurious portion or
balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may,
at its sole expense, contest by appropriate legal proceedings
conducted in good faith and with due diligence, the amount or validity
or application, in whole or in part of any Imposition or lien
therefor or any Legal Requirement or Insurance Requirement or the
application of any instrument of record affecting the Trust Estate
or any part thereof or any claims of mechanics, materialmen,
suppliers, or vendors or lien therefore, and may withhold payment
of the same pending such proceedings if permitted by law, or make
payment under protest, or defer compliance with any such Legal
Requirement, any such Insurance Requirement or the terms of any
such instrument, and the same shall not be a Default hereunder,
provided that (a) in the case of any Impositions or lien therefor
or any claims of mechanics, materialmen, suppliers or vendors or
lien therefor, such proceedings shall suspend the collection
thereof from each of the Mortgagor, the Mortgagee, the Trustee,
the Noteholder and the Trust Estate, (b) neither the Trust Estate
nor any interest therein would be in any danger of being sold,
forfeited, or lost, (c) such action would not result in or
constitute a default under any Ground Lease or Superior Mortgage,
(d) in the case of a Legal Requirement, neither the Noteholder nor
the Mortgagee shall be in any danger of any civil or any criminal
liability, and the failure of the Mortgagor to comply with such
Legal Requirement shall not affect the continuance in good
standing of any Permit or result in the suspension, termination,
non-renewal or material adverse modification of any permit, and
(e) in the case of an Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any
insurance required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without
limiting the generality of the first sentence of Section 5.03 and
notwithstanding the provisions of Section 5.03(a)(ii), the
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Mortgagor will cause to be removed, either by payment, or bonding
or otherwise, all claims and demands of mechanics, materialmen,
laborers, and others which, if unpaid, might result in, or permit
the creation of, a lien on the Premises and/or Trust Estate or any
part thereof, or on the revenues, rents, issues, income and profits
arising therefrom and in general will do or cause to be done
everything necessary so that the lien hereof shall be fully
preserved, at the cost of the Mortgagor, without expense to the
Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage
by fire, lightning, and other risks from time to time included
under "all-risk" policies and against loss or damage by
sprinkler leakage, water damage, collapse, malicious
mischief and explosion in respect of any steam and pressure
boiler and similar apparatus located on such insurable
properties, in amounts at all times sufficient to prevent
the Mortgagor from becoming a coinsurer within the terms of
the applicable policies, but in any event such insurance
shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the
"Insurance Amount"): (i) 100% of the then full insurable value
of such insurable properties, the term "full insurable value"
to mean the actual replacement cost (excluding the costs of
foundation, footing, excavation, paving, landscaping and
other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36
calendar months), by an Architect, contractor, appraiser, or
an Insurer, (ii) the amount required to be maintained pursuant
to the Superior Instrument Requirements;
(2) war risk insurance as and when such insurance is obtainable
from the United States of America or any agency thereof as
promptly as reasonably practicable after the same becomes so
obtainable, in an amount not less than the Insurance Amount,
or in such lesser amount as may then be so obtainable;
(3) public liability, including personal injury and property
damage and comprehensive general liability connected with the
possession, use, leasing, operation or condition of such
insurable properties in such amounts as, in the Mortgagor's
judgment, are prudent, considering the cost of such insurance,
for personal injury and
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property damage with respect to any one occurrence, which may
be under an umbrella policy. Anything contained in this clause
(3) to the contrary notwithstanding, the Superior Instrument Requirements
with respect to the kinds and amount of insurance described in
this clause (3) shall be satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to
any work (to the extent the risks to be covered thereby are
not already covered by other policies of insurance maintained
by the Mortgagor) on or about such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time
that the Mortgagor is renewing any policy for such insurance
or taking out any new or replacement such policy covering a
period of less than 12 months, the Mortgagor shall deliver to
the Mortgagee an Officers' Certificate certifying that the
period of coverage to be maintained by the Mortgagor under
such policy is the maximum that can be maintained at rates
determined by the Mortgagor to be reasonable for such
coverage;
(6) to the extent available, flood insurance in an amount not
less than the Insurance Amount, or such lesser amount as may
then be so obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time
customarily insured against by persons owning or using
casino-hotels of comparable size in the boardwalk area of
Atlantic City, New Jersey and (ii) required to be maintained
pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to
maintain a deductible with respect to the insurance policies
described in clauses (1), (2), (6) and (7) in an amount not to
exceed (x) for the twelve month period commencing the date hereof,
$100,000 with respect to the insurance policies described in
clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels
of a similar size and value in Atlantic City, New Jersey (but in no
event more than $1,000,000), (ii) the Mortgagor shall be
permitted to maintain a $200,000 self insured
retention under the general liability policy described in
clause (3) and a deductible with respect to the other insurance
policies described in clause (3) in an amount not to exceed the
amount of deductible as is customarily maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the Mortgagor
shall not reduce its insurance coverage for the matters described
in clause (3) (which for purposes of
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this paragraph means a reduction in single limits or an increase
in deductible) unless and until the Mortgagor delivers to the
Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained at rates
determined by the Mortgagor to be reasonable for such coverage,
(x) the amount of the proposed reduction, (y) the premium for the
existing and the proposed reduced coverage, and (z) that the
proposed deductible satisfied the criteria set forth in this clause (iii), and
(iv) the Mortgagor shall be permitted to maintain a deductible with
respect to the insurance policies described in clause (5) in the
forms of and in an amount not to exceed the amount of deductible as
is customarily maintained by casino-hotels of similar size in
Atlantic City, New Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of
workers' compensation insurance, name as additional insureds the Mortgagee
and, to the extent required by the Superior Instrument
Requirements, the Lessors and the holders of the Superior
Mortgages, (2) provide that all insurance proceeds for losses,
except in the case of public liability insurance and workers'
compensation insurance or as otherwise provided in Subsections
(d), (e) and (f) of this Section 5.11, be payable solely to the
Mortgagee or such other party as is required to receive such
proceeds under a Superior Mortgage, (3) except in the case of workers'
compensation, include effective waivers
(whether under the terms of any such policy or otherwise) by the
insurer of all claims for insurance premiums against all lost
payees and named insureds (other than the Mortgagor) and all
rights of subrogation against any named insured, (4) except in the
case of public liability and workers' compensation insurance,
provide that any losses shall be payable notwithstanding (i) any
act, failure to act, negligence of, or violation or breach of
warranties, declarations or conditions contained in such policy by
the Mortgagor or the Mortgagee or any other named insured or loss
payee (including, without limitation, with respect to the Released
Fee Land, the holders of any After-Acquired Fee Mortgages), (ii)
the occupation or use of the insurable properties for purposes more
hazardous than permitted by the terms of the policy, (iii) any
foreclosure or other proceeding or notice of sale relating to the
insurable properties or (iv) any change in the title to or
ownership or possession of the insurable properties, (5) contain
a non-contributory mortgagee clause in favor of the Mortgagee, and
(6) provide that if all or any part of such policy is cancelled,
terminated or expires, the insurer will forthwith give notice
thereof to each named insured an loss payee and that no
cancellation, reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by
each named insured and loss payee of written notice thereof.
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(c) The Mortgagor will deliver to the Mortgagee, (1)
duplicate originals of all insurance policies that the Mortgagor is
required to maintain pursuant to this Section 5.11 and (2) within
30 days after each reduction in insurance required to be maintained
by the Mortgagor hereunder, an Officers' Certificate setting forth
the particulars as to all such insurance policies and certifying
that the same comply with the requirements of this Section 5.11,
that all premiums or installments thereof then due thereon have
been paid and that the same are in full force and effect. The
Mortgagee shall not be responsible for effecting or renewing any
insurance or for the responsibility or solvency of the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x)
results in damage, loss or destruction in an amount in excess of
$5,000,000 to any buildings or improvements on the Premises
and/or any Tangible Personal Property or (y) pursuant to any
Superior Instrument Requirement, would require the deposit of
insurance proceeds with the Depositary, or action or proceeding
with respect thereto. Whenever the Superior Instrument
Requirements require or permit the selection of the Depositary
by the Mortgagor, the Mortgagor shall select the Insurance Trustee
as the Depositary. Within 30 days after any Casualty which results
in any damage, loss or destruction in an amount in excess of
$10,000,000 to any buildings or improvements of the Premises
and/or any Tangible Personal Property, the Mortgagor shall deliver
to the Mortgagee a certificate of an Architect stating whether, in
such Architect's opinion, applicable Legal Requirements permit the
Restoration of such buildings and improvements for the same uses
and to the same size and quality in all material respects, as
existed immediately prior to the Casualty (and if such certificate
states the Legal Requirements do not permit such Restoration, such
certificate shall describe the manner closest approximating such
criteria to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of Appraised
Value dated not more than 10 days prior to delivery setting forth
the Appraised Value immediately prior to the Casualty and the
estimated Appraised Value immediately after the Restoration). If
the Mortgagor is required to deliver such Certificates of Appraised
Value and if based on such Certificates of Appraised Value
immediately after Restoration, the aggregate Outstanding Amount
of First Mortgage Debt immediately after such Restoration shall
exceed the greater of (i) 66 2/3% of the Appraised Value
immediately after such Restoration or (ii) the quotient of the
Outstanding Amount of First Mortgage Debt immediately prior to such
Casualty divided by the Appraised Value immediately prior to the
Casualty multiplied by the Appraised Value immediately after such
Restoration, then the proceeds of any insurance shall, at the
election of Mortgagee, either be applied to Restoration as set
forth in Subsections (e), (h) and (i)
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below) or paid and delivered to the Mortgagee to the extent of the then
Outstanding Amount of the Notes and any other interest or other sums due
hereunder or thereunder to be applied to the satisfaction of the Mortgage to
the extent proceeds are available for such purpose and provided
that no additional sums are due to the Trustee or the Noteholders
under the Notes or the Indenture, the balance of any net insurance
proceeds shall be paid to the Mortgagor. Notwithstanding the
foregoing sentence, if such Certificates of Appraised Values
indicates that the Outstanding Amount of First Mortgage Debt
immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the
proceeds of insurance will be made available for Restoration
(subject to paragraphs, (e), (h) and (i) below) if the Mortgagor
obtains an irrevocable commitment from a nationally recognized
financial institution having a combined capital and surplus of at
least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor
as additions to capital in an amount equal to the Outstanding
Amount of First Mortgage Debt in excess of the Appraised Value
necessary to be paid down so that the Outstanding Amount of First
Mortgage Debt will not exceed either of the two amounts determined
pursuant to such clauses (i) and (ii), PROVIDED that such commitment
may only be released if, upon an Appraisal at any time following
completion of such Restoration, the aggregate Outstanding Amount of
the First Mortgage Debt does not exceed 66-2/3% of the Appraised
Value.
(e) Subject to the provisions of Subsection (d) above,
in case a Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined)
does not exceed the sum of $10,000,000, the net insurance proceeds
shall be paid by the Mortgagee to the Mortgagor (unless the
Superior Instrument Requirements provide that the same shall
be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more
or if the Superior Instrument Requirements provide that the same shall
be paid to the Depositary, the net insurance proceeds shall
be paid by the Mortgagee to the Insurance Trustee (or other
Depositary required by the Superior Instrument Requirements,
provided that such Depositary holds such proceeds in trust for
purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable
promptness under the circumstances and thereafter with due
diligence proceed to perform and complete in a good and
workmanlike manner the restoration, repair, replacement or
rebuilding of the damage or destruction
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resulting from the Casualty (all of which restoration, repair, replacement
or rebuilding are referred to as the "Restoration") in accordance with
the plans and specifications submitted to the Insurance Trustee, in
conformance with all Legal Requirements and Superior
Instrument Requirements, and in accordance with the further
provisions of this Subsection (e), regardless of the extent of
any such Casualty and whether or not net insurance proceeds,
if any, shall be available or, if available, shall be
sufficient, for the purpose of the Restoration (provided,
however, that if the Mortgagor does not receive any net
insurance proceeds within 30 days after any Casualty because
the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration
shall be deferred until such proceeds are made available to
the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an
Officers' Certificate certifying that the Mortgagor is diligently and
continuously adjusting such loss with the Insurer, (ii) the
Mortgagor delivers to the Mortgagee an Officers' Certificate
within such 30-day period requesting the extension of such
period, estimating the date on which such proceeds will be
available and describing the Mortgagor's efforts to adjust
such loss and certifying that such extension does not
constitute a default or a breach of any of the provisions of
any of the Ground Leases (or if so, such default or breach has
been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate
described in Clause (ii)). All Restoration work shall be
performed in accordance with the applicable provisions of
Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements
and, prior to commencing any Restoration, the Mortgagor shall
obtain all Permits necessary in connection therewith, and
shall obtain, and keep in full force and effect until the
completion of such Restoration, such additional insurance as
the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration
shall be accompanied by a certificate of the Mortgagor and an
Opinion of Counsel to the effect that upon the completion of
the Restoration pursuant to the plans and specifications the
Premises, and all buildings and improvements, thereon will
comply with all superior Instrument Requirements, Legal
Requirements and Insurance Requirements. Notwithstanding
anything in this Section 5.11 to the contrary, if such
Casualty is in an amount less than $5,000,000, the
Mortgagor shall not be required to perform and complete such
Restoration (unless the performance and completion of the
Restoration is necessary in order for the Mortgagor to be in
compliance with any term, provision or condition of this
Mortgage
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(other than this Section 5.11(e)) or any Superior
Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall
be held by the Mortgagor in trust for the purpose of paying
the cost of the Restoration, except as otherwise provided
herein;
(5) Any net insurance proceeds that the Insurance
Trustee holds pursuant to this Subsection (e), shall be deposited
in an interest-bearing investment reasonably designate by Mortgagor
(to the extent the Mortgagor is permitted to designate such
investment under the Superior Instrument Requirements) (and
the interest thereon shall be added to such proceeds) and
shall be paid by the Insurance Trustee in reimburse the
Mortgagor for, or to make payment for, the Restoration,
after the Insurance Trustee deducts therefrom the amount of
any reasonable costs and expenses incurred in connection with
the performance of its obligations under this Section 5.11.
The Insurance Trustee shall make such payments not more
frequently than once every 30 days upon the written request
of the Mortgagor (unless more frequent payments are required
by Superior Instrument Requirements), by paying to the
Mortgagor or the persons named in the certificate described
in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate from time to time as the
Restoration progresses, provided the Mortgagor has complied
with the requirements of this Subsection (e) and such payment
is permitted by an applicable Superior Instrument
Requirements. The Mortgagor's written request shall be
accompanied by (i) the certificate described in Clause (6) of
this Subsection (e) and (ii) a title company or official
search, or other evidence reasonably acceptable to the
Insurance Trustee, showing that there have not been filed
with respect to the Premises, any vendor's, contractor's
mechanic's, laborer's or materialman's statutory or similar
lien which has not been discharged of record (or bonded
against or secured by other security) or any other
encumbrance irrespective of its priority (other than
Permitted Encumbrances).
(6) The certificate required by Clause (5) of this
Subsection (e) shall (A) be an Officers' Certificate,
countersigned by the Architect in charge of the Restoration with
respect to the matters described in (i) and (v) below, (B) be dated
not more than 10 days prior to such request and (C) set forth (in
addition to any other requirements contained in any
applicable Superior Instrument Requirements) that:
(i) all of the Restoration work theretofore performed
is in substantial compliance with the
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plans and specifications theretofore submitted to the Insurance
Trustee and in compliance with all Superior Instrument Requirements,
Legal Requirements and Insurance Requirements;
(ii) the sum then requested either has been paid by the
Mortgagor or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered
services or furnished or contracted to deliver materials
for the Restoration therein specified, and the names and
addresses of such persons, a brief description of such
services and materials and the several amounts so paid
or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the
basis in any pervious or then pending request for the
withdrawal of net insurance proceeds, and that the sum
then requested does not exceed the value of the services
and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to
Subclause (ii) of this Clause (6) in such certificate
to be due for services or materials, and except for
amounts in dispute and/or customary retainages, there
is no outstanding indebtedness known to the person
signing such certificate, after due inquiry, which is
then due for labor, wages, materials, supplies or
services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons
signing such certificate, of the Restoration in order
to complete the same does not exceed the net insurance
proceeds remaining in the hands of Insurance Trustee
after payment of the sum requested in such certificate
or if such estimated cost does exceed such insurance
proceeds such certificate shall state the amount of any
such deficiency. If the certificate states that such
deficiency will exist, the Mortgagor shall deliver the
amount of such deficiency in cash or cash equivalent to
the Insurance Trustee simultaneously with the delivery
of such certificate, which amount shall be deemed
insurance proceeds for purposes of this Section
5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the
entire cost of the Restoration, then, after completion of the
Restoration, the Mortgagor shall pay the deficiency. If all
or any part of the net insurance proceeds are not used for
the restoration in accordance
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with this Subsection (e) (because such proceeds exceed the amount
required to complete the Restoration), then upon completion of the
Restoration in accordance with this Subsection (e), such
amount not so used, if held by the Insurance Trustee, shall
be paid to the Mortgagor (if permitted by Superior Instrument
Requirements).
(f) Provided that no Event of Default has occurred and is continuing,
all net business interruption insurance proceeds shall be paid to
the Mortgagor, to be segregated from the other funds of Mortgagor
and held in trust by Mortgagor for the following purposes and in
the following order of priority: (i) for the payment of Impositions
and amounts due under the Ground Leases and Superior Mortgages;
(ii) for debt service for the estimated period of Restoration (for
purposes of this Section 5.11(f), interest and principal payments
due on any payment date under the Note will deemed to accrue in
equal daily installments beginning the day after the immediately
preceding payment date and ending on such payment date); and (iii)
for any expense incurred in connection with the operation or
business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to
be maintained pursuant to this Section 5.11, unless the same are
permitted by Superior Instrument Requirements and the Mortgagee is
included therein as a named insured, with loss payable to the
Mortgagee and the Insurance Trustee pursuant to Section 5.11(b)
hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall
promptly deliver to the Mortgagee a duplicate original of the
policy of such insurance, a copy thereof certified by the insurer
or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance
claims by reason of damage or destruction to any
portion of the Trust Estate may be adjusted by the Mortgagor, but the
Mortgagee shall have the right (but not the obligation) to join the
Mortgagor in adjusting, and approving the adjustment of, any such
loss except in the event of a loss where the amount of insurance
reasonably anticipated to be received with respect to such loss is
less than Five Million Dollars ($5,000,000), and the Mortgagor
shall assist the Mortgagee in any such adjustment at the request of
the Mortgagee. If the Mortgagee at its election as aforesaid joins
the Mortgagor in any adjustment process, then the Mortgagee's
approval of the adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary,
if an Event of Default shall have occurred and be continuing, the
Mortgagee may, at its option, (A) refrain from paying to the
Mortgagor or the Insurance Trustee any net insurance proceeds or
(B) instruct the Insurance Trustee to
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pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee,
as the case may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not
authorize, permit or make any demolition, alteration or
improvement of any building included in the Trust Estate or any
new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in
this Section 5.12 set forth.
Unless an Event of Default shall have occurred and be continuing,
the Mortgagor shall have the right at all times to make or permit
such alterations, improvements or new constructions, structural or
otherwise (herein sometimes called collectively "alterations"), of
or on the Trust Estate, to be made in all cases subject to the
following conditions:
(a) no alteration shall be undertaken or carried out except in
conformity with all Superior Instrument Requirements, Legal
Requirements and Insurance Requirements;
(b) if the estimated cost of any alteration, together with other
alterations that constitute a single construction plan or
project (whether or not accomplished in several stages or
procedures), exceeds $5,000,000, the building or buildings,
as so improved or altered, upon completion of the work shall
be of a value not less than the value of such building or
buildings immediately prior to the making of such
alterations;
(c) any alteration which is structural in nature or involves an
estimated cost of more than $5,000,000 shall be conducted
under the supervision of an Architect, and no such alteration
shall be undertaken until 10 days after there shall have been
filed with the Mortgagee detailed plans and specifications and
cost estimates therefor, stating that such plans and
specification conform to all, prepared and approved in
writing by such Architect and accompanied by a certificate of
such Architect stating that such plans and specifications
conform to all applicable provisions of this Section 5.12;
(d) no alteration involving an estimated cost of more than
$5,000,000 shall be undertaken until the Mortgagor has
furnished to the Mortgagee, at the Mortgagor's sole cost and
expense, a surety bond or bonds, covering performance, and
labor and material payments with respect to the work to be so
performed, naming the Mortgagee as obligee, issued by a
responsible surety company, authorized to do business in the
state of New Jersey, in a form generally and customarily used
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by such surety in an amount equal to the estimated cost of
construction of the work covered by the plans and
specifications therefor, guaranteed and conditioned upon
the performance and completion of such construction,
substantially in conformity with the such plans and
specifications and within a reasonable time, subject to
delays by fire, strikes, lock-out, acts of God, inability to
obtain labor or materials, governmental restrictions, enemy
action, civil commotion or unavoidable Casualty or other
similar causes beyond the control of the Mortgagor, free and
clear of all liens, claims and liabilities for the cost of
such alterations. In the event such surety bond or bonds
shall be unobtainable the Mortgagor shall deliver to the
Mortgagee security by cash, letter of credit or other
guarantee, affording substantially the same protection as
would such bond or bonds;
(e) all work done in connection with any alterations
shall be done promptly and in good and workmanlike manner.
The work in connection with any alteration shall be prosecuted with
reasonable dispatch, delays due to fire, strikes, lockouts,
acts of God, inability to obtain labor or materials,
governmental restrictions, enemy action, civil commotion or
unavoidable casualty or similar causes beyond the control of
the Mortgagor excepted;
(f) if the estimated cost of alterations exceed $5,000,000, the
Mortgagor shall have delivered to the Mortgagee (A) prior to
the commencement of such alterations, additions or
improvements copies of all Permits required for the
commencement of such work together with a certificate of the
Architect or an Opinion of Counsel to the effect that all
Permits required for the commencement of such alterations
have been obtained; and (B) within a reasonable period of
time after the completion of the alterations, copies of all
Permits required in connection with the completion thereof,
together with either an Opinion of Counsel or a certificate
of the Architect that all such Permits have been so obtained
by the Mortgagor and that the Mortgagor has complied with all
the requirements of this Section 5.12;
(g) no alterations of any kind shall be made to any building
which shall change the use or reduce the size or quality of
the building in any material respect; and
(h) no alterations costing in excess of
$5,000,000, together with other alterations that
constitute a single construction plan or project (whether or
not accomplished in several stages or procedures), shall be
made to any building if such alterations are not
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expected to be completed at least 120 days prior to the maturity
date of the Note (except if such alterations are required in
order to comply with Legal Requirements or Superior Instrument
Requirements).
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d),
enter into any Lease, or renew, modify, extend, terminate, or
amend any Lease, except in the ordinary course of business
of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or
collection of, any rental payments under any Lease more than
one year in advance of the respective periods in respect of
which they are to accrue, except that, in connection with
the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected
and received in advance in an amount not in excess of three months'
rent and/or a security deposit may be required thereunder in an
amount not exceeding one year's rent;
(c) collaterally assign, transfer or hypothecate
(other than to the Mortgagee hereunder, to the mortgagee under the
Guaranty Mortgage or to the holder of any Working Capital
Facility Lien) any rental payment under any Lease whether
then due or to accrue in the future, the interest of the
Mortgagor as landlord under any Lease or the rents, issues or
profits of the Trust Estate;
(d) after the date hereof, enter into any Lease,
or renew any Lease unless such Lease contains terms to the
effect as follows:
(1) the Lease and the rights of the tenants
thereunder shall be subject and subordinate to the
rights of the Mortgagee under this Mortgage, the
mortgagee under the Guaranty Mortgage and the holders
of any Superior Mortgage,
(2) the Lease may be assigned by the
landlord thereunder to the Mortgagee,
(3) the rights and remedies of the tenant in
respect of any obligations of the landlord thereunder
shall be nonrecourse as to any assets of the landlord
other than its equity in the building in which the
leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee
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under any new lease entered into in the event of a termination
of a Ground Lease;
(e) modify any Lease with respect to the matters described
in clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than
with any Affiliate of the Mortgagor) for a term of not
less than 3 nor more than 10 years, the Mortgagee shall deliver a
non-disturbance and attornment agreement substantially in the form of
Schedule 4 hereto, following receipt of a certificate of a leasing broker
(who is not an Affiliate of the Mortgagor or the broker involved in such
transaction) experienced with respect to leases of commercial space in the
Atlantic City area stating that the rent under the Lease is not less than
fair market rent and that the other terms of the Lease are fair and
reasonable in the commercial leasing market. The Mortgagor shall, upon
demand, reimburse the Mortgagee for any costs and expenses (including
reasonable attorney's fees) incurred by the Mortgagee in connection with
the preparation, review and delivery of such non-disturbance and attornment
agreements.
Promptly after the execution and delivery hereof, the Mortgagor
will cause the lessee under each Lease now in effect and promptly after
each Lease is executed or becomes effective after the date of the execution
and delivery hereof, the Mortgagor will cause the lessee under each such.
Lease, to be duly notified in writing (unless the substance and effect of
such notice shall be contained in such Lease) of the subjection of the
owner's interest, as lessor, in and to such Lease to the lien of this
Mortgage and of the name and address of the Mortgagee. Each such notice
shall state that the lease of such lessee is a Lease as herein defined.
If a new Mortgagee is at any time appointed hereunder or the address
of the Mortgagee shall at any time be changed, the Mortgagor will cause
each lessee under each Lease to be promptly notified in writing of the name
address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur
any expenditure other than de minimis amounts) to obtain from each lessee
under each Lease to whom any notice is sent pursuant to this paragraph an
acknowledgment of receipt of such notice, and the Mortgagor will promptly
deliver to the Mortgagee, upon request, a copy of each such acknowledgment
of receipt which it is able to obtain. The Mortgagee shall not be
responsible for securing or causing the Mortgagor to secure any such
acknowledgment.
Nothing contained in this Section 5.13 shall limit the
provisions of Section 4.04 hereof.
Section 5.14. [Reserved]
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Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject
to Article Four, the Mortgagor will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence
as a corporation, and its rights (both statutory and under its
articles of incorporation) and franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The
Mortgagor will keep proper books of record and account in accordance
with Section 12.05 of the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall
fail to perform any of its covenants in this Mortgage and
such failure shall continue for 10 days following notice
thereof given by the Mortgagee (or at any time, without
notice, in case of emergency), the Mortgagee may (but is not
obligated to), at any time and from time to time, take any
action or make advances, to effect performance of any such
covenant on behalf of the Mortgagor; and all moneys so used
or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith,
together with interest on all of the same at the rate of
interest set forth in the Note, shall be repaid by the
Mortgagor upon demand and such advances shall be secured
under this Mortgage prior to the Note.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The
Mortgagor covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury, stay
or extension law or any other law which would prohibit or forgive the
Mortgagor from paying all or any portion of the obligations evidenced
by the Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may otherwise affect the covenants
or the performance of this Mortgage; and the Mortgagor (to the extent
that it may lawfully do so) 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
Mortgagee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN.
(a) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Taking affecting the Trust
Estate. If the Taking (i) is estimated to result in an award of more
than [$5,000,000] or (ii) the Taking would interfere with or adversely
affect the operation of the Casino-Hotel in accordance with Legal
Requirements then within 30 days after any such Taking, the Mortgagor
shall
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deliver to the Mortgagee a certificate of an Architect stating
whether, in such Architect's opinion, applicable Legal Requirements
permit the Restoration of any buildings and improvements for the same
uses and the same size and quality in all material respects as existed
immediately prior to the Taking (and if such certificate states that
Legal Requirements do not permit such Restoration, such certificate
shall describe the manner closest approximating such criteria to which
the buildings and improvements could be so restored and shall be
accompanied by a Certificate of Appraised Value dated not more than 10
days prior to delivery setting forth the Appraised Value immediately
prior to the Taking and the estimated Appraised Value immediately
after the permitted Restoration). If the Mortgagor is required to
deliver such Certificates of Appraised Value and if based on such
Certificates of Appraised Value immediately after Restoration, the
aggregate Outstanding Amount of First Mortgage Debt immediately after
such Restoration shall exceed the greater of (i) 66-2/3% of the
Appraised Value immediately after such Restoration or (ii) the
quotient of the Outstanding Amount of the First Mortgage Debt
immediately prior to such Taking divided by the Appraised Value
immediately prior to the Taking multiplied by the Appraised Value
immediately after such Restoration, then the Taking shall be deemed a
Taking of "the whole or substantially all of the Premises."
Notwithstanding the foregoing sentence, if such Certificates of
Appraised Value indicate that the Outstanding Amount of First Mortgage
Debt immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the
Taking will not be deemed a Taking of "the whole or substantially all
of the Premises", if the Mortgagor obtains an irrevocable commitment
from a nationally recognized financial institution having a combined
capital and surplus of at least [$100,000,000], to supply, upon an
acceleration under this Mortgage as a result of an Event of Default,
funds to the Mortgagor as additions to capital in an amount equal to
the Outstanding Amount of First Mortgage Debt in excess of the
Appraised Value necessary to be paid down so that the Outstanding
Amount of First Mortgage Debt will not exceed either of the two
amounts determined pursuant to such clauses (i) and (ii), PROVIDED
that such commitment may only be released if, upon an Appraisal at any
time following completion of such Restoration, the aggregate
Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3%
of the Appraised Value.
(b) If at any time there shall occur a Taking of less than the
whole or substantially all of the Premises and the award or
awards resulting therefrom payable to the Mortgagor (and not
to any Lessor or the holder of any Superior Mortgage) (after
there shall have been first deducted the fees and expenses
incurred in connection with the termination, settlement and
collection of such award or awards, including but not
limited to reasonable counsel fees and expenses,
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hereinafter referred to as "Settlement Costs") (i) shall not exceed
the sum of [$10,000,000] (except to the extent that the Insurance
trustee or a Depositary is required to hold such amount pursuant to a
Superior Instrument Requirement), the entire amount of such award
shall be paid to the Mortgagor; and (ii) if such award is
[$10,000,000] or more, the entire amount of such award shall be paid
to the Insurance Trustee (or other Depositary required by a Superior
Mortgage, provided that such Depositary holds such award in trust for
purposes of paying the cost of Restoration). In either event, such
awards shall be applied to the cost of demolition, repair, Restoration
and replacement of the Trust Estate to as nearly practicable to their
uses, value and condition immediately prior to the Taking (except to
the extent otherwise provided by Superior Instrument Requirements).
The Mortgagor shall promptly commence and with due diligence perform
that Restoration in accordance with clauses (3), (4) and (7) of
Section 5.11(e) (after substituting the words "Taking" of "Casualty"
and "award" for "not insurance proceeds"), at no cost to the
Mortgagee. All claims or suits arising out of any Taking may be
settled by the Mortgagor, except that the Mortgagee shall have the
right (but not the obligation) to participate in such claim or suit,
and not the obligation) to participate in such claim or suit, and to
approve settlement thereof (and notwithstanding anything in the Ground
Leases to the contrary, the Mortgagor shall not agree to any
settlement or compromise of the amount of any such claim or suit),
except a claim or suit where the amount reasonably anticipated to be
received by the Mortgagor is less than $5,000,000. If the Mortgagee
at its election as aforesaid joins such claim or suit, the Mortgagee's
approval of such settlement shall not be unreasonably withheld. The
Insurance Trustee shall promptly pay such sums as are received by it
from such Taking from time to time in accordance with the procedures
set forth in clauses (5) and (6) of Section 5.11(e) (after
substituting the words "Taking" for "Casualty" and "award" for "net
insurance proceeds").
(c) If at any time there shall occur a Taking of the whole or
substantially all of the Premises, then the award payable to the
Mortgagor shall not be applied to Restoration but shall instead be
paid and delivered to the Trustee (subject to the rights of the
Lessors under the Superior Leases and the holders of any Superior
Mortgages) to the extent of the then Outstanding Amount of the Note
and any other interest or other sums due hereunder or thereunder to be
applied to the satisfaction of this Mortgage to the extent proceeds
are available for such purpose and provided that no additional sums
are due the Trustee or the Noteholder under the Note or the Indenture,
the balance of any award shall be paid to the Mortgagor.
(d) Notwithstanding anything contained herein to the contrary,
if an Event of Default shall have occurred and
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is continuing, the Mortgagee may, at its option, (A) refrain from
paying to the Mortgagor or the Insurance Trustee any award or
(B) instruct the Insurance Trustee to pay to the Mortgagee any
award then held by the Insurance Trustee, as the case may be.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause
to be done all things necessary to preserve and keep unimpaired the
rights of the Mortgagor, as lessee under the Ground Lease, and to
prevent any termination, surrender, cancellation, forfeiture or
impairment thereof. The Mortgagor shall at all times fully perform
and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all
taxes, assessments and other charges mentioned therein) prior to the
expiration of any notice and/or cure period provided in each such
Ground Lease. Upon receipt by the Mortgagee from a Lessor of any
written notice of default by the lessee thereunder, Mortgagee may rely
thereon and take any action the Mortgagee deems necessary in its sole
discretion to prevent or to cure any default by the Mortgagor in the
performance of or compliance with any of the agreements, covenants,
terms or conditions imposed upon or assumed by the Mortgagor as lessee
under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by the Mortgagor
or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers'
Certificate, Opinion of Counsel and a copy of the injunction, all as
described in Section 3.01(g), the Mortgagee shall not take any such
action unless and until the Mortgagor and/or the Mortgagee no longer
has the benefit of any tolling or stay referred to in Section 3.01(g).
Without limiting the generality of Section 3.09 hereof, the Mortgagor
hereby expressly grants to the Mortgagee, and agrees that the
Mortgagee shall have, the absolute and immediate right to enter in and
upon the Premises or any part thereof to such extent and as often as
the Mortgagee, in its sole discretion, deems necessary or desirable
for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. Subject to the
preceding and without limiting the Mortgagee's other remedies under
this Mortgage, the Mortgagee may pay and expend such sums of money as
the Mortgagee in its sole discretion deems necessary for any such
purpose, and the Mortgagor hereby agrees to pay to the Mortgagee,
immediately and without demand, all such sums so paid and expended by
the Mortgagee, together with interest thereon from the date of each
such payment at the highest rate of interest set forth in the Note.
All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this
Mortgage.
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(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and
that it will not without the express written consent of the Mortgagee
modify, change, supplement, alter or amend such Ground Leases either
orally or in writing and, as further security for the repayment of the
indebtedness secured hereby and for the performance of the covenants
herein and in such Ground Leases contained, the Mortgagor hereby
assigns to the Mortgagee all of its rights, privileges and
prerogatives as lessee under such Ground Leases to terminate, cancel,
modify, change, supplement, alter or amend such Ground Leases, and any
such termination, cancellation, modification, change, supplement,
alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing
and (2) either (A) there has been an acceleration of maturity of the
Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises
its rights under Section 3.09 hereof, the Mortgagee shall have no
right to terminate, cancel, modify, change, supplement, alter or amend
the Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of
the Mortgagor's obligations under such Ground Leases, pursuant to such
Ground Leases or otherwise, shall release the Mortgagor from any of
its obligations under this Mortgage, including its obligations with
respect to the payment of rent as provided for in such Ground Leases
and the performance of all of the terms, provisions, covenants,
conditions and agreements contained in such Ground Leases, to be kept,
performed and complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest
in the improvements on the Leased Land and the leasehold estates shall
not merge by and shall always remain separate and distinct,
notwithstanding the union of such estates either in the Lessor or in
the lessee, or in a third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in
writing of any request made by the Mortgagor, as lessee under each of
the Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any
arbitration proceedings, as well as all proceedings thereunder. In
addition, the Mortgagor shall promptly
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deliver to the Mortgagee a copy of the determination of the
arbitrators in each such arbitration proceeding. The Mortgagee shall
have the right to participate in such arbitration proceedings in
association with the Mortgagor or on its own behalf as an interested
party in accordance with the terms of the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of
any Ground Lease to any mortgage deed of trust or other lien of the
fee interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option
under any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such
election to the Lessor or (B) the Mortgagor acquires fee simple title
or any other estate, title or interest in the Leased Land, the
Mortgagor shall promptly notify the Mortgagee of such acquisition and
shall cause to be executed and
recorded all such other and further assurances or other instruments in
writing as may be required by law or, in the opinion of the Mortgagee, be
reasonably desirable to carry out the intent and meaning of clause (x) of
Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease
by any Lessor or any trustee arising from or in connection with any
case, proceeding or other action commenced or pending by or against
any Lessor under the Code or any comparable provision contained in any
present or future federal, state, local, foreign or other statute,
law, rule or regulation, the Mortgagor shall give notice thereof to
the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any
and all of the Mortgagor's rights as lessee under Section 365(h) of
the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation ("Comparable Provision") and (B) covenants that it shall
not elect to treat any Ground Lease as terminated pursuant to Section
365(h) of the Code or any Comparable Provision without the prior
written consent of the Mortgagee and (C) agrees that any such election
by the Mortgagor without such consent shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to
the Mortgagee all of the Mortgagor's claims and rights to the payment
of damages arising from any rejection by Lessor of any Ground lease
under the Code or any Comparable Provision. The Mortgagee shall have
the right to proceed in its own name or in
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the name of the Mortgagor in respect of any claim, suit, action or
proceeding relating to the rejection of any Ground Lease, including,
without limitation, the right to file and prosecute, in cooperation
with the Mortgagor, any proofs of claim, complaints, motions,
applications notices and other documents, in any case in respect of
Lessor under the Code or any Comparable Provision. This assignment
constitutes a present, irrevocable and unconditional assignment of the
foregoing claims, rights and remedies, and shall continue in effect
until all of the indebtedness and obligations secured by this Mortgage
shall have been satisfied and discharged in full. Any amounts
received by the Mortgagee in damages arising out of the rejection of
any Ground Lease as aforesaid shall be applied first to all reasonable
costs and expenses of the Mortgagee (including, without limitation,
reasonable attorneys' fees) incurred in connection with the exercise
of any of its rights or remedies under this Section 5.21, and
thereafter as provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or
all of the Ground Leases the Mortgagor shall give the Mortgagee not
less than 10 days' prior notice of the date on which the Mortgagor
shall apply to the Bankruptcy Court or other judicial body with
appropriate jurisdiction for authority to reject the lease. The
Mortgagee shall have the right, but not the obligation, to serve upon
the Mortgagor within such 10 day period a notice stating that (a) the
Mortgagee demands that the Mortgagor assume and assign such Ground
Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any
Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s).
If the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a)
of the preceding sentence within 30 days after the notice shall have
been given subject to the performance by the Mortgagee of the covenant
provided for in clause (b) of the preceding sentence. Effective upon
the entry of an order for relief in respect of the Mortgagor under
Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby
assigns and transfers to the Mortgagee a non-exclusive right to apply
to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
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(x) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other communications or
notices with respect to events which relate to the possible impairment
of the security of this Mortgage, which it shall give or receive under
the Ground Leases and shall promptly notify the Mortgagor of any
default under any Ground lease on the part of the Lessor or the
Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the
Lessor under each Ground Lease, to the end that the Mortgagor may
enjoy all of the rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed
net rent, taxes and assessments, payable under the Ground Leases have
been paid to the extent they were due and payable to the date hereof
and that the Mortgagor has not received notice of its failure to pay
any other amounts payable under the Ground Leases which have not been
cured.
(d) If both the Lessor's and lessee's estates under any of the
Ground Leases or any portion thereof shall at any time become vested
in one owner, this Mortgage and the lien created hereby shall
nevertheless not be merged, extinguished, destroyed or terminated by
application of the doctrine of merger and, in such event, Mortgagee
shall continue to have all of the rights and privileges of the a
leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease
shall be terminated prior to the natural expiration of its term due to
default by the lessee thereunder, and if pursuant to such Ground
Lease, the Mortgagee or its designee shall acquire from the Lessor a
new lease of the Leased land or any portion thereof, the Mortgagor
shall have no right, title or interest in or to such lease or the
leasehold estate created thereby, or the options therein contained.
(f) Any leases for parking purposes hereafter entered into by
the Mortgagor as lessee shall contain provisions permitting the
assignment of the same to the Mortgagee and the Trustee and permitting
assignment without the lessor's consent if this Mortgage is
foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements,
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covenants, terms and conditions imposed upon or assumed by it as
mortgagor under the Superior Mortgages prior to the expiration of any
notice and/or cure period provided in each such Superior Mortgage. If
a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior
Mortgage has been accelerated as a result thereof, the Mortgagee may
rely thereon and take any action the Mortgagee deems necessary in its
sole discretion to prevent or to cure any default by the Mortgagor in
the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the
Mortgagor as mortgagor under each of the Superior Mortgages even
though the existence of such default or the nature thereof may be
questioned or denied by the Mortgagor or by any party on behalf of the
Mortgagor provided that if the Mortgagor has heretofore taken such
actions as described in Section 3.01(h), the Mortgagee shall not take
any such action unless and until the Mortgagor and/or the Mortgagee no
longer has the benefit of any such tolling or stay referred to in
Section 3.01(h). Without limiting the generality of Section 3.09
hereof, the Mortgagor hereby expressly grants to the Mortgagee, and
agrees that upon such acceleration the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any
part thereof to such extent and as often as the Mortgagee, in its sole
discretion, deems necessary for the purpose permitted by the
immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money
as the Mortgagee in its sole discretion deems necessary for any such
purpose and (ii) in its sole discretion prepay any Superior Mortgage,
and the Mortgagor hereby agrees to pay to the Mortgagee, immediately
and without demand, all such sums referred to in (i) and (ii) above so
paid and expended by the Mortgagee, together with interest thereon
from the date of each such payment at the rate of interest set forth
in the Note. All sums so paid and expended by the Mortgagee and the
interest thereon shall be added to and be secured by the lien of this
Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first obtaining the
written consent of the Mortgagee in each instance: (A) modify any of
the terms, covenants or conditions of any Superior Mortgage, and
without limiting the foregoing, the Mortgagor shall not, without
satisfying such conditions, enter into or obtain any agreement whereby
the holder of any Superior Mortgage waives, postpones, extends,
reduces or modifies the payment of the installment of principal or
interest or any other item or amount now required to be paid under the
terms of any Superior Mortgage or modifies any other provision
thereof, or (B) acquire or permit or suffer any Affiliate of the
Mortgagor to acquire any Superior
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Mortgage or any interest therein. Notwithstanding anything in clause
(A) to the contrary, the Mortgagor shall have the right to amend,
supplement or modify any Superior Mortgage, if (x) the then
outstanding principal balance of the indebtedness secured by such
Superior Mortgage is not increased thereby, and (y) in the case of any
After-Acquired Fee Mortgage, such amendment, supplement or agreement
does not increase the property covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each
Superior Mortgage, the note secured thereby and any other instrument
evidencing or securing the indebtedness owing to any holder of any
Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an estoppel certificate or letter addressed to the Mortgagee
from holders of the Superior Mortgages, such certificate or letter to
be in such form as the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any
default under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified
portions of the Trust Estate shall be subject and subordinate to any
Existing Encumbrances, to the liens created by the Senior Mortgage
Documents and any mortgage, assignment, security agreement, financing
statement or other lien securing any Working Capital Facility (the
"Working Capital Facility Lien") encumbering Mortgagor's interest in
the affected portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be
self-operative with respect to the liens created by the Senior
Mortgage Documents and any Working Capital Facility Lien, and no
further instrument shall be required to give effect to such
subordination. Mortgagee shall, however, from time to time, execute
instruments in form and substance reasonably satisfactory to the
holder of the liens created by the Senior Mortgage Documents and the
holder of the Working Capital Facility Lien, confirming such
subordination and agreeing to such other matters reasonably required
by the holders of such liens which do not, in the aggregate,
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materially adversely reduce or impair the rights of Trustee under the
Mortgage, and Mortgagor and others may rely conclusively thereon,
provided that Mortgagee shall have no liability thereunder and all
costs and expenses (including reasonable attorneys' fees) shall be
paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions
of the Trust Estate shall be subject and subordinate to any Existing
Encumbrances. The provisions of this Section 5.22(d) shall be
self-operative, and no further instrument shall be required to give
effect to such subordination.
Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County,
New Jersey Clerk's Office prior to the recordation of the Guaranty
Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not
senior to, the lien created by the Guaranty Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. COUNTERPARTS. This instrument may be executed in
any number of counterparts, each of which as executed shall be deemed
to be an original, but all such counterparts shall constitute one and
the same instrument.
Section 6.02. MODIFICATION. This Mortgage is subject to
modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and
this Mortgage shall have the benefit of the lien priority provisions
of such statute. Such modification may include, without limitation, a
change in the interest rate, maturity date or other terms and
conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE
COPY OF THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
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ATTEST:______________________ By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
ATTEST:______________________ By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
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NA932810098 - JUNIOR MORTGAGE ASSIGNMENT
GD&C DRAFT DATED 12/17/93
==============================================================================
ASSIGNMENT OF AGREEMENTS
________________
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignor,
TO
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
a national banking association,
as Assignee
Dated as of _________________, 1994
===============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware
corporation ("ASSIGNOR"), having an address at c/o Resorts
International, Inc., 1133 Boardwalk, Atlantic City, New Jersey
08401, to U. S. TRUST COMPANY OF CALIFORNIA, N.A.
a national banking association, having an address at
555 South Flower Street, Suite 2780 Los Angeles, California 90071,
in its capacity as Trustee ("ASSIGNEE"), under that certain Indenture
dated as of
even date herewith (the "INDENTURE") among Assignor, Assignee and
Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR").
WITNESSETH:
WHEREAS, in partial repayment of certain inter-company debt owed by
Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"),
Mortgagor has issued to RII a promissory note on the date hereof in the
principal amount of $35,000,000 (as the same may be amended or
restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof (the "MORTGAGE"), which Mortgage encumbers
certain real property owned or leased by Mortgagor as more
specifically described on SCHEDULE 1 hereto together with all
buildings and improvements erected thereon (collectively, the
"PROPERTY"); and
WHEREAS, RII has transferred the RIH Junior Promissory Note and the
Mortgage to Assignor in exchange for 11.375% Junior Mortgage Notes
due 2004 (the "NOTES") in an aggregate principal amount of
$35,000,000, which Notes were issued pursuant to the Indenture;
and
WHEREAS, as further security for the obligations of Mortgagor under
the RIH Junior Promissory Note, Mortgagor has executed and
delivered (i) an Assignment of Operating Assets and (ii) an
Assignment of Leases and Rents, each in favor of Assignor (as
assignee of RII) and each dated as of the
date hereof (said Assignments and the Mortgage collectively
referred to herein as the "RIH JUNIOR PROMISSORY NOTE MORTGAGE
DOCUMENTS"), pursuant to which Mortgagor granted
<PAGE>
a security interest in specified personal property, assigned certain other
rights and assigned all right, title and interest of Mortgagor in
leases and rents to Assignor, all as security for the performance
and observance of obligations of Mortgagor under the RIH Junior
Promissory Note; and
WHEREAS, the rights and obligations of the Assignee hereunder are
subject to the terms set forth in that certain Intercreditor
Agreement dated as of the date hereof among Assignor, Assignee,
Mortgagor, Fidelity Management and Trust Company, as trustee, and
State Street Bank and Trust Company of Connecticut, National
Association, as trustee (and such other parties that may from
time to time become a party thereto); and
WHEREAS, in order to secure payment of the Notes and all other
payments due to the holder(s) from time to time of the Notes
(collectively, the "HOLDERS") or the Trustee under the Indenture,
Assignor has agreed to execute this Assignment and to be bound by
its terms;
NOW, THEREFORE, THIS ASSIGNMENT
FURTHER WITNESSETH:
That Assignor in consideration of the purchase of the Notes by the
Holders, Ten Dollars ($10.00) lawful money of the United States of
America duly paid to Assignor by Assignee at or before the
execution and delivery of these presents and for other good and
valuable consideration, the receipt of which are hereby
acknowledged, does hereby sell, assign and transfer unto
Assignee and unto its successors and to its assigns forever, for
its benefit and for the benefit of the Holders, and does hereby
grant to Assignee a security interest in and to all of Assignor's
estate, right, title and interest in, to and under any and all of
the following described property, rights and interests
(collectively, the "ASSIGNED PROPERTIES"):
GRANTING CLAUSE FIRST
All right, title and interest of Assignor in and to the RIH Junior
Promissory Note, including all renewals, extensions, modifications
and replacements of the same, and without limiting the generality
of the foregoing, the present, continuing and future right to make
claim for, collect or cause to be collected, receive or cause to be
received directly from Mortgagor thereunder, all payments of
principal, interest and other sums of money payable thereunder.
GRANTING CLAUSE SECOND
All right, title and interest of Assignor in and to
the RIH Junior Promissory Note Mortgage Documents, including
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<PAGE>
all extensions, renewals, modifications, supplements and replacements
of the same.
TO HAVE AND TO HOLD all said properties, rights and
interests unto Assignee and its successors and assigns forever.
THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and
covenants with Assignee as follows:
ARTICLE ONE
PARTICULAR COVENANTS OF ASSIGNOR
Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents,
warrants and covenants that it is duly authorized to enter into
this Assignment, and to grant and convey a lien on and security
interest in the Assigned Properties to Assignee in the manner and
to the extent herein set forth and that all action on its part
required for the execution and delivery of this Assignment has
been duly and effectively taken.
Section 1.02. FURTHER ACTION REQUIRED.
(a) Assignor covenants that it will, from time to time, execute and
deliver such further instruments and take such further actions as
may be required to carry out the purposes of this Assignment.
(b) Assignor hereby appoints Assignee as its lawful attorney-in-fact
(such power being coupled with an interest) in the name of Assignor
or Assignee or both to execute any instruments or to take any
actions to enforce all rights, powers and remedies of Assignor
under or pursuant to the Assigned Properties.
(c) Nothing contained herein shall limit the rights of Assignee
contained in the Mortgage or the Indenture.
(d) Until this Assignment is discharged in accordance with Section 5.01
hereof, no amendment, waiver, modification, discharge, release,
enforcement or satisfaction by Assignor of any of the rights or
remedies under the Assigned Properties shall be effective without
the prior consent and approval of Assignee, and Assignor shall have
no power or authority to take any such action without such consent
and approval.
ARTICLE TWO
OBLIGATIONS TO ASSIGNEE
Section 2.01. CONTINUING OBLIGATIONS.
3
<PAGE>
(a) Assignee shall have no obligation, duty or liability with
respect to the Assigned Properties or any of them (other than
those specifically assumed in its capacity as Trustee pursuant to
the Indenture).
(b) Assignor shall at all times remain liable to observe and perform
all of its covenants and obligations, if any, under the Assigned
Properties, and does hereby agree to indemnify and hold harmless
Assignee, its successors and assigns, from any liability, loss,
damage or expense it or they may incur under the Assigned
Properties or by reason of this Assignment.
ARTICLE THREE
PAYMENTS
Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due
and to become due under or pursuant to the Assigned Properties
shall be paid by Mortgagor directly to Assignee at the address set
forth in Section 6.02 hereof. Neither Assignor nor Assignee shall
have the right, without Mortgagor's prior written consent, to
instruct Mortgagor to pay Revenues to Assignor or in any manner or
to any party other than directly to Assignee.
Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins
in the execution of this Assignment to acknowledge (a) the
assignment by Assignor to Assignee of Assignor's right, title and
interest in, to and under the Assigned Properties, (b) Mortgagor's
agreement to make payment of all Revenues under the Assigned
Properties directly to Assignee at the address set forth in this
Assignment, and (c) the right of Assignee to exercise or enforce in
its own name, in the name of Assignor, or both, all of the rights,
powers and remedies of Assignor in, to and under the Assigned
Properties.
Section 3.03. REVENUES. As used herein, the term "REVENUES" shall
mean (a) all amounts paid or payable by Mortgagor under the RIH
Junior Promissory Note or the RIH Junior Promissory Note Mortgage
Documents, and (b) the net proceeds realized upon or as a result of
the enforcement of any mortgage lien or security interest granted
under the Assigned Properties or this Assignment or upon or as a
result of the exercise of any right or remedy under the Assigned
Properties or this Assignment.
Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor
hereby acknowledges, that Mortgagor may rely exclusively on
Assignee's directive that Assignee is entitled to take action
under this Assignment.
4
<PAGE>
ARTICLE FOUR
DEFAULT PROVISIONS AND REMEDIES
Section 4.01. ENFORCEMENT OF REMEDIES.
(a) Upon the occurrence of any default under the
Indenture or the Assigned Properties, or any of them (each, a
"DEFAULT"), not cured within the applicable grace period after the
applicable notice provision, if any, has been satisfied (each
called an "EVENT OF DEFAULT"), Assignee may, at its option, (i)
proceed directly to protect and enforce its rights and the rights
of any Holders under this Assignment or pursuant to the Assigned
Properties, or any one of them, by such suits, actions or special
proceedings in equity or at law, or by proceedings in the office of
any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein, or in
the Assigned Properties, or any of them, or in aid of execution of
any power granted herein or pursuant to the Assigned Properties, or
any one of them, or for the enforcement of any proper legal or
equitable remedy, including, without limitation, foreclosure of
the Mortgage and/or the sale of the collateral or part thereof
secured thereby at such foreclosure sale, subject to statutory and
other legal requirements, as Assignee shall deem most effective to
protect and enforce such rights, and Assignor hereby appoints
Assignee as its lawful attorney-in-fact (such power being coupled
with an interest) in the name of Assignor or Assignee or both to
effectuate such foreclosure and/or sale of such collateral or part
thereof; or (ii) instruct, direct and cause Assignor to effectuate
the foregoing on behalf of and for the benefit of Assignee and the
Holders, it being further understood that Mortgagor joins in the
execution of this Assignment in order to acknowledge its agreement
to promptly and duly execute and deliver any and all documents and
take any and all actions required by Assignee in order to permit
Assignee to foreclose and/or sell such collateral or part thereof,
and obtain the benefits of this Assignment, as aforesaid.
(b) Upon the occurrence of any Event of Default, Assignee shall be
entitled to sue for, enforce payment of and receive any and all
amounts then and at any time remaining due from Assignor or
Mortgagor for principal and interest on the RIH Junior Promissory
Note, or other sums due under the RIH Junior Promissory Note
Mortgage Documents, as the case may be, or otherwise under any of
the provisions of the Assigned Properties, or any of them, with
interest on overdue payments of such principal, at the rate set
forth in the RIH Junior Promissory Note, from the date of Default
to the date of such payment, together with any and all fees, costs
and expenses of collection (including reasonable attorneys' fees
and court costs), subject to statutory and other legal
requirements.
5
<PAGE>
(c) Regardless of the occurrence of an Event of Default, upon five
days' written notice to Mortgagor (or such shorter period or
without notice if deemed necessary and appropriate by Assignee),
Assignee may institute and maintain or cause in the name of
Assignor or Assignee or both to be instituted and maintained such
suits and proceedings as it may be advised by its counsel shall be
necessary and appropriate to prevent any impairment of the Assigned
Properties, or any of them, and to protect its interests in the
Assigned Properties, and in the rents, issues, rights, revenues
and other income arising therefrom, including power to institute
and maintain proceedings to restrain the enforcement or compliance
with any 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 the
security hereunder or would be materially prejudicial to the
interests of Assignee.
(d) Nothing contained in this Article Four is intended to grant
Assignee any greater remedies and rights than those allowed to
Assignor in the respective Assigned Properties. In the event of
any conflict between the remedies and rights contained in any of
the Assigned Properties and the remedies and rights contained in
this Article Four, then the remedies and rights set forth in the
applicable Assigned Property shall govern.
ARTICLE FIVE
DISCHARGE OF ASSIGNMENT
Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or
cause to be paid, or there shall otherwise be paid, to Assignee
and/or the Holders' all amounts required to be paid by Assignor
pursuant to the Indenture and the Notes, and the conditions
precedent for the Indenture shall cease, determine and become
null and void in accordance with Section 5.01 of the Indenture,
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statements filed in connection
herewith and execute and deliver to Assignor and to Mortgagor all
such instruments as may be appropriate to evidence such discharge
and satisfaction of said lien or liens, and Assignee shall pay over
or deliver to Assignor all other moneys and securities held by it
pursuant to this Assignment, which are not required for the payment
of (a) principal and redemption price, if applicable, of and
interest on, the Notes, and (b) all other amounts required to be
paid by Assignor pursuant to the Indenture and the Notes.
6
<PAGE>
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the
covenants, stipulations, obligations and agreements contained in
this Assignment shall be binding upon and inure to the benefit of
Assignor, Assignee and Mortgagor (to the extent applicable to
Mortgagor) and their respective successors and assigns.
Section 6.02. NOTICES.
(a) Any request, notice, demand, authorization, direction, request or
other instrument authorized or required by this Assignment to be
given to or filed with Assignor, Assignee or Mortgagor
(collectively, "NOTICES") shall be deemed given when either (i)
delivered by hand or (ii) five days after sending by registered or
certified mail, postage prepaid, in either case addressed as follows:
If to Assignor, at:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Assignee, at:
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
555 South Flower Street
Suite 2780
Los Angeles, California 90071
Attention: Corporate Trust Department
If to Mortgagor, at:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to Mortgagor, Assignor and/or Assignee, given as
provided above, any party may designate additional or substitute
addresses for Notices, which shall, notwithstanding Section
6.02(a), be deemed given with received.
Section 6.03. PARTIAL INVALIDITY. In case any one
or more of the provisions of this Assignment shall for any
7
<PAGE>
reason be held to be illegal or invalid, such illegality or
invalidity shall not affect any other provision of this
Assignment, but this Assignment shall be construed and
enforced at the time as if such illegal or invalid
provisions had not been contained herein or therein, nor shall such
illegality or invalidity or any application thereof affect any
legal and valid application herein or thereof from time to time.
Section 6.04. APPLICABLE LAW. This Assignment shall be governed
by and construed under the internal laws of the State of New
Jersey, without giving effect to the principles of conflicts of
law.
Section 6.05. NO AMENDMENT. For so long as the Notes shall remain
outstanding, the Assigned Properties may not be modified, amended
or terminated except in accordance with the provisions of the
Indenture or the Assigned Properties.
Section 6.07. CASINO CONTROL ACT. Each of the provisions of this
Assignment is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act. This Agreement
shall not be transferred, assigned or amended without prior approval
of the New Jersey Casino Control Commission.
IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed
this Assignment Agreement as of the date first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest:
_________________________________ By:_______________________________
President
RESORTS INTERNATIONAL HOTEL, INC.
Attest:
_________________________________ By:_______________________________
President
8
<PAGE>
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Attest:
___________________________________ By:_________________________________
Title
9
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of U.S. TRUST COMPANY OF CALIFORNIA, N.A., the
corporation named in the within instrument; that
__________________ is the Vice President of said Corporation;
that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of
directors of the said corporation; that deponent well knows the
corporate seal of said corporation; and that the seal affixed to
said instrument is the proper corporate seal and was thereto
affixed and said instrument signed and delivered by said Vice
President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
10
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation named
in the within instrument; that ____________ is the Vice President of said
Corporation; that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of directors of
the said corporation; that deponent well knows the corporate seal
of said corporation; and that the seal affixed to said instrument
is the proper corporate seal and was thereto affixed and said
instrument signed and delivered by said Vice President as and for
the voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
11
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation
named in the within instrument; that ______________ is the Vice
President of said corporation; that the execution, as well as the
making of this instrument, has been duly authorized by a proper
resolution of the board of directors of the said corporation; that
deponent well knows the corporate seal of said corporation; and
that the seal affixed to said instrument is the proper corporate
seal and was thereto affixed and said instrument signed and
delivered by said Vice President as and for the voluntary act and
deed of said corporation. In presence of deponent who thereupon
subscribed his name thereto as attesting witness; and deponent
signed this proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
12
<PAGE>
NA932810100 - ASSIGNMENT OF RENTS
(RIH JUNIOR PROMISSORY NOTE)
GD&C DRAFT DATED 12/17/93
=============================================================================
ASSIGNMENT
OF LEASES AND RENTS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignee
Dated as of _________________, 1994
==========================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having
its principal office at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation,
having its principal office at c/o Resorts International, Inc.,
1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to
secure: (i) the obligations of Assignor under a promissory note
dated as of the date hereof made by Assignor to Assignee in the
principal amount of $35,000,000 (as the same may be amended or
restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof, between Assignor, as mortgagor,
and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used
and not otherwise defined herein shall have the meanings ascribed
to those terms in the Mortgage); and (ii) the performance and
observance of all of the provisions herein contained;
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages and other Existing Encumbrances),
all leases or occupancy agreements wherein it is lessor concerning
or affecting the use or occupancy of the certain real property
owned or leased by Assignor, which real property is described on
SCHEDULE 1 hereto and which real property, together with all
buildings and improvements erected thereon, is hereinafter
collectively referred to as the "PROPERTY", or any part thereof,
now existing or which may be executed at any time in the future,
and all amendments, extensions and renewals of such leases or
occupancy agreements, and any of them, all of which are
collectively referred to as the "LEASES", all rents and other
income which may now or hereafter be or become due or owing under
the Leases, and any of them, and any and all payments derived from
or relating to the Leases to which Assignor is entitled, including
but not limited to (a) claims for the recovery of damages done to
the Property, (b) claims for damages resulting from acts of
insolvency or acts of bankruptcy or otherwise, and (c) lump sum
payments for the
<PAGE>
cancellation of Leases or the waiver of any
obligation or term thereof prior to the expiration date;
PROVIDED, HOWEVER, that no Excepted Property is conveyed
hereby; it being intended hereby to establish a present and
complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the Leases and all the rents,
payments and other income arising thereunder; PROVIDED, HOWEVER,
that Assignor is hereby granted a license by Assignee to (i) collect
all of such rents, payments and other income herein assigned which
may become due during the life of this Assignment and (ii) enter
into, renew, modify, extend, terminate, amend, collectively
assign, transfer or hypothecate any or all of the Leases, in
accordance with the provisions of Sections 4.04 and 5.13 of the
Mortgage, each until an Event of Default under the Mortgage (an
"EVENT OF DEFAULT") shall have occurred and be continuing. Upon
the occurrence of an Event of Default, Assignor agrees to deposit
with Assignee upon demand such of the Leases and the rents payable
thereunder as may from time to time be designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to demand, collect, receive and give receipts and
complete acquittance for any and all other rents and other
amounts herein assigned which may be or become due and payable
under the Leases, and at its discretion to file any claim or take
any other action or proceeding and make any settlement of any
claims, either in its own name or in the name of Assignor or
otherwise, which Assignee may deem necessary or desirable in order
to collect and enforce the payment of any and all rents and other
amounts herein assigned. No right shall be exercised by Assignee
under this paragraph until an Event of Default has occurred. All
lessees under the Leases are hereby expressly authorized and
directed, after the occurrence, and during the continuance, of an
Event of Default, to pay all rents and other sums herein assigned
to Assignee or such nominee as Assignee may designate in writing
delivered to and received by such lessees, who thereafter are
expressly relieved of any and all duty, liability or obligation to
Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Assignment and to collect the rents and other sums assigned
hereunder. Assignee shall be under no obligation to exercise any
of the rights or to press any of the claims assigned to it
hereunder, or to perform or carry out any of the obligations of
Assignor under any of the Leases, and does not assume any of the
liabilities in connection with or arising or growing out of the
covenants and agreements of Assignor in the Leases. It is further
2
<PAGE>
understood that this Assignment shall not operate to place
responsibility for the control, care, management or repair of
Assignor's estates or interests in and to the Property, or parts
thereof, upon Assignee, nor shall it operate to make Assignee
liable for the carrying out of any of the terms and conditions of
any of the Leases, or for any waste to Assignor's estates or
interests in and to the Property by any lessee or sublessee of
Assignor under any leases, or by any occupant of the Property, or
by any party whatsoever or for any dangerous or defective condition
of the Property or for any negligence in the management, upkeep,
repair or control of Assignor's estates or interests in and to the
Property resulting in loss or injury or death to any lessee,
licensee, employee or stranger thereat. No right shall be
exercised by Assignee under this paragraph until an Event of
Default has occurred.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
Nothing herein contained is intended to limit or reduce the rights
of Assignee or the obligations of Assignor set forth in the
Mortgage, but rather all of the terms, provisions and conditions
of this Assignment are in addition to and in supplement of such
rights and obligations. If any provision contained in this
Assignment is in conflict with, or inconsistent with, any
provision in the Mortgage, the provisions contained in the
Mortgage shall govern and control.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this
Assignment shall be null and void with respect to those Leases (the
"RELEASED LEASES") which cover exclusively the portion of the
Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Leases shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of a portion of the
Property as aforesaid to confirm any reversion of Assignee's
right, title and interest in the Released Leases effectuated in
accordance with this paragraph, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 or 2.06 of the
Mortgage (as the case may be), provided that Assignee shall have
no liability thereunder and all costs and expenses shall be paid by
Assignor.
3
<PAGE>
Assignee acknowledges that (i) contemporaneously with the execution
and delivery of this Assignment, it has assigned this Assignment to U.S. Trust
Company of California, N.A. ("Trustee"), as trustee under an Indenture
of even date herewith among Assignor, Assignee and Trustee (the
"Indenture"), and (ii) that the Trustee is also the assignee under
an Assignment of Leases and Rents dated as of the date hereof from
Assignor to Trustee securing the obligations of Assignor in respect
of the Guaranty under and as defined in the Indenture (the "Other
Assignment"), which assignment creates a lien on the Leases and
rents and income due and owing thereunder PARI PASSU with the lien
of this Assignment. Assignee further acknowledges and agrees that
whenever it is provided in the Other Assignment that the Assignor
shall deliver any notice or document, or is require to make any
payment thereunder, the delivery of such notice or document or the
making of such payment pursuant to the terms of such Other
Assignment shall also constitute the delivery of such notice or
document or the making of such payment in satisfaction of the
terms, conditions and provisions of this Assignment to the same
extent as the same constitutes satisfaction of the terms,
conditions and provisions of the Other Assignment.
Upon the termination of the Mortgage and the payment in full of the
obligations secured thereby, this Assignment shall be and become
null and void, and all estate, right, title and interest of
Assignee in and to the Leases shall revert to Assignor and
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statement filed in connection
herewith and execute and deliver to Assignor all such instruments
as may be appropriate to evidence such discharge and satisfaction
of this Assignment (provided that Assignee shall have no liability
hereunder or thereunder and all costs and expenses shall be paid by
Assignor); otherwise, this Assignment shall remain in full force
and effect as herein provided, shall inure to the benefit of
Assignee and its successors and assigns, and shall be binding
upon Assignor and its successors and assigns, and any subsequent
holder of Assignor's right, title and interest and estate in and to
the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without the prior approval of
the New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain Intercreditor Agreement dated
as of the date hereof among
4
<PAGE>
Assignor, Assignee, Fidelity Management and Trust Company,
as trustee, Trustee and State Street Bank and Trust
Company of Connecticut, National Association, as trustee (and
such other parties that may from time to time become a party
thereto).
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
RESORTS INTERNATIONAL HOTEL,
FINANCING, INC., a Delaware
corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared _____________,
who, being by me duly sworn on his oath, deposes and makes proof to
my satisfaction, that he is the (Asst.) Secretary of RESORTS
INTERNATIONAL HOTEL, INC., the corporation named in the within
instrument; that ______________ is the (Vice) President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the
corporation named in the within instrument; that ____________ is
the Vice President of said corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
__________________________
[Name]
Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
7
<PAGE>
NA932810102 - ASSIGNMENT OF RENTS
(JUNIOR GUARANTY)
GD&C DRAFT DATED 12/17/93
- -------------------------------------------------------------------------------
ASSIGNMENT
OF LEASES AND RENTS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
a national banking association,
as Assignee
Dated as of _________________, 1994
- -------------------------------------------------------------------------------
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation
("ASSIGNOR"), having an address at c/o Resorts International,
Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 to U.S. TRUST
COMPANY OF CALIFORNIA, N.A., a national banking association ("ASSIGNEE"),
having an address at 555 South Flower Street, Suite 2780 Los Angeles California
90071, in its capacity as Trustee under that certain Indenture dated as of
even date herewith (the "INDENTURE"), among Assignor, Assignee and Resorts
International Hotel Financing, Inc., a Delaware corporation ("RIHF").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in order to
secure: (i) Assignor's guarantee of the payments of principal and
interest due on the 11.375% Junior Mortgage Notes due 2004 in an
aggregate principal amount of $35,000,000, issued by RIHF pursuant
to the provisions of the Indenture and of the performance of
certain of RIHF's obligations, all in accordance with the terms
and provisions of Article Fourteen of the Indenture; and (ii) the
performance and observance of all of the provisions herein
contained (capitalized terms used and not otherwise defined
herein shall have the respective meanings ascribed to those terms
in that certain Mortgage Securing Guaranty of Junior Mortgage Notes
dated as of even date herewith, between Assignor, as mortgagor, and
Assignee, as mortgagee (the "MORTGAGE"));
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages and other Existing Encumbrances),
all leases or occupancy agreements wherein it is lessor concerning
or affecting the use or occupancy of certain real property owned or
leased by Assignor, which real property is described on SCHEDULE 1
hereto and which real property, together with all buildings and
improvements erected thereon, is hereinafter collectively referred
to as the "PROPERTY", or any part thereof, now existing or which
may be executed at any time in the future, and all amendments,
extensions and renewals of such leases or occupancy agreements,
and any of them, all of which are collectively referred to as the
"LEASES", all rents and other income which may now or hereafter
be or become due or owing under the Leases, and any of them, and
any and all payments
<PAGE>
derived from or relating to the Leases to
which Assignor is entitled, including but not limited to (a) claims
for the recovery of damages done to the Property, (b) claims for
damages resulting from acts of insolvency or acts of bankruptcy or
otherwise, and (c) lump sum payments for the cancellation of Leases
or the waiver of any obligation or term thereof prior to the
expiration date; PROVIDED, HOWEVER, that no Excepted Property is
conveyed hereby; it being intended hereby to establish a present
and complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the Leases and all the rents,
payments and other income arising thereunder; PROVIDED, HOWEVER,
that Assignor is hereby granted a license by Assignee to (i) collect
all of such rents, payments and other income herein assigned which
may become due during the life of this Assignment and (ii) enter
into, renew, modify, extend, terminate, amend, collectively
assign, transfer or hypothecate any or all of the Leases, in
accordance with the provisions of Sections 4.04 and 5.13 of the
Mortgage, each until an Event of Default under the Mortgage (an
"EVENT OF DEFAULT") shall have occurred and be continuing. Upon
the occurrence of an Event of Default, Assignor agrees to deposit
with Assignee upon demand such of the Leases and the rents payable
thereunder as may from time to time be designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to demand, collect, receive and give receipts and
complete acquittance for any and all other rents and other
amounts herein assigned which may be or become due and payable
under the Leases, and at its discretion to file any claim or take
any other action or proceeding and make any settlement of any
claims, either in its own name or in the name of Assignor or
otherwise, which Assignee may deem necessary or desirable in order
to collect and enforce the payment of any and all rents and other
amounts herein assigned. No right shall be exercised by Assignee
under this paragraph until an Event of Default has occurred. All
lessees under the Leases are hereby expressly authorized and
directed, after the occurrence, and during the continuance, of an
Event of Default, to pay all rents and other sums herein assigned
to Assignee or such nominee as Assignee may designate in writing
delivered to and received by such lessees, who thereafter are
expressly relieved of any and all duty, liability or obligation to
Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Assignment and to collect the rents and other sums assigned
hereunder. Assignee shall be under no obligation to exercise any
of the rights or to press any of
2
<PAGE>
the claims assigned to it hereunder, or to perform or carry out any of the
obligations of Assignor under any of the Leases, and does not assume any of
the liabilities in connection with or arising or growing out of the
covenants and agreements of Assignor in the Leases. It is further
understood that this Assignment shall not operate to place
responsibility for the control, care, management or repair of
Assignor's estates or interests in and to the Property, or parts
thereof, upon Assignee, nor shall it operate to make Assignee
liable for the carrying out of any of the terms and conditions of
any of the Leases, or for any waste to Assignor's estates or
interests in and to the Property by any lessee or sublessee of
Assignor under any leases, or by any occupant of the Property, or
by any party whatsoever or for any dangerous or defective condition
of the Property or for any negligence in the management, upkeep,
repair or control of Assignor's estates or interests in and to the
Property resulting in loss or injury or death to any lessee,
licensee, employee or stranger thereat. No right shall be
exercised by Assignee under this paragraph until an Event of
Default has occurred.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
Nothing herein contained is intended to limit or reduce the rights
of Assignee or the obligations of Assignor set forth in the
Mortgage, but rather all of the terms, provisions and conditions
of this Assignment are in addition to and in supplement of such
rights and obligations. If any provision contained in this
Assignment is in conflict with, or inconsistent with, any
provision in the Mortgage, the provisions contained in the
Mortgage shall govern and control.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this
Assignment shall be null and void with respect to those Leases (the
"RELEASED LEASES") which cover exclusively the portion of the
Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Leases shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of a portion of the
Property as aforesaid to confirm any reversion of Assignee's
right, title and interest in the Released Leases effectuated in
accordance with this paragraph, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
3
<PAGE>
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 or 2.06 of the
Mortgage (as the case may be), provided that Assignee shall have
no liability thereunder and all costs and expenses shall be paid by
Assignor.
Upon the termination of the Mortgage and the payment in full of the
obligations secured thereby, this Assignment shall be and become
null and void, and all estate, right, title and interest of
Assignee in and to the Leases shall revert to Assignor and
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statement filed in connection
herewith and execute and deliver to Assignor all such instruments
as may be appropriate to evidence such discharge and satisfaction
of this Assignment (provided that Assignee shall have no liability
hereunder or thereunder and all costs and expenses shall be paid by
Assignor); otherwise, this Assignment shall remain in full force
and effect as herein provided, shall inure to the benefit of
Assignee and its successors and assigns, and shall be binding
upon Assignor and its successors and assigns, and any subsequent
holder of Assignor's right, title and interest and estate in and to
the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without the prior approval
of the New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain Intercreditor Agreement dated
as of the date hereof among Assignor, RIHF, Assignee, Fidelity
Management and Trust Company, as trustee, and State Street Bank
and Trust Company of Connecticut, National Association, as trustee
(and such other parties that may from time to time become a party
thereto).
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the (Asst.)
Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation
named in the within instrument; that _________________ is the
(Vice) President of said Corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of U.S. TRUST COMPANY OF CALIFORNIA (N.A.), the corporation
named in the within instrument; that ____________ is the Vice President
of said corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well knows
the corporate seal of said corporation; and that the seal affixed
to said instrument is the proper corporate seal and was thereto
affixed and said instrument signed and delivered by said Vice
President as and for the voluntary act and deed of said corporation.
In presence of deponent who thereupon subscribed his name thereto
as attesting witness; and deponent signed this proof to attest to
the truth of these facts.
__________________________
[Name]
Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
7
<PAGE>
NA932280122 - ASSIGNMENT OF ASSETS
(RIH PROMISSORY NOTE)
GD&C DRAFT DATED 12/17/93
=============================================================================
ASSIGNMENT
OF OPERATING ASSETS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignee
Dated as of _________________, 1994
==========================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF OPERATING ASSETS
THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having
its principal office at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey ("ASSIGNOR"), to RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation,
having its principal office at c/o Resorts International, Inc.,
1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to
secure: (i) the obligations of Assignor under a secured promissory note
dated as of the date hereof made by Assignor to Assignee in the
principal amount of $125,000,000 (as the same may be amended or
restated from time to time, the "RIH PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Promissory
Note dated as of the date hereof, between Assignor, as mortgagor,
and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used
and not otherwise defined herein shall have the meanings ascribed
to those terms in the Mortgage) which mortgage encumbers certain
real property owned or leased by Assignor and described on SCHEDULE
1 hereto together with all buildings and improvements erected
thereon (collectively, the "PROPERTY"); and (ii) the performance
and observance of all of the provisions herein contained;
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages), all of Mortgagor's right, title
and interest in and to the Operating Assets (other than Excepted
Property), now existing or hereafter acquired (including without
limitation, to the extent assignable, with respect to the bookings,
contracts, Permits, leases, licenses and agreements constituting a
part of the Operating Assets (collectively, the "OPERATING
AGREEMENTS"), all Operating Agreements now existing or which may
be executed at any time in the future, and all amendments,
extensions and renewals of the Operating Agreements, and any of
them, and all rents and other income which may now or hereafter be
or become receivable under the Operating Agreements, and any of
them); it being intended hereby to establish a present and
complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the Operating Agreements and
all the Income (as hereinafter
<PAGE>
defined) arising thereunder; PROVIDED, HOWEVER, that Assignor is
hereby granted a license by Assignee so long as there neither shall
have been an acceleration of maturity of the Note pursuant to
Section 3.02 of the Mortgage nor an exercise by the Mortgagee of
its rights under Section 3.09 of the Mortgage (either being
hereinafter referred to as an "ACCELERATION EVENT"), to
(a) possess, use, manage, operate, enjoy and, subject to
and in accordance with the terms of the Mortgage, dispose of the
Operating Assets or any part thereof and to collect, receive, use,
invest and dispose of the rents, issues, tolls, profits, revenues
and other income therefrom (collectively, the "INCOME"), (b) use,
consume and dispose of any consumables, goods, wares and
merchandise in the ordinary course of business of operating the
Casino-Hotel and (c) adjust and settle all matters relating to choses
in action, leases and contracts. Upon the occurrence of an
Acceleration Event, Assignor agrees to deposit with Assignee upon
demand such of the Operating Agreements, Operating Assets and
receipts and revenues therefrom as may from time to time be
designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to possess, use, manage and enjoy the Operating Assets
or any part thereof and to collect, receive, use, invest, dispose
of and give complete acquittance for any and all Income herein
assigned which may be or become due and payable under the
Operating Agreements, to use, consume and dispose of any
consumable goods, wares and merchandise and to adjust and settle
all matters relating to choses in action, leases and contracts, and
at its discretion to file any claim or take any other action or
proceeding and make any settlement of any claims, either in its
own name or in the name of Assignor or otherwise, which Assignee
may deem necessary or desirable in order to collect and enforce the
rights herein assigned. No rights shall be exercised by Assignee
under this paragraph until an Acceleration Event has occurred. All
parties to the Operating Agreements are hereby expressly authorized
and directed, after the occurrence of an Acceleration Event, to pay
all amounts payable to Assignor thereunder to Assignee or such
nominee as Assignee may designate in writing delivered to and
received by such parties, who thereafter are expressly relieved of
any and all duty, liability or obligation to Assignor in respect of
all payments so made.
Assignee acknowledges that (i) contemporaneously with the execution
and delivery of this Assignment, it has assigned this Assignment to
State Street Bank and Trust Company of Connecticut, National
Association ("Trustee"), as trustee under an Indenture of even
date herewith among
2
<PAGE>
Assignor, Assignee and Trustee (the "Indenture"), and (ii) that
the Trustee is also the assignee under an Assignment of Operating
Assets dated as of the date hereof from Assignor to Trustee
securing the obligations of Assignor in respect of the Guaranty
under and as defined in the Indenture (the "Other Assignment"),
which assignment creates a lien on the Operating Agreements,
Operating Assets and receipts and revenues therefrom
PARI PASSU with the lien of this Assignment. Assignee
further acknowledges and agrees that whenever it is
provided in the Other Assignment that the Assignor shall deliver
any notice or document, or is require to make any payment
thereunder, the delivery of such notice or document or the making
of such payment pursuant to the terms of such Other Assignment
shall also constitute the delivery of such notice or document or
the making of such payment in satisfaction of the terms, conditions
and provisions of this Assignment to the same extent as the same
constitutes satisfaction of the terms, conditions and provisions of
the Other Assignment.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Agreement, to collect all Income and to exercise all other
rights provided for hereunder. Assignee shall be under no
obligation to press any of the rights or claims assigned to it
hereunder, or to perform or carry out any of the obligations of
Assignor under any of the Operating Agreements and does not assume
any of the liabilities in connection with or arising or growing out
of the covenants and agreements of Assignor in the Operating
Agreements. It is further understood that this Assignment shall
not operate to place responsibility for the control, care,
management or repair of Assignor's estates or interests in and to
the Operating Assets, or parts thereof, upon Assignee, nor shall it
operate to make Assignee liable for the carrying out of any of the
terms and conditions of any of the Operating Agreements, or for any
negligence in the management, upkeep, repair or control of
Assignor's estates or interests in and to the Operating Assets
resulting in loss or injury or death to any lessee, licensee,
employee or stranger thereat. No rights shall be exercised by
Assignee under this paragraph until an Acceleration Event has
occurred.
For purposes of this Assignment, the term "OPERATING ASSETS" shall
exclude (i) any Tangible Personal Property, and (ii) other items
constituting Operating Assets or leases, which are Excepted
Property.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
3
<PAGE>
IT IS AGREED that, to the extent the grant of a security interest
in the Operating Assets is governed by the provisions of the
Uniform Commercial Code, this Assignment is hereby agreed to be a
"Security Agreement" under such Code, and Assignor hereby grants to
Assignee a security interest in the Operating Assets. Assignor
shall at any time and from time to time execute and deliver such
additional security agreements, financing statements and
continuation statements, and shall take all such actions, as may
be necessary to perfect Assignee's interest under this Assignment
as a secured party under the Uniform Commercial Code.
IT IS FURTHER AGREED that the rights and benefits created hereunder
supplement and are not in substitution for the liens created by the
Mortgage with respect to the Operating Assets and that nothing
contained herein shall limit or affect the rights of Assignee
under the Mortgage.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 of the Mortgage (other than
(i) the release of the fee interest in and to the Leased Land or any
portion thereof, or (ii) if the Mortgagor obtains a Qualified
Leasehold Interest with respect to such portion of the Property),
this Assignment shall be null and void with respect to those
Operating Assets (the "RELEASED ASSETS") which theretofore have
exclusively been used by Assignor with respect to the portion of
the Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Assets shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of such portion of the
Property to confirm any reversion of Assignee's right, title and
interest in the Released Assets effectuated pursuant to the
immediately preceding sentence, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 of the Mortgage,
provided that Assignee shall have no liability thereunder and all
costs and expenses shall be paid by Assignor.
Upon the termination of the Mortgage Documents and the payment in
full of the principal sum, interest and other Indebtedness secured
thereby, this Assignment shall be and become null and void, and all
estate, right, title and interest of Assignee in and to the
Operating Assets shall revert to Assignor and Assignee shall
promptly cancel and discharge of record this Assignment and any
financing statement filed in connection herewith and execute and deliver
4
<PAGE>
to Assignor all such instruments as may be appropriate to
evidence such discharge and satisfaction of this Assignment
(provided that Assignee shall have no liability hereunder or
thereunder and all costs and expenses shall be paid by Assignor);
otherwise, this Assignment shall remain in full force and effect as
herein provided, shall inure to the benefit of Assignee and its
successors and assigns, and shall be binding upon Assignor and its
successors and assigns, and any subsequent holder of Assignor's
right, title, interest and estate in and to the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without the prior approval
of the New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain Intercreditor Agreement dated
as of the date hereof among Assignor, Assignee, Fidelity Management
and Trust Company, as trustee, Trustee and State Street Bank and
Trust Company of Connecticut, National Association, as trustee,
(and such other parties that may from time to time become a party
thereto).
5
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have caused this
Assignment to be duly executed, all as of the date first above
set forth.
WITNESSES: ASSIGNOR:
RESORTS INTERNATIONAL HOTEL, INC.
________________________________ By:_________________________
Name:
Title:
ASSIGNEE:
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
_________________________________ By:_________________________
Name:
Title:
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared ____________,
who, being by me duly sworn on his oath, deposes and makes proof to
my satisfaction, that he is the (Asst.) Secretary of RESORTS
INTERNATIONAL HOTEL, INC., the corporation named in the within
instrument; that ____________ is the (Vice) President of said
Corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the
corporation named in the within instrument; that ____________ is
the Vice President of said corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
__________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________
<PAGE>
NA932810105 - ASSIGNMENT OF ASSETS
(JUNIOR GUARANTY)
GD&C DRAFT DATED 12/17/93
==============================================================================
ASSIGNMENT
OF OPERATING ASSETS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
a national banking association,
as Assignee
Dated as of _________________, 1994
==============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF OPERATING ASSETS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation
("ASSIGNOR"), having an address at c/o Resorts International,
Inc. 1133 Boardwalk, Atlantic City, New Jersey 08401, to U.S. TRUST
COMPANY OF CALIFORNIA, N.A., a National banking association
("ASSIGNEE"), having an address at 555 South Flower Street Suite 2700,
Los Angeles, California 90071 in its capacity as Trustee under that certain
Indenture dated as of even date herewith (the "INDENTURE"), among Assignor,
Assignee and Resorts International Hotel Financing, Inc., a Delaware
corporation ("RIHF").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in order to
secure: (i) Assignor's guarantee of the payments of principal and
interest due on the 11.375% Junior Mortgage Notes due 2004 in an
aggregate principal amount of $35,000,000, issued by RIHF pursuant
to the provisions of the Indenture and of the performance of
certain of RIHF's obligations, all in accordance with the terms
and provisions of Article Fourteen of the Indenture; and (ii) the
performance and observance of all of the provisions herein
contained (capitalized terms used and not otherwise defined
herein shall have the respective meanings ascribed to those terms
in that certain Mortgage Securing Guaranty of Junior Mortgage Notes
dated as of even date herewith, between Assignor, as mortgagor, and
Assignee, as mortgagee (the "MORTGAGE"));
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages), all of Mortgagor's right, title
and interest in and to the Operating Assets (other than Excepted
Property), now existing or hereafter acquired (including without
limitation, to the extent assignable, with respect to the bookings,
contracts, Permits, leases, licenses and agreements constituting a
part of the Operating Assets (collectively, the "OPERATING
AGREEMENTS"), all Operating Agreements now existing or which may
be executed at any time in the future, and all amendments,
extensions and renewals of the Operating Agreements, and any of
them, and all rents and other income which may now or hereafter be
or become receivable under the Operating Agreements, and any of
them); it being intended hereby to establish a present and
complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the
<PAGE>
Operating Agreements and all the Income (as hereinafter defined) arising
thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by
Assignee so long as there neither shall have been an acceleration
of maturity of the Note pursuant to Section 3.02 of the Mortgage nor
an exercise by the Mortgagee of its rights under Section 3.09 of the
Mortgage (either being hereinafter referred to as an "ACCELERATION
EVENT"), to (a) possess, use, manage, operate, enjoy and, subject to
and in accordance with the terms of the Mortgage, dispose of the
Operating Assets or any part thereof and to collect, receive, use,
invest and dispose of the rents, issues, tolls, profits, revenues
and other income therefrom (collectively, the "INCOME"), (b) use,
consume and dispose of any consumables, goods, wares and
merchandise in the ordinary course of business of operating the
Casino-Hotel and (c) adjust and settle all matters relating to choses
in action, leases and contracts. Upon the occurrence of an
Acceleration Event, Assignor agrees to deposit with Assignee upon
demand such of the Operating Agreements, Operating Assets and
receipts and revenues therefrom as may from time to time be
designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to possess, use, manage and enjoy the Operating Assets
or any part thereof and to collect, receive, use, invest, dispose
of and give complete acquittance for any and all Income herein
assigned which may be or become due and payable under the
Operating Agreements, to use, consume and dispose of any
consumable goods, wares and merchandise and to adjust and settle
all matters relating to choses in action, leases and contracts, and
at its discretion to file any claim or take any other action or
proceeding and make any settlement of any claims, either in its
own name or in the name of Assignor or otherwise, which Assignee
may deem necessary or desirable in order to collect and enforce the
rights herein assigned. No rights shall be exercised by Assignee
under this paragraph until an Acceleration Event has occurred. All
parties to the Operating Agreements are hereby expressly authorized
and directed, after the occurrence of an Acceleration Event, to pay
all amounts payable to Assignor thereunder to Assignee or such
nominee as Assignee may designate in writing delivered to and
received by such parties, who thereafter are expressly relieved of
any and all duty, liability or obligation to Assignor in respect of
all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Agreement, to collect all Income and to exercise all other
rights provided for hereunder. Assignee
2
<PAGE>
shall be under no obligation to press any of the rights or claims assigned to
it
hereunder, or to perform or carry out any of the obligations of
Assignor under any of the Operating Agreements and does not assume
any of the liabilities in connection with or arising or growing out
of the covenants and agreements of Assignor in the Operating
Agreements. It is further understood that this Assignment shall
not operate to place responsibility for the control, care,
management or repair of Assignor's estates or interests in and to
the Operating Assets, or parts thereof, upon Assignee, nor shall it
operate to make Assignee liable for the carrying out of any of the
terms and conditions of any of the Operating Agreements, or for any
negligence in the management, upkeep, repair or control of
Assignor's estates or interests in and to the Operating Assets
resulting in loss or injury or death to any lessee, licensee,
employee or stranger thereat. No rights shall be exercised by
Assignee under this paragraph until an Acceleration Event has
occurred.
For purposes of this Assignment, the term "OPERATING ASSETS" shall
exclude (i) any Tangible Personal Property, and (ii) other items
constituting Operating Assets or leases, which are Excepted
Property.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
IT IS AGREED that, to the extent the grant of a security interest
in the Operating Assets is governed by the provisions of the
Uniform Commercial Code, this Assignment is hereby agreed to be a
"Security Agreement" under such Code, and Assignor hereby grants to
Assignee a security interest in the Operating Assets. Assignor
shall at any time and from time to time execute and deliver such
additional security agreements, financing statements and
continuation statements, and shall take all such actions, as may
be necessary to perfect Assignee's interest under this Assignment
as a secured party under the Uniform Commercial Code.
IT IS FURTHER AGREED that the rights and benefits created hereunder
supplement and are not in substitution for the liens created by the
Mortgage with respect to the Operating Assets and that nothing
contained herein shall limit or affect the rights of Assignee
under the Mortgage.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 of the Mortgage (other than
(i) the release of the fee interest in and to the Leased Land or any
portion thereof, or (ii) if the Mortgagor obtains a Qualified
Leasehold Interest with respect
3
<PAGE>
to such portion of the Property), this Assignment shall be null and void with
respect to those Operating Assets (the "RELEASED ASSETS") which theretofore
have exclusively been used by Assignor with respect to the portion of
the Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Assets shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of such portion of the
Property to confirm any reversion of Assignee's right, title and
interest in the Released Assets effectuated pursuant to the
immediately preceding sentence, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 of the Mortgage,
provided that Assignee shall have no liability thereunder and all
costs and expenses shall be paid by Assignor.
Upon the termination of the Mortgage Documents and the payment in
full of the principal sum, interest and other Indebtedness secured
thereby, this Assignment shall be and become null and void, and all
estate, right, title and interest of Assignee in and to the
Operating Assets shall revert to Assignor and Assignee shall
promptly cancel and discharge of record this Assignment and any
financing statement filed in connection herewith and execute and
deliver to Assignor all such instruments as may be appropriate to
evidence such discharge and satisfaction of this Assignment
(provided that Assignee shall have no liability hereunder or
thereunder and all costs and expenses shall be paid by Assignor);
otherwise, this Assignment shall remain in full force and effect as
herein provided, shall inure to the benefit of Assignee and its
successors and assigns, and shall be binding upon Assignor and its
successors and assigns, and any subsequent holder of Assignor's
right, title, interest and estate in and to the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without the prior approval of
the New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain Intercreditor Agreement dated
as of the date hereof among Assignor, RIHF, Assignee, Fidelity
Management and Trust
4
<PAGE>
Company, as trustee, and State Street Bank and Trust Company of Connecticut,
National Association, as trustee (and such other parties that may from time to
time become a party thereto).
IN WITNESS WHEREOF, Assignor and Assignee have caused this
Assignment to be duly executed, all as of the date first above
set forth.
WITNESSES: ASSIGNOR:
RESORTS INTERNATIONAL HOTEL, INC.
__________________________ By:_________________________
Name:
Title:
ASSIGNEE:
U.S. TRUST COMPANY OF
CALIFORNIA, N.A.
___________________________ By:_________________________
Name:
Title:
5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the (Asst.)
Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation
named in the within instrument; that ____________ is the (Vice)
President of said Corporation; that the execution, as well as the
making of this instrument, has been duly authorized by a proper
resolution of the board of directors of the said corporation; that
deponent well knows the corporate seal of said corporation; and
that the seal affixed to said instrument is the proper corporate
seal and was thereto affixed and said instrument signed and
delivered by said Vice President as and for the voluntary act and
deed of said corporation. In presence of deponent who thereupon
subscribed his name thereto as attesting witness; and deponent
signed this proof to attest to the truth of these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of U.S. TRUST COMPANY OF CALIFORNIA, N.A., the
corporation named in the within instrument; that ____________ is
the Vice President of said corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
__________________________
[Name]
Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
7
<PAGE>
NOTE A
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re
RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware
corporation, formerly known as Griffin Resorts, Inc.,
Debtors.
Case Nos. _______________
and
_______________
Jointly Administered
Under Case No. _________________
Chapter 11
BALLOT TO (1) VOTE TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED
BY RESORTS INTERNATIONAL, INC. GGRI, INC., RESORTS INTERNATIONAL HOTEL INC.,
RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED AND (2)
ELECT TO CONSENT TO RELEASE OF OLD SECURITY DOCUMENTS
RESORTS INTERNATIONAL, INC. SERIES A NOTES BALLOT
RESORTS INTERNATIONAL, INC. SENIOR SECURED
REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES A
(RII CLASS 2 AND GRI CLASS 2)
PLEASE READ AND FOLLOW THE ATTACHED VOTING INSTRUCTIONS CAREFULLY BEFORE
COMPLETING THIS BALLOT. PLEASE COMPLETE, SIGN AND DATE THIS BALLOT AND PROMPTLY
RETURN IT IN THE ENCLOSED PREPAID RETURN ENVELOPE. THIS BALLOT MUST BE RECEIVED
BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK
CITY TIME, ON __________________ (THE "VOTING DEADLINE"). IF YOU SIGN THIS
BALLOT BUT FAIL TO INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN, THIS BALLOT
WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE PLAN. ALSO, IF YOU SIGN THIS
BALLOT BUT FAIL TO INDICATE WHETHER YOU AGREE OR REFUSE TO CONSENT TO THE
RELEASE OF THE OLD SECURITY DOCUMENTS, THIS BALLOT WILL BE DEEMED AND COUNTED AS
A CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS.
Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts
International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc.
("RIHF") and P. I. Resorts Limited ("PIRL") are soliciting your vote with
respect to the prepackaged joint plan of reorganization
SERIES A BALLOT
<PAGE>
under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the
"Debtors" or the "Company") which has been proposed by RII, GRI, RIH, RIHF and
PIRL (the "Plan") and is attached as Appendix A to the accompanying Information
Statement/Prospectus dated December __, 1993 (the "Information Statement").
This Ballot is to be used by registered record owners and beneficial owners of
Resorts Senior Secured Redeemable Notes due April 15, 1994, Series A (the
"Series A Notes"). Record holders/beneficial owners of Series A Notes are also
beneficiaries of the GRI Guaranty (as defined in the Plan). This Ballot is to
be used to vote with respect to the Plan both as record holders/beneficial
owners of Series A Notes and as beneficiaries of the GRI Guaranty and of the
Series A Notes.
Please read the Information Statement carefully before you vote.
TO INDICATE YOUR VOTE, COMPLETE THIS BALLOT
IN ACCORDANCE WITH THE ATTACHED INSTRUCTIONS.
ITEM 1: AMOUNT OF SERIES A NOTES.
The undersigned (the "Claimant") is as of January 10, 1994 (the "Voting
Record Date") the registered record holder or the beneficial owner of Series A
Notes in the principal amount of $__________, or such lesser or greater
principal amount as may be reflected in the records available to the Debtors
(the "Ballot Amount").
If you are a beneficial owner, the Ballot Amount should include only the
amount of Series A Notes held in account(s) with the bank or broker which
transmitted this Ballot to you. If you hold other Series A Notes in record name
or in one or more accounts with other banks or brokers, such Series A Notes
should be voted separately on the ballots received from such other banks or
brokers, or with respect to record name Series A Ballots, by you, in accordance
with the attached instructions. If you are a beneficial owner and do not know
your Ballot Amount, please contact your bank or broker immediately.
ITEM 2: VOTES WITH RESPECT TO THE PLAN AND RELEASE ELECTION.
As explained in the instructions, you are entitled to three separate votes
in connection with the Plan: (i) with respect to your Old Series Notes Claim (as
defined in the instructions hereto), you may vote to accept or reject the Plan;
(ii) with respect to your GRI Guaranty Claim (as defined in the instructions
hereto), you may vote to accept or reject the Plan; and (iii) you may elect to
consent to the release of the Old Security Documents (as defined in and) as
contemplated by the Plan. Please read the attached instructions carefully and
then complete each of Items 2A, 2B and 2C.
SERIES A BALLOT 2
<PAGE>
PLEASE COMPLETE EACH OF THE FOLLOWING SECTIONS:
A. OLD SERIES NOTES CLAIM.
Please vote to accept or reject the Plan.
YOUR FAILURE TO MARK EITHER CHOICE WILL
BE DEEMED AND COUNTED AS AN ACCEPTANCE.
---------------------------------------------------------
THE PLAN
---------------------------------------------------------
The undersigned Claimant votes the Ballot Amount
with respect to its Old Series Notes Claim to (please
check one):
__ ACCEPT THE PLAN
__ REJECT THE PLAN
------------------------------------------------------------
B. GRI Guaranty Claim.
Please vote to accept or reject the Plan.
YOUR FAILURE TO MARK EITHER CHOICE WILL
BE DEEMED AND COUNTED AS AN ACCEPTANCE.
-------------------------------------------------------------
THE PLAN
--------------------------------------------------------------
The undersigned Claimant votes the Ballot Amount
with respect to its GRI Guaranty Claim
to (please check one):
__ ACCEPT THE PLAN
__ REJECT THE PLAN
--------------------------------------------------------------
SERIES A BALLOT 3
<PAGE>
C. ELECTION TO CONSENT TO RELEASE OF THE OLD SECURITY DOCUMENTS
Please check whether you consent to the release of the Old Security
Documents. PLEASE NOTE THAT A CONDITION PRECEDENT TO CONSUMMATION TO THE PLAN
IS THE RELEASE AND TERMINATION OF THE OLD SECURITY DOCUMENTS.
YOUR FAILURE TO MARK EITHER CHOICE
WILL BE DEEMED AND COUNTED AS A CONSENT.
-------------------------------------------------------
RELEASE OF OLD SECURITY DOCUMENTS
-------------------------------------------------------
__ I consent to the release of the Old Security
Documents.
__ I do NOT consent to the release of the Old
Security Documents.
---------------------------------------------------------
ITEM 3: CERTIFICATION AS TO OLD SERIES NOTES.
The Resorts Senior Secured Redeemable Notes due April 15, 1994 were issued
in two series: Series A and Series B. Collectively, these two series of notes
are referred to as the Old Series Notes. By returning this Ballot, the
undersigned Claimant certifies that it has not submitted any other Ballots for
Old Series Notes (either Series A or Series B) except as specified in the table
immediately below. Please note that you must submit a separate Ballot for any
Series A Notes that you hold in record name or that are held on your behalf by a
broker or bank (or agent thereof). If you have submitted any other Ballot with
respect to Old Series Notes, Series A or Series B, please provide the
information required by this Item 3 in the following table (please use
additional sheets of paper if necessary):
- --------------------------------------------------------------------------------
Account Number
Series* Name of Holder** (if applicable) Principal Amount
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Please specify the series (A or B) of Old Series Notes for which other
Ballots were submitted.
** Insert your name if the Old Series Note is held by you in record name or, if
held in street name, insert the name of the broker or bank (or agent thereof).
SERIES A BALLOT 4
<PAGE>
ITEM 4: OTHER CERTIFICATIONS.
By returning this Ballot, the undersigned Claimant certifies:
(a) that it has not submitted any other Ballots for Old Series Notes
(Series A or Series B) that are inconsistent with the votes to accept or reject
the Plan and the decision with respect to the consent to the release of the Old
Security Documents as set forth herein or that, if such other Ballots have been
submitted for Old Series Notes, such earlier Ballots are hereby revoked;
(b) that it has been provided with a copy of the Information
Statement relating to the Plan and all related solicitation materials;
(c) that it understands that if this Ballot is validly executed and
returned without indicating any acceptance or rejection of the Plan (for either
the Old Series Notes Claim or the GRI Guaranty Claim), IT WILL BE COUNTED AS A
VOTE ACCEPTING THE PLAN WITH RESPECT BOTH TO THE Old SERIES NOTES CLAIM AND THE
GRI GUARANTY CLAIM;
(d) that it understands that if this Ballot is validly executed and
returned without indicating a consent or a refusal to consent to the release of
the Old Security Documents, IT WILL BE COUNTED AS A CONSENT TO THE RELEASE OF
THE OLD SECURITY DOCUMENTS; AND
(e) that it is the registered record holder or beneficial owner of
the Series A Notes set forth in Item 1 and has full power and authority to vote
to accept or reject the Plan. The undersigned Claimant also acknowledges that
this solicitation is subject to all the terms and conditions set forth in the
Information Statement relating to the Plan.
SERIES A BALLOT 5
<PAGE>
YOU ARE URGED TO VOTE ON THE PLAN AND TO INDICATE WHETHER YOU CONSENT
TO THE RELEASE OF THE OLD SECURITY DOCUMENTS.
Name of Creditor:
______________________________________
(Print or Type)
By:___________________________________
(Signature of Creditor or Authorized Agent)
Print Name of
Signatory:______________________________
Title:__________________________________
(If Appropriate)
Street Address:__________________________
_________________________________________
City, State and Zip Code
Telephone Number:_______________________
________________________________________
Social Security or Federal Tax I.D. No. (Optional)
Date Completed:_________________________
YOUR VOTE MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON
AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY
5:00 P.M., NEW YORK CITY TIME, ON ___________________, 1994 OR YOUR VOTE WILL
NOT BE COUNTED. IF YOU HOLD IN STREET NAME, PLEASE ALLOW SUFFICIENT ADDITIONAL
TIME FOR PROCESSING OF YOUR VOTE BY YOUR BANK OR BROKER, OR ITS AGENT.
SERIES A BALLOT 6
<PAGE>
VOTING INFORMATION AND
INSTRUCTIONS FOR SERIES A NOTES BALLOT
RESORTS INTERNATIONAL, INC. SENIOR SECURED
REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES A
(RII CLASS 2 AND GRI CLASS 2)
1. Resorts International, Inc. ("RII") and GGRI, Inc. ("GRI")
(collectively, the Debtors), and Resorts International Hotel, Inc.("RIH"),
Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited
("PIRL") are soliciting your vote with respect to the Joint Plan of
Reorganization under Chapter 11 of the Bankruptcy Code Proposed by Resorts
International, Inc., GGRI, Inc., Resorts International Hotel, Inc., Resorts
International Hotel Financing, Inc. and P. I. Resorts Limited (the "Plan"), a
copy of which is attached as Appendix A to the accompanying Information
Statement/Prospectus dated January __, 1994 (the "Information Statement").
PLEASE REVIEW THE INFORMATION STATEMENT CAREFULLY BEFORE YOU VOTE.
2. The Plan can be confirmed by the Bankruptcy Court and thereby
made binding on you if it is accepted by the holders of two-thirds in amount and
more than one-half in number of claims in each class and the holders of
two-thirds in amount of equity interests in each class voting on such plan. In
the event the requisite acceptances are not obtained, the Bankruptcy Court may
nevertheless confirm the Plan if at least one impaired class of creditors votes
to accept the Plan and the Bankruptcy Court finds that the Plan accords fair and
equitable treatment to and does not discriminate unfairly against the class or
classes rejecting it.
3. The Resorts Senior Secured Redeemable Notes due April 15, 1994
were issued in two series: Series A and Series B. Collectively, these two
series of notes are referred to as the Old Series Notes. Under the Plan, all
Claims arising from Old Series Notes, regardless of series, are classified in a
single class (RII Class 2). For purposes of voting with respect to the Plan,
Claimants who hold both Series A Notes and Series B Notes are treated as having
a single "Old Series Notes Claim" (in the aggregate principal amount of the
Claimant's Series A Notes and Series B Notes). Additionally, record
holders/beneficial owners of Old Series Notes (regardless of series) are also
beneficiaries of the GRI Guaranty (as defined in the Plan) which secured RII's
obligations under the Old Series Notes. As a result of the GRI Guaranty, record
holders/beneficial owners of Old Series Notes also hold Claims against GRI ("GRI
Guaranty Claims"). A Claimant's GRI Guaranty Claim is classified separately
from its Old Series Notes Claim in GRI Class 2. As a result, for purposes of
voting with respect to the Plan, a record holder/beneficial owner of Old Series
Notes is entitled to a separate vote on the Plan with respect to its GRI
Guaranty Claim.
4. Finally, RII and GRI are soliciting your consent to release the
Old Security Documents under which the liens on the property securing the Old
Series Notes were granted or created. The Old Security Documents, in effect,
pledge RIH's assets (including the Resorts International Hotel) to secure the
Old Series Notes. Under the Plan, these same assets are pledged to secure the
new debt obligations to be issued to you. Pursuant to the Old Series Note
Indenture, to effectuate such termination and
SERIES A BALLOT 7
<PAGE>
release consensually, the record holders of at least 66 2/3% in aggregate
principal amount of the outstanding Old Series Notes and the record holders of
at least a majority in aggregate principal amount of each series of the Old
Series Notes must execute consents. Accordingly, RII and GRI are seeking
consents from the holders of Old Series Notes. If insufficient consents are
received from holders of Old Series Notes to effectuate such termination and
release consensually, RII and GRI intend to request the Bankruptcy Court to
order the release of the Old Security Documents; however, no assurance can be
given that such an order will be entered. In no event will the consents to
release the Old Security Documents be used to effectuate the termination and
release of the Old Security Documents in the absence of the confirmation and
consummation of the Plan. If RII and GRI fail to receive the Requisite
Acceptances, notwithstanding receipt of sufficient consents to release and
terminate the Old Security Documents pursuant to the Old Series Note Indenture,
such consents will only be used in the event that RII and GRI continue to pursue
confirmation and consummation of the Plan. In the event that RII and GRI elect
or are required to resolicit Acceptances of the Plan, however, they reserve the
right not to resolicit with respect to the consents to release the Old Security
Documents and to use consents received from the initial Solicitation.
5. Accordingly, this Ballot requests three separate votes from the
record holders/beneficial owners of Series A Notes. Each record
holder/beneficial owner of Series A Notes has the right to vote with respect to
TWO Claims, its Old Series Notes Claim and its GRI Guaranty Claim. Therefore,
first, you must vote with respect to your Old Series Notes Claim to accept or
reject your treatment under the Plan. Second, you must vote with respect to
your GRI Guaranty Claim to accept or reject your treatment under the Plan.
Third, you must vote whether to consent to the release of the Old Security
Documents (as defined in the Plan). IF YOU DO NOT CONSENT TO THE RELEASE OF THE
OLD SECURITY DOCUMENTS, THE PLAN MAY NOT BE CONFIRMABLE AND THE TRANSACTIONS
THEREUNDER MAY NOT BE IMPLEMENTED.
6. For your vote to be counted, you must complete the Ballot, and
sign and return it to the address set forth on the enclosed prepaid return
envelope. Ballots must be received by Hill and Knowlton, Inc. (the
"Solicitation Agent") no later than 5:00 p.m., New York City time, on
_____________, 1994 (the "Voting Deadline"). If you received a return envelope
addressed to your broker or bank (or agent thereof), be sure to return your
Ballot early enough for your vote to be processed and then forwarded to and
received by the Solicitation Agent by the Voting Deadline.
7. If you are a beneficial owner and your broker or bank accepts
facsimiles, your Ballot may be transmitted by facsimile to the appropriate
telephone number provided by your broker or bank (or agent thereof). If you are
a record holder, Ballots may be submitted by facsimile to Hill and Knowlton at
the appropriate number set forth below. In either case, Ballots transmitted by
facsimile must be received by the Solicitation Agent no later than the Voting
Deadline. For inspection purposes, the original of any telecopied Ballot should
be delivered to your broker or bank (or agent thereof) or to Hill and Knowlton,
whichever is applicable, so as to be received no later than fifteen (15) days
after the Voting Deadline.
ITEM 1
Insert the Ballot Amount in Item 1 of the Ballot. The "Ballot
Amount"is the principal amount of Series A Notes held by you as the registered
record holder or the beneficial owner thereof. If you are a beneficial owner,
the Ballot Amount should include only the amount of Series A Notes held in
account(s) with the bank or broker which transmitted this Ballot to you. If you
hold other Series A Notes in record name or in one or more accounts with other
banks or brokers, such Series A Notes must be voted separately on the ballots
received from such other banks or brokers, or in the case of record name Series
A Notes, by you, in accordance with the instructions for Item 2 set forth below.
If you are a
SERIES A BALLOT 8
<PAGE>
beneficial owner and do not know your Ballot Amount, please contact your bank or
broker immediately.
ITEM 2
(i) In the appropriate boxes in Item 2, indicate your votes with
respect to (a) your Old Series Note Claim, (b) your GRI Guaranty Claim and (c)
your decision whether to consent to the release of the Old Security Documents.
(ii) You may vote differently on the Plan with respect to your Old
Series Notes Claim and your GRI Guaranty Claim. If, however, you cast a vote on
the Plan with respect to only one of these two Claims, you will be deemed to
have voted identically with respect to the other Claim. Additionally, any
VALIDLY EXECUTED Ballot which does not indicate acceptance or rejection of the
Plan with respect to either the Old Series Notes Claim or the GRI Guaranty Claim
WILL BE DEEMED AN ACCEPTANCE OF THE PLAN WITH RESPECT TO BOTH CLAIMS. There can
be no assurance, however, that the Bankruptcy Court will permit unmarked Ballots
to be counted. Accordingly, you are encouraged to both execute your Ballot and
to indicate in the appropriate boxes in Item 2 your votes with respect to the
Plan.
(iii) Although you may vote differently on the Plan with respect
to your Old Series Notes Claim (RII Class 2) and your GRI Guaranty Claim (GRI
Class 2), you must vote your entire Claim Amount with respect to each Claim to
accept or reject the Plan. Also if you hold Old Series Notes in multiple
accounts, you must vote all of your claims within a single class under the Plan
to accept or reject the Plan. Thus, you may not split your vote on the Plan in
any way (either on a single Ballot or on multiple Ballots) with respect to your
Old Series Notes Claim or your GRI Guaranty Claim. If you are a record
holder/beneficial owner of Series B Notes as well as Series A Notes, you must
also vote your Old Series Notes Claim represented by this Ballot consistently
with any Ballot you submit with respect to your Series B Notes.
(iv) Furthermore, any VALIDLY EXECUTED Ballot which does not indicate
whether the holder consents or refuses to consent to the release of the Old
Security Documents WILL BE DEEMED AND COUNTED AS A CONSENT TO THE RELEASE OF THE
OLD SECURITY DOCUMENTS, REGARDLESS OF HOW THE HOLDER MAY HAVE VOTED ITS CLAIMS
WITH RESPECT TO THE PLAN. Please note that a condition precedent to
consummation to the Plan is the release and termination of the Old Security
Documents. As with the vote to accept or reject the Plan, you may not split
your vote with respect to the consent to release of the Old Security Documents
in any way (either on a single Ballot or on multiple Ballots).
(v) A Ballot that partially accepts and partially rejects the Plan
with respect to either of the record holder/beneficial owner's two Claims or
splits its vote with respect to the election to consent to the release of the
Old Security Documents will not be counted. Additionally, any prior Ballots
submitted by you as a record holder/beneficial owner of Old Series Notes (for
the Series A Notes represented by this Ballot, other Series A Notes or Series B
Notes) will not be counted to the extent that the votes indicated by those prior
Ballots are inconsistent with the votes indicated on this Ballot within a single
class of claims or with respect to the decision as to whether to consent to the
release of the Old Security Documents. If multiple Ballots are received from an
individual Claimant for the same Claim prior to the Voting Deadline that are
inconsistent with respect to the votes to accept or reject the Plan and the
decision regarding the consent to the release of the Old Security Documents, the
last ballot received shall supersede and revoke any earlier received ballot.
SERIES A BALLOT 9
<PAGE>
ITEM 3
In Item 3 of the Ballot, insert the requested information for all Old
Series Notes held by you either as record holder or beneficial owner for which
other Ballots have been submitted.
ITEM 4
Please review and certify as to the matter set forth in Item 4 and
execute the Ballot in the space provided. This Ballot must be returned in
sufficient time to allow it to be received by the Solicitation Agent by no later
than 5:00 p.m., New York City time, on ___________, 1994. If you believe you
have received the wrong ballot, please contact the Solicitation Agent or your
broker or bank immediately.
The Ballot attached hereto is not a letter of transmittal and may not
be used for any purpose other than to vote to (i) accept or reject the Plan and
(ii) elect to consent to the release of the Old Security Documents. Accordingly,
at this time, holders should not surrender certificates representing their
securities, and neither the Debtors nor the Solicitation Agent will accept
delivery of any such certificates surrendered together with this Ballot. The
remittance of your securities for exchange pursuant to the Plan may only be made
by your broker or bank (or agent thereof) or, in the case of registered record
holders, by you, and will only be accepted if certificates representing your
securities (in proper form for transfer) are delivered together with a letter of
transmittal which will be furnished to your broker or bank (or agent thereof) or
you (in the case of registered record holders) as provided under the Plan or as
notified following confirmation of the Plan by the Bankruptcy Court. Moreover,
the Ballot does not constitute and shall not be deemed a proof of claim or
interest or an assertion of a claim or interest.
PLEASE MAIL YOUR BALLOT PROMPTLY!
IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING
PROCEDURES, PLEASE CALL THE SOLICITATION AGENT:
HILL AND KNOWLTON, INC.
ATTN: RESORTS BALLOT SOLICITATION GROUP
420 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 210-8850
SERIES A BALLOT 10
<PAGE>
For your information, the Plan divides creditors and equity interest
holders of RII and GRI into the following classes:
RII CREDITORS AND EQUITY INTEREST HOLDERS
Class 1.* Priority Claims
Class 2. Old Series Notes Claims
Class 3.* Showboat Notes Claims
Class 4.* Secured Claims
Class 5.* RII Unsecured Claims
Class 6.* Paradise Subsidiary Claims
Class 7. RII Equity Interests
Class 8. 1990 Stock Option Plan Interests
GRI CREDITORS AND EQUITY INTEREST HOLDERS
Class 1.* Priority Claims
Class 2. GRI Guaranty Claims
Class 3.* GRI Unsecured Claims
Class 4. RII Intercompany Claim
Class 5. GRI Equity Interest
* Unimpaired or otherwise deemed to accept or reject the Plan.
SERIES A BALLOT 11
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re
RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware
corporation, formerly known as Griffin Resorts, Inc.,
Debtors.
Case Nos. _______________
and
_______________
Jointly Administered
Under Case No. _________________
Chapter 11
BALLOT TO VOTE TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED BY
RESORTS INTERNATIONAL, INC., GGRI, INC., RESORTS INTERNATIONAL HOTEL INC.,
RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED
RESORTS INTERNATIONAL, INC. COMMON STOCK BALLOT
RESORTS INTERNATIONAL, INC. COMMON STOCK, PAR VALUE $.01 PER SHARE
(RII CLASS 7)
PLEASE READ AND FOLLOW THE ATTACHED VOTING INSTRUCTIONS CAREFULLY BEFORE
COMPLETING THIS BALLOT. PLEASE COMPLETE, SIGN AND DATE THIS BALLOT AND PROMPTLY
RETURN IT IN THE ENCLOSED PREPAID RETURN ENVELOPE. THIS BALLOT MUST BE RECEIVED
BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK
CITY TIME, ON __________________ (THE "VOTING DEADLINE"). IF YOU SIGN THIS
BALLOT BUT FAIL TO INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN, THIS BALLOT
WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE PLAN.
Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts
International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc.
("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting your vote with
respect to the prepackaged joint plan of reorganization under chapter 11 of the
Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company")
which has been proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") and is
attached as Appendix A to the accompanying Information Statement/Prospectus
dated January___, 1994 (the "Information Statement"). This Ballot is to be used
by registered record owners and Beneficial Owners (as defined herein) of shares
of Resorts International, Inc. Common Stock, par value $.01 per share (the
"Common Stock") to vote with respect to the Plan.
<PAGE>
Please read the Information Statement carefully before you vote.
TO INDICATE YOUR VOTE, COMPLETE THIS BALLOT
IN ACCORDANCE WITH THE ATTACHED INSTRUCTIONS.
ITEM 1: AMOUNT OF COMMON STOCK.
The undersigned (the "Interest Holder") is as of January 10, 1994 ("the
Voting Record Date") the registered record holder or the beneficial owner of
Common Stock in the amount of ____________ shares, or such lesser or greater
number of shares as may be reflected in the records available to the Debtors
(the "Interest").
If you are a beneficial owner, the Interest amount requested above should
include only the amount of Common Stock held in account(s) with the bank or
broker which transmitted this Ballot to you. If you hold other shares of Common
Stock in record name or in one or more accounts with other banks or brokers,
such shares of Common Stock should be voted separately on the ballots received
from such other banks or brokers, or with respect to record name shares of
Common Stock, by you, in accordance with the attached instructions. If you are
a beneficial owner and do not know the amount of your Interest, please contact
your bank or broker immediately.
ITEM 2: VOTE WITH RESPECT TO THE PLAN.
Please vote to accept or reject the Plan. YOUR FAILURE TO MARK EITHER
CHOICE WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE.
--------------------------------------------------
THE PLAN
--------------------------------------------------
The undersigned Interest Holder votes all of its
Common Stock Interest to (please check one):
__ ACCEPT
__ REJECT
--------------------------------------------------
2
<PAGE>
ITEM 3: CERTIFICATION AS TO COMMON STOCK.
By returning this Ballot, the undersigned Interest Holder certifies that it
has not submitted any other Ballots for the Common Stock, except as
specified in the table immediately below.
- --------------------------------------------------------------------------------
ACCOUNT NUMBER
NAME OF HOLDER* (IF APPLICABLE) NUMBER OF SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Insert your name if the shares of Common Stock are held by you in record name
or, if held in street name, insert the name of the broker or bank (or agent
thereof).
ITEM 4: OTHER CERTIFICATIONS.
By returning this Ballot, the undersigned Interest Holder certifies:
(a) that it has not submitted any other Ballots for Common Stock or
that, if any other Ballots have been submitted for Common Stock, such earlier
Ballots are hereby revoked;
(b) that it has been provided with a copy of the Information
Statement relating to the Plan and all related solicitation materials;
(c) that it understands that if this Ballot is validly executed and
returned without indicating an acceptance or rejection of the Plan, IT WILL BE
COUNTED AS A VOTE ACCEPTING THE PLAN; and
(d) that it is the registered record holder or Beneficial Owner of
the Common Stock set forth in Item 1 and has full power and authority to vote to
accept or reject the Plan. The undersigned Interest Holder also acknowledges
that this solicitation is subject to all the terms and conditions set forth in
the Information Statement relating to the Plan.
3
<PAGE>
YOU ARE URGED TO VOTE ON THE PLAN.
Name of Interest Holder:
_____________________________________________
(Print or Type)
By:__________________________________________
(Signature of Holder or Authorized Agent)
Print Name of
Signatory:___________________________________
Title:_______________________________________
(If Appropriate)
Street Address:______________________________
_____________________________________________
City, State and Zip Code
Telephone Number: _(___)_____________________
_____________________________________________
Social Security or Federal Tax I.D. No.
(Optional)
Date Completed:______________________________
YOUR VOTE MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON
AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY
5:00 P.M., NEW YORK CITY TIME, ON ________________________ OR YOUR VOTE WILL NOT
BE COUNTED. IF YOU HOLD IN STREET NAME, PLEASE ALLOW SUFFICIENT ADDITIONAL TIME
FOR PROCESSING OF YOUR VOTE BY YOUR BANK OR BROKER, OR ITS AGENT.
4
<PAGE>
VOTING INFORMATION AND INSTRUCTIONS FOR
RESORTS INTERNATIONAL, INC. COMMON STOCK BALLOT
RESORTS INTERNATIONAL, INC. COMMON STOCK, PAR VALUE $.01 PER SHARE
(RII CLASS 7)
1. Resorts International, Inc. ("RII") and GGRI, Inc. ("GGRI")
(collectively, the Debtors), Resorts International Hotel, Inc.("RIH"), Resorts
International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL")
are soliciting your vote with respect to the Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code Proposed by Resorts International, Inc., GGRI,
Inc., Resorts International Hotel, Inc., Resorts International Hotel Financing,
Inc., and P. I. Resorts Limited (the "Plan"), a copy of which is attached as
Appendix A to the accompanying Information Statement/Prospectus dated January
__, 1994 (the "Information Statement"). PLEASE REVIEW THE INFORMATION STATEMENT
CAREFULLY BEFORE YOU VOTE.
2. The Plan can be confirmed by the Bankruptcy Court and thereby
made binding on you if it is accepted by the holders of two-thirds in amount and
more than one-half in number of claims or interests in each class and the
holders of two-thirds in amount of equity interests in each class voting on such
plan. In the event the requisite acceptances are not obtained, the Bankruptcy
Court may nevertheless confirm the Plan if at least one impaired class of
creditors votes to accept the Plan and the Bankruptcy Court finds that the Plan
accords fair and equitable treatment to and does not discriminate unfairly
against the class or classes rejecting it.
3. This Ballot requests that you, as a record holder/Beneficial
Owner of Common Stock, vote to accept or reject your treatment under the Plan.
For your vote to be counted, you must complete the Ballot and sign and return it
to the address set forth on the enclosed prepaid return envelope. Ballots must
be received by Hill and Knowlton, Inc. (the "Solicitation Agent") no later than
5:00 p.m., New York City time, on ________________, 1994 (the "Voting
Deadline"). If you received a return envelope addressed to your broker or bank
(or agent thereof), be sure to return your ballot early enough for your vote to
be processed and then forwarded to and received by the Solicitation Agent by the
Voting Deadline.
4. If you are a beneficial owner and your broker or bank accepts
facsimiles, your Ballot may be transmitted by facsimile to the appropriate
telephone number provided by your broker or bank (or agent thereof). If you are
a record holder, Ballots may be submitted by facsimile to Hill and Knowlton at
the appropriate number set forth below. In either case, Ballots transmitted by
facsimile must be received by the Solicitation Agent no later than the Voting
Deadline. For inspection purposes, the original of any telecopied Ballot should
be delivered to your broker or bank (or agent thereof) or to Hill and Knowlton,
whichever is applicable, so as to be received no later than fifteen (15) days
after the Voting Deadline.
ITEM 1
Insert the Interest amount in Item 1 of the Ballot.
5
<PAGE>
ITEM 2
(i) Indicate your vote with respect to the Plan in the appropriate
box in Item 2.
(ii) Any VALIDLY EXECUTED Ballot which does not indicate acceptance
or rejection of the Plan WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE
PLAN. There can be no assurance, however, that the Bankruptcy Court will permit
unmarked Ballots to be counted. Accordingly, you are encouraged to both execute
your Ballot and to indicate in the box in Item 2 your vote with respect to the
Plan.
(iii) You must vote all of your Interest to accept or reject the Plan.
If you hold Common Stock in multiple accounts, you must vote all of your Common
Stock Interest to accept or reject the Plan. Thus, you may not split your vote
on the Plan in any way (either on a single Ballot or on multiple Ballots) with
respect to your Common Stock Interest.
(iv) A Ballot that partially accepts and partially rejects the Plan
will not be counted. Additionally, any prior Ballots submitted by you as a
record holder/beneficial owner of Common Stock will not be counted to the extent
that the votes indicated by those prior Ballots are inconsistent with the votes
indicated on this Ballot. If multiple Ballots are received from an
individual Interest holder with respect to that holder's RII Common Stock prior
to the Voting Deadline that are inconsistent with respect to the vote to accept
or reject the Plan, the last ballot received shall supersede and revoke any
earlier received ballot.
ITEM 3
In Item 3 of the Ballot, insert the requested information for all 1990
Stock Options held by you either as record holder or beneficial owner for
which other Ballots have been submitted.
ITEM 4
Please review and certify as to the matters set forth in Item 4 and
execute the Ballot in the space provided. This Ballot must be returned in
sufficient time to allow it to be received by the Solicitation Agent by no later
than 5:00 p.m., New York City time, on ______________. If you believe you have
received the wrong ballot, please contact the Solicitation Agent or your broker
or bank immediately.
7. The Ballot attached hereto is not a letter of transmittal and may
not be used for any purpose other than to vote to accept or reject the Plan.
Accordingly, at this time, holders should not surrender certificates
representing their securities, and neither the Debtors nor the Solicitation
Agent will accept delivery of any such certificates surrendered together with
this Ballot. The remittance of your securities for exchange pursuant to the
Plan may only be made by your broker or bank (or agent thereof) or, in the case
of registered record holders, by you, and will only be accepted if certificates
representing your securities (in proper form for transfer) are delivered
together with a letter of transmittal which will be furnished to your broker or
bank (or agent thereof) or you (in the case of registered record holders) as
provided under the Plan or as notified following confirmation of the Plan by the
Bankruptcy Court. Moreover, the Ballot does not constitute and shall not be
deemed a proof of claim or interest or an assertion of a claim or interest.
6
<PAGE>
PLEASE MAIL YOUR BALLOT PROMPTLY!
---------------------------------
IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING
PROCEDURES, PLEASE CALL THE SOLICITATION AGENT:
HILL AND KNOWLTON, INC.
ATTN: RESORTS BALLOT SOLICITATION GROUP
420 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 210-8850
7
<PAGE>
For your information, the Plan divides creditors and equity interest
holders of RII and GRI into the following classes:
RII CREDITORS AND EQUITY INTEREST HOLDERS
Class 1.* Priority Claims
Class 2. Series Notes Claims
Class 3.* Showboat Notes Claims
Class 4.* Secured Claims
Class 5.* RII Unsecured Claims
Class 6.* Paradise Subsidiary Claims
Class 7. RII Equity Interests
Class 8. 1990 Stock Option Plan Interests
GRI CREDITORS AND EQUITY INTEREST HOLDERS
Class 1.* Priority Claims
Class 2. GRI Guaranty Claims
Class 3.* GRI Unsecured Claims
Class 4. RII Intercompany Claim
Class 5. GRI Equity Interest
* Unimpaired or otherwise deemed to accept or reject the Plan.
8
<PAGE>
EXHIBIT 10.47
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re
RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware
corporation, formerly known as Griffin Resorts, Inc.,
Debtors.
Case Nos. _______________
and
_______________
Jointly Administered
Under Case No. _________________
Chapter 11
BALLOT TO VOTE TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED BY
RESORTS INTERNATIONAL, INC., GGRI, INC., RESORTS INTERNATIONAL HOTEL INC.,
RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED
RESORTS INTERNATIONAL, INC. STOCK OPTION BALLOT
STOCK OPTIONS ISSUED PURSUANT TO
RESORTS INTERNATIONAL, INC. SENIOR MANAGEMENT STOCK OPTION PLAN
(RII CLASS 8)
PLEASE READ AND FOLLOW THE ATTACHED VOTING INSTRUCTIONS CAREFULLY BEFORE
COMPLETING THIS BALLOT. PLEASE COMPLETE, SIGN AND DATE THIS BALLOT AND PROMPTLY
RETURN IT IN THE ENCLOSED PREPAID RETURN ENVELOPE. THIS BALLOT MUST BE RECEIVED
BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK
CITY TIME, ON __________________ (THE "VOTING DEADLINE"). IF YOU SIGN THIS
BALLOT BUT FAIL TO INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN, THIS BALLOT
WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE PLAN.
Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts
International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc.
("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting your vote with
respect to the prepackaged joint plan of reorganization under chapter 11 of the
Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company")
which has been proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") and is
attached as Appendix A to the accompanying Information Statement/Prospectus
dated January ____, 1994 (the "Information Statement"). This Ballot is to be
used by registered record holders of stock options ("1990 Stock Options") issued
pursuant to the Resorts International, Inc. Senior Management Stock Option Plan,
dated as of September 17, 1990 (the "1990 Stock Option Plan") to vote with
respect to the Plan.
<PAGE>
Please read the Information Statement carefully before you vote.
TO INDICATE YOUR VOTE, COMPLETE THIS BALLOT
IN ACCORDANCE WITH THE ATTACHED INSTRUCTIONS.
ITEM 1: AMOUNT OF STOCK OPTIONS.
The undersigned (the "Interest Holder") is as of January 10, 1993 (the
Voting Record Date") the registered record holder or the beneficial owner of
1990 Stock Options in the amount of ____________ options, or such lesser or
greater number of options as may be reflected in the records available to the
Debtors (the "Interest").
ITEM 2: VOTE WITH RESPECT TO THE PLAN.
Please vote to accept or reject the Plan:
-----------------------------------------------------
THE PLAN
-----------------------------------------------------
The undersigned Interest Holder votes all of its 1990
Stock Option Interest to (please check one):
__ ACCEPT
__ REJECT
-----------------------------------------------------
2
<PAGE>
ITEM 3: CERTIFICATION AS TO 1990 STOCK OPTIONS.
By returning this Ballot, the undersigned Interest Holder certifies that it
has not submitted any other Ballots for the 1990 Stock Options, except as
specified in the table immediately below. If applicable to you, please provide
the information required by this Item 3 in the following table (please use
additional sheets of paper if necessary):
- --------------------------------------------------------------------------------
ACCOUNT NUMBER
NAME OF HOLDER* (IF APPLICABLE) NUMBER OF SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Insert your name if the 1990 Stock Options are held by you in record name or,
if held in street name, insert the name of the broker or bank (or agent
thereof).
ITEM 4: OTHER CERTIFICATIONS.
By returning this Ballot, the undersigned Interest Holder certifies:
(a) that it has not submitted any other Ballots for 1990 Stock
Options or that, if any other Ballots have been submitted for 1990 Stock
Options, such earlier Ballots are hereby revoked;
(b) that it has been provided with a copy of the Information
Statement relating to the Plan and all related solicitation materials;
(c) that it understands that if this Ballot is validly executed and
returned without indicating an acceptance or rejection of the Plan, IT WILL BE
COUNTED AS A VOTE ACCEPTING THE PLAN; and
(d) that it is the registered record holder or beneficial owner of
the 1990 Stock Options set forth in Item 1 and has full power and authority to
vote to accept or reject the Plan. The undersigned Interest Holder also
acknowledges that this solicitation is subject to all the terms and conditions
set forth in the Information Statement relating to the Plan.
3
<PAGE>
YOU ARE URGED TO VOTE ON THE PLAN.
Name of Interest Holder:
_____________________________________________
(Print or Type)
By:__________________________________________
(Signature of Holder or Authorized Agent)
Print Name of
Signatory:___________________________________
Title:_______________________________________
(If Appropriate)
Street Address:______________________________
_____________________________________________
City, State and Zip Code
Telephone Number: _(___)_____________________
_____________________________________________
Social Security or Federal Tax I.D. No.
(Optional)
Date Completed:______________________________
YOUR VOTE MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON
AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY
5:00 P.M., NEW YORK CITY TIME, ON ________________________ OR YOUR VOTE WILL NOT
BE COUNTED.
4
<PAGE>
VOTING INFORMATION AND INSTRUCTIONS FOR
RESORTS INTERNATIONAL, INC. STOCK OPTIONS BALLOT
STOCK OPTIONS ISSUED PURSUANT TO
RESORTS INTERNATIONAL, INC. SENIOR MANAGMENT STOCK OPTION PLAN
(RII CLASS 8)
1. Resorts International, Inc. ("RII") and GGRI, Inc. ("GRI")
(collectively, the Debtors), Resorts International Hotel, Inc.("RIH"), Resorts
International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL")
are soliciting your vote with respect to the Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code Proposed by Resorts International, Inc., GGRI,
Inc., Resorts International Hotel, Inc., Resorts International Hotel Financing,
Inc., and P. I. Resorts Limited (the "Plan"), a copy of which is attached as
Appendix A to the accompanying Information Statement/Prospectus dated January
____, 1994 (the "Information Statement"). PLEASE REVIEW THE INFORMATION
STATEMENT CAREFULLY BEFORE YOU VOTE.
2. The Plan can be confirmed by the Bankruptcy Court and thereby
made binding on you if it is accepted by the holders of two-thirds in amount and
more than one-half in number of claims or interests in each class and the
holders of two-thirds in amount of equity interests in each class voting on such
plan. In the event the requisite acceptances are not obtained, the Bankruptcy
Court may nevertheless confirm the Plan if at least one impaired class of
creditors votes to accept the Plan and the Bankruptcy Court finds that the Plan
accords fair and equitable treatment to and does not discriminate unfairly
against the class or classes rejecting it.
3. This Ballot requests that you, as a record holder of stock
options ("1990 Stock Options") issued pursuant to the Resorts International,
Inc. Senior Management Stock Option Plan, dated as of September 17, 1990 (the
"1990 Stock Option Plan"), vote to accept or reject your treatment under the
Plan. For your vote to be counted, you must complete the Ballot, and sign and
return it to the address set forth on the enclosed prepaid return envelope.
Ballots must be received by Hill and Knowlton, Inc. (the "Solicitation Agent")
no later than 5:00 p.m., New York City time, on ________________ (the "Voting
Deadline"). If you received a return envelope addressed to your broker or bank
(or agent thereof), be sure to return your ballot early enough for your vote to
be processed and then forwarded to and received by the Solicitation Agent by the
Voting Deadline.
4. If you are a beneficial owner and your broker or bank accepts
facsimiles, your Ballot may be transmitted by facsimile to the appropriate
telephone number provided by your broker or bank (or agent thereof). If you are
a record holder, Ballots may be submitted by facsimile to Hill and Knowlton at
the appropriate number set forth below. In either case, Ballots transmitted by
facsimile must be received by the Solicitation Agent no later than the Voting
Deadline. For inspection purposes, the original of any telecopied Ballot should
be delivered to your broker or bank (or agent thereof) or to Hill and Knowlton,
whichever is applicable, so as to be received no later than fifteen (15) days
after the Voting Deadline.
ITEM 1
Insert the Interest amount in Item 1 of the Ballot.
5
<PAGE>
ITEM 2
(i) Indicate your vote with respect to the Plan in the appropriate
box in Item 2.
(ii) You must vote all of your Interest to accept or reject the Plan.
A Ballot that partially accepts and partially rejects the Plan will not be
counted. Additionally, any prior Ballots submitted by you as a record
holder/beneficial owner of 1990 Stock Options will not be counted. If multiple
Ballots are received from an individual Interest holder with respect to that
holder's 1990 Stock Options prior to the Voting Deadline, the last ballot
received shall supersede and revoke any earlier received ballot.
(iii) Any VALIDLY EXECUTED Ballot which does not indicate acceptance
or rejection of the Plan WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE
PLAN. There can be no assurance, however, that the Bankruptcy Court will permit
unmarked Ballots to be counted. Accordingly, you are encouraged to both execute
your Ballot and to indicate in the box in Item 2 your vote with respect to the
Plan.
ITEM 3
In Item 3 of the Ballot, insert the requested information for all 1990
Stock Options held by you either as record holder or beneficial owner for
which other Ballots have been submitted.
ITEM 4
Please review and certify as to the matters set forth in Item 4 and
execute the Ballot in the space provided. This Ballot must be returned in
sufficient time to allow it to be received by the Solicitation Agent by no later
than 5:00 p.m., New York City time, on ______________. If you believe you have
received the wrong ballot, please contact the Solicitation Agent or your broker
or bank immediately.
The Ballot attached hereto is not a letter of transmittal and may not
be used for any purpose other than to vote to accept or reject the Plan.
Accordingly, at this time, holders should not surrender certificates
representing their securities, and neither the Debtors nor the Solicitation
Agent will accept delivery of any such certificates surrendered together with
this Ballot. The remittance of your securities for exchange pursuant to the
Plan may only be made by your broker or bank (or agent thereof) or, in the case
of registered record holders, by you, and will only be accepted if certificates
representing your securities (in proper form for transfer) are delivered
together with a letter of transmittal which will be furnished to your broker or
bank (or agent thereof) or you (in the case of registered record holders) as
provided under the Plan or as notified following confirmation of the Plan by the
Bankruptcy Court. Moreover, the Ballot does not constitute and shall not be
deemed a proof of claim or interest or an assertion of a claim or interest.
PLEASE MAIL YOUR BALLOT PROMPTLY!
IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING
PROCEDURES, PLEASE CALL THE SOLICITATION AGENT:
HILL AND KNOWLTON, INC.
ATTN: RESORTS BALLOT SOLICITATION GROUP
420 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 210-8850
6
<PAGE>
For your information, the Plan divides creditors and equity interest
holders of RII and GRI into the following classes:
RII CREDITORS AND EQUITY INTEREST HOLDERS
Class 1.* Priority Claims
Class 2. Series Notes Claims
Class 3.* Showboat Notes Claims
Class 4.* Secured Claims
Class 5.* RII Unsecured Claims
Class 6.* Paradise Subsidiary Claims
Class 7. RII Equity Interests
Class 8. 1990 Stock Option Plan Interests
GRI CREDITORS AND EQUITY INTEREST HOLDERS
Class 1.* Priority Claims
Class 2. GRI Guaranty Claims
Class 3.* GRI Unsecured Claims
Class 4. RII Intercompany Claim
Class 5. GRI Equity Interest
* Unimpaired or otherwise deemed to accept or reject the Plan.
7
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re
RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware
corporation, formerly known as Griffin Resorts, Inc.,
Debtors.
Case Nos. _______________
and
_______________
Jointly Administered
Under Case No. _________________
Chapter 11
MASTER BALLOT TO CAST VOTES TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION
PROPOSED BY RESORTS INTERNATIONAL, INC., GGRI, INC., RESORTS INTERNATIONAL HOTEL
INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED
RESORTS INTERNATIONAL, INC. COMMON STOCK MASTER BALLOT
RESORTS INTERNATIONAL, INC. COMMON STOCK, PAR VALUE $.01 PER SHARE
(RII CLASS 7)
Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts
International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc.
("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting the votes of your
beneficial owners with respect to the prepackaged joint plan of reorganization
under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the
"Debtors" or the "Company") which is proposed by RII, GRI, RIH, RIHF and PIRL
(the "Plan") and is attached as Appendix A to the accompanying Information
Statement/Prospectus dated January ___, 1994 (the "Information Statement").
Please read the Information Statement carefully before you vote.
This Resorts International, Inc. Common Stock Master Ballot (the "Master
Ballot") may not be used for any purpose other than for casting votes to accept
or reject the Plan.
This Master Ballot is to be used by brokers, proxy intermediaries, or other
nominees for casting votes on the Plan on behalf of beneficial owners of shares
of Resorts International, Inc. Common Stock, par value $.01 per share (the
"Common Stock").
The record date (the "Voting Record Date") for purposes of determining
which holders of Common Stock are eligible to vote on the Plan is January 10,
1994. Only holders of Common Stock in whose names such securities are
registered on the books of the Company on the Voting Record Date or any person
who has obtained a properly completed proxy from such person are eligible to
cast Master Ballots relating to the Plan. Holders of
<PAGE>
Common Stock who purchased such securities or whose purchase of such securities
is registered after the Voting Record Date who wish to vote on the Plan must
arrange with their seller to receive a proxy from the holder of record on such
date. A validly executed ballot submitted by a holder which does not indicate
whether such holder accepts or rejects the Plan is deemed to be and should be
counted as an acceptance of the Plan.
PLEASE READ AND FOLLOW THE ATTACHED INSTRUCTIONS CAREFULLY. COMPLETE, SIGN
AND DATE THIS MASTER BALLOT AND ARRANGE FOR ITS DELIVERY SO THAT IT IS RECEIVED
BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK
CITY TIME, ON __________________, 1994 (THE "VOTING DEADLINE").
2
<PAGE>
ITEM 1: TABULATION OF VOTES WITH RESPECT TO THE PLAN.
A beneficial owner may not split its vote on the Plan. A beneficial owner
must vote its entire Interest Amount to accept or reject the Plan. Also if such
beneficial owner holds RII Common Stock in multiple accounts, it must vote all
of its interests within a single class under the Plan to accept or reject the
Plan. Thus, a beneficial owner may not split its vote on the Plan in any way
(either on a single Ballot or on multiple Ballots) with respect to its RII
Common Stock Interest.
A Resorts International, Inc. Common Stock Ballot (the "Ballot") received
from a beneficial owner that partially accepts and partially rejects the Plan
should not be counted. For purposes of computing the vote, each voting
beneficial owner should be deemed to have voted the full amount of its claim
according to your records. Additionally, a validly executed Ballot which does
not indicate either an acceptance or rejection of the Plan should be counted as
a vote for the Plan.
The undersigned certifies that ________ (INSERT THE NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Common Stock in the aggregate amount of
__________ shares, as identified by their respective customer account numbers
set forth below, have delivered to the undersigned Ballots casting votes to
ACCEPT the Plan.
The undersigned certifies that _________ (INSERT THE NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Common Stock in the aggregate amount of
__________ shares, as identified by their respective customer account numbers
set forth below, have delivered to the undersigned Ballots casting votes to
REJECT the Plan.
ITEM 2: BENEFICIAL OWNER INFORMATION.
The undersigned certifies that attached hereto is a true and accurate
schedule of the beneficial owners of Common Stock, as identified by their
respective customer account numbers and numbers of shares of Common Stock voted,
that have delivered Ballots for the Common Stock to the undersigned.
(Please complete Table A or attach the information requested by this Item 2
in the format of Table A.)
ITEM 3: ADDITIONAL BALLOTS SUBMITTED BY BENEFICIAL OWNERS.
The undersigned certifies that it has transcribed the information, if any,
provided in Item 3 of each Ballot for the Common Stock received from a
beneficial owner.
(Please complete Table B or attach the information requested by this Item 3
in the format of Table B.)
3
<PAGE>
ITEM 4: CERTIFICATIONS.
By signing this Master Ballot, the undersigned certifies that each
beneficial owner of the Common Stock whose votes are being transmitted by this
Master Ballot has been provided with a copy of the Information Statement (as
defined in the instructions hereto) relating to the Plan and all related
solicitation materials. A record of the voting instructions received from each
beneficial owner will remain on file with the undersigned (and be subject to
inspection by the Bankruptcy Court) until the Effective Date of the Plan (or
such other date as may be required by Court order).
By signing this Master Ballot, the undersigned certifies that it is the
registered or record owner of the shares of Common Stock set forth in Item 1
and/or has full power and authority to vote to accept or reject the Plan. The
undersigned also acknowledges that this solicitation is subject to all the terms
and conditions set forth in the Information Statement relating to the Plan.
Name of Record or Registered Holder:
_____________________________________________
(Print or Type)
Signature:___________________________________
By:__________________________________________
(Print or Type Name)
Title:_______________________________________
(If Appropriate)
Address:_____________________________________
Street
_____________________________________________
City, State and Zip Code
Telephone Number: _(__)______________________
_____________________________________________
Social Security or Federal Tax I.D. No.(Optional)
Date Completed:______________________________
THIS MASTER BALLOT MUST BE RECEIVED BY HILL AND KNOWLTON,
INC., 420 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017 (ATTN:
RESORTS BALLOT SOLICITATION GROUP), BY 5:00 P.M., NEW YORK CITY
TIME, ON __________________________ OR THE VOTES TRANSMITTED
HEREBY WILL NOT BE COUNTED.
4
<PAGE>
TABLE A
BENEFICIAL OWNER INFORMATION
(RII CLASS 7)
- --------------------------------------------------------------------------------
INSERT NUMBER OF SHARES OF COMMON STOCK VOTED
- --------------------------------------------------------------------------------
CUSTOMER ACCOUNT NO. ACCEPT THE PLAN REJECT THE PLAN
- --------------------------------------------------------------------------------
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
4.
- --------------------------------------------------------------------------------
5.
- --------------------------------------------------------------------------------
6.
- --------------------------------------------------------------------------------
7.
- --------------------------------------------------------------------------------
8.
- --------------------------------------------------------------------------------
9.
- --------------------------------------------------------------------------------
10.
- --------------------------------------------------------------------------------
5
<PAGE>
TABLE B
TRANSCRIPTION OF INFORMATION FROM ITEM 3 OF BALLOTS SUBMITTED BY BENEFICIAL
OWNERS
- --------------------------------------------------------------------------------
CUSTOMER ACCOUNT NUMBER
YOUR CUSTOMER OF OTHER ACCOUNT
ACCOUNT NUMBER NAME OF HOLDER (IF APPLICABLE) NUMBER OF SHARES
- --------------------------------------------------------------------------------
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
4.
- --------------------------------------------------------------------------------
5.
- --------------------------------------------------------------------------------
6.
- --------------------------------------------------------------------------------
7.
- --------------------------------------------------------------------------------
8.
- --------------------------------------------------------------------------------
9.
- --------------------------------------------------------------------------------
10.
- --------------------------------------------------------------------------------
11.
- --------------------------------------------------------------------------------
12.
- --------------------------------------------------------------------------------
13.
- --------------------------------------------------------------------------------
14.
- --------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS FOR COMMON STOCK MASTER BALLOT
RESORTS INTERNATIONAL, INC. COMMON STOCK, PAR VALUE $.01 PER SHARE
(RII CLASS 7)
1. Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts
International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc.
("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting the votes of your
Beneficial Owners (as defined herein) with respect to the prepackaged joint plan
of reorganization under chapter 11 of the Bankruptcy Code for RII and GRI
(collectively, the "Debtors") which is proposed by RII, GRI, RIH, RIHF and PIRL
(the "Plan") attached as Appendix A to the accompanying Information
Statement/Prospectus dated January___, 1994 (the "Information Statement").
2. This Master Ballot related to the Plan requests that you compile
information with respect to the decisions to be made by the holders of Common
Stock to accept or reject their treatment under the Plan. This Master Ballot is
to be used by brokers, proxy intermediaries or other nominees for casting votes
to accept or reject the Plan on behalf of Beneficial Owners (as defined herein)
of Common Stock.
3. You should deliver a Resorts International, Inc. Common Stock Ballot
(the "Ballot") and other documents relating to the Plan including the
Information Statement (collectively, the "Solicitation Materials") to each
beneficial owner of the Common Stock, and take any action required to enable
each such beneficial owner to vote the Common Stock. With regard to any Ballots
returned to you, you must either (i) forward such Ballots to the Solicitation
Agent (as defined herein) indicating the appropriate authority to vote on each
such Ballot submitted or (ii)(a) retain such Ballots in your files and transfer
the requested information from each such Ballot onto the attached Master Ballot
or your computer generated version of the Master Ballot which indicates
identical information, (b) execute the Master Ballot and (c) arrange for
facsimile and/or delivery of such Master Ballot, as provided below, to Hill and
Knowlton, Inc. (the "Solicitation Agent"), 420 Lexington Avenue, New York, New
York 10017 (Attn: Resorts Ballot Solicitation Group). Please keep any records
of the voting instructions received from beneficial owners until the Effective
Date of the Plan (or such other date as may be required by Court order).
4. If you are both the registered owner and beneficial owner of Common
Stock and you wish to vote such Common Stock, you may return either a Ballot or
a Master Ballot for such Common Stock.
5. Multiple Master Ballots may be completed and delivered to the
Solicitation Agent. Votes reflected by these multiple Master Ballots will be
counted except to the extent that they are duplicative of other Master Ballots;
if two or more Master Ballots are inconsistent, the latest Master Ballot that is
received shall, to the extent of such inconsistency, supersede and revoke any
prior Master Ballot. If more than one Master Ballot is submitted and the later
Master Ballot(s) supplements rather than replaces earlier Master Ballot(s),
please mark the subsequent Master Ballot(s) with the words "Additional Vote" or
such other language as you customarily use to indicate an additional vote that
is not meant to revoke an earlier vote.
6. A computer generated version of the Master Ballot prepared by a bank,
brokerage firm or its agent will be acceptable.
7
<PAGE>
7. If a Master Ballot must be completed by you, please complete, sign and
return this Master Ballot so that it is received by the Solicitation Agent no
later than 5:00 p.m., New York City time, on _______________ (the "Voting
Deadline"). Master Ballots may be transmitted by facsimile. Master Ballots
transmitted by facsimile must be received by Hill and Knowlton at
(212)_______________ no later than the Voting Deadline. For inspection purposes
the original of any telecopied Master Ballot should be delivered to Hill and
Knowlton so as to be received no later than fifteen (15)days after the Voting
Deadline. Please contact the Solicitation Agent in order to arrange for
delivery of the completed Master Ballot to its offices.
8. To complete the Master Ballot properly, please take the following
steps:
ITEM 1:
Provide appropriate information for each of the items in Item 1 of the
Master Ballot.
ITEM 2:
Item 2 of the Master Ballot requests information for each individual
beneficial owner for whom you hold Common Stock in your name or in street name.
To identify such beneficial owners without disclosing their names, please use
the customer account number assigned by you to each such beneficial owner.
Please note that Item 2 of the Master Ballot requests information which would be
obtained from Item 2 of the Ballot returned to you by your customers.
ITEM 3:
Transfer the information regarding additional votes provided in Item 3 of
the Ballot to Item 3 of the Master Ballot.
ITEM 4:
(a) Sign and date your Master Ballot;
(b) If you are completing this Master Ballot on behalf of another entity,
kindly state your relationship with such entity; and
(c) Provide your name and mailing address.
IF YOU RETURN A MASTER BALLOT, PLEASE RETAIN IN YOUR FILES ANY RECORDS OF
THE VOTING INSTRUCTIONS RECEIVED FROM THE BENEFICIAL OWNERS UNTIL THE EFFECTIVE
DATE OF THE PLAN (OR SUCH OTHER DATE AS MAY BE REQUIRED BY COURT ORDER).
8
<PAGE>
No fees or commissions or other remuneration will be payable to any broker,
dealer or other person for soliciting Ballots accepting the Plans. We will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding the Ballots and other enclosed materials to your
clients. We will also pay all transfer taxes, if any, applicable to the
transfer and exchange of securities pursuant to and following confirmation of
the Plans.
PLEASE DELIVER THIS MASTER BALLOT PROMPTLY!
IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING
PROCEDURES, PLEASE CALL THE SOLICITATION AGENT:
HILL AND KNOWLTON, INC.
ATTN: RESORTS BALLOT SOLICITATION GROUP
420 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 210-8850.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENT SHALL CONSTITUTE
AUTHORITY FOR YOU OR ANY OTHER PERSON TO ACT AS THE AGENT OF THE DEBTORS OR THE
SOLICITATION AGENT, OR AUTHORIZE YOU OR ANY PERSON TO USE ANY DOCUMENT OR MAKE
ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE PLAN, EXCEPT FOR THE
STATEMENTS CONTAINED IN THE DOCUMENTS ENCLOSED HEREWITH.
9
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re
RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware
corporation, formerly known as Griffin Resorts, Inc.,
Debtors.
Case Nos. _______________
and
_______________
Jointly Administered
Under Case No. _________________
Chapter 11
MASTER BALLOT TO (1) CAST VOTES TO ACCEPT OR REJECT THE JOINT PLAN OF
REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC., GGRI, INC., RESORTS
INTERNATIONAL HOTEL INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I.
RESORTS LIMITED AND (2) ELECT TO CONSENT TO RELEASE OF OLD SECURITY DOCUMENTS
RESORTS INTERNATIONAL, INC. SERIES A NOTES MASTER BALLOT
RESORTS INTERNATIONAL, INC. SENIOR SECURED
REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES B
(RII CLASS 2 AND GRI CLASS 2)
Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts
International Hotel, Inc. ("RIH"), Resorts International Hotel Financing, Inc.
("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting the votes of your
Beneficial Owners (as defined herein) with respect to the prepackaged joint plan
of reorganization under chapter 11 of the Bankruptcy Code for RII and GRI
(collectively, the "Debtors" or the "Company") which is proposed by RII, GRI,
RIH, RIHF and PIRL (the "Plan") and is attached as Appendix A to the
accompanying Information Statement/Prospectus dated January __, 1994 (the
"Information Statement"). Please read the Information Statement carefully
before you vote.
This Resorts International, Inc. Series A Notes Master Ballot (the "Master
Ballot") may not be used for any purpose other than for (1) casting votes to
accept or reject the Plan and (2) indicating elections to consent to the release
of the Old Security Documents (as defined in the Plan).
This Master Ballot is to be used by brokers, proxy intermediaries, or other
nominees for casting votes and electing to consent, to release of the Old
Security Documents on behalf of beneficial owners of Resorts Senior Secured
Redeemable Notes due April 15, 1994, Series A (the "Series A Notes") and
beneficiaries of the GRI Guaranty (as defined in the Plan).
SERIES A MASTER BALLOT 1
<PAGE>
The record date (the "Voting Record Date") for purposes of determining
which holders of Series A Notes (and beneficiaries of the GRI Guaranty) are
eligible to vote on the Plan is January 10, 1994 and to make the election with
respect to the release of the Old Security Documents. Only holders of Series A
Notes in whose names such securities are registered on the books of the Company
on the Voting Record Date or any person who has obtained a properly completed
proxy from such person are eligible to cast Master Ballots relating to the Plan
and the release of the Old Security Documents. Holders of Series A Notes who
purchased such securities or whose purchase of such securities is registered
after the Voting Record Date who wish to vote on the Plan and the release of the
Old Security Documents must arrange with their seller to receive a proxy from
the holder of record on such date. A validly executed ballot submitted by a
holder which does not indicate whether such holder accepts or rejects the Plan
is deemed to be and should be counted as an acceptance of the Plan. Similarly,
a validly executed ballot submitted by a holder which does not indicate whether
consent is given or denied with respect to the release of the Old Security
Documents is deemed to be and should be counted as a consent to the release of
the Old Security Documents.
PLEASE READ AND FOLLOW THE ATTACHED INSTRUCTIONS CAREFULLY. COMPLETE, SIGN
AND DATE THIS MASTER BALLOT AND ARRANGE FOR ITS DELIVERY SO THAT IT IS RECEIVED
BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK
CITY TIME, ON __________________, 1994 (THE "VOTING DEADLINE").
SERIES A MASTER BALLOT 2
<PAGE>
ITEM 1: TABULATION OF (1) VOTES WITH RESPECT TO THE PLAN AND (2) RELEASE
ELECTION.
Please note that each beneficial owner of Old Series Notes has the right to
vote to accept or reject the Plan with respect to TWO Claims, its Old Series
Note Claim (as defined in the instructions hereto) and its GRI Guaranty Claim
(as defined in the instructions hereto). With respect to each of these two
claims, each beneficial owner of Series A Notes who votes must vote its entire
claim on each separate issue voted below.
A beneficial owner may vote differently on the Plan with respect to its Old
Series Note Claim and its GRI Guaranty Claim. If, however, a beneficial owner
casts a vote on the Plan with respect to either of its Old Series Note Claim or
its GRI Guaranty Claim, but not with respect to both of such claims, the
beneficial owner should be deemed to have voted identically with respect to both
of such claims. Furthermore, A BENEFICIAL OWNER THAT SUBMITS A VALIDLY EXECUTED
BALLOT WHICH FAILS TO INDICATE WHETHER SUCH BENEFICIAL OWNER ACCEPTS OR REJECTS
THE PLAN WITH RESPECT TO BOTH ITS OLD SERIES NOTE CLAIM AND ITS GRI GUARANTY
CLAIM SHOULD BE COUNTED AS AN ACCEPTANCE OF THE PLAN WITH RESPECT TO BOTH ITS
OLD SERIES NOTE CLAIM AND ITS GRI GUARANTY CLAIM.
Furthermore, any VALIDLY EXECUTED Ballot which does not indicate whether
the beneficial owner consents or refuses to consent to the release of the Old
Security Documents SHOULD BE COUNTED AS A CONSENT TO THE RELEASE OF THE OLD
SECURITY DOCUMENTS, REGARDLESS OF THE HOW THE BENEFICIAL OWNER MAY HAVE VOTED
ITS CLAIMS WITH RESPECT TO THE PLAN.
Although a beneficial owner may vote differently on the Plan with respect
to your Old Series Notes Claim (RII Class 2) and your GRI Guaranty Claim (GRI
Class 2), a beneficial owner may not split its vote on the Plan with respect to
its Old Series Note Claim, its GRI Guaranty Claim or its election with respect
to the consent to release of the Old Security Documents. A beneficial owner
must vote its entire Claim Amount with respect to each Claim to accept or reject
the Plan. Also if such beneficial owner holds Series A Notes in multiple
accounts, it must vote all of its claims within a single class under the Plan to
accept or reject the Plan. Thus, a beneficial owner may not split its vote on
the Plan in any way (either on a single Ballot or on multiple Ballots) with
respect to its Old Series Notes Claim, GRI Guaranty Claim or its election with
respect to the consent to release of the Old Security Documents. If any
beneficial owner is a record holder/beneficial owner of Series B Notes as well
as Series A Notes, it must vote its Old Series Notes Claim represented by this
Ballot consistently with any Ballot submitted with respect to its Series B
Notes.
Accordingly, a Series B Note Holder Ballot (the "Ballot") received from a
beneficial owner that partially accepts and partially rejects the Plan with
respect to either of the beneficial owner's two claims or splits its vote with
respect to the election to consent to the release of the Old Security Documents
should not be counted.
For purposes of computing the vote, each voting beneficial owner should be
deemed to have voted the full amount of its claim according to your records.
A. THE PLAN.
i. OLD SERIES NOTE CLAIMS (RII CLASS 2 CLAIMS).
SERIES A MASTER BALLOT 3
<PAGE>
The undersigned certifies that ________ (INSERT THE NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Series A Notes in the aggregate
principal amount of $__________, as identified by their respective customer
account numbers set forth below, have delivered to the undersigned Ballots
casting votes with respect to their Old Series Note Claims to ACCEPT the Plan.
The undersigned certifies that _________ (INSERT THE NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Series A Notes in the aggregate
principal amount of $__________, as identified by their respective customer
account numbers set forth below, have delivered to the undersigned Ballots
casting votes with respect to their Old Series Note Claims to REJECT the Plan.
ii. GRI GUARANTY CLAIMS (GRI CLASS 2 CLAIMS).
The undersigned certifies that ________ (INSERT THE NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Series A Notes in the aggregate
principal amount of $__________, as identified by their respective customer
account numbers set forth below, have delivered to the undersigned Ballots
casting votes with respect to their GRI Guaranty Claims to ACCEPT the Plan.
The undersigned certifies that _________ (INSERT THE NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Series A Notes in the aggregate
principal amount of $__________, as identified by their respective customer
account numbers set forth below, have delivered to the undersigned Ballots
casting votes with respect to their GRI Guaranty Claims to REJECT the Plan.
B. CONSENT TO RELEASE AND TERMINATE OLD SECURITY DOCUMENTS ELECTIONS
A BENEFICIAL OWNER'S BALLOT WHICH FAILS TO INDICATE WHETHER CONSENT IS
GIVEN OR DENIED WITH RESPECT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS SHOULD
BE COUNTED AS IF AFFIRMATIVE CONSENT HAD BEEN GIVEN, REGARDLESS OF HOW SUCH
BENEFICIAL OWNER VOTED ITS CLAIMS WITH RESPECT TO THE PLAN.
The undersigned certifies that ________ (INSERT NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Series A Notes, as identified by their
respective customer account numbers set forth below, have delivered to the
undersigned Ballots electing to consent to the release of the Old Security
Documents.
ITEM 2: BENEFICIAL OWNER INFORMATION.
The undersigned certifies that attached hereto is a true and accurate
schedule of the beneficial owners of Series A Notes, as identified by their
respective customer account numbers and dollar amounts of Series B Notes voted,
that have delivered Ballots for the Series A Notes to the undersigned.
(Please complete Table A or attach the information requested by this Item 2
in the format of Table A.)
SERIES A MASTER BALLOT 4
<PAGE>
ITEM 3: ADDITIONAL BALLOTS SUBMITTED BY BENEFICIAL OWNERS.
The undersigned certifies that it has transcribed the information, if any,
provided in Item 3 of each Ballot for the Series A Notes received from a
beneficial owner.
(Please complete Table B or attach the information requested by this Item 3
in the format of Table B.)
ITEM 4: CERTIFICATIONS.
By signing this Master Ballot, the undersigned certifies that each
beneficial owner of the Series A Notes whose votes are being transmitted by this
Master Ballot has been provided with a copy of the Information Statement (as
defined in the instructions hereto) relating to the Plan and all related
solicitation materials. A record of the voting instructions received from each
beneficial owner will remain on file with the undersigned (and be subject to
inspection by the Court) until the Effective Date of the Plan (or such other
date as may be required by Court order).
SERIES A MASTER BALLOT 5
<PAGE>
By signing this Master Ballot, the undersigned certifies that it is the
registered or record owner of the Series A Notes set forth in Item 1 and/or has
full power and authority to vote to accept or reject the Plan and elect to
consent to the release of the Old Security Documents. The undersigned also
acknowledges that this solicitation is subject to all the terms and conditions
set forth in the Information Statement relating to the Plan.
Name of Record or Registered Holder:
__________________________________________
(Print or Type)
Signature:_________________________________
By:________________________________________
(Print or Type Name)
Title:_____________________________________
(If Appropriate)
Address:____________________________________
Street
___________________________________________
City, State and Zip Code
Telephone Number: _(__)___________________
___________________________________________
Social Security or Federal Tax I.D. No.(Optional)
Date Completed:______________________________
THIS MASTER BALLOT MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON
AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY
5:00 P.M., NEW YORK CITY TIME, ON __________________________ OR THE VOTES
TRANSMITTED HEREBY WILL NOT BE COUNTED.
SERIES A MASTER BALLOT 6
<PAGE>
TABLE A.1
BENEFICIAL OWNER INFORMATION
(RII CLASS 2 and GRI CLASS 2)
VOTES REGARDING PLAN
- --------------------------------------------------------------------------------
INSERT DOLLAR AMOUNT OF SERIES A NOTES VOTED
--------------------------------------------
- --------------------------------------------------------------------------------
OLD SERIES NOTE CLAIM GRI GUARANTY CLAIM
- --------------------------------------------------------------------------------
CUSTOMER
ACCOUNT NO. ACCEPT THE PLAN REJECT THE PLAN ACCEPT THE PLAN REJECT THE PLAN
- --------------------------------------------------------------------------------
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
4.
- --------------------------------------------------------------------------------
5.
- --------------------------------------------------------------------------------
6.
- --------------------------------------------------------------------------------
7.
- --------------------------------------------------------------------------------
8.
- --------------------------------------------------------------------------------
9.
- --------------------------------------------------------------------------------
10.
- --------------------------------------------------------------------------------
SERIES A MASTER BALLOT 7
<PAGE>
TABLE A.2
BENEFICIAL OWNER INFORMATION
(RII CLASS 2 and GRI CLASS 2)
CONSENTS TO RELEASE OLD SECURITY DOCUMENTS
- --------------------------------------------------------------------------------
INSERT DOLLAR AMOUNT OF SERIES B NOTES VOTED
--------------------------------------------
- --------------------------------------------------------------------------------
CUSTOMER ACCOUNT NO. CONSENT TO RELEASE DO NOT CONSENT TO RELEASE
- --------------------------------------------------------------------------------
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
4.
- --------------------------------------------------------------------------------
5.
- --------------------------------------------------------------------------------
6.
- --------------------------------------------------------------------------------
7.
- --------------------------------------------------------------------------------
8.
- --------------------------------------------------------------------------------
9.
- --------------------------------------------------------------------------------
10.
- --------------------------------------------------------------------------------
SERIES A MASTER BALLOT 8
<PAGE>
TABLE B
TRANSCRIPTION OF INFORMATION FROM ITEM 3 OF BALLOTS SUBMITTED BY BENEFICIAL
OWNERS
- --------------------------------------------------------------------------------
YOUR CUSTOMER CUSTOMER ACCOUNT NUMBER
ACCOUNT NUMBER NAME OF HOLDER OF OTHER ACCOUNT
(IF APPLICABLE) PRINCIPAL AMOUNT
- --------------------------------------------------------------------------------
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
4.
- --------------------------------------------------------------------------------
5.
- --------------------------------------------------------------------------------
6.
- --------------------------------------------------------------------------------
7.
- --------------------------------------------------------------------------------
8.
- --------------------------------------------------------------------------------
9.
- --------------------------------------------------------------------------------
10.
- --------------------------------------------------------------------------------
11.
- --------------------------------------------------------------------------------
12.
- --------------------------------------------------------------------------------
13.
- --------------------------------------------------------------------------------
14.
- --------------------------------------------------------------------------------
SERIES A BALLOT 9
<PAGE>
INSTRUCTIONS FOR OLD SERIES NOTES MASTER BALLOT
-----------------------------------------------
RESORTS INTERNATIONAL, INC. SENIOR SECURED
REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES A
(RII CLASS 2 AND GRI CLASS 2)
1. Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts
International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc.
("RIHF") and P. I. Resorts Limited ("PIRL") are soliciting the votes of your
beneficial owners (as defined herein) with respect to the joint plan of
reorganization under Chapter 11 of the Bankruptcy Code for RII and GRI
(collectively, the "Debtors" or the "Company") which is proposed by RII, GRI,
RIH, RIHF and PIRL (the "Plan") attached as Appendix A to the accompanying
Information Statement/Prospectus dated January___, 1994 (the "Information
Statement").
2. The Resorts Senior Secured Redeemable Notes due April 15, 1994
were issued in two series: Series A and Series B. Collectively, these two
series of notes are referred to as the Old Series Notes. Under the Plan, all
Claims arising from Old Series Notes, regardless of series, are classified in a
single class (RII Class 2). For purposes of voting with respect to the Plan,
Claimants who hold both Series A Notes and Series B Notes are treated as having
a single "Old Series Notes Claim" (in the aggregate principal amount of the
Claimant's Series A Notes and Series B Notes). Additionally, record
holders/beneficial owners of Old Series Notes (regardless of series) are also
beneficiaries of the GRI Guaranty (as defined in the Plan) which secured RII's
obligations under the Old Series Notes. As a result of the GRI Guaranty, record
holders/beneficial owners of Old Series Notes also hold Claims against GRI ("GRI
Guaranty Claims"). A Claimant's GRI Guaranty Claim is classified separately
from its Old Series Notes Claim in GRI Class 2. As a result, for purposes of
voting with respect to the Plan, a record holder/beneficial owner of Old Series
Notes is entitled to a separate vote on the Plan with respect to its GRI
Guaranty Claim.
3. RII and GRI are also soliciting consents of the holders of Old
Series Notes to release the Old Security Documents under which the liens on the
property securing the Old Series Notes were granted or created. The Old
Security Documents, in effect, pledge RIH's assets (including the Resorts
International Hotel) to secure the Old Series Notes. Under the Plan, these same
assets are pledged to secure the new debt obligations to be issued under the
Plan. Pursuant to the Old Series Note Indenture, to effectuate such termination
and release consensually, the record holders of at least 66 2/3% in aggregate
principal amount of the outstanding Old Series Notes and the record holders of
at least a majority in aggregate principal amount of each series of the Old
Series Notes must execute consents. Accordingly, RII and GRI are seeking
consents from the holders of Old Series Notes.
4. This Master Ballot related to the Plan requests that you compile
information with respect to three votes to be made by the holders of Series A
Notes. First, holders of Series A Notes must vote with respect to their Old
Series Note Claims to accept or reject their treatment under the Plan. Second,
holders of Series A Notes must vote with respect to their GRI Guaranty Claims to
accept or reject their treatment under the Plan. Third, holders of Series A
Notes must vote whether to consent to the release of the Old Security Documents
(as defined in the Plan).
5. This Master Ballot is to be used by brokers, proxy intermediaries
or other nominees for casting votes to accept or reject the Plan and for
consenting to the release
SERIES A MASTER BALLOT 10
<PAGE>
of the Old Security Documents on behalf of beneficial owners (as defined herein)
of Old Series Notes.
6. You should deliver a Series A Note Holder Ballot and other
documents relating to the Plan including the Information Statement
(collectively, the "Solicitation Materials") to each beneficial owner of the
Series A Notes, and take any action required to enable each such beneficial
owner to vote the Series A Notes. With regard to any Series A Note Holder
Ballots returned to you, you must either (i) forward such Ballots to the
Solicitation Agent (as defined herein) indicating the appropriate authority to
vote on each such Ballot submitted or (ii)(a) retain such Ballots in your files
and transfer the requested information from each such Ballot onto the attached
Master Ballot or your computer generated version of the Master Ballot which
indicates identical information, (b) execute the Master Ballot and (c) arrange
for facsimile and/or delivery of such Master Ballot, as provided in paragraph 8
below to Hill and Knowlton, Inc. (the "Solicitation Agent"), 420 Lexington
Avenue, New York, New York 10017 (Attn: Resorts Ballot Solicitation Group).
Please keep any records of the voting instructions received from beneficial
owners until the Effective Date of the Plan (or such other date as may be
required by Court order).
7. If you are both the registered owner and beneficial owner of
Series A Notes and you wish to vote such Series A Notes, you may return either a
Ballot or a Master Ballot for such Series A Notes.
8. Multiple Master Ballots may be completed and delivered to the
Solicitation Agent. Votes reflected by these multiple Master Ballots will be
counted except to the extent that they are duplicative of other Master Ballots;
if two or more Master Ballots are inconsistent, the latest Master Ballot that is
received shall, to the extent of such inconsistency, supersede and revoke any
prior Master Ballot. If more than one Master Ballot is submitted and the later
Master Ballot(s) supplements rather than replaces earlier Master Ballot(s),
please mark the subsequent Master Ballot(s) with the words "Additional Vote" or
such other language as you customarily use to indicate an additional vote that
is not meant to revoke an earlier vote.
9. A computer generated version of the Master Ballot prepared by a
bank, brokerage firm or its agent will be acceptable.
10. If a Master Ballot must be completed by you, please complete,
sign and return this Master Ballot so that it is received by the Solicitation
Agent no later than 5:00 p.m., New York City Time, on _______________ (the
"Voting Deadline"). Master Ballots may be transmitted by facsimile. Master
Ballots transmitted by facsimile must be received by Hill and Knowlton at
(212)_______________ no later than the Voting Deadline. For inspection
purposes the original of any telecopied Master Ballot should be delivered to
Hill and Knowlton so as to be received no later than fifteen (15) days after
the Voting Deadline. Please contact the Solicitation Agent in order to arrange
for delivery of the completed Master Ballot to its offices.
11. To complete the Master Ballot properly, please take the following
steps:
ITEM 1:
SERIES A MASTER BALLOT 11
<PAGE>
Provide appropriate information for each of the items in Item 1 of the
Master Ballot.
ITEM 2:
Item 2 of the Master Ballot requests information for each individual
beneficial owner for whom you hold Series A Notes in your name or in street
name. To identify such beneficial owners without disclosing their names, please
use the customer account number assigned by you to each such beneficial owner.
Please note that Item 2 of the Master Ballot requests information which would be
obtained from Item 2 of the Series A Note Holder Ballot returned to you by your
customers.
ITEM 3:
Transfer the information regarding additional votes provided in Item 3 of
the Series B Note Holder Ballot to Item 3 of the Master Ballot.
ITEM 4:
(a) Sign and date your Master Ballot;
(b) If you are completing this Master Ballot on behalf of another entity,
kindly state your relationship with such entity; and
(c) Provide your name and mailing address.
IF YOU RETURN A MASTER BALLOT, PLEASE RETAIN IN YOUR FILES ANY RECORDS OF
THE VOTING INSTRUCTIONS RECEIVED FROM THE BENEFICIAL OWNERS UNTIL THE EFFECTIVE
DATE OF THE PLAN (OR SUCH OTHER DATE AS MAY BE REQUIRED BY COURT ORDER).
No fees or commissions or other remuneration will be payable to any broker,
dealer or other person for soliciting Ballots accepting the Plans. We will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding the Ballots and other enclosed materials to your
clients. We will also pay all transfer taxes, if any, applicable to the transfer
and exchange of securities pursuant to and following confirmation of the Plan.
PLEASE DELIVER THIS MASTER BALLOT PROMPTLY!
IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE
VOTING PROCEDURES, PLEASE CALL THE SOLICITATION AGENT:
HILL AND KNOWLTON, INC.
ATTN: RESORTS BALLOT SOLICITATION GROUP
420 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 210-8850.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENT SHALL CONSTITUTE
AUTHORITY FOR YOU OR ANY OTHER PERSON TO ACT AS THE AGENT OF THE PROPONENTS OR
THE SOLICITATION AGENT, OR AUTHORIZE YOU OR ANY PERSON TO USE ANY DOCUMENT OR
MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE
SERIES A MASTER BALLOT 12
<PAGE>
PLAN, EXCEPT FOR THE STATEMENTS CONTAINED IN THE DOCUMENTS ENCLOSED HEREWITH.
SERIES A MASTER BALLOT 13
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re
RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware
corporation, formerly known as Griffin Resorts, Inc.,
Debtors.
Case Nos. _______________
and
_______________
Jointly Administered
Under Case No. _________________
Chapter 11
BALLOT TO (1) VOTE TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED
BY RESORTS INTERNATIONAL, INC. GGRI, INC., RESORTS INTERNATIONAL HOTEL INC.,
RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED AND (2)
ELECT TO CONSENT TO RELEASE OF OLD SECURITY DOCUMENTS
RESORTS INTERNATIONAL, INC. SERIES B NOTES BALLOT
RESORTS INTERNATIONAL, INC. SENIOR SECURED
REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES B
(RII CLASS 2 AND GRI CLASS 2)
PLEASE READ AND FOLLOW THE ATTACHED VOTING INSTRUCTIONS CAREFULLY BEFORE
COMPLETING THIS BALLOT. PLEASE COMPLETE, SIGN AND DATE THIS BALLOT AND PROMPTLY
RETURN IT IN THE ENCLOSED PREPAID RETURN ENVELOPE. THIS BALLOT MUST BE RECEIVED
BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK
CITY TIME, ON __________________ (THE "VOTING DEADLINE"). IF YOU SIGN THIS
BALLOT BUT FAIL TO INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN, THIS BALLOT
WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE PLAN. ALSO, IF YOU SIGN THIS
BALLOT BUT FAIL TO INDICATE WHETHER YOU AGREE OR REFUSE TO CONSENT TO THE
RELEASE OF THE OLD SECURITY DOCUMENTS, THIS BALLOT WILL BE DEEMED AND COUNTED AS
A CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS.
Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts
International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc.
("RIHF") and P. I. Resorts Limited ("PIRL") are soliciting your vote with
respect to the prepackaged joint plan of reorganization
SERIES B BALLOT
<PAGE>
under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the
"Debtors" or the "Company") which has been proposed by RII, GRI, RIH, RIHF and
PIRL (the "Plan") and is attached as Appendix A to the accompanying Information
Statement/Prospectus dated December __, 1993 (the "Information Statement").
This Ballot is to be used by registered record owners and beneficial owners of
Resorts Senior Secured Redeemable Notes due April 15, 1994, Series B (the
"Series B Notes"). Record holders/beneficial owners of Series B Notes are also
beneficiaries of the GRI Guaranty (as defined in the Plan). This Ballot is to
be used to vote with respect to the Plan both as record holders/beneficial
owners of Series B Notes and as beneficiaries of the GRI Guaranty and of the
Series B Notes.
Please read the Information Statement carefully before you vote.
TO INDICATE YOUR VOTE, COMPLETE THIS BALLOT
IN ACCORDANCE WITH THE ATTACHED INSTRUCTIONS.
ITEM 1: AMOUNT OF SERIES B NOTES.
The undersigned (the "Claimant") is as of January 10, 1994 (the "Voting
Record Date") the registered record holder or the beneficial owner of Series B
Notes in the principal amount of $__________, or such lesser or greater
principal amount as may be reflected in the records available to the Debtors
(the "Ballot Amount").
If you are a beneficial owner, the Ballot Amount should include only the
amount of Series B Notes held in account(s) with the bank or broker which
transmitted this Ballot to you. If you hold other Series B Notes in record name
or in one or more accounts with other banks or brokers, such Series B Notes
should be voted separately on the ballots received from such other banks or
brokers, or with respect to record name Series B Ballots, by you, in accordance
with the attached instructions. If you are a beneficial owner and do not know
your Ballot Amount, please contact your bank or broker immediately.
ITEM 2: VOTES WITH RESPECT TO THE PLAN AND RELEASE ELECTION.
As explained in the instructions, you are entitled to three separate votes
in connection with the Plan: (i) with respect to your Old Series Notes Claim (as
defined in the instructions hereto), you may vote to accept or reject the Plan;
(ii) with respect to your GRI Guaranty Claim (as defined in the instructions
hereto), you may vote to accept or reject the Plan; and (iii) you may elect to
consent to the release of the Old Security Documents (as defined in and) as
contemplated by the Plan. Please read the attached instructions carefully and
then complete each of Items 2A, 2B and 2C.
SERIES B BALLOT 2
<PAGE>
PLEASE COMPLETE EACH OF THE FOLLOWING SECTIONS:
A. OLD SERIES NOTES CLAIM.
Please vote to accept or reject the Plan.
YOUR FAILURE TO MARK EITHER CHOICE WILL
BE DEEMED AND COUNTED AS AN ACCEPTANCE.
- --------------------------------------------------------------------------------
THE PLAN
- --------------------------------------------------------------------------------
The undersigned Claimant votes the Ballot Amount
with respect to its Old Series Notes Claim to (please
check one):
__ ACCEPT THE PLAN
__ REJECT THE PLAN
- --------------------------------------------------------------------------------
B. GRI GUARANTY CLAIM.
Please vote to accept or reject the Plan.
YOUR FAILURE TO MARK EITHER CHOICE WILL
BE DEEMED AND COUNTED AS AN ACCEPTANCE.
- --------------------------------------------------------------------------------
THE PLAN
- --------------------------------------------------------------------------------
The undersigned Claimant votes the Ballot Amount
with respect to its GRI Guaranty Claim
to (please check one):
__ ACCEPT THE PLAN
__ REJECT THE PLAN
- --------------------------------------------------------------------------------
SERIES B BALLOT 3
<PAGE>
C. ELECTION TO CONSENT TO RELEASE OF THE OLD SECURITY DOCUMENTS
Please check whether you consent to the release of the Old Security
Documents. PLEASE NOTE THAT A CONDITION PRECEDENT TO CONSUMMATION TO THE PLAN
IS THE RELEASE AND TERMINATION OF THE OLD SECURITY DOCUMENTS.
YOUR FAILURE TO MARK EITHER CHOICE
WILL BE DEEMED AND COUNTED AS A CONSENT.
- --------------------------------------------------------------------------------
RELEASE OF OLD SECURITY DOCUMENTS
- --------------------------------------------------------------------------------
__ I consent to the release of the Old Security
Documents.
__ I do NOT consent to the release of the Old
Security Documents.
- --------------------------------------------------------------------------------
ITEM 3: CERTIFICATION AS TO OLD SERIES NOTES.
The Resorts Senior Secured Redeemable Notes due April 15, 1994 were issued
in two series: Series A and Series B. Collectively, these two series of notes
are referred to as the Old Series Notes. By returning this Ballot, the
undersigned Claimant certifies that it has not submitted any other Ballots for
Old Series Notes (either Series A or Series B) except as specified in the table
immediately below. Please note that you must submit a separate Ballot for any
Series A Notes that you hold in record name or that are held on your behalf by a
broker or bank (or agent thereof). If you have submitted any other Ballot with
respect to Old Series Notes, Series A or Series B, please provide the
information required by this Item 3 in the following table (please use
additional sheets of paper if necessary):
- --------------------------------------------------------------------------------
ACCOUNT NUMBER
SERIES* NAME OF HOLDER** (IF APPLICABLE) PRINCIPAL AMOUNT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Please specify the series (A or B) of Old Series Notes for which other
Ballots were submitted.
SERIES B BALLOT 4
<PAGE>
** Insert your name if the Old Series Note is held by you in record name or, if
held in street name, insert the name of the broker or bank (or agent
thereof).
SERIES B BALLOT 5
<PAGE>
ITEM 4: OTHER CERTIFICATIONS.
By returning this Ballot, the undersigned Claimant certifies:
(a) that it has not submitted any other Ballots for Old Series Notes
(Series A or Series B) that are inconsistent with the votes to accept or reject
the Plan and the decision with respect to the consent to the release of the Old
Security Documents as set forth herein or that, if such other Ballots have been
submitted for Old Series Notes, such earlier Ballots are hereby revoked;
(b) that it has been provided with a copy of the Information
Statement relating to the Plan and all related solicitation materials;
(c) that it understands that if this Ballot is validly executed and
returned without indicating any acceptance or rejection of the Plan (for either
the Old Series Notes Claim or the GRI Guaranty Claim), IT WILL BE COUNTED AS A
VOTE ACCEPTING THE PLAN WITH RESPECT BOTH TO THE OLD SERIES NOTES CLAIM AND THE
GRI GUARANTY CLAIM;
(d) that it understands that if this Ballot is validly executed and
returned without indicating a consent or a refusal to consent to the release of
the Old Security Documents, IT WILL BE COUNTED AS A CONSENT TO THE RELEASE OF
THE OLD SECURITY DOCUMENTS; AND
(e) that it is the registered record holder or beneficial owner of
the Series B Notes set forth in Item 1 and has full power and authority to vote
to accept or reject the Plan. The undersigned Claimant also acknowledges that
this solicitation is subject to all the terms and conditions set forth in the
Information Statement relating to the Plan.
SERIES B BALLOT 6
<PAGE>
YOU ARE URGED TO VOTE ON THE PLAN AND TO INDICATE WHETHER
YOU CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS.
Name of Creditor:
________________________________________
(Print or Type)
By:_____________________________________
(Signature of Creditor or Authorized
Agent)
Print Name of
Signatory:______________________________
Title:__________________________________
(If Appropriate)
Street Address:_________________________
________________________________________
City, State and Zip Code
Telephone Number:_______________________
________________________________________
Social Security or Federal Tax I.D. No.
(Optional)
Date Completed:_________________________
YOUR VOTE MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON
AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY
5:00 P.M., NEW YORK CITY TIME, ON ___________________, 1994 OR YOUR VOTE WILL
NOT BE COUNTED. IF YOU HOLD IN STREET NAME, PLEASE ALLOW SUFFICIENT ADDITIONAL
TIME FOR PROCESSING OF YOUR VOTE BY YOUR BANK OR BROKER, OR ITS AGENT.
SERIES B BALLOT 7
<PAGE>
VOTING INFORMATION AND
INSTRUCTIONS FOR SERIES B NOTES BALLOT
RESORTS INTERNATIONAL, INC. SENIOR SECURED
REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES A
(RII CLASS 2 AND GRI CLASS 2)
1. Resorts International, Inc. ("RII") and GGRI, Inc. ("GRI")
(collectively, the Debtors), and Resorts International Hotel, Inc.("RIH"),
Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited
("PIRL") are soliciting your vote with respect to the Joint Plan of
Reorganization under Chapter 11 of the Bankruptcy Code Proposed by Resorts
International, Inc., GGRI, Inc., Resorts International Hotel, Inc., Resorts
International Hotel Financing, Inc. and P. I. Resorts Limited (the "Plan"), a
copy of which is attached as Appendix A to the accompanying Information
Statement/Prospectus dated January __, 1994 (the "Information Statement").
PLEASE REVIEW THE INFORMATION STATEMENT CAREFULLY BEFORE YOU VOTE.
2. The Plan can be confirmed by the Bankruptcy Court and thereby
made binding on you if it is accepted by the holders of two-thirds in amount and
more than one-half in number of claims in each class and the holders of
two-thirds in amount of equity interests in each class voting on such plan. In
the event the requisite acceptances are not obtained, the Bankruptcy Court may
nevertheless confirm the Plan if at least one impaired class of creditors votes
to accept the Plan and the Bankruptcy Court finds that the Plan accords fair and
equitable treatment to and does not discriminate unfairly against the class or
classes rejecting it.
3. The Resorts Senior Secured Redeemable Notes due April 15, 1994
were issued in two series: Series A and Series B. Collectively, these two
series of notes are referred to as the Old Series Notes. Under the Plan, all
Claims arising from Old Series Notes, regardless of series, are classified in a
single class (RII Class 2). For purposes of voting with respect to the Plan,
Claimants who hold both Series A Notes and Series B Notes are treated as having
a single "Old Series Notes Claim" (in the aggregate principal amount of the
Claimant's Series A Notes and Series B Notes). Additionally, record
holders/beneficial owners of Old Series Notes (regardless of series) are also
beneficiaries of the GRI Guaranty (as defined in the Plan) which secured RII's
obligations under the Old Series Notes. As a result of the GRI Guaranty, record
holders/beneficial owners of Old Series Notes also hold Claims against GRI ("GRI
Guaranty Claims"). A Claimant's GRI Guaranty Claim is classified separately
from its Old Series Notes Claim in GRI Class 2. As a result, for purposes of
voting with respect to the Plan, a record holder/beneficial owner of Old Series
Notes is entitled to a separate vote on the Plan with respect to its GRI
Guaranty Claim.
4. Finally, RII and GRI are soliciting your consent to release the
Old Security Documents under which the liens on the property securing the Old
Series Notes were granted or created. The Old Security Documents, in effect,
pledge RIH's assets (including the Resorts International Hotel) to secure the
Old Series Notes. Under the Plan, these same assets are pledged to secure the
new debt obligations to be issued to you. Pursuant to the Old Series Note
Indenture, to effectuate such termination and release consensually, the record
holders of at least 66 2/3% in aggregate principal amount of the outstanding Old
Series Notes and the record holders of at least a majority in aggregate
principal amount of each series of the Old Series Notes must execute consents.
Accordingly, RII and GRI are seeking consents from the holders of Old Series
Notes. If insufficient consents are received from holders of Old Series Notes
to effectuate such termination and
SERIES B BALLOT 8
<PAGE>
release consensually, RII and GRI intend to request the Bankruptcy Court to
order the release of the Old Security Documents; however, no assurance can be
given that such an order will be entered. In no event will the consents to
release the Old Security Documents be used to effectuate the termination and
release of the Old Security Documents in the absence of the confirmation and
consummation of the Plan. If RII and GRI fail to receive the Requisite
Acceptances, notwithstanding receipt of sufficient consents to release and
terminate the Old Security Documents pursuant to the Old Series Note Indenture,
such consents will only be used in the event that RII and GRI continue to pursue
confirmation and consummation of the Plan. In the event that RII and GRI elect
or are required to resolicit Acceptances of the Plan, however, they reserve the
right not to resolicit with respect to the consents to release the Old Security
Documents and to use consents received from the initial Solicitation.
5. Accordingly, this Ballot requests three separate votes from the
record holders/beneficial owners of Series B Notes. Each record holder/
beneficial owner of Series B Notes has the right to vote with respect to
TWO Claims, its Old Series Notes Claim and its GRI Guaranty Claim. Therefore,
first, you must vote with respect to your Old Series Notes Claim to accept or
reject your treatment under the Plan. Second, you must vote with respect to
your GRI Guaranty Claim to accept or reject your treatment under the Plan.
Third, you must vote whether to consent to the release of the Old Security
Documents (as defined in the Plan). IF YOU DO NOT CONSENT TO THE RELEASE OF THE
OLD SECURITY DOCUMENTS, THE PLAN MAY NOT BE CONFIRMABLE AND THE TRANSACTIONS
THEREUNDER MAY NOT BE IMPLEMENTED.
6. For your vote to be counted, you must complete the Ballot, and
sign and return it to the address set forth on the enclosed prepaid return
envelope. Ballots must be received by Hill and Knowlton, Inc. (the
"Solicitation Agent") no later than 5:00 p.m., New York City time, on
_____________, 1994 (the "Voting Deadline"). If you received a return envelope
addressed to your broker or bank (or agent thereof), be sure to return your
Ballot early enough for your vote to be processed and then forwarded to and
received by the Solicitation Agent by the Voting Deadline.
7. If you are a beneficial owner and your broker or bank accepts
facsimiles, your Ballot may be transmitted by facsimile to the appropriate
telephone number provided by your broker or bank (or agent thereof). If you are
a record holder, Ballots may be submitted by facsimile to Hill and Knowlton at
the appropriate number set forth below. In either case, Ballots transmitted by
facsimile must be received by the Solicitation Agent no later than the Voting
Deadline. For inspection purposes, the original of any telecopied Ballot should
be delivered to your broker or bank (or agent thereof) or to Hill and Knowlton,
whichever is applicable, so as to be received no later than fifteen (15) days
after the Voting Deadline.
ITEM 1
Insert the Ballot Amount in Item 1 of the Ballot. The "Ballot
Amount"is the principal amount of Series B Notes held by you as the registered
record holder or the beneficial owner thereof. If you are a beneficial owner,
the Ballot Amount should include only the amount of Series B Notes held in
account(s) with the bank or broker which transmitted this Ballot to you. If you
hold other Series B Notes in record name or in one or more accounts with other
banks or brokers, such Series B Notes must be voted separately on the ballots
received from such other banks or brokers, or in the case of record name Series
B Notes, by you, in accordance with the instructions for Item 2 set forth below.
If you are a
SERIES B BALLOT 9
<PAGE>
beneficial owner and do not know your Ballot Amount, please contact your bank or
broker immediately.
ITEM 2
(i) In the appropriate boxes in Item 2, indicate your votes with
respect to (a) your Old Series Note Claim, (b) your GRI Guaranty Claim and (c)
your decision whether to consent to the release of the Old Security Documents.
(ii) You may vote differently on the Plan with respect to your
Old Series Notes Claim and your GRI Guaranty Claim. If, however, you cast a
vote on the Plan with respect to only one of these two Claims, you will be
deemed to have voted identically with respect to the other Claim. Additionally,
any VALIDLY EXECUTED Ballot which does not indicate acceptance or rejection of
the Plan with respect to either the Old Series Notes Claim or the GRI Guaranty
Claim WILL BE DEEMED AN ACCEPTANCE OF THE PLAN WITH RESPECT TO BOTH CLAIMS.
There can be no assurance, however, that the Bankruptcy Court will permit
unmarked Ballots to be counted. Accordingly, you are encouraged to both execute
your Ballot and to indicate in the appropriate boxes in Item 2 your votes with
respect to the Plan.
(iii) Although you may vote differently on the Plan with respect
to your Old Series Notes Claim (RII Class 2) and your GRI Guaranty Claim (GRI
Class 2), you must vote your entire Claim Amount with respect to each Claim to
accept or reject the Plan. Also if you hold Old Series Notes in multiple
accounts, you must vote all of your claims within a single class under the Plan
to accept or reject the Plan. Thus, you may not split your vote on the Plan in
any way (either on a single Ballot or on multiple Ballots) with respect to your
Old Series Notes Claim or your GRI Guaranty Claim. If you are a record
holder/beneficial owner of Series A Notes as well as Series B Notes, you must
also vote your Old Series Notes Claim represented by this Ballot consistently
with any Ballot you submit with respect to your Series A Notes.
(iv) Furthermore, any VALIDLY EXECUTED Ballot which does not
indicate whether the holder consents or refuses to consent to the release of the
Old Security Documents WILL BE DEEMED AND COUNTED AS A CONSENT TO THE RELEASE OF
THE OLD SECURITY DOCUMENTS, REGARDLESS OF HOW THE HOLDER MAY HAVE VOTED ITS
CLAIMS WITH RESPECT TO THE PLAN. Please note that a condition precedent to
consummation to the Plan is the release and termination of the Old Security
Documents. As with the vote to accept or reject the Plan, you may not split
your vote with respect to the consent to release of the Old Security Documents
in any way (either on a single Ballot or on multiple Ballots).
(v) A Ballot that partially accepts and partially rejects the
Plan with respect to either of the record holder/beneficial owner's two Claims
or splits its vote with respect to the election to consent to the release of the
Old Security Documents will not be counted. Additionally, any prior Ballots
submitted by you as a record holder/beneficial owner of Old Series Notes (for
the Series B Notes represented by this Ballot, other Series B Notes or Series A
Notes) will not be counted to the extent that the votes indicated by those prior
Ballots are inconsistent with the votes indicated on this Ballot within a single
class of claims or with respect to the decision as to whether to consent to the
release of the Old Security Documents. If multiple Ballots are received from an
individual Claimant for the same Claim prior to the Voting Deadline that are
inconsistent with respect to the votes to accept or reject the Plan and the
decision regarding the consent to the release of the Old Security Documents, the
last ballot received shall supersede and revoke any earlier received ballot.
SERIES B BALLOT 10
<PAGE>
ITEM 3
In Item 3 of the Ballot, insert the requested information for all Old
Series Notes held by you either as record holder or beneficial owner for which
other Ballots have been submitted.
ITEM 4
Please review and certify as to the matter set forth in Item 4 and
execute the Ballot in the space provided. This Ballot must be returned in
sufficient time to allow it to be received by the Solicitation Agent by no later
than 5:00 p.m., New York City time, on ___________, 1994. If you believe you
have received the wrong ballot, please contact the Solicitation Agent or your
broker or bank immediately.
The Ballot attached hereto is not a letter of transmittal and may not
be used for any purpose other than to vote to (i) accept or reject the Plan and
(ii) elect to consent to the release of the Old Security Documents.
Accordingly, at this time, holders should not surrender certificates
representing their securities, and neither the Debtors nor the Solicitation
Agent will accept delivery of any such certificates surrendered together with
this Ballot. The remittance of your securities for exchange pursuant to the
Plan may only be made by your broker or bank (or agent thereof) or, in the case
of registered record holders, by you, and will only be accepted if certificates
representing your securities (in proper form for transfer) are delivered
together with a letter of transmittal which will be furnished to your broker or
bank (or agent thereof) or you (in the case of registered record holders) as
provided under the Plan or as notified following confirmation of the Plan by the
Bankruptcy Court. Moreover, the Ballot does not constitute and shall not be
deemed a proof of claim or interest or an assertion of a claim or interest.
PLEASE MAIL YOUR BALLOT PROMPTLY!
IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING
PROCEDURES, PLEASE CALL THE SOLICITATION AGENT:
HILL AND KNOWLTON, INC.
ATTN: RESORTS BALLOT SOLICITATION GROUP
420 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 210-8850
SERIES B BALLOT 11
<PAGE>
For your information, the Plan divides creditors and equity interest
holders of RII and GRI into the following classes:
RII CREDITORS AND EQUITY INTEREST HOLDERS
Class 1.* Priority Claims
Class 2. Old Series Notes Claims
Class 3.* Showboat Notes Claims
Class 4.* Secured Claims
Class 5.* RII Unsecured Claims
Class 6.* Paradise Subsidiary Claims
Class 7. RII Equity Interests
Class 8. 1990 Stock Option Plan Interests
GRI CREDITORS AND EQUITY INTEREST HOLDERS
Class 1.* Priority Claims
Class 2. GRI Guaranty Claims
Class 3.* GRI Unsecured Claims
Class 4. RII Intercompany Claim
Class 5. GRI Equity Interest
* Unimpaired or otherwise deemed to accept or reject the Plan.
SERIES B BALLOT 12
<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re
RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware
corporation, formerly known as Griffin Resorts, Inc.,
Debtors.
Case Nos. _______________
and
_______________
Jointly Administered
Under Case No. _________________
Chapter 11
MASTER BALLOT TO (1) CAST VOTES TO ACCEPT OR REJECT THE JOINT PLAN OF
REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC. GGRI, INC., RESORTS
INTERNATIONAL HOTEL INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I.
RESORTS LIMITED AND (2) ELECT TO CONSENT TO RELEASE OF OLD SECURITY DOCUMENTS
RESORTS INTERNATIONAL, INC. SERIES B NOTES MASTER BALLOT
RESORTS INTERNATIONAL, INC. SENIOR SECURED
REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES B
(RII CLASS 2 AND GRI CLASS 2)
Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts
International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc.
("RIHF"), and P. I. Resorts Limited("PIRL") are soliciting the votes of your
Beneficial Owners (as defined herein) with respect to the prepackaged joint plan
of reorganization under chapter 11 of the Bankruptcy Code for RII and GRI
(collectively, the "Debtors" or the "Company") which is proposed by RII, GRI,
RIH, RIHF and PIRL (the "Plan") and is attached as Appendix A to the
accompanying Information Statement/Prospectus dated January __, 1994 (the
"Information Statement"). Please read the Information Statement carefully
before you vote.
This Resorts International, Inc. Series B Notes Master Ballot (the "Master
Ballot") may not be used for any purpose other than for (1) casting votes to
accept or reject the Plan and (2) indicating elections to consent to the release
of the Old Security Documents (as defined in the Plan).
This Master Ballot is to be used by brokers, proxy intermediaries, or other
nominees for casting votes and electing to consent to release of the Old
Security Documents on behalf of beneficial owners of Resorts Senior Secured
Redeemable Notes due April 15, 1994, Series B (the "Series B Notes") and
beneficiaries of the GRI Guaranty (as defined in the Plan).
SERIES B MASTER BALLOT 1
<PAGE>
The record date (the "Voting Record Date") for purposes of determining
which holders of Series B Notes (and beneficiaries of the GRI Guaranty) are
eligible to vote on the Plan is January 10, 1994 and to make the election with
respect to the release of the Old Security Documents. Only holders of Series B
Notes in whose names such securities are registered on the books of the Company
on the Voting Record Date or any person who has obtained a properly completed
proxy from such person are eligible to cast Master Ballots relating to the Plan
and the release of the Old Security Documents. Holders of Series B Notes who
purchased such securities or whose purchase of such securities is registered
after the Voting Record Date who wish to vote on the Plan and the release of the
Old Security Documents must arrange with their seller to receive a proxy from
the holder of record on such date. A validly executed ballot submitted by a
holder which does not indicate whether such holder accepts or rejects the Plan
is deemed to be and should be counted as an acceptance of the Plan. Similarly,
a validly executed ballot submitted by a holder which does not indicate whether
consent is given or denied with respect to the release of the Old Security
Documents is deemed to be and should be counted as a consent to the release of
the Old Security Documents.
PLEASE READ AND FOLLOW THE ATTACHED INSTRUCTIONS CAREFULLY. COMPLETE, SIGN
AND DATE THIS MASTER BALLOT AND ARRANGE FOR ITS DELIVERY SO THAT IT IS RECEIVED
BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK
CITY TIME, ON __________________, 1994 (THE "VOTING DEADLINE").
SERIES B MASTER BALLOT 2
<PAGE>
ITEM 1: TABULATION OF (1) VOTES WITH RESPECT TO THE PLAN AND (2) RELEASE
ELECTION.
Please note that each beneficial owner of Old Series Notes has the right to
vote to accept or reject the Plan with respect to two Claims, its Old Series
Note Claim (as defined in the instructions hereto) and its GRI Guaranty Claim
(as defined in the instructions hereto) and its GRI Guaranty Claim (as defined
in the instructions hereto). With respect to each of these two claims, each
beneficial owner of Series B Notes who votes must vote its entire claim on each
separate issue voted below.
A beneficial owner may vote differently on the Plan with respect to its Old
Series Note Claim and its GRI Guaranty Claim. If, however, a beneficial owner
casts a vote on the Plan with respect to either of its Old Series Note Claim or
its GRI Guaranty Claim, but not with respect to both of such claims, the
beneficial owner should be deemed to have voted identically with respect to both
of such claims. Furthermore, a beneficial owner that submits a validly executed
ballot which fails to indicate whether such beneficial owner accepts or rejects
the Plan with respect to both its Old Series Note Claim and its GRI Guaranty
Claim should be counted as an acceptance of the Plan with respect to both its
Old Series Note Claim and its GRI Guaranty Claim.
Furthermore, any validly executed Ballot which does not indicate whether
the beneficial owner consents or refuses to consent to the release of the Old
Security Documents should be counted as a consent to the release of the Old
Security Documents, regardless of the how the beneficial owner may have voted
its Claims with respect to the Plan.
Although a beneficial owner may vote differently on the Plan with respect
to your Old Series Notes Claim (RII Class 2) and your GRI Guaranty Claim (GRI
Class 2), a beneficial owner may not split its vote on the Plan with respect to
its Old Series Note Claim, its GRI Guaranty Claim or its election with respect
to the consent to release of the Old Security Documents. A beneficial owner
must vote its entire Claim Amount with respect to each Claim to accept or reject
the Plan. Also if such beneficial owner holds Series B Notes in multiple
accounts, it must vote all of its claims within a single class under the Plan to
accept or reject the Plan. Thus, a beneficial owner may not split its vote on
the Plan in any way (either on a single Ballot or on multiple Ballots) with
respect to its Old Series Notes Claim, GRI Guaranty Claim or its election with
respect to the consent to release of the Old Security Documents. If any
beneficial owner is a record holder/beneficial owner of Series B Notes as well
as Series A Notes, it must vote its Old Series Notes Claim represented by this
Ballot consistently with any Ballot submitted with respect to its Series B
Notes.
Accordingly, a Series B Note Holder Ballot (the "Ballot") received from a
beneficial owner that partially accepts and partially rejects the Plan with
respect to either of the beneficial owner's two claims or splits its vote with
respect to the election to consent to the release of the Old Security Documents
should not be counted.
For purposes of computing the vote, each voting beneficial owner should be
deemed to have voted the full amount of its claim according to your records.
A. THE PLAN.
i. Old Series Note Claims (RII Class 2 Claims).
SERIES B MASTER BALLOT 3
<PAGE>
The undersigned certifies that ________ (INSERT THE NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Series B Notes in the aggregate
principal amount of $__________, as identified by their respective customer
account numbers set forth below, have delivered to the undersigned Ballots
casting votes with respect to their Old Series Note Claims to ACCEPT the Plan.
The undersigned certifies that _________ (INSERT THE NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Series B Notes in the aggregate
principal amount of $__________, as identified by their respective customer
account numbers set forth below, have delivered to the undersigned Ballots
casting votes with respect to their Old Series Note Claims to REJECT the Plan.
ii. GRI GUARANTY CLAIMS (GRI CLASS 2 CLAIMS).
The undersigned certifies that ________ (INSERT THE NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Series B Notes in the aggregate
principal amount of $__________, as identified by their respective customer
account numbers set forth below, have delivered to the undersigned Ballots
casting votes with respect to their GRI Guaranty Claims to ACCEPT the Plan.
The undersigned certifies that _________ (INSERT THE NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Series B Notes in the aggregate
principal amount of $__________, as identified by their respective customer
account numbers set forth below, have delivered to the undersigned Ballots
casting votes with respect to their GRI Guaranty Claims to REJECT the Plan.
B. CONSENT TO RELEASE AND TERMINATE OLD SECURITY DOCUMENTS ELECTIONS
A BENEFICIAL OWNER'S BALLOT WHICH FAILS TO INDICATE WHETHER CONSENT IS
GIVEN OR DENIED WITH RESPECT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS SHOULD
BE COUNTED AS IF AFFIRMATIVE CONSENT HAD BEEN GIVEN, REGARDLESS OF HOW SUCH
BENEFICIAL OWNER VOTED ITS CLAIMS WITH RESPECT TO THE PLAN.
The undersigned certifies that ________ (INSERT NUMBER OF DIFFERENT
BENEFICIAL OWNERS) beneficial owners of Series B Notes, as identified by their
respective customer account numbers set forth below, have delivered to the
undersigned Ballots electing to consent to the release of the Old Security
Documents.
ITEM 2: BENEFICIAL OWNER INFORMATION.
The undersigned certifies that attached hereto is a true and accurate
schedule of the beneficial owners of Series B Notes, as identified by their
respective customer account numbers and dollar amounts of Series B Notes voted,
that have delivered Ballots for the Series B Notes to the undersigned.
(Please complete Table A or attach the information requested by this Item 2
in the format of Table A.)
SERIES B MASTER BALLOT 4
<PAGE>
ITEM 3: ADDITIONAL BALLOTS SUBMITTED BY BENEFICIAL OWNERS.
The undersigned certifies that it has transcribed the information, if any,
provided in Item 3 of each Ballot for the Series B Notes received from a
beneficial owner.
(Please complete Table B or attach the information requested by this Item 3
in the format of Table B.)
ITEM 4: CERTIFICATIONS.
By signing this Master Ballot, the undersigned certifies that each
beneficial owner of the Series B Notes whose votes are being transmitted by this
Master Ballot has been provided with a copy of the Information Statement (as
defined in the instructions hereto) relating to the Plan and all related
solicitation materials. A record of the voting instructions received from each
beneficial owner will remain on file with the undersigned (and be subject to
inspection by the Court) until the Effective Date of the Plan (or such other
date as may be required by Court order).
SERIES B MASTER BALLOT 5
<PAGE>
By signing this Master Ballot, the undersigned certifies that it is the
registered or record owner of the Series B Notes set forth in Item 1 and/or has
full power and authority to vote to accept or reject the Plan and elect to
consent to the release of the Old Security Documents. The undersigned also
acknowledges that this solicitation is subject to all the terms and conditions
set forth in the Information Statement relating to the Plan.
Name of Record or Registered Holder:
_____________________________________________
(Print or Type)
Signature:___________________________________
By:__________________________________________
(Print or Type Name)
Title:_______________________________________
(If Appropriate)
Address:_____________________________________
Street
_____________________________________________
City, State and Zip Code
Telephone Number: _(__)______________________
_____________________________________________
Social Security or Federal Tax I.D. No.
(Optional)
Date Completed:______________________________
THIS MASTER BALLOT MUST BE RECEIVED BY HILL AND KNOWLTON,
INC., 420 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017 (ATTN:
RESORTS BALLOT SOLICITATION GROUP), BY 5:00 P.M., NEW YORK CITY
TIME, ON __________________________ OR THE VOTES TRANSMITTED
HEREBY WILL NOT BE COUNTED.
SERIES B MASTER BALLOT 6
<PAGE>
TABLE A.1
BENEFICIAL OWNER INFORMATION
(RII CLASS 2 and GRI CLASS 2)
VOTES REGARDING PLAN
- --------------------------------------------------------------------------------
INSERT DOLLAR AMOUNT OF SERIES B NOTES VOTED
- --------------------------------------------------------------------------------
Old Series Note Claim GRI Guaranty Claim
- --------------------------------------------------------------------------------
Customer
Account No. Accept the Plan Reject the Plan Accept the Plan Reject the Plan
- --------------------------------------------------------------------------------
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
4.
- --------------------------------------------------------------------------------
5.
- --------------------------------------------------------------------------------
6.
- --------------------------------------------------------------------------------
7.
- --------------------------------------------------------------------------------
8.
- --------------------------------------------------------------------------------
9.
- --------------------------------------------------------------------------------
10.
- --------------------------------------------------------------------------------
SERIES B MASTER BALLOT 7
<PAGE>
TABLE A.2
BENEFICIAL OWNER INFORMATION
(RII CLASS 2 and GRI CLASS 2)
CONSENTS TO RELEASE OLD SECURITY DOCUMENTS
- --------------------------------------------------------------------------------
INSERT DOLLAR AMOUNT OF SERIES B NOTES VOTED
- --------------------------------------------------------------------------------
Customer Account No. Consent to Release Do Not Consent to Release
- --------------------------------------------------------------------------------
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
4.
- --------------------------------------------------------------------------------
5.
- --------------------------------------------------------------------------------
6.
- --------------------------------------------------------------------------------
7.
- --------------------------------------------------------------------------------
8.
- --------------------------------------------------------------------------------
9.
- --------------------------------------------------------------------------------
10.
- --------------------------------------------------------------------------------
SERIES B MASTER BALLOT 8
<PAGE>
TABLE B
TRANSCRIPTION OF INFORMATION FROM ITEM 3 OF BALLOTS SUBMITTED BY BENEFICIAL
OWNERS
- --------------------------------------------------------------------------------
Customer Account Number
Your Customer of Other Account
Account Number Name of Holder (if applicable) Principal Amount
- --------------------------------------------------------------------------------
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
4.
- --------------------------------------------------------------------------------
5.
- --------------------------------------------------------------------------------
6.
- --------------------------------------------------------------------------------
7.
- --------------------------------------------------------------------------------
8.
- --------------------------------------------------------------------------------
9.
- --------------------------------------------------------------------------------
10.
- --------------------------------------------------------------------------------
11.
- --------------------------------------------------------------------------------
12.
- --------------------------------------------------------------------------------
13.
- --------------------------------------------------------------------------------
14.
- --------------------------------------------------------------------------------
SERIES B MASTER BALLOT 9
<PAGE>
INSTRUCTIONS FOR OLD SERIES NOTES MASTER BALLOT
RESORTS INTERNATIONAL, INC. SENIOR SECURED
REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES B
(RII CLASS 2 AND GRI CLASS 2)
1. Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts
International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc.
("RIHF") and P. I. Resorts Limited ("PIRL") are soliciting the votes of your
beneficial owners (as defined herein) with respect to the joint plan of
reorganization under Chapter 11 of the Bankruptcy Code for RII and GRI
(collectively, the "Debtors" or the "Company") which is proposed by RII, GRI,
RIH, RIHF and PIRL (the "Plan") attached as Appendix A to the accompanying
Information Statement/Prospectus dated January___, 1994 (the "Information
Statement").
2. The Resorts Senior Secured Redeemable Notes due April 15, 1994
were issued in two series: Series A and Series B. Collectively, these two
series of notes are referred to as the Old Series Notes. Under the Plan, all
Claims arising from Old Series Notes, regardless of series, are classified in a
single class (RII Class 2). For purposes of voting with respect to the Plan,
Claimants who hold both Series A Notes and Series B Notes are treated as having
a single "Old Series Notes Claim" (in the aggregate principal amount of the
Claimant's Series A Notes and Series B Notes). Additionally, record
holders/beneficial owners of Old Series Notes (regardless of series) are also
beneficiaries of the GRI Guaranty (as defined in the Plan) which secured RII's
obligations under the Old Series Notes. As a result of the GRI Guaranty, record
holders/beneficial owners of Old Series Notes also hold Claims against GRI ("GRI
Guaranty Claims"). A Claimant's GRI Guaranty Claim is classified separately
from its Old Series Notes Claim in GRI Class 2. As a result, for purposes of
voting with respect to the Plan, a record holder/beneficial owner of Old Series
Notes is entitled to a separate vote on the Plan with respect to its GRI
Guaranty Claim.
3. RII and GRI are also soliciting consents of the holders of Old
Series Notes to release the Old Security Documents under which the liens on the
property securing the Old Series Notes were granted or created. The Old
Security Documents, in effect, pledge RIH's assets (including the Resorts
International Hotel) to secure the Old Series Notes. Under the Plan, these same
assets are pledged to secure the new debt obligations to be issued under the
Plan. Pursuant to the Old Series Note Indenture, to effectuate such termination
and release consensually, the record holders of at least 66 2/3% in aggregate
principal amount of the outstanding Old Series Notes and the record holders of
at least a majority in aggregate principal amount of each series of the Old
Series Notes must execute consents. Accordingly, RII and GRI are seeking
consents from the holders of Old Series Notes.
4. This Master Ballot related to the Plan requests that you compile
information with respect to three votes to be made by the holders of Series B
Notes. First, holders of Series B Notes must vote with respect to their Old
Series Note Claims to accept or reject their treatment under the Plan. Second,
holders of Series B Notes must vote with respect to their GRI Guaranty Claims to
accept or reject their treatment under the Plan. Third, holders of Series B
Notes must vote whether to consent to the release of the Old Security Documents
(as defined in the Plan).
5. This Master Ballot is to be used by brokers, proxy intermediaries
or other nominees for casting votes to accept or reject the Plan and for
consenting to the release
SERIES B MASTER BALLOT 10
<PAGE>
of the Old Security Documents on behalf of beneficial owners (as defined herein)
of Old Series Notes.
6. You should deliver an Series B Note Holder Ballot and other
documents relating to the Plan including the Information Statement
(collectively, the "Solicitation Materials") to each beneficial owner of the
Series B Notes, and take any action required to enable each such beneficial
owner to vote the Series B Notes. With regard to any Series B Note Holder
Ballots returned to you, you must either (i) forward such Ballots to the
Solicitation Agent (as defined herein) indicating the appropriate authority to
vote on each such Ballot submitted or (ii)(a) retain such Ballots in your files
and transfer the requested information from each such Ballot onto the attached
Master Ballot or your computer generated version of the Master Ballot which
indicates identical information, (b) execute the Master Ballot and (c) arrange
for facsimile and/or delivery of such Master Ballot, as provided in paragraph 8
below to Hill and Knowlton, Inc. (the "Solicitation Agent"), 420 Lexington
Avenue, New York, New York 10017 (Attn: Resorts Ballot Solicitation Group).
Please keep any records of the voting instructions received from beneficial
owners until the Effective Date of the Plan (or such other date as may be
required by Court order).
7. If you are both the registered owner and beneficial owner of
Series B Notes and you wish to vote such Series B Notes, you may return either a
Ballot or a Master Ballot for such Series B Notes.
8. Multiple Master Ballots may be completed and delivered to the
Solicitation Agent. Votes reflected by these multiple Master Ballots will be
counted except to the extent that they are duplicative of other Master Ballots;
if two or more Master Ballots are inconsistent, the latest Master Ballot that is
received shall, to the extent of such inconsistency, supersede and revoke any
prior Master Ballot. If more than one Master Ballot is submitted and the later
Master Ballot(s) supplements rather than replaces earlier Master Ballot(s),
please mark the subsequent Master Ballot(s) with the words "Additional Vote" or
such other language as you customarily use to indicate an additional vote that
is not meant to revoke an earlier vote.
9. A computer generated version of the Master Ballot prepared by a
bank, brokerage firm or its agent will be acceptable. Master Ballots may be
transmitted by facsimile. Master Ballots transmitted by facsimile must be
received by Hill and Knowlton at (212) ________ no later than the Voting
Deadline. For inspection purposes the original of any telecopied Master Ballot
should be delivered to Hill and Knowlton so as to be received no later than
fifteen (15) days after the Voting Deadline.
10. If a Master Ballot must be completed by you, please complete,
sign and return this Master Ballot so that it is received by the Solicitation
Agent no later than 5:00 p.m., New York City Time, on _______________ (the
"Voting Deadline"). Please contact the Solicitation Agent in order to arrange
for delivery of the completed Master Ballot to its offices.
11. To complete the Master Ballot properly, please take the following
steps:
ITEM 1:
SERIES B MASTER BALLOT 11
<PAGE>
Provide appropriate information for each of the items in Item 1 of the
Master Ballot.
ITEM 2:
Item 2 of the Master Ballot requests information for each individual
beneficial owner for whom you hold Series B Notes in your name or in street
name. To identify such beneficial owners without disclosing their names, please
use the customer account number assigned by you to each such beneficial owner.
Please note that Item 2 of the Master Ballot requests information which would be
obtained from Item 2 of the Series B Note Holder Ballot returned to you by your
customers.
ITEM 3:
Transfer the information regarding additional votes provided in Item 3 of
the Series Note B Holder Ballot to Item 3 of the Master Ballot.
ITEM 4:
(a) Sign and date your Master Ballot;
(b) If you are completing this Master Ballot on behalf of another entity,
kindly state your relationship with such entity; and
(c) Provide your name and mailing address.
IF YOU RETURN A MASTER BALLOT, PLEASE RETAIN IN YOUR FILES ANY RECORDS OF
THE VOTING INSTRUCTIONS RECEIVED FROM THE BENEFICIAL OWNERS UNTIL THE EFFECTIVE
DATE OF THE PLAN (OR SUCH OTHER DATE AS MAY BE REQUIRED BY COURT ORDER).
No fees or commissions or other remuneration will be payable to any broker,
dealer or other person for soliciting Ballots accepting the Plans. We will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding the Ballots and other enclosed materials to your
clients. We will also pay all transfer taxes, if any, applicable to the transfer
and exchange of securities pursuant to and following confirmation of the Plan.
PLEASE DELIVER THIS MASTER BALLOT PROMPTLY!
-------------------------------------------
IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE
VOTING PROCEDURES, PLEASE CALL THE SOLICITATION AGENT:
HILL AND KNOWLTON, INC.
ATTN: RESORTS BALLOT SOLICITATION GROUP
420 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 210-8850.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENT SHALL CONSTITUTE
AUTHORITY FOR YOU OR ANY OTHER PERSON TO ACT AS THE AGENT OF THE PROPONENTS OR
THE SOLICITATION AGENT, OR AUTHORIZE YOU OR ANY PERSON TO USE ANY DOCUMENT OR
MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE
SERIES B MASTER BALLOT 12
<PAGE>
PLAN, EXCEPT FOR THE STATEMENTS CONTAINED IN THE DOCUMENTS ENCLOSED HEREWITH.
SERIES B MASTER BALLOT 13
<PAGE>
RESORTS INTERNATIONAL, INC.
1133 BOARDWALK
ATLANTA CITY, NEW JERSEY 08401-7329
October 11, 1993
Fidelity Management and Research Company
(as investment adviser to certain funds
and accounts)
82 Devonshire Street
Boston, Massachusetts 02109
TCW Special Credits
(as manager of certain funds and accounts)
865 South Figueroa Street
Suite 1800
Los Angeles, California 90017
Re: CONSENT RIGHTS
Reference is made to that certain Purchase Agreement, dated the date
hereof, by and between Resorts International, Inc. ("RII") and Sun
International Hotels Limited ("SIHL") (the "Purchase Agreement"), that certain
Standby Distribution Agreement, to be executed and delivered on or before
October 16, 1993, by and between RII and Paradise Island Resorts Limited
("PIRL") (the "Standby Agreement") and RII's Reorganization Plan (as defined
in each of the Purchase Agreement and the Standby Agreement). Unless otherwise
indicated, the capitalized terms used herein have the same meaning assigned to
such terms in the Standby Agreement.
If, and only if, at any time prior to the Effective Date under the
Reorganization Plan, or the Closing Date under either the Purchase Agreement
or the Standby Agreement, as applicable, Fidelity and TCW shall cease to
beneficially own an aggregate of at least twenty percent (20%) of the aggregate
principal amount of the outstanding Old Series Notes, then all the rights of
consent, approval, acceptance or direction granted to Fidelity and TCW under
the Reorganization Plan, the Purchase Agreement or the Standby Agreement, as
applicable, shall thereupon cease to exist; PROVIDED, HOWEVER, that nothing
herein shall limit or otherwise prejudice in any manner any rights which
Fidelity and TCW may have under the Bankruptcy Code and the Bankruptcy Rules.
In addition, if either of Fidelity or TCW shall cease to beneficially own any
Old Series Notes whatsoever (but the other retains an aggregate of at least
twenty percent
<PAGE>
(20%) of the aggregate principal amount of the outstanding Old
Series Notes), then the rights described above shall be extinguished solely as
to the person ceasing to own any such Old Series Notes, without prejudice to
the rights of the other hereunder.
The foregoing is without prejudice to the rights of each of Fidelity and
TCW under that certain letter agreement among Fidelity, TCW, RII, GRI, SIHL
and Sun International Investments Limited setting forth the terms and
conditions under which funds managed by Fidelity and TCW will vote Old Series
Notes beneficially owned by them for acceptance of the Reorganization Plan.
If the foregoing accurately sets forth the arrangements among us, please
so indicate by signing this letter below.
Very truly yours,
RESORTS INTERNATIONAL, INC.
By: /s/ Christopher D. Whitney
__________________________________
ACCEPTED AND AGREED:
Fidelity Management and research Company
(as investment adviser to certain funds and accounts)
By: /s/ Judy Mencher
______________________________________
TCW Special Credits
(as manager of certain funds and accounts)
By: TCW Asset Management Co.,
its managing partner
By: /s/ Bruce Karsh
__________________________________
By: /s/ Richard Masson
__________________________________
ACKNOWLEDGED AND AGREED TO:
Sun International Hotels Limited
By: /s/ Howard Kerzner
______________________________________
2
<PAGE>
RESORTS INTERNATIONAL, INC.
Revised Term Sheet for
11.0% Senior Secured Loan due 2002
Issuer Resorts International Hotel
Financing, Inc. ("RIHF" or "Issuer").
Guarantors Resorts International Hotel, Inc.
("RIH") and, if any proceeds are
loaned by RIH to RII, Resorts
International, Inc. ("RII").
Issue Senior Secured Loan due 2002.
Principal Up to $20 million.
Availability Available in one borrowing during the
twelve months following the effective
date of the Plan of Reorganization of
RII and GGRI, Inc.
Maturity July 15, 2002 (approx. 8 years).
Interest 11.0% payable semi-annually in cash
on January 15th and July 15th on the basis of
a 360-day year consisting of twelve 30-day months.
Interest will accrue on the principal amount
advanced from the date of drawdown.
Security - A secured promissory note from RIH in an
aggregate principal amount of $20 million
(the "RIH Note") payable in amounts and at times
necessary to pay the principal of and interest on
the RIHF Senior Facility Note issued pursuant to
the Senior Facility Indenture (the "Indenture"),
with a collateral assignment of the mortgage,
assignment of leases and rents and assignment of
operating assets securing such note. The mortgage
securing the RIH Note will be a first priority lien
on all property and improvements of Merv Griffin's
Resorts Casino Hotel in Atlantic City, New Jersey.
- The guarantee of RIH will be secured by a first
mortgage, an assignment of leases and rents and an
assignment of operating assets (in form and substance
similar to the mortgage, assignment of leases and
rents and assignment of assets securing the 11% Senior
Mortgage Notes due 2003 (the "Senior Mortgage Notes"))
which mortgage shall be PARI PASSU with the liens
created by the mortgage documents securing the
RIH Note.
- If any proceeds are loaned by RIH to RII, the
collateral securing RIH's guarantee will include
the promissory note by RII evidencing such loan.
Rank Senior as to payment of all principal, interest,
premiums, fees and expenses to all debt, including
Senior Mortgage Notes and Junior Mortgage Notes.
Mandatory Redemption Upon the merger or consolidation of RIH or GGRI, Inc.
or a sale of assets by RIH; provided that such a merger
or consolidation shall be permitted without mandatory
redemption only if (i) all tests applicable to the
Senior Mortgage Notes are satisfied, and (ii) the
surviving entity assumes all obligations of its
predecessor under the Indenture.
Optional Redemption At any time during a period ending on the third
anniversary of the funding date at 103% of par. At
any time thereafter at par.
Open Market Purchases Authorized, in accordance with the Indenture (on terms
similar to those set forth in the indenture for the
Senior Mortgage Notes).
Indenture Modifications Requirement of two-thirds of outstanding principal
amount (on terms similar to those set forth in the
indenture for the Senior Mortgage Notes).
Use of Proceeds Advances will be made to RIHF and must be loaned by
RIHF to RIH. No further restrictions.
Conditions to Advances Execution of an Indenture reasonably satisfactory to
Purchaser based generally upon the indenture for the
Senior Mortgage Notes (except as described herein or
as agreed); no defaults or Events of Default under and
as defined in the Indenture and the indenture for the
Senior Mortgage Notes or Junior Mortgage Notes; and
effectiveness of a registration statement covering
Purchaser's public resale of the Notes by Purchaser
(see "Registration", below).
Indenture Covenants Payments of principal and interest; corporate
existence; quarterly and annual financial reports;
compliance certificates and notice of defaults;
limitation on dividends and restricted payments.
In addition, RII shall be limited as to debt
incurrence so that it may (i) issue the intercompany
notes contemplated hereby, and (ii) incur additional
indebtedness to the extent that RII's Pro Forma
Consolidated Interest Coverage Ratio for the four
full fiscal quarters next preceding the date such
additional indebtedness is proposed to be incurred
would have been less than or equal to ____, determined
on a pro forma basis (including pro forma for the
intended application of the net proceeds of such
indebtedness) as if such additional indebtedness had
been outstanding at the beginning of such four quarter
period.
Cross-Defaults The Senior Facility loan will contain cross defaults
to the Senior Mortgage Notes and the Junior Mortgage
Notes and cross-acceleration provisions similar to
those set forth in the indenture for the Senior
Mortgage Notes.
Registration As a condition to the advance of funds hereunder,
Issuer, RII, RIH and GGRI, Inc. shall take such
actions as may be necessary to ensure that all notes
issued to Purchaser in respect of the Senior Facility
loan may be re-sold publicly by Purchaser, without
restriction under the Securities Act of 1933, as
amended, immediately following the issuance thereof,
provided such re-sale occurs within 180 days
thereafter.
<PAGE>
=================================================================
STANDBY DISTRIBUTION AGREEMENT
between
RESORTS INTERNATIONAL, INC.
and
P. I. RESORTS LIMITED
-----------------------------------------
Dated as of October __, 1993
------------------------------------------
Purchase of Stock of Resorts International (Bahamas)
1984 Limited, and certain assets of
RII Paradise Subsidiaries
=================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I
Definitions . . . . . . . . . . . . . . . . 2
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . 2
ARTICLE II Purchase and Sale of the Shares
and the RII Paradise Assets . . . . . . . . 3
SECTION 2.01. Transfer of the Shares . . . . . . . . . . 3
SECTION 2.02. Purchase and Sale of the Shares, the
RII Real Estate Assets and the RII
Paradise Assets . . . . . . . . . . . . . . 3
SECTION 2.03. Delivery of Certificates and Other
Instruments of Transfer . . . . . . . . . . 3
SECTION 2.04. Purchase Price . . . . . . . . . . . . . . 4
SECTION 2.05. Preparation of the Closing Date Balance
Sheet and Operations Statement;
Adjustments . . . . . . . . . . . . . . . . 4
SECTION 2.06. Closing . . . . . . . . . . . . . . . . . . 6
SECTION 2.07. Third-Party Consents . . . . . . . . . . . 6
SECTION 2.08. Further Assurances . . . . . . . . . . . . 7
SECTION 2.09. Power of Attorney, etc . . . . . . . . . . 8
ARTICLE III Assumption of Certain Liabilities . . . . . 9
SECTION 3.01. Assumed Liabilities . . . . . . . . . . . . 9
SECTION 3.02. Liabilities Not Assumed . . . . . . . . . . 9
SECTION 3.03. No Successor . . . . . . . . . . . . . . . 10
SECTION 3.04. Indemnification . . . . . . . . . . . . . . 10
ARTICLE IV Representations and Warranties of RII . . . 11
SECTION 4.01. Incorporation of Representations
and Warranties. . . . . . . . . . . . . . 11
SECTION 4.02. Organization and Good Standing of
Buyer . . . . . . . . . . . . . . . . . . . 12
SECTION 4.03. Authorization of Buyer . . . . . . . . . . 12
SECTION 4.04. Buyer: No Conflict; Required
Filings and Consents . . . . . . . . . . . 12
SECTION 4.05. Buyer Shares . . . . . . . . . . . . . . . 13
ARTICLE V Additional Agreements . . . . . . . . . . . 14
<PAGE>
SECTION 5.01. Conduct of Paradise Island Business
Pending the Closing . . . . . . . . . . . . 14
SECTION 5.02. Securities Laws . . . . . . . . . . . . . . 14
SECTION 5.03. Documents and Motions to be Filed by
RII and GRI . . . . . . . . . . . . . . . . 15
SECTION 5.04. Reorganization Proceedings . . . . . . . . 15
SECTION 5.05. Access to Information. . . . . . . . . . 16
SECTION 5.06. Notification of Certain Matters . . . . . . 16
SECTION 5.07. Further Action; Reasonable Efforts . . . . 17
SECTION 5.08. Employee Benefit Matters . . . . . . . . . 17
SECTION 5.09. Bulk Transfer Laws . . . . . . . . . . . . 19
SECTION 5.10. Intercompany Accounts, Contracts
Guaranties and Indebtedness . . . . . . . . 19
SECTION 5.11. Reorganization Plan Solicitation
Documents . . . . . . . . . . . . . . . . . 20
SECTION 5.12. Reorganization Proceedings . . . . . . . . 20
SECTION 5.13. Airline Governmental Consents . . . . . . . 21
SECTION 5.14. Comfort Letter . . . . . . . . . . . . . . 22
SECTION 5.15. Attorneys Fees . . . . . . . . . . . . . . 22
SECTION 5.16. Transfer Taxes . . . . . . . . . . . . . . 22
SECTION 5.17. Actions on Behalf of Buyer; Knowledge
of Buyer . . . . . . . . . . . . . . . . . 22
SECTION 5.18. Articles of Association . . . . . . . . . . 23
SECTION 5.19. Representations and Warranties . . . . . . 23
SECTION 5.20. Operation of Buyer and Buyer
Subsidiaries . . . . . . . . . . . . . . . 23
SECTION 5.21. Insurance Proceeds . . . . . . . . . . . . 23
SECTION 5.22. Acquisition Proposals . . . . . . . . . . . 24
ARTICLE VI Conditions to the Closing . . . . . . . . 24
SECTION 6.01. Conditions to Obligations of Buyer . . . . 24
SECTION 6.02. Conditions to Obligations of RII . . . . . 27
ARTICLE VII Survival and Indemnification . . . . . . . 27
SECTION 7.01. Survival of Representations . . . . . . . . 27
SECTION 7.02. Indemnification by RII . . . . . . . . . . 28
SECTION 7.03. Notice, etc. . . . . . . . . . . . . . . . 28
SECTION 7.04. Reimbursement of Costs . . . . . . . . . . 29
SECTION 7.05. Time Limitations . . . . . . . . . . . . . 29
SECTION 7.06. Sole and Exclusive Remedy . . . . . . . . . 29
ARTICLE VIII Termination, Amendment And Waiver . . . . . 30
SECTION 8.01. Termination . . . . . . . . . . . . . . . . 30
SECTION 8.02. Rights of Termination . . . . . . . . . . . 31
<PAGE>
SECTION 8.03. Effect of Termination . . . . . . . . . . 31
SECTION 8.04. Waiver . . . . . . . . . . . . . . . . . . 31
SECTION 8.05. Amendments . . . . . . . . . . . . . . . . 32
ARTICLE IX General Provisions . . . . . . . . . . . . 32
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . 32
SECTION 9.02. Entire Agreement; Assignment . . . . . . . 33
SECTION 9.03. Parties in Interest . . . . . . . . . . . . 34
SECTION 9.04. GOVERNING LAW . . . . . . . . . . . . . . . 34
SECTION 9.05. Headings . . . . . . . . . . . . . . . . . 34
SECTION 9.06. Counterparts . . . . . . . . . . . . . . . 34
SECTION 9.07. Specific Performance . . . . . . . . . . . 34
SECTION 9.08. JURISDICTION . . . . . . . . . . . . . . . 34
SECTION 9.09. Knowledge or Consents . . . . . . . . . . . 35
SECTION 9.10. Rights of Fidelity and TCW . . . . . . . . 35
EXHIBITS
Exhibit A Comfort Letter
Exhibit B Articles of Association of Buyer
Exhibit C Form of Opinion of Gibson, Dunn &
Crutcher
Exhibit D Management Agreement
<PAGE>
STANDBY DISTRIBUTION AGREEMENT
STANDBY DISTRIBUTION AGREEMENT dated as of
October __, 1993 (this "Agreement"), between RESORTS
INTERNATIONAL, INC., a Delaware corporation ("RII"),
and P.I. RESORTS LIMITED, a Bahamian corporation
("Buyer").
WHEREAS, RII has entered into that certain Purchase
Agreement, dated as of October __, 1993 (the "Sun Purchase
Agreement"), by and between RII and Sun International Hotels
Limited ("SIHL") providing for the sale of the Shares to SIHL on
the terms and conditions set forth therein;
WHEREAS, in connection with the proposed sale of the
Shares to SIHL, the Sun Purchase Agreement further contemplates
that SIHL will cause certain subsidiaries thereof to acquire the
RII Real Estate Assets from RII and the RII Paradise Assets from
the RII Paradise Subsidiaries on the terms and conditions set
forth therein;
WHEREAS, Buyer is, as of the date hereof, a wholly-
owned subsidiary of RII;
WHEREAS, if and only if the transactions contemplated
by the Sun Purchase Agreement are not consummated in accordance
with the terms thereof and the Sun Purchase Agreement is
terminated in accordance with the terms thereof, Buyer desires to
acquire the Shares from RII, and RII desires to sell the Shares
to Buyer on the terms and conditions set forth herein (such
purchase, the "Stock Acquisition");
WHEREAS, in connection with the Stock Acquisition,
Buyer desires to cause the Buyer Subsidiaries to acquire the RII
Real Estate Assets from RII and the RII Paradise Assets from the
RII Paradise Subsidiaries, and RII desires to sell the RII Real
Estate Assets and to cause the RII Paradise Subsidiaries to sell
the RII Paradise Assets to the Buyer Subsidiaries on the terms
and conditions set forth herein (such purchase, the "Asset
Acquisition");
WHEREAS, in connection with the Stock Acquisition and
the Asset Acquisition (collectively, the "Acquisitions"), RII and
GRI will file the Reorganization Plan with the Bankruptcy Court,
providing, INTER ALIA, under
<PAGE>
certain terms and conditions to be set forth in the Reorganization Plan
(including the condition that the Sun Purchase Agreement shall have
terminated in accordance with the terms thereof), for the (i) sale of
the Shares to Buyer, (ii) sale of the RII Paradise Assets and the RII
Real Estate Assets to the Buyer Subsidiaries, (iii) distribution
to holders of the Old Series Notes (as defined in the
Reorganization Plan) of RII of the Buyer Shares and (iv) the
other distributions to holders of the Old Series Notes of RII to
be made pursuant to the Reorganization Plan;
WHEREAS, the respective Boards of Directors of each of
RII and Buyer deem it advisable and in the best interests of such
corporations that, if the Sun Purchase Agreement terminates in
accordance with its terms, the Stock Acquisition and Asset
Acquisition occur upon the terms and subject to the conditions
set forth herein and in the Reorganization Plan;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants, agreements, representations and warranties
herein contained, and subject to the conditions hereinafter set
forth, and for the purpose of prescribing the terms and
conditions of the Stock Acquisition and Asset Acquisition, if the
Sun Purchase Agreement terminates in accordance with its terms,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used but
not defined herein shall have the meanings ascribed to those
terms in Appendix A to the Sun Purchase Agreement or elsewhere in
the Sun Purchase Agreement, except that (a) all references to
"Buyer" therein and herein shall be deemed to refer to Paradise
Island Resorts Limited, (b) all references therein and herein to
"Buyer Subsidiaries" shall be deemed to refer to direct or
indirect wholly-owned Subsidiaries of Paradise Island Resorts
Limited to be formed to buy the RII Paradise Assets from the RII
Paradise Subsidiaries and the RII Real Estate Assets from RII,
(c) all references herein to the "Closing" shall be deemed to
refer to the closing of the Acquisitions under this Agreement and
(d) as otherwise expressly required by the context hereof.
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ARTICLE II
PURCHASE AND SALE OF THE SHARES
AND THE RII PARADISE ASSETS
SECTION 2.01. TRANSFER OF THE SHARES. Prior to
Closing, RII may, with the consent of Fidelity and TCW, cause GRI
to transfer the Shares to RII in a transaction reasonably
acceptable to Fidelity and TCW and their counsel.
SECTION 2.02. PURCHASE AND SALE OF THE SHARES, THE RII
REAL ESTATE ASSETS AND THE RII PARADISE ASSETS. On the terms and
subject to the conditions of this Agreement, on the Closing Date
(a) RII agrees to sell, transfer and deliver, or cause GRI to
sell, transfer and deliver, to Buyer, and Buyer agrees to
purchase and accept from RII or GRI, as applicable, the Shares,
free and clear of all Encumbrances, other than those Encumbrances
arising from acts of Buyer or its Affiliates from and after (but
not prior to) the Closing and (b) RII shall, and shall cause each
RII Paradise Subsidiary to, sell, convey, assign, transfer and
deliver to a Buyer Subsidiary designated by Buyer, and Buyer
shall cause each such Buyer Subsidiary to purchase and accept
from RII and each such RII Paradise Subsidiary, all right, title
and interest of RII in the RII Real Estate Assets and all right,
title and interest of each such RII Paradise Subsidiary in the
RII Paradise Assets, free and clear of all Encumbrances except
Permitted Encumbrances and those Encumbrances arising from acts
of Buyer or its Affiliates from and after (but not prior to) the
Closing.
SECTION 2.03. DELIVERY OF CERTIFICATES AND OTHER
INSTRUMENTS OF TRANSFER. On the Closing Date (a) RII or GRI, as
applicable, shall deliver to Buyer certificates representing the
Shares together with stock powers executed in blank and (b) RII
shall, and shall cause the RII Paradise Subsidiaries to, deliver
to the Buyer Subsidiaries such specific assignments, bills of
sale (to be in a form reasonably satisfactory to Fidelity, TCW
and RII), endorsements, deeds and other good and sufficient
instruments of conveyance and transfer, in form and substance
reasonably satisfactory to Fidelity and TCW and their counsel, as
shall be effective to vest in the Buyer Subsidiaries title to all
the RII Paradise Assets and the RII Real Estate Assets. All
right, title and interest of RII in the RII Real Estate Assets
and of the RII Paradise
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Subsidiaries in the RII Paradise Assets shall pass and delivery of
the RII Real Estate Assets and the RII Paradise Assets shall take
place in such location or locations as Fidelity, TCW and RII shall
determine.
SECTION 2.04. PURCHASE PRICE. As consideration for
the transfer of the Shares, the RII Real Estate Assets and the
RII Paradise Assets (the "Purchase Price"), Buyer shall cause on
the Closing Date (a) the 5,000,000 Ordinary Shares, par value
$.01 per share, of Buyer (the "Buyer Shares") to be delivered, on
behalf of RII and the RII Paradise Subsidiaries, to the
Disbursing Agent designated pursuant to the Reorganization Plan
or pursuant to an order of the Bankruptcy Court for purposes of
making distributions thereunder to the holders of the Old Series
Notes of RII and (b) the Buyer Subsidiaries to assume the Assumed
Liabilities in accordance with Article III hereof. The Purchase
Price shall be allocated as set forth on Schedule 2.04 to the Sun
Purchase Agreement.
SECTION 2.05. PREPARATION OF THE CLOSING DATE BALANCE
SHEET AND OPERATIONS STATEMENT; ADJUSTMENTS.
(a) Within 45 days after the Closing Date, RII shall cause to be
prepared, in accordance with the books and records of account of
the Paradise Island Business and a physical inventory, and shall
deliver, an audited balance sheet for the Paradise Island
Business as of the Closing Date (the "Preliminary Closing Date
Balance Sheet") and an audited statement of operations for the
Paradise Island Business for the period beginning at 12:01 a.m.
on January 1, 1994, and ending at the close of business on the
Closing Date (the "Preliminary Closing Date Operations
Statement"), accompanied by an opinion of Ernst & Young thereon
to the effect that such balance sheet and statement of operations
present fairly in all material respects the financial position
and results of operation of the Paradise Island Business at such
date and for such period in conformity with GAAP and the
preparation of the June 30 Balance Sheet and the statement of
operations for the six months ending June 30, 1993.
Representatives of Buyer's auditors, which will be a nationally-
recognized firm of independent accountants, shall be entitled to
review the scope of the audit in advance thereof as well as the
work of Ernst & Young as it progresses and all drafts of the
Preliminary Closing Date Balance Sheet and the Preliminary
Closing Date Operations Statement. Within 10 days after the
delivery to Buyer of the Preliminary Closing Date Balance Sheet
and the Preliminary Closing Date Operations Statement, Buyer
shall
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notify RII if it disagrees in any respect with such
Preliminary Closing Date Balance Sheet or Preliminary Closing
Date Operations Statement. If Buyer does disagree, Buyer and RII
shall promptly attempt to settle such disagreement. If Buyer and
RII are unable to resolve such disagreement within 7 days after
such notice, such disagreement shall be referred to the
Accounting Arbitrator for a determination, which shall be final
and binding on the parties hereto for all purposes of this
Agreement. The fees of the Accounting Arbitrator shall be
allocated between Buyer and RII by the Accounting Arbitrator
based on its good faith view as to which party's positions were
more reasonable. The Preliminary Closing Date Balance Sheet and
Preliminary Closing Date Operations Statement as agreed to by the
parties or as adjusted pursuant to the determination of the
Accounting Arbitrator are herein referred to as the "Closing Date
Balance Sheet" and the "Closing Date Operations Statement".
Buyer and RII agree that if prior to 35 days after the Closing
Date there has not been a resolution of the dispute (the "Union
Contract Dispute") between the Company and the Bahamas Hotel
Catering and Allied Workers Union (the "Union") with respect to
amounts claimed by the Union to be owed by the Company through
December 31, 1993, under the collective bargaining agreement
dated as of January 7, 1990, between the Bahamas Hotel Employers
Association and the Union, then RII and Buyer shall agree as to
the amount they believe it would reasonably take to settle the
Union Contract Dispute (the "Union Contract Dispute Amount"). If
Buyer and Seller are unable to agree on the Union Contract
Dispute Amount by the fortieth day after the Closing Date, then
the Union Contract Arbitrator shall determine such amount prior
to the sixtieth day after the Closing Date, and such
determination shall be final and binding on the parties hereto.
The Union Contract Dispute Amount, as agreed to by the parties or
determined by the Union Contract Arbitrator, shall appear on the
Preliminary Closing Date Balance Sheet and the Closing Date
Balance Sheet as a Current Liability. Prior to the Closing Date,
RII shall, as between the parties, control the resolution of the
Union Contract Dispute; PROVIDED, HOWEVER, RII shall consult with
Fidelity and TCW with respect thereto and allow a representative
of Fidelity or TCW to be present when reasonable in all material
negotiations in connection therewith.
(b) Within three Business Days after the Closing Date,
Buyer and RII shall jointly prepare a cash statement setting
forth the amount of Adjusted Cash of the Paradise
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Island Business as of the Closing Date. If the Adjusted Cash of
the Paradise Island Business shown on such cash statement shall be
less than the Target Adjusted Cash, on the fourth Business Day after the
Closing Date RII shall pay to Buyer the difference in immediately
available funds.
(c) If the Adjusted Working Capital of the Paradise
Island Business plus any Adjusted Cash in excess of $5 million
shown on the Closing Date Balance Sheet shall be greater than the
Target Adjusted Working Capital plus the EBITDA Adjustment, on
the Adjustment Date (as defined below) Buyer shall pay to RII the
difference in immediately available funds, together with interest
on such amount at the Applicable Rate from and including the
Closing Date to but excluding the Adjustment Date. If the
Adjusted Working Capital of the Paradise Island Business plus any
Adjusted Cash in excess of $5 million shown on the Closing Date
Balance Sheet shall be less than the Targeted Adjusted Working
Capital plus the EBITDA Adjustment, on the Adjustment Date RII
shall pay to Buyer the difference in immediately available funds,
together with interest on such amount at the Applicable Rate from
and including the Closing Date to but excluding the Adjustment
Date. For purposes of the foregoing, "Adjustment Date" shall
mean (i) if Buyer does not disagree in any respect with the
Preliminary Closing Date Balance Sheet, the 10th day following
Buyer's receipt of the Preliminary Closing Date Balance Sheet or
(ii) if Buyer shall disagree in any respect with the Preliminary
Closing Date Balance Sheet, the third Business Day following
either the resolution of such disagreement by the parties or a
final determination by the Accounting Arbitrator in accordance
with Section 2.05(a).
SECTION 2.06. CLOSING. The Closing of the
transactions contemplated by this Agreement shall take place at
the offices of Gibson Dunn & Crutcher, 200 Park Avenue, New York,
New York, on a date to be agreed upon by RII, Fidelity and TCW,
as promptly as practicable following the satisfaction or waiver
of all of the conditions set forth in Article VI hereof, but in
no event later than 10 Business Days thereafter.
SECTION 2.07. THIRD-PARTY CONSENTS. To the extent
that any Contract relating to the RII Paradise Assets to be
assumed by a Buyer Subsidiary for which assignment to such Buyer
Subsidiary is provided for herein is not assignable without the
consent of another party (a "Non-Assignable Contract"), this
Agreement shall not constitute an assignment or an
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attempted assignment thereof if such assignment or attempted assignment
would constitute a breach thereof. RII and Buyer agree to use
their best efforts (without the payment of money) to obtain the
consent of such other party to the assignment of any such
Contract to the relevant Buyer Subsidiary in all cases in which
such consent is or may be required for such assignment. If any
such consent shall not be obtained, RII agrees to cooperate with
Buyer in any reasonable arrangement (at the cost and for the
account of such Buyer Subsidiary) designed to provide for the
relevant Buyer Subsidiary the benefits intended to be assigned to
such Buyer Subsidiary under the relevant Contract, including
enforcement of any and all rights of the relevant RII Paradise
Subsidiary against the other party thereto arising out of the
breach or cancellation thereof by such other party or otherwise.
If and to the extent that such arrangement cannot be made, except
as provided in the next sentence, neither Buyer nor any Buyer
Subsidiary shall have any obligation with respect to any such
Contract. If PIA is unable to assign to a designated Buyer
Subsidiary the Ft. Lauderdale Ground Space Lease (Hangar) with
Broward County, Florida (the "Hangar Lease"), or is otherwise
unable to arrange for such designated Buyer Subsidiary to obtain
the benefits of the Hangar Lease, then (i) PIA shall use its
reasonable best efforts to sub-lease the Hangar Lease and (ii)
Buyer and PIA shall each be responsible for 50% of the
obligations of lessee under the Hangar Lease and shall each be
entitled to receive 50% of the proceeds relating to any sublease
of the Hangar Lease.
SECTION 2.08. FURTHER ASSURANCES. From and after the
Closing, upon request of Buyer, RII shall, and shall cause any of
its Affiliates formerly owning an interest in the Paradise Island
Assets to, execute, acknowledge and deliver all such further
acts, assurances, deeds, assignments, transfers, conveyances and
other instruments and papers as may be reasonably required to
sell, assign, transfer, convey and deliver (at Buyer's expense,
unless otherwise provided in this Agreement) to and vest in
Buyer, the Company or its Subsidiaries or the Buyer Subsidiaries,
as the case may be, and more fully protect their respective
right, title and interest in and employment of, the Shares and
all the Paradise Island Assets and the RII Real Estate Assets and
as otherwise may be appropriate to carry out the transactions
contemplated in this Agreement.
(b) From and after the Closing, upon request of RII,
Buyer shall, and shall cause any of the Buyer
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Subsidiaries or any Subsidiaries of Buyer to, execute, acknowledge
and deliver all such further acts, assurance, assumptions and other
instruments and papers as may be reasonably required (i) in respect
of the assumption by the Buyer Subsidiaries of the Assumed Liabilities,
and (ii) as otherwise may be appropriate to carry out the
transactions contemplated in this Agreement.
SECTION 2.09. POWER OF ATTORNEY, ETC. (a) Effective
on the Closing Date, RII shall cause each RII Paradise Subsidiary
to constitute and appoint, and will cause any Affiliate owning an
interest in any RII Paradise Assets to constitute and appoint,
the applicable Buyer Subsidiary designated by Buyer and its
successors, legal representatives and assigns, the true and
lawful attorneys of such RII Paradise Subsidiary and such
Affiliates, with full power of substitution, in the name of such
RII Paradise Subsidiary and such Affiliates, but on behalf of and
for the benefit of such Buyer Subsidiary and its successors,
legal representatives and assigns, and at the expense of such
Buyer Subsidiary: (i) to demand and receive from time to time
any and all of the RII Paradise Assets and to make endorsements
and give receipts and releases for and in respect of the same and
any part thereof; (ii) to institute, prosecute, compromise and
settle any and all proceedings at law, in equity or otherwise
that any Buyer Subsidiary and its successors, legal
representatives or assigns may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to
the RII Paradise Assets; (iii) to defend or compromise any or all
actions, suits or proceedings in respect of any of the RII
Paradise Assets; and (iv) to do all such acts and things in
relation to the matters set forth in the preceding clauses (i)
through (iii) as each such Buyer Subsidiary and its successors,
legal representatives or assigns shall deem desirable. RII
hereby agrees that the appointment to be hereby made and the
powers to be hereby granted are coupled with an interest and are
and shall be irrevocable by it in any manner or for any reason.
RII shall cause each RII Paradise Subsidiary to deliver to the
applicable Buyer Subsidiary designated by Buyer at Closing an
acknowledged power of attorney to the foregoing effect executed
by each such RII Paradise Subsidiary and any Affiliate selling
any of the Paradise Island Assets. Buyer agrees to indemnify and
hold RII and its Affiliates harmless from and against any Losses
resulting from Buyer's improper use of the power of attorney
described in this Section 2.09(a).
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(b) Effective upon the Closing Date Buyer and the
Buyer Subsidiaries shall have the right to receive and open all
mail, packages and other communications which relate to the
Paradise Island Business addressed to any of the RII Paradise
Subsidiaries. RII agrees promptly to deliver to Buyer and the
Buyer Subsidiaries any mail, packages or other communications
received directly or indirectly by RII or any of its Affiliates
that relate to the Paradise Island Business. Buyer and the Buyer
Subsidiaries shall have the right and authority to collect, for
its own account, all receivables and other items which shall be
transferred or are intended to be transferred to Buyer and the
Buyer Subsidiaries as provided in this Agreement, and to endorse
with the name of RII or any of its Affiliates any checks or
drafts received on account of any such receivables or other
items, and RII shall promptly transfer or deliver, or cause its
Affiliates to transfer or deliver, to Buyer and the Buyer
Subsidiaries any cash or other property received directly or
indirectly by RII or any of its Affiliates in respect of such
receivables or other items including any amounts payable as
interest. Buyer and the Buyer Subsidiaries shall promptly
deliver to RII packages and other communications received by them
which relate to RII or any of its Affiliates but do not relate to
the Paradise Island Business.
ARTICLE III
ASSUMPTION OF CERTAIN LIABILITIES
SECTION 3.01. ASSUMED LIABILITIES. Buyer shall cause
designated Buyer Subsidiaries to severally assume on the Closing
Date the Assumed Liabilities, and shall cause each designated
Buyer Subsidiary to execute an Assumption Agreement relating to
the Assumed Liabilities assumed by such designated Buyer
Subsidiary. On the Closing Date, Buyer shall assume the
obligations of RII under Sections 7.02(a)(vi) and (vii) of the
Sun Purchase Agreement.
SECTION 3.02. LIABILITIES NOT ASSUMED. Except for the
Assumed Liabilities and as provided in Section 3.04 and the last
sentence of Section 3.01, neither Buyer nor any Buyer Subsidiary,
pursuant to this Agreement or the Assumption Agreements or
otherwise, assumes, agrees to perform, pay, discharge or
indemnify RII or any of its Affiliates against, or otherwise
agrees to have any responsibility for, any liabilities or
obligations of RII,
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GRI or any RII Paradise Subsidiary, fixed, contingent or otherwise,
known or unknown, relating to or arising out of the RII Paradise Assets,
whether arising prior to, on or after the Closing.
SECTION 3.03. NO SUCCESSOR. It is expressly
understood that the parties intend that neither the Buyer nor any
Buyer Subsidiary shall be considered a successor to any RII
Paradise Subsidiary and that neither Buyer nor any Buyer
Subsidiary shall have any liability except as otherwise provided
in this Agreement or the Assumption Agreements. Without limiting
the generality of the foregoing, neither Buyer nor any Buyer
Subsidiary, pursuant to this Agreement, the Assumption Agreements
or otherwise, assumes (a) any liability for or obligation with
respect to (i) any Indebtedness of RII or its Affiliates or (ii)
any Taxes relating to RII or its Affiliates (except Assumed
Taxes), (b) any liabilities or obligations owed to RII or any of
its Affiliates (except for liabilities owed to RII or any of its
Affiliates under this Agreement or any agreements, certificates
or other instruments delivered by Buyer or the Buyer Subsidiaries
pursuant to this Agreement), and (c) any liabilities that do not
constitute Assumed Liabilities.
SECTION 3.04. INDEMNIFICATION. (a) From and after
the Closing Date, RII and the RII Paradise Subsidiaries shall
indemnify Buyer, the Buyer Subsidiaries and their respective
Affiliates (each a "Buyer Indemnified Party") against, and hold
them harmless from, any Losses with respect to the ownership, use
or operation of the RII Paradise Assets prior to the Closing Date
(other than the Assumed Liabilities), which any Buyer Indemnified
Party may be requested to pay, perform or discharge at any time.
No Buyer Indemnified Party shall be entitled to indemnification
under this Section 3.04(a) until the date on which the aggregate
amount of the claims made by Buyer Indemnified Parties is at
least equal to $25,000, at which time claims may be asserted by
any Buyer Indemnified Party against the indemnifying parties
regardless of amount.
(b) From and after the Closing Date, Buyer and the
Buyer Subsidiaries shall indemnify RII, the RII Paradise
Subsidiaries and their respective Affiliates (each an "RII
Indemnified Party") against, and hold them harmless from, any
Losses with respect to (i) the Assumed Liabilities, (ii) the
ownership, use or operation of the RII Paradise Assets on or
after the Closing Date, (iii) any liability or
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obligation of the Company or any of its Subsidiaries (fixed, contingent
or otherwise, known or unknown (except to the extent such liability
or obligation was incurred after the date of this Agreement and
in breach of Section 5.01)), which any RII Indemnified Party
may be requested to pay, perform or discharge at any time and
(iv) the obligations assumed by Buyer as contemplated by the last
sentence of Section 3.01 hereof to pay any Buyer Expense
Reimbursement to SIHL under the Sun Purchase Agreement. No RII
Indemnified Party shall be entitled to indemnification under this
Section 3.04(b) until the date on which the aggregate amount of
the claims made by RII Indemnified Parties is at least equal to
$25,000, at which time claims may be asserted by any RII
Indemnified Party against the indemnifying parties regardless of
the amount.
(c) The provisions of Sections 7.03 and 7.04 shall
apply to any indemnification under this Section 3.04.
(d) The indemnification obligations of the applicable
parties under this Section 3.04 shall constitute the sole and
exclusive remedies of the applicable Buyer Indemnified Parties
and RII Indemnified Parties, as the case may be, with respect to
the matters described in this Section 3.04.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RII
RII represents and warrants to Buyer as follows:
SECTION 4.01. INCORPORATION OF REPRESENTATIONS AND
WARRANTIES. Each of the representations and warranties made by
RII to SIHL in Sections 4.01, 4.02, 4.03, 4.04, 4.13, 4.16 and
4.22 of the Sun Purchase Agreement (but not any other
representations or warranties contained in Article IV thereof) is
hereby made by RII in favor of Buyer for all purposes as if such
representations and warranties were fully set forth herein;
PROVIDED, HOWEVER, that any such representation or warranty
relating to the delivery of documents, information schedules or
other materials to Buyer shall not be deemed to be satisfied
hereunder unless and until RII shall have delivered such
documents, information schedules or other materials to Fidelity
and TCW; and PROVIDED, FURTHER, that for purposes of this
Agreement clause (iii) of Section 4.03(b) of the Sun Purchase
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Agreement shall be deemed to have been stricken in its entirety
and replaced by the following: "(iii) consents and approvals
required to be obtained by Buyer or RII from the government of
the Commonwealth of The Bahamas in order to effectuate the
transactions contemplated hereby, to operate the Paradise Island
Business or to permit the public trading of the Buyer Shares when
they are distributed in accordance with the Reorganization Plan,
including without limitation any approvals for exchange controls
required to be received from the Exchange Control Department of
the Central Bank of The Bahamas (the "Bahamas Exchange Control
Approval")".
SECTION 4.02. ORGANIZATION AND GOOD STANDING OF BUYER.
Buyer is, and each of the Buyer Subsidiaries will be at Closing,
a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of the Bahamas.
SECTION 4.03. AUTHORIZATION OF BUYER. Buyer has all
necessary corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by Buyer and the
purchase of the Shares by Buyer have been, and the purchase of
the RII Paradise Assets by the Buyer Subsidiaries will be at
Closing, duly and validly authorized by all necessary corporate
action on the part of Buyer and the Buyer Subsidiaries and no
other corporate proceedings or shareholder actions on the part of
Buyer or the Buyer Subsidiaries are or will be necessary to
authorize this Agreement or to purchase the Shares and the RII
Paradise Assets. This Agreement has been duly and validly
executed and delivered by Buyer and, assuming the due
authorization, execution and delivery by RII, constitutes the
legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms (subject as to enforcement to
applicable bankruptcy, reorganization, insolvency, fraudulent
transfer and moratorium and similar laws from time to time in
effect affecting creditors' rights generally and to legal and
equitable limitations on availability of specific performance and
other equitable remedies).
SECTION 4.04. BUYER: NO CONFLICT; REQUIRED FILINGS
AND CONSENTS. (a) The execution and delivery of this Agreement
by Buyer does not (and in the case of the Buyer Subsidiaries will
not at Closing), and the performance of this Agreement by Buyer
and each Buyer Subsidiary will not, (i) conflict with or violate
the memorandum of association or articles of association or
equivalent
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organizational documents of Buyer or any Buyer Subsidiary, (ii)
conflict with or violate any law, rule, regulation, order, judgment
or decree applicable to Buyer or any Buyer Subsidiary or by which
any of them or their properties is bound or affected or (iii) result
in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any
of the property or assets of Buyer or any Buyer Subsidiary pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which
Buyer or any Buyer Subsidiary is a party or by which any of them
or their properties is bound or affected, except, in the case of
this clause (iii) and clause (ii) above, for any such breaches,
defaults or other occurrences which would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by
Buyer does not, and the performance of this Agreement by Buyer
will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority
except for (i) the Confirmation Order, (ii) required filings
under the HSR Act, (iii) the Airline Governmental Consents, (iv)
the Governmental Consents and (v) where failure to obtain such
consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially delay
consummation of the transactions contemplated hereby, or
otherwise prevent Buyer from performing its obligations under
this Agreement.
SECTION 4.05. BUYER SHARES. The authorized capital
stock of Buyer consists of 25,000,000 Ordinary Shares, $.01 par
value per share, of which two shares are duly authorized and
validly issued and outstanding, fully paid and non-assessable
(the "Founder's Shares") and 10,000,000 Preference Shares, $.01
par value per share, of which no shares are issued and
outstanding. As of the date hereof, RII is the registered holder
of one of the Founder's Shares. RII is the sole beneficial owner
of both of the Founder's Shares. The Buyer Shares upon issuance
and delivery in accordance with the terms of this Agreement will
be duly authorized, validly issued and outstanding, fully paid
and non-assessable. The Founder's Share has not been, and the
Buyer Shares will not be, issued in violation of,
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and are not subject to, any preemptive or subscription rights. Except
as set forth above, there are no shares of capital stock or other equity
securities of Buyer outstanding. Except for the agreements and
instruments described in Schedule 4.16(a) of the Sun Purchase
Agreement, there are no outstanding warrants, options,
agreements, convertible or exchangeable securities or other
commitments (other than this Agreement) pursuant to which RII or
any of its Affiliates is or may become obligated to issue, sell,
purchase, return or redeem any shares of capital stock or other
securities of Buyer or any Subsidiary of Buyer, and there are not
any equity securities of Buyer or any Subsidiary of Buyer
reserved for issuance for any purpose (other than the Buyer
Shares). Prior to the Closing, RII will have caused Buyer to
form, under the laws of the Commonwealth of The Bahamas, the
Buyer Subsidiaries, and there will be one Buyer Subsidiary to
purchase the assets of each RII Paradise Subsidiary hereunder.
At the Closing, Buyer directly will have good and valid title to
all of the outstanding shares of capital stock of each Subsidiary
of Buyer, free and clear of Encumbrances, and all such shares
will be duly authorized and validly issued and outstanding, fully
paid and non-assessable. Buyer does not directly or indirectly
own any capital stock of or other equity interests in any
corporation, partnership or other entity other than the Buyer
Subsidiaries.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. CONDUCT OF PARADISE ISLAND BUSINESS
PENDING THE CLOSING. Each of the covenants and agreements made
by RII to SIHL in Section 6.01 of the Sun Purchase Agreement is
hereby made by RII in favor of Buyer for all purposes as if such
covenants and agreements were fully set forth herein; PROVIDED,
HOWEVER, that any consents required to be obtained from Buyer
thereunder shall not be deemed to have been granted unless and
until Fidelity and TCW shall have consented thereto in writing.
SECTION 5.02. SECURITIES LAWS. Each of RII and Buyer
shall make all filings under the Securities Act and the Exchange
Act necessitated by the provisions of this Agreement. RII shall
cause the Buyer Shares to be registered under the Exchange Act
and listed on the American
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Stock Exchange or authorized for quotation on the NASDAQ National
Market System.
SECTION 5.03. DOCUMENTS AND MOTIONS TO BE FILED BY RII
AND GRI. (a) Promptly upon completion of the Reorganization
Plan Solicitation and in no event later than February 15, 1994,
RII and GRI shall commence the Bankruptcy Cases. Notwithstanding
anything to the contrary, RII and GRI shall not be under any
obligation to commence the Bankruptcy Cases unless and until RII
and GRI shall have received in the Reorganization Plan
Solicitation the requisite number of acceptances from impaired
creditors and the requisite number of consents to terminate the
Old Security Documents (as defined in the Reorganization Plan).
(b) Promptly upon the commencement of the Bankruptcy
Cases, and in no event later than five Business Days thereafter,
RII and GRI shall (i) file the Disclosure Statement and the
Reorganization Plan and the certification of votes for acceptance
or rejection of the Reorganization Plan with the Bankruptcy Court
and (ii) seek from the Bankruptcy Court and take all steps
necessary to obtain a hearing at the earliest practicable date
for approval of the Disclosure Statement and confirmation of the
Reorganization Plan.
(c) RII shall use its reasonable best efforts to file
the Registration Statement with the SEC as soon as possible.
SECTION 5.04. REORGANIZATION PROCEEDINGS. (i) RII
shall, and shall cause GRI to, seek confirmation of the
Reorganization Plan by the Bankruptcy Court using the acceptances
of the Reorganization Plan received by RII and GRI pursuant to
the Reorganization Plan Solicitation, (ii) RII shall, and shall
cause GRI to, comply in all material respects with the Bankruptcy
Code and all other laws, rules, regulations, decrees and orders
promulgated thereunder in connection with obtaining confirmation
of the Reorganization Plan, (iii) RII shall, and shall cause GRI
to, use its best efforts to obtain, and shall, and shall cause
GRI to, refrain from knowingly taking any action that would be
likely to prevent, materially impede or result in the revocation
of, (A) the entry by the Bankruptcy Court of the Confirmation
Order and (B) the vesting upon the date on which the
Reorganization Plan shall become effective of (y) the property of
each of RII and GRI in the reorganized entities and (z) the
property dealt with by the
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Reorganization Plan in the recipients thereof under the Reorganization
Plan, in each case free and clear of all claims and interests of
creditors and equity securityholders except as provided in and in
accordance with the Reorganization Plan and (iv) RII shall not, and
shall cause GRI not to, consent to any amendment or supplement to, or
modification of, the Reorganization Plan or the Disclosure Statement
that purports to change in any material respect the terms or
conditions of the transactions contemplated by this Agreement
without the prior written consent of Fidelity and TCW.
SECTION 5.05. ACCESS TO INFORMATION. From the date
hereof to the Closing Date, RII shall, and shall cause its
Affiliates, officers, directors, employees, auditors and other
agents to, (i) afford the officers, employees, auditors and other
agents of Fidelity and TCW reasonable access at all reasonable
times to its officers, employees, agents, properties, offices,
plants and other facilities and to all books and records, and
shall furnish Fidelity and TCW with all financial, operating and
other data and information with respect to the Paradise Island
Business as Fidelity and TCW, through their officers, employees
or agents, may reasonably request and (ii) furnish, and cause the
officers and employees of RII and its Affiliates to furnish, to
Fidelity and TCW and their authorized representatives such
additional financial and operating data and other information
regarding the Paradise Island Assets and the Paradise Island
Business as Fidelity or TCW shall from time to time reasonably
request including, without limitation, all monthly or other
interim financial and operating reports relating to the Paradise
Island Business prepared by or for officers of RII and its
Affiliates. Without limiting the foregoing, RII agrees to
provide representatives of Fidelity and TCW with offices in
Paradise Island and Miami and such representatives shall be given
adequate prior notice (if time permits) of and allowed to attend
all material meetings of RII and its Subsidiaries relating to the
Paradise Island Business. Notwithstanding the foregoing, RII
shall not be obligated to provide Fidelity or TCW or any of their
authorized representatives with any material confidential
information or any material nonpublic information unless Fidelity
and TCW shall have entered into reasonable confidentiality
arrangements with respect to such confidential or nonpublic
information, subject to reasonable and customary exceptions.
SECTION 5.06. NOTIFICATION OF CERTAIN MATTERS. RII
shall give prompt notice to Fidelity and TCW of (i) the
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occurrence or non-occurrence of any event the occurrence or non-
occurrence of which would be likely to cause a representation or
warranty contained in this Agreement to be untrue or inaccurate
in any material respect and (ii) any failure of RII or Buyer to
comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it
hereunder; PROVIDED, HOWEVER, that the delivery of any notice
pursuant to this Section 5.06 shall not limit, increase or
otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 5.07. FURTHER ACTION; REASONABLE EFFORTS. Upon
the terms and subject to the conditions hereof, each of RII and
Buyer shall use all reasonable best efforts (without undue
expense) to take or cause to be taken all appropriate action and
to do or cause to be done all things reasonably necessary, proper
or advisable under applicable laws and regulations to consummate
and make effective the transactions contemplated hereby and by
the Reorganization Plan, including, without limitation, using all
reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to Material Contracts as are
necessary for the consummation of the transactions contemplated
hereby and by the Reorganization Plan and to fulfill the
conditions to the Closing.
SECTION 5.08. EMPLOYEE BENEFIT MATTERS. (a) As of
the Closing Date, Buyer shall cause the Buyer Subsidiaries to
offer employment to each person employed by the RII Paradise
Subsidiaries whose primary functions relate to the operation of
the Paradise Island Business and each person set forth on
Schedule 6.09 to the Sun Purchase Agreement (a "Paradise
Employee"), except that Buyer may designate in writing within 60
days from the date of this Agreement up to 40 Paradise Employees
to whom it does not wish to offer employment (the "Excluded
Employees"). Schedule 6.09(a) to the Sun Purchase Agreement
generally describes severance benefits for Paradise Island
Employees and sets forth a list of each Paradise Employee and the
salary as of the date hereof and the employment commencement date
of each such Paradise Employee. The Buyer Subsidiaries shall not
be required to offer employment to any Excluded Employee and RII
hereby agrees that all obligations, including obligations under
any Benefit Plan or similar employee benefits, to such Excluded
Employees shall remain the responsibility solely of RII. RII
shall cooperate with
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and assist Buyer in any reasonable manner in hiring Paradise Employees
(other than any Excluded Employee). Buyer agrees that, for a period of
one year from the Closing Date, Buyer will not, without the written
consent of RII, employ any Excluded Employees, as consultants or
otherwise. Any Paradise Employee who becomes an employee of Buyer or
the Buyer Subsidiaries shall be referred to herein as a "Continuing
Employee".
(b) Buyer shall have no obligation to maintain or
assume obligations under any Benefit Plan, or to provide any
employee benefits, other than the obligations contained in this
subsection. Within 90 days from the date of this Agreement,
Buyer shall determine whether it shall offer Continuing Employees
a 401(k) plan. If Buyer determines to offer Continuing Employees
a 401(k) plan, then on or prior to the Closing, Buyer shall
sponsor, or cause one or more of its Affiliates to sponsor, a
plan (the "Successor Plan") that is qualified under Section 401
of the Code, under which there is established a trust (the
"Successor Trust") that is exempt under Section 501 of the Code,
to which the following transfers shall be made. As promptly as
practical after the Closing Date, RII shall take all actions
necessary to transfer to the Successor Trust the account balances
in the Resorts Retirement Savings Plan (the "Savings Plan") of
all Continuing Employees. Such transfers shall be made solely in
cash or, where applicable, in cash plus any loan from an account
to a Continuing Employee that satisfies the requirements of ERISA
and the Code. The transfer of the account balances referred to
above shall take place upon receipt by RII of either (x) a copy
of a favorable determination letter or letters from the IRS that
the Successor Plan is qualified under Section 401 of the Code and
the Successor Trust is exempt from taxation under Section 501 of
the Code or (y) an opinion of counsel to Buyer, on which RII is
entitled to rely and which is reasonably satisfactory to RII,
that the Successor Plan is qualified under Section 401 of the
Code and the Successor Trust is exempt from taxation under
Section 501 of the Code.
(c) Schedule 6.09(c) to the Sun Purchase Agreement
sets forth a list of the officers and directors of the Company or
any of its Subsidiaries who are not directly involved in the
business and operations of the Company and its Subsidiaries. On
the Closing Date, RII shall cause to be delivered to Buyer duly
signed (i) resignations (with respect to their entire association
with or employment by the Company or any of its Subsidiaries)
effective as of the
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Closing Date of all such officers and directors and (ii) releases of
such officers and directors releasing the Company and its Subsidiaries
of all obligations and liabilities relating to such resignations.
(d) RII and Buyer agree to cooperate in making all
appropriate filings and taking all appropriate actions required
to implement this Section 5.08.
SECTION 5.09. BULK TRANSFER LAWS. RII shall cause
each RII Paradise Subsidiary to comply in all material respects
with the provisions of any so-called Bulk Transfer Law of all
states of the United States in which any of the RII Paradise
Assets subject to any such Bulk Transfer Law are located in
connection with the sale of the RII Subsidiary Assets to the
Buyer Subsidiaries. RII represents and warrants to Buyer that
the list of creditors to be provided by RII pursuant to such Bulk
Transfer Laws will, to RII's knowledge, contain the names and
business addresses of all creditors of the RII Paradise
Subsidiaries, with the amounts of credit listed when known, and
also the names of all persons who are known to RII to assert
claims against any RII Paradise Subsidiary even though such
claims are disputed, and that such list will be true, correct and
complete in all material respects and will comply in all material
respects with such Bulk Transfer Laws. As promptly as
practicable after the Closing, RII shall pay and discharge when
known all amounts so listed (other than Assumed Liabilities and
claims disputed in good faith).
SECTION 5.10. INTERCOMPANY ACCOUNTS, CONTRACTS
GUARANTIES AND INDEBTEDNESS. On or prior to the Closing Date,
the net amount of all Indebtedness between RII and any of its
Affiliates (other than the Company and any Subsidiary of the
Company), on the one hand, and the Company and any Subsidiary of
the Company, on the other hand, shall be cancelled or contributed
to the capital of the relevant entity. On or prior to the
Closing Date, RII shall cause the Company and each Subsidiary of
the Company not to have any Indebtedness, except for Indebtedness
disclosed on Schedule 4.06(b) to the Sun Purchase Agreement. On
or prior to the Closing Date, RII shall terminate or cause to be
terminated all Contracts between and among RII and its Affiliates
and any of the Company, the Subsidiaries of
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the Company and the RII Paradise Subsidiaries (to the extent such
Contracts relate to the Paradise Island Business), and shall cancel
or cause to be cancelled all guarantees and security interests given
by the Company, the Subsidiaries of the Company or the RII Paradise
Subsidiaries on behalf of RII or any of its Affiliates. On or
prior to the Closing Date, RII shall cancel or cause to be
cancelled (a) all liens held by RII or any of its Affiliates on
any of the Paradise Island Assets and (b) all liens held by the
Company or any of its Subsidiaries on any of the assets of RII or
any of its Affiliates (other than the Paradise Island Assets) and
(c) all liens on any of the Paradise Island Assets relating to
Indebtedness, except any such liens disclosed on Schedule 4.06(b)
to the Sun Purchase Agreement.
SECTION 5.11. REORGANIZATION PLAN SOLICITATION
DOCUMENTS. RII shall use its reasonable best efforts to prepare
each of the Registration Statement and the Disclosure Statement
so that they shall not (i) at the time the Disclosure Statement
is first mailed, (ii) at the time the Registration Statement
becomes effective, (iii) on the date of the Bankruptcy Court's
hearing with respect to the Disclosure Statement, (iv) on the
date of the confirmation of the Reorganization Plan by the
Bankruptcy Court or (v) at the Closing, contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, RII makes no such covenant with
respect to any information included in the Registration Statement
or the Disclosure Statement that was supplied in writing to RII
by Fidelity or TCW (or any representative of Fidelity or TCW)
specifically for use therein. If, at any time prior to the
Closing Date, any event relating to RII or any of its Affiliates,
officers or directors should be discovered by RII or any of its
Affiliates which is required by the Bankruptcy Court to be set
forth in a supplement to the Disclosure Statement, RII will
prepare, file with (and, if required, use its best efforts to
have approved by) the SEC and the Bankruptcy Court and dissemi-
nate any such supplements. RII shall use its reasonable best
efforts to ensure that the Registration Statement and the
Disclosure Statement did, or shall, as the case may be, comply as
to form in all material respects with the requirements of the
Securities Act, the Exchange Act and the Bankruptcy Code and all
other laws, rules, regulations, decrees and orders promulgated
thereunder.
SECTION 5.12. REORGANIZATION PROCEEDINGS. Neither RII
nor GRI will knowingly take any action, or fail to take any
action, which could reasonably be expected to prevent, materially
impede or result in the revocation of
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the confirmation of the Reorganization Plan (as provided in Section
1144 of the Bankruptcy Code).
SECTION 5.13. AIRLINE GOVERNMENTAL CONSENTS. In the
-----------------------------
event the Airline Governmental Consents are not obtained before
the Closing Date, RII and Buyer agree that until the earlier of
the date such Airline Governmental Consents are obtained and one
year after the Closing Date, RII and Buyer will enter into a
service agreement pursuant to which RII or a Subsidiary of RII
will, through PIA, operate scheduled air service equivalent to
that currently operated by PIA, such scheduled air service to be
operated for the account of Buyer. Such service agreement will
be mutually agreed upon by RII and Buyer and shall generally
provide that Buyer will receive all revenues generated by PIA in
its provision of that scheduled air service operated for the
account of the Buyer. Such service agreement shall further
provide that Buyer will be responsible for all expenses related
to such scheduled air service. RII will be responsible for
procuring all other services for the airline, including flight
crews, maintenance and catering services, and will receive a
commercially reasonable fee for its participation in such
arrangement. In addition, Buyer would indemnify RII and its
Subsidiaries against any losses and liabilities arising from its
participation in such lease arrangement other than losses or
liabilities arising from the gross negligence or willful
misconduct of the indemnified party. This Agreement may not be
terminated and, assuming RII has otherwise used its reasonable
best efforts (without the payment of money) to assist Buyer in
obtaining the Airline Governmental Consents, a breach of this
Agreement shall not be deemed to have occurred as a result of a
failure to obtain the Airline Governmental Consents or because
RII is prohibited by any governmental agency from complying with
this Section 5.13. This Agreement may not be terminated nor
shall a condition to Closing fail to be satisfied as a result of
RII and Buyer failing to enter into the service agreement
referred to above; PROVIDED, HOWEVER, that if RII and Buyer shall
fail to enter into the service agreement referred to above,
Fidelity and TCW shall be entitled, in their discretion, (a) to
cause RII to sell all or substantially all of the assets of PIA
or all of the issued and outstanding capital stock of PIA to a
third party purchaser designated by Fidelity and TCW on terms
negotiated by Fidelity and TCW and reasonably acceptable to RII
(in lieu of selling such assets to a Buyer Subsidiary), and, as
determined by Fidelity and TCW, to pay, or direct the payment of,
the purchase price payable in connection with
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<PAGE>
any such sale either to Buyer or to the Disbursing Agent designated
pursuant to the Reorganization Plan or pursuant to an order of the
Bankruptcy Court for purposes of making distributions thereunder to the
holders of Old Series Notes of RII or (b) to make alternative
arrangements, reasonably acceptable to RII, pursuant to which a
third party manager shall enter into a service agreement with RII
and Buyer and shall operate scheduled air service, through PIA,
for the account of Buyer until the earlier of the date the
Airline Governmental Consents are obtained and one year after the
Closing Date, and to cause RII to execute such documents or take
such actions as may be reasonably required to effectuate such
alternative arrangements (provided that either of such
alternative arrangements shall not result in any out-of-pocket
costs or expenses, other than DE MINIMIS costs or expenses, that
would not have been incurred hereunder), to RII or any of its
Affiliates after the Closing Date).
SECTION 5.14. COMFORT LETTER. RII shall cause Ernst &
Young to deliver to Buyer a comfort letter dated a date not more
than five Business Days before November 30, 1993, which Comfort
Letter shall be in the form of Exhibit A.
SECTION 5.15. ATTORNEYS FEES. In any action by any
party to enforce the terms of this Agreement, the prevailing
party shall be entitled to receive reimbursement of all of its
reasonable attorneys fees and expenses incurred in such action.
SECTION 5.16. TRANSFER TAXES. Any sales, transfer
(including any real property transfer) and other Taxes (excluding
gross or net income taxes), including without limitation any
documentary stamp tax, and any filing, recording or other fees
applicable to the conveyance and transfer pursuant to the
provisions of this Agreement of the Shares, the RII Real Estate
Assets and the Paradise Island Assets (collectively, the
"Transfer Taxes"), shall be borne and paid by RII. The
provisions of this Section shall survive the Closing of this
Agreement.
SECTION 5.17. ACTIONS ON BEHALF OF BUYER; KNOWLEDGE OF
BUYER. RII shall not cause Buyer to take any actions in respect
of any amendments to or waivers or actions under this Agreement
except as are agreed to or directed by Fidelity and TCW, and
Fidelity and TCW may, in their reasonable judgment, cause Buyer
to take any actions
22
<PAGE>
that Buyer may take under this Agreement; PROVIDED, HOWEVER,
that Fidelity and TCW shall not act so as to prevent Buyer from
performing any of its affirmative obligations, agreements or
covenants hereunder. No knowledge of any facts shall be imputed
to the Buyer under this Agreement unless such facts are known to
Fidelity and TCW.
SECTION 5.18. ARTICLES OF ASSOCIATION. The Articles
of Association of Buyer are attached hereto as Exhibit B, and RII
shall cause such Articles to remain in full force and effect and
not to be amended prior to or on the Closing unless consent
thereto shall be granted by Fidelity and TCW.
SECTION 5.19. REPRESENTATIONS AND WARRANTIES. If any
representation or warranty contained in Article IV shall be, or
shall become, inaccurate or shall be breached by RII at any time
prior to Closing, RII will, promptly upon discovering such
inaccuracy or breach, (i) notify Fidelity and TCW and (ii) use
its best efforts to cure such breach or inaccuracy as soon as is
reasonably practicable and prior to the Closing.
SECTION 5.20. OPERATION OF BUYER AND BUYER
SUBSIDIARIES. RII agrees that, since their respective inceptions
and as of the Closing Date, (a) neither Buyer nor any of the
Buyer Subsidiaries shall have engaged in any activity or business
other than those relating to the implementation of this Agreement
and preparation relating thereto, in each case as shall have been
agreed to in writing by Fidelity and TCW, and (b) neither Buyer
nor any of the Buyer Subsidiaries shall have Indebtedness.
SECTION 5.21. INSURANCE PROCEEDS. If any of the
Paradise Island Assets are destroyed or damaged or taken in
condemnation, the insurance proceeds or condemnation award with
respect thereto shall be a Paradise Island Asset. At the
Closing, RII shall pay to Buyer any such insurance proceeds or
condemnation awards received by RII on or prior to the Closing
and shall assign to or assert for the benefit of Buyer all of its
rights against any insurance companies, governmental entities and
others with respect to such damage, destruction or condemnation.
If and to the extent that there is available insurance under
policies maintained by RII or its Subsidiaries in respect of any
Assumed Liability, except for any such insurance proceeds with
respect to which the insured is directly or indirectly self-
insured or has agreed to indemnify the insurer, RII shall
23
<PAGE>
cause such insurance to be applied toward the payment of such Assumed
Liability.
SECTION 5.22. ACQUISITION PROPOSALS. Neither RII nor
any of its Affiliates shall propose or support before the
Bankruptcy Court any proposal for the sale or disposition of the
Paradise Island Business, other than the Acquisitions or as
contemplated by the Sun Purchase Agreement, without the prior
written consent of Fidelity and TCW.
ARTICLE VI
CONDITIONS TO THE CLOSING
SECTION 6.01. CONDITIONS TO OBLIGATIONS OF BUYER. The
obligations of Buyer to effect the Closing shall be subject to
the prior fulfillment of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; AGREEMENTS AND
COVENANTS. (i) Each of the representations and warranties of RII
contained in Section 4.02, 4.03, 4.04 and 4.05 hereof and each of
the representations and warranties incorporated from the Sun
Purchase Agreement pursuant to Section 4.01 qualified as to
materiality shall be true and correct in all respects and those
not so qualified shall be true and correct in all material res-
pects, in each case when made and as of the Closing Date, (ii)
RII shall not have failed to comply with the covenants in
Sections 5.01 and 5.09, where such failures in the aggregate
would have a Material Adverse Effect, (iii) RII shall have
complied in all respects with the covenants contained in Sections
5.10 and 5.20, (iv) except for the covenants contained in
Sections 5.03, 5.04, 5.11 and 5.12, each of the other agreements
and covenants contained in this Agreement and in any certificate
or agreement by RII delivered pursuant hereto to be performed or
complied with by RII, at or before Closing, shall have been duly
performed or complied with in all material respects, PROVIDED,
HOWEVER, that a breach of Section 5.06 would not constitute a
failure of a condition hereunder, if the representation, warranty
or covenant in question would not have resulted in a failure of a
condition hereunder, and (v) Buyer shall have received a
certificate of RII, signed by a Vice President thereof as to the
fulfillment of the conditions set forth in the foregoing clauses
(i), (ii), (iii) and (iv).
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(b) SUN PURCHASE AGREEMENT. The Sun Purchase
Agreement shall have been terminated in accordance with its
terms.
(c) HSR ACT. Any waiting period (and any extension
thereof) applicable to the consummation of the transactions
contemplated hereby under the HSR Act shall have expired or been
terminated.
(d) CONFIRMATION OF THE REORGANIZATION PLAN AND ENTRY
OF THE CONFIRMATION ORDER; CONSUMMATION OF THE REORGANIZATION
PLAN. The Confirmation Order shall have been entered by the
Bankruptcy Court and the Effective Date (as defined in the
Reorganization Plan) shall have occurred, or there shall be no
unsatisfied conditions to the occurrence of the Effective Date
other than the Closing, and such Confirmation Order shall be in
full force and effect and shall not then be stayed.
(e) GOVERNMENTAL CONSENTS. All Governmental Consents
shall have been received on or prior to the Closing Date.
(f) NO INJUNCTIONS. There shall not be in effect any
injunction or restraining order issued by a court of competent
jurisdiction against the consummation of the sale and purchase of
the Shares, the RII Real Estate Assets and the RII Paradise
Assets pursuant to this Agreement.
(g) BANKRUPTCY; INSOLVENCY; ETC. No proceeding shall
have been instituted or consented to by or against any of the
Company, any of its Subsidiaries or any RII Paradise Subsidiary
seeking to adjudicate any of them a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of any of their
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of any
order for relief or the appointment of a receiver, trustee,
custodian or other similar official for any of them or any
substantial part of any of their property, and such proceeding
shall not have been dismissed or terminated within 60 days of the
commencement thereof.
(h) OPINIONS. Buyer shall have received an opinion of
Gibson, Dunn & Crutcher, counsel to RII, in form and content
reasonably acceptable to Fidelity and TCW, as to matters set
forth on Exhibit C hereto and opinions of
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Florida counsel reasonably acceptable to Buyer and Harry B. Sands
& Co. in form and content reasonably acceptable to Fidelity and TCW.
(i) RESIGNATIONS. Buyer shall have received
resignations and releases of all officers and directors of the
Company and its Subsidiaries who are not directly involved in the
business and operations of the Company and its Subsidiaries in
accordance with Section 5.08(c).
(j) SECURITY DOCUMENTS. The agreements listed in
Schedule 4.16 to the Sun Purchase Agreement shall not be in full
force and effect.
(k) MANAGEMENT AGREEMENT. At the election of Buyer,
RII and Buyer shall have entered into a Management Agreement in
substantially the form attached hereto as Exhibit D, and all
conditions under the Management Agreement shall have been
satisfied by RII or waived by Buyer.
(l) REGISTRATION RIGHTS AGREEMENT. RII and Buyer
shall have taken such action, including granting such
registration rights, as may be necessary to ensure that all
shares of the capital stock of Buyer issued upon consummation of
the transactions contemplated hereby may be re-sold publicly,
without restriction under the Securities Act by the recipients
thereof following the disbursement of such shares by the
Disbursing Agent as contemplated by Section 2.04.
(m) SUN SECURITY INTEREST. RII shall have caused
Buyer to have granted a security interest to Sun International
Investments Limited as contemplated by Section 7.02(b) of the Sun
Purchase Agreement (the "Permitted Sun Lien"), and RII shall have
caused Buyer to assume its obligations to pay the Buyer Expense
Reimbursement to SIHL pursuant to Sections 7.02(a)(vi) and (vii)
of the Sun Purchase Agreement.
(n) ADDITIONAL TIME. If Fidelity and TCW reasonably
shall have determined that it is necessary and appropriate for
the time of the Closing to be extended (including without
limitation to allow time for the completion of their due
diligence investigation of the Paradise Island Business) beyond
the date when the other conditions set forth in this Section 6.01
have been satisfied, a reasonable period of additional time (not
to
26
<PAGE>
exceed 30 days) shall have elapsed from the date when such
other conditions were satisfied.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF RII. The
obligations of RII to effect the Closing shall be subject to the
prior fulfillment of each of the following conditions:
(a) HSR ACT. Any waiting period (and any extension
thereof) applicable to the consummation of the transactions
contemplated hereby under the HSR Act shall have expired or been
terminated.
(B) CONFIRMATION OF THE REORGANIZATION PLAN AND ENTRY
OF THE CONFIRMATION ORDER; CONSUMMATION OF THE REORGANIZATION
PLAN. The Confirmation Order shall have been entered by the
Bankruptcy Court and the Effective Date (as defined in the
Reorganization Plan) shall have occurred, or there shall be no
unsatisfied conditions to the occurrence of the Effective Date
other than the Closing, and such Confirmation Order shall be in
full force and effect and shall not then been stayed.
(c) CONSENTS. All Governmental Consents shall have
been received on or prior to the Closing Date.
(d) NO INJUNCTIONS. There shall not be in effect any
injunction or restraining order issued by a court of competent
jurisdiction against the consummation of the sale and purchase of
the Shares, the RII Real Estate Assets and the RII Paradise
Assets pursuant to this Agreement.
(e) SUN PURCHASE AGREEMENT. The Sun Purchase
Agreement shall have been terminated in accordance with its
terms.
(f) SECURITY DOCUMENTS. The agreements listed in
Schedule 4.16 to the Sun Purchase Agreement shall not be in full
force and effect.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
SECTION 7.01. SURVIVAL OF REPRESENTATIONS. The
representations and warranties of RII set forth in Sections
4.02, 4.03, 4.04 and 4.05 hereof and the representations and
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warranties incorporated from Sections 4.01, 4.02, 4.03(a), 4.04,
4.16(a) and 4.22 of the Sun Purchase Agreement (the "Surviving
Representations") and the covenants and agreements contained in
this Agreement (except the covenants contained in Sections 5.11
and 5.12 which shall not survive the Closing), and the covenants
and agreements contained in any agreements, certificates or other
instruments delivered pursuant to this Agreement, shall survive
the Closing and shall remain in full force and effect, regardless
of any investigation made by or on behalf of any party, but
subject to all limitations and other provisions contained in this
Agreement or any agreements, certificates or other instruments
delivered pursuant to this Agreement. All representations and
warranties set forth herein and in any agreements, certificates
or other instruments delivered pursuant hereto (other than the
Surviving Representations) shall not survive the Closing and
shall not remain in full force and effect; PROVIDED, HOWEVER,
that no representation or warranty shall be deemed not to have
survived the Closing if any breach or inaccuracy thereof was
knowingly or fraudulently concealed by RII or any of its
Subsidiaries prior to the Closing and such breach or inaccuracy
was not actually known to TCW and Fidelity prior to the Closing.
SECTION 7.02. INDEMNIFICATION BY RII. Subject to the
other provisions of this Article VII, RII hereby agrees to
indemnify and hold Buyer and its Affiliates harmless from and
against any and all claims, damages, liabilities, liens, losses
or other obligations whatsoever, together with reasonable costs
and expenses, including reasonable fees and disbursements of
counsel and expenses of investigation (collectively, "Losses"),
arising out of, based upon or caused by the inaccuracy of any
representation or the breach of any warranty of RII contained in
the Surviving Representations.
SECTION 7.03. NOTICE, ETC. Each indemnified party
agrees to give the indemnifying party prompt written notice of
any action, claim, demand, discovery of fact, proceeding or suit
(collectively, "Claims") for which such indemnified party intends
to assert a right to indemnification under this Agreement;
PROVIDED, HOWEVER, that failure to give such notification shall
not affect the indemnified party's entitlement to indemnification
hereunder except to the extent that the indemnifying party shall
have been actually prejudiced as a result of such failure. The
indemnifying party shall have the sole right to defend, settle or
otherwise dispose of any Claim, on such terms as
28
<PAGE>
the indemnifying party, in its sole discretion, shall deem appropriate;
PROVIDED, HOWEVER, that (i) the indemnified party may participate in the
defense of any claim pursuant to which the indemnified party
could become subject to injunctive or other equitable relief or
the business of the indemnified party could be materially and
adversely affected in any manner (such participation in the
defense of any claim to be at the indemnified party's expense
unless the use of separate counsel arises by reason of a material
conflict of interest between the indemnifying party and the
indemnified party in connection with the defense of such claim)
and (ii) the indemnifying party shall obtain the written consent
of the indemnified party, which shall not be unreasonably
withheld or delayed, prior to ceasing to defend, settling or
otherwise disposing of any such Claim, or taking any course of
action or omitting to take a permitted course of action with
respect thereto, if as a result thereof the indemnified party
would become subject to injunctive or other equitable relief.
SECTION 7.04. REIMBURSEMENT OF COSTS. The costs and
expenses, including reasonable fees and disbursements of counsel
and expenses of investigation, incurred by any indemnified party
in connection with any claim for which the indemnified party is
entitled to indemnification hereunder shall be reimbursed on a
quarterly basis by the indemnifying party.
SECTION 7.05. TIME LIMITATIONS. Notwithstanding
anything to the contrary contained herein, each party's
obligation to indemnify or otherwise hold harmless the other
party and its Affiliates for any Loss arising out of, based upon
or caused by the inaccuracy or breach of any Surviving
Representation shall, terminate at 11:59 p.m. New York City time,
on the later of March 31, 1995 or the first anniversary of the
Closing Date; PROVIDED, HOWEVER, that claims pending on, or
asserted prior to such date may continue to be asserted and shall
be indemnified against.
SECTION 7.06. SOLE AND EXCLUSIVE REMEDY. The
indemnification obligations of the applicable parties under
Section 7.02 hereof shall constitute the sole and exclusive
remedies of the indemnified party with respect to the matters
described in Section 7.02.
29
<PAGE>
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be
terminated at any time prior to the Closing Date, notwithstanding
the fact that votes may have been received pursuant to the
Reorganization Plan Solicitation:
(a) by mutual written consent of RII and Buyer at any
time prior to entry the Confirmation Order;
(b) in the event that a proposal for the sale of the
Paradise Island Business by RII or GRI, other than the
Acquisitions or the transactions contemplated by the Sun Purchase
Agreement, is approved by the Bankruptcy Court this Agreement
will automatically be deemed terminated without the necessity of
providing written notice notwithstanding any provision to the
contrary herein;
(c) by Buyer, if a Material Adverse Effect occurs as a
result of any fire, flood, hurricane, accident, explosion or
other calamity or casualty or any strike, labor disturbance,
riot, act of God or public enemy, or the institution of
condemnation proceedings affecting any material portion of the
Real Property or Improvements (a "Force Majeure Event"),
PROVIDED, HOWEVER, that Buyer shall not have the right to
terminate this Agreement in the event that the loss caused by the
Force Majeure Event (including the present value of lost profits)
is less than $20 million and there is adequate insurance to cover
such loss;
(d) by Buyer, if Buyer reasonably determines that RII
will not be able to deliver good title free and clear of
encumbrances other than Permitted Encumbrances and the Permitted
Sun Lien, to a material portion of the Paradise Island Business
or the Shares by September 30, 1994;
(e) by Buyer, if as a result of a breach of RII of its
covenant to operate the Paradise Island Business in the ordinary
course contained in Section 5.01, a Material Adverse Effect has
occurred;
(f) by Buyer, if the Sun Purchase Agreement shall have
been terminated by SIHL, after November 30, 1993, pursuant to
Section 6.14(b)(iii) thereof on account of any matter arising or
occurring on or before November 30, 1993 (x) which was known by
RII or any of its Affiliates or which
30
<PAGE>
would have been known by RII or any of its Affiliates had they not
been grossly negligent or (y) which was fraudulently or knowingly
concealed from SIHL by RII or any of its Affiliates;
(g) by Buyer, if in Fidelity's and TCW's reasonable
judgment (based on the advice of legal counsel), the consummation
of the transactions contemplated hereby could be expected to
result in the incurrence of any personal liabilities by the
holders of Buyer's capital stock by virtue of their status as
shareholders (and expressly not including any losses resulting
solely from a decline in the economic value of such capital
stock); PROVIDED, HOWEVER, that in the event of a good faith
dispute concerning whether Buyer is entitled to terminate the
Agreement under this subparagraph (g), the matter shall be
submitted to a court of competent jurisdiction for resolution,
and the determination of such court shall be final and binding
upon the parties;
(h) by Buyer, if RII or any of its Affiliates shall
have breached the covenant set forth in Section 5.22 hereof; or
(i) in the event that the sale of the Paradise Island
Business by RII and the RII Paradise Subsidiaries to SIHL is
consummated pursuant to the Sun Purchase Agreement, this
Agreement will automatically be deemed terminated without the
necessity of providing written notice notwithstanding any
provision to the contrary herein.
SECTION 8.02. RIGHTS OF TERMINATION. The right of
termination hereunder may be exercised by Buyer or RII, as the
case may be, only by giving written notice, signed on behalf of
such party to the other party. A right of termination may be
exercised on Buyer's behalf only by Fidelity and TCW.
SECTION 8.03. EFFECT OF TERMINATION. In the event of
the termination of this Agreement pursuant to Section 8.01, this
Agreement shall forthwith become void and have no effect, but no
such termination shall prejudice any party's rights and remedies
against the other for breaches of obligations under this
Agreement.
SECTION 8.04. WAIVER. Subject to Section 5.17, at any
time prior to the Closing Date, any party hereto may (a) extend
the time for the performance of any of the obligations or other
31
<PAGE>
acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument
in writing signed by the party to be bound thereby. The failure
of any party to assert any of its rights hereunder shall not
constitute a waiver of any such rights. The rights of Buyer
hereunder may be exercised on its behalf only by Fidelity and
TCW.
SECTION 8.05. AMENDMENTS. The parties hereto may, by
written agreement signed by such parties, modify any of the
covenants or agreements or extend the time for any performance of
any of the obligations contained in this Agreement or any
document delivered pursuant to this Agreement. No such written
agreement shall be signed on behalf of Buyer or shall be valid
without the written consent thereto of Fidelity and TCW.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NOTICES. All notices, requests, claims,
demands and other communications hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by cable, telecopy, telegram
or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
if to Buyer:
Paradise Island Resorts Limited
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, NJ 08401
Attention: Christopher D. Whitney, Esq.
32
<PAGE>
with a copies to:
Fidelity Management and Research Company
82 Devonshire Street
Boston, MA 02109
Attention: Judy Mencher, Esq.
Trust Company of the West
865 South Figueora Street
Suite 1800
Los Angeles, CA 90017
Attention: Bruce Karsh
Weil, Gotshal & Manges
767 Fifth Avenue
New York, NY 10153
Attention: Bruce R. Zirinsky, Esq.
if to RII:
Resorts International, Inc.
1133 Boardwalk
Atlantic City, NJ 08401
Attention: Christopher D. Whitney, Esq.
with a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attention: Steven R. Finley, Esq.
SECTION 9.02. ENTIRE AGREEMENT; ASSIGNMENT. This
Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the
parties with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise,
except that Buyer may assign all or any of its rights and
obligations hereunder to any wholly owned Subsidiary of Buyer
upon the execution of a written instrument whereby such assignee
agrees to assume all of the assignor's obligations hereunder and
be bound by all the terms and conditions of this Agreement;
PROVIDED, that no such assignment shall relieve the assigning
party of its
33
<PAGE>
obligations hereunder if such assignee does not perform such obligations.
SECTION 9.03. PARTIES IN INTEREST. This Agreement
shall be binding upon and inure solely to the benefit of each
party hereto, and, except to the extent that consent or approval
of Fidelity and TCW may be required hereunder (E.G., Sections
5.17, 8.02, 8.04 and 8.05 hereof), nothing in this Agreement,
express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 9.04. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
SECTION 9.05. HEADINGS. The descriptive headings
contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.06. COUNTERPARTS. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.07. SPECIFIC PERFORMANCE. The parties
hereto agree that irreparable damage would occur in the event any
of the provisions of this Agreement were not to be performed in
accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition
to any other remedy at law or equity.
SECTION 9.08. JURISDICTION. THE PARTIES HEREBY WAIVE
ANY OBJECTION THEY MAY HAVE TO PERSONAL JURISDICTION AND VENUE IN
THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND, WHERE NO DIVERSITY OR OTHER SUBJECT MATTER JURISDICTION
EXISTS IN SUCH U.S. DISTRICT COURT, THE PARTIES WAIVE SUCH
OBJECTIONS IN ANY COURT OF THE STATE OF NEW YORK LOCATED IN THE
COUNTY OF NEW YORK, AS TO LITIGATION RELATING TO THIS AGREEMENT.
BUYER HEREBY IRREVOCABLY APPOINTS AND DESIGNATES AS ITS LAWFUL
34
<PAGE>
AGENT AND ATTORNEY FOR RECEIPT AND SERVICE OF PROCESS IN ANY
ACTION ARISING OR TAKEN HEREUNDER BY RII THE PRENTICE-HALL
CORPORATION SYSTEM, INC., 15 COLUMBUS CIRCLE, NEW YORK, NEW YORK
10023.
SECTION 9.09. KNOWLEDGE OR CONSENTS. For the purpose
of this Agreement (including the Schedules hereto), unless the
context otherwise expressly requires, whenever a document or
matter is subject to the "approval", "consent", "satisfaction" or
"acceptance" (including any variation of such terms) of any party
to this Agreement or Fidelity or TCW, such person, shall not
unreasonably withhold or delay its approval, consent,
satisfaction or acceptance of such document or matter; PROVIDED,
HOWEVER, that the foregoing is without prejudice to RII's right
to seek approval, consent, satisfaction or acceptance of any
documents or matters from the Bankruptcy Court (in Fidelity's and
TCW's stead) upon a showing by RII, and a finding by the
Bankruptcy Court, that any consent, approval, satisfaction or
acceptance is being unreasonably withheld by Fidelity or TCW.
For the purpose of this Agreement (including the Schedules
hereto) and subject to Section 5.17 hereof, unless the context
otherwise expressly requires, "knowledge" with respect to any
person (other than an individual) shall mean the knowledge of an
executive officer, director, partner, executor or trustee of such
person.
SECTION 9.10. RIGHTS OF FIDELITY AND TCW. If, and
only if, at any time prior to the Closing Date, Fidelity and TCW
shall cease to beneficially own an aggregate of at least twenty
percent (20%) of the aggregate principal amount of the
outstanding Old Series Notes, then all the rights of consent,
approval, acceptance or direction granted to Fidelity and TCW
hereunder shall thereupon cease to exist; PROVIDED, HOWEVER, that
nothing in this Section 9.10 shall limit or otherwise prejudice
in any manner any rights which Fidelity and TCW may have under
the Bankruptcy Code and the Bankruptcy Rules. In addition, if
either of Fidelity or TCW shall cease to beneficially own any Old
Series Notes whatsoever (but the other retains an aggregate of at
least twenty percent (20%) of the aggregate principal amount of
the outstanding Old Series Notes), then the rights described
above shall be extinguished solely as to the person ceasing to
own any such Old Series Notes, without prejudice to the rights of
the other hereunder.
35
<PAGE>
IN WITNESS WHEREOF, Buyer and RII have caused this
Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
RESORTS INTERNATIONAL, INC.
By: /s/ Christopher D. Whitney
____________________________
Name: Christopher D. Whitney
Title: Executive Vice President,
Chief of Staff
P.I. RESORTS LIMITED
By: /s/ Christopher D. Whitney
____________________________
Name: Christopher D. Whitney
Title: President
36
<PAGE>
EXHIBIT A
COMFORT LETTER
<PAGE>
EXHIBIT A
[Letterhead of Ernst & Young]
[ ], 1993
Paradise Island
---------------
Dear Sirs,
We have performed the procedures requested by you,
as described below, with respect to the Purchase Agreement
(the "Purchase Agreement") dated August [ ], 1993,
among Resorts International, Inc. ("RII") a Delaware
corporation and Sun International Hotels Limited ("Sun") a
Bahamian corporation. The Purchase Agreement provides for
the Stock Acquisition and the Asset Acquisition (in each
case as defined in the Purchase Agreement and, together, the
"Acquisitions"). This letter is solely to assist Sun with
the proposed Acquisition and is not to be used for any other
purpose. The procedures that we performed, and our findings
are summarized as follows:
1. We are independent certified public
accountants with respect to (RII and the RII Paradise
Subsidiaries) under the standards of the American Institute
of Certified Public Accountants (Code of Professional Ethics
Rule 101 and related interpretations).
2. We have audited the combined statements of
operations in respect of the Paradise Island Business for
the three fiscal years ending December 31, 1992, and the
combined balance sheets in respect of the Paradise Island
Business as of December 31, 1990, December 31, 1991 and
December 31, 1992. These financial statements and our
report with respect thereto dated [ ] are
included as Exhibit A to this letter. We have not audited
any financial statements as of any date or for any period
subsequent to December 31, 1992. Therefore, save as set
forth in this letter, we are unable to and do not express
any opinion on any unaudited interim financial statements as
of any date or for any period subsequent to December 31,
1992.
3. For the purposes of this letter we have read
the 1993 minutes of meetings of the shareholders and the
boards of directors of RII and each of the RII Paradise
Subsidiaries as set forth in the minute books of those
<PAGE>
companies as at the date hereof, officials of RII and of the
RII Paradise Subsidiaries having advised us that the minutes
of all such meetings through that data were set forth
therein. In addition, with respect to the six month period
ended June 30, 1993, we have:
(a) read the unaudited combined statement of
operations in respect of the Paradise Island Business
for the fiscal quarters ending March 31, 1993 and June
30, 1993 and the unaudited combined balance sheets in
respect of the Paradise Island Business as of March 31,
1993 and June 30, 1993. These financial statements are
included as Exhibit B to this letter; and
(b) made inquiries of certain officials of RII
and the RII Paradise Subsidiaries who have
responsibility for financial and accounting matters
regarding whether the unaudited financial statements
referred to in paragraph (a) have been prepared on a
basis consistent with that of the audited financial
statements referred to in paragraph 2.
4. With respect to the monthly periods ended
July 31, August 31 and September 30, 1993 we have:
(a) read the unaudited combined statement of
operations in respect of the Paradise Island Business
for each of the calendar months ending July 31, August
31, and September 30, 1993 and the unaudited balance
sheets in respect of the Paradise Island Business as of
July 31, August 31 and September 30, 1993. These
financial statements are included as Exhibit C to this
letter; and
(b) made inquiries of certain officials of RII
and the RII Paradise Subsidiaries who have
responsibility for financial and accounting matters
regarding whether the unaudited financial statements
referred to in paragraph (a) have been prepared on a
basis consistent with that of the audited financial
statements referred to in paragraph 2.
5. Nothing came in our attention as a result of
the foregoing procedures in paragraphs 3 or 4 above that
caused us to believe that:
(a) the unaudited combined financial statements
referred to in Paragraphs 3(a) and 4(a) are not in
<PAGE>
conformity with GAAP applied on a consistent basis
throughout the period covered or were not prepared on a
basis consistent with that of the audited financial
statements referred to in paragraph 2 [except
for ]; or
(b) at each of June 30, July 31, August 31 and
September 30, 1993 (i) there was any decrease in net
current assets or in fixed assets other than normal
depreciation or increases in long-term liabilities or
contingencies as compared with amounts shown in the
December 31, 1992 audited balance sheet or (ii) there
were any decreases, as compared with the corresponding
period in the preceding year, in the amount of
operating revenues or income [except for ].
6. Officials of RII and RII paradise
Subsidiaries have advised us that no financial statements as
of any date or for any period subsequent to [September 30,]
1993, are available; accordingly, the procedures carried out
by us with respect to changes in financial statement items
after [September 30,] 1993, have, of necessity, been even
more limited than those with respect to the periods ending
[September 30,] 1993. We have made inquiries of certain
officials of RII and the RII Paradise Subsidiaries who have
responsibility for financial and accounting matters
regarding whether:
(a) there was any decrease as at [ ], 1993,
in net current assets or in fixed assets other than
normal depreciation or increases in long-term
liabilities or contingencies as compared with amounts
shown on the [September 30,] 1993, unaudited combined
balance sheet;
(b) for the period from [September 30,] 1993 to
[ ], 1993, there were any decreases, as
compared with the corresponding period in the preceding
year, in the amount of operating revenues or income; or
(c) there were any liabilities or obligations
incurred since [September 30,] 1993, other than
liabilities and obligations incurred in the ordinary
course of business consistent with past practice, not
shown or adequately provided for in the [September 30,]
1993 unaudited combined balance sheet.
7. On the basis of the procedures referred to in
paragraph 6 and our reading of the minutes as described in
<PAGE>
paragraph 3, nothing came to our attention that caused us to
believe that there was any such change or decrease, or any
such liabilities or obligations, as is mentioned in
paragraph 6 except for [ ].
Very truly yours,
Sun International Hotels Limited
[ ]
<PAGE>
EXHIBIT B
ARTICLES OF ASSOCIATION OF BUYER
<PAGE>
P.I. RESORTS LIMITED
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
(ADOPTED ON 15TH, DECEMBER 1993)
PRELIMINARY AND CONSTRUCTION
1. The Articles contained in the First Schedule to
the Companies Act shall not apply to the Company.
2. (1) In these Articles, except where the subject
or context otherwise requires:
"Articles" means the articles of association of the
Company on the date hereof as the same may be amended from
time to time;
the "board" means the directors or any of them acting
as the board of directors of the Company;
"Closing Date" shall mean the date the Company acquires
the Paradise Island assets of Resorts International Inc.;
"Commonwealth" means the Commonwealth of The Bahamas;
"Companies Act" means the Companies Act 1992 including
any modification or re-enactment thereof for the time being
in force;
"Company" means P. I. Resorts Limited, the company to
which these Articles apply;
"director" means a director of the Company;
"dollar" or "$" means the lawful currency of the United
States of America;
"holder" means, in relation to any shares, the member
whose name is entered in the register of members as the
holder of such shares;
"Ordinary Shares" means the Ordinary Shares of $0.01
each of the Company having the rights set forth in these
Articles;
<PAGE>
"Preference Shares" means the Preference Shares of
$0.01 each of the Company having the rights set forth in
these Articles;
"secretary" means the secretary of the Company and
includes a joint, assistant, deputy or temporary secretary
and any other person appointed to perform the duties of the
secretary; and
"shares" means shares in the Company including the
Ordinary Shares and the Preference Shares.
(2) Save as aforesaid or as otherwise defined herein
any words or expressions defined in the Companies Act (but
excluding any modification thereof not in force at the date of
adoption of these Articles) shall, if not inconsistent with the
subject or the context, bear the same meaning in these Articles.
(3) For the purposes of these Articles, references to
writing include references to any visible substitute for writing
and to anything partly in one form and partly in another form;
words denoting the singular number include the plural number and
vice versa; words denoting the masculine gender include the
feminine gender and vice versa; and references to persons include
references to bodies corporate.
3. In addition to the registered office of the
Company in the Commonwealth, which shall be at such place as the
directors shall from time to time appoint, the Company may have
an office for the transaction of business at any other place, and
meetings of the Company or of the directors may be held either
within or without the Commonwealth at such place as the directors
may determine.
SHARES
4. The authorized share capital of the Company at the
date of adoption of these Articles is $350,000 divided into
35,000,000 Ordinary Shares of $0.01 each and 10,000,000
Preference Shares of $0.01 each, having the rights set forth in
these Articles. The Preference Shares may be issued by the
Directors from time to time in one or more Series having such
rights as the board may by resolution determine. All the shares
of the Company shall be in registered form, shall be fully paid
for at the time of issuance and shall be nonassessable.
2
<PAGE>
5. Without prejudice to any special rights previously
conferred on the holders of existing shares in the Company, any
shares in the Company may be issued with such preferred, deferred
or other special rights or such restrictions, whether in regard
to dividend, voting, return of share capital or otherwise, as the
board may from time to time by resolution determine. Preference
Shares may be voting, non-voting or voting only for specific
purposes or in specific circumstances; PROVIDED, HOWEVER that the
Company shall be prohibited from issuing any non-voting
Preference Shares which are not entitled to at least one vote per
share in the specific case where an event of default in the
payment of dividends has occurred with respect to such shares.
6. Where at any time the share capital is divided
into different classes or series of shares, the rights attached
to any class or series (unless otherwise provided by the terms of
issue of the shares of the class or series) may only be varied
or abrogated with the sanction of a resolution of the board and
either (i) the consent in writing of the holders of a majority in
nominal value of the issued shares of the class or series or (ii)
the sanction of a resolution of members holding shares of that
class or series passed at a separate general meeting of the
holders of the shares of that class or series.
CERTIFICATES
7. Every person whose name is entered as a member in
the register of members shall, without payment, be entitled to a
certificate under the common seal of the Company specifying the
share or shares held by him and the amount paid up thereon,
provided that in respect of a share or shares held jointly by
several persons the Company shall not be bound to issue more than
one certificate, and delivery of a certificate for a share to one
of several joint holders shall be sufficient delivery to all.
8. A share certificate defaced, lost or destroyed may
be renewed or replaced on payment of such fee, if any, as may be
prescribed, and on such terms, if any, as to evidence and
indemnity as the directors think fit.
3
<PAGE>
PURCHASE OF SHARES
9. Subject to and in accordance with the provisions
of the Companies Act and without prejudice to any relevant
special rights attached to any class or series of shares, the
Company may, with the agreement of the holders of the relevant
shares, purchase any of its own shares of any class or series
(including redeemable shares) at any price (whether at par or
above or below par), and any shares to be so purchased may be
selected by the Company in any manner whatsoever.
TRANSFER AND TRANSMISSION OF SHARES
10. Subject to Article 11, the instrument of transfer
of any share in the Company shall be executed by the transferor
(or its duly authorized agent), and the transferor shall be
deemed to remain the holder of the share until the name of the
transferee is entered in the register of members in respect
thereof.
11. Shares in the Company shall be transferred in any
usual or common form. The transfer agent for the Company or the
Company's board may determine if a form of transfer is usual or
common in the case of any question or dispute concerning a
transfer.
12. The board may:
(a) decline to register a transfer of shares
unless the instrument of transfer is
accompanied by the certificate or
certificates of the shares to which it
relates, and such other evidence as the board
may reasonably require to show the right of
the transferor to make the transfer; and
(b) suspend the registration of transfers during
the fourteen days immediately preceding the
ordinary general meeting in each year.
13. The executors or administrators of a deceased sole
holder of a share shall be the only persons recognized by the
Company as having any title to the share. In the case of a share
registered in the names of two or more holders, the survivors or
the executors or administrators of
4
<PAGE>
the deceased survivor shall be the only persons recognized by the
Company as having any title to the share.
14. Any person becoming entitled to a share in
consequence of the death or bankruptcy of a member shall, upon
such evidence being produced as may from time to time be required
by the board, have the right, either to be registered as a member
in respect of the share or, instead of being registered himself,
to make such transfer of the share as the deceased or bankrupt
person could have made; but the directors shall, in either case,
have the same right to decline or suspend registration as they
would have had in the case of a transfer of the share by the
deceased or bankrupt person before the death or bankruptcy.
15. A person becoming entitled to a share by reason of
the death or bankruptcy of the holder shall be entitled to the
same dividends and other advantages to which he would be entitled
if he were the registered holder of the share, except that he
shall not, before being registered as a member in respect of the
share, be entitled in respect of it to exercise any right
conferred by membership in relation to meetings of the Company.
ALTERATION OF CAPITAL
16. The Company may, by a resolution of the holders of
Ordinary Shares, increase the share capital by such sum to be
divided into shares of such amount as the resolution shall
prescribe.
17. The Company may, by resolution of the board (and
the holders of the Ordinary Shares, if and to the extent required
by the Companies Act):
(a) consolidate and divide its share capital into
shares of larger amount than its existing
shares;
(b) subdivide its existing shares, or any of them
or divide the whole or any part of its share
capital into shares of smaller amount than is
fixed by the Articles; or
(c) reduce its share capital in any manner and
with and subject to any incident authorized
and consent required by law.
5
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GENERAL MEETINGS
18. The statutory general meeting of the Company shall
be held within the period required by Section 70 of the Companies
Act.
19. (1) A general meeting shall be held once in every
year at such time (not being more than fifteen months after the
holding of the last preceding general meeting) and at such place
as may be prescribed by the board.
(2) In default of a general meeting so held, a general
meeting shall be held in the month next following and may be
convened by any two or more members holding Ordinary Shares
carrying at least one-tenth of the votes of all members entitled
to vote at general meetings, in the same manner as nearly as
possible as that in which meetings are to be convened by the
directors and any such meetings shall be held at such place as the
members convening the meeting may designate in the notice
thereof.
20. The above-mentioned general meetings shall be
called annual general meetings; all other general meetings shall
be called extraordinary.
21. The board may, whenever it thinks fit, convene an
extraordinary general meeting, and extraordinary general meetings
shall also be convened by the board on the requisition, in
accordance with Section 71 of the Companies Act, of members of
the Company holding not less than one-tenth of the paid-up
capital of the Company, or, in default, may be convened by such
requisitionists, as provided by Section 71(3) of the Companies
Act.
PROCEEDINGS AT GENERAL MEETINGS
22. (1) Thirty-days' notice at the least (exclusive
of the day on which the notice is served or deemed to be served,
but inclusive of the day for which notice is given) specifying
the place, the day and the hour of meeting and, in case of
special business, the general nature of that business, shall be
given in the manner hereinafter mentioned, or in such other
manner, if any, as may be prescribed by the Company in general
meeting, to such persons as are under the Articles entitled to
receive such notices from the Company.
6
<PAGE>
(2) Every notice convening a general meeting shall
include a statement having reasonable prominence that a member
entitled to attend and vote is entitled to appoint a proxy to
attend and vote instead of him, and that a proxy need not also be
a member.
23. All business shall be deemed special that is
transacted at an extraordinary meeting, as shall all that is
transacted at an ordinary meeting with the exception of
(i) sanctioning a dividend, (ii) the consideration of the
accounts, balance-sheets and the ordinary report of the directors
and auditors, (iii) election of directors and other officers in
the place of those retiring by rotation and (iv) the fixing of
the remuneration of the auditors.
24. No business shall be transacted by any general
meeting unless a quorum of members is present at the time when
the meeting proceeds to business; save as herein otherwise
provided, members present in person or by proxy holding at least
a majority of the then outstanding of Ordinary Shares shall be a
quorum.
25. Where within half an hour from the time appointed
for the meeting a quorum is not present, the meeting, if convened
upon the requisition of members, shall be dissolved; in any other
case it shall stand adjourned to the same day in the next week,
at the same time and place and where at the adjourned meeting a
quorum is not present within half an hour from the time appointed
for the meeting, the members present shall be a quorum.
26. The chairman, if any, of the board shall preside
as chairman at every general meeting of the Company.
27. Where there is no such chairman or at any meeting
he is not present within fifteen minutes after the time appointed
for holding the meeting or at which he is unwilling to act as
chairman, the directors in office prior to such meeting who are
present shall choose someone of their number to be chairman.
28. (1) The chairman may, with the consent of any
meeting at which a quorum is present (and shall if so directed by
the meeting), adjourn the meeting from time to time and from
place to place, but no business shall be transacted at any
adjourned meeting other than the business left unfinished at the
meeting from which the adjournment takes place.
7
<PAGE>
(2) When a meeting is adjourned for ten days or more,
notice of the adjourned meeting shall be given as in the case of
any original meeting.
(3) Save as aforesaid, it shall not be necessary to
give any notice of an adjournment or of the business to be
transacted at an adjourned meeting.
29. At any general meeting a resolution put to the
vote of the meeting shall be decided on a voice call or show of
hands, unless a poll is (before or on the declaration of the
result of the show of hands) demanded by at least two members
present in person or by proxy holding Ordinary Shares carrying at
least one-tenth of the votes of all members entitled to vote at
the meeting or by the chairman and unless a poll is so demanded,
a declaration by the chairman that a resolution has, on a voice
call or show of hands, been carried or carried unanimously or by
a particular majority or lost, and an entry to that effect in the
book of the proceedings of the Company, shall be conclusive
evidence of the fact, without proof of the number or proportion
of the votes recorded in favor of or against that resolution.
30. If a poll is duly demanded it shall be taken in
such manner as the chairman directs, and the results of the poll
shall be deemed to be the resolution of the meeting at which the
poll is demanded.
31. The demand for a poll may, before the poll is
taken, be withdrawn but only with the consent of the chairman and
a demand so withdrawn shall not be taken to have invalidated the
result of the voice call or show of hands taking place before the
demand was made.
VOTES OF MEMBERS
32. Every member shall have one vote for each Ordinary
Share of which he is the holder. Voting rights of Preference
Shares (if any) shall be as specified in accordance with Article
5.
33. In the case of joint holders of the vote of the
senior who tenders a vote, whether in person or by proxy, shall
be accepted to the exclusion of the votes of the other joint
holders; and for this purpose seniority shall be determined by
the order in which the names stand in the register of members.
8
<PAGE>
34. A member of unsound mind, or in respect of whom an
order has been made by any court having jurisdiction with respect
to persons of unsound mind, may vote, whether on a voice call,
show of hands or on a poll, by his committee or other person in
the nature of a committee appointed by that court.
PROXIES
35. (1) The instrument appointing a proxy shall be in
writing under the hand of the appointer or his attorney duly
authorized in writing or, if the appointer is a corporation,
either under the common seal or under the hand of an officer or
attorney so authorized.
(2) An instrument appointing a proxy may be in the
following form or in any other form which the board may approve:
"I of
being a member of P. I. Resorts Limited,
hereby appoint of
as my proxy to vote for
me and on my behalf at the general meeting of the
Company to be held on the day of and at
any adjournment thereof."
36. The instrument appointing a proxy and the power of
attorney or other authority, if any, under which it is signed or
a certified copy of that power or authority shall be deposited at
the registered office of the Company not less than forty-eight
hours before the holding of the meeting at which the person named
in the instrument proposes to vote, or shall be delivered to the
Company at such meeting, and in default the instrument of proxy
shall not be treated as valid.
37. A vote given in accordance with the terms of an
instrument of proxy shall be valid notwithstanding the previous
death or insanity of the principal or revocation of the
instrument of proxy, or the authority under which the instrument
of proxy was executed, or transfer of the shares in respect of
which the vote is given, provided no transfer shall have been received
at the registered office of the Company before the meeting or
adjourned meeting at which the instrument or proxy is used.
9
<PAGE>
CORPORATE REPRESENTATIVES
38. Any body corporate which is a member of the
Company may by resolution of its directors or other governing
body or by authority to be given under seal or under the hand of
an officer duly authorized by it authorize such person as it
thinks fit to act as its representative at any meeting of the
Company or at any separate meeting of the holders of any class or
series of shares and such authority may be general or in respect
of specific meetings. A person so authorized shall be entitled
to exercise the same power on behalf of the grantor of the
authority as the grantor could exercise if it were an individual
member of the Company and the grantor shall for the purposes of
these Articles be deemed to be present in person at any such
meeting if a person so authorized is present at it.
CLASS MEETINGS
SERIES MEETINGS
39. All provisions of these Articles relating to
general meetings of the Company shall apply mutatis mutandis to
every separate meeting of the holders of any class or series of
shares in the capital of the Company.
DIRECTORS
40. Unless otherwise determined by a resolution of the
members, the number of the directors shall be five.
41. The directors shall be appointed and may be
removed in accordance with the Companies Act.
42. It shall be presumed that it is in the best
interests of the Company to allow directors to participate in
meetings of the board or of committees thereof by telephonic
communication and otherwise as set forth in Article 56 and,
accordingly, it shall be a term of appointment of each director
that he irrevocable consents to the holding of such meetings in
the manner set forth in Article 56.
43. The directors of the Company holding office
immediately following the Closing Date shall hold office until
the date of the annual general meeting to be held in 1997. At
the annual general meeting held in 1997 and at each subsequent
annual general meeting, directors shall be appointed by
resolution of the holders of Ordinary Shares in
10
<PAGE>
accordance with these Articles (including provisions as to nomination)
and any director so appointed (and any director appointed to fill a
vacancy in the directors prior to the next annual general
meeting) shall hold office until the date of the next annual
general meeting of the Company, or if later the date his
successor shall be duly elected and qualified.
EXECUTIVE DIRECTORS
44. The board may appoint one or more of its body to
be the holder of any one or more executive office (except that of
auditor) under the Company and may enter into an agreement or
arrangement with any director for his employment by the Company
or for the provision by him of any services outside the scope of
the ordinary duties of a director. Any such appointment,
agreement or arrangement may be made upon such terms, including
terms as to remuneration, as the board determines, and any
remuneration which is so determined may be in addition to or in
lieu of any ordinary remuneration as a director. The board may
revoke or vary any such appointment but without prejudice to any
rights or claims which the person whose appointment is revoked or
varied may have against the Company by reason thereof.
45. Any appointment of a director to an executive
office shall terminate if he ceases to be a director but without
prejudice to any rights or claims which he may have against the
Company by reason of the termination of such appointment. A
director appointed to an executive office shall not ipso facto
cease to be a director if his appointment to such executive
officer terminates.
46. The emoluments of any director holding executive
office for his services as such shall be determined by the board,
and may be of any description, and (without limiting the
generality of the foregoing) may include admission to or
continuance of membership of any scheme (including any share
acquisition scheme) or fund instituted or established or financed
or contributed to by the Company for the provision of pensions,
life assurance or other benefits for employees or their
dependents, or the payment of a pension or other benefits to him
or his dependents on or after retirement or death, apart from
membership of any such scheme or fund.
11
<PAGE>
POWERS AND DUTIES OF THE BOARD
47. The business of the Company shall be managed by
the board, which may exercise all such powers of the Company as
are not by the Companies Act or by these Articles, required to be
exercised by the Company in general meeting, subject nevertheless
to these Articles (including in particular Article 68 for so long
as it is in effect) and to the Companies Act.
PROCEEDINGS OF DIRECTORS
48. (1) The directors may meet together for the
dispatch of business, adjourn and otherwise regulate their
meetings, as they think fit.
(2) Questions arising at any meeting shall be decided
by a majority of votes.
(3) A director may, and the secretary on the
requisition of a director shall, at any time summon a meeting of
the directors. Directors shall be given reasonable notice
(which, except in the case of emergencies shall be not less than
three business days) of the time and place appointed for such
meeting of the directors, which notice may be waived by any or
all directors at any time before or after such meeting.
49. The quorum necessary for the transaction of the
business of the directors may be fixed by the directors and
unless so fixed shall be three.
50. The continuing directors may act notwithstanding
any vacancy in their body, but, if and so long as their number is
reduced below the number fixed by or pursuant to the Articles as
the necessary quorum of directors, the continuing directors may
act for the purpose of summoning a general meeting of the
Company, but for no other purpose.
51. The directors may elect a chairman of their
meetings and determine the period for which he is to hold office;
but if no such chairman is elected or if at any meeting the
chairman is not present within five minutes after the time
appointed for holding the same, the directors present may choose
one of their number to be chairman of the meeting.
12
<PAGE>
52. The directors may delegate any of their powers to
committees consisting of such members of the Company or members
of their body as they think fit; any committee so formed shall in
the exercise of the powers so delegated conform to any
regulations that may be imposed on them by the directors.
53. A committee may elect a chairman of their
meetings; if no such chairman is elected or if at any meeting the
chairman is not present within five minutes after the time
appointed for holding the same, the members present may choose
one of their number to be chairman of the meeting.
54. (1) A committee shall meet and adjourn as
determined by the board and otherwise as they think proper.
(2) Questions arising at any meeting shall be
determined by a majority of votes of the members present.
55. A resolution in writing signed by a simple
majority of the directors entitled to vote on that resolution at
a meeting of the board or of the members of an existing committee
of the board with authority to consider and act on the matter
(not being less than the number of directors required to form a
quorum of the board) shall be as valid and effectual as if it had
been passed at a meeting of the board or (as the case may be) a
committee of the board duly convened and held and for this
purpose a resolution may consist of several documents to the same
effect, each signed by one or more directors.
56. A meeting of the board or of a committee of the
board may, if all the directors consent, consist of a conference
between directors who are not all in one place, but of whom each
is able (directly or by telephonic communication) to speak to
each of the others, and to be heard and recognized by each of the
others. A director taking part in such a conference shall be
deemed to be present in person at the meeting and shall be
entitled to vote or be counted in a quorum accordingly. Such a
meeting shall be deemed to take place where the largest group of
those participating in the conference is assembled, or, if there
is no such group, where the chairman of the meeting then is. The
word meeting in these Articles shall be construed accordingly.
13
<PAGE>
57. The board shall cause minutes to be made in books
provided for the purpose:
(a) of all appointments of officers made by the
board;
(b) of the names of the directors or members
present at each meeting of the directors and
of any committee of the directors; and
(c) of all resolutions and proceedings at all
meetings of the Company and of the board or
committees of the board.
POWERS OF ATTORNEY
58. The board may from time to time and at any time by
power of attorney appoint any company, firm or person or body of
persons, whether nominated directly or indirectly by the board,
to be the attorney or attorneys of the Company for such purposes
and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the board under these Articles)
and for such period and subject to such conditions as they may
think fit, and any such powers of attorney may contain such
provisions for the protection and convenience of persons dealing
with any such attorney as the board may think fit and may also
authorize any such attorney to delegate all or any of the powers,
authorities and discretions vested in him.
THE SEAL
59. The seal of the Company shall not be affixed to
any instrument except by the authority of a resolution of the
directors, and in the presence of at least two directors and of
the secretary or such other person as the directors may appoint
for the purpose; and those two directors and secretary or other
person as aforesaid shall sign every instrument to which the seal
of the Company is so affixed in their presence. The Company is
hereby authorized to adopt and use an official seal in accordance
with the provisions of Section 26 of the Companies Act.
14
<PAGE>
DIVIDENDS AND RESERVE
60. The board may from time to time declare and pay to
the members of the Company such quarterly dividends as appear to
the directors to be justified by the profits of the Company.
61. No dividend shall be paid otherwise than out of
profits or surplus available for the purpose in accordance with
the Companies Act.
62. The directors may, before recommending any
dividend, set aside out of the profits of the Company such sums
as they think proper as a reserve or reserves which shall, at the
discretion of the directors, be applicable for meeting
contingencies or for equalizing dividends or for any other
purpose to which the profits of the Company may be properly
applied, and pending such application may, at the like
discretion, either be employed in the business of the Company or
be invested in such investments (other than shares of the
Company), as the directors may from time to time think fit.
63. Where several persons are registered as joint
holders of any share any one of them may give effectual receipts
for any dividend payable on the share.
64. No dividend shall bear interest against the
Company.
ACCOUNTS
65. The directors shall cause true accounts to be
kept:
(a) of the sums of money received and expended by
the Company and the matter in respect of
which such receipt and expenditure takes
place; and
(b) of the assets and liabilities of the Company.
66. The books of account shall be kept at the
registered office of the Company or at such other place or places
as the directors think fit and shall always be open to the
inspection of the directors.
15
<PAGE>
67. The directors shall from time to time determine
whether and to what extent and at what time and places and under
what conditions or regulation the accounts and books of the
Company or any of them shall be open to the inspection of members
not being directors, and no member (not being a director) shall
have any right of inspecting any account or book or document of
the Company except as conferred by statute or authorized by the
directors or by the Company in general meeting.
68. Once at least in every year the directors shall
lay before the Company in general meeting a profit and loss
account for the period since the preceding account or (in the
case of the first account) since the incorporation of the
Company, made up to a date not more than six months before such
meeting.
69. (1) A balance-sheet shall be made out in every
year and laid before the Company in general meeting made up to a
date not more than six months before such meeting.
(2) The balance-sheet shall be accompanied by a report
of the board as to the state of the Company's affairs and the
amount which they recommend to be paid by way of dividend and the
amount, if any, which they propose to carry to a reserve fund.
70. A copy of the balance-sheet and report shall,
seven days previous to the meeting, be sent to the persons
entitled to receive notices of general meetings in the manner in
which notices are to be given hereunder.
NOTICES
71. (1) A notice may be given by the Company to any
member either personally or by sending it by post to him to his
registered address.
(2) Where a notice is sent by post, service of the
notice shall be deemed to be effected by properly addressing,
pre-paying and posting a letter (by air-mail if to an address
outside the country from which it is sent) containing the notice
and, unless the contrary is proved, to have been effected three
days after posting (or seven days if sent to an address outside
the country from which it is sent).
16
<PAGE>
72. A notice may be given by the Company to the joint
holders of a share by giving the notice to the joint holder named
first in the register in respect of the share.
73. A notice may be given by the Company to the
persons entitled to a share in consequence of the death or
bankruptcy of a member by sending it through the post in a pre-
paid letter addressed to them by name or by the title of
representatives of the deceased, or trustees of the bankrupt, or
by any like description, at the address, if any, supplied for the
purpose by the persons claiming to be so entitled, or (until such
an address has been so supplied) by giving the notice in any
manner in which the same might have been given if the death or
bankruptcy has not occurred.
74. Notice of every general meeting shall be given in
some manner hereinbefore authorized to the members of the
Company, including any person entitled to a share in consequence
of the death or bankruptcy of a member, who, but for his death or
bankruptcy, would be entitled to receive notice of the meeting
and to very director. No other persons shall be entitled to
receive notice of general meetings.
INDEMNITY
75. The Company shall, subject to the provisions of
Article 79, indemnity to the fullest extent permitted by the
Companies Act any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative and whether external or internal to the Company by
reason of the fact that he is or was a director or officer of the
Company, or is or was serving at the request of the Company as a
director or officer of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
suit, action or proceeding if he acted in good faith and in a
manner which he reasonably believed to be in, or not opposed to,
the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
that his conduct was unlawful.
76. Subject to Article 79, expenses incurred by a
director or officer in defending a civil or criminal action,
17
<PAGE>
suit or proceeding shall be paid by the Company in advance of the
final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to
repay such amount if it shall ultimately be determined that he is
not entitled under Article 75 to be indemnified by the Company in
respect of such expenses.
77. The board shall from time to time cause the
Company to purchase and maintain insurance from reputable
insurance carriers on behalf of any person who is or was a
director or officer of the Company, or is or was serving at the
request of the Company as a director or officer of another
corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such with reasonable limits and subject to reasonable
and customary deductibles, for so long as such insurance is
available from such carriers.
78. The Company's indemnification under Article 76 of
any person who is or was serving, at the request of the Company
as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, shall be reduced by
amounts such person receives as indemnification (i) under any
policy of insurance purchased and maintained on his behalf by
the Company, (ii) from such other corporation, partnership,
joint venture, trust or other enterprise, or (iii) under any
other applicable indemnification provision.
79. (a) It shall be a condition of the Company's
obligation to indemnify or advance expenses under Articles 75 and
76 that the person asserting, or proposing to assert, the right
to be indemnified, promptly after receipt of notice of
commencement of any action, suit or proceeding in respect of
which a claim for indemnification is or is to be made against the
Company notify the Company of the commencement of such action,
suit or proceeding, including therewith a copy of all papers
served and the name of counsel retained or to be retained by such
person in connection with such action, suit or proceeding, and
thereafter to keep the Company timely and fully apprised of all
developments and proceedings in connection with such action, suit
or proceeding or as the Company shall request; and the fees and
expenses of any counsel retained by a person asserting, or
proposing to assert, the right to be indemnified under
18
<PAGE>
Article 75 shall be at the expense of such person unless the counsel
retained shall have been approved by the Company in writing,
which approval shall not be unreasonably withheld.
(b) If a claim for indemnification and advancement of
expenses under Articles 75 and 76 is not paid in full by the
Company within forty five (45) days after a written claim
therefor has been received by the Company, the claimant may at
any time thereafter bring suit against the Company to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expenses
of prosecuting such claim.
80. To the fullest extent permitted by the Companies
Act as it exists on the date hereof or as it may hereafter be
amended, no director or officer of the Company shall be liable to
the Company or its members for monetary or other damages for
breach of fiduciary duty as a director or officer.
81. The provisions of Articles 75 to 80 shall continue
as to, and for the benefit of, a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
82. No amendment to or repeal of the provisions of
Articles 75 to 80 shall apply to or have any effect on the
eligibility for, or entitlement to, indemnification, advancement
of expenses and the other rights provided by, or granted pursuant
to, Articles 75 to 80 for or with respect to any acts or omissions
of any director or officer occurring prior to any such amendment or
repeal.
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EXHIBIT C
SUBORDINATION PROVISIONS
<PAGE>
EXHIBIT C
All opinions set forth below shall be delivered in
customary form and in reliance, where customary, on typical
certificates and certified copies of documents:
(i) RII is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware; (ii) RII has all necessary corporate power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder; (iii) the execution and delivery of
this Agreement by RII, and the sale of the Shares and the RII
Real Estate Assets by RII, have been duly and validly authorized
by all necessary corporate action on the part of RII, and no
other corporate proceedings or shareholder actions on the part of
RII are necessary to authorize this Agreement and the sale of the
Shares and the RII Real Estate Assets; (iv) this Agreement has
been duly and validly executed and delivered by RII, and this
Agreement constitutes the legal, valid and binding obligation of
RII, enforceable against RII in accordance with its terms
(subject as to enforcement to applicable bankruptcy,
reorganization, insolvency, fraudulent transfer and moratorium
and similar laws from time to time in effect affecting creditors'
rights generally and to legal and equitable limitations on
availability of specific performance and other equitable
remedies); (v) the execution and delivery of this Agreement by
RII does not, and the performance of this Agreement by RII will
not, (A) conflict with or violate the certificate of
incorporation or bylaws of RII, (B) to the actual knowledge of
such counsel, conflict with or violate any law, rule, regulation,
order judgment or decree applicable to RII; (vi) assuming that
Buyer has purchased the Shares for value in good faith and
without notice of any adverse claim, good and valid title to the
Shares will pass to Buyer, free and clear of any adverse claim;
and (vii) as of the Closing Date, the order of the Bankruptcy
Court confirming the sale of the Shares by RII to Buyer has been
duly entered, is in full force and effect and has not been
stayed.
[Subject to changes to reflect GRI as the transferor of the
Shares, if applicable]
<PAGE>
EXHIBIT D
MANAGEMENT AGREEMENT
<PAGE>
INTERIM MANAGEMENT AGREEMENT
INTERIM MANAGEMENT AGREEMENT, dated as of this _____
day of ______, 199_, by and between P.I. Resorts Limited, a
Bahamas corporation ("OWNER"), and Resorts International, Inc., a
Delaware corporation ("MANAGER").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Owner owns and operates, directly and through
subsidiaries, certain businesses in the leisure, resort and
related industries on Paradise Island in The Bahamas and in the
State of Florida, as more particularly described on EXHIBIT "A"
attached hereto and made a part hereof (collectively, the
"BUSINESSES"); and
WHEREAS, Owner desires to engage and employ Manager to
perform, and Manager desires to perform (or cause to be
performed), certain management services respecting the operation
of the Businesses (collectively, the "SERVICES"); and
WHEREAS, the parties hereto are entering into this
Agreement in accordance with the Plan of Reorganization (the
"PLAN") confirmed by the bankruptcy court for the District of New
Jersey in the bankruptcy case styled In re: RESORTS
INTERNATIONAL, INC. and GRIFFIN RESORTS, INC., (Case Nos.
___________ and _________; Jointly Administered Under Case No.
_______________________________.
<PAGE>
NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained herein, and other good and
valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. MANAGEMENT. Owner hereby engages and employs
Manager to act as its exclusive agent to oversee the day-to-day
management of the business and affairs of the Businesses and to
provide the Services detailed in paragraph 2(c) hereof in
connection with the Businesses, and Manager hereby accepts such
engagement and employment, on and subject to the terms and
conditions hereinafter set forth.
2. RESPONSIBILITIES OF THE PARTIES.
(a) STANDARDS. With respect to the operation of the
Businesses, Manager shall manage and maintain the Businesses in a
manner reasonably consistent with the standards and procedures
exercised by other first class operators of businesses comparable
(in terms of type, class and quality) to the Businesses, in the
same or similar competitive markets as the Businesses. For
purposes hereof such management standard is hereinafter referred
to as the "MANAGEMENT STANDARD".
(b) NO INTERFERENCE. Owner hereby agrees that, except
to the extent otherwise provided in this Agreement,
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Manager shall have exclusive control of and responsibility for the
operation of the Businesses during the Term (as hereinafter defined).
Manager agrees that, in connection with its performance hereunder,
Manager shall not knowingly take any action which would cause
Owner to violate any material term of any of the loan indentures
described in SCHEDULE "1" attached hereto (collectively, the
"INDENTURES"; and the trustees thereunder, together with their
successors in trust and assigns, the "TRUSTEES"). Manager
further agrees that no action which Owner or any of the Trustees
shall take under and in accordance with the provisions of the
Indentures or the Security Instruments (as defined in the
Indentures, and as such agreements are in effect on the date
hereof) shall constitute a breach by Owner of this Agreement,
notwithstanding that the same may constitute an interference with
or disturbance of management within the contemplation of these
provisions; provided, however, that if and to the extent that
such action by Owner or the Trustees shall constitute an
interference with or disturbance of management within the
contemplation of these provisions, then Manager shall be relieved
of such management obligation hereunder so interfered with or
disturbed.
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(c) SERVICES. Manager covenants and agrees to
perform, or cause to be performed, consistent with the Management
Standard, the following Services in connection with the
Businesses:
(i) PERMITS. Manager, on behalf of and with the
cooperation of Owner, shall oversee the obtaining of and
maintenance of all necessary licenses, findings of suitability,
approvals and permits required by any law, rule or regulation of
any applicable national, state or local authorities having
jurisdiction over the Businesses (the "APPLICABLE GOVERNMENTAL
AUTHORITIES"), as may be required for the operation of the hotel
and casino Businesses as hotel and casino businesses including,
without limitation, gaming, liquor, bar, restaurant, sign and
hotel licenses and any permits required in connection with any
refurbishing or expansion of such Businesses, and for the
operation of the airline and other Businesses to permit the same
to be operated in a manner similar to their current operation.
Manager shall comply with the rules, regulations and orders of
the Applicable Governmental Authorities and with any conditions
set out in any such licenses and permits issued by any such
authorities and, with the cooperation of Owner, shall provide any
information, report or access to records
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reasonably required by the Applicable Governmental Authorities.
(ii) PERSONNEL. Except as otherwise expressly
provided herein, all personnel employed at the Businesses shall
be employees of Owner. Manager shall hire, terminate, advance,
demote, supervise, direct the work of and determine the
compensation and other benefits (except for the establishment of
any new employee pension and profit-sharing plans, which shall be
proposed by Manager and shall be subject to the approval of the
Board of Directors of Owner, not to be unreasonably withheld or
delayed, it being understood that any employee pension and
profit-sharing plans in existence as of the date hereof have been
approved by the Board of Directors of Owner) of all personnel
working at the Businesses, in all events consistent with the then
current Annual Budget (hereinafter defined); PROVIDED, HOWEVER,
that Manager will not enter into any employment contracts with
any employees for a period that exceeds the Initial Term (as
hereinafter defined) or the then current Term of this Agreement,
as the case may be, or any material employee contracts or benefit
arrangements (I.E., any such contract or arrangement involving an
annual compensation (including salary and bonuses) of more than
$125,000), unless first approved by
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the Board of Directors of Owner. Manager agrees that employees'
wages, benefits and conditions of employment (inclusive of any
discretionary employee bonuses granted from time to time by Manager)
shall be granted by Manager consistent with the Management Standard
and the then current Annual Budget. The parties hereto agree that
all wages, bonuses, compensation and benefits (including, without
limitation, severance and termination pay) of personnel at the
Businesses, and state and federal withholding, social security
and similar employee related taxes, are the exclusive obligation
of Owner and that Manager shall furnish to Owner such information
as shall be required by Owner in order for Owner to satisfy such
obligation.
Manager shall be responsible for the training of all
personnel and shall cooperate with all personnel in their efforts
to obtain and maintain key employee, casino employee or casino
hotel employee licenses issued by the Applicable Governmental
Authorities, if such are required, and Manager will hire only
persons with valid employee licenses, if under the rules and
regulations of the Applicable Governmental Authorities, such
employee licenses are a condition of employment.
The employees necessary to discharge Manager's
obligations and responsibilities hereunder (I.E. those
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providing management related services) shall be employees of Manager
(or its affiliates) ("MANAGER EMPLOYEES") and shall be hired, paid
and discharged by Manager in its reasonable discretion; provided,
however, that if Owner (exercising reasonable judgment, in good
faith) shall request Manager to terminate the management
responsibilities of any Manager Employee in respect of the
Businesses, then Manager shall effect such termination. Manager,
in its sole discretion, shall determine, consistent with the
Management Standard and the then current Annual Budget, the
number of Manager Employees necessary to discharge Manager's
obligations and responsibilities hereunder. The salaries and
other compensation arrangements of Manager Employees shall be the
responsibility of Manager and, except to the extent provided in
paragraph 7(a) below, Manager shall not have any right of
reimbursement from Owner in respect thereof.
(iii) SALES AND PROMOTIONS. Manager shall
formulate, coordinate and implement promotion, marketing and
sales programs, and shall cause the Businesses to participate in
promotional, marketing and sales campaigns and, as appropriate,
activities involving complimentary rooms and food and beverages
to bona fide travel agents, tourist officials and airlines
representatives, and to all other individuals and entities
whatsoever which, in
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Manager's reasonable discretion consistent with the Management Standard,
is deemed to be beneficial to the Businesses.
Credit facilities shall be granted by Manager in its
reasonable discretion and in accordance with the Management
Standard and the then current Annual Budget; provided, however,
that except for extending credit for the purchase of goods,
services, gaming or entertainment in the ordinary course of the
Businesses, and except as otherwise required or permitted herein,
Manager shall not be authorized to make any loans or extensions
of credit for or on behalf of Owner without the prior approval of
the Board of Directors of Owner.
(iv) BOOKS AND RECORDS. Consistent with the
Management Standard, Manager shall maintain, or cause to be
maintained, a complete accounting system for and on behalf of
Owner in connection with its management of the Businesses. The
books and records shall be kept in accordance with generally
accepted accounting principles consistently applied and in
accordance with the uniform system of accounts for hotels and
casinos and otherwise consistent with the system of accounts
required by GAAP for the applicable Business. Such books and
records shall be kept on the basis of a [________] fiscal year.
Books and
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accounts shall be maintained at the Businesses or at the principal
office of Manager with a duplicate copy thereof at the respective
principal office of each of the Businesses. Owner shall have the
right and privilege of examining and copying said books and records,
including all daily reports prepared by Manager for internal use at
the Businesses, at reasonable times during regular business hours.
Manager shall comply with all requirements with respect to internal
controls and accounting and shall prepare and provide all required
reports under the rules and regulations of the Applicable Governmental
Authorities.
(v) AUDITS AND AUDITORS. Manager shall cooperate
with and assist Owner's auditors in connection with the audit of
the Businesses to be performed by such auditors as at the end of
each fiscal year of Owner occurring after the date hereof and at
least three (3) copies thereof shall be furnished to each party
as soon as available to permit Owner to meet any public reporting
requirements as may be applicable to it, and in no event later
than 90 days following the end of such fiscal year of Owner. Any
change in public auditors during the Term of this Agreement shall
be subject to the prior written approval of Owner.
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(vi) INTERIM STATEMENTS. On or before the 30th
day of each month, Manager shall furnish to Owner an operating
statement for the preceding calendar month for each of the
Businesses, detailing the gross revenues received from all
sources, opening and closing balances in each of the Management
Accounts (as hereinafter defined) (including account designation
and name of and location of depositaries), guest room occupancy
percentages, average room rates, and expenses incurred, including
estimated compensation and other amounts, if any, that may be due
or payable to Manager and including a report and computation of
sums due and payable to Owner. The gross revenue detail shall
include specific details concerning on all gaming revenues
(including total drop). Adjustments predicated on the annual
audited statements for the Businesses shall be made during the
first month following completion of the annual audit.
(vii) BANK ACCOUNTS.
(A) MANAGEMENT ACCOUNTS. Consistent with the
Management Standard, Manager shall establish such operating
accounts as Manager deems necessary or appropriate for the
operation of the Businesses. Manager, in the future, may
establish additional operating accounts with, or change existing
operating accounts to, one or more banks,
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savings and loans, or money market mutual funds as it may designate.
Such accounts shall be styled "____________ -[type of account]" (e.g.
operations, payroll, etc.), and all such accounts shall provide
that Manager's designees shall be the only parties authorized to
draw upon such accounts (the "MANAGEMENT ACCOUNTS"). Manager
agrees that it will not use any Management Accounts as
compensating balances related to the extension of credit to
Manager or grant any right of set-off or bankers' lien on any
such accounts in respect of any amounts owed by Manager to such
depositaries. Manager shall seek to obtain reasonable rates of
interest for the Management Accounts, with due regard to the
financial stability of and services offered by the depositaries
with which such accounts are kept; provided, however, that,
Manager shall not be responsible for the amount, if any, of such
interest or the solvency of such depositories. All depositories
shall be subject to Owner's prior approval. The parties agree
that all funds held from time to time in the Management Accounts
are solely the property of Owner, and upon the expiration or
termination of this Agreement for any reason, Manager shall cease
to have authority, and shall cease, to withdraw funds from any of
the Management Accounts and, upon notice to the institution(s)
maintaining the Management Accounts (1)
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Manager's designees shall be removed as signatories to the
Management Accounts, and (2) Owner's designees shall become
the sole signatories to the Management Accounts. Manager,
when such Management Accounts first are established, shall
use reasonable efforts to obtain the written confirmation of
the institution maintaining such accounts that the procedure
set forth in the previous sentence is agreed to, and shall be
implemented, by such institution, and in the absence of such
confirmation shall obtain Owner's written authorization to
maintain accounts with such institution. It is understood and
agreed that Manager may maintain petty cash funds at the Businesses
and make payments therefrom as the same are customarily made in
the hotel and casino business.
Following the furnishing to Owner of interim statements
pursuant to subparagraph 2(c)(vi) hereof, from time to time
Manager shall direct, and Owner may direct, that sums be
transferred from the Management Accounts to such accounts as may
be established by Owner (and with respect to which Manager shall
not have access) to the extent that such funds are in excess of
amounts that Manager, consistent with the Management Standard, or
Owner, deems reasonably necessary for the operation of the Businesses.
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(B) OPERATING CAPITAL. If Owner fails or delays
in furnishing funds to cover operating deficits, Owner shall
indemnify and hold harmless Manager with respect to claims of
third parties which may arise out of or relate to, directly or
indirectly, the Businesses and such failure or delay in funding
such deficits.
(viii) TAXES AND INSURANCE. Throughout the Term,
Owner shall furnish Manager with copies of all tax statements and
insurance policies and all financing documents (including notes
and mortgages) relating to the Businesses. Manager shall assist
Owner's accountants in the preparation of all federal and state
income and sales tax returns of Owner to the extent such returns
relate to the Businesses and in connection with any inquiries or
audits by Applicable Governmental Authorities. Manager will also
assist Owner in procuring and maintaining liability, property and
such other insurance in at least such amounts and covering such
risks as is currently maintained with respect to the Businesses
and in such additional amounts and covering such additional
risks, if any, as Manager or Owner reasonably determines is
necessary in connection with the operation of the Businesses,
with responsible and reputable insurance companies or
associations. All such insurance policies shall name Manager as
an additional insured and all
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insurers thereon shall be required to issue to Manager and Owner
a certificate of insurance providing that such insurer shall deliver
to Manager and Owner reasonable prior notice of termination of any
such policy or the coverage provided thereby and, if and to the extent
the same shall be available without adversely affecting Owner's coverage
and without additional premiums or charges, waiving the rights of
such insurer, if any, of subrogation against Manager and Owner.
Without in any way diminishing Owner's responsibility hereunder,
Manager is hereby authorized and directed to pay from the
Management Accounts all taxes and fees including, without
limitation, withholding taxes and insurance premiums, and all
other items of expense relating to the ownership or operation of
the Businesses.
(ix) CONCESSIONS. Manager shall consummate, if in
Manager's reasonable discretion it deems the same to be in the
best interest of the Businesses, in the name of and for the
benefit of Owner, reasonable arms-length arrangements and leases
with concessionaires, licensees, tenants and other intended users
of any facilities related to the Businesses; provided, however,
that no concession, license or tenancy shall be granted for a
period beyond the Initial Term or the then current Term. Copies
of all such
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arrangements shall be furnished to Owner upon Owner's
request therefor.
(x) ANNUAL BUDGET. Manager shall be obligated to
furnish Owner for Owner's approval, an annual budget (the "ANNUAL
BUDGET"), at least thirty (30) days prior to the end of each
fiscal year of Owner. Each Annual Budget shall detail all costs,
expenses and reserves reasonably anticipated by Manager or
contemplated in this Agreement, for the next succeeding fiscal
year. Manager, without the prior approval of Owner, shall not
incur expenditures in excess of or other than those provided in
the Annual Budget as approved by Owner. The Annual Budget may be
amended from time to time with Owner's approval, which approval
may be granted or withheld by Owner in Owner's sole discretion.
If Owner shall not have approved an Annual Budget for a new
fiscal year, then the last approved Annual Budget shall be deemed
to be approved as the then current Annual Budget until expressly
superseded.
(xi) EXPENSES. All costs, expenses, funding or
operating deficits and working capital, taxes, insurance premiums
and other obligations and liabilities of Owner hereunder
("OWNER'S FINANCIAL OBLIGATIONS") shall be the sole and exclusive
financial responsibility and obligation of Owner, except for
those instances herein where it is
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expressly and specifically stated that such item shall be the
responsibility of Manager. It is understood that statements
herein indicating that Manager shall furnish, provide or otherwise
supply, present or contribute items or Services hereunder shall
not be interpreted or construed to mean that Manager is liable
or responsible to fund or pay for such items or services, except
in those instances mentioned above. Except for petty cash funds
which Manager maintains at the Businesses and except as may be
disbursed to Owner pursuant to subparagraph 2(c)(vii)(A) hereof,
all funds derived from the ownership and operation of the Businesses
shall be deposited and held in the Management Accounts until disbursed
to pay and discharge Owner's Financial Obligations as set forth below,
subject to the laws, rules and regulations of the Applicable
Governmental Authorities:
(A) With respect to Owner's Financial
Obligations, the same shall be funded and/or paid for as
follows: (1) first, from monies which may be available in
Management Accounts (subject to the provisions of
subparagraph 2(c)(vii)(A) hereof) maintained for the
respective Business giving rise to such Owner's Financial
Obligation; (2) second, if such Management Accounts do not
contain monies sufficient
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to fund and/or pay such Owner's Financial Obligations, and
other Management Accounts have funds which exceed the requirements
of the Businesses for which such accounts are maintained, then
from such other Management Accounts, and (3) third, if Management
Accounts do not contain monies sufficient to fund and/or pay
Owner's Financial Obligations, then Owner shall be obligated to
fund and pay such deficits within thirty (30) days after written
request therefor by Manager or if Owner fails or delays in
furnishing funds to cover such deficits as aforesaid (by
unreasonable failure to approve or delay in approving
budgets in a timely manner or otherwise), (x) Owner shall
indemnify and hold harmless Manager with respect to any
liability to third parties however arising which may arise
out of or relate to, directly or indirectly, such failure or
delay in funding such deficits, and (y) Manager shall have
the option (but not the obligation) to terminate this
Agreement in accordance with subparagraph 8(b)(iii) hereof.
(B) It is understood and agreed that Manager
shall have no obligation or duty to fund and/or pay for any
of Owner's Financial Obligations from its own funds except
in those instances herein where it is
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expressly and specifically stated that such item shall be the
obligation of Manager.
(xii) MATERIAL AGREEMENTS. Manager, as exclusive
agent for Owner, is authorized to make and enter into any
agreements (including, without limitation, agreement with
Manager's affiliates, provided such agreements are upon "market"
terms no more onerous to Owner or favorable to such affiliates
than would be the case if Owner contracted with third parties
regarding the same) as are, in Manager's reasonable discretion,
necessary or desirable for the operation, supply and maintenance
of the Businesses, as required by this Agreement. Manager shall
be required to obtain the reasonable approval of the Board of
Directors of Owner before entering into any agreement not
contemplated by the approved Annual Budget involving (a) any
material structural repair or rehabilitation of the Businesses in
excess of $100,000; (b) any fundamental change in the character
of the Businesses; or (c) any other agreement (other than
employment contracts or benefit arrangements, the approval of
which shall be governed by the provisions of subparagraph
2(c)(ii)(A) hereof) involving the payment of more than $100,000
over the term thereof. Manager shall not enter into any
agreement involving the incurrence of debt obligations on behalf
of Owner or with
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respect to the operations of the Businesses, in excess of $100,000 in
any single case or in excess of $500,000 in the aggregate, over any
amounts therefor set forth in the approved Annual Budget, without
obtaining the prior approval of the Board of Directors of Owner.
(xiii) FUTURE CONSTRUCTION AND CAPITAL EXPENDITURES
BUDGET. Construction plans and specifications for the
refurbishment and modernization of the Businesses and the capital
expenditures budget for the cost thereof shall be prepared by or
at the direction of Manager and shall be submitted to the Board
of Directors of Owner for its approval. All additions and/or
material modifications to the Businesses subsequent to the date
hereof will be constructed by a general contractor with
hotel/casino construction experience chosen by Manager, subject
to the Owner's prior approval, to perform under Manager's
supervision and control. Unless expressly waived by Owner in
writing, Manager shall require that said general contractor post
completion, performance and payment bonds prior to the
commencement of any such construction. Owner shall pay all costs
associated with improvements, refurbishments, additions and
material modifications to the Businesses undertaken and completed
in accordance with the then current Annual Budget or any
supplemental budget
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therefor and title with respect thereto shall be in the name of Owner.
Proposals in connection with any other capital
expenditures to be incurred in connection with the operation of
the Businesses that are in excess of 2% in any single case or in
excess of 5% in the aggregate over any amounts therefor set forth
in the approved Annual Budget shall be submitted to the Board of
Directors of Owner for its approval.
(xiv) CAPITAL REPLACEMENT AND ADDITIONS. Owner and
Manager recognize the necessity of a program of replacement of
tangible personal property (other than construction materials
which shall be subject to subparagraph 2(c)(xiii) hereof) and the
need to cause the Businesses to continue to be furnished and
maintained in accordance with the standards described herein.
All costs of purchases of tangible personal property pursuant to
this paragraph 2(c)(xiv) shall be in accordance with the then
current Annual Budget or any supplemental budget therefor
approved by Owner and shall be paid by Owner within 30 days of
receipt of an invoice therefor from Manager, with title thereto
being taken in the name of Owner. Such purchases are subject to
Owner's prior approval to the extent that any single purchase
exceeds the line item therefor in the Annual
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Budget by more than $10,000 or by more than $100,000 in the aggregate
for all such purchases.
(xv) LEGAL MATTERS. Manager shall coordinate and
manage all legal matters and licensing activities with respect to
the Businesses, including, without limitation, the preparation of
required filings and reports to the Applicable Governmental
Authorities, including the Securities and Exchange Commission,
and Owner's stockholders and bondholders, which filings and
reports shall be submitted to Owner for review and approval prior
to filing or distribution. In connection with such legal
matters, Manager, as exclusive agent for and on behalf of Owner,
shall have the right to engage such legal counsel as it
determines, in its reasonable discretion, is necessary. Manager
shall obtain the reasonable approval of the Board of Directors of
Owner prior to the settlement of any material claim, action or
proceeding with respect to any of the Businesses or prior to
taking significant action in connection with any material
litigation matter (I.E., any settlement or litigation matter
involving a payment in excess of $100,000 net of insurance
proceeds in respect of such matter or which would substantially
affect the operations or assets of the Businesses).
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(xvi) ADDITIONAL CONSENTS AND APPROVALS. In acting
hereunder in all matters relative to this Agreement, and in
approving or consenting to any matter hereunder not otherwise
specifically provided for, Owner and Manager shall each act in
good faith and in a commercially reasonable manner.
3. INTELLECTUAL PROPERTY.
(a) ACKNOWLEDGMENTS. Manager (i) acknowledges Owner's
exclusive right, title and interest in and to the trademarks,
tradenames and service marks presently utilized, and hereafter
developed and utilized, in connection with the Businesses
(collectively, the "MARKS"); and (ii) agrees not to do knowingly
any act that will impair or affect the strength of the Marks, the
continuity of the registration of the Marks, Owner's ownership of
the Marks or the goodwill associated with the Marks. Manager
agrees to render whatever reasonable assistance Owner may
require, at the expense of Owner, in the procurement and
maintenance of registrations of the Marks in the United States
Patent and Trademark Office and in other jurisdictions.
(b) QUALITY OF SERVICES.
(i) Manager agrees that the services and goods
provided in connection with the Marks shall be consistent with
the Management Standard.
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(ii) Manager agrees that it will permit Owner
and/or its designated representatives reasonable access to the
Businesses, at the expense of Owner, to enable Owner to determine
whether the services and goods offered by Manager in connection
with the Marks conform to the Management Standard and this
Agreement.
(c) MARKING.
(i) Manager shall apply the appropriate legend or
registration symbol, as instructed by Owner in writing,
indicating the status of each of the Marks in connection with all
signs, tags, labels, containers, packaging, advertising,
promotional and display materials containing or referred to the
Marks.
(ii) Manager agrees to submit to Owner repre-
sentative samples of new advertising and promotional materials
and signage bearing the Marks at least fifteen (15) days before
their first publication or display. Owner shall be deemed to
have no objection to the material submitted if such objections
are not communicated to Manager in writing within ten (10)
business days after receipt of such material.
(d) INFRINGEMENT.
(i) If Manager receives information to the effect
that any third party is using the Marks, or any
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similar trademark, in connection with the operation of casinos,
hotels or other businesses similar to the Businesses, it shall
provide Owner with prompt written notice of such fact.
(ii) In the event of any infringement of the
Marks, Manager shall render all reasonable assistance to Owner,
at Owner's expense, and will join as a co-party with Owner at
Owner's reasonable request and expense in the event that Owner
desires to protect or proceed against such infringement.
However, Manager shall not incur any expense in connection with
any such proceedings without Owner's express written permission.
Any recovery in connection with such a proceeding shall be for
the sole benefit of Owner.
(e) ENFORCEMENT. The failure or delay of Owner in any
one or more instances to enforce one or more of the terms and
conditions of this Article 3, or to exercise any right or
privilege under this Article 3 or the waiver of any breach of the
terms and conditions contained in this Article 3, shall not be
construed thereafter as a waiver of any such terms, conditions,
rights or privileges and the same and all other terms,
conditions, rights or privileges under this Article 3 shall
continue and remain in full force and effect as though no such
failure or delay had occurred.
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(f) SOFTWARE. Manager acknowledges Owner's exclusive
right, title and interest in and to the proprietary (I.E. non
third party owned) software presently utilized, and hereafter
developed and utilized, in connection with the Businesses
(collectively, the "SOFTWARE"). Owner hereby grants to Manager a
non-exclusive license (the "SOFTWARE LICENSE") to use, exclusively
in connection with the operation of the Businesses and the
activities at any or all of the Businesses, the software listed
on SCHEDULE "2" hereto (the "SOFTWARE", which Manager hereby
warrants to be all of the software currently being used in
connection with, and which is material to the operation of, the
Businesses as currently being operated. No right is hereby
granted, and Manager specifically disclaims, any right to
decompile, disassemble, reverse engineer, copy (except for backup
purposes), transfer or sublicense (collectively, the "DISALLOWED
USES") the Software. Upon the occurrence of a Disallowed Use,
Owner shall provide Manager with notice thereof in writing and,
if such Disallowed Use is not cured within ten (10) days after
such notice, Owner shall have the right to terminate the Software
License immediately. If Manager determines that modifications or
changes to the Software are necessary or desirable, Manager shall
advise Owner in writing with
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respect thereto. Any such modifications or changes shall be subject
to Owner's prior approval, which approval shall not be unreasonably
withheld or delayed beyond thirty (30) days after its submission to
Owner. Such modifications or changes shall be made by Manager, within a
reasonable period of time, and Owner shall retain all right,
title and interest thereto. Owner makes no warranty of
merchantability or fitness for a particular purpose or for any
purpose as to the Software.
4. REPRESENTATIONS AND WARRANTIES OF MANAGER. Manager
represents and warrants to Owner as follows:
(a) ORGANIZATION. Manager is a corporation duly
organized, validly existing and in good standing under the law of
the State of Delaware, and has the full corporate power and authority to
enter into and perform its obligations under this Agreement.
(b) AUTHORIZATION OF AGREEMENT. The execution,
delivery and performance of this Agreement has been duly
authorized and approved by all necessary corporate action on the
part of Manager, and this Agreement has been duly executed and
delivered by Manager and constitutes the legal, valid and binding
obligation of Manager, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance,
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reorganization, moratorium and similar laws affecting creditors' rights
and remedies generally and subject, as to enforceability, to general
principles of equity. The execution, delivery and performance of this
Agreement by Manager does not and will not conflict with any law, rule or
regulation of the Applicable Governmental Authorities.
(c) LITIGATION. There are no judicial or admin
istrative actions, proceedings or investigations pending or, to
the best of Manager's knowledge, threatened against Manager that
question the validity of this Agreement or any action taken or to
be taken by Manager in connection with this Agreement and that,
if adversely determined, would have a material adverse effect
upon Manager's ability to perform its obligations under this
Agreement.
(d) CONSENTS AND APPROVALS. No authorization,
consent, approval, license, finding of suitability, exemption
from or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, including, without limitation, the
Applicable Governmental Authorities, is or will be necessary as a
condition to the valid execution, delivery or performance by
Manager of this Agreement, other than such authorizations,
consents, approvals, licenses, findings of suitability,
exemptions, filings or
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registrations as have been obtained and are in full force and effect.
5. REPRESENTATIONS AND WARRANTIES OF OWNER. Owner
represents and warrants to Manager as follows:
(a) OWNER'S ORGANIZATION. Owner is a corporation duly
organized, validly existing and in good standing under the laws of
The Bahamas and has the full corporate power and authority to enter
into and perform its obligations under this Agreement.
(b) AUTHORIZATION OF AGREEMENT. The execution,
delivery and performance of this Agreement has been duly
authorized and approved by all necessary corporate action on the
part of Owner, and this Agreement has been duly executed and
delivered by Owner and constitutes the legal, valid and binding
obligation of Owner, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity.
The execution, delivery and performance of this Agreement by
Owner does not and will not conflict with any law, rule or
regulation of the Applicable Governmental Authorities.
28
<PAGE>
(c) CONSENTS AND APPROVALS. No authorization,
consent, approval, license, finding of suitability, exemption
from or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, including, without limitation, the
Applicable Governmental Authorities, is or will be necessary as a
condition to the valid execution, delivery or performance by
Owner of this Agreement, other than such authorizations,
consents, approvals, licenses, findings of suitability,
exemptions, filings or registrations as have been obtained and
are in full force and effect.
6. NO JOINT VENTURE. It is expressly understood and
agreed that Manager is being employed by Owner as an independent
contractor to provide, or cause to be provided, supervisory
management and consulting services in respect of the Businesses
and not as a partner or joint venturer of Owner. All purchases
and acquisitions of every kind and character by Manager on behalf
of Owner shall be property of Owner and all debts and liabilities
incurred by Manager within the scope of the authority granted and
permitted hereunder in the course of its management and operation
of the Businesses shall be debts and liabilities of Owner only,
and Manager shall not be liable therefor for its own
29
<PAGE>
account, except as specifically stated to the contrary herein.
7. COMPENSATION.
(a) During the Initial Term, as compensation for the
Services to be rendered by Manager hereunder, Owner shall pay to
Manager an annual fee (the "MANAGEMENT FEE") equal to the sum of
(x) 3% of the gross revenue from the Business for such period
(the "PERCENTAGE FEE"), plus (y) Manager's reasonable costs
incurred during such period in connection with the rendering of
the Management Services (including out of pocket costs and
employee wages and benefits) ("COSTS"). For purposes of this
Section 7, the term "gross revenue" shall mean the aggregate
gross revenues of Owner from the conduct of the Business,
computed in accordance with United States generally accepted
accounting principles consistently applied, including those set
forth in the AICPA Accounting and Auditing Guide for Casinos.
(b) Commencing on the first anniversary of the date
hereof, if Manager shall continue to provide the Management
Services beyond the Initial Term, then Owner shall pay to Manager
a management fee for such services (the "ANNUAL FEE") shall be an
amount equal to (x) 3% of gross revenue from the Businesses (the
"ANNUAL PERCENTAGE FEE") for such period, plus (y) Costs for such
period.
30
<PAGE>
(c) The Percentage Fee and the Annual Percentage Fee
shall be payable in twelve equal monthly installments in arrears
on the last business day of each calendar month during the
balance of the term hereof, based upon an estimate utilizing
gross revenue for the Initial Term, with an appropriate adjustment
made within 90 days after the expiration of the then
current annual period. Costs shall be reimbursed monthly.
8. TERM AND TERMINATION EVENTS.
(a) The initial term of this Agreement (the "INITIAL
TERM"), shall commence on the date hereof (the "COMMENCEMENT
DATE"), and shall terminate on the day immediately preceding the
first (1st) anniversary of the Commencement Date. Thereafter,
this Agreement shall be automatically renewed from year-to-year
unless notice of intent not to renew is delivered by either party
to this Agreement to the other party at least six (6) months
prior to the expiration of the Initial Term or any subsequent
term (the Initial Period, and each one year period thereafter, as
the case may be, being referred to as the then current "TERM").
(b) This Agreement may be terminated under any of the
following circumstances (a "TERMINATION"):
31
<PAGE>
(i) at any time upon the mutual written consent of
Owner and Manager;
(ii) automatically, as to any of the Businesses
upon a sale of such Business;
(iii) by Manager ninety (90) days after the
delivery of a notice by Manager to Owner and the Trustees
following a breach by Owner of a material term hereof and Owner's
failure to cure such breach within such 90 day period; provided,
however, that Manager shall not have the right to terminate this
Agreement if such breach is the direct result of a wrongful act
or failure to act by Manager or any of its affiliates; or
(iv) by Owner immediately after the delivery of a
notice of Termination by Owner to Manager in the event that Owner
reasonably determines that there is cause for such termination,
which, for purposes hereof, shall include a determination that
Manager, in the exercise of its duties hereunder and pursuant to
the terms hereof, committed fraud or finds that Manager has com-
mitted willful misconduct or gross negligence;
(v) by Owner, upon thirty (30) days prior written
notice to Manager, for any reason whatsoever;
(vi) Notwithstanding anything to the contrary
contained in this paragraph 8(b), the Trustees may
32
<PAGE>
assign Owner's rights and obligations under this Agreement in respect
of any of the Businesses, to a purchaser of such Business following the
occurrence of an Event of Default under any of the Indentures in
accordance with the terms of the Security Instruments, subject to
the prior written consent of Manager, which consent shall not be
unreasonably withheld or delayed, in which case this Agreement
shall not terminate but shall continue in full force and effect
in all respects.
(c) If Manager continues to perform the Services
pursuant to this Agreement during any period following the
delivery of a termination notice as provided in this paragraph
8(b) and prior to the actual Termination hereof, Manager shall
continue to earn the compensation called for in this Agreement
during such period. In no event shall Owner, the Trustees, the
holders of the Notes or their successors or assigns be liable to
Manager or for any amounts owed by or damages recoverable against
Owner hereunder and Manager's recourse for the same shall be
limited solely to a recovery from and against the assets of Owner
comprising the Businesses.
(d) Upon a Termination of this Agreement, the parties
hereto shall account to each other with respect to all
uncompleted business and Manager shall promptly deliver
33
<PAGE>
to Owner any books, records, instruments or other documentation relating
to the Businesses and Owner in Manager's possession or under
Manager's control. The provisions of Articles 3, 7, 12 and 13
hereof shall survive the Termination of this Agreement.
9. TERMINATION FEE. In the event that this Agreement
is terminated pursuant to paragraph 8(b) hereof, a termination
fee (the "TERMINATION FEE") shall be payable by Owner to Manager
as follows:
(a) TERMINATION BY MUTUAL CONSENT OR FOR MISCONDUCT.
In the event that this Agreement is terminated in accordance with
subparagraphs 8(b)(i) or 8(b)(iv) hereof, no Termination Fee
shall be payable by Owner to Manager.
(b) TERMINATION UPON A SALE OF THE BUSINESSES. In the
event that this Agreement is terminated upon a sale of any of the
Businesses, other than a foreclosure sale following an Event of
Default under any of the Indentures, a Termination Fee equal to
(x) $1,000,000 plus (y) Costs theretofore incurred and remaining
unreimbursed, shall be payable by Owner to Manager immediately
upon such Termination.
(c) TERMINATION UPON A BREACH BY OWNER OR AT OWNER'S
DISCRETION WITHOUT CAUSE. In the event this Agreement is
terminated in accordance with subparagraphs
34
<PAGE>
8(b)(iii) or 8(b)(v) hereof, a Termination Fee equal to (x) $1,000,000
plus (y) Costs theretofore incurred and remaining unreimbursed, shall
be payable by Owner to Manager immediately upon such Termination,
subject to the condition that if this Agreement is terminated in
accordance with subparagraph 8(b)(iii) hereof, at the request of the
Trustees, Manager shall continue to perform its obligations
hereunder for a period of up to one hundred fifty (150) days
following such Termination provided Owner continues to pay to
Manager the monthly installments of the Percentage Fee or the
Annual Percentage Fee and reimburse Costs on a timely basis.
10. COOPERATION UPON TERMINATION. Upon the non
-renewal or termination of this Agreement, Manager shall cause
its affiliates to release and waive all rights, claims, interests
and relationships they may have pursuant to any contract,
principle or partnership law or otherwise, to control, retain, or
discharge any matter of management with respect to the
Businesses, or any other benefit thereunder or in connection
therewith. Manager shall peacefully vacate and surrender possession
to Owner, and shall fully cooperate in the prompt and efficient transfer
of the management of the Businesses from Manager to Owner or a person or
entity acceptable to Owner. In connection with
35
<PAGE>
the foregoing, Manager shall act in good faith to avoid any breach
or disruption of any contract involving the Businesses or the lapse
of any insurance policy covering or pertaining to the Businesses.
11. TRANSFER OF PERMITS AND GOVERNMENTAL LICENSES UPON
TERMINATION. To the extent permissible under applicable law,
upon termination or expiration of this Agreement, Manager shall
cooperate in the transfer of any and all permits, licenses or
similar authorizations issued by any governmental body relating
to the operation or management of any or all of the Businesses to
the new manager.
12. EXCULPATION AND INDEMNIFICATION.
(a) (i) Manager, its affiliates and each of their
respective officers, partners, directors, employees and agents
shall indemnify and hold harmless Owner and any person who has
acquired an interest in Owner, against and from all claims,
demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, losses sustained or liabilities
incurred, including monetary damages, as a result of (x) the
willful misconduct or gross negligence of Manager, its affiliates
and their respective officers, partners, directors, employees or
agents, or (y) a
36
<PAGE>
breach by Manager of or default by Manager under this Agreement.
(ii) In the event that any legal proceedings
shall be instituted or any claim or demand shall be asserted by
any person in respect of which payment may be sought by Owner
under the provisions of this paragraph 12(a), Owner promptly
shall cause written notice of the assertion of any such
proceeding or claim of which it has actual knowledge to be
forwarded to Manager. Upon receipt of such notice, Manager shall
have the right, at its option and at its own expense, to be
represented by counsel of its choice, and to participate in any
such proceeding with counsel of its choice; PROVIDED, HOWEVER,
that no settlement shall be made without prior written consent of
the Owner. The indemnitee and Owner agree to cooperate fully
with each other in connection with the defense, negotiation or
settlement of any such legal proceeding, claim or demand.
(b) (i) Subject to the provisions of subparagraph
12(b)(ii) hereof, Owner shall indemnify and hold harmless
Manager, its affiliates and any of their respective officers,
partners, directors, employees and agents, from and against any
and all losses, claims, damages, liabilities, expenses (including
reasonable legal fees and expenses), judgments, fines, set-
tlements and other
37
<PAGE>
amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, in
which any of them may be involved, or threatened to be involved,
as a party or otherwise, which relates to, or arises out of (x)
the willful misconduct or gross negligence of Owner, its employees
or representatives, (y) a breach by Owner of or default by Owner
under this Agreement, or (z) the performance of any duties and services
for or on behalf of Owner pursuant to the terms of this Agreement,
regardless of whether the such indemnitee continues to be Manager, an
affiliate thereof or an officer, partner, director, employee or agent of
Manager or its affiliates at the time any such liability or
expense is paid or incurred, and regardless of whether the
liability or expense accrued at or relates to, in whole or in
part, any time before, on or after the date hereof.
(ii) An indemnitee shall not be entitled to
indemnification under this paragraph 12(b) with respect to any
claim, issue or matter in respect of which it has committed
fraud, willful breach of this Agreement, gross negligence or willful or
wanton misconduct.
(iii) In the event that any legal proceedings shall
be instituted or any claim or demand shall be asserted by any
person in respect of which payment may be sought by
38
<PAGE>
an indemnitee under the provisions of this paragraph 12(b), the
indemnitee promptly shall cause written notice of the assertion
of any such proceeding or claim of which it has actual knowledge to be
forwarded to Owner. Upon receipt of such notice, Owner shall
have the right, at its option and at its own expense, to be
represented by counsel of its choice, which must be reasonably
satisfactory to the indemnitee, and to defend against, negotiate,
settle or otherwise deal with any proceeding, claim or demand
which relates to any loss, liability, damage or deficiency
indemnified against hereunder; PROVIDED, HOWEVER, that no
settlement shall be made without prior written consent of the
indemnitee, not to be unreasonably withheld, conditioned or
delayed; and PROVIDED FURTHER, that the indemnitee may
participate in any such proceeding with counsel of its choice and
at its expense. The indemnitee and Owner agree to cooperate
fully with each other in connection with the defense, negotiation
or settlement of any such legal proceeding, claim or demand.
(iv) The indemnification provided by this
paragraph 12(b) shall be in addition to any other rights to which
an indemnitee may be entitled under any agreement, bylaw or vote
of the Board of Directors of Owner or as a matter of law or
otherwise, both as to action in the
39
<PAGE>
indemnitee's capacity as Manager, an affiliate thereof or an officer,
partner, director, employee or agent of Manager or its affiliates
and as to action in any other capacity, shall continue as to an
indemnitee who has ceased to serve in such capacity and shall inure
to the benefit of the heirs, successors, assigns and administrators of
an indemnitee.
(v) The provisions of this Article 12 shall
survive the termination of this Agreement.
13. GOVERNMENTAL LAWS. Notwithstanding anything to
the contrary contained in this Agreement, this Agreement shall be
deemed to include all provisions required by the casino and
gaming authorities of The Commonwealth of The Bahamas and the
regulations promulgated thereunder (the "ACT"), and shall be
conditioned upon the approval of the Applicable Governmental
Authorities. To the extent that any term or provision contained
in this Agreement shall be inconsistent with the Act, the
provisions of the Act shall govern. All provisions of the Act,
to the extent required by law to be included in this Agreement,
are incorporated herein by reference as if fully restated in this
Agreement.
14. NOTICES. All notices, demands, approvals,
requests or other communications which may be or are required to
be given, served or sent by any party to the other parties, shall
be in writing and shall be delivered
40
<PAGE>
personally or by certified mail, return receipt requested, to the
other party's address as follows:
if to Owner to:
c/o __________________________
______________________________
______________________________
Attention: __________________
if to Manager to:
______________________________
______________________________
______________________________
Attention: __________________
Any party may change the name and/or address by written
notice given in each instance to the other parties. Notices shall
be deemed given when delivered personally, or, if sent by
certified mail, the earlier of (a) three (3) business days after
mailing or (b) when received.
15. SEVERABILITY. If any term or provision of this
Agreement or the application thereof to any person or
circumstance shall be invalid or unenforceable, to any extent,
the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be
valid and be enforced to the fullest extent permitted by law.
41
<PAGE>
16. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with the laws of the State of New York
without regard to its conflict of laws provisions.
17. ASSIGNMENT. This Agreement and/or right to
receive payments hereunder shall not be assigned by Owner or
Manager without the prior written approval of the other in each
instance; PROVIDED, HOWEVER, that Owner may assign its rights
under this Agreement to a purchaser of the Businesses and the
Trustees may assign the Owner's rights under this Agreement to a
purchaser of the Businesses in a foreclosure sale following an
Event of Default under any of the Indentures as provided in the
Security Instruments.
18. SUCCESSORS AND ASSIGNS. Subject to the provisions
of Section 17 hereof, all of the covenants, conditions and
obligations contained in this Agreement shall be binding upon and
inure to the benefit of the respective successors and permitted
assigns of Owner and Manager to the same extent as if each such
successor and permitted assign were in each case named as a party
to this Agreement.
19. ENTIRE AGREEMENT; AMENDMENT. This Agreement
constitutes the sole understanding of the parties with respect to
the matters provided for herein and supersedes any previous
agreements and understandings between the parties
42
<PAGE>
with respect to the subject matter hereof. No amendment, modification
or alteration of the terms or provisions of this Agreement shall be
binding unless the same shall be in writing and duly executed by
the parties hereto.
20. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be
deemed to be an original and all of which shall constitute the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Management Agreement to be duly executed by an authorized
representative thereof, all as of the day and year first above
written.
P.I. RESORTS LIMITED
By: _____________________
Name:
Title:
RESORTS INTERNATIONAL, INC.
By: _____________________
Name:
Title:
43
<PAGE>
EXHIBIT "A"
For purposes hereof the "Businesses" shall mean all of the
operations and properties conducted and owned by RII and its
affiliates relating primarily to Paradise Island, the Bahamas,
including, without limitation, the Paradise Island Resort &
Casino, Ocean Club Golf & Tennis Resort, Paradise Beach Resort,
Paradise Island Airlines, a short take-off and landing airport
facility at the southeast corner of Paradise Island and
approximately 219 acres of undeveloped land on Paradise Island
(including approximately 120 acres of waterfront property) not
used in the operation of the resorts on Paradise Island,
approximately 1675 acres of undeveloped and partially developed
land on Grand Bahama Island, approximately 561 acres on Andros
Island and other similarly related assets not currently used
actively in the Paradise Island operations.
44
<PAGE>
SCHEDULE "1"
INDENTURES
----------
45
<PAGE>
[GD&C Draft -- 12/30/93]
[NA932010.156]
--------------------------------------------
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
Issuer,
RESORTS INTERNATIONAL HOTEL, INC.,
Guarantor,
and
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
Trustee,
--------------------------------------------
I N D E N T U R E
Dated as of [ ], 1994
--------------------------------------------
11% MORTGAGE NOTES DUE 2003
--------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
Section of Trust Indenture Act of 1939 Section of Indenture
- -------------------------------------- --------------------
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . .8.08; 8.09
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .8.09
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . .8.14(b)
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.08
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.01; 9.02(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(c)
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(b)
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . .1.06
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . .1.06
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . .9.04(c); 12.07(i)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.06
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.14
316(a)(l)(A) . . . . . . . . . . . . . . . . . . . . . . . .7.12(b)
(a)(l)(B) . . . . . . . . . . . . . . . . . . . . . . . .7.13
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.08
317(a)(l). . . . . . . . . . . . . . . . . . . . . . . . . .7.03
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .7.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .12.03
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.07
- -------------------------
Note: This Cross-Reference Table shall not be deemed, for any
purpose, to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . 16
Section 1.03. Notices, etc., to Trustee, RIH, the Company, Casino
Control Commission and Director of Gaming
Enforcement.. . . . . . . . . . . . . . . . . . . . 18
Section 1.04. Notices to Noteholders; Waiver. . . . . . . . . . . 19
Section 1.05. Form and Contents of Documents Delivered to
Trustee.. . . . . . . . . . . . . . . . . . . . . . 20
Section 1.06. Compliance Certificates and Opinions. . . . . . . . 21
Section 1.07. Conflict with Trust Indenture Act.. . . . . . . . . 21
Section 1.08. Effect of Headings and Table of Contents. . . . . . 22
Section 1.09. Successors and Assigns. . . . . . . . . . . . . . . 22
Section 1.10. Separability Clause.. . . . . . . . . . . . . . . . 22
Section 1.11. Benefits of Indenture.. . . . . . . . . . . . . . . 22
Section 1.12. Governing Law.. . . . . . . . . . . . . . . . . . . 22
Section 1.13. Casino Control Act. . . . . . . . . . . . . . . . . 22
Section 1.14. General Application.. . . . . . . . . . . . . . . . 22
(i)
<PAGE>
Page
----
ARTICLE TWO
NOTE FORM
Section 2.01. Form Generally. . . . . . . . . . . . . . . . . . . 23
Section 2.02. Form of Notes.. . . . . . . . . . . . . . . . . . . 24
Section 2.03. Form of Trustee's Certificate of Authentication.. . 28
Section 2.04. Form of the Guaranty. . . . . . . . . . . . . . . . 29
ARTICLE THREE
THE NOTES
Section 3.01. General Title.. . . . . . . . . . . . . . . . . . . 29
Section 3.02. Form and Denominations. . . . . . . . . . . . . . . 30
Section 3.03. Execution, Authentication, Delivery and
Dating. . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.04. Temporary Notes.. . . . . . . . . . . . . . . . . . 30
Section 3.05. Registration, Transfer and Exchange.. . . . . . . . 31
Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes.. . . . 32
Section 3.07. Payment of Interest on Notes; Interest Rights
Preserved.. . . . . . . . . . . . . . . . . . . . . 33
Section 3.08. Persons Deemed Owners.. . . . . . . . . . . . . . . 34
Section 3.09. Cancellation. . . . . . . . . . . . . . . . . . . . 34
Section 3.10. Term and Form.. . . . . . . . . . . . . . . . . . . 35
Section 3.11. Exchangeability.. . . . . . . . . . . . . . . . . . 35
Section 3.12. Redemption. . . . . . . . . . . . . . . . . . . . . 35
Section 3.13. Authentication and Delivery of Original
Issue.. . . . . . . . . . . . . . . . . . . . . . . 36
(ii)
<PAGE>
Page
----
ARTICLE FOUR
GUARANTY
Section 4.01. Guaranty. . . . . . . . . . . . . . . . . . . . . . 36
Section 4.02. Execution and Delivery of Guaranty. . . . . . . . . 37
Section 4.03 Mortgage Securing Guaranty. . . . . . . . . . . . . 38
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. Payment of Indebtedness; Satisfaction and
Discharge of Indenture. . . . . . . . . . . . . . . 39
Section 5.02. Application of Deposited Money. . . . . . . . . . . 40
Section 5.03. Repayment to the Company. . . . . . . . . . . . . . 40
ARTICLE SIX
SECURITY
Section 6.01. Assignment Agreement. . . . . . . . . . . . . . . . 41
Section 6.02. Recording, Etc. . . . . . . . . . . . . . . . . . . 42
Section 6.03. Custody of Mortgage Documents.. . . . . . . . . . . 43
Section 6.04. Suits to Protect the Trust Estate and
Mortgage Documents. . . . . . . . . . . . . . . . . 44
ARTICLE SEVEN
REMEDIES
Section 7.01. Events of Default.. . . . . . . . . . . . . . . . . 44
Section 7.02. Acceleration of Maturity; Rescission and
Annulment.. . . . . . . . . . . . . . . . . . . . . 48
Section 7.03. Covenant to Pay Trustee Amounts Due on Notes
and Right of Trustee to Judgment. . . . . . . . . . 49
Section 7.04. Trustee May File Proofs of Claim. . . . . . . . . . 50
Section 7.05. Trustee May Enforce Claims Without Possession
of Notes. . . . . . . . . . . . . . . . . . . . . . 51
(iii)
<PAGE>
Page
----
Section 7.06. Application of Money Collected. . . . . . . . . . . 51
Section 7.07. Limitation on Suits.. . . . . . . . . . . . . . . . 52
Section 7.08. Unconditional Right of Noteholders to Receive
Principal and Interest. . . . . . . . . . . . . . . 53
Section 7.09. Restoration of Rights and Remedies. . . . . . . . . 53
Section 7.10. Rights and Remedies Cumulative. . . . . . . . . . . 53
Section 7.11. Delay or Omission Not Waiver. . . . . . . . . . . . 54
Section 7.12. Other Rights. . . . . . . . . . . . . . . . . . . . 54
Section 7.13. Waiver of Past Defaults.. . . . . . . . . . . . . . 54
Section 7.14. Undertaking for Costs.. . . . . . . . . . . . . . . 55
Section 7.15. Enforcement.. . . . . . . . . . . . . . . . . . . . 55
Section 7.16. Management of Casino-Hotel. . . . . . . . . . . . . 56
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. Certain Duties and Responsibilities. . . . . . . 56
Section 8.02. Notice of Defaults.. . . . . . . . . . . . . . . 58
Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . 58
Section 8.04. Not Responsible for Recitals or Issuance of
Notes or Application of Proceeds.. . . . . . . . 60
Section 8.05. May Hold Notes.. . . . . . . . . . . . . . . . . 60
Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . 60
Section 8.07. Compensation and Reimbursement.. . . . . . . . . 60
Section 8.08. Disqualification; Conflicting Interests. . . . . 61
Section 8.09. Corporate Trustee Required; Eligibility. . . . . 61
(iv)
<PAGE>
Page
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Section 8.10. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . 62
Section 8.11. Acceptance of Appointment by Successor.. . . . . 64
Section 8.12. Merger, Conversion, Consolidation or
Succession to Business.. . . . . . . . . . . . . 64
Section 8.13. Preferential Collection of Claims Against
Company. . . . . . . . . . . . . . . . . . . . . 64
Section 8.14. Co-trustees and Separate Trustees. . . . . . . . 65
Section 8.15. Appointment of Authenticating Agent. . . . . . . 66
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 9.01. Company to Furnish Trustee Semi-Annual Lists
of Noteholders.. . . . . . . . . . . . . . . . . 67
Section 9.02. Preservation of Information; Communications
to Noteholders.. . . . . . . . . . . . . . . . . 68
Section 9.03. Reports by Trustee.. . . . . . . . . . . . . . . 68
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 10.01. Consolidation, Merger, Conveyance or Transfer
Only on Certain Terms. . . . . . . . . . . . . . 70
Section 10.02. Successor Entity Substituted.. . . . . . . . . . 72
Section 10.03. Successor Management of Casino-Hotel.. . . . . . 73
Section 10.04. Limitation on Sales of Trust Estate. . . . . . . 73
Section 10.05 RIH Sale . . . . . . . . . . . . . . . . . . . . 73
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. Without Consent of Noteholders.. . . . . . . . . 73
Section 11.02. With Consent of Noteholders. . . . . . . . . . . 74
(v)
<PAGE>
Page
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Section 11.03. Execution of Amendments and Supplements. . . . . 76
Section 11.04. Effect of Amendment or Supplement. . . . . . . . 76
Section 11.05. Conformity with Trust Indenture Act. . . . . . . 76
Section 11.06. Reference in Notes to Amendment or Supplement. . 76
ARTICLE TWELVE
COVENANTS
Section 12.01. Payment of Principal and Interest. . . . . . . . 77
Section 12.02. Maintenance of Office or Agency. . . . . . . . . 77
Section 12.03. Money for Security Payments to Be Held in Trust. 78
Section 12.04. Corporate Existence. . . . . . . . . . . . . . . 79
Section 12.05. To Keep Books; Inspection by Trustee.. . . . . . 80
Section 12.06. Reports and Compliance Certificates. . . . . . . 80
Section 12.07. Limitations and Dividends and Restricted
Payments.. . . . . . . . . . . . . . . . . . . . 82
Section 12.08. Limitations on Additional Indebtedness and
Issuance of Notes. . . . . . . . . . . . . . . . 83
Section 12.09. Limitations on Repayment of Subordinated
Indebtedness.. . . . . . . . . . . . . . . . . . 84
Section 12.10. Limitation on Certain Transactions.. . . . . . . 85
Section 12.11. Restriction of Activities. . . . . . . . . . . . 85
Section 12.12. Limitation on Subsidiaries Consolidated Group. . 86
Section 12.13. Limitations on Liens.. . . . . . . . . . . . . . 86
Section 12.14. Compliance with Laws.. . . . . . . . . . . . . . 87
Section 12.15. Payment of Taxes and Other Claims. . . . . . . . 87
Section 12.16. Maintenance of Properties. . . . . . . . . . . . 87
(vi)
<PAGE>
Page
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Section 12.17. Insurance. . . . . . . . . . . . . . . . . . . . 88
Section 12.18. Waiver of Stay, Extension or Usury Laws. . . . . 88
Section 12.19. Appointment to Fill a Vacancy in Office of
Trustee. . . . . . . . . . . . . . . . . . . . . 89
Section 12.20. Validity of Liens. . . . . . . . . . . . . . . . 89
Section 12.21. Transactions with Stockholders and Affiliates. . 89
ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. General Applicability of Article.. . . . . . . . 90
Section 13.02. Election to Redeem; Notice to Trustee. . . . . . 90
Section 13.03. Selection by Trustee of Notes to Be Redeemed.. . 90
Section 13.04. Notice of Redemption.. . . . . . . . . . . . . . 90
Section 13.05. Deposit of Redemption Price. . . . . . . . . . . 91
Section 13.06. Notes Payable on Redemption Date.. . . . . . . . 91
Section 13.07. Notes Redeemed in Part.. . . . . . . . . . . . . 92
Section 13.08. Redemption Pursuant to Casino Control Act. . . . 92
ARTICLE FOURTEEN
DEFEASANCE
Section 14.01. Discharge of the Indenture and Defeasance of
the Securities.. . . . . . . . . . . . . . . . . 93
Section 14.02. Application of Deposited Money.. . . . . . . . . 94
Section 14.03. Repayment to the Company.. . . . . . . . . . . . 94
(vii)
<PAGE>
TABLE OF EXHIBITS
-----------------
Exhibits Document
-------- --------
Exhibit A RIH Promissory Note
Exhibit B Assignment Agreement from Resorts
International Hotel Financing, Inc.
Exhibit C Subordination Provisions
Exhibit D Mortgage securing RIH Promissory Note
between Resorts International Hotel, Inc. and
Resorts International Hotel Financing, Inc.
Exhibit E Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
Exhibit F Mortgage securing Guaranty of Mortgage
Notes between Resorts International Hotel,
Inc. and State Street Bank and Trust Company
of Connecticut, National Association, as Trustee
Exhibit G Intercreditor Agreement Terms
<PAGE>
INDENTURE
THIS INDENTURE dated as of [ ], 1994, among
Resorts International Hotel Financing, Inc., a Delaware corporation (the
"Company"), Resorts International Hotel, Inc., a New Jersey corporation ("RIH"),
and State Street Bank and Trust Company of Connecticut, National Association, a
national banking association, as trustee (together with its successors as such
trustee, the "Trustee").
PRELIMINARY STATEMENT
The capitalized terms used in this Indenture which are not otherwise
defined herein have the meanings set forth in Article I.
The Company has duly authorized the creation, execution and
delivery of its 11% Mortgage Notes due 2003 (the "Notes"), issuable in
accordance with the terms hereof, and RIH has duly authorized the guaranty of
the Company's obligations under this Indenture, and, to secure the Notes and to
provide therefor, each of the Company and RIH has duly authorized the execution
and delivery of this Indenture.
All things have been done which are necessary to make the Notes,
when executed by the Company and authenticated and delivered by the
Trustee hereunder and duly issued by the Company, the valid obligations of the
Company, and to constitute this Indenture a valid agreement of the Company and
RIH, in accordance with the terms of the Notes and this Indenture.
THEREFORE, for and in consideration of the premises and the
purchase or acceptance of the Notes by the Holders thereof, RIH and the Company
do hereby covenant and agree to and with the Trustee, for the Ratable Benefit of
all Holders of the Notes thereto appertaining, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
<PAGE>
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as
well as the singular;
(b) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein,
have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have
the meanings assigned to them, and all computations herein
provided for shall be made, in accordance with GAAP consistently
applied; and
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision.
"ACCOUNTANT" means a Person engaged in the practice of accounting
who (except as otherwise expressly provided in this Indenture) may
be employed by or affiliated with the Company or RIH.
"ACT" when used with respect to any Noteholder or Noteholders has
the meaning stated in Section 1.02(a).
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, and, with respect to any specified natural
Person, any other Person having a relationship by blood, marriage or adoption
not more remote than first cousin with such specified Person. For purposes of
this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be
required under the TIA, the term "Affiliate" shall not include, with respect to
the Company or RIH, any of Fidelity Management & Research Company,
TCW Special Credits or funds or accounts managed or advised by either of them.
"AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured
by an After-Acquired Fee Mortgage.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section
2.07 of the Mortgage.
"ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of
the date hereof, providing
<PAGE>
for the assignment of the RIH Promissory Note
and other Mortgage Documents to the Trustee by the Company, and acknowledgment
thereof by RIH, a copy of which is attached hereto as Exhibit B.
"ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and
Rents dated as of the date hereof, from RIH to the Company securing the RIH
Promissory Note, a copy of which is attached hereto as Exhibit E.
"AUTHENTICATING AGENT" means any Person named as Authenticating
Agent for the Notes in accordance with the provisions of this Indenture until a
successor Authenticating Agent becomes such pursuant thereto, and thereafter
Authenticating Agent shall mean such successor.
"AUTHORIZED SIGNATURE" means the signatures of the chairman of the
board, the president or a Vice President and of the treasurer, an assistant
treasurer, the controller, an assistant controller, the secretary or an
assistant secretary of the Company or RIH, as the case may be.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person,
any lease of any property (whether real, personal or mixed) by such
Person as lessee which, in conformity with GAAP consistently applied, is
accounted for as a capitalized lease on the balance sheet of such Person.
"CASE" means, collectively, the bankruptcy cases involving RII and
GRI in the United States Bankruptcy Court for the District of Delaware.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture,
fixtures and equipment at any time contained therein.
"CASINO CONTROL ACT" means the New Jersey Casino Control Act and
the regulations promulgated thereunder, as amended.
"CASINO CONTROL COMMISSION" means the New Jersey Casino Control
Commission, as from time to time constituted, or if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties theretofore assigned to it, then the body performing such duties at such
time.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01.
3
<PAGE>
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or
if at any time after the execution of this instrument such Commission is not
existing and performing the duties theretofore assigned to it under the TIA,
then the body performing such duties at such time.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor entity shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter, except to the extent otherwise contemplated by Section 10.02,
"Company" shall mean such successor entity exclusively.
"COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean,
respectively, a written consent, order or request signed with an
Authorized Signature and delivered to the Trustee.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, an amount equal to the sum of (i) the consolidated net
income (or loss) of such Person for such period determined in accordance with
GAAP consistently applied, excluding interest income, interest expense and gains
or losses from extraordinary or nonrecurring items, plus (ii) all amounts
deducted in computing such consolidated net income (or loss) in respect of
depreciation and amortization, plus (iii) non-cash charges arising from the
reduction of CRDA Deposits to market value, minus (iv) taxes based upon or
measured by income which are payable in cash, minus (v) CRDA Deposits.
"CONSOLIDATED INTEREST CHARGES" means, with respect to any Person
for any period, the consolidated interest expense (not including
the non-cash amortization of discount on the original issuance of (a) the RIH
Promissory Note, (b) any intercompany indebtedness of RIH issued in
connection with Indebtedness represented by the Junior Mortgage Facility and (c)
any intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Working Capital Facility), whether payable in cash or in-kind
(and with respect to RIH, including, without limitation, the interest
paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii)
any intercompany indebtedness of RIH issued in connection with Indebtedness
represented by the Junior Mortgage Facility and (iii) any intercompany
indebtedness of RIH issued in connection with Indebtedness represented by the
Working Capital Facility), without deduction for interest income (other than
cash interest income received from RII in payment of its interest cost
on any Working Capital Facility), in each case for such Person and
4
<PAGE>
its consolidated Subsidiaries for such period determined in
accordance with GAAP consistently applied.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH
and its consolidated Subsidiaries for the immediately preceding four consecutive
fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated
Subsidiaries for such period.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, an amount equal to consolidated net income (or loss) of such Person for
such period determined in accordance with GAAP consistently applied, minus (a)
federal and state taxes based upon or measured by income which are payable in
cash, plus (b) non-cash charges arising from federal and state taxes based upon
or measured by income.
"CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the
Casino Reinvestment Development Authority in an amount equal to
1.25% of RIH's gross revenue in order to satisfy its investment
obligation pursuant to the Casino Control Act, and (b) the amounts
invested in qualified investments in lieu of any of the quarterly
deposits (or portion thereof) referred to in clause (a) above.
"CRDA DISPUTE" means the dispute existing on the date hereof
between RIH and the New Jersey Casino Reinvestment Development
Authority regarding CRDA Deposits and New Jersey Casino
Reinvestment Authority Notes, which dispute involves an amount
of approximately $30,000,000.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both,
would become an Event of Default.
"DEFAULTED INTEREST" has the meaning stated in Section 3.07.
"EFFECTIVE DATE" means the date on which the prepackaged plan of
reorganization of RII and GRI becomes effective.
"EVENT OF DEFAULT" has the meaning stated in Section 7.01. An
Event of Default shall "exist" if an Event of Default shall have
occurred and be continuing.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
5
<PAGE>
"FAIR MARKET VALUE" of any Notes means (a) the average of the
closing sales price of the Notes for the 30 trading days immediately prior to
the date of determination of such value on the largest national securities
exchange on which such Notes shall have traded on such trading days, or (b) if
no such sales of such Notes occurred during such 30-day period or if the Notes
are not so listed but are traded in the over-the-counter market with
quotations available in the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the average of the means between the "bid" and
"asked" prices on such national securities exchange or as quoted on NASDAQ, as
the case may be, during such 30-day period, or (c) if the Notes are not traded
on a national securities exchange or quoted on NASDAQ, the fair market
value of such Notes as of the date of determination as determined
by agreement of two nationally recognized Independent investment banking firms,
one to be chosen by the Company and the other by the Holder of the Notes being
valued, with the costs of each such firm being the responsibility of the Person
selecting such firm. If such firms cannot agree upon such fair market value,
such firms shall select a third nationally recognized Independent investment
banking firm, which shall determine such fair market value, the costs of such
third firm being shared equally by the Company and such Holder.
"F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01
of the Mortgage.
"GAAP" means United States generally accepted accounting
principles.
"GRI" means GGRI, Inc., a Delaware corporation.
"GROUND LEASES" has the meaning stated in Granting Clause Second of
the Mortgage.
"GUARANTY" means the guaranty contained in Article Four.
"GUARANTY MORTGAGE" means the Mortgage securing Guaranty of
Mortgage Notes dated as of the date hereof, between RIH, as
mortgagor, and the Trustee, as mortgagee, securing the Guaranty,
a copy of which is attached hereto as Exhibit F.
"HOTEL" means that portion of the Casino-Hotel not included within
the Casino.
"INDEBTEDNESS" means, as applied to any Person, without
duplication, any indebtedness, exclusive of deferred taxes,
(a) in respect of borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to a portoin
thereof); (b) evidenced by bonds,
6
<PAGE>
notes, debentures or similar instruments or letters of credit; (c) representing
the balance deferred and unpaid of the purchase price of any property, if and to
the extent such indebtedness would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP (but excluding trade accounts
payable arising in the ordinary course of business that are not overdue by more
than 90 days or are being contested by such Person in good faith); (d) any
Capitalized Lease Obligations (other than, with respect to RIH or the
Company, the Ground Leases) of such Person; and (e) Indebtedness of
others guaranteed by such Person, including, without limitation, every
obligation of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness, (ii) to purchase property, securities or services for the purpose
of assuring the holder of such Indebtedness of the payment of such Indebtedness,
or (iii) to maintain working capital, equity capital or other financial
sta tement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; PROVIDED,
HOWEVER, that the guaranty by any Person shall not include endorsements by such
Person for collection or deposit, in either case in the ordinary course of
business. The term "INDEBTEDNESS" does not include: (1) any of the types of
indebtedness described in clauses (a) through (e) above (inclusive) owed by the
Company to RIH or any of their Subsidiaries, by RIH to the Company or any of
their Subsidiaries or by any such Subsidiary to RIH, the Company or
any other such Subsidiary (including, without limitation, the RIH Promissory
Note and the RIH Junior Promissory Note); (2) the Guaranty, the
Junior Guaranty and the Working Capital Facility Guaranty; (3) matters relating
to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes
or the CRDA Deposits; and (4) any payments made by the Company or RIH under
the RII Management Agreement, the RII Tax Sharing Agreement or the Services
Agreement.
"INDENTURE" means this instrument as originally executed or as it
may from time to time be supplemented, modified or amended by one or more
indentures or other instruments supplemental hereto entered into pursuant to the
applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Company or
in any other obligor upon the Notes or in any Affiliate of the Company or of
such other obligor and (c) is not connected with the Company or such other
obligor or any Affiliate of the Company or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or person
7
<PAGE>
performing similar functions. Whenever it is herein provided
that any Independent Person's opinion or certificate shall
be furnished to the Trustee, such Person shall be appointed
by a Company Order, and such opinion or certificate shall state
that the signer has read this definition and that the signer is
Independent within the meaning hereof. A Person who is performing
or who has performed services as an independent contractor to any
specified Person shall not be considered not Independent merely by
reason of the fact that such Person is or has performed such
services.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated
as of the date hereof, among the Trustee, the trustee under the
Junior Mortgage Note Indenture and such other parties that may
from time to time become a party thereto, which shall incorporate
the terms set forth in Exhibit G.
"INTEREST PAYMENT DATE" means the date on which an installment of
interest on the Notes is due and payable.
"JUNIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of
Leases and Rents dated as of the date hereof, from RIH to the
Company securing the RIH Junior Promissory Note.
"JUNIOR GUARANTY" means any guaranty of the Junior Mortgage
Facility by RIH, including, without limitation, the guaranty of
the Junior Mortgage Notes due 2004 by RIH contained in Article Four
of the Junior Mortgage Note Indenture.
"JUNIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty
of Junior Mortgage Notes dated as of the date hereof, between RIH,
as mortgagor, and U.S. Trust Company, N.A., as mortgagee, securing the Junior
Guaranty.
"JUNIOR MORTGAGE" means the Mortgage securing the RIH Junior
Promissory Note dated as of the date hereof, between the Company,
as successor mortgagee, and RIH, as mortgagor.
"JUNIOR MORTGAGE DOCUMENTS" means (a) the Junior Mortgage, the
Junior Guaranty Mortgage, the RIH Junior Promissory Note, the
Junior Assignment of Leases and Rents and any other security
document to which either RIH or the Company is a party relating to
the Junior Mortgage Notes, which is executed and delivered pursuant
to or in connection with the Junior Mortgage, the Junior Guaranty
Mortgage or the Junior Assignment Agreement, and (b) any mortgage,
deed of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of operating assets
8
<PAGE>
and any other security document to which either RIH or the
Company is a party relating to the Junior Mortgage Facility.
"JUNIOR MORTGAGE FACILITY" means the Junior Mortgage Notes and any
secured or unsecured facility or facilities entered into by RIH or
the Company providing for the making of loans to RIH or the Company
on a revolving or term basis, or the issuance of notes, debentures
or bonds by RIH or the Company, as such agreement, indenture or
instrument may be amended, supplemented or modified from time to
time, or any refinancing thereof, in an aggregate principal amount
up to $35,000,000 plus additional notes, debentures or bonds issued
in payment of interest accrued on outstanding notes, debentures or
bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if any, securing the Junior
Mortgage Facility shall be PARI PASSU with the lien of the Junior
Mortgage and the Junior Guaranty Mortgage. The term "JUNIOR
MORTGAGE FACILITY" does not include the Junior Guaranty.
"JUNIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of
the date hereof, among the Company, RIH and U.S. Trust Company of
California, N.A., as trustee, pursuant to which the
Junior Mortgage Notes were issued, as originally executed or as it
may from time to time be supplemented, modified or amended by one
or more indentures or other instruments supplemental thereto
entered pursuant to the applicable provisions thereof.
"JUNIOR MORTGAGE NOTES" means the 11.375% Junior Mortgage Notes due
2004 of the Company issued pursuant to the Junior Mortgage Note
Indenture, including, without limitation, any Additional Notes (as
defined in the Junior Mortgage Note Indenture).
"LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the
Mortgage.
"MATURITY" when used with respect to any Note means the date on
which the principal (or any portion thereof) of such Note becomes
due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration or call for
redemption or otherwise.
"MORTGAGE" means the Mortgage securing the RIH Promissory
Note dated as of the date hereof, between the Company, as successor
mortgagee, and RIH, as mortgagor.
"MORTGAGE DEBT" means, at any point in time, the RIH
Promissory Note, the RIH Junior Promissory Note and any
9
<PAGE>
secured Indebtedness outstanding under any Working Capital Facility.
"MORTGAGE DOCUMENTS" means the Mortgage, the Guaranty Mortgage, the
RIH Promissory Note, the Assignment of Leases and Rents and
any other security document to which either RIH or the Company is a
party relating to the Notes, which is executed and delivered pursuant to or in
connection with the Mortgage, the Guaranty Mortgage or the Assignment Agreement.
"NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a).
"NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall
mean bonds issued by the Casino Reinvestment Development Authority,
a public authority created under the Casino Control Act.
"NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in
connection with the acquisition, purchase, improvement or
development of property or assets (other than the Trust Estate)
used by the Company, RIH or any Subsidiary of RIH or the Company to
engage in the casino business, the hotel business or related or
ancillary business or purpose and which is secured only by such
assets and without recourse to RIH, the Company or any Subsidiary
of RIH or the Company or the Trust Estate for such indebtedness.
"NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is
registered in the Note Register.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
stated in Section 3.05.
"NOTES" has the meaning stated in the Preliminary Statement of this
instrument and more particularly includes any Note authenticated
and delivered hereunder. The term "Notes" does not include the
Guaranty.
"OFFICER" of the Company or RIH means any Person authorized to
execute an Authorized Signature.
"OFFICERS' CERTIFICATE" delivered by the Company or RIH means a
certificate signed with an Authorized Signature and delivered to
the Trustee. Whenever this Indenture requires that an Officers'
Certificate be signed also by an Accountant or other expert, such
Accountant or other expert may (except as otherwise expressly
provided in this Indenture) be in the general employ of the
Company or RIH.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in
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this Indenture) be an employee of the Company or RIH. Unless otherwise
specifically provided in this Indenture, such counsel may rely as to any
statement of facts not personally known to such counsel and relating to
such opinion on an Officers' Certificate, to the extent not rejected by
the Trustee and its counsel (which rejection shall not be unreasonably
given).
"OUTSTANDING" when used with respect to Notes means, as of the date
of determination, all Notes theretofore authenticated and delivered
under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(b) Notes for whose payment or redemption money in the
necessary amount has been theretofore deposited with the
Trustee or any Paying Agent in trust for the Holders of such
Notes;
(c) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered under this Indenture;
and
(d) Notes alleged to have been destroyed, lost or stolen
which have been paid as provided in Section 3.06;
PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of Notes Outstanding have given any
request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor
upon the Notes or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding. In
determining whether the Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent
or waiver, only Notes which the Trustee actually knows to be so
owned shall be so disregarded.
"OUTSTANDING AMOUNT" of any Indebtedness at any time means the
principal amount outstanding of such Indebtedness at such time.
"PAYING AGENT" means any Person now or hereafter authorized by the
Company to pay the principal of or interest on any Notes on behalf
of the Company.
"PERMITS" has the meaning stated in Section 1.01 of the Mortgage.
"PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
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"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or any other entity or government or any agency or
political subdivision thereof.
"PLACE OF PAYMENT" when used with respect to the Notes means a city
or any political subdivision thereof in which the Company is by
this Indenture required to maintain an office or agency for the
payment of the principal of or interest on the Notes.
"PLAN" means the Plan of Reorganization of RII and GRI dated
[ ], 1994.
"PREDECESSOR NOTES" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for purposes of this
definition, any Note authenticated and delivered under Section 3.06
in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the lost, destroyed or stolen Note.
"PREMISES" has the meaning stated in Granting Clause Third of the
Mortgage.
"RATABLE BENEFIT" means, for any class or classes of Indebtedness
at any time, in proportion to the total Outstanding Amount of such
class or classes held by each holder thereof at such time.
"REDEMPTION DATE" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to this
Indenture.
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"REDEMPTION PRICE" when used with respect to any Note to be
redeemed means the price at which it is to be redeemed pursuant
to this Indenture. It does not include installments of interest
due on or before the Redemption Date.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Notes means the date specified in the
provisions of this Indenture.
"RESPONSIBLE OFFICER" means any Vice President, any Assistant
Vice President or any other officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"RESTRICTED PAYMENT" means (a) any declaration or payment of any
dividend or the making of any distribution to holders of capital
stock of RIH or the Company or any Subsidiary of RIH or the Company
in respect of such capital stock (other than to RIH or the Company
or a direct or indirect wholly owned Subsidiary of RIH or the
Company), (b) any purchase, redemption or other acquisition or
retirement for value of any capital stock (or warrants, rights or
options to acquire any capital stock or Indebtedness convertible
into or exchangeable for any capital stock) of RIH or the Company
or any Subsidiary of RIH or the Company (other than purchases,
redemptions, acquisitions or retirement solely from RIH or the
Company or a direct or indirect wholly owned Subsidiary of RIH or
the Company); PROVIDED, HOWEVER, that any such purchase, redemption
or other acquisition or retirement that is required by the Casino
Control Commission or under the Casino Control Act shall not
constitute a Restricted Payment. The term "Restricted Payment"
also shall not include any loan or advance to RII of all or any
portion of the proceeds of the Indebtedness represented by the
Working Capital Facility.
"RIH" means the person named as "RIH" in the first paragraph of
this instrument until a successor entity shall have become such
pursuant to the applicable provisions of the Indenture, and
thereafter, except to the extent otherwise
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contemplated by Section 10.02, "RIH" shall mean such successor entity
exclusively.
"RIH JUNIOR PROMISSORY NOTE" means, collectively, the secured
junior promissory note, dated the date hereof, made by RIH in the
principal amount of $35,000,000, plus any additional junior
promissory notes, issued in connection with the payment of
interest accrued on outstanding Junior Mortgage Notes, payable to
the order of the Company, a copy of which is attached to the Junior
Mortgage Note Indenture as Exhibit A.
"RIH SALE" means (a) a consolidation, combination or merger
involving RIH and any other Person, (b) a sale, assignment, conveyance
or transfer or RIH's interest in the Trust Estate, substantially as an
entirety, to any other Person or group of Persons in one transaction or a
series of related transactions, or (c) any transaction as a result of
which RIH ceases to be a direct or indirect wholly owned Subsidiary of
RII; provided, however, that nay of the transactions described in clauses
(a), (b), and (c) above shall not constitute an RIH Sale if the other
party or parties to the transaction consists of only one or more of the
following Persons: the Company provided, further, however, that
notwithstanding any other provision of this definition, if the primary
effect of any of the aforesaid transactions is the redemption of the Notes,
then such transaction shall not be considered to be a RIH Sale.
"RIH PROMISSORY NOTE" means the secured promissory
note, amended and restated as of the date hereof, made by RIH in the principal
amount of $125,000,000 payable to the order of the Company, a copy of which
is attached hereto as Exhibit A.
"RIHF SENIOR FACILITY" means the senior secured note facility
contemplated by the purchase agreement dated as of the date
hereof, among the Company, RIH, RII and funds managed by Fidelity
Management and Research Company, which allows the Company to borrow
up to $20,000,000 in aggregate principal amount through the
issuance of RIHF Senior Facility Notes. The term "RIHF SENIOR
FACILITY" does not include the Working Capital Facility Guaranty.
"RIHF SENIOR FACILITY NOTES" means, collectively, the notes
executed and delivered by the Company under the RIHF Senior
Facility.
"RII" means Resorts International, Inc., a Delaware corporation.
"RII MANAGEMENT CONTRACT" means the Management Contract dated as of
the date hereof, between RII and RIH
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pursuant to which RII provides certain management services to RIH for an
annual fee of 3% of the gross revenues of RIH.
"RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated
as of the date hereof between RII and RIH pursuant to which (i) RIH
will not make any payments to RII or any other Affiliate in respect
of taxes, other than to reimburse RII for any cash payments
actually made by RII in respect of any federal, state or local
income or alternative minimum taxes arising from the earnings or
operations of RIH; PROVIDED, HOWEVER, that RIH shall not be
required to reimburse RII for cash payments in respect of
federal, state or local income or alternative minimum taxes that
would not have been owed but for the reduction, if any, of the
amount of the consolidated net operating loss carryforwards or
consolidated current losses of the affiliated group of which RII
is a common parent which resulted from the inclusion in the
consolidated return filed for such group for any taxable year
ending after the Effective Date of the income of any entity other
than RIH, other than income directly attributable to the
consummation of the Plan, including but not limited to the
transfer of the stock of RIB (as defined in the Plan) and the
assets of the U.S. Paradise Island Subsidiaries (as defined in the
Plan), and (ii) RIH will be entitled to any refund (plus the
interest thereon) of any taxes for which RIH is required to
reimburse RII.
"SERVICES AGREEMENT" means the Services Agreement dated as of
September 17, 1992, between RII, RIH and The Griffin Group, Inc.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on
Notes means a date fixed by the Trustee pursuant to Section 3.07.
"STATED MATURITY" when used with respect to any Note means the date
specified in such Note as the fixed date on which the principal of
such Note is due and payable.
"SUBSIDIARY" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly,
by such Person or one or more Subsidiaries of such Person.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of
1939, as amended.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this
Indenture, and thereafter Trustee shall mean such successor
Trustee.
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"TRUST ESTATE" has the meaning stated in the Granting Clauses to
the Mortgage.
"U.S. GOVERNMENT OBLIGATIONS" has the meaning stated in Section
14.01.
"U.S. LEGAL TENDER" means such coin or currency of the United
States of America as at the time of payment shall be legal tender
for the payment of public and private debts, PROVIDED that for
purposes of Article Fourteen, U.S. Legal Tender includes wire
transfer payable in U.S. Legal Tender.
"VICE PRESIDENT" when used with respect to the Company, RIH or the
Trustee means any vice president, whether or not designated by a
number or a word added to the title.
"WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the
RIHF Senior Facility Notes issued thereunder) and any other secured
or unsecured facility or facilities entered into by RIH and/or the
Company providing for the making of working capital loans to RIH or
the Company (with RII [and GRI] as a guarantor[s] thereunder) on a revolving
or term basis, or the issuance of notes, debentures or bonds
by RIH, the Company or RII, as such agreement may be amended,
supplemented or modified from time to time, or any refinancing
thereof, in an aggregate principal amount up to $20,000,000;
PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if any, securing the Working
Capital Facility may be senior to the lien of the Mortgage, the
Guaranty Mortgage, the Junior Mortgage and the Junior Guaranty
Mortgage. The term "WORKING CAPITAL FACILITY" does not include
the Working Capital Facility Guaranty.
"WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage,
deed of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of operating
assets and any other security document to which either RIH or the
Company is a party relating to the Working Capital Facility.
"WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the
Working Capital Facility by RIH, including, without limitation,
the guaranty of the RIHF Senior Facility Notes.
Section 1.02. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Noteholders may be embodied
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in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Noteholders signing such instrument
or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Company
and (subject to Section 8.01(c)) in favor of the Trustee, if made in
the manner provided in this Section 1.02.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness
of such execution or by the certificate of any notary public or
other officer authorized by law to take acknowledgments of deeds,
certifying that the individual
signing such instrument or writing acknowledged to him the execution
thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or
partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The fact and date of execution of any such instrument or
writing and the authority of any Person executing the same may also
be proved in any other manner which the Trustee deems sufficient; and
the Trustee may in any instance require further proof with respect
to any of the matters referred to in this Section 1.02.
(d) The ownership of Notes shall be proved by the Note Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Note shall bind
every future Holder of the same Note and the Holder of every Note
issued upon the transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Note.
(f) The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holder of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this
Indenture to be given or taken by holders of Notes. With regard
to any record date set pursuant to this
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Section 1.02(f) the holders of Outstanding Notes on such record date (or their
duly appointed agents), and only such Persons, shall be entitled to give or
take the relevant action, whether or not such Persons remain holders
after such record date.
(g) Until a waiver or consent becomes effective, such waiver or
consent by a Holder is a continuing waiver or consent by the
Holder and every subsequent Holder of a Note or portion of a Note
that evidences the same debt as the consenting Holder's Note, even
if notation of the waiver or consent is not made on any Note.
However, any such Holder or subsequent Holder may, until such
waiver or consent becomes effective, revoke the waiver or consent
as to his Note or portion of his Note. Such revocation shall be
effective only if the Trustee receives the notice of such
revocation before the date on which the waiver or consent has
become effective.
Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH, THE COMPANY, CASINO
CONTROL COMMISSION AND DIRECTOR OF GAMING ENFORCEMENT.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with, the Company,
RIH, the Trustee, the Casino Control Commission or the Director of
the Division of Gaming Enforcement be deemed given when either
(i) delivered by hand or (ii) two days after sending by registered
or certified mail, postage prepaid, in either case, addressed as follows:
To the Company:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
To RIH:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
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To the Trustee:
State Street Bank and Trust Company of Connecticut,
National Association
750 Main Street
Hartford, Connecticut 06103
Attn.: Corporate Trust Department
To Casino Control Commission:
New Jersey Casino Control Commission
Arcade Building
Tennessee Avenue & Boardwalk
Atlantic City, New Jersey 08401
Attn.: Chairman
To Director of Division of Gaming Enforcement:
New Jersey Division of Gaming Enforcement
140 E. Front Street
CN 047
Trenton, New Jersey 08625
Attn.: Director
(b) By notice to the Company, RIH, the Trustee, Casino Control
Commission and/or Director of the Division of Gaming Enforcement, given
as provided above, any party may designate additional or substitute
addresses for such notices, which, notwithstanding Section 1.03(a),
shall be deemed given when received.
Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER.
Where this Indenture provides for notice to Noteholders of any
event, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder of such Notes, at the address of
such Holder as it appears in the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for
the provision of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular
Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event,
and such waiver shall be the equivalent of such notice. Waivers of
notice by Noteholders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
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In case, by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impracticable to give such
notice by mail, then such notification may be given by any other
method that the Trustee shall consider to be reasonable and shall
be deemed to be a sufficient giving of such notice for every
purpose hereunder.
Section 1.05. FORM AND CONTENTS OF
DOCUMENTS DELIVERED TO TRUSTEE.
Whenever several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other
such Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Company or of RIH
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an Officer
or Officers of the Company or RIH stating that the information with
respect to such factual matters is in the possession of the Company
or RIH, unless such counsel knows that the certificate or opinion
or representations with respect to such matters are erroneous. If
appropriate to the matter being opined upon and to the extent not
prohibited by the TIA, any Opinion of Counsel may be subject to
rights of creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the
Company or RIH shall deliver any document as a condition of the
granting of such application, or as evidence of the Company's or
RIH's compliance with any term hereof, it is intended that the
truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or
report (as the case may be), of the facts and opinions stated in
such document shall in such case be conditions precedent to the
right of the Company or
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RIH to have such application granted or to the sufficiency of such certificate
or report.
Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company or RIH to the
Trustee to take any action under any provision of this Indenture
or any Mortgage Document, the Company or RIH shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture or such Mortgage Document relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any,
have been complied with, except that in the case of any such
application or request as to which the furnishing of such
documents is specifically required by any provision of this
Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture or any Mortgage
Document shall include:
(a) a statement that each individual signing such
certificate or opinion has read such condition or covenant
and the definitions herein relating thereto;
(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 each such
individual, he has made such examination or investigation
as is necessary to enable him to express an informed opinion
as to whether or not such condition or covenant has been
complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied
with.
Section 1.07. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof or of the Mortgage Documents or the
Assignment Agreement limits, qualifies or conflicts with another
provision hereof or of the Mortgage Documents or the Assignment
Agreement which is required to be included herein or therein by
any of the provisions of the TIA, such required provision shall
control.
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Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and in the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 1.09. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company or
RIH shall, subject to Section 10.02, bind its successors and
assigns, whether so expressed or not.
Section 1.10. SEPARABILITY CLAUSE.
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 1.11. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person other than the parties hereto and their
successors hereunder, any separate trustee or co-trustee appointed
under Section 8.14 and the Holders of Notes, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.12. GOVERNING LAW.
This Indenture and each Note shall be deemed to be a contract under
the laws of the State of New York and shall be construed in
accordance with and governed by the internal laws of the State of
New York.
Section 1.13. CASINO CONTROL ACT.
Each of the provisions of this Indenture is subject to and shall be
enforced in compliance with the provisions of the Casino Control
Act, unless such provisions are in conflict with the TIA, in which
case the TIA shall control.
Section 1.14. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject
in each instance to the giving of any notice and the expiration of
any grace period provided for in Section 7.01 as a condition to
such Default becoming an Event of Default, unless the TIA requires
otherwise, in which case the TIA shall control.
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(b) For the purposes of this Indenture, it is understood that an
event which does not materially diminish the value of the
Trustee's interest in the Trust Estate shall not be deemed an
impairment of security, as that phrase is used in this Indenture.
(c) This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company, other than the Mortgage and
the Guaranty Mortgage. Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.
(d) In the event of a conflict between any provision of this
Indenture and any provision of a Mortgage Document, the provision
of this Indenture shall prevail.
ARTICLE TWO
NOTE FORM
Section 2.01. FORM GENERALLY.
The Notes and the Trustee's certificate of authentication shall be
substantially in the forms set forth in this Article Two, with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and
may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange, or as may,
consistently herewith, be determined by the officers executing
such Notes as evidenced by their execution thereof. Any portion of
the text of any Note may be set forth on the reverse thereof.
The definitive Notes shall be printed, lithographed or engraved or
produced by any combination of these methods or produced in any
other manner permitted by the rules of any securities exchange on
which the Notes may be listed, all as determined by the officers
executing such Notes as evidenced by their execution thereof.
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Section 2.02. FORM OF NOTES.
The form of the Notes shall be substantially as follows:
[Face of Notes]
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
11% MORTGAGE NOTE DUE 2003
No.______________ $________________
Resorts International Hotel Financing, Inc., a Delaware corporation
(hereinafter called the "Company", which term includes any
successor entity under the Indenture referred to on the reverse),
for value received, hereby promises to pay to ______________, or registered
assigns, on September 15, 2003 the sum of __________ Dollars (or so much
thereof as shall not have been paid upon prior redemption) and to
pay interest (computed on the basis of a 360-day year of twelve
30-day months based on the actual number of days elapsed) thereon
from [ ], 1994 [the Effective Date], or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, semi-annually at March 15 and September 15 in each
year (commencing September 15, 1994), at the rate of 11% per annum,
until the principal hereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in said Indenture,
be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the Person
in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on a Special Record Date for
the payment of such defaulted interest to be fixed by the Trustee,
notice thereof being given to Noteholders not less than ten days
prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes of this series may be
listed and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture. The principal of and
interest on this Note shall be payable at the corporate trust
office of the Trustee, as defined on the reverse, or at an office
or agency of the Company in the Borough of Manhattan, City and
State of New York. All such payments shall be made in such coin or
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currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
At the option of the Company, payment of interest may be made by
check mailed to the address of the Person entitled thereto as such
address shall appear on the Note Register.
Unless the certificate of authentication hereon has been executed
by the Trustee or the Authenticating Agent by manual signature,
this Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS
OF THE STATE OF NEW YORK AND SHALL BE CONSTRUE IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Dated: ______________________ By:________________________
Attest:______________________
[Back of Notes]
This Note is one of a duly authorized issue of Notes of the Company
designated as "11% Mortgage Notes due 2003" (the "Notes"),
issued under an Indenture dated as of __________ __, 1994 (the
"Indenture"), among the Company, Resorts International Hotel,
Inc., a New Jersey corporation, as guarantor ("RIH"), and State
Street Bank and Trust Company of Connecticut, National Association,
a national banking association, as Trustee (the "Trustee", which
term includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is
hereby made for a description of the nature and extent of the
security, the respective rights thereunder of the Holders of the
Notes, the Trustee and the Company and the terms upon which the
Notes are, and are to be, authenticated and delivered. Payment of
principal and interest (including interest on overdue principal)
and performance of all obligations under the Indenture is
guaranteed by RIH (the "Guaranty"). The Notes are secured by an assignment
of one or more secured senior promissory notes of RIH, which owns and
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operates the property known as Merv Griffin's
Resorts Casino Hotel, and of a mortgage on the Trust Estate made
by RIH (the "Mortgage"). Additionally, the Guaranty is secured by
a separate direct mortgage of the Trust Estate made by RIH to the
Trustee (the "Guaranty Mortgage"). All terms in this Note defined
in the Indenture shall have the same meaning herein as therein.
The lien of the Mortgage is pari passu with the lien of the
Guaranty Mortgage, junior to the lien securing payment of the
RIHF Senior Facility Notes and any other secured Working Capital
Facility and junior to the lien (if any) securing the Working
Capital Facility Guaranty.
The Notes may be redeemed at the option of the Company, as a whole
or from time to time in part, on or after the fifth anniversary of
the Effective Date on notice as provided in the Indenture, at par
together with interest accrued and unpaid thereon to the date fixed
for redemption. In the event of an RIH Sale, all the Notes shall
be redeemed by the Company, whether such RIH Sale occurs before, on
or after the fifth anniversary of the Effective Date, at par
together with interest, if any, accrued and unpaid thereon to the
Redemption Date; PROVIDED, HOWEVER, that such obligation of the
Company to redeem the Notes in the event of a proposed RIH Sale
shall cease to exist if the Holders of not less than 66-2/3% in
Outstanding Amount of the Outstanding Notes have consented to such
proposed RIH Sale.
Notwithstanding the foregoing, each Holder by accepting a Note
agrees that if the Casino Control Commission does not waive the
qualification requirement as to the Holder (whether the record
owner or beneficial owner) of this Note and requires that the
Holder be qualified under the Casino Control Act, then, in such
event, the Holder must qualify under the Casino Control Act. If
the Holder does not so qualify, the Holder must dispose of its
interest in this Note, within 30 days after the Company's receipt
of notice of such finding, or the Company may repurchase this Note
at the lower of the Holder's original cost and the Fair Market
Value of this Note, plus accrued interest thereon to the date of
such repurchase. Commencing on the date the Casino Control Commission
serves notice upon either RIH or the Company that any Holder is disqualified,
it shall be unlawful for any such disqualified Holder: (i) to receive any
dividends or interest upon this Note; (ii) to exercise, directly or through
any trustee or nominee, any right conferred by this Note;
or (iii) to receive any remuneration in any form from either the Company or
RIH for services rendered or otherwise.
It is provided in the Indenture that Notes of a denomination larger
than $1,000 may be redeemed in part ($1,000 or a multiple thereof)
and that upon any partial
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redemption of any such Note the same shall be surrendered in exchange
for one or more new Notes in authorized form for the unredeemed portion of
principal. Notes (or portions thereof as aforesaid) for whose redemption and
payment provision is made in accordance with the Indenture shall thereupon
cease to be entitled to the lien of the Indenture and the Mortgage
and shall cease to bear interest from and after the date fixed for
redemption.
If an Event of Default shall occur, the principal of the Notes and
all accrued and unpaid interest thereon may
become or be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereto and the modification of the rights and
obligations of the Company and the rights of the Holders of the
Notes under the Indenture at any time by the Company with the
consent of the Holders of a majority or 66-2/3%, as the case may
be, in aggregate Outstanding Amount of the Notes at the time
Outstanding affected by such modification. The Indenture also
contains provisions permitting the Holders of specified percentages
in Outstanding Amount of Notes at the time Outstanding on behalf of
the Holders of all the Notes to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of
any Note issued upon the transfer hereof or in exchange hereof or
in lieu hereof, in respect of anything done or offered to be done
by the Trustee in the Company in reliance thereon, whether or not
notation of such action is made upon this Note.
The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holders of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by the
Indenture to be given or taken by holders of Notes. With regard
to any such record date, the holders of Outstanding Notes on such
record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action,
whether or not such Persons remain holders after such record date.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal
of and interest on this Note at the times, places and rates, and in
the coin or currency, herein prescribed.
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As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable on the Note Register
of the Company, upon surrender of this Note for transfer at the
corporate trust office of the Trustee, or at an office or agency
of the Company in the Borough of Manhattan, City and State of New
York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Note Registrar
duly executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
The Notes are issuable only as registered Notes without coupons in
denominations of $1,000 and integral multiples thereof. As
provided in the Indenture, and subject to certain limitations
therein set forth, Notes are exchangeable for a like aggregate
principal amount of Notes of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any transfer or exchange
hereinbefore referred to, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is
registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or
not this Note be overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary.
Section 2.03. FORM OF TRUSTEE'S
CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, as Trustee
By:__________________________
Authorized Signature
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Section 2.04. FORM OF THE GUARANTY.
The form of the Guaranty of RIH shall be substantially as follows
and shall appear on the reverse of each Note:
GUARANTY OF
RESORTS INTERNATIONAL HOTEL, INC.
For value received, Resorts International Hotel, Inc., a New Jersey
corporation, hereby unconditionally guarantees, as more fully set
forth in Article Four of the Indenture, to the Holder of this Note
the payment of the principal of and interest on this Note in the
amounts and at the time when due and interest on the overdue
principal and interest, if any, of this Note, if lawful, and the
payment or performance of all other obligations of the Company to
the Holder or the Trustee, all in accordance with and subject to
the terms and limitations of this Note and Article Four of the
Indenture, the foregoing Guaranty being a guaranty of payment and
not of collectibility and being absolute and in no way conditional
or contingent. This Guaranty will not become effective until the
Trustee or the Authenticating Agent signs the certificate of
authentication on such Note. As more fully described in the
Indenture, this Guaranty is secured by a mortgage of the Trust
Estate made by RIH to the Trustee.
RESORTS INTERNATIONAL HOTEL, INC.
Dated:__________________________ By:_______________________________
Attest:_________________________
ARTICLE THREE
THE NOTES
Section 3.01. GENERAL TITLE.
The general title of the Notes shall be "11% Mortgage Notes
due 2003".
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Section 3.02. FORM AND DENOMINATIONS.
The form of the Notes shall be as provided by the provisions of
this Indenture.
The Notes shall be issuable only in registered form and in such
denominations as shall be provided in the provisions of this
Indenture. The Notes shall be of the denominations of $1,000 and
any integral multiple thereof.
Section 3.03. EXECUTION, AUTHENTICATION,
DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its
chairman of the board, vice chairman of the board, its president,
or one of its Vice Presidents and attested to by an Officer of the
Company other than an Officer who has executed the Notes. The
signature of any of these Persons on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signatures of
individuals who were at any time Officers of the Company shall
bind the Company, notwithstanding that such individuals or any of
them shall have ceased to be such prior to the authentication and
delivery of such Notes.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication and the Trustee shall
authenticate and deliver such Notes as in this Indenture provided
and not otherwise. All Notes shall be dated the date of their
authentication.
No Note shall be secured by, or be entitled to any lien, right or
benefit under, this Indenture or be valid or obligatory for any
purpose, unless there appears on such Note a certificate of
authentication substantially in the form provided for herein,
executed by the Trustee or the Authenticating Agent by manual
signature, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 3.04. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Request the Trustee shall authenticate
and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any
denomination, substantially of the tenor of the definitive Notes
in lieu of which they are issued, in registered form, without
coupons, with provision for registration as to principal and with such
appropriate insertions, omissions, substitutions and other variations as
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the Officers executing such Notes may determine, as evidenced by their
execution of such Notes.
If temporary Notes are issued, the Company will cause definitive
Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be
exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company in a Place of Payment
therefor, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Company
shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Notes of
authorized denominations. Until so exchanged, temporary
Outstanding Notes shall in all respects be entitled to the
security and benefits of this Indenture.
Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE.
The Company shall cause to be kept at one of the offices or
agencies maintained by the Company as provided in Section 12.02 a
register (herein sometimes referred to as the "Note Register") in
which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Notes and
registration of transfers of Notes entitled to be registered or
transferred as herein provided. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers
of Notes as herein provided.
Upon surrender for transfer of any Note at the office or agency of
the Company in a Place of Payment therefor, the Company shall
execute and, upon request of the Company, the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one
or more new Notes of any authorized denominations and of a like aggregate
principal amount. The Trustee has no obligation to determine that any Note
has been properly transferred and may conclusively rely on instructions
given by the Company pursuant to this Section 3.05.
All Notes surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly canceled by the Trustee and
thereafter disposed of as directed by a Company Request.
All Notes issued upon any transfer or exchange of Notes shall be
the valid obligations of the Company, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as
the Notes surrendered upon such transfer or exchange.
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Every Note presented or surrendered for transfer, exchange or
discharge from registration shall (if so required by the Company
or the Note Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company
and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration, discharge
from registration, transfer or exchange of Notes, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
transfer or exchange of Notes, other than exchanges under
Section 3.04 or 11.06 not involving any transfer.
The Company shall not be required (i) to issue, transfer or exchange
any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of
Notes under Section 13.04 and ending at the close of business on the day of
such mailing, or (ii) to transfer or exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.
Section 3.06. MUTILATED, DESTROYED,
LOST AND STOLEN NOTES.
If (a) any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Note and (b) there is
delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a new Note of like tenor
and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 3.06, the
Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith.
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Every new Note issued pursuant to this Section 3.06 in lieu of any
destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the security and benefits
of this Indenture equally and ratably with all other Notes.
The provisions of this Section 3.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or
stolen Notes.
Section 3.07. PAYMENT OF INTEREST ON
NOTES; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to
the Person in whose name that Note (or one or more Predecessor
Notes) is registered at the close of business on the Regular Record Date
for such interest specified in the provisions of this Indenture.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date ("Defaulted
Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date solely by virtue of such Holder having
been such Holder; and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in subsection
(a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest on the Notes to the Persons in whose names such
Notes (or their respective Predecessor Record Date for the
payment of such Defaulted Interest Notes) are registered
at the close of business on a Special, which shall be fixed in
the following manner. The Company shall notify the Trustee
in writing of the amount of Defaulted Interest proposed to be
paid on each Note and the date of the proposed payment (which
date shall be such as will enable the Trustee to comply with
the next sentence hereof), and at the same time the Company
shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as
provided in this subsection (a) and not to be deemed part of
the Trust Estate. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which
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shall be not more than 15 nor less than ten days prior to the
date of the proposed payment and not less than ten days after
the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor
to be mailed, first-class postage prepaid, to each Holder of
a Note at his address as it appears in the Note Register not
less than ten days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid,
such Defaulted Interest shall be paid to the Persons in whose
names the Notes (or their respective Predecessor Notes) are
registered on such Special Record Date and shall no longer be
payable pursuant to subsection (b) of this Section 3.07.
(b) The Company may make payment of any Defaulted Interest
on the Notes in any other lawful manner not inconsistent with
the requirements of any securities exchange in which the Notes
may be listed and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this subsection (b), such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.07, each Note
delivered under this Indenture upon transfer of or in exchange for
or in lieu of any other Note shall carry all the rights to interest
accrued and unpaid, and to accrue, which were carried by such other
Note.
Section 3.08. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Note is registered
as the owner of such Note for the purpose of receiving payment of
principal of, and interest on, such Note and for all other purposes
whatsoever whether or not such Note be overdue, and, to the extent
permitted by law, neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
Section 3.09. CANCELLATION.
All Notes surrendered for payment, redemption, transfer, exchange
or conversion, if surrendered to the Trustee, shall be promptly
canceled by it, and, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee and, if not already
canceled, shall be promptly canceled by it. The Company shall
deliver to the Trustee for
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cancellation any Notes previously authenticated and delivered hereunder which
the Company may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Note shall be
authenticated in lieu of or in exchange for any Note canceled as
provided in this Section 3.09, except as expressly provided by this
Indenture. All canceled Notes held by the Trustee shall be
disposed of as directed by a Company Request.
Section 3.10. TERM AND FORM.
The Stated Maturity of the Notes shall be September 15, 2003. The
aggregate principal amount of Notes that may be authenticated,
delivered and outstanding is limited to $125,000,000. The Notes
shall bear interest from [ ], 1994 [the Effective Date] or from the
most recent Interest Payment Date to which interest has been paid
or duly provided for, payable semi-annually on March 15 and
September 15 each year, commencing September 15, 1994. The Notes
shall bear interest at the rate of 11% per annum until the
principal thereof shall become due and payable, and at the rate
of 14% per annum on any overdue principal and, to the extent
permitted by law, overdue interest. Interest shall be computed
on the basis of a 360-day year of twelve 30-day months based on the
actual number of days elapsed.
The principal and the Redemption Price of the Notes and interest on
the Notes on each Interest Payment Date shall be payable at a Place
of Payment, and, in addition to any other lawful means of such
payment, may be paid by check payable to the order of the
Noteholder.
The Regular Record Date referred to in Section 3.07 for the payment
of the interest on the Notes payable, and punctually paid or duly
provided for, on any Interest Payment Date shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date.
Section 3.11. EXCHANGEABILITY.
Subject to Section 3.05, all Notes shall be fully interchangeable
with other Notes, and, upon surrender at the office or agency of
the Company in a Place of Payment therefor, all Notes shall be
exchangeable for other Notes of a different authorized
denomination or denominations, as requested by the Holder
surrendering the same. The Company will execute, and the Trustee
shall authenticate and deliver, Notes whenever the same are
required for any such exchange.
Section 3.12. REDEMPTION.
The Company may, at its option, redeem, in accordance with Article
Thirteen, all or from time to time any
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part of the Notes on or after the fifth anniversary of the Effective Date,
at par together, in each case, with interest, if any, accrued and unpaid
thereon to the Redemption Date. In the event of an RIH Sale, all
the Notes shall be redeemed by the Company whether such RIH Sale
occurs before, on or after the fifth anniversary of the Effective
Date, at par together with interest, if any, accrued and unpaid
thereon to the Redemption Date; PROVIDED, HOWEVER, that such
obligation of the Company to redeem the Notes in the event of a
proposed RIH Sale shall cease to exist if the Holders of not less
than 66-2/3% in Outstanding Amount of the Outstanding Notes have
consented to such proposed RIH Sale.
Section 3.13. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE.
Forthwith upon the execution and delivery of this Indenture, Notes
up to an aggregate principal amount of $125,000,000 may be executed
by the Company and delivered to the Trustee for authentication, and shall
thereupon be authenticated and delivered by the Trustee upon Company Order,
without any further action by the Company.
ARTICLE FOUR
GUARANTY
Section 4.01. GUARANTY.
RIH hereby guarantees (such guaranty to be referred to herein as
the "Guaranty") to each Holder 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 hereunder or
thereunder, that: (a) the principal of and interest on the Notes
will be promptly paid in the amounts and at the times when due,
whether at the maturity or Interest Payment Date, by acceleration,
call for redemption or otherwise, and interest on the overdue
principal, if any, of the Notes, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will
be promptly paid in full or performed, all in accordance with the
terms hereof and thereof; and (b) in case of any extension of time
of payment or renewal of any Notes or payment or performance of any
of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension
or renewal, whether at Stated Maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed
for whatever reason, RIH will be obligated to pay the same
immediately. RIH hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or
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this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Notes with respect to any provisions hereof or
thereof, any releases of collateral, any delays in obtaining or realizing upon
or failures to obtain or realize upon collateral, the recovery of
any judgment against the Company, any action to enforce the same or
any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. This Guaranty is a
guaranty of payment and not of collectibility, and is secured by
the Guaranty Mortgage, as described therein. RIH hereby waives
diligence, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Guaranty
will not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture. If any
Noteholder or the Trustee is required by any court or
otherwise to return to either RIH or the Company, or any custodian,
trustee, liquidator or other similar official acting in relation to either
RIH or the Company, any amount paid by either RIH or the Company to
the Trustee or such Noteholder, this Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and
effect. RIH agrees that it shall not be entitled to, and hereby
irrevocably waives, any right of subrogation in relation to the
Company in respect of any obligations guaranteed hereby. RIH
further agrees that, as between RIH, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Section 7.02 for the purposes of this Guaranty, notwithstanding
any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of such
obligations as provided in Section 7.02, such obligations
(whether or not due and payable) shall forthwith become due and
payable by RIH for the purpose of this Guaranty.
Section 4.02. EXECUTION AND DELIVERY OF GUARANTY.
To evidence its Guaranty set forth in Section 4.01, RIH hereby
agrees to execute its Guaranty substantially in the form set forth
in Section 2.04, to be endorsed on each Note authenticated and
delivered by the Trustee and that this Indenture shall be executed
on behalf of RIH by an Authorized Signature.
RIH hereby agrees that its Guaranty set forth in Section 4.01 shall
remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guaranty; PROVIDED,
HOWEVER, that the Trustee or the
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Authenticating Agent has
signed the certificate of authentication on such Note.
If an Officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates a Note on which a
Guaranty is endorsed, the Guaranty shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of RIH.
Section 4.03 MORTGAGE SECURING GUARANTY.
In order to secure the due and punctual payment of all amounts
which may ever become owing under the Guaranty, when and as the
same shall be due and payable, and performance of all other
obligations of RIH to the Holders or the Trustee under the Guaranty,
according to the terms hereof, RIH has mortgaged and
encumbered all of its right, title and interest in and to the Trust
Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has
the full right, power and authority to grant, bargain, sell,
release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm the property constituting the Trust Estate, in the
manner and form done, or intended to be done, in the Guaranty
Mortgage, free and clear of all liens, pledges, charges and
encumbrances, whatsoever, except for the items described in
clauses (a) through (d) (inclusive) of Section 12.13, and (a) will
forever warrant and defend the title to the same against the claims
of all Persons whatsoever in accordance with the terms of the
Guaranty Mortgage, (b) will execute, acknowledge and deliver to
the Trustee such further instruments as the Trustee may require or
request, and (c) will do or cause to be done all such acts and
things as may be reasonably necessary or proper, or as may be
required by the Trustee (other than obtaining a loan title
insurance policy or title policy endorsement pertaining to the
Guaranty Mortgage), to assure and confirm to the Trustee its
interest in the Trust Estate and the right, title and interest in
and to the Guaranty Mortgage, so as to render the same available
for the security and benefit of this Guaranty secured thereby,
according to the intent and purposes herein expressed. The
Guaranty Mortgage creates and vests in the Trustee a direct and
valid lien, which lien is senior to the lien securing payment of
the Junior Mortgage Facility, senior to any lien securing the
Junior Guaranty, PARI PASSU with the lien of the Mortgage, junior
to the lien securing payment of the RIHF Senior Facility Notes and
any other secured Working Capital Facility and junior to any lien
securing the Working Capital Facility Guaranty. To the extent that
any security interest in the Trust Estate or the Guaranty Mortgage
is deemed to be
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granted and to be governed by the Uniform Commercial Code, the Guaranty
Mortgage is deemed to be a security agreement.
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. PAYMENT OF INDEBTEDNESS;
SATISFACTION AND DISCHARGE OF INDENTURE.
Whenever the following conditions exist, namely:
(a) all Notes theretofore authenticated and delivered have been
canceled by the Trustee or delivered to the Trustee for
cancellation, excluding, however,
(1) Notes for the payment of which money has theretofore
been deposited in trust with the Trustee
or a Paying Agent (other than the Company) or segregated and held in
trust by the Company and thereafter repaid to the
Company or discharged from such trust as provided in
Section 12.03,
(2) Notes alleged to have been destroyed, lost or stolen
which have been replaced or paid as provided in
Section 3.06, except for any such Note which, prior to
the satisfaction and discharge of this Indenture, has
been presented to the Trustee with a claim of ownership
and enforceability by the Holder thereof and where
enforceability has not been determined adversely
against such Holder by a court of competent
jurisdiction, and
(3) other than any Notes excluded by clauses (1) and (2) of
this Section 5.01(a), Notes which have become due and
payable, Notes which will become due and payable at
their Stated Maturity within one year and Notes which
have been or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name and at the expense of the Company, provided the
Company, in the case of such Notes, has deposited or
caused to be deposited with the Trustee in trust for the
purpose an amount sufficient to pay and discharge the
entire indebtedness on such Notes for principal and
interest to the date of maturity thereof in the case of
Notes which have become due and payable or to the Stated
Maturity or Redemption Date, as the case may be;
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(b) the Company or RIH has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company or RIH has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each of which shall
state that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with;
then this Indenture and the lien, rights and interests created
hereby shall cease, terminate and become null and void (except as
to any surviving rights of transfer or exchange of Notes herein or
therein provided for and any right to receive payments of principal
and interest as provided in Section 5.01(a)(3)) and the Trustee and
each co-trustee and separate trustee, if any, then acting as such
hereunder shall, at the expense of the Company, execute and deliver
a termination statement prepared by the Company in form reasonably
satisfactory to the Trustee and such instruments of satisfaction and
discharge as may be necessary and pay, assign, transfer and deliver
to the Company or upon Company Order all cash, securities and other personal
property then held by it hereunder, other than pursuant to Section 5.01(a)(3).
In the absence of satisfaction of all of the above conditions, the
payment of all Outstanding Notes shall not render this Indenture
inoperative.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 8.07
shall survive.
Section 5.02. APPLICATION OF DEPOSITED MONEY.
Money deposited with the Trustee pursuant to Section 5.01 shall
constitute a separate trust fund for the benefit of the Persons
entitled thereto. Subject to the provisions of Section 12.03, such
money shall be applied by the Trustee to the payment (either
directly or through any Paying Agent, as the Trustee may
determine) to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the
Trustee.
Section 5.03. REPAYMENT TO THE COMPANY.
The Trustee and any Paying Agent shall promptly pay to the Company
upon request any excess money or securities held by them at any
time. Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust, for the payment of the principal of, or
interest on, any Note and remaining unclaimed for two years
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after such principal or interest has become due and payable shall be paid to
the Company on its request, or (if then held by the Company) shall be dis-
charged from such trust, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with regard to such money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the ex-
pense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each business day and of general
circulation in the City of new York, State of New York, or mailed to each such
Holder, or both, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, as the case may be, any unclaimed balance of such
money then remaining will be paid to the Company.
ARTICLE SIX
SECURITY
Section 6.01. ASSIGNMENT AGREEMENT.
In order to secure the due and punctual payment of the principal of
and interest on the Notes, when and as the same shall be due and
payable, whether at Maturity or at an Interest Payment Date, by
acceleration, call for redemption or otherwise, of the Notes and
performance of all other obligations of the Company to the Holders
or the Trustee under this Indenture, according to the terms hereof,
the Company has made an assignment of all of its right, title and
interest in and to the Mortgage Documents (other than the Guaranty
Mortgage) to the Trustee pursuant to the Assignment Agreement. RIH
has the full right, power and authority to grant, bargain,
sell, release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm the property constituting the Trust Estate, in the
manner and form done, or intended to be done, in the Mortgage
Documents, and the Company has the full right, power and authority
to grant, bargain, sell, release, re-convey, assign, transfer and
confirm, absolutely, all of its right, title and interest in and to
the Mortgage Documents, in each case free and clear of all liens,
pledges, charges and encumbrances, whatsoever, except for the items
described in clauses (a) through (d) (inclusive) of Section 12.13,
and (a) each will forever warrant and defend the title to the same
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against the claims of all persons whatsoever in accordance with the
terms of the Mortgage Documents and the Assignment Agreement,
(b) each will execute, acknowledge and deliver to the Trustee
such further assignments, transfers, assurances or other
instruments as the Trustee may require or request, and (c) each
will do or cause to be done all such acts and things as may be
reasonably necessary or proper, or as may be required by the
Trustee, to assure and confirm to the Trustee its interest in the
Trust Estate and the right, title and interest in and to the
Mortgage Documents, so as to render the same available for the
security and benefit of this Indenture and of the Notes secured
hereby, according to the intent and purposes herein expressed.
The Mortgage Documents (other than the Guaranty Mortgage) and the
Assignment Agreement together create and vest in the Trustee a
direct and valid lien, which is PARI PASSU with the Guaranty
Mortgage, junior to the lien securing payment of the RIHF Senior
Facility Notes and any other secured Working Capital Facility and
junior to any lien securing payment of the Working Capital Facility
Guaranty, on the property constituting the Trust Estate and the
interest in the Mortgage Documents which they purport to create.
To the extent that any security interest in the Trust Estate or the
Mortgage Documents are deemed to be granted and to be governed by
the Uniform Commercial Code, the Mortgage and the Assignment
Agreement are deemed to be security agreements.
Section 6.02. RECORDING, ETC.
The Company will cause, at its own expense, the Assignment
Agreement, the Mortgage Documents, this Indenture and all
amendments or supplements thereto, to be registered, recorded and
filed and/or re-recorded, refiled and renewed in such manner and in
such place or places, if any, as may be required by law in order
fully to preserve and protect the lien of the Mortgage Documents
and the Assignment Agreement on all parts of the Trust Estate and
the Mortgage Documents and the interest in the RIH Promissory Note
and to effectuate and preserve the security of the Noteholders and
all rights of the Trustee.
The Company shall furnish to the Trustee:
(a) promptly after the execution and delivery of this
Indenture or other instrument of further assurance or
amendment, including any supplemental indenture, an Opinion
or Opinions of Counsel either (1) stating that, in the opinion
of such counsel, this Indenture, the Mortgage Documents and
the assignment to the Trustee of the Mortgage Documents
intended to be made by the Assignment Agreement and all
other instruments of further assurance or amendment have been
properly recorded, registered and filed to the extent
necessary to make effective the liens intended to be created by the
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Mortgage Documents and the Assignment Agreement, 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 the Mortgage Documents and the Assignment
Agreement 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 Mortgage
Documents and the Assignment Agreement, or (2) stating that,
in the opinion of such counsel, no such action is necessary
to make such liens and assignments effective; and
(b) within 60 days after June 30 in each year beginning with
the year 1995, an Opinion or Opinions of Counsel, dated as of
such date, either (1) 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 all supplemental indentures, financing
statements, continuation statements or other instruments of
further assurance as is necessary to maintain the liens of the
Mortgage Documents and the assignment of the Mortgage
Documents to the Trustee made by the Assignment Agreement
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 Noteholders
and the Trustee hereunder and under the Mortgage Documents
and the Assignment Agreement, or (2) stating that, in the
opinion of such counsel, no such action is necessary to
maintain such liens and assignments.
The Company and RIH shall cause TIA SECTION 314(d) relating to the release
of property from the liens of the Mortgage to be complied with.
Any certificate or opinion required by TIA SECTION 314(d) may be made by an
Officer of the Company or RIH, unless otherwise required by TIA
SECTION 314(d).
Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS.
The Trustee shall hold in its possession the Mortgage Documents,
except as it from time to time may be required for actions, suits
or proceedings relating to the Mortgage Documents or for the
purpose of enforcing or realizing upon any right or value thereby
represented. The Trustee may, from time to time, in its sole
discretion, for
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the purpose of convenient location of the Mortgage Documents, appoint
one or more agents to hold physical custody, for the account of the Trustee,
of the Mortgage Documents.
Section 6.04. SUITS TO PROTECT THE TRUST
ESTATE AND MORTGAGE DOCUMENTS.
Upon five days' prior written notice to the Company (or such
shorter period or without notice if deemed necessary and
appropriate by the Trustee), the Trustee shall have the power, but
not the obligation to institute and to maintain such suits and proceedings
as it may deem necessary or appropriate to prevent any impairment of the
Trust Estate by any acts which may be unlawful or in violation of
the Mortgage Documents, the Assignment Agreement or this Indenture,
and such suits and proceedings as the Trustee may deem necessary or
appropriate to preserve or protect its interest and the interests
of the Noteholders in the Trust Estate and the Mortgage Documents
and the principal, interest, issues, profits, rents, revenues and
other income arising therefrom (including 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 result in an impairment of security hereunder or be
materially prejudicial to the interests of the Noteholders or of
the Trustee). The Trustee shall also have authority to exercise
any rights or powers conferred on the Trustee as the holder of the
Note.
ARTICLE SEVEN
REMEDIES
Section 7.01. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", whenever used herein, means any one of the
following events (including any applicable notice requirement and
any period of grace as specified in this Section 7.01) (whatever
the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Note
when such interest becomes due and payable and continuance of
such default (the deposit with the Trustee pursuant to Section
3.07 of funds sufficient to make such interest payment in full
being deemed to cure any such
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default for the purposes hereof) for a period of ten days; or
(b) default in the payment of all or any portion of the
principal of any Note at its Maturity; or
(c) default in the performance or breach of any covenant of
the Company or RIH in this Indenture (other than a covenant a
default in the performance or breach of which is elsewhere in
this Section 7.01 specifically dealt with), the Assignment
Agreement or any of the Mortgage Documents and continuance of
such default or breach for a period of 30 days (or such
shorter or longer cure period, if any, as may be specified
in respect of such default or breach in the Assignment
Agreement or the applicable Mortgage Document, as the case
may be), and (other than with respect to Sections 12.07,
12.08, 12.09, 12.10, 12.11, 12.12, 12.13 or 12.21) after
there has been given (i) to the Company by the Trustee or
(ii) to the Company and the Trustee by the Holders of at least
25% in Outstanding Amount of the Outstanding Notes, a written
notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of
Default" hereunder; PROVIDED, HOWEVER, that, if such default
or breach is of a covenant set forth in Section 12.02, 12.04,
12.05, 12.11, 12.13 or 12.21, and if such default or breach is
of such a nature that is curable but is not susceptible of
being cured with due diligence within such 30-day period (or
such shorter or longer cure period) (for reasons other than
lack of funds), then such period shall be extended for such
further period of time
as may reasonably be required to cure such default or breach, so
long as (i) RIH delivers an
Officers' Certificate to the Trustee within such period
stating (A) the applicability of the provisions of this
proviso to such default or breach, (B) the Company's or RIH's
intention to remedy such default or breach with reasonable
diligence and (C) the steps which the Company or RIH has
undertaken to remedy such default or breach, and (ii) RIH
delivers to the Trustee additional Officers' Certificates
every 30 days thereafter updating the information contained
in the certificate described in clause (i) above, in which case
such period shall be extended for such further period of time
as may reasonably be required to cure such default or breach,
provided that the Company or RIH is then proceeding and
thereafter continues to proceed to cure such default or
breach with reasonable diligence; PROVIDED FURTHER, HOWEVER,
that such additional period of time shall not in any case
exceed 60 days; or
(d) a proceeding or case shall be commenced, without the
application or consent of the Company or RIH,
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in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator
or the like of the Company or RIH or of all or any
substantial part of its assets, or (iii) similar relief in
respect of the Company or RIH under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of
60 consecutive days; or
(e) the commencement by the Company or RIH of a voluntary
case under the federal bankruptcy laws or any other
applicable federal or state law, or the consent or
acquiescence by any of them to the filing of any such
petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or
sequestrator (or other similar official) of the Company or
RIH or any substantial part of any of their property, or the
making by any of them of an assignment for the benefit of
creditors, or the taking of action by the Company or RIH in
furtherance of any such action; or
(f) the revocation, suspension or involuntary loss of any
Permit which results in the cessation of a substantial
portion of the operations of the Casino-Hotel for a period
of more than 90 consecutive days; or
(g) (i) a default by the Company, RIH or any of their
Subsidiaries under any Indebtedness (other than the
Indebtedness represented by the Working Capital Facility and
the Junior Mortgage Facility) in an aggregate principal amount
in excess of $5,000,000, which default results in the
acceleration of the maturity of any such Indebtedness under
the evidence of indebtedness, indenture or other instrument
governing such Indebtedness; PROVIDED, HOWEVER, that, if such
default under such evidence of indebtedness, indenture or
other instrument shall be cured by the obligor, or be waived
by the holders of such Indebtedness, in each case as may be
permitted by such evidence of indebtedness, indenture or
other instrument and in each case resulting in rescission of
such acceleration thereunder, then the Event of Default
hereunder by reason of such default shall be deemed likewise
to have been thereupon cured or waived; or (ii) a default by
the Company, RIH or any of their Subsidiaries under any
Indebtedness represented by the Working Capital Facility or
the Junior Mortgage Facility, the effect of which default
(after the expiration of any applicable notice or grace
periods) is to permit the
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holder or holders of any such Indebtedness represented by the Working
Capital Facility or the Junior Mortgage Facility in an aggregate principal
amount in excess of $5,000,000 (or a trustee or agent on behalf of
such holder or holders) to cause the acceleration of the
maturity of such Indebtedness represented by the Working
Capital Facility or the Junior Mortgage Facility under the
evidence of indebtedness, indenture or other instrument
governing such Indebtedness; PROVIDED, HOWEVER, that if such
default under such evidence of indebtedness, indenture or
other instrument shall be cured by the obligor, or be waived
by the holders of such Indebtedness, in each case as may be
permitted by such evidence of indebtedness, indenture or
other instrument (and, if such default resulted in the
acceleration of the maturity of such Indebtedness, such
acceleration shall have been rescinded thereunder) then the
Event of Default hereunder by reason of such default shall be
deemed likewise to have been thereupon cured or waived; or
(iii) the existence of a final judgment of a court of
competent jurisdiction in an amount in excess of $3,000,000
against the Company, RIH or the Trust Estate, which judgment
has not been satisfied or otherwise provided for, for a
period of 30 days (during which execution shall not be
effectively stayed) following the date on which such
judgment becomes a lien against the Trust Estate or any part
thereof (unless the lawsuit in question was commenced without
effective service of process upon either the Company or RIH in
which case such 30-day period shall not commence until the
Company or RIH receives notice of such final judgment); or
(iv) the existence of a final judgment of a court of competent
jurisdiction in an amount in excess of $15,000,000 against the
Company, RIH or the Trust Estate, which judgment has not been
satisfied or otherwise provided for, for a period of 60 days
(during which execution shall not be effectively stayed)
following the date of such final judgment; or (v) the
existence of a final judgment of a court of competent
jurisdiction, regardless of amount, against the Company, RIH
or the Trust Estate, which judgment has not been satisfied or
otherwise provided for, for a period of 60 days (during which
execution shall not be effectively stayed) following the date
of such final judgment, if such judgment, by itself or upon
recordation or other action of the judgment creditor, imposes
or would impose a lien on the Trust Estate or any part thereof
senior to the lien of the Mortgage; or
(h) default in the performance, or breach, of any covenant
of the Company or RIH in Article Ten; or
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(i) the existence of a judgment of a court of competent
jurisdiction in an amount in excess of $3,000,000 against RIH regarding the
CRDA Dispute, which judgment has not been stayed, satisfied or otherwise
provided for, for a period of 30 days (during which execution shall not be
effectively stayed) (unless the lawsuit in question was commenced without
effective service of process upon RIH in which case such 30-day period
shall not commence until RIH receives notice of such final judgment); or
(j) if RII fails to pay or discharge or cause to be paid or
discharged, within 30 days before the same shall become delinquent, all
taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of
Default or Default shall be deemed to exist hereunder with respect to
any tax liability not paid or discharged by RII if and to the extent
that the amount, applicability or validity of such tax liabilities is
being contested in good faith by appropriate proceedings if adequate
reserves therefor have been established in accordance with GAAP; PROVIDED
FURTHER, HOWEVER, that this clause (j) shall not apply to amounts due
with respect to any period during which neither the Company, RIH nor any
of their Subsidiaries is included in RII's consolidated group for federal
income tax purposes.
No action, event, claim, liability or judgment regarding the CRDA
Dispute shall constitute a Default or an Event of Default under this Section
7.01 unless and until a judgment shall have
been entered against RIH which constitutes an Event of Default pursuant
to clause (i) of this Section 7.01.
Section 7.02. ACCELERATION OF MATURITY;
RESCISSION AND ANNULMENT.
If an Event of Default (other than one referred to in clause (d) or
(e) of Section 7.01) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes
Outstanding may declare the Outstanding Amount and all accrued interest of
all the Notes to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee, if given by any Noteholders), and upon any such
declaration such Outstanding Amount shall become immediately due and payable.
If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs,
then the Outstanding Amount of all the Notes shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company.
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At any time after such a declaration of acceleration has been made,
but before any judgment or decree for payment of money due on any
Notes has been obtained by the Trustee as hereinafter provided in
this Article Seven, the Holders of a majority in Outstanding Amount
of the Notes may, by written notice to the Company and the Trustee,
rescind and annul such declaration and its consequences if:
(a) the Company has deposited with the Trustee a sum
sufficient to pay:
(1) all overdue installments of interest on all Notes,
(2) the principal of any Notes which have become due
otherwise than by such declaration of acceleration and
interest thereon at the rate or rates prescribed
therefor in the Notes, and
(3) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel; and
(b) all Events of Default, other than the non-payment of the
Outstanding Amount of Notes which have become due solely by
such declaration of acceleration, have been cured, or have
been waived as provided in Section 7.13.
No such rescission and annulment shall affect any subsequent
default or impair any right consequent thereon.
Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON
NOTES AND RIGHT OF TRUSTEE TO JUDGMENT.
The Company covenants that, if:
(a) default is made in the payment of any interest on any
Note when such interest becomes due and payable, and such
default continues for a period of 10 days (the deposit with the
Trustee during such 10 day period pursuant to Section 3.07 of funds
sufficient to make such interest payment in full being deemed to
cure any such default for the purposes hereof), or
(b) default is made in the payment of the principal of any
Note at its Maturity,
then, upon demand of the Trustee, the Company will pay to the
Trustee for the benefit of the Holders of such Notes, the whole
amount then due and payable on such Notes for principal and
interest, with interest at the rate prescribed therefor in
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the Notes on overdue principal and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel. If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, shall be entitled to sue for and recover judgment
against the Company, RIH and any other obligor on the Notes for the
whole amount so due and unpaid. The Trustee shall be entitled to
institute such suit either before, after or during the pendency of
any proceedings for the enforcement of this Indenture or of the
Mortgage Documents or of the Assignment Agreement, but only after
the occurrence of an Event of Default.
Subject to the Intercreditor Agreement, in the case of a
foreclosure of the Mortgage and a sale of the Trust Estate and
application of the proceeds as provided in Section 7.06, the
Trustee, in its own name and as trustee of an express trust,
shall be entitled to enforce payment of, and to receive, all
amounts then remaining due and unpaid upon the Notes, for the
benefit of the Holders thereof, and shall be entitled to recover
judgment for any portion of the same remaining unpaid, with
interest as aforesaid. No recovery of any such judgment upon any
property of the Company shall affect or impair the security
provided by this Indenture and the Assignment Agreement or the
lien of the Mortgage upon the Trust Estate or any rights, powers or
remedies of the Holders of the Notes.
Section 7.04. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company
or RIH or any other obligor upon the Notes or the property of the Company or
RIH or of such other obligor or their creditors, the Trustee (irrespective of
whether the principal (or any portion thereof) of the Notes shall then be due
and payable, as therein expressed or by declaration or otherwise, and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the
Outstanding Notes and to file such 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
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advances of the Trustee, its agents and counsel) and of the Noteholders
allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding 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 8.07.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Noteholder any
plan of reorganization, arrangement, adjustment or compensation affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
on the claim of any Noteholder in any such proceeding.
Section 7.05. TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture, the Notes,
the Assignment Agreement or the Mortgage Documents may be prosecuted and
enforced by the Trustee without the possession of any of the Notes or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the Ratable Benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
Section 7.06. APPLICATION OF MONEY COLLECTED.
Subject to the Intercreditor Agreement, any money
collected by the Trustee pursuant to this Article Seven or pursuant
to Article Three or Section 5.11 or 5.20 of the Mortgage which is
not required to be paid to the Mortgagor thereunder shall be
applied in the following order, at the date or dates fixed by the
Trustee and upon such date interest shall cease to accrue, and, in
case of the distribution of such money on account of principal upon
presentation of the Notes, and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:
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(a) FIRST: To the payment of all amounts due the
Trustee under Section 8.07;
(b) SECOND: To the payment of the whole amount then
due upon the Outstanding Notes, for principal and interest,
in respect of which or for the benefit of which such money
has been collected, with interest (to the extent that such
interest has been collected by the Trustee or a sum sufficient
therefor has been so collected and payment thereof is legally
enforceable at the respective rate or rates prescribed
therefor in the Notes) on overdue principal; and in case such
proceeds shall be insufficient to pay in full the whole amount
so due and unpaid upon such Notes, then first, payment of
accrued but unpaid interest (with interest thereon as
aforesaid), and second, to outstanding principal, in each
case, ratably according to the aggregate amount so due; and
(c) THIRD: To the payment of the remainder, if any, to the
Company or to whomever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct.
Section 7.07. LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute
any proceeding, judicial or otherwise, under or with respect to
this Indenture, the Assignment Agreement or the Mortgage Documents,
or for the appointment of a receiver or trustee or for any other
remedy hereunder, unless:
(a) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in Outstanding
Amount of the Outstanding Notes shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day
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period by the Holder of a majority in Outstanding Amount of the
Outstanding Notes;
it being understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Indenture, the Assignment
Agreement or the Mortgage Documents, to affect, disturb or
prejudice the right of any other Holders of Notes, or to obtain
or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, the Assignment
Agreement or the Mortgage Documents, except in the manner herein
and therein provided and for the Ratable Benefit of all Notes.
Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS
TO RECEIVE PRINCIPAL AND INTEREST.
Notwithstanding any other provision in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest
on such Note on the Stated Maturity or Interest Payment Dates
expressed in such Note (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any
such payment and such rights shall not be impaired without the
consent of such Holder.
Section 7.09. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Noteholder has instituted any
proceeding to enforce any right or remedy under this Indenture, the
Assignment Agreement or the Mortgage Documents and such proceeding
has been discontinued or abandoned for any reason or has been
determined adversely to the Trustee or to such Noteholder, then and
in every such case the Company, the Trustee and the Noteholders
shall, subject to any determination in such proceeding, be restored
to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
Section 7.10. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to
the Trustee or to the Noteholders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right
or remedy.
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Section 7.11. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of
any Note to exercise any right or remedy accruing upon an Event of
Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Seven or by law to the
Trustee or to the Noteholders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the
Noteholders, as the case may be.
Section 7.12. OTHER RIGHTS.
Subject to Section 8.03(e), the Holders of a majority in
Outstanding Amount of the Outstanding Notes shall have the right, during
the continuance of an Event of Default,
(a) to require the Trustee to proceed to enforce this
Indenture, either by judicial proceedings for the
enforcement of the payment of the Notes by the foreclosure
of the Mortgage and exercise of any remedies under the
Mortgage Documents and the Assignment Agreement and the sale
of the Trust Estate or otherwise or, at the election of the
Trustee, by the exercise of the power of entry and/or sale
conferred by the Mortgage; and
(b) to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee
hereunder, provided that
(1) such direction shall not be in conflict with
any rule of law or this Indenture or any applicable Mortgage
Document or the Assignment Agreement;
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction; and
(3) the Trustee shall not be required to determine if
any action so directed would be unjustly prejudicial to the
Holders not taking part in such direction.
Section 7.13. WAIVER OF PAST DEFAULTS.
Before any judgment or decree for payment of money due
has been obtained by the Trustee as provided in this Article Seven,
the Holders of not less than 66-2/3% in Outstanding Amount of the
Outstanding Notes may, by Act of such Noteholders delivered to the
Trustee and the Company, on
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behalf of the Holders of all the Notes waive any past Default hereunder
and its consequences, except a Default
(a) in the payment of the principal of or interest on
any Note, or
(b) in respect of a covenant or provision hereof which
under Article Eleven cannot be modified or amended without the
consent of the Holder of each Outstanding Note affected.
Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other Default or impair any
right subsequent thereon.
Section 7.14. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of
any Note by his acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, the
Assignment Agreement or the Mortgage Documents, or in any suit
against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claim or defense
made by such party litigant; but the provisions of this Section
7.14 shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Noteholders, or group of Noteholders,
holding in the aggregate more than 10% in Outstanding Amount of
the Outstanding Notes, or to any suit instituted by any Noteholder
for the enforcement of the payment of the principal of or interest
on any Note on or after the Stated Maturity expressed in such Note
(or, in the case of redemption, on or after the Redemption Date) or
the relevant Interest Payment Date.
Section 7.15. ENFORCEMENT.
In case an Event of Default shall occur and be
continuing, the Trustee, in it discretion may, subject to the
provisions of Section 7.12, proceed to protect and enforce its
rights and the rights of the Noteholders under this Indenture by
a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement
contained in this Indenture or in aid of the execution of any power
granted in this Indenture or for the enforcement of any other
legal, equitable or other remedy,
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as the Trustee, being advised by counsel, shall deem most effectual to protect
and enforce any of the rights of the Trustee or the Noteholders hereunder.
In case an Event of Default shall occur and be continuing
under the Mortgage, the Trustee, as assignee of the Mortgage
Documents, in its discretion may, subject to the provisions of
Section 7.12, proceed to enforce its rights under the Mortgage
Documents and the Assignment Agreement.
Section 7.16. MANAGEMENT OF CASINO-HOTEL.
Notwithstanding any provision of this Article Seven to
the contrary,
(a) following an Event of Default under the Mortgage and
the taking of possession of the Trust Estate by the Trustee
and/or the appointment of a receiver of the Trust Estate or
any part thereof, the Trustee or any such receiver shall be
authorized, in addition to the rights and power of the Trustee
and such receiver set forth elsewhere in this Indenture, the
Assignment Agreement and the Mortgage Documents, to retain
one or more experienced operators of hotels and/or casinos to
manage and operate the Casino-Hotel on behalf of the Noteholders,
provided that any such operator shall have all necessary legal
qualifications, including all Permits, to manage the
Casino-Hotel; and
(b) no Noteholder shall have any right to take
possession of, operate or manage all or any portion of the
Casino-Hotel, individually or as a member of a group, unless
such Noteholder shall have all necessary legal qualifications,
including all Permits, to do so and shall otherwise be
qualified to be retained to manage the Casino-Hotel under
subsection (a) of this Section 7.16.
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of
Default,
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
Indenture and the Mortgage Documents, and no implied covenants or
obligations shall be read into this Indenture and the Mortgage Documents
against the Trustee; and
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(2) 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 expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture or the
Mortgage Documents; but in the case of any such certificates or
opinions which by any provision hereof or thereof are specifically
required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture and the
Mortgage Documents.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture or the Mortgage Document,
and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
(c) No provision of this Indenture or any Mortgage Document
shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that
(1) this Section 8.01(c) shall not be construed to limit
the effect of Section 8.01(a);
(2) the Trustee shall not be liable for any error of
judgment made in good faith by it, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than
a majority in Outstanding Amount of the Outstanding Notes
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Indenture or any Mortgage Document; and
(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
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(d) Whether or not therein expressly so provided, every
provision of this Indenture and the Mortgage Documents relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section 8.01.
Section 8.02. NOTICE OF DEFAULTS.
Within 45 days after the occurrence of any Default hereunder of which
a Responsible Officer of the Trustee has actual knowledge, the Trustee shall
transmit by mail to all Holders of Notes as their names and addresses appear
in the Note Register, notice of such Default hereunder known to the Trustee,
unless such Default shall have been cured or waived; PROVIDED, HOWEVER, that,
except in the case of a default in the payment of the principal of
or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the best interests of the
Noteholders.
Section 8.03. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 8.01:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, coupon, other
evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel, and the
written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection in respect
of any action taken, suffered or omitted by
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the Trustee 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 or any
of the Mortgage Documents at the request or direction of any of the
Noteholders pursuant to this Indenture, unless such Noteholders shall
have offered to the Trustee reasonable security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) 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, direction, consent, order,
bond, debenture, other evidence of indebtedness or other paper or
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 RIH, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or
by or through agents or attorneys, and the Trustee shall not
be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be deemed to have knowledge
of and shall not be required to take any action with respect
to any Event of Default (other than an Event of Default described
in Section 7.01(a) and (b) or any event which would, with the giving
of notice or the passage of time or both, constitute an Event of Default,
unless the Trustee shall have actual knowledge of such event or shall have
been notified in writing of such event by Noteholders holding in the
aggregate more than 25% in Outstanding Amount of the Outstanding Notes;
(i) subject to Section 8.01(c), the Trustee shall not be
personally liable, in case of entry by it upon the Trust
Estate, for debts contracted or liabilities or damages
incurred in the management or operation of the Trust Estate;
and
(j) in addition to and not in limitation of its other
powers hereunder, the Trustee shall have such power and
authority as may be necessary to enter into and
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accept delivery of any document as may be necessary to effect
on behalf of the Holders of the Notes the subordination of the
indebtedness in respect of the Notes to any secured Working
Capital Facility (in accordance with the provisions of the
Mortgage), and upon written request of the Company, the
Trustee shall enter into such agreements on behalf of the
holders of the Notes.
Section 8.04. NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS.
The recitals contained herein and in the Notes, except
in a certificate of authentication on the Notes, shall be taken as
the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Indenture,
the Notes or the Mortgage Documents. The Trustee shall not be
accountable for the use or application by the Company of Notes or the proceeds
thereof or of any money paid to the Company or by a Company Order under any
provision hereof.
Section 8.05. MAY HOLD NOTES.
The Trustee, any Paying Agent, Note Registrar,
Authenticating Agent or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee
of Notes and, subject to Sections 8.08 and 8.13, if operative, may
otherwise deal with the Company with the same rights it would have
if it were not Trustee, Paying Agent, Note Registrar,
Authenticating Agent or such other agent.
Section 8.06. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law.
The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Company.
Section 8.07. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder and
under the Mortgage Documents (which compensation shall not be
limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(b) except as otherwise expressly provided herein and in
the Mortgage Documents, to reimburse the Trustee
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upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustee's negligence
or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this
Indenture or the trust created hereunder or the performance of its duties
hereunder, including the reasonable costs and expenses of
defending itself against or investigating any claim or liability in con-
nection with the exercise or performance of any of its powers or
duties hereunder (including reasonable attorneys' fees and expenses).
As security for the performance of the obligations of the
Company and RIH under this Section 8.07, the Trustee shall be
secured under this Indenture and the Mortgage Documents by a lien
prior to the Mortgage upon all property and funds held or collected by the
Trustee, and for the payment of such compensation, expenses, reimbursements
and indemnity the Trustee shall have the right to use and apply any money held
by it pursuant hereto.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company and RIH under this Section 8.07 shall survive.
Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS.
This Indenture shall always have a Trustee who satisfies
the requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The
Trustee shall comply with TIA SECTION 310(b) including the second sentence
of TIA SECTION 310(b)(9).
Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which
shall be a corporation organized and doing business under the law
of the United States of America or of any state, authorized under
such laws to exercise corporate trust powers, having (or in the case of a
corporation included in a bank holding company system, the related bank holding
company having) a combined capital and surplus of at least
$100,000,000, subject to supervision or examination by federal or
state authority. In addition, if the Trustee is a
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corporation included in a bank holding company system, the Trustee,
independently of such bank holding company, shall meet the capital requirements
of TIA SECTION 310(a)(2). The Trustee shall comply with 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 certificates of interest or participation in other securities, of the
Company are outstanding, if the requirements for such exclusion set forth in
TIA SECTION 310(b)(1) are met. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of such
supervising or examining authority, then for the purposes of this Section 8.09,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section 8.09, it shall resign
immediately in the manner and with the effect hereinafter specified
in this Article Eight.
Section 8.10. RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article Eight
shall become effective until the acceptance of appointment by the
successor Trustee under Section 8.11.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of a majority in Outstanding Amount of the Outstanding
Notes, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 8.08
after written request therefor by the Company or by any
Noteholder who is a bona fide Holder of a Note, or
(2) the Trustee shall cease to be eligible under Section
8.09 and shall fail to resign after written request therefor
by the Company or by any Noteholder who is a bona fide Holder
of a Note, or
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(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, (i) the Company by a Company Order may
remove the Trustee, or (ii) subject to Section 7.14, any Noteholder
who is a bona fide Holder of a Note may, on behalf of himself and
all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
the Trustee for any cause, the Company, by a Company Order, shall
promptly appoint a successor Trustee. In case all or substantially
all of the Trust Estate shall be in the possession of a receiver or
trustee lawfully appointed, such receiver or trustee, by written instrument,
may similarly appoint a successor to fill such vacancy until a new Trustee
shall be so appointed by the Noteholders. If, within one year after such
resignation, removal or incapacity or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in Outstanding Amount of the Outstanding
Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment, become the successor Trustee and supersede the
successor Trustee appointed by the Company or by such receiver or
trustee. If no successor Trustee shall have been so appointed by
the Company or the Noteholders and accepted appointment in the
manner hereinafter provided, subject to Section 7.14, any
Noteholder who is a bona fide Holder of a Note may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give written notice of each
resignation and each removal of the Trustee and each appointment of
a successor Trustee to each Noteholder by mailing such notice by first-class
mail, postage prepaid, to each Noteholder as such Noteholder's name and address
appear in the Note Register; provided, however, that failure of the Company
to give such notice shall not affect the resignation or removal of such
Trustee. Each notice shall include the name of the successor Trustee and the
address of its principal corporate trust office.
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Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall became
effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the estates,
properties, rights, powers, trusts and duties of the retiring
Trustee; but, on request of the Company or the successor Trustee,
such retiring Trustee shall, upon payment of its charges, execute
and deliver an instrument conveying and transferring to such
successor Trustee all the estates, properties, rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder, subject nevertheless to its lien,
if any, provided for in Section 8.07. Upon request of any such
successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such estates,
properties, rights, powers and trusts.
No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article Eight.
Section 8.12. MERGER, CONVERSION, CONSOLIDATION
OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this
Article Eight, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any
Notes shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated
such Notes.
Section 8.13. PREFERENTIAL COLLECTION
OF CLAIMS AGAINST COMPANY.
The Trustee will comply with TIA SECTION 311(a).
A Trustee
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who has resigned or been removed shall be subject to
TIA SECTION 311(a) to the extent indicated.
Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES.
At any time or times, for the purpose of meeting the
legal requirements of the TIA or of any jurisdiction in which any
of the Trust Estate may at the time be located or in which it shall
be necessary or desirable for the Trustee to act, the Company and
the Trustee shall have power to appoint, and, upon the written
request of the Trustee or of the Holders of at least 25% in
Outstanding Amount of the Notes Outstanding, the Company shall for
such purpose join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Trustee either to
act as co-trustee, jointly with the Trustee, of all or any part of
the Mortgage Documents or of the Trust Estate covered by such
Mortgage Documents, or to act as separate trustee of any such
property, in either case with such powers as may be provided in
the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or
power deemed necessary or desirable, subject to the other
provisions of this Section 8.14. If the Company does not join in
such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default has occurred
and is continuing, the Trustee alone shall have power to make such
appointment.
Should any written instrument from the Company be
required by any co-trustee or separate trustee so appointed for
more fully confirming to such co-trustee or separate trustee such
property, title, right or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by the
Company within three business days of such request.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to
the following terms, namely:
(a) the Notes shall be authenticated and delivered, and
all rights, powers, duties and obligations hereunder in
respect of the custody of securities, cash and other personal
property held by, or required to be deposited or pledged with,
the Trustee hereunder, shall be exercised solely, by the
Trustee;
(b) the rights, powers, duties and obligations hereby
conferred or imposed upon the Trustee in respect of any
property covered by such appointment shall be conferred or
imposed upon and exercised or performed by the Trustee or by
the Trustee and such co-trustee or
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separate trustee jointly,
as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that
under any law of any jurisdiction in which any particular act
is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee;
(c) the Trustee, at any time, by an instrument in writing
executed by it may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section
8.14. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided
in this Section 8.14;
(d) the Trustee, or any other such trustee hereunder,
shall not be personally liable by reason of any act or
omission of any co-trustee or separate trustee hereunder, and
no co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the
Trustee, or any other such trustee hereunder;
(e) any Act of Noteholders delivered to the Trustee
shall be deemed to have been delivered to each such co-trustee
and separate trustee; and
(f) any co-trustee or separate trustee appointed
hereunder shall be entitled to compensation and indemnification
from the Company under Section 8.07 hereunder and shall be
entitled to all such other rights and protections afforded
the Trustee hereunder.
Section 8.15 APPOINTMENT OF AUTHENTICATING AGENT.
Upon the request of the Company, the Trustee shall
appoint an Authenticating Agent with power to act on its behalf and
subject to its direction in the authentication and delivery of the
Notes designated for such authentication by the Company and
containing provisions therein for such authentication in connection
with transfers and exchanges under Sections 3.04, 3.05, 3.06 and
13.07, as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by those
Sections to authenticate and deliver such Notes. For all purposes
of this Indenture, the authentication and delivery of Notes by the
Authenticating Agent pursuant to this Section 8.15 shall be
deemed to be the authentication and delivery of Notes "by the
Trustee". Such Authenticating Agent shall at all times be a bank
or trust company having its principal office in the Borough of
Manhattan, City and State of New York, and shall at all times be a
corporation organized and doing business under the laws
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of the
United States or of any State with a combined capital and surplus
of at least $50,000,000 and authorized under such laws to exercise
corporate trust powers and subject to supervision or examination by
federal or state authority. If such corporation publishes reports
of condition at least annually pursuant to law or the requirements
of such authority, then for the purposes of this Section 8.15 the
combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published.
Any corporation into which any Authenticating Agent may
be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or
any corporation succeeding to the corporate trust business of any
Authenticating Agent, shall be the successor of the Authenticating
Agent hereunder, if such successor corporation is otherwise
eligible under this Section 8.15, without the execution or filing
of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and the Company. The
Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such
Authenticating Agent and the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this
Section 8.15, the Trustee shall promptly appoint a successor
Authenticating Agent, and shall give written notice of such
appointment to the Company.
The Company agrees to pay to the Authenticating Agent
from time to time reasonable compensation for its services.
The provisions of Sections 3.10, 8.04 and 8.05 shall be applicable
to any Authenticating Agent.
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS
BY TRUSTEE
Section 9.01. COMPANY TO FURNISH TRUSTEE
SEMI-ANNUAL LISTS OF NOTEHOLDERS.
The Company will furnish or cause to be furnished to the
Trustee semi-annually, not less than 45 days nor more than
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60 days
after each date (month and day) specified as a semi-annual Interest
Payment Date for the Notes (whether or not any Notes are then
Outstanding), and at such other times as the Trustee may request
in writing, within 60 days after receipt by the Company of any such
request, a list in such form as the Trustee may reasonably require
containing all the information in the possession or control of the
Company, or any of its Paying Agents other than the Trustee, as to
the names and addresses of the Holders of Notes, obtained since the
date as of which the next previous list, if any, was furnished,
excluding from any such list the names and addresses received by
the Trustee in its capacity as Note Registrar. Any such list may
be dated as of a date not more than 15 days prior to the time such
information is furnished and need not include information received
after such date.
Section 9.02. PRESERVATION OF INFORMATION;
COMMUNICATIONS TO NOTEHOLDERS.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders of
Notes (1) contained in the most recent list
furnished to the Trustee as provided in Section 9.01, (2) received
by the Trustee in the capacity of Paying Agent (if so acting)
hereunder or (3) received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided
in Section 9.01 upon receipt of a new list so furnished.
(b) Holders may communicate pursuant to TIA SECTION
312(b) with other Holders with respect to their rights under this
Indenture or the Notes. The Company, the Trustee, the Note
Registrar and any other Person shall have the protection of TIA
SECTION 312(c).
(c) Every Holder of Notes, by receiving and holding the
same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any Paying Agent shall be held
accountable by reason of the disclosure of any such information as
to the names and addresses of the Holders of Notes in accordance
with Section 9.02(b), regardless of the source from which
information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request
made under Section 9.02(b).
Section 9.03. REPORTS BY TRUSTEE.
(a) Within 60 days after each May 15 beginning with
May 15, 1995, the Trustee shall transmit to each Noteholder a
report dated as of such May 15 that complies with TIA SECTION
313(a). The Trustee shall also comply with TIA SECTION 313(b)
and SECTION 313(c).
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(b) A copy of each such report shall, at the time of
such transmission to Noteholders, be filed by the Trustee with any
stock exchange on which the Notes are listed and also with the
Commission. The Company will notify the Trustee when the Notes are
listed on any stock exchange.
(c) The Trustee will provide the Casino Control
Commission and the Director of the Division of Gaming Enforcement
of New Jersey with:
(1) copies of all notices, reports and other written
communications which the Trustee gives to Noteholders;
(2) a list of Noteholders promptly after the original
issuance of the Notes and a list of Noteholders annualy on December 1
of each year, or such other time as requested by the Casino Control
Commission or Director of Division of Gaming Enforcement;
(3) notice of any Event of Default under this Indenture or
of any event, occurrence or condition actually known by the
Trustee which, with the giving of notice or lapse of time or
both would constitute an Event of Default under this Indenture
(including the Guaranty),
the RIH Promissory Note or the Mortgage Documents (as
such term is defined in such instruments), any acceleration
of the Indebtedness evidenced or secured hereby or thereby,
the institution of any legal actions or proceedings before any
court or governmental authority in respect of this Indenture
(including the Guaranty) or the Mortgage Documents, the
entering into or taking possession of any property
constituting the Trust Estate and any rescission, annulment
or waiver in respect of an Event of Default under any
instruments described in this clause (3);
(4) notice of the removal or resignation of the Trustee;
(5) notice of any transfer or assignment of rights under
this Indenture (including the Guaranty) (but not in respect
of the Notes) or the Mortgage Documents after a Responsible Officer of
the Trustee becomes aware of the same; and
(6) a copy of any amendment to the Notes, this Indenture
(including the Guaranty) or the Mortgage Documents immediately;
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provided
however, that the Trustee shall not be liable to any Person (other than
the Casino Control Commission and the Director of the Division of Gaming
Enforcement of New Jersey) for any failure to provide any of the above-
mentioned documents to the Casino Control Commission and the Director of
the Division of Gaming Enforcement of New Jersey.
The notice specified in Section 9.03 (c) above shall be in writing and,
except as set forth below, shall be given immediately
after the Trustee has actual knowledge of any circumstances
requiring such notice. In the case of any notice in respect of
any Default or Event of Default under any instrument described in
Section 9.03(c), such notice shall be accompanied by a copy of any
notice from the Holders of Notes, or a representative thereof or
the Trustee, to the defaulting Person and, if accompanied by any
such notice to the defaulting Person, shall be given simultaneously
with the giving of any such notice to the defaulting Person. In
the case of any legal actions or proceedings, such notice shall be
accompanied by a copy of the complaint or other initial pleading or
document.
The Trustee and its Responsible Officers shall cooperate
with the Casino Control Commission and the Director of the Division of Gaming
Enforcement of New Jersey in order to provide such Commission and
Director with information and documentation relevant to compliance
with Section 9.03(c) above and as otherwise required by the Casino
Control Act.
The expiration date of the current gaming Permit held by
RIH is February 26, 1994. Subsequent gaming Permits held by RIH
are scheduled to expire every two years on February 26th, commencing February
26, 1996 unless and until the Trustee is advised otherwise. RIH
will advise the Trustee of any change
in such expiration date within five business days of knowledge thereof.
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE
OR TRANSFER ONLY ON CERTAIN TERMS.
Neither the Company nor RIH shall consolidate, combine or
merge with or into any other Person or permit any other Person to
consolidate, combine or merge with or into the Company or RIH, as
the case may be; and neither the Company with respect to its assets
nor RIH with respect to the Trust
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Estate shall sell, assign, convey
or transfer its interest in such assets or the Trust Estate, as the
case may be, substantially as an entirety (and notwithstanding
anything to the contrary contained herein (including the proviso
at the end of this sentence, but subject to Section 10.05), but subject to the
provisions of the Mortgage regarding dispositions of the Trust Estate, neither
the Company with respect to its assets nor RIH with respect to the
Trust Estate may sell, assign, convey or transfer such assets or
the Trust Estate, as the case may be, other than substantially as
an entirety) to any other Person or group of Persons in one
transaction or a series of related transactions, or permit any
other Person or group of Persons to convey or transfer all or
substantially all of its assets, subject to liabilities other than
DE MINIMIS liabilities, to the Company or RIH; and the Company
and RIH shall not transfer, convey, sell or otherwise dispose of to
any other Person, or issue to any Person, any equity interest in
the Company or RIH, as the case may be (each of the aforesaid
transactions described in this Section 10.01 is referred to herein
as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) the
Company may engage in a Combination Transaction in which the only
other party or parties is RIH or a direct or indirect wholly owned
Subsidiary of the Company or RIH, and (ii) the Company or RIH may
engage in any other Combination Transaction (either independently
or at the same time as other Combination Transactions), subject to
the following with respect to each such Combination Transaction:
(a) the conditions set forth in Section 10.03 are
satisfied;
(b) in the event the Company or RIH shall consolidate,
combine or merge with or into another Person or sell,
assign, convey or transfer its interest in its assets or in
the Trust Estate, as the case may be, substantially as an
entirety (but not less than
substantially as an entirety) to another Person in one
transaction or a series of related transactions, the entity
which is formed by or survives such consolidation, combination
or merger or the Person to which such assets or the Trust
Estate are conveyed or transferred:
(1) shall be organized and existing under the laws
of the United States of America, any state thereof, or
the District of Columbia;
(2) shall expressly assume, by an indenture
supplemental hereto, in form reasonably satisfactory to the
Trustee, executed and delivered to the
Trustee, the performance and observance of every
covenant, obligation and condition of this Indenture
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to be performed or observed by the Company or RIH,
whichever the case may be;
(3) shall expressly assume, by an instrument
executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the due and punctual performance of
every covenant, obligation and condition of the Mortgage
Documents and Assignment Agreement to be performed by
the Company or RIH, whichever the case may be; and
(4) immediately after and giving effect to such
transaction could incur at least $1.00 of additional
Indebtedness under Section 12.08;
(c) immediately after giving effect to such transaction,
no Event of Default, or Default hereunder or under the Mortgage
shall have occurred and be continuing;
(d) such Combination Transaction shall be on such terms
as shall not impair the lien and security and priority hereof
or of the Mortgage Documents or of the Assignment Agreement
and the rights and powers of the Trustee and the Holders of
the Notes hereunder and thereunder; and
(e) the Company or RIH, as the case may be, shall have
delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each of which shall state that such
Combination Transaction and such supplemental indenture
comply with this Article Ten and that all conditions
precedent herein provided for relating to such transaction
have been complied with.
Section 10.02. SUCCESSOR ENTITY SUBSTITUTED.
Upon any consolidation, combination or merger or any
conveyance or transfer of an interest in the assets of the Company
or in the Trust Estate permitted by Section 10.01, the successor
entity formed by such consolidation or into which
the Company or RIH is combined or to which such conveyance or
transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, and shall be bound by every obligation
and liability of, the Company or RIH, whichever
the case may be, under this Indenture with the same effect as if
such successor entity had been named as the Company or RIH herein;
PROVIDED, HOWEVER, that no such consolidation or combination
involving the Company or RIH, unless such transaction is in
compliance with the provisions of this Article Ten, shall have the
effect of releasing the Person named as "the Company" or "RIH", as
the case may be, in the first paragraph of this instrument, or any
successor entity which shall theretofore have become such in the
manner
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prescribed in this Article Ten, from its liability as
obligor and maker on the RIH Promissory Note or any of the
Notes.
Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL.
Neither the Company nor RIH shall engage in any
Combination Transaction unless, immediately following such
Combination Transaction, (a) RIH (or any successor entity) shall
be eligible for and shall meet all relevant Legal Requirements,
including holding all permits, required for the normal operation
of the business of owning and operating the Casino-Hotel, and (b)
RIH (or any successor entity) shall be controlled by a Person that
is, or shall retain to manage the Casino-Hotel one or more Persons
that are, experienced in the operation and management of
casino-hotels.
Section 10.04. LIMITATION ON SALES OF TRUST ESTATE.
Except as otherwise expressly permitted by the Mortgage
and this Indenture, neither the Company nor RIH shall sell, assign,
lease, sublease, hypothecate, pledge, mortgage or otherwise transfer
all or any part of the assets of the Company or the Trust Estate or
any interest therein (including, without limitation, any interest in
the Ground Leases). Without limiting the generality of the
foregoing, RIH shall not separate, or attempt to separate, its
ownership of its interest in the Ground Leases from the ownership
of the buildings constituting the Casino-Hotel or any part thereof.
Section 10.05 RIH SALE.
The foregoing provisions of this Article Ten shall not apply in
connection with an RIH Sale.
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS.
Without the consent of the Holders of any Notes, the
parties hereto may from time to time amend or supplement this
Indenture, the Assignment Agreement, the Notes or the Mortgage
Documents, as long as the form of such amendment or supplement
is satisfactory to the Trustee, for any of the following purposes:
(a) to correct or amplify the description of the Trust
Estate or better to assure, convey and confirm unto the
Trustee the assignment of the Mortgage Documents; or
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(b) to add additional conditions, limitations and
restrictions thereafter to be observed to the conditions,
limitations and restrictions on the authorized amount, terms
of issue, authentication and delivery of Notes as herein set
forth; or
(c) to comply with Article Ten; or
(d) to add to the covenants of the Company for the
benefit of the Holders of all Notes or to surrender any right
or power herein conferred upon the Company; or
(e) to cure any ambiguity, defect or inconsistency in
any of the enumerated documents, provided such action shall not
adversely affect the interests of the Holders of the Notes;
or
(f) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect
the qualification of this Indenture under the TIA or under any
similar federal statute hereafter enacted, and to add to this
Indenture such other provisions as may be expressly permitted
by the TIA, EXCLUDING, HOWEVER, the provisions referred to in
TIA SECTION 316(a)(2) as in effect at the date as of which this
instrument was executed or any corresponding provision in
any similar federal statute hereafter enacted; or
(g) to effectuate any subordination contemplated in
Section 8.03(i); or
(h) to comply with the requirements of the Casino Control Act.
The terms of any such enumerated document entered into
pursuant to this Section 11.01 shall be subject to prior approval of
the Casino Control Commission in consultation with the New Jersey Division
of Gaming Enforcement.
Section 11.02. WITH CONSENT OF NOTEHOLDERS.
With the consent of the Holders of not less than 66-2/3%
in Outstanding Amount of the Notes then Outstanding, by Act of such
Holders delivered to the Company and the Trustee, the parties
hereto may amend or supplement this Indenture, the Mortgage
Documents, the Assignment Agreement or the Notes, provided that the form of
such amendment or supplement is reasonably satisfactory to the Trustee. The
Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding may
waive compliance by the Company or RIH with any provision of this
Indenture, the Mortgage
Documents, the Assignment Agreement or the Notes, except a default
in the payment of principal of or interest on any Note, without
notice to any
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Noteholder. Without the consent of the Holder of each
Outstanding Note affected thereby, an amendment, supplement or
waiver, including a waiver pursuant to Section 7.13, may not:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal
amount thereof or the interest thereon or the amount payable
upon the redemption thereof, or change any Place of Payment
where, or the coin or currency in which, any Note, or the
interest thereon, is payable, or impair the right to
institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date); or
(b) reduce the percentage in Outstanding Amount of the
Outstanding Notes, the consent of whose Holders is required
for any amendment, supplement or waiver; or
(c) modify or alter the provisions of the proviso to the
definition of the term Outstanding; or
(d) modify any of the provisions of this Section or
Section 7.13, except to increase any percentage provided
thereby or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of
the Holder of each Note affected thereby; or
(e) permit the creation of any lien ranking prior to the
lien of the Mortgage (except for such liens expressly
permitted pursuant to Section 12.13).
In determining whether to execute any amendment or
supplement, subject to Sections 11.02(a) through (e), the Trustee
may in its discretion determine whether or not any Notes would be
affected by any such amendment or supplement and any such
determination shall be conclusive upon the Holders of all Notes,
whether theretofore or thereafter authenticated and delivered
hereafter. The Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders
under this Section to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such
Act shall approve the substance thereof.
In connection with any amendment, supplement or waiver
under this Indenture, the Company or RIH may, but shall not be
obligated to, offer to any Holder who consents to such amendment,
supplement or waiver, or to all Holders, at the
discretion of the Company or RIH,consideration for such Holder's
consent to such amendment,supplement or waiver. The terms of any such
enumerated document entered into pursuant to
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this Section 11.02 shall be
subject to the prior approval of the Casino Control Commission in consultation
with the New Jersey Division of Gaming Enforecement.
Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS.
In executing, or accepting the additional trusts created
by, any amendment or supplement permitted by this Article or the
modification thereby of the trusts already created by this
Indenture, the Trustee shall be entitled to receive from the Company, and,
subject to Section 8.01(c), shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such amendment or
supplement is authorized or permitted by this Indenture. The
Trustee may, but shall not, except to the extent required in the
case of a supplemental indenture entered into under Section
11.01(e), be obligated to, enter into any such amendment or
supplement which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT.
Upon the execution of any amendment or supplement under
this Article, every Holder of Notes theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the TIA and Casino Control
Act as then in effect.
Section 11.06. REFERENCE IN NOTES TO
AMENDMENT OR SUPPLEMENT.
In the absence of a direction from the Company,
Notes authenticated and delivered after the execution of
any amendment or supplement pursuant to this Article may, and if
required by the Trustee shall, bear a notation in form approved by
the Trustee as to any matter provided for in such amendment or
supplement. If the Company shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the
Company, to any such amendment or supplement may be prepared and
executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Notes.
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ARTICLE TWELVE
COVENANTS
Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay or cause to be
paid the principal of and interest on each of the Notes at the
place or places, at the respective times and in the manner provided
in the Notes and this Indenture. Each installment of interest on
the Notes may be paid by mailing checks for such interest payable to
or upon the written order of the Holders of Notes entitled thereto,
to such address and in such name as they shall appear on the Note
Register. Any installment of principal and interest shall be
considered paid on the date it is due if the Trustee or Paying
Agent (other than the Company or a Subsidiary of the Company or
any Affiliate thereof) holds on that date money in immediately
available funds designated exclusively for and sufficient to pay
the installment and the Trustee and/or the Paying Agent has not
received instructions from the Company not to make such payment or
is not prohibited from paying such money to the Noteholders
pursuant to the terms of this Indenture.
The Company shall pay interest (including post-petition
interest in any proceeding under any applicable bankruptcy law) to
the extent legally permitted on overdue principal at the rate set
forth in the Notes; and it shall pay interest (including
post-petition interest in any proceeding under any applicable
bankruptcy law) on unpaid interest otherwise payable under the
first clause of this sentence at the same rate to the extent
legally permitted.
Section 12.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain, in the Borough of Manhattan,
the City of New York, State of New York, an office or agency where
Notes may be presented or surrendered for payment, where Notes may
be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Notes
and this Indenture may be served. The Company initially appoints
the Trustee as its agent for presentation or surrender of Notes for
payment or registration, transfer or exchange. The Trustee (or its corporate
parent) will maintain an office in the Borough of Manhattan, the City of New
York, State of New York, for such purposes.
The Company may from time to time designate one or more
other offices or agencies (in or outside the City of New
York, State of New York) where the Notes may be presented or
surrendered for any or all such purposes, and may from time to
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time rescind such designations; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York, State of New York, for such
purposes as stated in this Section 12.02. The Company will give
prompt written notice to the Trustee of any such designation and
any change in the location of any such office or agency.
If at any time the Company shall fail to maintain such
an office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and
demands may be made or served at the principal corporate trust
office of the Trustee, and the Company hereby appoints the Trustee
its agent to receive all such presentations, surrenders, notices
and demands.
Section 12.03. MONEY FOR SECURITY
PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of, or
interest on, any of the Notes, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum, sufficient to pay
the principal or interest so becoming due until such sums shall be
paid or issued to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of such action or
any failure so to act.
The Company will, on or before each due date of the
principal of or interest on, any Notes, deposit with a Paying Agent
a sum in same day funds, sufficient to pay the principal or
interest so becoming due, such sum, as the case may be, to be held
in trust for the benefit of the Persons entitled to such principal
or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of such action or any
failure so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all sums received by it as such agent for the
payment of the principal of or interest on Notes (whether such
sums have been paid to it by the Company or by any other
obligor on the Notes) in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
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(b) promptly give the Trustee notice of any failure by
the Company (or any other obligor upon the Notes) to make any
payment of the principal of, or interest on, the Notes when
the same shall be due and payable; and
(c) at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent.
Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the
principal of, or interest on, any Note and remaining unclaimed for
two years after such principal or interest has become due and
payable shall be paid to the Company on its request, or (if then
held by the Company) shall be discharged from such trust, unless
otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, and the Holder of such
Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with regard to such money, and all
liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each
business day and of general circulation in the City of New York,
State of New York, or mailed to each such Holder, or both, notice
that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
publication or mailing, as the case may be, any unclaimed balance
of such money then remaining will be paid to the Company.
Section 12.04. CORPORATE EXISTENCE.
Subject to Article Ten, each of the Company and RIH 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
existence of each of its Subsidiaries in accordance with the
respective organizational documents of the Company, RIH and each
such Subsidiary and the rights (charter and statutory), licenses,
permits, approvals and governmental franchises of it and each of
its Subsidiaries necessary to the conduct of its and their
respective businesses, including, without limitation, all
licenses, permits, approvals and franchises necessary to assure
the continued operation of RIH's gaming operations at the
Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly
owned subsidiary of RIH may consolidate with, merge into or
transfer or distribute all or part of its properties and assets
to RIH or the Company or as otherwise provided in Section 10.01.
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Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE.
The Company and RIH will each keep proper books of record
and account, in which full and correct entries shall be made of all
material dealings or transactions of or in relation to the Notes
and the properties, business and affairs of the Company and RIH in
accordance with GAAP. The Company and RIH will at any and all
times, upon the written request of the Trustee and at the expense
of RIH, permit the Trustee by its representatives to inspect the
Casino-Hotel and the books of account, records, reports and other
papers of the Company and RIH, and to make copies and extracts
therefrom, and will afford and procure a reasonable opportunity to
make any such inspection (provided that the Company and RIH shall
have received reasonable advance notice of such inspection and that
any such inspection shall not unreasonably interfere with the
business operations of the Company and RIH). The Company and RIH
will furnish to the Trustee any and all information as the Trustee
may reasonably request with respect to the performance by the
Company and RIH of their covenants in this indenture.
Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES.
(a) RIH shall furnish or cause to be furnished to the
Trustee, within 105 days after each fiscal year of RIH: (i) a copy
of annual audited financial statements of RIH prepared in
conformity with GAAP, accompanied by a report of Ernst & Young or
of another firm of independent certified public accountants of
recognized national standing selected by RIH (the "National
Accountants"), together with a certificate from such National
Accountants stating that their audit examination has included a
review of the terms of this Indenture and that the National
Accountants have not become aware of any Event of Default or that
a Default has occurred and is continuing, and if they have become
aware of any such Event of Default or Default, describing it;
PROVIDED, HOWEVER, that the National Accountants shall not be
liable to any Person for any failure to discover any Event of
Default or Default in connection with such review; and (ii) a copy
of annual unaudited financial statements of RIH, including notes
to such financial statements and corresponding management's
discussion and analysis, in form and substance comparable to that
which would be required to be filed with the Commission in an
Annual Report on Form 10-K under the Exchange Act, prepared in the
same manner as the audited financial statements referred to in
clause (i) of this Section 12.06(a), signed by a proper accounting
officer of RIH. RIH contemporaneously with the furnishing of such
audited financial statements to the Trustee under clause (i) this
Section 12.06(a), RIH shall mail copies of such audited financial
statements to the Holders (which need not include the
certificate referred to in such clause (i)).
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(b) RIH shall furnish or cause to be furnished to the
Trustee, within 60 days after each quarter of each fiscal year of
RIH, except the final quarter of such fiscal year, a copy of
unaudited financial statements of RIH prepared on a consistent
basis with the audited financial statements referred to in clause
(i) of Section 12.06(a), signed by a proper accounting officer of
RIH and consisting of at least a balance sheet as at the close of
such quarter and statements of operations and cash flow for such
quarter and for the period from the beginning of such fiscal year
to the close of such quarter, including notes to such financial
statements and corresponding management's discussion and analysis,
in form and substance comparable to that which would be required to
be filed with the Commission in a Quarterly Report on Form 10-Q
under the Exchange Act. RIH contemporaneously with the furnishing
of such unaudited financial statements to the Trustee under this
Section 12.06(b), RIH shall mail copies of such unaudited financial
statements to the Holders (which need not be signed by a proper
accounting officer of RIH).
(c) RIH shall furnish or cause to be furnished to the
Trustee, contemporaneously with the furnishing of a copy of the
annual financial statements and of the quarterly financial
statements referred to in Section 12.06(a) and Section 12.06(b),
an Officers' Certificate dated the date of such annual financial
statement or such quarterly financial statements to the effect that
no Default or Event of Default has occurred and is continuing, or,
if there is any such Default or Event of Default, describing it and
the steps, if any, being taken to cure it.
(d) RIH shall furnish or cause to be furnished to the
Trustee, copies of each filing and report made by RIH or the Company
with the Commission pursuant to the reporting and filing requirements
of Section 13 or 15(d) of the Exchange Act, within 15 days after RIH
or the Company, as applicable, is required to file the same.
(e) RIH agrees that, if RIH becomes exempt from the
Commission reporting and filing requirements of Section 13 or 15(d)
of the Exchange Act, RIH shall prepare such periodic reports as it
would otherwise have been required to file with the Commission and
(i) at its own expense, cause all such periodic reports to be filed
with the Commission, the Trustee and any exchange upon which the
Notes then are listed, in each case on the date when such periodic
report would have been required to be filed with the Commission
under Section 13 or 15(d) of the Exchange Act, if either of such
provisions were applicable, and (ii) keep copies of such periodic
reports available at its office and promptly provide any Person who so
requests with a copy of any such periodic report, at the Company's
expense.
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(f) Each of the Company and RIH shall comply with the
provisions of SECTION 314(a) of the Trust Indenture Act.
(g) The Company shall deliver to the Trustee, promptly
upon becoming aware of any Default or Event of Default (but in no
event later than five business days thereafter) in the performance
of any covenant or agreement of the Company contained in this
Indenture or any of the Mortgage Documents, an Officers' Certificate
specifying with particularity such event.
Section 12.07. LIMITATIONS AND DIVIDENDS
AND RESTRICTED PAYMENTS.
(a) The Company hereby covenants that, on and after the
date of this Indenture, it will not, directly or indirectly, make,
or permit any Subsidiary of the Company to make, any Restricted
Payment.
(b) RIH hereby covenants that, on or after the date of
this Indenture,it will not, directly or indirectly make, or permit
any Subsidiary of RIH to make, any Restricted Payment; PROVIDED,
HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio,
as certified to the Trustee by an Officers' Certificate, calculated
at the time of the declaration of the dividend or distribution is
equal to or exceeds two, then RIH may declare and pay cash dividends
or make cash distributions in respect of any class of capital stock
of RIH in an amount not to exceed in the aggregate with any other
such cash dividends or distributions declared or made from and after
the date hereof, 50 percent of RIH's Consolidated Net Income from
and after the date hereof; and (ii) if (1) RIH's Consolidated
Interest Coverage Ratio, as certified to the Trustee by an
Officer's Certificate, calculated at the time of the declaration
of the dividend or distribution is equal to or exceeds two, and (2)
RIH has cash in excess of the amount required to pay interest on
the Notes and the Junior Mortgage Notes on the next Interest
Payment Date plus $20,000,000, then RIH may declare and pay cash
dividends or make cash distributions in respect of any class of
capital stock of RIH in an amount not to exceed such excess cash
amount.
(c) The Company and RIH will not, and will not permit
any of their respective Subsidiaries to, create or otherwise cause
or suffer to exist or become effective any encumbrance or
restriction of any kind on the ability of any Subsidiary of RIH or
the Company: (i) to pay dividends or make any other distribution
on the capital stock of such Subsidiary that is owned by RIH, the
Company or a wholly owned
Subsidiary of the Company or RIH, as applicable; (ii) to pay any
Indebtedness owed by such Subsidiary to RIH, the Company or any
wholly owned Subsidiary of the Company or RIH, as
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applicable; (iii)
to make loans or advances to RIH, the Company or any wholly owned
Subsidiary of the Company or RIH, as applicable; or (iv) to
transfer any of its property or assets to the Company, RIH or any
wholly owned Subsidiary of the Company or RIH, as applicable,
except (A) any restrictions existing on or prior to the date
hereof, or in connection with agreements in effect, or entered
into, on the date hereof, or any permitted amendments, renewals,
refundings, refinancings or extensions thereof; PROVIDED, HOWEVER,
that the terms and conditions of any such amendments, renewals,
refundings, refinancings or extensions are no more restrictive with
respect to the matters set forth in clauses (i) through (iv) of
this Section 12.07(c) than the agreements being amended, refunded,
renewed, refinanced or extended; (B) any restrictions or
encumbrances existing or arising pursuant to the terms of
Indebtedness of a Person outstanding at the time such Person
becomes a Subsidiary of the Company or RIH and not incurred in
connection with, or in contemplation of, such Person becoming a
Subsidiary of the Company or RIH or any permitted amendments,
renewals, refinancings or extensions thereof; PROVIDED, HOWEVER,
that the terms and conditions of any such amendments, renewals,
refundings, refinancings or extensions are no more restrictive with
respect to the matters set forth in clauses (i) through (iv) of this
Section 12.07(c) than the agreements being amended, renewed,
refunded, refinanced or extended; (c) encumbrances or restrictions
existing under or by reason of applicable law or regulation
(including, without limitation, the Casino Control Act) or this
Indenture; (d) customary provisions restricting assignment of
contracts or subletting or assignment of any lease governing a
leasehold interest of any Subsidiary of the Company or RIH; or
(e) net worth maintenance requirements imposed by any governmental
authority.
Section 12.08. LIMITATIONS ON ADDITIONAL
INDEBTEDNESS AND ISSUANCE OF NOTES.
(a) The Company and RIH shall not, and shall not permit
any of their respective Subsidiaries to, directly or indirectly,
incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to, including, without limitation,
through any merger or consolidation to which the Company, RIH or
any of their respective Subsidiaries is a party or through any other
acquisition of any such Subsidiary (collectively, "incur"), or
have outstanding, any Indebtedness other than, without duplication,
the following:
(i) the Notes;
(ii) Indebtedness represented by the Junior Mortgage
Facility;
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(iii) Indebtedness represented by the Working Capital
Facility;
(iv) Indebtedness represented by Capitalized Lease
Obligations in an amount not in excess of $5,000,000 in the
aggregate at any time outstanding;
(v) Indebtedness represented by F,F&E Financing
Agreements in an amount not in excess of $10,000,000 in the
aggregate at any time outstanding;
(vi) unsecured Indebtedness in an amount not in excess of
$5,000,000 in the aggregate at any time outstanding that is
subordinated and junior to the Junior Mortgage Notes at least
to the extent set forth in the Subordination Provisions
attached hereto as Exhibit C and which Indebtedness does not
have any requirements for amortization payments, mandatory
redemption or sinking fund payments prior to the stated
maturity of the Junior Mortgage Notes and does not provide
for the payment of interest in cash at any time when the most
recent installment of interest on the Junior Mortgage Notes
was not paid in cash;
(vii) Non-Recourse Indebtedness in an amount not in
excess of $25,000,000 in the aggregate at any time outstanding;
(viii) After-Acquired Fee Mortgage Debt in an amount not
in excess of $3,000,000 in the aggregate at any time
outstanding; and
(ix) Intercompany advances between RIH, the Company or
any of their direct or indirect Subsidiaries on the one hand,
and RII, on the other hand, in an in excess of $1,000,000 in the
aggregate at any time outstanding.
(b) The Company and RIH shall not permit any of their
respective Subsidiaries to issue (other than to the Company, RIH or
a direct or indirect wholly owned Subsidiary of the Company or RIH)
any capital stock which has voting rights or has a preference as to
any distribution over its common stock.
Section 12.09. LIMITATIONS ON REPAYMENT
OF SUBORDINATED INDEBTEDNESS.
Neither the Company nor RIH shall, and neither the
Company nor RIH shall permit any Subsidiary to, directly or
indirectly, purchase, redeem, defease (including, but not
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limited to, in-substance or legal defeasance) or otherwise acquire
or retire for value prior to the stated maturity of, or prior to
any scheduled mandatory redemption or sinking fund payment with
respect to (collectively, to "repay" or a "repayment"), the
principal of any Indebtedness of the Company, RIH or any Subsidiary
of the Company or RIH which is subordinated (whether pursuant to
its terms or by operation of law) in right of payment to the Notes;
PROVIDED, HOWEVER, that this Section 12.09 shall not apply with
respect to the Indebtedness represented by the Junior Mortgage
Facility.
Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS.
Each of the Company and RIH covenants that it will not,
and will not permit any Subsidiary to, repurchase any Notes in the
open market if an Event of Default shall have occurred and shall be
continuing hereunder, under the Junior Mortgage Note Indenture or
under the Senior Facility Note Indenture.
Section 12.11. RESTRICTION OF ACTIVITIES.
(a) RIH shall not, on or after the date of execution of
this Indenture, until the date that is 91 days after the payment in
full by the Company of the principal of (and interest, if any, on)
all Outstanding Notes, engage in any business or investment
activities other than those necessary for, incident to, connected
with or arising out of acquiring, financing, owning and operating
the Casino-Hotel or additional hotels or casinos or related or
ancillary businesses.
(b) Neither the Company nor RIH shall make any loans
to any Affiliate or any other Person other than (i) Indebtedness of
the type described in clause (ix) of Section 12.08(a), and (ii)
loans to RII from the proceeds of the Indebtedness represented by
the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have
the right to make loans to employees of RIH actively involved in
the operation of the Casino-Hotel or to engage in credit
transactions in the operation of the Casino-Hotel, if such loans
or credit transactions are in the ordinary course of business of
operating a casino-hotel.
(c) The Company shall not engage in any business (and
shall not have any Subsidiaries) other than (i) to
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collect
principal, interest (and any interest on overdue principal and
interest) and other amounts under any intercompany notes or
guaranties made to the order of or otherwise in favor of the
Company, (ii) to preserve its rights under this Indenture and the
Mortgage Documents and otherwise to comply with its obligations
thereunder and under the Notes, (iii) to do or cause to be done all
things necessary or appropriate to protect the Trust Estate, (iv)
to preserve its rights under the Junior Mortgage Indenture and the
Junior Mortgage Documents and otherwise to comply with its
obligations thereunder and under the Junior Mortgage Notes, (v) to
issue the Indebtedness represented by any other Junior Mortgage
Facility Notes, (vi) to issue Indebtedness represented by the
Working Capital Facility; (vii) to preserve its rights under the
Working Capital Facility and otherwise comply with its obligations
under the Working Capital Facility, (viii) to incur any other
Indebtedness permitted under this Indenture, (ix) to do all such
acts and deeds necessary in connection with the Junior Mortgage
Facility and the documents and instruments relating thereto and in
connection with the Working Capital Facility and the documents and
instruments relating thereto, (x) to declare, issue and pay
dividends on, or make any redemptions or repurchases of, the
Company's capital stock as contemplated by its Certificate of
Incorporation (to the extent permitted hereby) and otherwise to
comply with and perform the provisions of its Certificate of
Incorporation and By-laws, and (xi) to do such further acts and
deeds to effectuate any of the matters listed in the foregoing
clauses of this Section 12.11(c).
Section 12.12. LIMITATION ON SUBSIDIARIES
CONSOLIDATED GROUP.
The Company and RIH shall not have any Subsidiaries
except the Subsidiaries existing on the date of this Indenture and
Subsidiaries acquired by the Company or RIH in transactions not
prohibited by the other provisions of this Indenture which are and
shall at all times be wholly owned (directly or indirectly) by the
Company or RIH.
Section 12.13. LIMITATIONS ON LIENS.
Neither the Company nor RIH will create, incur, suffer to
exist or permit to be created or incurred any mortgage, lien, charge
or encumbrance on or pledge of the Mortgage Documents or any of the
Trust Estate, other than (a) the lien of the Mortgage Documents and
the Assignment Agreement, (b) liens on the Trust Estate in
connection with Indebtedness permitted by clauses (i), (ii), (iii),
(iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on
the Trust Estate, and (d) a notice of intention or building
contract filed by a mechanic, materialman or laborer under the New
Jersey lien law. Without limiting the generality of the
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previous
sentence, but notwithstanding the provisions of such sentence, RIH
shall not be deemed to have breached such provisions by virtue of
the existence of liens for Impositions (as defined in the Mortgage)
or mechanics' liens so long as RIH is in good faith contesting the
validity of such liens in accordance with the provisions of Section
5.09 of the Mortgage.
Section 12.14. COMPLIANCE WITH LAWS.
Each of the Company and RIH shall comply, and shall cause
each of its Subsidiaries to comply, with the Casino Control Act and
all other applicable statutes (including, without limitation, ERISA),
rules, regulations, orders and restrictions of the United States of
America, states and municipalities, and of any governmental
department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing in respect of the
conduct of its business and the ownership of its properties and
assets, including, without limitation, the Trust Estate, except such
as are being contested in good faith by appropriate proceedings in
accordance with the Mortgage Documents (to the extent applicable)
and except for such non-compliances as will not in the aggregate
have a material adverse effect on the business, properties,
operations or financial condition of the Company, RIH or their
respective Subsidiaries.
Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company or RIH shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (a) all
taxes, assessments and governmental charges levied or imposed upon
the Company, RIH or any of their respective Subsidiaries or upon the
Trust Estate or any portion thereof or upon the income, profits or
property of the Company, RIH or any of their respective
Subsidiaries, and (b) all lawful claims for labor, materials and
supplies which, if unpaid, will by law become a Lien upon the Trust
Estate or upon any other property of the Company, RIH or any of
their respective Subsidiaries; PROVIDED, HOWEVER, that the Company
and RIH shall not be required to pay or discharge or cause to be
paid or discharged any such tax, assessments, charge or claim the
amount, applicability or validity of which is being contested in
good faith by appropriate proceedings in accordance with the
Mortgage Documents (to the extent applicable) if adequate
reserves therefor have been established in accordance with GAAP.
Section 12.16. MAINTENANCE OF PROPERTIES.
Each of the Company and RIH shall cause the Trust Estate
and all other properties (other than obsolete
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equipment) owned by or
leased to it or any of its Subsidiaries, and used or useful in the
conduct of its business or the business of the Company, RIH or such
Subsidiary to be maintained and kept in good condition, repair
and working order, except for reasonable wear and use, and will
cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as required by the
Mortgage Documents or, to the extent not governed by the Mortgage
Documents, as in the reasonable judgment of the Board of Directors
of RII may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times.
Section 12.17. INSURANCE.
Each of the Company and RIH shall maintain, and shall
cause each of its Subsidiaries to maintain, with financially sound
and reputable insurers, appropriate insurance on each of their
respective properties and businesses against liabilities,
casualties, risks and contingencies of the type and in amounts
required by the Mortgage Documents or, to the extent not governed
by the Mortgage Documents, as customarily maintained by corporations
and other entities engaged in the same or similar businesses and
similarly situated; PROVIDED, HOWEVER, that any such insurer shall
be qualified to do business in the jurisdiction where the insured
property is located.
Section 12.18. WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each of the Company and RIH covenants (to the extent that
it may lawfully do so) that it will not, and will not cause or permit
any of its Subsidiaries to, at any time insist upon, or plead, or in
any manner whatsoever claim, and will resist any and all efforts to
be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or
forgive the Company or RIH from paying all or any portion of the
principal of, or premium, if any, and interest on the Notes or the
RIH Promissory Note or the Guaranty as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which
may affect the covenants or the performance of this Indenture or
the RIH Promissory Note or the Guaranty; and (to the extent
that it may lawfully do so) the Company and RIH hereby expressly
waive all benefit or advantage of any such law, and covenant that
they will not hinder, delay or impede the execution of any power
granted to the Trustee herein and in the Mortgage Documents, but
will suffer and permit the execution of every such power as though
no such law had been enacted.
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Section 12.19. APPOINTMENT TO FILL A
VACANCY IN OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy
in the office of Trustee, will appoint, in the manner provided in
Section 8.10, a Trustee, so that there shall at all times be a
Trustee hereunder.
Section 12.20. VALIDITY OF LIENS.
Each of the Company and RIH represents and warrants that
it has, and covenants that it shall continue to have, full corporate
power and lawful authority to grant, release, convey, assign,
transfer, mortgage, pledge, hypothecate and otherwise create the
lien on the Trust Estate; and the Company and RIH shall warrant,
preserve and defend the interest of the Trustee in and to the Trust
Estate against the claims of all Persons, except as otherwise
expressly permitted by the Mortgage Documents or this Indenture, and
will take all action necessary to maintain and preserve the lien on
the Trust Estate contemplated therein.
Section 12.21. TRANSACTIONS WITH
STOCKHOLDERS AND AFFILIATES.
Each of the Company and RIH covenants that it shall not,
and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transaction (including,
without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of the
Company or RIH or with any Affiliate of any such holder, unless (a)
such transaction is upon fair and reasonable terms which are no less
favorable to the Company or such Subsidiary, as the case may be,
than would be available in an arm's-length transaction with an
unrelated person and (b) if over $250,000, such transaction is
determined in the good faith judgment of a majority of the members
of the Board of Directors of either (i) RII, so long as RII owns,
directly or indirectly, a majority of the outstanding capital stock
of RIH, directly or indirectly, or (ii) RIH, to be in the best
interests of the Company, RIH or such Subsidiary as applicable;
PROVIDED, HOWEVER, that this provision shall not apply to (A)
any agreements, documents, instruments or transactions entered into
in connection with the RIHF Senior Facility Notes, (B) the Services
Agreement, (C) the RII Management Contract, or (D) the RII Tax
Sharing Agreement.
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ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. GENERAL APPLICABILITY OF ARTICLE.
Notes which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and in accordance
with this Article.
Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes shall be
evidenced by a Company Order. Redemption of any Notes shall not take
place earlier than 15 days after the corporate action taken to
authorize the redemption. In case of any redemption at the election
of the Company of less than all the Outstanding Notes, the Company
shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal
amount of Notes to be redeemed.
Section 13.03. SELECTION BY TRUSTEE
OF NOTES TO BE REDEEMED.
If less than all the Outstanding Notes are to be redeemed,
the particular Notes to be redeemed shall be selected by a random,
automated selection process or pro rata, as deemed appropriate by
the Trustee, not more than 60 days prior to the Redemption Date by
the Trustee from the Outstanding Notes which have not previously
been called for redemption, and such selection method may provide
for the selection for redemption of portions (equal to the greater
of $1,000 and the smallest authorized denomination of the Notes of
such series, or a multiple thereof) of the principal of Notes of a
denomination larger than $1,000.
The Trustee shall promptly notify the Company in writing
of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to
be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Notes shall relate, in the case of any Note redeemed or to be
redeemed only in part, to the portion of the principal of such Note
which has been or is to be redeemed.
Section 13.04. NOTICE OF REDEMPTION.
Notice of redemption shall be given by the Company or, at
the Company's request, by the Trustee in the name and
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at the expense
of the Company by first-class mail, postage prepaid, mailed not
less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Notes of such series to be redeemed, at his
address appearing in the Note Register.
Any notice which is mailed in the manner herein provided
shall be conclusively presumed to have been duly given, whether or
not the Holder receives the notice. In any case, failure to duly
give notice by mail, or any defect in the notice to the Holder of
any Notes designated for redemption in whole or in part, shall not
affect the validity of the proceedings for the redemption of any
other Notes.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the principal amount of Notes to be redeemed, and, if
less than all outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the
respective principal amounts) of the Notes to be redeemed;
(d) that on the Redemption Date, the Redemption Price of
each of the Notes to be redeemed will become due and payable
and that the interest thereon shall cease to accrue from and
after such date; and
(e) the place or places where the Notes to be redeemed are
to be surrendered for payment of the Redemption Price.
Section 13.05. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting
as its own Paying Agent, segregate and hold in trust as provided in
Section 12.03) an amount of money sufficient to pay the Redemption
Price of all the Notes which are to be redeemed on that date. Such
money shall be held in trust for the benefit of the Persons
entitled to such Redemption Price and shall not be deemed to be
part of the Trust Estate.
Section 13.06. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the
Notes so to be redeemed shall, on the Redemption Date, become due
and payable at the Redemption Price therein specified and from and
after such date (unless the Company
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shall default in the payment of
the Redemption Price) such Notes shall cease to bear interest.
Upon surrender of any such Note for redemption in accordance with
said notice, such Note shall be paid by the Company at the
Redemption Price. Installments of interest due on or prior to
the Redemption Date shall be payable to the Holders of the Notes
registered as such on the relevant Record Dates according to the
terms of such Notes and the provisions of Section 3.07.
If any Note called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until
paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Note.
Section 13.07. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly
executed by the Holder thereof or his attorney duly authorized in
writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note, without
service charge, a new Note or Notes of any authorized denomination
or denominations as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.
Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT.
Notwithstanding the provisions of this Article Thirteen,
if the Casino Control Commission does not waive the qualification
requirements as to any Noteholder (whether the record owner or
beneficial owner) and requires that such Noteholder be qualified
under the Casino Control Act, then, in such event, such Noteholder
must qualify under such Act. If a Noteholder does not so qualify,
the Noteholder must dispose of its interest in the Notes, within 30
days after the Company's receipt of notice of such finding, or the
Company may repurchase such Notes at the lower of the Outstanding
Amount and the Fair Market Value of such Notes, plus accrued
interest to the date of such repurchase. Commencing on the date the Casino
Control Commission serves notice upon either RIH or the Company that any Holder
is disqualified, it shall be unlawful for any such disqualified Holder: (i) to
receive any dividends or interest upon this Note; (ii) to exercise, directly
or through any trustee or nominee, any right conferred by this Note; or (iii)
to receive any remuneration in any form from either the Company or RIH for
services rendered or otherwise.
92
<PAGE>
ARTICLE FOURTEEN
DEFEASANCE
Section 14.01. DISCHARGE OF THE INDENTURE
AND DEFEASANCE OF THE SECURITIES.
The Company shall be deemed to have paid and discharged
the entire Indebtedness on the Notes and the provisions of this
Indenture (except as to any surviving rights of transfer or exchange
of Notes herein or therein provided for and any right to receive
payments of principal and interest as provided in this Section
14.01), if:
(1) The Company irrevocably deposits in trust with
the Trustee, pursuant to an irrevocable trust and security
agreement in form and substance reasonably satisfactory to the
Trustee, U.S. Legal Tender or direct non-callable obligations
of, or non-callable obligations guaranteed as to timely payment
by, the United States of America for the payment of which
obligation or guarantee the full faith and credit of the United
States of America is pledged ("U.S. Government Obligations")
maturing as to principal and interest in such amounts and at
such times as are sufficient, without consideration of the
reinvestment of such interest and after payment of all Federal,
state and local taxes or other charges or assessments in respect
thereof payable by the Trustee, in the opinion of a nationally
recognized firm of independent public accountants expressed in
a written certification thereof (in form and substance reasonably
satisfactory to the Trustee) delivered to the Trustee, to pay
reasonable compensation to the Trustee under Section 8.07 and
the principal of and interest on the outstanding Notes on the
dates on which any such payments are due and payable in
accordance with the terms of the Indenture and of the Notes;
(2) Such deposits shall not cause the Trustee to
have a conflicting interest as defined in and for purposes of
the TIA;
(3) Such deposit will not result in a Default under
this Indenture;
(4) The Company shall deliver to the Trustee an
Opinion of Counsel, or a private ruling of the Internal
Revenue Service, in form and substance satisfactory to the
Trustee, to the effect that Holders of the Notes will not
recognize income, gain or loss for Federal income tax purposes
as a result of such deposit
and the defeasance contemplated hereby and will be subject to
Federal income tax in the same amounts and in
93
<PAGE>
the same manner
and at the same times as would have been the case if such
deposit and defeasance had not occurred;
(5) The deposit shall not result in the Company,
the Trustee or the trust becoming or being deemed to be an
"investment company" under the Investment Company Act of 1940,
as amended;
(6) The Holders shall have a perfected security
interest under applicable law in the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 14.01(1);
and
(7) The Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent specified herein relating to the
defeasance contemplated by this Section 14.01 have been
complied with.
If all or any portion of the Notes are to be redeemed
through such irrevocable trust, the Company must make arrangements
satisfactory to the Trustee, at the time of such deposit, for the
giving of the notice of such redemption or redemptions by the
Trustee in the name and at the expense of the Company.
The Trustee and each co-trustee and separate trustee,
if any, then acting as such hereunder shall, at the expense of the
Company, execute and deliver a termination statement and such
instruments of satisfaction and discharge as may be necessary and
pay, assign, transfer and deliver to the Company or upon Company
Order all cash, securities and other personal property then held
by it hereunder, other than pursuant to this Section 14.01.
Section 14.02. APPLICATION OF DEPOSITED MONEY.
U.S. Legal Tender or U.S. Government Obligations
deposited with the Trustee pursuant to Section 14.01 shall be
applied by the Trustee in accordance with Section 5.02.
Section 14.03. REPAYMENT TO THE 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 in accordance with the provisions of Section 5.03.
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<PAGE>
____________________
This instrument may be executed in any number of
counterparts or with counterpart signatures, each of which as
executed shall be deemed to be an original, but all such
counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed and attested, all as of the day
and year first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest: By:
------------------------- --------------------------
Name:
Title:
RESORTS INTERNATIONAL HOTEL, INC.
Attest: By:
_________________________ __________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, as Trustee
Attest: By:
_________________________ __________________________
Name:
Title:
95
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ___________, 1993, ____________________
personally came before me, and he acknowledged under oath, to my
satisfaction, that: (a) he is the ______________ of Resorts
International Hotel Financing, Inc., the corporation named in this
document; (b) he is the attesting witness to the signing of this
document by the proper corporate officer who is ___________________
of Resorts International Hotel Financing Inc.; (c) this document
was signed and delivered by the corporation as its voluntary act
duly authorized by a proper resolution of its Board of Directors;
(d) he knows the proper seal of the corporation which was affixed to
this document; and (e) he signed this proof to attest to the truth
of these facts.
________________________________
Signed and sworn to
before me on _________, 1993.
_____________________________
Notary Public of the
State of New York
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ___________, 1993, _________________
personally came before me, and this person acknowledged under oath,
to my satisfaction, that: (a) this person is the ________________
of Resorts International Hotel, Inc., the corporation named in this
document; (b) this person is the attesting witness to the signing
of this document by the proper corporate officer who is
______________________, the __________________________ of Resorts
International Hotel, Inc.; (c) this document was signed and
delivered by the corporation by its voluntary act duly authorized
by a proper resolution of its Board of Directors; (d) this person
knows the proper seal of the corporation which was affixed to this
document; and (e) this person signed this proof to attest to the
truth of these facts.
--------------------------------
Signed and sworn to
before me on _________, 1993.
- -----------------------------
Notary Public
[seal]
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ________, 1993, ________________
personally came before me, and this person acknowledged under oath,
to my satisfaction, that: (a) this person is the _________________
of State Street Bank and Trust Company of Connecticut, National
Association, a national banking association named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer who is __________________,
the __________________________ of State Street Bank and Trust
Company of Connecticut, National Association; (c) this document was
signed and delivered by the corporation by its voluntary act duly
authorized by a proper resolution of its Board of Directors;
(d) this person knows the proper seal of the corporation which
was affixed to this document; and (e) this person signed this proof
to attest to the truth of these facts.
--------------------------------
Signed and sworn to
before me on _________, 1993.
- -----------------------------
Notary Public
<PAGE>
Exhibit A
RIH Promissory Note
<PAGE>
EXHIBIT A
AMENDED AND RESTATED SECURED PROMISSORY NOTE
$125,000,000 [ ], 1994
WHEREAS, in partial repayment of certain inter-
company debt owed by Resorts International Hotel, Inc., a New
Jersey corporation ("RIH"), to Resorts International, Inc., a Delaware
corporation ("RII"), RIH has issued to RII a promissory note
on the date hereof in the principal amount of $125,000,000 (as
the same may be amended or restated from time to time, the
"Note"), which Note is secured by a Mortgage Securing RIH
Promissory Note dated as of the date hereof (the "Mortgage"), by RIH,
as mortgagor which Mortgage encumbers certain real property
owned or leased by RIH together with all buildings and improvements erected
thereon (collectively, the "Property"); and
WHEREAS, RII has transferred the Note and the
Mortgage to RIHF in exchange for 11% Mortgage Notes due
2003 (the "Notes") in an aggregate principal amount of
$125,000,000, which Notes were issued pursuant to that
certain Indenture dated as of even date herewith (the
"Indenture") among RIHF, as issuer, RIH, as guarantor, and
State Street Bank and Trust Company of Connecticut, National
Association, as trustee (the "Trustee"); and
WHEREAS, RIHF has requested RIH to amend and restate
the Note;
NOW, THEREFORE, RIH agrees to amend and restate the
Note as follows:
RIH, for value received hereby promises to pay to
the order of RIHF (RIHF and any subsequent holder of this Note
being herein referred to as the "Payee"), the principal sum of
One Hundred Twenty-Five Million Dollars ($125,000,000), or
such other principal sum as shall be outstanding hereunder, on
September 15, 2003 (the "Maturity Date") in accordance with
the provisions hereof, with interest on such principal sum
from time to time outstanding, computed from [ ], 1994
[the Effective Date], in semi-annual installments of interest
on March 15 and September 15 of each year, commencing
1
<PAGE>
initially on September 15, 1994, at a rate of 11% per annum on
the unpaid balance hereof, until the principal hereof is paid
in full. Payments of principal and interest on this Note
shall be made at [address of the Payee], or
at such other address as the Payee may designate in writing.
Interest will be computed on the basis of a 360-day year of
twelve 30-day months, based on the actual number of days
elapsed. Principal and interest shall be paid in money of the
United States that at the time of payment is legal tender for
public and private debts.
l.(a) This Note shall be prepaid (i) in connection
with, but only to the extent of, any redemption of the
Notes of RIHF issued pursuant to the Indenture (all
prepayments of this Note are hereinafter referred to as
"Prepayments"), and/or (ii) by the surrender to the Trustee of
the principal amount of any Notes purchased or
otherwise acquired by RIH or the Company (as defined in the
Indenture) other than pursuant to the redemption provisions of
the Notes and surrendered to the Trustee for
cancellation in accordance with the provisions of the
Notes or the Indenture (it being expressly understood that the
same Notes shall reduce the principal amount of this
Note only once). Each Prepayment under clause (i) above shall
be made at the time that payment is required or permitted to
be made by the Company to the Trustee under the Indenture in
respect of any redemption of Notes. Each Prepayment
under clause (ii) above shall be deemed to be made at the time
of surrender of such Notes for cancellation. Each
Prepayment of this Note pursuant to clause (i) above shall be
in an amount equal to the aggregate amount paid to holders of
Notes on account of the redemption thereof (other than
interest), together with accrued and unpaid interest on the
amount of the reduction in the principal amount of this Note
as a result of such Prepayment. The principal amount of this
Note shall be reduced as a result of such prepayment in an
amount equal to the aggregate principal amount of the
Notes so redeemed or surrendered.
(b) Except as set forth in Section 1(a), this Note
may not be prepaid in whole or in part.
2. RIH shall pay interest on overdue principal and
prepayment premium at the rate of 14% per annum.
3. This Note is secured by the Mortgage on the
Property.
4. If (i) RIH defaults in the payment of interest
when the same becomes due and payable and the default
continues for a period of ten days following receipt of a
notice from the Payee or the Trustee specifying such default
2
<PAGE>
and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; (ii) RIH defaults in the
payment of the principal or any part thereof when the same
becomes due and payable at Maturity (as defined in the
Mortgage); (iii) there shall occur any other Event of Default
under the Mortgage or any other Note (as defined in the
Mortgage); or (iv) there shall occur any other Event of
Default under the Indenture, then on the happening of any such
event, the Payee may declare the entire Outstanding Amount (as
defined in the Indenture) of this Note and all accrued and
unpaid interest thereon and all sums due under Section 5 of
this Note and the Mortgage (collectively, the "Debt") to
become immediately due and payable.
5. RIH hereby waives presentment and demand for
payment, notice of dishonor, protest and notice of protest of
this Note and agrees to pay all costs of collection when
incurred, including reasonable attorneys' fees, which costs
may be added to the amount due under this Note and be
receivable therewith, and to perform and comply with each of
the terms, covenants and provisions contained in this Note and
the Mortgage on the part of RIH to be observed or performed.
Except as expressly provided herein, no release of any
security for the principal sum due under this Note or
extension of time for payment of this Note, or any installment
hereof, and no alteration, amendment or waiver of any
provision of this Note or the Mortgage shall release,
discharge, modify, change or affect the liability of RIH under
this Note or the Mortgage.
6. RIH covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit
or advantage of, any usury, stay or extension law or any other
law which would prohibit or forgive RIH from paying all or any
portion of the interest on this Note, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect
the covenants or the performance of this Note or the Mortgage;
and RIH (to the extent that it may lawfully do so) 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 Payee, but will
suffer and permit the execution of every such power as though
no such law had been enacted.
7. This Note shall be deemed to be a contract
under the laws of the State of New York and shall be construed
in accordance with and governed by the internal laws of the
State of New York.
8. This Note may not be changed or terminated
orally, but only by an agreement in writing signed by the
3
<PAGE>
party against whom enforcement of such change or termination
is sought.
9. RIH shall not claim any credit or deduction
from the interest or principal due hereunder by reason of
payment of any tax assessed upon the Property.
10. Whenever the provisions of this Note and the
provisions of the Indenture shall be inconsistent, the
provisions of the Indenture shall govern.
11. This Note is subject to and shall be enforced
in compliance with the provisions of the New Jersey Casino
Control Act. This Note shall not be transferred, assigned or amended
without the prior approval of the New Jersey Casino Control Commission.
12. Whenever used herein, the singular number shall
include the plural, the plural the singular, and the words
"Payee" and "RIH" shall include their respective successors
and assigns.
IN WITNESS WHEREOF, RIH has duly executed this Note
as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL, INC.
By: _____________________________
Name:
Title:
4
<PAGE>
STATE OF NEW YORK )
)ss.
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this [ ] day of [ ],
1994, before me, the subscriber, a Notary public of the State
of New York, personally appeared [ ], [ ] of
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation,
and he acknowledged that he signed, sealed and delivered the
same as his voluntary act and deed and the act and deed of
said RESORTS INTERNATIONAL HOTEL, INC., and that he received a
true copy of the within instrument on behalf of said
corporation.
Notary Public of the State of New York
[Seal]
5
<PAGE>
Exhibit B
Assignment Agreement from Resorts
International Hotel Financing, Inc.
<PAGE>
NA932280131 - MORTGAGE ASSIGNMENT
GD&C DRAFT DATED 12/17/93
==============================================================================
ASSIGNMENT OF AGREEMENTS
________________
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignor,
TO
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Assignee
Dated as of _________________, 1994
==============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware
corporation ("ASSIGNOR"), having an address at c/o Resorts
International, Inc., 1133 Boardwalk, Atlantic City, New Jersey
08401, to STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association,
having an address at 750 Main Street, Suite 1114, Hartford, Connecticut
06103, in its capacity as Trustee ("Assignee"), under that certain Indenture
dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and
Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR").
WITNESSETH:
WHEREAS, in partial repayment of certain inter-company debt owed by
Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"),
Mortgagor has issued to RII a secured promissory note on the date hereof in
the principal amount of $125,000,000 (as the same may be amended or
restated from time to time, the "RIH PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Promissory Note of even date
(the "MORTGAGE"), which Mortgage encumbers certain real property owned or
leased by Mortgagor as more specifically described on SCHEDULE 1 hereto
together with all buildings and improvements erected thereon (collectively,
the "PROPERTY"); and
WHEREAS, RII has transferred the RIH Promissory Note and the
Mortgage to Assignor in exchange for 11% Mortgage Notes due 2003 (the "NOTES")
in an aggregate principal amount of $125,000,000, which Notes were issued
pursuant to the Indenture; and
WHEREAS, as further security for the obligations of Mortgagor under
the RIH Promissory Note, Mortgagor has executed and delivered (i) an Assignment
of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor
of Assignor (as assignee of RII) and each dated as of the date hereof
(said Assignments and the Mortgage collectively referred to herein as the
"RIH PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted
<PAGE>
a security interest in specified personal property, assigned certain other
rights and assigned all right, title and interest of Mortgagor in
leases and rents to Assignor, all as security for the performance
and observance of obligations of Mortgagor under the RIH Promissory Note;
and
WHEREAS, the rights and obligations of the Assignee hereunder are
subject to the terms set forth in that certain Intercreditor
Agreement dated as of the date hereof among Assignor, Assignee,
Mortgagor, Fidelity Management and Trust Company, as trustee, and
U.S. Trust Company of California, N.A., as trustee (and
such other parties that may from time to time become a party
thereto); and
WHEREAS, in order to secure payment of the Notes and all other
payments due to the holder(s) from time to time of the Notes
(collectively, the "HOLDERS") or the Trustee under the Indenture,
Assignor has agreed to execute this Assignment and to be bound by
its terms;
NOW, THEREFORE, THIS ASSIGNMENT
FURTHER WITNESSETH:
That Assignor in consideration of the purchase of the Notes by the
Holders, Ten Dollars ($10.00) lawful money of the United States of
America duly paid to Assignor by Assignee at or before the
execution and delivery of these presents and for other good and
valuable consideration, the receipt of which are hereby
acknowledged, does hereby sell, assign and transfer unto
Assignee and unto its successors and to its assigns forever, for
its benefit and for the benefit of the Holders, and does hereby
grant to Assignee a security interest in and to all of Assignor's
estate, right, title and interest in, to and under any and all of
the following described property, rights and interests
(collectively, the "ASSIGNED PROPERTIES"):
GRANTING CLAUSE FIRST
All right, title and interest of Assignor in and to the RIH
Promissory Note, including all renewals, extensions, modifications
and replacements of the same, and without limiting the generality
of the foregoing, the present, continuing and future right to make
claim for, collect or cause to be collected, receive or cause to be
received directly from Mortgagor thereunder, all payments of
principal, interest and other sums of money payable thereunder.
GRANTING CLAUSE SECOND
All right, title and interest of Assignor in and to the RIH
Promissory Note Mortgage Documents, including all extensions,
renewals, modifications, supplements and replacements of the same.
2
<PAGE>
TO HAVE AND TO HOLD all said properties, rights and interests unto
Assignee and its successors and assigns forever.
THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and
covenants with Assignee as follows:
ARTICLE ONE
PARTICULAR COVENANTS OF ASSIGNOR
Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents,
warrants and covenants that it is duly authorized to enter into
this Assignment, and to grant and convey a lien on and security
interest in the Assigned Properties to Assignee in the manner and
to the extent herein set forth and that all action on its part
required for the execution and delivery of this Assignment has
been duly and effectively taken.
Section 1.02. FURTHER ACTION REQUIRED.
(a) Assignor covenants that it will, from time to time, execute and
deliver such further instruments and take such further actions as
may be required to carry out the purposes of this Assignment.
(b) Assignor hereby appoints Assignee as its lawful attorney-in-fact
(such power being coupled with an interest) in the name of Assignor
or Assignee or both to execute any instruments or to take any
actions to enforce all rights, powers and remedies of Assignor
under or pursuant to the Assigned Properties.
(c) Nothing contained herein shall limit the rights of Assignee
contained in the Mortgage or the Indenture.
(d) Until this Assignment is discharged in accordance with Section
5.01 hereof, no amendment, waiver, modification, discharge, release,
enforcement or satisfaction by Assignor of any of the rights or
remedies under the Assigned Properties shall be effective without
the prior consent and approval of Assignee, and Assignor shall have
no power or authority to take any such action without such consent
and approval.
ARTICLE TWO
OBLIGATIONS TO ASSIGNEE
Section 2.01. CONTINUING OBLIGATIONS.
(a) Assignee shall have no obligation, duty or liability with
respect to the Assigned Properties or any of
3
<PAGE>
them (other than those specifically assumed in its capacity as Trustee
pursuant to the Indenture).
(b) Assignor shall at all times remain liable to observe and perform
all of its covenants and obligations, if any, under the Assigned
Properties, and does hereby agree to indemnify and hold harmless
Assignee, its successors and assigns, from any liability, loss,
damage or expense it or they may incur under the Assigned
Properties or by reason of this Assignment.
ARTICLE THREE
PAYMENTS
Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due
and to become due under or pursuant to the Assigned Properties
shall be paid by Mortgagor directly to Assignee at the address set
forth in Section 6.02 hereof. Neither Assignor nor Assignee shall
have the right, without Mortgagor's prior written consent, to
instruct Mortgagor to pay Revenues to Assignor or in any manner or
to any party other than directly to Assignee.
Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins
in the execution of this Assignment to acknowledge (a) the
assignment by Assignor to Assignee of Assignor's right, title and
interest in, to and under the Assigned Properties, (b) Mortgagor's
agreement to make payment of all Revenues under the Assigned
Properties directly to Assignee at the address set forth in this
Assignment, and (c) the right of Assignee to exercise or enforce in
its own name, in the name of Assignor, or both, all of the rights,
powers and remedies of Assignor in, to and under the Assigned
Properties.
Section 3.03. REVENUES. As used herein, the term "REVENUES" shall
mean (a) all amounts paid or payable by Mortgagor under the RIH
Promissory Note or the RIH Promissory Note Mortgage
Documents, and (b) the net proceeds realized upon or as a result of
the enforcement of any mortgage lien or security interest granted
under the Assigned Properties or this Assignment or upon or as a
result of the exercise of any right or remedy under the Assigned
Properties or this Assignment.
Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor
hereby acknowledges, that Mortgagor may rely exclusively on
Assignee's directive that Assignee is entitled to take action
under this Assignment.
4
<PAGE>
ARTICLE FOUR
DEFAULT PROVISIONS AND REMEDIES
Section 4.01. ENFORCEMENT OF REMEDIES.
(a) Upon the occurrence of any default under the
Indenture or the Assigned Properties, or any of them (each, a
"DEFAULT"), not cured within the applicable grace period after the
applicable notice provision, if any, has been satisfied (each
called an "EVENT OF DEFAULT"), Assignee may, at its option, (i)
proceed directly to protect and enforce its rights and the rights
of any Holders under this Assignment or pursuant to the Assigned
Properties, or any one of them, by such suits, actions or special
proceedings in equity or at law, or by proceedings in the office of
any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein, or in
the Assigned Properties, or any of them, or in aid of execution of
any power granted herein or pursuant to the Assigned Properties, or
any one of them, or for the enforcement of any proper legal or
equitable remedy, including, without limitation, foreclosure of
the Mortgage and/or the sale of the collateral or part thereof
secured thereby at such foreclosure sale, subject to statutory and
other legal requirements, as Assignee shall deem most effective to
protect and enforce such rights, and Assignor hereby appoints
Assignee as its lawful attorney-in-fact (such power being coupled
with an interest) in the name of Assignor or Assignee or both to
effectuate such foreclosure and/or sale of such collateral or part
thereof; or (ii) instruct, direct and cause Assignor to effectuate
the foregoing on behalf of and for the benefit of Assignee and the
Holders, it being further understood that Mortgagor joins in the
execution of this Assignment in order to acknowledge its agreement
to promptly and duly execute and deliver any and all documents and
take any and all actions required by Assignee in order to permit
Assignee to foreclose and/or sell such collateral or part thereof,
and obtain the benefits of this Assignment, as aforesaid.
(b) Upon the occurrence of any Event of Default, Assignee shall be
entitled to sue for, enforce payment of and receive any and all
amounts then and at any time remaining due from Assignor or
Mortgagor for principal and interest on the RIH Promissory
Note, or other sums due under the RIH Promissory Note Mortgage
Documents, as the case may be, or otherwise under any of the
provisions of the Assigned Properties, or any of them, with interest
interest on overdue payments of such principal, at the rate set
forth in the RIH Promissory Note, from the date of Default
to the date of such payment, together with any and all fees, costs
and expenses of collection (including reasonable attorneys' fees
and court costs), subject to statutory and other legal
requirements.
5
<PAGE>
(c) Regardless of the occurrence of an Event of Default, upon five
days' written notice to Mortgagor (or such shorter period or
without notice if deemed necessary and appropriate by Assignee),
Assignee may institute and maintain or cause in the name of
Assignor or Assignee or both to be instituted and maintained such
suits and proceedings as it may be advised by its counsel shall be
necessary and appropriate to prevent any impairment of the Assigned
Properties, or any of them, and to protect its interests in the
Assigned Properties, and in the rents, issues, rights, revenues
and other income arising therefrom, including power to institute
and maintain proceedings to restrain the enforcement or compliance
with any 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 the
security hereunder or would be materially prejudicial to the
interests of Assignee.
(d) Nothing contained in this Article Four is intended to grant
Assignee any greater remedies and rights than those allowed to
Assignor in the respective Assigned Properties. In the event of
any conflict between the remedies and rights contained in any of
the Assigned Properties and the remedies and rights contained in
this Article Four, then the remedies and rights set forth in the
applicable Assigned Property shall govern.
ARTICLE FIVE
DISCHARGE OF ASSIGNMENT
Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or
cause to be paid, or there shall otherwise be paid, to Assignee
and/or the Holders' all amounts required to be paid by Assignor
pursuant to the Indenture and the Notes, and the conditions
precedent for the Indenture shall cease, determine and become
null and void in accordance with Section 5.01 of the Indenture,
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statements filed in connection
herewith and execute and deliver to Assignor and to Mortgagor all
such instruments as may be appropriate to evidence such discharge
and satisfaction of said lien or liens, and Assignee shall pay over
or deliver to Assignor all other moneys and securities held by it
pursuant to this Assignment, which are not required for the payment
of (a) principal and redemption price, if applicable, of and
interest on, the Notes, and (b) all other amounts required to be
paid by Assignor pursuant to the Indenture and the Notes.
6
<PAGE>
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the
covenants, stipulations, obligations and agreements contained in
this Assignment shall be binding upon and inure to the benefit of
Assignor, Assignee and Mortgagor (to the extent applicable to
Mortgagor) and their respective successors and assigns.
Section 6.02. NOTICES.
(a) Any request, notice, demand, authorization, direction, request
or other instrument authorized or required by this Assignment to be
given to or filed with Assignor, Assignee or Mortgagor
(collectively, "NOTICES") shall be deemed given when either (i)
delivered by hand or (ii) five days after sending by registered or
certified mail, postage prepaid, in either case addressed as
follows:
If to Assignor, at:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Assignee, at:
State Street Bank and Trust Company of
Connecticut, National Association
750 Main Street
Suite 1114
Hartford, Connecticut 06103
Attention: Corporate Trust Department
If to Mortgagor, at:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to Mortgagor, Assignor and/or Assignee, given as
provided above, any party may designate additional or substitute
addresses for Notices, which shall, notwithstanding Section
6.02(a), be deemed given with received.
Section 6.03. PARTIAL INVALIDITY. In case any one or more of the
provisions of this Assignment shall for any reason be held to be
illegal or invalid, such illegality or
7
<PAGE>
invalidity shall not affect any other provision of this Assignment, but this
Assignment shall be construed and enforced at the time as if such illegal or
invalid provisions had not been contained herein or therein, nor shall such
illegality or invalidity or any application thereof affect any legal and valid
application herein or thereof from time to time.
Section 6.04. APPLICABLE LAW. This Assignment shall be governed
by and construed under the internal laws of the State of New
Jersey, without giving effect to the principles of conflicts of
law.
Section 6.05. NO AMENDMENT. For so long as the Notes shall remain
outstanding, the Assigned Properties may not be modified, amended
or terminated except in accordance with the provisions of the
Indenture or the Assigned Properties.
Section 6.07. CASINO CONTROL ACT. Each of the provisions of this
Assignment is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act. This Agreement shall not
be transferred, assigned or amended without prior approval of the New Jersey
Casino Control Commission.
IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed
this Assignment Agreement as of the date first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest:
_________________________________________ By:_____________________________
President
RESORTS INTERNATIONAL HOTEL, INC.
Attest:
_________________________________________ By:______________________________
President
8
<PAGE>
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION
Attest:
_______________________________________ By:______________________________
Title
9
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel Financing, Inc., the
corporation named in the within instrument; that
__________________ is the Vice President of said Corporation;
that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of
directors of the said corporation; that deponent well knows the
corporate seal of said corporation; and that the seal affixed to
said instrument is the proper corporate seal and was thereto
affixed and said instrument signed and delivered by said Vice
President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
10
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, the corporation named in the within
instrument; that ____________ is the Vice President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
11
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation
named in the within instrument; that ______________ is the Vice
President of said corporation; that the execution, as well as the
making of this instrument, has been duly authorized by a proper
resolution of the board of directors of the said corporation; that
deponent well knows the corporate seal of said corporation; and
that the seal affixed to said instrument is the proper corporate
seal and was thereto affixed and said instrument signed and
delivered by said Vice President as and for the voluntary act and
deed of said corporation. In presence of deponent who thereupon
subscribed his name thereto as attesting witness; and deponent
signed this proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
12
<PAGE>
EXHIBIT C
SUBORDINATION PROVISIONS
A. SUBORDINATION. Anything herein to the contrary
notwithstanding, the Subordinated Debt, including principal,
premium, if any, and interest, shall be subordinate and junior to
the extent set forth in subparagraphs (i) to (v), inclusive, below,
to all Senior Indebtedness.
(i) If the Company (as defined in this Exhibit C)
shall default in the payment of any principal of or interest
on any Senior Indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, then, unless
and until such default shall have been remedied by payment in
full in cash or waived or shall have ceased to exist or all
amounts then due and payable in respect of Senior Indebtedness
shall have been paid in full or provision shall have been made
for such payment in cash, no holder of the Subordinated Debt
shall accept or receive any direct or indirect payment (in
cash, property, by set-off or otherwise) of or on account of
any Subordinated Debt.
(ii) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or
any receivership proceedings in connection therewith, relative
to the Company, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of
the Company, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Indebtedness shall
first be paid in full in cash, or such payment shall have been
provided for in cash, before any payment of or on account of
principal or interest is made by the Company upon the
Subordinated Debt.
(iii) In any of the proceedings referred to in
subparagraph (ii) above, any payment or distribution of any
kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable by the
Company in respect of the Subordinated Debt shall be paid or
delivered directly to the holders of Senior Indebtedness (or
to a banking institution selected by the court or Person
making the payment or delivery or designated by any holder of
Senior Indebtedness) for application in payment thereof in
accordance with the priorities then existing among such
holders, unless and
<PAGE>
until all principal of and interest on all Senior Indebtedness
shall have been paid in full in cash or such payment shall
have been provided for; PROVIDED, HOWEVER, that no such
delivery shall be made to holders of Senior Indebtedness of
stock or obligations which are issued pursuant to
reorganization proceedings or dissolution or liquidation
proceedings, or upon any merger, consolidation, sale, lease,
transfer or other disposal not prohibited by the provisions
of the Subordinated Debt, by the Company, as reorganized, or
by the corporation succeeding to the Company or acquiring its
property and assets, if such stock or obligations are
subordinate and junior (whether by law or agreement) at least
to the extent provided in this Section ___ to the payment of
all Senior Indebtedness then outstanding and to the payment
of any stock or obligations which are issued in exchange or
substitution for any Senior Indebtedness then outstanding.
(iv) Upon the occurrence and continuance of any
Default Subordination Event (other than under circumstances
when the terms of subparagraph (ii) above are applicable), no
holder of the Subordinated Debt shall accept or receive any
direct or indirect payment (in cash, property, by set-off or
otherwise) of or on account of any indebtedness in respect of
the Subordinated Debt during the Applicable Stand-Still Period;
PROVIDED, HOWEVER, that in the case of any payment on or in
respect of any Subordinated Debt which would (in the absence
of any such Default Subordination Event) have been due and
payable on any date (a "Scheduled Payment Date") during such
Applicable Stand-Still Period, the provisions of this
subparagraph (iv) shall not prevent such payment (a
"Scheduled Payment") on or after the date (the "Deferred
Maturity Date") immediately following the termination of such
Applicable Stand-Still Period. Notwithstanding the foregoing
provisions of this subparagraph (iv), the failure by the
Company to make a Scheduled Payment on a Scheduled Payment
Date during an Applicable Stand-Still Period shall
nevertheless constitute an Event of Default.
(v) If any payment or distribution of any
character, whether in cash, securities or other property,
shall be received by any holder of Subordinated Debt in
contravention of any of the terms of this Section ___ and
before all the Senior Indebtedness shall have been paid in
full, such payment or distribution shall be received in trust
for the benefit of the holders of the Senior Indebtedness at
the time outstanding in accordance with the priorities then
existing among such holders, and shall forthwith be paid over
or delivered and transferred to the holders of Senior
Indebtedness.
<PAGE>
B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions
of this Section ___ are for the purpose of defining the relative
rights of the holders of Senior Indebtedness on the one hand, and
the holders of the Subordinated Debt on the other hand, against the
Company and its property; and nothing herein shall impair, as
between the Company and the holders of the Subordinated Debt, the
obligation of the Company, which is unconditional and absolute, to
pay to the holders thereof the principal thereof and premium, if
any, and interest thereon in accordance with their terms and the
provisions hereof, nor shall anything herein prevent the holders of
the Subordinated Debt from exercising all remedies otherwise
permitted by applicable law or hereunder upon default hereunder
or under the Subordinated Debt (including, without limitation, the
right to demand payment and sue for performance hereof and of the
Subordinated Debt and to accelerate the maturity thereof as
provided in Section ___), subject to the rights, if any, under
this Section ___ of holders of Senior Indebtedness to receive cash,
property, stock or obligations otherwise payable or deliverable by
the Company to the holders of the Subordinated Debt; PROVIDED,
HOWEVER, that upon the commencement and during the continuance of
an Applicable Stand-Still Period the holders of the Subordinated
Debt, to the extent they are otherwise entitled to do so, will not
accelerate the maturity of the Subordinated Debt or pursue any
other remedy to enforce payment thereof or initiate any bankruptcy
or insolvency proceeding relative to the Company unless and until
the earlier of (i) the end of such Applicable Stand-Still Period and
(ii) the acceleration of the Senior Indebtedness related to such
Applicable Stand-Still Period.
C. SUBROGATION. Upon payment in full of Senior
Indebtedness, the holders of the Subordinated Debt shall be
subrogated to the rights of the holders of the Senior Indebtedness
to receive payments or distributions of assets of the Company made
on Senior Indebtedness until the principal of and premium, if any,
and interest on the Subordinated Debt shall be paid in full, and,
for the purposes of such subrogation, no payments to the holders
of Senior Indebtedness of any cash, property, stock or obligations
to which the holders of the Subordinated Debt would be entitled
except for the provisions of subparagraph (iii) of Section A above
shall, as between the Company, its creditors (other than the
holders of the Senior Indebtedness) and the holders of the
Subordinated Debt, be deemed to be a payment by the Company to or
on account of the Senior Indebtedness.
D. DEFINITIONS.
"COMPANY" means RIH, the Company or any of their respective
subsidiaries, as the case may be.
<PAGE>
"DEFAULT SUBORDINATION EVENT" means the existence of all
of the following: (i) an event of default shall have occurred and
be continuing in respect of the Senior Indebtedness, (ii) the
holders of the Subordinated Debt shall have received a notice from
or on behalf of any holder of Senior Indebtedness specifying that
such event of default has occurred and is continuing and that such
notice constitutes a "Default Subordination Notice", and (iii) no
other Default Subordination Notice shall have been delivered by or
on behalf of any holder of Senior Indebtedness within the 365-day
period immediately preceding the giving of such notice.
The "APPLICABLE STAND-STILL PERIOD" relating to any
Default Subordination Event shall be deemed to continue until the
event of default under the Senior Indebtedness giving rise thereto
shall have been cured (by payment or otherwise) or waived or a
period of 180 days shall have elapsed from the giving of the
Default Subordination Notice relating thereto, in any such case
whichever shall be the shorter period.
"SENIOR INDEBTEDNESS" shall mean and include all
obligations (whether now outstanding or hereafter incurred), for
the payment of which the Company is responsible or liable as
obligor, guarantor or otherwise, including, without limitation,
principal, interest, premium, fees, expenses and indemnities,
whether now owing or hereafter incurred (including any interest
accruing subsequent to the commencement of a proceeding described
in Section 7.04, regardless of whether the claims of holders of
such payment obligations for such interest are allowed in any such
proceeding).
<PAGE>
Exhibit D
Mortgage securing RIH Promissory
Note between Resorts International
Hotel, Inc, and Resorts International
Hotel Financing, Inc.
<PAGE>
NA932010185 - MORTGAGE
SECURING RIH PROMISSORY NOTE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING
RIH PROMISSORY NOTE
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
a Delaware corporation,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING
RIH PROMISSORY NOTE
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having
an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City,
New Jersey 08401 (RIHF, or its successors or assigns which shall than be the
Noteholder (as hereinafter defined), being referred to herein as "Mortgagee").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to (i) the payment of the
principal amount (and premium, if any) of the secured promissory note
by Mortgagor to Mortgagee in the principal amount of $125,000,000 as amended
and restated the date hereof (hereinafter
collectively referred to as the "Note"), in lawful money of the United States,
to be paid in accordance with the provisions thereof (and all renewals,
extensions, and modifications thereof) all of which are hereby made an
integral part hereof as though set forth at length herein; (ii) payment of
interest (including interest on all overdue principal and premium,
if any) becoming due under the provisions of the Note; (iii) payment
by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee
pursuant to any term or provision of this Mortgage; (iv) performance of each
covenant, term, condition and agreement of Mortgagor herein or in the Note
contained; (v) all costs and expenses, including reasonable counsel fees and
expenses as provided in Section 3.07, which may arise in respect of the Note
and this Mortgage or of the obligations secured hereby; and (vi) performance
and observance of all of the provisions herein contained, Mortgagor has
executed and delivered this Mortgage and has bargained, sold, aliened,
mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and
its successors hereunder and assigns forever, all of its right, title and
interest in, to and under any of the following described property:
<PAGE>
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause
as fully as if set forth in this Granting Clause at length.
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the "Ground
Leases") particularly described in Schedule 2, which Schedule is hereby made
a part of, and deemed to be described in, this Granting Clause as fully
as if set forth in this Granting Clause at length, which Ground Leases
cover the real property described in such Schedule 2 (the "Leased Land")
and in and to any and all modifications, extensions andrenewals
of the Ground Leases and all options set forth therein, together with (i) all
credits, deposits, privileges and rights of the Mortgagor as lessee under the
Ground Leases, now or at any time existing, (ii) the leaseholds and the
leasehold estates created by the Ground Leases and (iii) all of the estates,
rights, titles, claims or demands whatsoever of Mortgagor, either in law
or in equity, in possession or in expectancy, of, in and to the Ground
Leases and the Leased Land, together with (x) any and all other, further
or additional title, estates, interests or rights which may at anytime be
acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to
payment in full of all indebtedness secured hereby, acquire fee simple
title or any other greater estate to the Leased Land pursuant to
the Ground Leases, or otherwise, the lien of this Mortgage shall attach,
extend to, cover and be a lien upon such fee simple title or other
greater estate and thereupon the lien of this Mortgage shall be prior
to the lien of any mortgage or deed of trust placed on such acquired
title, estate, interest or right subsequent to the date of this Mortgage
and (y) any right to possession or statutory term of years derived from,
or incident to, the Ground Leases pursuant to Section 365(h) of
the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in
any present or future federal, state, local, foreign or other statute, law,
rule or regulation.
3
<PAGE>
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and
proceeds of the property subjected or required to be subjected to the lien
of this Mortgage, including, without limitation, the property described in
Granting Clauses First, Second, and Sixth (such property is hereinafter
collectively referred to as the "Premises") and all the estate, right,
title and interest of every nature whatsoever of the Mortgagor in and
to the same and every part thereof. The collective metes and bounds
description of the Owned Land and the Leased Land is set forth in
annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the
date of execution of this Mortgage or hereafter entered into by
the Mortgagor, if any, including extensions, renewals or amendments
of all of the same, and the immediate and continuing right as
security in accordance with an Assignment of Leases and Rents of even date
herewith between Mortgagor and Mortgagee, and, after the occurrence of an
Event of Default, to make claim for, collect, receive and receipt for (and to
apply the same as provided herein) any and all rents, income, revenues,
issues, profits, security and other sums of money payable or receivable
thereunder or pursuant thereto, and all proceeds thereof, whether payable
as rent, insurance proceeds, condemnation awards, security or
otherwise and whether payable prior to or subsequent to the maturity date of
the Note, to receive and give notices and consents thereunder, to bring actions
and proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any
Lease, including the commencement, conduct and consummation of any
proceedings at law or in equity as shall be permitted by any provision
of any Lease, and to do any and all things which the Mortgagor
or any lessor is or may become entitled to do under the Leases;
provided, that the assignment made by this granting Clause Fourth
shall not impair or diminish any obligation of the Mortgagor
under the Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of
Granting Clause Third, the Mortgagor's rights, privileges and
franchises in and to the following, to the extent of the
Mortgagor's interest therein and thereto and to the extent assignable
(collectively, "Operating Assets"):
4
<PAGE>
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including
guaranties and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties
and other items of intangible personal property relating to the
ownership or operation of the Casino-Hotel, including, without
limitation, (1) telephone and other communication numbers, (2) all
software licensing agreements as are required to operate computer software
systems at the Casino-Hotel, all transferable proprietary interest in software
required to operate the computer systems at the Casino Hotel and books
and records relating to the software programs, and (3) lessee's
interest under leases of Tangible Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor or
which have been assigned to the Mortgagor, for the design and construction,
and for the equipping and furnishing, of the Casino-Hotel, including
architect's agreements, engineering agreements, construction contracts,
consulting agreements and agreements or purchase orders for all items
of Tangible Personal Property and payment and performance bonds in
favor of the Mortgagor in connection with the Trust Estate (and all
warranties and guaranties thereunder and warranties and guaranties of any
subcontractor and bond issued in connection with the work to be
performed by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances,
fixtures and fittings and other articles of tangible personal property
which are, or are to be located on, or used in connection with the
operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six
5
<PAGE>
wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the
operation thereof;
(iii) all cards, dice, gaming chips and placques, tokens,
chip racks, dealing shoes, dice cups, dice sticks, layouts,
paddles, roulette balls and other consumable supplies and items to be
used in connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether in use or held in reserve storage
for future use, in connection with the operation of the Casino-Hotel,
which are on hand or on order whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind and
nature for use in all of the operating departments of the Casino-Hotel,
or in the improvements now or hereafter located on any of the Owned
Land, including without limitation, accounting supplies, guest
supplies, forms, printing, stationery, food and beverage stock, bar
supplies, laundry supplies and brochures to existing purchase orders;
(vi) all sets and scenery, costumes, props and other items of
tangible personal property on hand or on order for use in the production
of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by
the architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to time;
(h)any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
6
<PAGE>
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high roller"
lists; and
(j) all of the goodwill in connection with the operation of
the Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on which such facilities are shared
are not detrimental to the operations of the Casino-Hotel or the financial
condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel
would not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair
or diminish any obligation of the Mortgagor with respect to the Operating
Assets, nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures
and articles of personal property now or hereafter attached to or contained
in and used in connection with such buildings and improvements, including,
but not limited to, all apparatus, furniture, furnishings, machinery,
motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice
machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces,
coal and oil-burning apparatus, wall cabinets, machinery, generators,
partitions, steam and hot water boilers, lighting and power plants, pipes,
plumbing, radiators, sinks, bath tubs, water closets, gas and electrical
fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum
cleaning systems, office equipment and other furnishings, and all plumbing,
heating, lighting, cooking, laundry, ventilating, incinerating,
air-conditioning and sprinkler equipment or other fire prevention or
extinguishing apparatus and material, and fixtures and appurtenances thereto;
and all renewals or replacements thereof or articles in substitution therefor,
whether or not the same are or shall be attached to the Owned Land, the
Leased Land or to any such buildings and improvements thereon, in any
manner and
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(b) All of the Mortgagor's right, title and interest in
and to (i) the Leased Land, if the Mortgagor acquires the fee simple
title to the Leased Land or any part thereof (subject to the provisions
Section 2.06 hereof), (ii) all air rights and rights to maintain
supporting columns and all rights to construct and maintain bridges,
and to create private rights of way over streets now or hereafter owned or
enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and
(iii) all right, title and interest of Mortgagor as grantee or licensee
in and to the following to the extent necessary for the use and
enjoyment of the Owned Land or the Leased Land: (A) all those plots,
pieces or parcels of land and air rights, more particularly described on
Schedule 5, attached hereto and made a part hereof (the "Bridge Easement
Parcels"), with respect to which Mortgagor has easements, licenses or other
rights of possession or use pursuant to these certain easement and license
agreements more particularly described on Schedule 5 (the "Bridge
Easements"), (B) all those plots, pieces or parcels of land and air
rights, more particularly described on Schedule 6 attached hereto and
made a part hereof (the "Elevator Easement Parcels"), with respect to which
Mortgagor has easements, licenses or other rights of possession or use
pursuant to those certain license agreements more particularly described
on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or
parcel of land and air rights more particularly described on Schedule 7
attached hereto and made a part hereof (the "Turn-Around Easement Parcel")
with respect to which Mortgagor has easements, licenses, or other rights of
possession or use pursuant to that certain easement more particularly
described on Schedule 7 (the "Turn-Around Easement"), (the Bridge
Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement
Parcel are collectively referred to herein as the "Easement Parcels"; and the
Bridge Easements, the Elevator Easements and the Turn-Around Easement
are collectively referred to as the "Easements"), together with all
rights of way, privileges, liberties, tenements, hereditaments and
ppurtenances belonging or in any way appertaining to such estates, it
being the intention hereof that all property, interests, rights and privileges
and franchises pertaining to the Premises (other than Excepted Property) shall
be as fully embraced within and subjected to the lien hereof as if such
property were specifically described herein.
To the extent the grant of a security interest in any portion of the
Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be as well a security agreement under the Uniform Commercial Code for
the purpose of creating hereby a security interest in all of the Mortgagor's
right, title and interest in and to such property, securing the obligations
secured hereby, for the benefit of the Mortgagee.
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TOGETHER with all of the Mortgagor's right, title and interest
in and to all mineral and water rights and any title or reversion, in
and to the beds of the ways, streets, avenues and alleys adjoining the
Premises to the center line thereof and in and to all strips, gaps and gores
adjoining the premises on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to
and singular the tenements, hereditaments, easements, appurtenances,
passages, water courses, riparian rights, other rights, liberties and
privileges thereof or in any way appertaining to the Premises, including
any other claim at law or in equity as well as any after-acquired title,
franchise or license and the reversion and reversions and remainder and
remainders thereof; and
TOGETHER with all awards and other compensation heretofore or
hereafter to be made to the present and all subsequent owners of
the Trust Estate for any taking by eminent domain, either permanent
or temporary, of all or any part of the Trust Estate or any easement or
appurtenances thereof, including severance and consequential damage
and change in grade of streets, all in accordance with and subject to the
provisions of the Superior Instrument Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any
insurance policies described in Section 5.11, and the right to
receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Trust Estate or
otherwise, all in accordance with and subject to the provisions of
Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted
property, rights, title, interest, privileges and franchises, the
Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases,
Operating Assets, Easements, properties, options, credits, deposits,
rights, privileges and franchises of every kind and description, real,
personal or mixed, granted hereby, bargained, sold, aliened, assigned,
transferred, hypothecated, pledged, released, conveyed, mortgaged, or
confirmed as aforesaid, or intended, agreed or covenanted so to
be, together with all the appurtenances thereto appertaining (the Premises,
Leases, Ground Leases, Operating Assets, Easements, properties, options,
credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its
successors and assigns forever.
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SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and,
after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the Mortgagee
and the Noteholder as set forth in that certain Intercreditor Agreement
dated as of the date hereof among RIH, RIHF, Trustee, Fidelity Management and
Trust Company ("Fidelity"), as trustee under that certain note purchase
agreement dated as of the date hereof among Fidelity, RIH and RIHF, and
U.S. Trust of California, N.A.,("U.S. Trust"), as trustee under
that certain indenture dated as of the date hereof among U.S. Trust, RIH
and RIHF (and such other parties that may from time to time become a party
thereto).
BUT IN TRUST, NEVERTHELESS, for the benefit and security of the
Noteholder.
UPON CONDITION that, until the happening of an Event of Default and
subject to the provisions of Article Two, the Mortgagor shall be permitted to
possess and use the Trust Estate, and to receive and use the rents, issues,
profits, revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is
to be held and applied by the Mortgagee, subject to the further covenants,
conditions and trusts hereinafter set forth, and the Mortgagor does hereby
covenant and agree to and with the Mortgagee, for the benefit of the holder
of the Note as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage,
except as otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as
well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided
for shall be made in accordance with generally accepted accounting
principles consistently applied; and
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(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Mortgage as a whole and not
to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in
Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good
standing of the American Institute of Real Estate Appraisers) who is (i) of
recognized standing among appraisers of properties similar to the Casino-Hotel
and (ii) experienced in the appraisals of properties of a similar size and
scope to that of the Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in
Section 1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in
Section 1.01 of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming
and related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture, fixtures and
equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which
results in damage, loss or destruction to any buildings or improvements on the
Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in
Section 10.01 of the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both, would become
an Event of Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds
or a condemnation award is paid to be
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held in trust for restoration pursuant to the provisions of a Ground Lease or
Superior Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event
of Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
(1) subject to the provisions of the Assignment of Leases and
Rents, any cash held by the Mortgagor from rents, issues, profits,
revenues and other proceed of the Trust Estate to the extent that such
cash may be, but has not been, distributed or paid out in accordance with
the Services Agreement or in accordance with the provisions of
Section 12.07 the Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior
Mortgage secured by or imposing a lien on all or a portion of the Trust Estate
on a parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any
Tangible Personal Property and other items constituting Operating Assets, such
as computer software, which are financed, purchased or leased by the
Mortgagor, provided that, except as set forth on Schedule 3, the principal
amount of the indebtedness secured by such lien shall not exceed
eighty-five (85%) percent of the cost to the Mortgagor of such property at the
time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
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"GUARANTY MORTGAGE" means that certain Mortgage Securing Guaranty of
Mortgage Notes dated as of the date hereof from Mortgagor to State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association, which secures the Notes (as defined in the Indenture),
the lien of which shall be PARI PASSU with the lien of this Mortgage.
"HOTEL" means that portion of the Casino-Hotel not included within
the Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11% Mortgage Notes
due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and State Street Bank and Trust Company of Connecticut, National Association,
as trustee, as it may from time to time be supplemented, modified or amended
by one or more trust indentures or other instruments supplemental thereto
entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the
Mortgagor or in any other obligor upon the Note or in any Affiliate of the
Mortgagor or of such other obligor and (c) is not connected with the Mortgagor
or such other obligor or any Affiliate of the Mortgagor or such other obligor
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the
Mortgagee, such opinion or certificate shall state that the signer has read
this definition and that the signer is Independent within the meaning
thereof. A Person who is performing or who has performed services as an
independent contractor to any specified Person shall not be considered not
Independent merely by reason of the fact that such Person is or has performed
such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy
covering or applicable to the Trust Estate or any part thereof, all
requirements of the issuer of any such policy, and all orders, rules,
regulations and other requirements of the National Board of Fire Underwriters
(or any other body exercising similar functions) applicable to or affecting
the Trust Estate or any part thereof or any use or condition of the Trust
Estate or any other part thereof.
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"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects,
any bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected by the
Mortgagor authorized to issue insurance in the State of New Jersey with an
A.M. Best rating as high or higher than the rating of insurance companies
insuring other casino-hotels in Atlantic City, New Jersey.
"LEASE" means each lease or sublease demising all or any portion of
the Owned Land, the Leased Land or the buildings or improvements thereon and
made by the Mortgagor as lessor or sublessor, as the case may be, or any
spaces in any building or buildings which constitute a part of the Trust
Estate, including every agreement relating thereto or entered into in
connection therewith and every guaranty of the performance and observance of
the covenants, conditions and agreements to be performed by the lessee under
any such lease. Notwithstanding the foregoing, the term "Lease" shall
not include any transient room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements (including,
without limitation, the New Jersey Environment Cleanup Responsibility Act and
the New Jersey Spill Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, of governments, federal, state and municipal (including, without
limitation, the New Jersey Department of Environmental Protection, the
Atlantic City Bureau of Investigations, Division of Protection, the Atlantic
City Bureau of Investigations, Division of Gaming Enforcement of the State of
New Jersey, and the Casino Control Commission of the State of New Jersey),
foreseen or unforeseen, ordinary or extraordinary, which now is or at any time
hereafter becomes applicable to the Trust Estate or any part thereof, or any
of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or
gambling facility or any other use or condition of the Trust Estate or any
part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Note means the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at
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the Stated Maturity or by declaration of acceleration or prepayment
or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDER" shall mean the holder or holders of the Note.
"NOTE" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of
the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires
that an Officers' Certificate be signed also by an Architect or an Accountant
or other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Mortgage) be an employee of
the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless
otherwise specifically provided in this Mortgage, such counsel may rely, as
to any state of facts not personally known to such counsel and relating to
such opinions, on an Officers' Certificate to the extent not rejected by the
Trustee and its counsel (which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by
[list title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
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"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material
portion of the Premises whether held by the Mortgagor or any other Person
(which may be temporary or permanent) (including, without limitation, those
required for the use of the Casino-Hotel as a licensed casino facility), in
accordance with all applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet
due and payable or if due and payable are not delinquent to the extent
that any fine, penalty, interest or cost may be added for nonpayment
thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien; and
(9) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or any other entity or government or any agency or political subdivision
thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
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"RESTRICTED ENCUMBRANCES" means Leases permitted by and made
in accordance with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing, Inc., a
Delaware corporation.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"SETTLEMENT COSTS" has the meaning stated in Section 5.20.
"STATED MATURITY" when used with respect to a note means the date
specified in such note as the fixed date on which the principal of such note
is due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms,
conditions and provisions of (i) the Ground Leases with respect to the Leased
Land; and (ii) Superior Mortgages with respect to the portion of the Trust
Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, any Working Capital
Facility Lien and any After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of
the whole or any part of the Premises, by a competent authority, for any
public or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting
Clause Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the
Granting Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of
the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in
Section 5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
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(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent, waiver or other
document provided or permitted by this Mortgage to be made upon, given or
furnished to, or filed with, the Mortgagor or the Mortgagee (collectively,
"Notices") shall be deemed given when either (i) delivered by hand or (ii) two
days after sending by registered or certified mail, postage prepaid, addressed
as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any
party may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO
MORTGAGEE. Whenever
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such
Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such Officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Officer or Officers
of the Mortgagor stating that the information with respect to such factual
matters is in the possession of the Mortgagor, unless such counsel knows that
the certificate or opinion or representations with respect to such matters are
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erroneous. If appropriate to the matter being opined upon and to the extent
not prohibited by the Trust Indenture Act, any Opinion of Counsel may be
subject to rights of creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor
shall deliver any document as a condition of the granting of such application,
or as evidence of the Mortgagor's compliance with any term hereof, it is
intended that the truth and accuracy, at
the time of the granting of such application or at the effective date of such
certificate or report (as the case may be), of the facts and opinions stated
in such document shall in such case be conditions precedent to the right of
the Mortgagor to have such application granted or to the sufficiency of such
certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Mortgagor to the Mortgagee to take any action
under any provision of this Mortgage, the Mortgagor shall furnish to the
Mortgagee an Officers' Certificate stating that all conditions precedent,
if any, provided for in this Mortgage relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Mortgage relating to such particular application or request, no additional
certificate or opinion need be furnished. Every certificate or opinion with
respect to compliance with a condition or covenant provided for in this
Mortgage shall include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he
has made such
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examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such condition or covenant has been
complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each
case named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged,
released nor any of its provisions waived except by agreement in writing
executed by the Mortgagor and the Mortgagee and in accordance with the
provisions of this Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this
Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage,
express or implied, shall give to any Person, other than the parties hereto
and their successors and assigns, any benefit or any legal or equitable right,
remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the
provisions of this Mortgage and the provisions of the Indenture shall be
inconsistent, the provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the
holder of a security interest in this
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Mortgage and the Note by an assignment from Mortgagee to Trustee, except as
otherwise provided in Section 8.01 of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the Mortgagee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Mortgagee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by the Mortgagee hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to exercise any of
the rights or powers vested in it by this Mortgage at the request or
direction of any Noteholder pursuant to the Indenture, unless such holder
shall have offered to the Mortgagee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, or other paper or document but the Mortgagee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Mortgagee shall determine to
make such further inquiry or investigation, it shall be entitled (subject
to the express limitations with respect thereto contained in this Mortgage)
to examine the books, records and premises of the Mortgagor, personally or
by agent or attorney;
(f) the Mortgagee may execute any of the trusts or power hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys, and the Mortgagee shall not be responsible for any
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misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in case of entry
by it upon the Trust Estate, for debts contracted or liabilities or damages
incurred in the management or operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the Mortgagee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of its obligations hereunder, or in the exercise of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Mortgage shall
not be transferred, assigned or amended without prior approval of the New Jersey
Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or
cause to be paid, or there shall otherwise be paid, to the Mortgagee all
amounts required to be paid by the Mortgagor pursuant to the Note, and the
conditions precedent for the Indenture to cease, determine and become null and
void in accordance with Section 5.01 of the Indenture shall have occurred, the
Mortgagee shall promptly cancel and discharge this Mortgage, and execute and
deliver to the Mortgagor all such instruments as may be necessary, required or
appropriate to evidence such discharge and satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject
in each instance to the giving of any notice and the expiration of any grace
period provided for in Section 3.01 as a condition to such Default making it
an Event of Default, unless the Trust Indenture Act requires otherwise, in
which case the Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an
event which does not materially diminish the value of the Mortgagee's interest
in the Trust Estate shall not be deemed an "impairment of security", as that
phrase is used in this Mortgage.
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ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT
RELEASE. So long as there shall have been no acceleration of maturity of the
Note under Section 3.02, the Mortgagor shall be suffered and permitted, with
power freely and without let or hindrance on the part of the Mortgagee, subject
to the provisions of this Mortgage and the Guaranty Mortgage, to possess, use,
manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time
to time, unless an Event of Default shall have occurred and be continuing,
without any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any
question affecting the Mortgagor's right to sell or otherwise dispose of
the same, free from the lien of this Mortgage;
(b)to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and
add to any Tangible Personal Property; provided, however, that no change
shall be made in the location of any such property subject to the lien pf
this Mortgage which would in any respect impair the security of this
Mortgage upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the
right to pay dividends or make cash distributions pursuant to Section 12.07 of
the Indenture) received from the sale or disposition of any Tangible
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Personal Property under Subsection (a) of this Section 2.02, in the business
of operating the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect
to the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible
Personal Property.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any
provisions contained in this Mortgage or the Indenture to the contrary,
including, without limitation, the provisions of Granting Clauses Fifth and
Sixth and of Articles Two and Five hereof, if
the Mortgagor acquires Tangible Personal Property and other items constituting
operating assets, such as computer software subject to any FF&E Financing
Agreement, or becomes the lessee under a lease for any of the same and if the
document evidencing such F&E Financing Agreement prohibits subordinate liens
or the provisions of any such lease prohibits any assignment thereof by the
lessee, and if any such prohibition is customary with respect to similar
transactions of the lender or lessor, as the case may be, then the property so
purchased or the lessee's interest in the lease, as the case may be, shall be
deemed to be Excepted Property. If any such FF&E Financing Agreement permits
subordinate liens then the Mortgagee agrees to execute and deliver to the
Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination
of the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part
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of the Released Fee Land (the land to be so conveyed is hereinafter referred
to as the "Released Land"), free from the lien of the Mortgage, provided that:
(i) the Mortgagor furnishes the Mortgagee with an Officers'
Certificate requesting the release of such property from the Trust Estate
and stating (w) so long as the Released Land is owned or used by an
Affiliate of the Mortgagor, the Released Land shall not be operated in a
manner in competition with the operation of the Casino-Hotel as a casino,
(x) that no permanent structures have been constructed on the Released
Land, (y) that the Mortgagor is not required to hold the Released Land
in, order to maintain all Permits and in order to comply with the
provisions of all material contracts to which the Mortgagor is a party or
by which the Mortgagor is bound and either (A) the Mortgagor has made
adequate provision to maintain all Permits and to comply
with such contractual requirements by: (1) owning and using the balance
of the Trust Estate; (2) acquiring fee title to any real property that
would enable Mortgagor to maintain all Permits and satisfy such
contractual requirements; or (3) acquiring a Qualified Leasehold Interest
in real property that would enable the Mortgagor to maintain such Permits
and satisfy such contractual requirements; or (B) neither the
requirements of such Permits nor such contracts require the Mortgagor to
own the Released Land or use or operate any land in the manner in which
the Released Land is intended to be used; or (C) such requirements have
been waived, and (z) that such conveyance will not materially interfere
with the operation of the Casino-Hotel;
(ii) the Mortgagor delivers to the Mortgagee an Opinion of Counsel
to the effect that the Mortgagor is not required to own and use the
Released Land in order to maintain in good standing all Permits or by the
provisions of any material contract to which the Mortgagor is a party or
by which it is bound to own and use the Released Land;
(iii) the Mortgagor delivers to the Mortgagee, if applicable, an
endorsement to the Original Policy in accordance with Section 2.05(d);
(iv) the Mortgagor delivers to the Mortgagee an executed
counterpart of the instruments of conveyance in recordable form, which
shall contain a covenant prohibiting the use of the Released Land by any
Affiliate of the Mortgagor (A) as a casino or (B) in a manner in
competition with the operation of
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the Casino-Hotel as a casino prior to the latest Stated Maturity Date of
the Note; and
(v) in the case of a conveyance or release described in (A) or (B)
above, if the Released Land is being conveyed to an Affiliate of the
Mortgagor, the cash consideration received by the Mortgagor for the
Released Land shall not be less than the product of the Release Price
multiplied by the area (in square feet) of the Released Land.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective
purchaser to confirm the release of the Released Fee Land, upon receipt
by the Mortgagee of an Officers' Certificate stating that the Mortgagor is
entitled to such release by virtue of the Mortgagor's compliance with this
Section 2.05 (and, if applicable, Section 2.05 of the Guaranty Mortgage),
PROVIDED, that the Mortgagee shall have no liability thereunder
and all costs and expenses (including reasonable attorneys' fees) shall be
paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in
the event the Mortgagor intends to exercise an option to acquire fee title to
Leased Land under the provisions of any Ground Lease, the Mortgagor shall have
the right, unless an Event of Default shall have occurred and be continuing,
to have an Affiliate exercise such options(s) or for the Mortgagor to exercise
such options(s) on behalf of an Affiliate and in connection therewith to cause
fee simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee
with the following:
(i) an Officers' Certificate requesting the release of the Released
Fee Land from the Trust Estate and stating that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain all Permits
and in order to comply with the provisions of all material contracts to
which the Mortgagor is a party or by which the Mortgagor is bound, (B)
such Affiliate has received all Permits necessary to own the Released Fee
Land (including without limitation all approvals required by the Casino
Control Commission of the State of New Jersey), (C) there has been
delivered to the Mortgagor and the Mortgagee a true copy of an instrument
executed by such Affiliate stating that
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(i) such Affiliate may only engage in the activity of owning the
Released Fee Land and (ii) such Affiliate shall not convey the Released
Fee Land to another Affiliate of the Mortgagor, unless such other
Affiliate executes and delivers to the Mortgagor and the Mortgagee, the
instruments that would have been required to be delivered pursuant to
clause (C) if the Mortgagor conveyed the Released Fee Land to such
other Affiliate (provided that this restriction shall only be effective
until such time as this Mortgage shall be satisfied of record) and (D)
the deed conveying the Released Fee Land to such Affiliate shall state
that such conveyance is made subject to the terms, provisions and
conditions of the applicable Ground Lease and that the fee and leasehold
interests in the Released Fee Land shall not merge by reason of the
Mortgagor and/or any Affiliate owning both the leasehold and fee estate
therein, and that such estates shall always remain separate and distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor is
not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to
which the Mortgagor is a party or by which it is bound to own the
Released Fee Land and (B) the instruments described in clause (C) of
subparagraph (i) were duly executed by and are binding upon such
Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory
to Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by
Mortgagee, including, without limitation, (A) a covenant of the landlord not
to terminate the Ground Lease for any reason whatsoever (including without
limitation, due to any default by tenant of its obligations under such Ground
Lease), and (B) an agreement by the landlord not to accept payment of any
fixed or base rent from the tenant (and, if tendered by the Mortgagor, and
agreement to return same to the Mortgagor) or any other charges payable
thereunder at any time that an Event of Default shall have occurred and shall
be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective
purchaser to confirm the
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release of the Released Fee Land, upon receipt by the Mortgagee of an
Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED that
the Mortgagee shall
have no liability thereunder and all costs and expenses (including reasonable
attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i)
if no Event of Default has occurred and is continuing and (ii) if the
Mortgagor shall acquire Released Fee Land, then simultaneously with the
acquisition thereof, the Mortgagor shall have the right to encumber such fee
simple title with a mortgage (such mortgage and any refinancing thereof
permitted by the Indenture is hereinafter referred to as an "After-Acquired
Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be
subordinated to the lien of the After-Acquired Fee Mortgage on the Released
Fee Land (and to the lien of other Superior Mortgages which shall become a
lien thereon in accordance with the terms thereof), provided the following
conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee
Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee
simple title at the time of the acquisition and (B) satisfies the
criteria set forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers
fee simple title to the Leased Land or any part thereof, such
After-Acquired Fee Mortgage contains provisions binding on the holder of
the After-Acquired Fee Mortgage and its successors and assigns confirming
the provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire
Released Fee Land shall be used for purposes of Restoration; and
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(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstandi, the subordination of this Mortgage
to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land
shall not be self-operative but shall be effective only upon the execution and
delivery by the Mortgagee of an instrument in writing effecting such
subordination. The Mortgagee shall deliver such instrument of subordination
on the following conditions: (x) the Mortgagee shall have received an
Officers' Certificate confirming that the conditions of (i)
through (vi) of paragraph (a) have been satisfied, together with a true and
correct copy of the After-Acquired Fee Mortgage and all other instruments
securing the indebtedness evidenced thereby and (y) the instrument of
subordination shall specifically state that this Mortgage is being
subordinated not with respect to the lien of this Mortgage on the Ground Lease
or on the leasehold estate created thereby, but only with respect
to the fee simple title to the Leased Land or applicable part thereof and only
if and to the extent that the After-Acquired Fee Mortgage being subordinated
to is subject and subordinate to the Ground Lease and the leasehold estate
created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever
used herein, means any one of following events (including any applicable
notice requirement and any period of grace as specified in this Section 3.01)
(whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest on the Note when such
interest becomes due and payable and continuance of such default for a
period of 10 days after there has been given a written notice to the
Mortgagor specifying such default and stating that such notice is a
"Notice of Default" hereunder; or
(b) default in the payment of the principal of any Note at its
Maturity; or
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(c) an "Event of Default" as defined in Section 3.01 of the
Guaranty Mortgage shall occur; or
(d) default in the payment of any other sum due under the Note or
this Mortgage and the continuance of such default for a period of 10 days
after there has been given to the Mortgagor a written notice specifying
such default and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(e) default in the performance, or breach, of any covenant of the
Mortgagor in this Mortgage (other than a covenant a default in the
performance or breach of which is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
30 days after there has been given to the Mortgagor a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder, unless
(i) the default or breach is of such a nature that is curable but not
susceptible of being cured with due diligence within such 30-day period
(for reasons other than the lack of funds), (ii) the Mortgagor delivers
an Officers' Certificate to the Mortgagee within such 30-day period
stating (A) the applicability of the provisions of Clause (i) to such
default or breach, (B) the Mortgagor's intention to remedy such default
or breach with reasonable diligence and (C) the steps which the Mortgagor
has undertaken to remedy such default or breach and (iii) the Mortgagor
delivers to the Mortgagee additional Officers' Certificates every 30 days
thereafter updating the information contained in the certificate
described in Clause (ii), in which case such 30 day period shall be
extended for such further period of time as may reasonably be required to
cure the same, provided that the Mortgagor is then proceeding and
thereafter continues to proceed to cure the same with reasonable
diligence; or
(f) an "Event of Default" as defined in Section 7.01 of the
Indenture, shall occur; or
(g) default by the Mortgagor under any of the terms of any Ground
Lease which shall not be fully cured or waived prior to the expiration of
any grace period contained in such Ground Lease, unless prior to the
expiration of such grace period, the Mortgagor gives the Mortgagee an
Officers' Certificate, an Opinion of Counsel and a true copy of the
Injunction referred to below, which Certificate and Opinion state that
(i) a court of competent jurisdiction has issued an injunction (which is
in force and effect and has not been modified or reversed on appeal)
tolling or staying
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the expiration of the grace period set forth in such Ground Lease with
respect to such default, (ii) such injunction specifically provides that
in addition to the tolling or stay describe in (i) above, such tolling or
stay also applies to the Mortgagee for purposes of determining the
duration and expiration of the periods during which the Mortgagee may
exercise its rights under such Ground Lease (including without
limitation, periods to cure lessee defaults and delivering a guarantee
and the period during which the Mortgagee may elect to enter into a new
lease thereunder), (iii) such injunction further provides that the
tolling or stay under (i) and (ii) shall be effective until such time
that the Mortgagee is personally served with notice of the expiration of
such injunction and (iv) the Mortgagee is named as a party in any action
or proceeding involving such injunction and therefore entitled to notice
of any modification or termination thereof; and, if such injunction is
issued, then so long as such injunction remains in force and effect and
the preceding provisions of this Section 3.01(g) have been complied with,
the grace period referred to in the third line of this subparagraph (g)
shall be deemed to mean the grace period after giving effect to any such
tolling or stay in (i) above; or
(h) default by the Mortgagor under any of the terms of any Superior
Mortgage which default results in the acceleration of the maturity of
such Superior Mortgage and which shall not be fully cured or waived prior
to the expiration of any grace period contained in such Superior
Mortgage, unless prior to the expiration of such grace period, the
Mortgagor gives the Mortgagee an Officers' Certificate and an Opinion of
Counsel and a true copy of the injunction referred to below, which
Certificate and Opinion shall state (i) that a court of competent
jurisdiction has issued an injunction (which is in force and effect and
has not been modified or reversed on appeal) tolling or staying the
expiration of the grace period set forth in such Superior Mortgage with
respect to such default and (ii) the Mortgagee is named a party in any
action or proceeding relating to such injunction and therefore is
entitled to notice of any modification or termination thereof; and if
such injunction is issued, then so long as such injunction remains in
force and effect, and the preceding provisions of this Section 3.01(h)
have been complied with, the grace period referred to in the third line
of this subparagraph (h) shall be deemed to mean the grace period after
giving effect to any such tolling or stay; or
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(i) any modification, amendment or supplement of any Ground Lease
without the prior written consent of the Mortgage; or
(j) any modification, amendment or supplement of any Superior
Mortgage without the prior written consent of the Mortgagee, except to the
extent that such modification, amendment or supplement is permitted by
Section 5.22(b)(i) hereof; or
(k) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a
period of 60 days after there has been given a written notice to the
Mortgagor specifying that such notice is a "Notice of Default" hereunder;
or
(l) any representation or warranty of the Mortgagor set forth in
this Mortgage or in any notice, certificate, demand or request delivered
to the Mortgagee pursuant to this Mortgage shall prove to be incorrect as
of the time when made and the facts constituting such incorrectness
impairs the Mortgagee's security and such impairment continues for a
period of 30 days after there has been given to the Mortgagor a written
notice specifying that such notice is a "Notice of Default" hereunder,
unless (i) such impairment is curable, but not susceptible of cure within
such 30-day period (for reasons other than lack of funds), (ii) the
Mortgagor gives an Officers' Certificate to the Mortgagee within such
30-day period stating (A) the applicability of the provisions of (i) to
such impairment, (B) the Mortgagor's intention to remedy the same with
reasonable diligence and (C) the steps which the Mortgagor has undertaken
to remedy such default or breach and (iii) the Mortgagor delivers to the
Mortgagee additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate described in (ii),
in which case such 30-day period shall be extended for such further period
of time as may reasonably be required to cure
the same, provided that the Mortgagor is then proceeding and thereafter
continues to proceed to cure the same with reasonable diligence.
Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and
is continuing, then the Mortgagee may declare the Outstanding Amount of the
Note to be due and payable immediately, by a notice in writing to the
Mortgagor and upon any such declaration such principal shall become
immediately due and payable.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any
moneys received by the Mortgagee pursuant to
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the provisions of this Article Three (including moneys received by the Trustee
after any action or act by the Mortgagee under Section 3.10) shall be applied
by the Mortgagee in accordance with the provisions of Section 7.06 of the
Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this
Mortgage and such proceeding has been discontinued or abandoned for any reason
or has been determined adversely to the Mortgagee, then and in every such case
the Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such
proceeding had been instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission
of the Mortgagee to exercise any right or remedy accruing upon an Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy
given by this Article Three by law to the Mortgagee may be exercised, from
time to time, and as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect the indebtedness secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including
reasonable attorneys' fees and expenses, incurred by the Mortgagee in
connection therewith, together with interest at the rate then payable on the
Note, from the date of payment less the net amount received by the Mortgagee
or the Trustee, as their interests may appear under any title insurance
policy, and, until paid, all such expenses, together with interest as
aforesaid, shall be a lien on the Trust Estate.
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Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time
insist upon, plead, claim or take the benefit or advantage of, any
appraisement, valuation, stay, extension or redemption law now or hereafter in
force, in order to prevent or hinder the enforcement of this Mortgage or the
absolute sale of the Trust Estate, or any part hereof, or the possession
thereof by any purchaser at any sale under this Article Three; and the
Mortgagor, for itself and all who may claim under it, so far as it or they now
or hereafter may lawfully do so, hereby waives the benefit of all such laws.
The Mortgagor, for itself and all who may claim under it, waives, to the extent
that it may lawfully do so, all right to have the property in the Trust Estate
marshalled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate
as an entirety.
If any law in this Section 3.08 referred to and now in force, of
which the Mortgagor or its successor or successors might take advantage
despite this Section 3.08, shall hereafter be repealed or cease to be in
force, such law shall not thereafter be deemed to constitute any part of the
contract herein contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence
of an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate
(and the books and papers of the Mortgagor), and to hold, operate and manage
the Trust Estate (including the making of all needful repairs, and such
alterations, additions and improvements as the Mortgagee shall deem wise) and
to receive the rents, issues, tolls, profits, revenues and other income
thereof, and, after deducting the costs and expenses of entering, taking
possession, holding, operating and managing the Trust Estate, as well as
payments for taxes, insurance and other proper charges upon the Trust Estate
and reasonable compensation to itself, its agents and counsel, to apply the
same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's
rights under this Section 3.09 shall be subject to the provisions of the New
Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon
the Note and under any of the terms of this Mortgage shall have been paid and
all defaults hereunder shall have been made good, the Mortgagee shall
surrender possession to the Mortgagor.
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Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an
Event of Default shall occur and be continuing, the Mortgagee, with or without
entry, in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the
Mortgagee may determine, to the highest bidder at public auction at such
place and at such time (which sale may be adjourned by the Mortgagee from
time to time in its discretion by announcement at the time and place
fixed for such sale, without further notice) and upon such terms as the
Mortgagee may fix and briefly specify in a notice of sale to be published
as required by law; or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in
this Mortgage or in aid of the execution of any power granted in this
Mortgage or for the foreclosure of this Mortgage or for the enforcement
of any other legal, equitable or other remedy, as the Mortgagee, being
advised by counsel, shall deem most effectual to protect and enforce any
of the rights of the Mortgagee; the failure to join tenants shall not be
asserted as a defense to any foreclosure or proceeding to enforce the
rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust
Estate, whether made under the power of sale hereby given or pursuant to
judicial proceedings, to the extent permitted by law:
(a) the principal of and accrued interest on the Note, if not
previously due, shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt
of any required prior approvals of the New Jersey Casino Control
Commission, the Mortgagee may bid for and purchase the property offered
for sale, and upon compliance with the terms of sale may hold, retain and
possess and dispose of such property, without further accountability, and
may, in paying the purchase money therefor, delivery any notes or claims
for interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and
such notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon,
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shall be returned to the holders thereof after being appropriately
stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and instrument of
assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and
lawful attorney of the Mortgagor, in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold; and for that purpose it may execute all
necessary deeds, bills of sale and instruments of assignment and
transfer, and may substitute one or more persons, firms or corporations
with like power, the Mortgagor hereby ratifying and confirming all that
its attorney or such substitute or substitutes shall lawfully do by
virtue hereof; but if so requested by the Mortgagee or by any purchaser,
the Mortgagor shall ratify and confirm any such sale or transfer by
executing and delivering to the Mortgagee or to such purchaser or
purchasers all proper deeds, bills of sale, instruments of assignment and
transfer and releases as may be designated in any such request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of, in and to
the property so sold shall be divested and such sale shall be a perpetual
bar both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor,
its successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such
sale shall be a sufficient discharge to the purchaser or purchasers at
such sale for his or their purchase money and such purchaser or
purchasers and his or their assigns or personal representatives shall
not, after paying such purchase money and receiving such receipt, be
obliged to see to the application of such purchase money, or be in
anywise answerable for any loss, misapplication or non-application
thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default
and commencement of judicial proceedings by the Mortgagee to enforce any right
under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security
for the Note or the solvency of the
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Mortgagor, to the appointment of a receiver of the Trust Estate, and of the
rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER,
that the Mortgagee's rights under this Section 3.12 shall be subject to the
provisions of the New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days'
prior written notice to the Mortgagor (or such shorter period or without
notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee
shall have power to institute and maintain such proceedings as it may deem
necessary and appropriate to prevent any impairment of the Trust Estate by any
acts which may be unlawful or in violation of this Mortgage and to protect its
interests in the Trust Estate and in the rents, issues, profits, revenues and
other income arising therefrom, including power to institute and maintain
proceedings to restrain the enforcement of or compliance with any 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 the security hereunder or be materially prejudicial to the interests of
the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the contrary, following an Event of Default
and the taking of possession of the Trust Estate or any part thereof by the
Mortgagee and/or the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized, in addition
to the rights and powers of the Mortgagee and such receiver set forth
elsewhere in this Mortgage, to retain one or more experienced operators of
hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such
operator shall have all necessary legal qualifications, including all Permits,
to manage the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to
the Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation
or combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the
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successor entity formed by such consolidation or into which the Mortgagor is
combined or to which such conveyance or transfer is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Mortgagor
under this Mortgage with the same effect as if such successor entity had been
named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or
transfer of the Trust Estate substantially as an entirety, unless such
conveyance or transfer is in compliance with the provisions of Article Ten of
the Indenture, shall have the effect of releasing the Person named as "the
Mortgagor" in the first paragraph of this instrument or any successor entity
which shall theretofore have become such in the manner prescribed in such
Article Ten from its liability as obligor or maker of the Note.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as
otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor
shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or
otherwise transfer all or any part of the Trust Estate or any interest therein
(including without limitation any interest in the Ground Leases). Without
limiting the generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground Leases from
its ownership of the buildings constituting the Casino-Hotel or any part
thereof.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Mortgagor will duly and punctually pay the principal of (and premium, if any)
and interest on the Note in accordance with the terms of the Note and this
Mortgage.
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants
and agrees to comply with all of the terms and conditions set forth in any
FF&E Financing Agreements before the expiration of any applicable notice and
cure periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS.
(a) The Mortgagor will not create, incur, suffer or permit to be
created or incurred or to exist any mortgage, lien, charge or encumbrance on
or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances,
(ii) liens on the Trust Estate in connection with indebtedness permitted by
clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture,
and (iii) a building contract or a notice of intention filed by a
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mechanic, materialman or laborer under the New Jersey lien law. Without
limiting the generality of the foregoing sentence but notwithstanding the
provisions of the foregoing sentence, the Mortgagor shall not be deemed to
have breached the provisions of the foregoing sentence by virtue of the
existence of a lien for Impositions or mechanics liens so long as the
Mortgagor is in good faith contesting the validity of the same in accordance
with the provisions of Section 5.09 to the extent that the matters described
in (i) and (ii) do not constitute a default under any Ground Lease or Superior
Mortgage.
(b) Mortgagee acknowledges that, contemporaneously with the
execution and delivery of this Mortgage, it has assigned this Mortgage to the
Trustee and that the Trustee is also the mortgagee under the Guaranty
Mortgage, which Guaranty Mortgage creates a lien upon the same Trust Estate
PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and
agrees that whenever it is provided in the Guaranty Mortgage that the
Mortgagor shall deliver any notice or document, or is require to make any
payment thereunder, the delivery of such notice or document or the making of
such payment pursuant to the terms of the Guaranty Mortgage shall also
constitute the delivery of such notice or document or the making of such
payment in satisfaction of the terms, conditions and provisions of this
Mortgage to the same extent as the same constitutes satisfaction of the terms,
conditions and provisions of the Guaranty Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on behalf of the
Mortgagor, (a) to appear in and defend any action or proceeding brought with
respect to the Trust Estate or any part thereof and (b) upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgage), to commence any action or
proceeding to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The
Mortgagor represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to execute and deliver this Mortgage, and
all corporate action on its part necessary for the valid execution and
delivery of this Mortgage has been duly and effectively taken;
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(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the
Mortgage Documents, any Working Capital Facility Lien and Existing
Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than
the lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has
been given to or by the lessee, (iii) the Mortgagor has delivered true
and correct copies of the Ground Leases and all modifications, amendments
and supplements thereto, and (iv) each of the Ground Leases is in full
force and effect and has not been modified, amended or supplemented,
except as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to
execute this Mortgage and to grant, bargain, sell, alien, convey, assign,
transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as
provided herein (including without limitation with respect to the
Operating Assets and the Ground Leases, without the consent of any third
party, other than governmental authorities but any applicable or
necessary consent or approval of any such governmental authority has been
given or waived at or prior to the execution and delivery of this
Mortgage), and this Mortgage constitutes a valid second mortgage lien and
second priority security interest in the Trust Estate PARI PASSU with the
lien of the Guaranty Mortgage, subject only to Working Capital Facility
Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend (x)
the title to Trust Estate (including without limitation, its leasehold estates
under the lessee's interests in the Ground Leases) (subject to Permitted
Encumbrances) and (y) the priority of the lien of this
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Mortgage (subject to Permitted Encumbrances other than Restricted
Encumbrances), against the claims and demands of all persons whomsoever, at
the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will,
as provided in Section 5.13, from time to time subject its right, title an
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments
of further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded,
registered and filed, and will execute and file such financing statements and
cause to be issued and filed such continuation statements, all in such manner
and in such places as may be required by law or as requested by the
Mortgagee to fully preserve and protect the rights of the Mortgagee as a
secured party under the Uniform Commercial Code to all property comprising the
Trust Estate (to the extent a grant of a security interest therein is governed
by the Uniform Commercial Code) and to perfect, preserve and protect the lien
of this Mortgage as a valid mortgage lien of record and a valid security
interest on the Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all
expenses incident to the execution and delivery of this Mortgage, and any
instrument of further assurance, and all federal, state, county and municipal
stamp taxes and other taxes, duties, mposts, assessments and charges arising
out of or in connection with the execution and delivery of the Note, this
Mortgage, any financing statement or continuation statement with respect to
the personal property constituting part of the Trust Estate or any instrument
of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF
PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS.
The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to contests,
pay or cause to be paid promptly (or when installments of the same shall
become due and payable, if, by law or by agreement or arrangement with the
applicable governmental agency or authority, the same may be paid in
installments) before any fine, penalty, interest or cost may be added for
nonpayment (but no later than when the same are payable by the Mortgagor
dpursuant to any Superior Instrument
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Requirement), all taxes (including, without limitation, real estate taxes,
personal or other property taxes and all sales, value added, use and
similar taxes), assessments (including, without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed
prior to the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
profits or revenue tax upon the income of the Mortgagee, the Trustee or any
Noteholder nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholder nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed n substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Note;
(b) except for such property which the Mortgagor may dispose of or
replace pursuant to Section 2.02, maintain and keep all its properties used
or useful in the conduct of its business (other than obsolete equipment),
including, without limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition, except for
reasonable wear and use, and make or cause to be made all such needful and
proper repairs, renewals and replacements thereto consistent with the
standards of other casino-hotels in Atlantic City, New Jersey;
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(c) occupy and continuously operate the Casino-Hotel and keep the
Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to contests,
the Mortgagor at its sole expense will timely (1) comply with all Legal
Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if the failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the foregoing, the
Mortgagor represents and warrants that at the time of the execution of this
Mortgage, the Mortgagor is in compliance with the requirements of clauses
(1), (2) and (3);
(e) in the event of the passage after the date of this
Mortgage of any law of the State of New Jersey, or any other governmental
entity, changing in any way the laws now in force for the
taxation of mortgages, or debts secured thereby, for state or local
purposes, or the manner of the operation of any such taxes, so as to affect
the interest of the Mortgagee, then and in such event, the Mortgagor shall
bear and pay the full amount of such taxes, provided that if for any reason
payment by the Mortgagor of any such new or additional taxes would be
unlawful or if the payment thereof would constitute usury or render the
indebtedness secured hereby wholly or partially usurious under any of the
terms or provisions of the Note, or this Mortgage, or otherwise, the
Mortgagee may, at the Mortgagee's option, declare the whole sum
secured by this Mortgage, with interest thereon, to be due and payable 90
days after notice of election thereof has been given by the Mortgagee, or
the Mortgagee may, at the Mortgagee's option, pay that amount or portion of
such taxes as renders the loan or
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indebtedness secured hereby unlawful or usurious, in which event the
Mortgagor shall concurrently therewith pay the remaining lawful and
nonusurious portion or balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole
expense, contest by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part
of any Imposition or lien therefor or any Legal Requirement or Insurance
Requirement or the application of
any instrument of record affecting the Trust Estate or any part thereof or any
claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and
may withhold payment of the same pending such proceedings if permitted by law,
or make payment under protest, or defer compliance with any such Legal
Requirement, any such Insurance Requirement or the terms of any such
instrument, and the same shall not be a Default hereunder, provided that
(a) in the case of any Impositions or lien therefor or any claims of
mechanics, materialmen, suppliers or vendors or lien therefor, such
proceedings shall suspend the collection thereof from each of the Mortgagor,
the Mortgagee, the Trustee, the Noteholder and the Trust Estate, (b) neither
the Trust Estate nor any interest therein would be in any danger of being
sold, forfeited, or lost, (c) such action would not result in or constitute a
default under any Ground Lease or Superior Mortgage, (d) in the case of a
Legal Requirement, neither the Noteholder nor the Mortgagee shall be in any
danger of any civil or any criminal liability, and the failure of the
Mortgagor to comply with such Legal Requirement shall not affect the
continuance in good standing of any Permit or result in the suspension,
termination, non-renewal or material adverse modification of any permit, and
(e) in the case of an Insurance Requirement, the failure of the Mortgagor to
comply therewith shall not affect the validity of any insurance required to be
maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the
generality of the first sentence of Section 5.03 and notwithstanding the
provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed,
either by payment, or bonding or otherwise, all claims and demands of
mechanics, materialmen, laborers, and others which, if unpaid, might result
in, or permit the creation of, a lien on the Premises and/or Trust Estate or
any part thereof, or on the revenues, rents, issues, income and profits
arising therefrom and in general will do or cause to be done everything
necessary so that the lien hereof shall be fully preserved, at the cost of the
Mortgagor, without expense to the Mortgagee.
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Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable
properties, in amounts at all times sufficient to prevent the Mortgagor
from becoming a coinsurer within the terms of the applicable policies,
but in any event such insurance shall be maintained in such insurable
amounts not less than the greatest of the following (hereinafter referred
to as the "Insurance Amount"): (i) 100% of the then full insurable value
of such insurable properties, the term "full insurable value" to mean the
actual replacement cost (excluding the costs of foundation, footing,
excavation, paving, landscaping and other similar, non-insurable
improvements) determined from time to time (but not less frequently than
once in any 36 calendar months), by an Architect, contractor, appraiser,
or an Insurer, or (ii) the amount required to be maintained pursuant to the
Superior Instrument Requirements;
(2) war risk insurance as and when such insurance is obtainable
from the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then
be so obtainable;
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the
cost of such insurance, for personal injury and property damage with
respect to any one occurrence, which may be under an umbrella policy.
Anything contained in this clause (3) to the contrary notwithstanding,
the Superior Instrument Requirements with respect to the kinds and amount
of insurance described in this clause (3) shall be satisfied by the
Mortgagor;
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(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already
covered by other policies of insurance maintained by the Mortgagor) on or
about such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that at any time that the Mortgagor is
renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates
determined by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable
size in the boardwalk area of Atlantic City, New Jersey and (ii) required
to be maintained pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1),
(2), (6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, $100,000 with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
$1,000,000, (ii) the Mortgagor shall be permitted to maintain a $200,000 self
insured retention under the general liability policy described in clause (3) and
a deductible with respect to the other insurance policies described in clause
(3) in an amount not to exceed the amount of deductible as is customarily
maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the
Mortgagor shall not reduce its insurance coverage for the matters described in
clause (3) (which for purposes of this paragraph means a reduction in single
limits or an increase in deductible) unless and until the Mortgagor delivers
to the Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained atrates determined
by the Mortgagor to be reasonable for such coverage, (x) the amount of the
proposed reduction, (y)
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the premium for the existing and the proposed reduced coverage, and (z) that
the proposed deductible satisfied the criteria set forth in this clause (iii),
and (iv) the Mortgagor shall be permitted to maintain a deductible with
respect to the insurance policies described in clause (5) in the forms of and
in an amount not to exceed the amount of deductible as is customarily
maintained by casino-hotels of similar size in Atlantic City, New Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant
to Subsection (a) of this Section 5.11 shall, (1) except in the case of
workers' compensation insurance, name as additional insureds the Mortgagee
and, to the extent required by the Superior Instrument Requirements, the
Lessors and the holders of the Superior Mortgages, (2) provide that all
insurance proceeds for losses, except in the case of public liability insurance
and workers' compensation insurance or as otherwise provided in Subsections
(d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or
such other party as is required to receive such proceeds under a Superior
Mortgage, (3) except in the case of workers' compensation,
include effective waivers (whether under the terms of any such
policy or otherwise) by the insurer of all claims for insurance premiums
against all lost payees and named insureds (other than the Mortgagor) and all
rights of subrogation against any named insured, (4) except in the case of
public liability and workers' compensation insurance, provide that any losses
shall be payable notwithstanding (i) any act, failure to act, negligence of,
or violation or breach of warranties, declarations or conditions contained in
such policy by the Mortgagor or the Mortgagee or any other named insured or
loss payee (including, without limitation, with respect to the Released Fee
Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation
or use of the insurable properties for purposes more hazardous than
permitted by the terms of the policy, (iii) any foreclosure or other
proceeding or notice of sale relating to the insurable properties or (iv) any
change in the title to or ownership or possession of the insurable properties,
(5) contain a non-contributory mortgagee clause in favor of the Mortgagee,
and (6) provide that if all or any part of such policy is cancelled,
terminated or expires, the insurer will forthwith give notice thereof to each
named insured an loss payee and that no cancellation, reduction in amount
or material change in coverage thereof shall be effective until at least
30 days after receipt by each named insured and loss payee of written notice
thereof.
(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate
originals of all insurance policies that the Mortgagor is required to maintain
pursuant to this Section 5.11 and (2) within 30 days after each reduction in
insurance required to be maintained by the Mortgagor
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hereunder, an Officers' Certificate setting forth the articulars as to all
such insurance policies and certifying that the same comply with the
requirements of this Section 5.11, that all premiums or installments thereof
then due thereon have been paid and that the same are in full force and
effect. The Mortgagee shall not be responsible for effecting or renewing any
insurance or for the responsibility or solvency of the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x) results in
damage, loss or destruction in an amount in excess of $5,000,000 to any
buildings or improvements on the Premises and/or any Tangible Personal
Property or (y) pursuant to any Superior Instrument Requirement, would require
the deposit of insurance proceeds with the Depositary, or action or proceeding
with respect thereto. Whenever the Superior Instrument Requirements require
or permit the selection of the Depositary by the Mortgagor, the Mortgagor
shall select the Insurance Trustee as the Depositary. Within 30 days after
any Casualty which results in any damage, loss or destruction in an amount
in excess of $10,000,000 to any buildings or improvements of the Premises
and/or any Tangible Personal Property, the Mortgagor shall deliver to the
Mortgagee a certificate of an Architect stating whether, in such Architect's
opinion, applicable Legal Requirements permit the Restoration of such
buildings and improvements for the same uses and to the same size and quality
in all material respects, as existed immediately prior to the Casualty (and if
such certificate states the Legal Requirements do not permit such
Restoration, such certificate shall describe the manner closest approximating
such criteria to which the buildings and improvements could be so restored and
shall be accompanied by a Certificate of Appraised Value dated not more than
10 days prior to delivery setting forth the Appraised Value immediately prior
to the Casualty and the estimated Appraised Value immediately after the
Restoration). If the Mortgagor is required to deliver such Certificates of
Appraised Value and if based on such Certificates of Appraised Value
immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of
(i) 66 2/3% of the Appraised Value immediately after such Restoration or
(ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately
prior to such Casualty divided by the Appraised Value immediately prior to the
Casualty multiplied by the Appraised Value immediately after such Restoration,
then the proceeds of any insurance shall, at the election of Mortgagee,
either be applied to Restoration as set forth in Subsections (e), (h) and (i)
below) or paid and delivered to the Mortgagee to the extent of the then
Outstanding Amount of the Notes and any other interest or other sums due
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hereunder or thereunder to be applied to the satisfaction of the Mortgage to
the extent proceeds are available for such purpose and provided that no
additional sums are due to the Trustee or the Noteholders under the Notes or
the Indenture, the balance of any net insurance proceeds shall be paid to the
Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of
Appraised Values indicates that the Outstanding Amount of First Mortgage Debt
immediately after such Restoration exceeds the greater of the two amounts
determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance
will be made available for Restoration (subject to paragraphs (e), (h) and
(i) below) if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as
additions to capital in an amount equal to the Outstanding Amount of First
Mortgage Debt in excess of the Appraised Value necessary to be paid down so
that the Outstanding Amount of First Mortgage Debt will not exceed either of
the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED
that such commitment may only be released if, upon an Appraisal at any time
following completion of such Restoration, the aggregate Outstanding Amount of
the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value.
(e) Subject to the provisions of Subsection (d) above, in case a
Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of $10,000,000, the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to the
Insurance Trustee (or other Depositary required by the Superior Instrument
Requirements, provided that such Depositary holds such proceeds in trust for
purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable promptness under
the circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair, replacement
or rebuilding of the damage or destruction resulting from the Casualty (all of
which restoration, repair, replacement or rebuilding are referred to as
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the "Restoration") in accordance with the plans and specifications submitted
to the Insurance Trustee, in conformance with all Legal Requirements and
Superior Instrument Requirements, and in accordance with the further
provisions of this Subsection (e), regardless of the extent of any such
Casualty and whether or not net insurance proceeds, if any, shall be available
or, if available, shall be sufficient, for the purpose of the Restoration
(provided, however, that if the Mortgagor does not receive any net insurance
proceeds within 30 days after any Casualty because the adjustment of the loss
has not yet occurred, then the obligation of the Mortgagor to commence such
Restoration shall be deferred until such proceeds are made available to the
Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officer's
Certificate certifying that the Mortgagor is diligently and continuously
adjusting such
loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an
Officers' Certificate within such 30-day period requesting the extension of
such period, estimating the date on which such proceeds will be available and
describing the Mortgagor's efforts to adjust such loss and certifying that
such extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach has
been waived) and (iii) the Mortgagor delivers to the Mortgagee additional
Officers' Certificates every 30 days thereafter updating the information
contained in the certificate described in Clause (ii)). All Restoration
work shall be performed in accordance with the applicable provisions of
Section 5.12 and in conformance with all Superior Instrument Requirements,
Legal Requirements and Insurance Requirements and, prior to commencing any
Restoration, the Mortgagor shall obtain all Permits necessary in connection
therewith, and shall obtain, and keep in full force and effect until the
completion of such Restoration, such additional insurance as the Insurance
Trustee and Superior Instrument Requirements may require. The plans and
specifications for the Restoration shall be accompanied by a certificate of
the Mortgagor and an Opinion of Counsel to the effect that upon the
completion of the Restoration pursuant to the plans and specifications the
Premises, and all buildings and improvements, thereon will comply with all
superior Instrument Requirements, Legal Requirements and Insurance
Requirements. Notwithstanding anything in this Section 5.11 to the contrary,
if such Casualty is in an amount less than $5,000,000, the Mortgagor shall
not be required to perform and complete such Restoration (unless the
performance and completion of the Restoration is necessary in order for the
Mortgagor to be in compliance with any term, provision or condition of
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this Mortgage (other than this Section 5.11(e)) or any Superior Instrument
Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designate by Mortgagor (to the extent the Mortgagor is
permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds) and
shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or
to make payment for, the Restoration, after the Insurance Trustee deducts
therefrom the amount of any reasonable costs and expenses incurred in
connection with the performance of its obligations under this Section 5.11.
The Insurance Trustee shall make such payments not more frequently than once
every 30 days upon the written request of the Mortgagor (unless more frequent
payments are required by Superior Instrument Requirements), by paying to the
Mortgagor or the persons named in the certificate described in Clause (6)
of this Subsection (e) the respective amounts stated in such certificate from
time to time as the Restoration progresses, provided the Mortgagor has complied
with the requirements of this Subsection (e) and such payment is permitted by
an applicable Superior Instrument Requirements. The Mortgagor's written
request shall be accompanied by (i) the certificate described in Clause (6) of
this Subsection (e) and (ii) a title company or official search, or other
evidence reasonably acceptable to the Insurance Trustee, showing that there
have not been filed
with respect to the Premises, any vendor's, contractor's mechanic's, laborer's
or materialman's statutory or similar lien which has not been discharged of
record (or bonded against or secured by other security) or any other
encumbrance irrespective of its priority (other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate, countersigned by the Architect in
charge of the Restoration with respect to the matters described in (i) and (v)
below, (B) be dated not more than 10 days prior to such request and (C) set
forth (in addition to any other requirements contained in any applicable
Superior Instrument Requirements) that:
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(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen, engineers,
architects or other persons who have rendered services or furnished or
contracted to deliver materials for the Restoration therein specified,
and the names and addresses of such persons, a brief description of such
services and materials and the several amounts so paid or due to each of
such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net insurance
proceeds, and that the sum then requested does not exceed the value of
the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in such certificate to be due for services or
materials, and except for amounts in dispute and/or customary retainages,
there is no outstanding indebtedness known to the person signing such
certificate, after due inquiry, which is then due for labor, wages,
materials, supplies or services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if such
estimated cost does exceed such insurance proceeds such certificate shall
state the amount of any such deficiency. If the certificate states that
such deficiency will exist, the Mortgagor shall deliver the amount of such
deficiency in cash or cash equivalent to the Insurance Trustee
simultaneously with the delivery of such certificate, which amount shall
be deemed insurance proceeds for purposes of this Section 5.11(e); and
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(7) If net insurance proceeds shall be insufficient to pay the
entire cost of the Restoration, then, after completion of the
Restoration, the Mortgagor shall pay the deficiency. If all or any
part of the net insurance proceeds are not used for the restoration in
accordance with this Subsection (e) (because such proceeds exceed the
amount required to complete the Restoration), then upon completion of the
Restoration in accordance with this Subsection (e), such amount not so
used, if held by the Insurance Trustee, shall be paid to the Mortgagor
(if permitted by Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is
continuing, all net business interruption insurance proceeds shall be paid to
the Mortgagor, to be segregated from the other funds of Mortgagor and held
in trust by Mortgagor for the following purposes and in the following order of
priority: (i) for the payment of Impositions and amounts due under the Ground
Leases and Superior Mortgages; (ii) for debt service for the estimated period
of Restoration (for purposes of this Section 5.11(f), interest and principal
payments due on any payment date under the Note will deemed to accrue in equal
daily installments beginning the day after the immediately preceding payment
date and ending on such payment date); and (iii) for any expense incurred in
connection with the operation or business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to be
maintained pursuant to this Section 5.11, unless the same are permitted by
Superior Instrument Requirements and the Mortgagee is included therein as
a named insured, with loss payable to the Mortgagee and the Insurance
Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately
notify the Mortgagee whenever any such separate insurance is taken out and
shall promptly deliver to the Mortgagee a duplicate original of the policy of
such insurance, a copy thereof certified by the insurer or a certificate
thereof.
(h) Subject to final adjustment by the insurer, insurance claims
by reason of damage or destruction to any
portion of the Trust Estate may be adjusted by the Mortgagor, but the
Mortgagee shall have the right (but not the obligation) to join the
Mortgagor in adjusting, and approving the adjustment of, any such loss
except in the event of a loss where the amount of insurance reasonably
anticipated to be received with respect to such loss is less than Five
Million Dollars ($5,000,000), and the Mortgagor shall assist the
Mortgagee in any such adjustment at the request of the Mortgagee. If the
Mortgagee at its election as aforesaid joins the Mortgagor in any
adjustment process,
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then the Mortgagee's approval of the adjustment shall not be unreasonably
withheld;
(i) Notwithstanding anything contained herein to the contrary, if an
Event of Default shall have occurred and be continuing, the Mortgagee may, at
its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee
any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the
case may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit
or make any demolition, alteration or improvement of any building included in
the Trust Estate or any new construction on any part of the Trust Estate,
except in conformity with and subject to the limitations hereinafter in this
Section 5.12 set forth.
Unless an Event of Default shall have occurred and be continuing,
the Mortgagor shall have the right at all times to make or permit such
alterations, improvements or new constructions, structural or otherwise
(herein sometimes called collectively "alterations"), of or on the Trust
Estate, to be made in all cases subject to the following conditions:
(a) no alteration shall be undertaken or carried out except in
conformity with all Superior Instrument Requirements, Legal Requirements
and Insurance Requirements;
(b) if the estimated cost of any alteration, together with other
alterations that constitute a single construction plan or project
(whether or not accomplished in several stages or procedures), exceeds
[$5,000,000], the building or buildings, as so improved or altered, upon
completion of the work shall be of a value not less than the value of
such building or buildings immediately prior to the making of such
alterations;
(c) any alteration which is structural in nature or involves an
estimated cost of more than [$5,000,000] shall be conducted under the
supervision of an Architect, and no such alteration shall be undertaken
until 10 days after there shall have been filed with the Mortgagee
detailed plans and specifications and cost estimates therefor, stating
that such plans and specification conform to all, prepared and approved
in writing by such Architect and accompanied by a certificate of such
Architect stating that such plans and specifications conform to all
applicable provisions of this Section 5.12;
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(d) no alteration involving an estimated cost of more than
$5,000,000 shall be undertaken until the Mortgagor has furnished
to the Mortgagee, at the Mortgagor's sole cost and expense, a surety
bond or bonds, covering performance, and labor and material payments with
respect to the work to be so performed, naming the Mortgagee as obligee,
issued by a responsible surety company, authorized to do business in the
state of New Jersey, in a form generally and customarily used by such
surety in an amount equal to the estimated cost of construction of the
work covered by the plans and specifications therefor, guaranteed and
conditioned upon the performance and completion of such construction,
substantially in conformity with the such plans and specifications and
within a reasonable time, subject to delays by fire, strikes, lock-out,
acts of God, inability to obtain labor or materials, governmental
restrictions, enemy action, civil commotion or unavoidable Casualty or
other similar causes beyond the control of the Mortgagor, free and clear
of all liens, claims and liabilities for the cost of such alterations.
In the event such surety bond or bonds shall be unobtainable the
Mortgagor shall deliver to the Mortgagee security by cash, letter of
credit or other guarantee, affording substantially the same
protection as would such bond or bonds;
(e) all work done in connection with any alterations shall be done
promptly and in good and workmanlike manner. The work in connection with
any alteration shall be prosecuted with reasonable dispatch, delays due
to fire, strikes, lockouts, acts of God, inability to obtain labor or
materials, governmental restrictions, enemy action, civil commotion or
unavoidable casualty or similar causes beyond the control of the
Mortgagor excepted;
(f) if the estimated cost of alterations exceed $5,000,000, the
Mortgagor shall have delivered to the Mortgagee (A) prior to the
commencement of such alterations, additions or improvements copies of all
Permits required for the commencement of such work together with a
certificate of the Architect or an Opinion of Counsel to the effect that
all Permits required for the commencement of such alterations have been
obtained; and (B) within a reasonable period of time after the completion
of the alterations, copies of all Permits required in connection with the
completion thereof, together with either an Opinion of Counsel or a
certificate of the Architect that all such Permits have been so obtained
by the Mortgagor and that the Mortgagor has complied with all the
requirements of this Section 5.12;
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(g) no alterations of any kind shall be made to any building which
shall change the use or reduce the size or quality of the building in any
material respect; and
(h) no alterations costing in excess of $5,000,000, together with
other alterations that constitute a single construction plan or project
(whether or not accomplished in several stages or procedures), shall be
made to any building if such alterations are not expected to be completed
at least 120 days prior to the maturity date of the Note (except if such
alterations are required in order to comply with Legal Requirements or
Superior Instrument Requirements).
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d), enter into
any Lease, or renew, modify, extend, terminate, or amend any Lease,
except in the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection
of, any rental payments under any Lease more than one year in advance
of the respective periods in respect of which they are to accrue,
except that, in connection with the execution and delivery of any Lease
or of any amendment to any Lease, rental payments thereunder may be
collected and received in advance in an amount not in excess of three
months' rent and/or a security deposit may be required thereunder in an
amount not exceeding one year's rent;
(c) collaterally assign, transfer or hypothecate (other than
to the Mortgagee hereunder, to the mortgagee under the Guaranty Mortgage
or to the holder of any Working Capital Facility Lien) any rental payment
under any Lease whether then due or to accrue in the future, the interest
of the Mortgagor as landlord under any Lease or the rents, issues or
profits of the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any
Lease unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder
shall be subject and subordinate to the rights of the Mortgagee
under this Mortgage, the mortgagee under the Guaranty Mortgage and
the holders of any Superior Mortgage,
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(2) the Lease may be assigned by the landlord thereunder
to the Mortgagee,
(3) the rights and remedies of the tenant in respect of
any obligations of the landlord thereunder shall be nonrecourse as
to any assets of the landlord other than its equity in the building
in which the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee under any new lease entered
into in the event of a termination of a Ground Lease;
(e) modify any Lease with respect to the matters described in
clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate
of the Mortgagor) for a term of not less than 3 nor more than 10 years, the
Mortgagee shall deliver a non-disturbance and attornment agreement
substantially in the form of Schedule 4 hereto, following receipt of a
certificate of a leasing broker (who is not an Affiliate of the Mortgagor or
the broker involved in such transaction) experienced with respect to leases of
commercial space in the Atlantic City area stating that the rent under the
Lease is not less than fair market rent and that the other terms of the Lease
are fair and reasonable in the commercial leasing market. The Mortgagor
shall, upon demand, reimburse the Mortgagee for any costs and expenses
(including reasonable attorney's fees) incurred by the Mortgagee in
connection with the preparation. review and delivery of such non-disturbance
and attornment agreements.
Promptly after the execution and delivery hereof,
the Mortgagor will cause the lessee under each Lease now in effect and promptly
after each Lease is executed or becomes effective after the date of the
execution and delivery hereof, the Mortgagor will cause the lessee under each
such Lease, to be duly notified in writing (unless the substance and effect of
such notice shall be contained in such Lease) of the subjection of the
owner's interest, as lessor, in and to such Lease to the lien of this
Mortgage and of the name and address of the Mortgagee. Each such notice shall
state that the lease of such lessee is a Lease as herein defined. If a new
Mortgagee is at any time appointed hereunder or the address of the Mortgagee
shall at any time be changed, the Mortgagor will cause each lessee under each
Lease to be promptly notified in writing of the name address of such new
Mortgagee or the new address of the Mortgagee. The Mortgagor will use
reasonable efforts (but shall not be obligated to ncur any expenditure other
than DE MINIMIS
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amounts) to obtain from each lessee under each Lease to whomany notice is sent
pursuant to this paragraph an acknowledgment of receipt of such notice, and
the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of
each such acknowledgment of receipt which it is able to obtain. The Mortgagee
shall not be responsible for securing or causing the Mortgagor to secure any
such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject
to Article Four, the Mortgagor will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence as a
corporation, and its rights (both statutory and under its articles of
incorporation) and franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The
Mortgagor will keep proper books of record and account in accordance with
Section 12.05 of the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Note, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Note.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The
Mortgagor covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law or any
other law which would prohibit or forgive the Mortgagor from paying all or any
portion of the obligations evidenced by the Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may otherwise
affect the covenants or the performance of this Mortgage; and the Mortgagor
(to the extent that it may lawfully do so) 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 Mortgagee, but
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will suffer and permit the execution of every such power as though no such law
had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN.
(a) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Taking affecting the Trust
Estate. If the Taking (i) is estimated to result in an award of more than
$5,000,000 or (ii) the Taking would interfere with or adversely affect
the operation of the Casino-Hotel in accordance with Legal Requirements then
within 30 days after any such Taking, the Mortgagor shall deliver to the
Mortgagee a certificate of an Architect stating whether, in such Architect's
opinion, applicable Legal Requirements permit the Restoration of any buildings
and improvements for the same uses and the same size and quality in all
material respects as existed immediately prior to the Taking (and if such
certificate states that Legal Requirements do not permit such Restoration,
such certificate shall describe the manner closest approximating such criteria
to which the buildings and improvements could be so restored and shall be
accompanied by a Certificate of Appraised Value dated not more than 10 days
prior to delivery setting forth the Appraised Value immediately prior to the
Taking and the estimated Appraised Value immediately after the permitted
Restoration). If the Mortgagor is required to deliver such Certificates of
Appraised Value and if based on such Certificates of Appraised Value
immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of
(i) 66-2/3% of the Appraised Value immediately after such Restoration or
(ii) the quotient of the Outstanding Amount of the First Mortgage Debt
immediately prior to such Taking divided by the Appraised Value immediately
prior to the Taking multiplied by the Appraised Value immediately after such
Restoration, then the Taking shall be deemed a Taking of "the whole or
substantially all of the Premises." Notwithstanding the foregoing sentence,
if such Certificates of Appraised Value indicate that the Outstanding Amount of
First Mortgage Debt immediately after such Restoration exceeds the greater of
the two amounts determined pursuant to subclauses (i) and (ii) above, the
Taking will not be deemed a Taking of "the whole or substantially all of the
Premises", if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as
additions to capital in an amount equal to the Outstanding Amount of First
Mortgage Debt in excess of the Appraised Value
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necessary to be paid down so that the Outstanding Amount of First Mortgage
Debt will not exceed either of the two amounts determined pursuant to such
clauses (i) and (ii), PROVIDED that such commitment may only be released if,
upon an Appraisal at any time following completion of such Restoration, the
aggregate Outstanding Amount of the First Mortgage Debt does not exceed
66-2/3% of the Appraised Value.
(b) If at any time there shall occur a Taking of less than the whole
or substantially all of the Premises and the award or awards resulting
therefrom payable to the Mortgagor (and not to any Lessor or the holder of any
Superior Mortgage) (after there shall have been first deducted the fees and
expenses incurred in connection with the termination, settlement and
collection of such award or awards, including but not limited to reasonable
counsel fees and expenses, hereinafter referred to as "Settlement Costs")
(i) shall not exceed the sum of $10,000,000 (except to the extent
that the Insurance Trustee or a Depositary is required to hold such amount
pursuant to a Superior Instrument Requirement), the entire amount of such
award shall be paid to the Mortgagor; and (ii) if such award is $10,000,000
or more, the entire amount of such award shall be paid to the Insurance Trustee
(or other Depositary required by a Superior Mortgage, provided that such
Depositary holds such award in trust for purposes of paying the cost of
Restoration). In either event, such awards shall be applied to the cost of
demolition, repair, Restoration and replacement of the Trust Estate to as
nearly practicable to their uses, value and condition immediately prior to the
Taking (except to the extent otherwise provided by Superior Instrument
Requirements). The Mortgagor shall promptly commence and with due diligence
perform that Restoration in accordance with clauses (3), (4) and (7) of
Section 5.11(e) (after substituting the words "Taking" of "Casualty" and
"award" for "not insurance proceeds"), at no cost to the Mortgagee. All claims
or suits arising out of any Taking may be settled by the Mortgagor, except that
the Mortgagee shall have the right (but not the obligation) to participate in
such claim or suit, and not the obligation) to participate in such claim or
suit, and to approve settlement thereof (and notwithstanding anything in the
Ground Leases to the contrary, the Mortgagor shall not agree to any settlement
or compromise of the amount of any such claim or suit), except a claim or suit
where the amount reasonably anticipated to be received by the Mortgagor is
less than $5,000,000. If the Mortgagee at its election as aforesaid joins
such claim or suit, the Mortgagee's approval of such settlement shall not be
unreasonably withheld. The Insurance Trustee shall promptly pay such sums as
are received by it from such Taking from time to time in accordance with the
procedures set forth in clauses (5) and (6) of Section 5.11(e) (after
substituting the words
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"Taking" for "Casualty" and "award" for "net insurance proceeds").
(c) If at any time there shall occur a Taking of the whole or
substantially all of the Premises, then the award payable to the Mortgagor
shall not be applied to Restoration but shall instead be paid and delivered
to the Trustee (subject to the rights of the Lessors under the Superior Leases
and the holders of any Superior Mortgages) to the extent of the then
Outstanding Amount of the Note and any other interest or other sums due
hereunder or thereunder to be applied to the satisfaction of this Mortgage
to the extent proceeds are available for such purpose and provided that no
additional sums are due the Trustee or the Noteholder under the Note or the
Indenture, the balance of any award shall be paid to the Mortgagor.
(d) Notwithstanding anything contained herein to the contrary, if
an Event of Default shall have occurred and is continuing, the Mortgagee may,
at its option, (A) refrain from paying to the Mortgagor or the Insurance
Trustee any award or (B) instruct the Insurance Trustee to pay to the
Mortgagee any award then held by the Insurance Trustee, as the case may be.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause to
be done all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor
shall at all times fully perform and comply with all agreements, covenants,
terms and conditions imposed upon or assumed by it as lessee under each of the
Ground Leases (including without limitation the covenant to pay rent and all
taxes, assessments and other charges mentioned therein) prior to the
expiration of any notice and/or cure period provided in each such Ground
Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of
default by the lessee thereunder, Mortgagee may rely thereon and take any
action the Mortgagee deems necessary in its sole discretion to prevent or to
cure any default by the Mortgagor in the performance of or compliance with any
of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as lessee under each of the Ground Leases, even though the
existence of such default or the nature thereof be questioned or denied by the
Mortgagor or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers'
Certificate, Opinion of Counsel and a copy of the injunction, all as described
in Section 3.01(g), the Mortgagee shall not take any such action unless and
until the Mortgagor and/or the Mortgagee no longer has the benefit
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of any tolling or stay referred to in Section 3.01(g). Without limiting the
generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to
the Mortgagee, and agrees that the Mortgagee shall have, the absolute and
immediate right to enter in and upon the Premises or any part thereof to such
extent and as often as the Mortgagee, in its sole discretion, deems necessary
or desirable for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. Subject to the preceding and
without limiting the Mortgagee's other remedies under this Mortgage, the
Mortgagee may pay and expend such sums of money as the Mortgagee in its sole
discretion deems necessary for any such purpose, and the Mortgagor hereby
agrees to pay to the Mortgagee, immediately and without demand, all such sums
so paid and expended by the Mortgagee, together with interest thereon from the
date of each such payment at the highest rate of interest set forth in the
Note. All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i)it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and that
it will not without the express written consent of the Mortgagee modify,
change, supplement, alter or amend such Ground Leases either orally or in
writing and, as further security for the repayment of the indebtedness
secured hereby and for the performance of the covenants herein and in
such Ground Leases contained, the Mortgagor hereby assigns to the
Mortgagee all of its rights, privileges and prerogatives as lessee under
such Ground Leases to terminate, cancel, modify, change, supplement,
alter or amend such Ground Leases, and any such termination, cancellation,
modification, change, supplement, alteration or amendment of such Ground
Leases without the prior written consent thereto by Mortgagee shall be
void and of no force and effect. Unless (1) an Event of Default has
occurred and is continuing and (2) either (A) there has been an
acceleration of maturity of the Note pursuant to Section 3.02 hereof or
(B) the Mortgagee exercises its rights under Section 3.09 hereof, the
Mortgagee shall have no right to terminate, cancel, modify, change,
supplement, alter or amend the Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of the
Mortgagor's obligations under such Ground Leases, pursuant to such Ground
Leases or otherwise, shall release the Mortgagor from any of its
obligations under this Mortgage,
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including its obligations with respect to the payment of rent as
provided for in such Ground Leases and the performance of all of the
terms, provisions, covenants, conditions and agreements contained in such
Ground Leases, to be kept, performed and complied with by the lessee
therein;
(iii) unless the Mortgagee shall otherwise expressly consent in
writing, the fee title to the Leased Land, the Mortgagor's interest in
the improvements on the Leased Land and the leasehold estates shall not
merge by and shall always remain separate and distinct, notwithstanding
the union of such estates either in the Lessor or in the lessee, or in a
third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in
writing of any request made by the Mortgagor, as lessee under each of the
Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any arbitration
proceedings, as well as all proceedings thereunder. In addition, the
Mortgagor shall promptly deliver to the Mortgagee a copy of the
determination of the arbitrators in each such arbitration proceeding. The
Mortgagee shall have the right to participate in such arbitration
proceedings in association with the Mortgagor or on its own behalf as an
interested party in accordance with the terms of the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such election to
the Lessor or (B) the Mortgagor acquires fee simple title or any other
estate, title or interest in the Leased Land, the Mortgagor shall
promptly notify the Mortgagee of such acquisition and
shall cause to be executed and recorded all such other and further
assurances or other instruments in writing as may be required by law or,
in the opinion of the Mortgagee, be reasonably desirable to carry out the
intent and meaning of clause (x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease by
any Lessor or any
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trustee arising from or in connection with any case, proceeding or other
action commenced or pending by or against any Lessor under the Code or
any comparable provision contained in any present or future federal,
state, local, foreign or other statute, law, rule or regulation, the
Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor
hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights
as lessee under Section 365(h) of the Code or any comparable provision
contained in any present or future federal, state, local, foreign or
other statute, law, rule or regulation ("Comparable Provision") and (B)
covenants that it shall not elect to treat any Ground Lease as terminated
pursuant to Section 365(h) of the Code or any Comparable Provision
without the prior written consent of the Mortgagee and (C) agrees that
any such election by the Mortgagor without such consent shall be null and
void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to the
Mortgagee all of the Mortgagor's claims and rights to the payment of
damages arising from any rejection by Lessor of any Ground lease under
the Code or any Comparable Provision. The Mortgagee shall have the right
to proceed in its own name or in the name of the Mortgagor in respect of
any claim, suit, action or proceeding relating to the rejection of any
Ground Lease, including, without limitation, the right to file and
prosecute, in cooperation with the Mortgagor, any proofs of claim,
complaints, motions, applications notices and other documents, in any
case in respect of Lessor under the Code or any Comparable Provision.
This assignment constitutes a present, irrevocable and unconditional
assignment of the foregoing claims, rights and remedies, and shall
continue in effect until all of the indebtedness and obligations secured
by this Mortgage shall have been satisfied and discharged in full. Any
amounts received by the Mortgagee in damages arising out of the rejection
of any Ground Lease as aforesaid shall be applied first to all reasonable
costs and expenses of the Mortgagee (including, without limitation,
reasonable attorneys' fees) incurred in connection with the exercise of
any of its rights or remedies under this Section 5.21, and thereafter as
provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or all
of the Ground Leases the Mortgagor shall give the Mortgagee not less than
10 days' prior notice of the
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date on which the Mortgagor shall apply to the Bankruptcy Court or
other judicial body with appropriate jurisdiction for authority to
reject the lease. The Mortgagee shall have the right, but not the
obligation, to serve upon the Mortgagor within such 10 day period a
notice stating that (a) the Mortgagee demands that the Mortgagor
assume and assign such Ground Lease(s) to the Mortgagee pursuant to
Section 365 of the Code or any Comparable Provision and (b) the Mortgagee
covenants to cure or provide adequate assurance of prompt cure of all
defaults and provide adequate assurance of future performance under such
Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice
described in the preceding sentence, the Mortgagor shall not seek to
reject such Ground Lease(s) and shall comply with the demand provided for
in clause (a) of the preceding sentence within 30 days after the notice
shall have been given subject to the performance by the Mortgagee of the
covenant provided for in clause (b) of the preceding sentence. Effective
upon the entry of an order for relief in respect of the Mortgagor
under Chapter 7 of the Code or Any Comparable Provision the Mortgagor
hereby assigns and transfers to the Mortgagee a non-exclusive right to
apply to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
(x) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other communications or notices
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Ground Leases and shall promptly notify the Mortgagor of any default
under any Ground lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all of
the rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed net
rent, taxes and assessments, payable under the Ground Leases have been paid to
the extent they were due and payable to the date hereof and that the Mortgagor
has not received notice of its failure to pay any
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other amounts payable under the Ground Leases which have not been cured.
(d) If both the Lessor's and lessee's estates under any of the
Ground Leases or any portion thereof shall at any time become vested in one
owner, this Mortgage and the lien created hereby shall nevertheless not be
merged, extinguished, destroyed or terminated by application of the doctrine of
merger and, in such event, Mortgagee shall continue to have all of the rights
and privileges of the a leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease
shall be terminated prior to the natural expiration of its term due to default
by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee
or its designee shall acquire from the Lessor a new lease of the Leased land
or any portion thereof, the Mortgagor shall have no right, title or interest
in or to such lease or the leasehold estate created thereby, or the options
therein contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as mortgagor under the Superior Mortgages prior
to the expiration of any notice and/or cure period provided in each such
Superior Mortgage. If a notice of default has been given by the holder of any
Superior Mortgage and the maturity of the indebtedness secured by such
Superior Mortgage has been accelerated as a result thereof, the Mortgagee may
rely thereon and take any action the Mortgagee deems necessary in its sole
discretion to prevent or to cure any default by the Mortgagor in the
performance of or compliance with any of the agreements, covenants, terms or
conditions imposed upon or assumed by the Mortgagor as mortgagor under each of
the Superior Mortgages even though the existence of such default or the nature
thereof may be questioned or denied by the Mortgagor or by any party on behalf
of the Mortgagor provided that if the Mortgagor has heretofore taken such
actions as described in Section 3.01(h), the Mortgagee shall not take any such
action unless and until the Mortgagor and/or the Mortgagee no longer has the
benefit of any such tolling or stay referred to in Section 3.01(h). Without
limiting the generality of Section 3.09 hereof, the Mortgagor hereby
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expressly grants to the Mortgagee, and agrees that upon such acceleration the
Mortgagee shall have, the absolute and immediate right to enter in and upon
the Premises or any part thereof to such extent and as often as the Mortgagee,
in its sole discretion, deems necessary for the purpose permitted by the
immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money
as the Mortgagee in its sole discretion deems necessary for any such
purpose and (ii) in its sole discretion prepay any Superior Mortgage, and
the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without
demand, all such sums referred to in (i) and (ii) above so paid and expended
by the Mortgagee, together with interest thereon from the date of each such
payment at the rate of interest set forth in the Note. All sums so paid and
expended by the Mortgagee and the interest thereon shall be added to and be
secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first obtaining the
written consent of the Mortgagee in each instance: (A) modify any of the
terms, covenants or conditions of any Superior Mortgage, and without
limiting the foregoing, the Mortgagor shall not, without satisfying such
conditions, enter into or obtain any agreement whereby the holder of any
Superior Mortgage waives, postpones, extends, reduces or modifies the
payment of the installment of principal or interest or any other item or
amount now required to be paid under the terms of any Superior Mortgage
or modifies any other provision thereof, or (B) acquire or permit or
suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or
any interest therein. Notwithstanding anything in clause (A) to the
contrary, the Mortgagor shall have the right to amend, supplement or
modify any Superior Mortgage, if (x) the then outstanding principal
balance of the indebtedness secured by such Superior Mortgage is not
increased thereby, and (y) in the case of any After-Acquired Fee
Mortgage, such amendment, supplement or agreement does not increase the
property covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each Superior
Mortgage, the note secured thereby and any other instrument evidencing or
securing the indebtedness owing to any holder of any Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an
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estoppel certificate or letter addressed to the Mortgagee from holders of
the Superior Mortgages, such certificate or letter to be in such form as
the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any default
under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions
of the Trust Estate shall be subject and subordinate to any Existing
Encumbrances and any mortgage, assignment, security agreement, financing
statement or other lien securing any Working Capital Facility (the "Working
Capital Facility Lien") encumbering Mortgagor's interest in the affected
portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be self-
operative with respect to Existing Encumbrances and shall be self-operative
with respect to any Working Capital Facility Lien, and no further instrument
shall be required to give effect to such subordination. Mortgagee shall,
however, from time to time, execute instruments in form and substance
reasonably satisfactory to the holder of the Working Capital Facility Lien,
confirming such subordination and agreeing to such other matters reasonably
required by the holder of the Working Capital Facility Lien which do not, in
the aggregate, materially adversely reduce or impair the rights of Trustee
under the Mortgage, and Mortgagor and others may rely conclusively thereon,
provided that Mortgagee shall have no liability thereunder and all costs and
expenses (including reasonable attorneys' fees) shall be paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing
Encumbrances. The provisions of this Section 5.22(d) shall be self-operative,
and no further instrument shall be required to give effect to such
subordination.
Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County, New
Jersey Clerk's Office prior to the recordation of the Guaranty Mortgage, the
lien of this Mortgage ranks PARI PASSU with, and not senior to, the lien
reated by the Guaranty Mortgage.
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ARTICLE SIX
MISCELLANEOUS
Section 6.01. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
Section 6.02. MODIFICATION. This Mortgage is subject to
"modification" within the meaning of N.J.S.A. 46:9-8.1 ET SEQ., and this
Mortgage shall have the benefit of the lien priority provisions of such
statute. Such modification may include, without limitation, a change in the
interest rate, maturity date or other terms and conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY
OF THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to
be duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey
corporation
ATTEST:______________________
By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
ATTEST:______________________
By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
<PAGE>
Exhibit E
Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
<PAGE>
NA932230075 - GUARANTY MORTGAGE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING GUARANTY
OF MORTGAGE NOTES
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING GUARANTY
OF MORTGAGE NOTES
-----------------
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association having an address at 750 Main Street, Suite 1114 Hartford,
Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain
Indenture dated as of even date herewith (the "Indenture") among Mortgagor,
Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of
the payments of principal and interest due on the 11% Mortgage Notes due
2003 in an aggregate principal amount of $125,000,000, issued pursuant to the
provisions of the Indenture (defined therein, and hereinafter collectively
referred to herein, as the "Notes"), in accordance with the terms and conditions
of Article Fourth of the Indenture; and performance and observance of all of the
provisions herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and
confirmed unto Mortgagee and its successors hereunder and assigns forever, all
of its right, title and interest in, to and under any of the following described
property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause as
fully as if set forth in this Granting Clause at length.
<PAGE>
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the "Ground
Leases") particularly described in Schedule 2, which Schedule is hereby made a
part of, and deemed to be described in, this Granting Clause as fully as if set
forth in this Granting Clause at length, which Ground Leases cover the real
property described in Schedule 2 (the "Leased Land") and in and to any and all
modifications, extensions and renewals of the Ground Leases and all options set
forth therein, together with (i) all credits, deposits, privileges and rights of
the Mortgagor as lessee under the Ground Leases, now or at any time existing,
(ii) the leaseholds and the leasehold estates created by the Ground Leases and
(iii) all of the estates, rights, titles, claims or demands whatsoever of
Mortgagor, either in law or in equity, in possession or in expectancy, of, in
and to the Ground Leases and the Leased Land, together with (x) any and all
other, further or additional title, estates, interests or rights which may at
anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or any other
greater estate to the Leased Land pursuant to the Ground Leases, or otherwise,
the lien of this Mortgage shall attach, extend to, cover and be a lien upon such
fee simple title or other greater estate and thereupon the lien of this Mortgage
shall be prior to the lien of any mortgage or deed of trust placed on such
acquired title, estate, interest or right subsequent to the date of this
Mortgage and (y) any right to possession or statutory term of years derived
from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S.
Bankruptcy Code (the "Code") or any comparable provision contained in any
present or future federal, state, local, foreign or other statute, law, rule or
regulation.
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and proceeds
of the property subjected or required to be subjected to the lien of this
Mortgage, including, without limitation, the property described in Granting
Clauses First, Second, and Sixth (such property is hereinafter collectively
referred to as the "Premises") and all the estate, right, title and interest of
every nature whatsoever of the Mortgagor in and to the same and every part
thereof. The collective metes and bounds description of the Owned Land and the
Leased Land is set forth in annexed Schedule 3.
2
<PAGE>
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the date of
execution of this Mortgage or hereafter entered into by the Mortgagor, if any,
including extensions, renewals or amendments of all of the same, and the
immediate and continuing right as security in accordance with an Assignment of
Leases and Rents of even date herewith between Mortgagor and Mortgagee, and,
after the occurrence of an Event of Default, to make claim for, collect, receive
and receipt for (and to apply the same as provided herein) any and all rents,
income, revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof, whether
payable as rent, insurance proceeds, condemnation awards, security or otherwise
and whether payable prior to or subsequent to the maturity date of the Notes, to
receive and give notices and consents thereunder, to bring actions and
proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any Lease,
including the commencement, conduct and consummation of any proceedings at law
or in equity as shall be permitted by any provision of any Lease, and to do any
and all things which the Mortgagor or any lessor is or may become entitled to do
under the Leases; provided, that the assignment made by this granting Clause
Fourth shall not impair or diminish any obligation of the Mortgagor under the
Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting Clause
Third, the Mortgagor's rights, privileges and franchises in and to the
following, to the extent of the Mortgagor's interest therein and thereto and to
the extent assignable (collectively, "Operating Assets"):
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including guaranties
and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties and
other items of
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intangible personal property relating to the ownership or operation of the
Casino-Hotel, including, without limitation, (1) telephone and other
communication numbers, (2) all software licensing agreements as are
required to operate computer software systems at the Casino-Hotel, all
transferable proprietary interest in software required to operate the
computer systems at the Casino Hotel and books and records relating to the
software programs, and (3) lessee's interest under leases of Tangible
Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor
or which have been assigned to the Mortgagor, for the design and
construction, and for the equipping and furnishing, of the Casino-Hotel,
including architect's agreements, engineering agreements, construction
contracts, consulting agreements and agreements or purchase orders for all
items of Tangible Personal Property and payment and performance bonds in
favor of the Mortgagor in connection with the Trust Estate (and all
warranties and guaranties thereunder and warranties and guaranties of any
subcontractor and bond issued in connection with the work to be performed
by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other articles of
tangible personal property which are, or are to be located on, or used
in connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the operation
thereof;
(iii) all cards, dice, gaming chips and placques, tokens,
chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles,
roulette balls and other consumable supplies and items to be used in
connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether
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in use or held in reserve storage for future use, in connection with
the operation of the Casino-Hotel, which are on hand or on order
whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind
and nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on any
of the Owned Land, including without limitation, accounting supplies,
guest supplies, forms, printing, stationery, food and beverage stock,
bar supplies, laundry supplies and brochures to existing purchase
orders;
(vi) all sets and scenery, costumes, props and other items
of tangible personal property on hand or on order for use in the
production of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by
the architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to
time;
(h) any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high roller"
lists; and
(j) all of the goodwill in connection with the operation of the
Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on
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which such facilities are shared are not detrimental to the operations of the
Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular
operation of the Casino-Hotel would not be materially impaired upon the
separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair or
diminish any obligation of the Mortgagor with respect to the Operating Assets,
nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures and
articles of personal property now or hereafter attached to or contained in and
used in connection with such buildings and improvements, including, but not
limited to, all apparatus, furniture, furnishings, machinery, motors, elevators,
fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and hot water
boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath
tubs, water closets, gas and electrical fixtures, awnings, shades, screens,
blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and
other furnishings, and all plumbing, heating, lighting, cooking, laundry,
ventilating, incinerating, air-conditioning and sprinkler equipment or other
fire prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or articles in
substitution therefor, whether or not the same are or shall be attached to the
Owned Land, the Leased Land or to any such buildings and improvements thereon,
in any manner; and
(b) All of the Mortgagor's right, title and interest in and to (i)
the Leased Land, if the Mortgagor acquires the fee simple title to the Leased
Land or any part thereof (subject to the provisions of Section 2.06 hereof),
(ii) all air rights and rights to maintain supporting columns
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and all rights to construct and maintain bridges, and to create private rights
of way over streets now or hereafter owned or enjoyed by the Mortgagor and
appurtenant to the Owned Land or Leased Land, and (iii) all right, title and
interest of Mortgagor as grantee or licensee in and to the following to the
extent necessary for the use and enjoyment of the Owned Land or the Leased Land:
(A) all those plots, pieces or parcels of land and air rights, more particularly
described on Schedule 5, attached hereto and made a part hereof (the "Bridge
Easement Parcels"), with respect to which Mortgagor has easements, licenses or
other rights of possession or use pursuant to these certain easement and license
agreements more particularly described on Schedule 5 (the "Bridge Easements"),
(B) all those plots, pieces or parcels of land and air rights, more particularly
described on Schedule 6 attached hereto and made a part hereof (the "Elevator
Easement Parcels"), with respect to which Mortgagor has easements, licenses or
other rights of possession or use pursuant to those certain license agreements
more particularly described on Schedule 6 (the "Elevator Easements"), and; (C)
all that plot, piece or parcel of land and air rights more particularly
described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around
Easement Parcel") with respect to which Mortgagor has easements, licenses, or
other rights of possession or use pursuant to that certain easement more
particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge
Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement
Parcel are collectively referred to herein as the "Easement Parcels"; and the
Bridge Easements, the Elevator Easements and the Turn-Around Easement are
collectively referred to as the "Easements"), together with all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining to such estates, it being the intention hereof that all
property, interests, rights and privileges and franchises pertaining to the
Premises (other than Excepted Property) shall be as fully embraced within and
subjected to the lien hereof as if such property were specifically described
herein.
To the extent the grant of a security interest in any portion of the
Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be as well a security agreement under the Uniform Commercial Code for
the purpose of creating hereby a security interest in all of the Mortgagor's
right, title and interest in and to such property, securing the obligations
secured hereby, for the benefit of the Mortgagee.
* * *
TOGETHER with all of the Mortgagor's right, title and interest in and
to all mineral and water rights and any title or reversion, in and to the beds
of the ways, streets, avenues and alleys adjoining the Premises to the center
line thereof and in and to all strips, gaps and gores adjoining the premises on
all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to and
singular the tenements, hereditaments, easements, appurtenances, passages, water
courses, riparian rights, other rights, liberties and privileges thereof or in
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any way appertaining to the Premises, including any other claim at law or in
equity as well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore or
hereafter to be made to the present and all subsequent owners of the Trust
Estate for any taking by eminent domain, either permanent or temporary, of all
or any part of the Trust Estate or any easement or appurtenances thereof,
including severance and consequential damage and change in grade of streets, all
in accordance with and subject to the provisions of the Superior Instrument
Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any insurance
policies described in Section 5.11, and the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Trust Estate or otherwise, all in accordance with and subject to
the provisions of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted property,
rights, title, interest, privileges and franchises, the Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating
Assets, Easements, properties, options, credits, deposits, rights, privileges
and franchises of every kind and description, real, personal or mixed, granted
hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or
covenanted so to be, together with all the appurtenances thereto appertaining
(the Premises, Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its successors
and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and,
after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and
the Noteholder as set forth in that certain Intercreditor Agreement dated as of
the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust
Company ("Fidelity"), as trustee under that certain note purchase agreement
dated as of the date hereof among Fidelity, RIH and RIHF, and
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U.S. Trust Company of California, N.A. ("U.S. Trust"), as trustee under that
certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF
(and such other parties that may from time to time become a party thereto).
BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of
the Noteholders without any priority of any of the Notes over any other of the
Notes.
UPON CONDITION that, until the happening of an Event of Default and
subject to the provisions of Article Two, the Mortgagor shall be permitted to
possess and use the Trust Estate, and to receive and use the rents, issues,
profits, revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to
be held and applied by the Mortgagee, subject to the further covenants,
conditions and trusts hereinafter set forth, and the Mortgagor does hereby
covenant and agree to and with the Mortgagee, for the Ratable Benefit of the
Noteholders as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall
be made in accordance with generally accepted accounting principles
consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Mortgage as a whole and not to any particular
Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
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"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section
2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good standing of
the American Institute of Real Estate Appraisers) who is (i) of recognized
standing among appraisers of properties similar to the Casino-Hotel and (ii)
experienced in the appraisals of properties of a similar size and scope to that
of the Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section
1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01
of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture, fixtures and
equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which
results in damage, loss or destruction to any buildings or improvements on the
Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of
the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of Default
or an event which, after notice or lapse of time or both, would become an Event
of Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds
or a condemnation award is paid to be held in trust for restoration pursuant to
the provisions of a Ground Lease or Superior Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event
of Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
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(1) subject to the provisions of the Assignment of Leases and Rents,
any cash held by the Mortgagor from rents, issues, profits, revenues and
other proceeds of the Trust Estate to the extent that such cash may be, but
has not been, distributed or paid out in accordance with the Services
Agreement or in accordance with the provisions of Section 12.07 the
Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior
Mortgage secured by or imposing a lien on all or a portion of the Trust Estate
on a parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any
Tangible Personal Property and other items constituting Operating Assets, such
as computer software, which are financed, purchased or leased by the Mortgagor,
provided that, except as set forth on Schedule 3, the principal amount of the
indebtedness secured by such lien shall not exceed eighty-five (85%) percent of
the cost to the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
"GUARANTY" has the meaning set forth in Article Fourteen of the
Indenture.
"HOTEL" means that portion of the Casino-Hotel not included within the
Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
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"INDENTURE" means that certain Indenture - 11% Mortgage Notes
due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and Mortgagee, as trustee, as it may from time to time be supplemented, modified
or amended by one or more trust indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Mortgagor
or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or
of such other obligor and (c) is not connected with the Mortgagor or such other
obligor or any Affiliate of the Mortgagor or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions. Whenever it is herein provided that any Independent Person's
opinion or certificate shall be furnished to the Mortgagee, such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof. A Person who is performing or
who has performed services as an independent contractor to any specified Person
shall not be considered not Independent merely by reason of the fact that such
Person is or has performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy
covering or applicable to the Trust Estate or any part thereof, all requirements
of the issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Trust Estate or any
part thereof or any use or condition of the Trust Estate or any other part
thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects,
any bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected by the
Mortgagor authorized to issue insurance in the State of New Jersey with an A.M.
Best rating as high or higher than the rating of insurance companies insuring
other casino-hotels in Atlantic City, New Jersey.
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"LEASE" means each lease or sublease demising all or any portion of
the Owned Land, the Leased Land or the buildings or improvements thereon and
made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces
in any building or buildings which constitute a part of the Trust Estate,
including every agreement relating thereto or entered into in connection
therewith and every guaranty of the performance and observance of the covenants,
conditions and agreements to be performed by the lessee under any such lease.
Notwithstanding the foregoing, the term "Lease" shall not include any transient
room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements (including,
without limitation, the New Jersey Environment Cleanup Responsibility Act and
the New Jersey Spill Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, of governments, federal, state and municipal (including, without
limitation, the New Jersey Department of Environmental Protection, the Atlantic
City Bureau of Investigations, Division of Protection, the Atlantic City Bureau
of Investigations, Division of Gaming Enforcement of the State of New Jersey,
and the Casino Control Commission of the State of New Jersey), foreseen or
unforeseen, ordinary or extraordinary, which now is or at any time hereafter
becomes applicable to the Trust Estate or any part thereof, or any of the
adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling
facility or any other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Notes means the date on which
the principal of such Notes becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration or
prepayment or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
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to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDERS" has the meaning set forth in Section 1.01 of the
Indenture.
"NOTE MORTGAGE" means that certain Mortgage Securing RIH
Promissory Note dated as of the date hereof from Mortgagor to RIHF, which
secures the RIH Promissory Note (as defined in the Indenture), the lien
of which shall be PARI PASSU with the lien of this Mortgage.
"NOTES" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of
the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires
that an Officers' Certificate be signed also by an Architect or an Accountant or
other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Mortgage) be an employee of the
Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise
specifically provided in this Mortgage, such counsel may rely, as to any state
of facts not personally known to such counsel and relating to such opinions, on
an Officers' Certificate to the extent not rejected by the Trustee and its
counsel (which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list
title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material portion
of the Premises whether held by the Mortgagor or any other Person
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(which may be temporary or permanent) (including, without limitation, those
required for the use of the Casino-Hotel as a licensed casino facility), in
accordance with all applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet due
and payable or if due and payable are not delinquent to the extent that any
fine, penalty, interest or cost may be added for nonpayment thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien; and
(9) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
any other entity or government or any agency or political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RATABLE BENEFIT" has the meaning stated in Section 1.01 of the
Indenture.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made in
accordance with Section 5.13 of this Mortgage.
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"RIHF" shall mean Resorts International Hotel Financing, Inc., a
Delaware corporation.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"STATED MATURITY" when used with respect to a note means the date
specified in such note as the fixed date on which the principal of such note is
due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms,
conditions and provisions of (i) the Ground Leases with respect to the Leased
Land; and (ii) Superior Mortgages with respect to the portion of the Trust
Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility
Lien and any After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of
the whole or any part of the Premises, by a competent authority, for any public
or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause
Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the Granting
Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of
the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section
5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice (including,
without limitation, a notice of default), consent, waiver or other document
provided or permitted by this Mortgage to be made upon, given or furnished to,
or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be
deemed given when either (i) delivered by hand or
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(ii) two days after sending by registered or certified mail, postage prepaid,
addressed as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
State Street Bank and Trust Company
of Connecticut, National Association
750 Main Street,
Suite 1114
Hartford, Connecticut
Attention: Corporate Trust Department
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any
party may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE.
Whenever several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such Officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Officer or Officers of the Mortgagor stating that
the information with respect to such factual matters is in the possession of the
Mortgagor, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. If appropriate to
the matter being opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of creditors and
the availability of equitable remedies.
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Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor shall
deliver any document as a condition of the granting of such application, or as
evidence of the Mortgagor's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Mortgagor to have such application granted or to
the sufficiency of such certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Mortgagor to the Mortgagee to take any action
under any provision of this Mortgage, the Mortgagor shall furnish to the
Mortgagee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Mortgage relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Mortgage
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Mortgage shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such condition
or covenant has been complied with; and
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(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each case
named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged, released
nor any of its provisions waived except by agreement in writing executed by the
Mortgagor and the Mortgagee and in accordance with the provisions of this
Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this
Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in
the Guaranty, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns, any benefit or any legal or
equitable right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the
provisions of this Mortgage and the provisions of the Indenture shall be
inconsistent, the provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is
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subject to and shall be enforced in compliance with the provisions of the New
Jersey Casino Control Act. This Mortgage shall not be transferred, assigned
or amended without prior approval of the New Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause
to be paid, or there shall otherwise be paid, to the Mortgagee all amounts
required to be paid by the Mortgagor pursuant to the Guaranty, or the Note
Mortgage and the Notes, and the conditions precedent for the Indenture to cease,
determine and become null and void in accordance with Section 5.01 of the
Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge
this Mortgage, and execute and deliver to the Mortgagor all such instruments as
may be necessary, required or appropriate to evidence such discharge and
satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject in
each instance to the giving of any notice and the expiration of any grace period
provided for in Section 3.01 as a condition to such Default making it an Event
of Default, unless the Trust Indenture Act requires otherwise, in which case the
Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an event
which does not materially diminish the value of the Mortgagee's interest in the
Trust Estate shall not be deemed an "impairment of security", as that phrase is
used in this Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE.
So long as there shall have been no demand for payment under the Guaranty
pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and
permitted, with power freely and without let or hindrance on the part of the
Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to
possess, use, manage, operate and enjoy the Trust Estate and every part thereof
and to collect, receive, use, invest and dispose of the rents, issues, tolls,
profits, revenues and other income from the Trust Estate or any part hereof, to
use, consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
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Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to
time, unless an Event of Default shall have occurred and be continuing, without
any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right
to pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to
the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any
provisions contained in this Mortgage or
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the Indenture to the contrary, including, without limitation, the provisions of
Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the
Mortgagor acquires Tangible Personal Property and other items constituting
operating assets, such as computer software subject to any FF&E Financing
Agreement, or becomes the lessee under a lease for any of the same and if the
document evidencing such FF&E Financing Agreement prohibits subordinate liens or
the provisions of any such lease prohibits any assignment thereof by the lessee,
and if any such prohibition is customary with respect to similar transactions of
the lender or lessor, as the case may be, then the property so purchased or the
lessee's interest in the lease, as the case may be, shall be deemed to be
Excepted Property. If any such FF&E Financing Agreement permits subordinate
liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the
Mortgagor's expense, such documents as the holder of such FF&E Financing
Agreement may reasonably request to evidence the subordination of the lien of
this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part of the Released Fee Land (the land to be so conveyed is hereinafter
referred to as the "Released Land"), free from the lien of the Mortgage,
provided that the conditions set forth in Section 2.05(a) of the Note Mortgage
have been satisfied.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.05 and, if
applicable, Section 2.05 of the Note Mortgage, PROVIDED, that the Mortgagee
shall have no liability thereunder and all costs and expenses (including
reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be
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continuing, to have an Affiliate exercise such options(s) or for the Mortgagor
to exercise such options(s) on behalf of an Affiliate and in connection
therewith to cause fee simple title to the Leased Land or any part thereof to be
conveyed to an Affiliate of the Mortgagor (provided that no portion of the
purchase price of the Leased Land or part thereof is paid by Mortgagor), free
from the lien of this Mortgage (the land to be so conveyed is hereinafter
referred to as the "Released Fee Land"), provided that the Mortgagor furnishes
the Mortgagee with the following:
(i) an Officers' Certificate requesting the release of the
Released Fee Land from the Trust Estate and stating that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain all
Permits and in order to comply with the provisions of all material
contracts to which the Mortgagor is a party or by which the Mortgagor is
bound, (B) such Affiliate has received all Permits necessary to own the
Released Fee Land (including without limitation all approvals required by
the Casino Control Commission of the State of New Jersey), (C) there has
been delivered to the Mortgagor and the Mortgagee a true copy of an
instrument executed by such Affiliate stating that (i) such Affiliate may
only engage in the activity of owning the Released Fee Land and (ii) such
Affiliate shall not convey the Released Fee Land to another Affiliate of
the Mortgagor, unless such other Affiliate executes and delivers to the
Mortgagor and the Mortgagee, the instruments that would have been required
to be delivered pursuant to clause (C) if the Mortgagor conveyed the
Released Fee Land to such other Affiliate (provided that this restriction
shall only be effective until such time as this Mortgage shall be satisfied
of record) and (D) the deed conveying the Released Fee Land to such
Affiliate shall state that such conveyance is made subject to the terms,
provisions and conditions of the applicable Ground Lease and that the fee
and leasehold interests in the Released Fee Land shall not merge by reason
of the Mortgagor and/or any Affiliate owning both the leasehold and fee
estate therein, and that such estates shall always remain separate and
distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to which
the Mortgagor is a party or by which it is bound to own the Released Fee
Land and (B) the instruments described in clause (C) of subparagraph (i)
were duly executed by and are binding upon such Affiliate; and
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(iii) an endorsement to the Original Policy, confirming that
no merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, and agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgago's compliance with this Section 2.06, PROVIDED
that the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if
no Event of Default has occurred and is continuing and (ii) if the Mortgagor
shall acquire Released Fee Land, then simultaneously with the acquisition
thereof, the Mortgagor shall have the right to encumber such fee simple title
with a mortgage (such mortgage and any refinancing thereof permitted by the
Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The
lien of this Mortgage on the Released Fee Land shall be subordinated to the lien
of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of
other Superior Mortgages which shall become a lien thereon in accordance with
the terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
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(ii) the indebtedness secured by the After-Acquired Fee Mortgage
(A) does not exceed 75% of the cost to the Mortgagor of such fee simple
title at the time of the acquisition and (B) satisfies the criteria set
forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers
fee simple title to the Leased Land or any part thereof, such
After-Acquired Fee Mortgage contains provisions binding on the holder of
the After-Acquired Fee Mortgage and its successors and assigns confirming
the provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire Released
Fee Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstanding, the subordination of this Mortgage to
any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall
not be self-operative but shall be effective only upon the execution and
delivery by the Mortgagee of an instrument in writing effecting such
subordination. The Mortgagee shall deliver such instrument of subordination on
the following conditions: (x) the Mortgagee shall have received an Officers'
Certificate confirming that the conditions of (i) through (vi) of paragraph (a)
have been satisfied, together with a true and correct copy of the After-Acquired
Fee Mortgage and all other instruments securing the indebtedness evidenced
thereby and (y) the instrument of subordination shall specifically state that
this Mortgage is being subordinated not with respect to the lien of this
Mortgage on the Ground Lease or on the leasehold estate created thereby, but
only with respect to the fee simple title to the Leased Land or applicable part
thereof and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
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ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default by the Mortgagor under the Guaranty and continuance
of such default for a period of 10 days after there has been given a
written notice to the Mortgagor specifying such default and stating that
such notice is a "Notice of Default" hereunder; or
(b) an "Event of Default," as defined in Section 3.01 of the
Note Mortgage, shall occur; or
(c) default in the performance, or breach, of any of the
provisions of Article Four and the continuance of such default or breach
for a period of 60 days after there has been given a written notice to the
Mortgagor specifying that such notice is a "Notice of Default" hereunder;
or
(d) any representation or warranty of the Mortgagor set forth in
this Mortgage shall prove to be incorrect as of the time when made and the
facts constituting such incorrectness impairs the Mortgagee's security and
such impairment continues for a period of 30 days, unless such impairment
is curable, but not susceptible of cure within such 30-day period (for
reasons other than lack of funds), provided that the conditions set forth
in Section 3.01(l) of the Note Mortgage have been satisfied.
Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default
occurs and is continuing, and the Mortgagee has declared the Outstanding Amount
of the Note to be due and payable immediately pursuant to Section 3.02 of the
Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty
to be due and payable immediately.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any
moneys received by the Mortgagee pursuant to the provisions of this Article
Three (including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the
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Mortgagee in accordance with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this Mortgage
and such proceeding has been discontinued or abandoned for any reason or has
been determined adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such proceeding
had been instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect under the Guaranty secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, then, to the extent it has not already done so pursuant to the terms
of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all
expenses, including reasonable attorneys' fees and expenses, incurred by the
Mortgagee in connection therewith, together with interest at the rate then
payable on the Notes, from the date of payment less the net amount received by
the Mortgagee or the Trustee, as their interests may appear under any title
insurance policy, and, until paid, all such expenses, together with interest as
aforesaid, shall be a lien on the Trust Estate.
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Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time insist
upon, plead, claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law now or hereafter in force, in order
to prevent or hinder the enforcement of this Mortgage or the absolute sale of
the Trust Estate, or any part hereof, or the possession thereof by any purchaser
at any sale under this Article Three; and the Mortgagor, for itself and all who
may claim under it, so far as it or they now or hereafter may lawfully do so,
hereby waives the benefit of all such laws. The Mortgagor, for itself and all
who may claim under it, waives, to the extent that it may lawfully do so, all
right to have the property in the Trust Estate marshalled upon any foreclosure
hereof, and agrees that any court having jurisdiction to foreclose this Mortgage
may order the sale of the Trust Estate as an entirety.
If any law in this Section 3.08 referred to and now in force, of which
the Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence
of an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
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Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event
of Default shall occur and be continuing, the Mortgagee, with or without entry,
in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee
may determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Mortgage or in
aid of the execution of any power granted in this Mortgage or for the
foreclosure of this Mortgage or for the enforcement of any other legal,
equitable or other remedy, as the Mortgagee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of the
Mortgagee; the failure to join tenants shall not be asserted as a defense
to any foreclosure or proceeding to enforce the rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust
Estate, whether made under the power of sale hereby given or pursuant to
judicial proceedings, to the extent permitted by law:
(a) all obligations owing under the Guaranty, if not previously
due, shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt of
any required prior approvals of the New Jersey Casino Control Commission,
the Mortgagee may bid for and purchase the property offered for sale, and
upon compliance with the terms of sale may hold, retain and possess and
dispose of such property, without further accountability, and may, in
paying the purchase money therefor, delivery any notes or claims for
interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned to the
holders
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thereof after being appropriately stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and instrument of
assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and
lawful attorney of the Mortgagor, in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold; and for that purpose it may execute all
necessary deeds, bills of sale and instruments of assignment and transfer,
and may substitute one or more persons, firms or corporations with like
power, the Mortgagor hereby ratifying and confirming all that its attorney
or such substitute or substitutes shall lawfully do by virtue hereof; but
if so requested by the Mortgagee or by any purchaser, the Mortgagor shall
ratify and confirm any such sale or transfer by executing and delivering to
the Mortgagee or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment and transfer and releases as may be
designated in any such request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of, in and to the
property so sold shall be divested and such sale shall be a perpetual bar
both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such
sale shall be a sufficient discharge to the purchaser or purchasers at such
sale for his or their purchase money and such purchaser or purchasers and
his or their assigns or personal representatives shall not, after paying
such purchase money and receiving such receipt, be obliged to see to the
application of such purchase money, or be in anywise answerable for any
loss, misapplication or non-application thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default
and commencement of judicial proceedings by the Mortgagee to enforce any right
under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security for
the Guaranty or the solvency of the Mortgagor, to
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the appointment of a receiver of the Trust Estate, and of the rents, issues,
profits, revenues and other income thereof, PROVIDED, HOWEVER, that the
Mortgagee's rights under this Section 3.12 shall be subject to the provisions of
the New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have
power to institute and maintain such proceedings as it may deem necessary and
appropriate to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its interests in the
Trust Estate and in the rents, issues, profits, revenues and other income
arising therefrom, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any 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 the security
hereunder or be materially prejudicial to the interests of the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the contrary, following an Event of Default
and the taking of possession of the Trust Estate or any part thereof by the
Mortgagee and/or the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized, in addition to
the rights and powers of the Mortgagee and such receiver set forth elsewhere in
this Mortgage, to retain one or more experienced operators of hotels and/or
casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have
all necessary legal qualifications, including all Permits, to manage the
Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the
Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation
or combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the successor entity
formed
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by such consolidation or into which the Mortgagor is combined or to which such
conveyance or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Mortgagor under this Mortgage with the
same effect as if such successor entity had been named as the Mortgagor herein;
PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate
substantially as an entirety, unless such conveyance or transfer is in
compliance with the provisions of Article Ten of the Indenture, shall have the
effect of releasing the Person named as "the Mortgagor" in the first paragraph
of this instrument or any successor entity which shall theretofore have become
such in the manner prescribed in such Article Ten from its liability as
guarantor.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as
otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor
shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or
otherwise transfer all or any part of the Trust Estate or any interest therein
(including without limitation any interest in the Ground Leases). Without
limiting the generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground Leases from its
ownership of the buildings constituting the Casino-Hotel or any part thereof.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. [Reserved]
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing Agreements before the expiration of any applicable notice and cure
periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create,
incur, suffer or permit to be created or incurred or to exist any mortgage,
lien, charge or encumbrance on or pledge of any of the Trust Estate, other than
(i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with
indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section
12.08(a) of the Indenture, and (iii) a building contract or a notice of
intention filed by a mechanic, materialman or laborer under the New Jersey lien
law. Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the Mortgagor shall
not be deemed to have breached the provisions of the foregoing sentence by
virtue of the
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existence of a lien for Impositions or mechanics liens so long as the Mortgagor
is in good faith contesting the validity of the same in accordance with the
provisions of Section 5.09 to the extent that the matters described in (i) and
(ii) do not constitute a default under any Ground Lease or Superior Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on behalf of the
Mortgagor, (a) to appear in and defend any action or proceeding brought with
respect to the Trust Estate or any part thereof and (b) upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgage), to commence any action or
proceeding to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor
represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to execute and deliver this Mortgage, and all
corporate action on its part necessary for the valid execution and delivery
of this Mortgage has been duly and effectively taken;
(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the Mortgage
Documents, any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than the
lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has been
given to or by the lessee, (iii) the Mortgagor has delivered true and
correct copies of the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in full
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force and effect and has not been modified, amended or supplemented, except
as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to execute
this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer,
hypothecate, pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the Operating Assets
and the Ground Leases, without the consent of any third party, other than
governmental authorities but any applicable or necessary consent or
approval of any such governmental authority has been given or waived at or
prior to the execution and delivery of this Mortgage), and this Mortgage
constitutes a valid second mortgage lien and second priority security
interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage,
subject only to Working Capital Facility Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend (x) the
title to Trust Estate (including without limitation, its leasehold estates under
the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances)
and (y) the priority of the lien of this Mortgage (subject to Permitted
Encumbrances other than Restricted Encumbrances), against the claims and demands
of all persons whomsoever, at the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as
provided in Section 5.13, from time to time subject its right, title and
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments of
further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, and will execute and file such financing statements and cause to be
issued and filed such continuation statements, all in such manner and in such
places as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party under the
Uniform Commercial Code to all property comprising the Trust Estate (to the
extent a grant of a security interest therein is governed by the Uniform
Commercial Code) and to perfect, preserve and protect the lien
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of this Mortgage as a valid mortgage lien of record and a valid security
interest on the Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all expenses
incident to the execution and delivery of this Mortgage, and any instrument of
further assurance, and all federal, state, county and municipal stamp taxes and
other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Mortgage, any financing
statement or continuation statement with respect to the personal property
constituting part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH
LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to
contests, pay or cause to be paid promptly (or when installments of the
same shall become due and payable, if, by law or by agreement or
arrangement with the applicable governmental agency or authority, the same
may be paid in installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are payable by the
Mortgagor pursuant to any Superior Instrument Requirement), all taxes
(including, without limitation, real estate taxes, personal or other
property taxes and all sales, value added, use and similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
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profits or revenue tax upon the income of the Mortgagee, the Trustee or the
Noteholders nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholders nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed in substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Guaranty;
(b) except for such property which the Mortgagor may dispose of
or replace pursuant to Section 2.02, maintain and keep all its properties
used or useful in the conduct of its business (other than obsolete
equipment), including, without limitation, the Casino-Hotel and all
Tangible Personal Property, in such good repair, working order and
condition, except for reasonable wear and use, and make or cause to be made
all such needful and proper repairs, renewals and replacements thereto
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey;
(c) occupy and continuously operate the Casino-Hotel and keep
the Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to
contests, the Mortgagor at its sole expense will timely (1) comply with all
Legal Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if
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the failure to comply with the same would impair the Mortgagee's security
hereunder. Without limiting the generality of the foregoing, the Mortgagor
represents and warrants that at the time of the execution of this Mortgage,
the Mortgagor is in compliance with the requirements of clauses (1), (2)
and (3);
(e) in the event of the passage after the date of this Mortgage
of any law of the State of New Jersey, or any other governmental entity,
changing in any way the laws now in force for the taxation of mortgages, or
debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of the Mortgagee,
then and in such event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for any reason payment by the Mortgagor of any
such new or additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured hereby wholly or
partially usurious under any of the terms or provisions of the Note, or
this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option,
declare the whole sum secured by this Mortgage, with interest thereon, to
be due and payable 90 days after notice of election thereof has been given
by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that
amount or portion of such taxes as renders the loan or indebtedness secured
hereby unlawful or usurious, in which event the Mortgagor shall
concurrently therewith pay the remaining lawful and nonusurious portion or
balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole
expense, contest by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part
of any Imposition or lien therefor or any Legal Requirement or Insurance
Requirement or the application of any instrument of record affecting the Trust
Estate or any part thereof or any claims of mechanics, materialmen, suppliers,
or vendors or lien therefore, and may withhold payment of the same pending such
proceedings if permitted by law, or make payment under protest, or defer
compliance with any such Legal Requirement, any such Insurance Requirement or
the terms of any such instrument, and the same shall not be a Default hereunder,
provided that (a) in the case of any Impositions or lien therefor or any claims
of mechanics, materialmen, suppliers or vendors or lien therefor, such
proceedings shall suspend the collection thereof from each of the Mortgagor, the
Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the
Trust Estate nor any interest therein would be in any danger of being sold,
forfeited, or lost, (c) such action
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would not result in or constitute a default under any Ground Lease or Superior
Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor
the Mortgagee shall be in any danger of any civil or any criminal liability, and
the failure of the Mortgagor to comply with such Legal Requirement shall not
affect the continuance in good standing of any Permit or result in the
suspension, termination, non-renewal or material adverse modification of any
permit, and (e) in the case of an Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the
generality of the first sentence of Section 5.03 and notwithstanding the
provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed,
either by payment, or bonding or otherwise, all claims and demands of mechanics,
materialmen, laborers, and others which, if unpaid, might result in, or permit
the creation of, a lien on the Premises and/or Trust Estate or any part thereof,
or on the revenues, rents, issues, income and profits arising therefrom and in
general will do or cause to be done everything necessary so that the lien hereof
shall be fully preserved, at the cost of the Mortgagor, without expense to the
Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable properties,
in amounts at all times sufficient to prevent the Mortgagor from becoming a
coinsurer within the terms of the applicable policies, but in any event
such insurance shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the "Insurance
Amount"): (i) 100% of the then full insurable value of such insurable
properties, the term "full insurable value" to mean the actual replacement
cost (excluding the costs of foundation, footing, excavation, paving,
landscaping and other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36 calendar months),
by an Architect, contractor, appraiser, or an Insurer, or
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(ii) the amount required to be maintained pursuant to the Superior
Instrument Requirements;
(2) war risk insurance as and when such insurance is obtainable from
the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then be
so obtainable;
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the cost
of such insurance, for personal injury and property damage with respect to
any one occurrence, which may be under an umbrella policy. Anything
contained in this clause (3) to the contrary notwithstanding, the Superior
Instrument Requirements with respect to the kinds and amount of insurance
described in this clause (3) shall be satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already covered
by other policies of insurance maintained by the Mortgagor) on or about
such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time that the
Mortgagor is renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates determined
by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable size
in the boardwalk area of Atlantic City, New Jersey and
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(ii) required to be maintained pursuant to the Superior Instrument
Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1), (2),
(6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, $100,000 with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
$1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self
insured retention under the general liability policy described in clause (3)
and a deductible with respect to the other insurance policies described in
clause (3) in an amount not to exceed the amount of deductible as is customarily
maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii)
the Mortgagor shall not reduce its insurance coverage for the matters described
in clause (3) (which for purposes of this paragraph means a reduction in single
limits or an increase in deductible) unless and until the Mortgagor delivers to
the Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained at rates determined
by the Mortgagor to be reasonable for such coverage, (x) the amount of the
proposed reduction, (y) the premium for the existing and the proposed reduced
coverage, and (z) that the proposed deductible satisfied the criteria set forth
in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clause (5) in the
forms of and in an amount not to exceed the amount of deductible as is
customarily maintained by casino-hotels of similar size in Atlantic City, New
Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of workers'
compensation insurance, name as additional insureds the Mortgagee, in both its
individual and fiduciary capacities, and, to the extent required by the Superior
Instrument Requirements, the Lessors and the holders of the Superior Mortgages,
(2) provide that all insurance proceeds for losses, except in the case of public
liability insurance and workers' compensation insurance or as otherwise provided
in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the
Mortgagee or such other party as is required to receive such proceeds under a
Superior Mortgage, (3) except in the case of workers' compensation, include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all lost payees and
named insureds (other than the Mortgagor) and all rights of subrogation against
any named insured, (4) except in the case of public liability and
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workers' compensation insurance, provide that any losses shall be payable
notwithstanding (i) any act, failure to act, negligence of, or violation or
breach of warranties, declarations or conditions contained in such policy by the
Mortgagor or the Mortgagee or any other named insured or loss payee (including,
without limitation, with respect to the Released Fee Land, the holders of any
After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable
properties for purposes more hazardous than permitted by the terms of the
policy, (iii) any foreclosure or other proceeding or notice of sale relating to
the insurable properties or (iv) any change in the title to or ownership or
possession of the insurable properties, (5) contain a non-contributory mortgagee
clause in favor of the Mortgagee, and (6) provide that if all or any part of
such policy is cancelled, terminated or expires, the insurer will forthwith give
notice thereof to each named insured an loss payee and that no cancellation,
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by each named insured and loss payee of
written notice thereof.
(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate
originals of all insurance policies that the Mortgagor is required to maintain
pursuant to this Section 5.11 and (2) within 30 days after each reduction in
insurance required to be maintained by the Mortgagor hereunder, an Officers'
Certificate setting forth the particulars as to all such insurance policies and
certifying that the same comply with the requirements of this Section 5.11, that
all premiums or installments thereof then due thereon have been paid and that
the same are in full force and effect. The Mortgagee shall not be responsible
for effecting or renewing any insurance or for the responsibility or solvency of
the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x) results in
damage, loss or destruction in an amount in excess of $5,000,000 to any
buildings or improvements on the Premises and/or any Tangible Personal Property
or (y) pursuant to any Superior Instrument Requirement, would require the
deposit of insurance proceeds with the Depositary, or action or proceeding with
respect thereto. Whenever the Superior Instrument Requirements require or
permit the selection of the Depositary by the Mortgagor, the Mortgagor shall
select the Insurance Trustee as the Depositary. Within 30 days after any
Casualty which results in any damage, loss or destruction in an amount in excess
of $10,000,000 to any buildings or improvements of the Premises and/or any
Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a
certificate of an Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit
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the Restoration of such buildings and improvements for the same uses and to the
same size and quality in all material respects, as existed immediately prior to
the Casualty (and if such certificate states the Legal Requirements do not
permit such Restoration, such certificate shall describe the manner closest
approximating such criteria to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of Appraised Value dated not
more than 10 days prior to delivery setting forth the Appraised Value
immediately prior to the Casualty and the estimated Appraised Value immediately
after the Restoration). If the Mortgagor is required to deliver such
Certificates of Appraised Value and if based on such Certificates of Appraised
Value immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of (i)
66 2/3% of the Appraised Value immediately after such Restoration or (ii) the
quotient of the Outstanding Amount of First Mortgage Debt immediately prior to
such Casualty divided by the Appraised Value immediately prior to the Casualty
multiplied by the Appraised Value immediately after such Restoration, then the
proceeds of any insurance shall, at the election of Mortgagee, either be applied
to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and
delivered to the Mortgagee to the extent of the then Outstanding Amount of the
Note and any other interest or other sums due hereunder or thereunder to be
applied to the satisfaction of the Mortgage to the extent proceeds are available
for such purpose and provided that no additional sums are due to the Trustee or
the Noteholder under the Indenture, the balance of any net insurance proceeds
shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such
Certificates of Appraised Values indicates that the Outstanding Amount of First
Mortgage Debt immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of
insurance will be made available for Restoration (subject to paragraphs, (e),
(h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as additions
to capital in an amount equal to the Outstanding Amount of First Mortgage Debt
in excess of the Appraised Value necessary to be paid down so that the
Outstanding Amount of First Mortgage Debt will not exceed either of the two
amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such
commitment may only be released if, upon an Appraisal at any time following
completion of such Restoration, the aggregate Outstanding Amount of the First
Mortgage Debt does not exceed 66-2/3% of the Appraised Value.
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(e) Subject to the provisions of Subsection (d) above, in case a
Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of $10,000,000, the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to
the Insurance Trustee (or other Depositary required by the Superior
Instrument Requirements, provided that such Depositary holds such proceeds
in trust for purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable promptness under the
circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair,
replacement or rebuilding of the damage or destruction resulting from the
Casualty (all of which restoration, repair, replacement or rebuilding are
referred to as the "Restoration") in accordance with the plans and
specifications submitted to the Insurance Trustee, in conformance with all
Legal Requirements and Superior Instrument Requirements, and in accordance
with the further provisions of this Subsection (e), regardless of the
extent of any such Casualty and whether or not net insurance proceeds, if
any, shall be available or, if available, shall be sufficient, for the
purpose of the Restoration (provided, however, that if the Mortgagor does
not receive any net insurance proceeds within 30 days after any Casualty
because the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration shall be deferred
until such proceeds are made available to the Mortgagor, provided that (i)
Mortgagor delivers to the Mortgagee an Officers' Certificate certifying
that the Mortgagor is diligently and continuously adjusting such loss with
the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers'
Certificate within such 30-day period requesting the extension of such
period, estimating the date on which such proceeds will be available and
describing the Mortgagor's efforts to adjust such loss and certifying that
such extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach
has been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter updating the
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information contained in the certificate described in Clause (ii)). All
Restoration work shall be performed in accordance with the applicable
provisions of Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements and, prior to
commencing any Restoration, the Mortgagor shall obtain all Permits
necessary in connection therewith, and shall obtain, and keep in full force
and effect until the completion of such Restoration, such additional
insurance as the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration shall be
accompanied by a certificate of the Mortgagor and an Opinion of Counsel to
the effect that upon the completion of the Restoration pursuant to the
plans and specifications the Premises, and all buildings and improvements,
thereon will comply with all superior Instrument Requirements, Legal
Requirements and Insurance Requirements. Notwithstanding anything in this
Section 5.11 to the contrary, if such Casualty is in an amount less than
$5,000,000, the Mortgagor shall not be required to perform and complete
such Restoration (unless the performance and completion of the Restoration
is necessary in order for the Mortgagor to be in compliance with any term,
provision or condition of this Mortgage (other than this Section 5.11(e))
or any Superior Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designate by Mortgagor (to the extent the Mortgagor
is permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds)
and shall be paid by the Insurance Trustee in reimburse the Mortgagor for,
or to make payment for, the Restoration, after the Insurance Trustee
deducts therefrom the amount of any reasonable costs and expenses incurred
in connection with the performance of its obligations under this Section
5.11. The Insurance Trustee shall make such payments not more frequently
than once every 30 days upon the written request of the Mortgagor (unless
more frequent payments are required by Superior Instrument Requirements),
by paying to the Mortgagor or the persons named in the certificate
described in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate
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from time to time as the Restoration progresses, provided the Mortgagor has
complied with the requirements of this Subsection (e) and such payment is
permitted by an applicable Superior Instrument Requirements. The
Mortgagor's written request shall be accompanied by (i) the certificate
described in Clause (6) of this Subsection (e) and (ii) a title company or
official search, or other evidence reasonably acceptable to the Insurance
Trustee, showing that there have not been filed with respect to the
Premises, any vendor's, contractor's mechanic's, laborer's or materialman's
statutory or similar lien which has not been discharged of record (or
bonded against or secured by other security) or any other encumbrance
irrespective of its priority (other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate, countersigned by the Architect in
charge of the Restoration with respect to the matters described in (i) and
(v) below, (B) be dated not more than 10 days prior to such request and (C)
set forth (in addition to any other requirements contained in any
applicable Superior Instrument Requirements) that:
(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance
Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered services or
furnished or contracted to deliver materials for the Restoration
therein specified, and the names and addresses of such persons, a
brief description of such services and materials and the several
amounts so paid or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net
insurance proceeds, and that the sum then requested does not exceed
the value of the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in
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such certificate to be due for services or materials, and except for
amounts in dispute and/or customary retainages, there is no
outstanding indebtedness known to the person signing such certificate,
after due inquiry, which is then due for labor, wages, materials,
supplies or services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if
such estimated cost does exceed such insurance proceeds such
certificate shall state the amount of any such deficiency. If the
certificate states that such deficiency will exist, the Mortgagor
shall deliver the amount of such deficiency in cash or cash equivalent
to the Insurance Trustee simultaneously with the delivery of such
certificate, which amount shall be deemed insurance proceeds for
purposes of this Section 5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the entire
cost of the Restoration, then, after completion of the Restoration, the
Mortgagor shall pay the deficiency. If all or any part of the net
insurance proceeds are not used for the restoration in accordance with this
Subsection (e) (because such proceeds exceed the amount required to
complete the Restoration), then upon completion of the Restoration in
accordance with this Subsection (e), such amount not so used, if held by
the Insurance Trustee, shall be paid to the Mortgagor (if permitted by
Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is continuing,
all net business interruption insurance proceeds shall be paid to the Mortgagor,
to be segregated from the other funds of Mortgagor and held in trust by
Mortgagor for the following purposes and in the following order of priority:
(i) for the payment of Impositions and amounts due under the Ground Leases and
Superior Mortgages; (ii) for debt service for the estimated period of
Restoration (for purposes of this Section 5.11(f), interest and principal
payments due on any payment date under the Notes will deemed to accrue in equal
daily installments beginning the day after the immediately preceding payment
date and ending on such payment date); and (iii) for any expense incurred in
connection with the operation or business of the Casino-Hotel.
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(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to be maintained
pursuant to this Section 5.11, unless the same are permitted by Superior
Instrument Requirements and the Mortgagee is included therein as a named
insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant
to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall promptly deliver to
the Mortgagee a duplicate original of the policy of such insurance, a copy
thereof certified by the insurer or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance claims by
reason of damage or destruction to any portion of the Trust Estate may be
adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the
obligation) to join the Mortgagor in adjusting, and approving the adjustment of,
any such loss except in the event of a loss where the amount of insurance
reasonably anticipated to be received with respect to such loss is less than
[Five Million Dollars ($5,000,000)], and the Mortgagor shall assist the
Mortgagee in any such adjustment at the request of the Mortgagee. If the
Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment
process, then the Mortgagee's approval of the
adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary, if an
Event of Default shall have occurred and be continuing, the Mortgagee may, at
its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee
any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case
may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or
make any demolition, alteration or improvement of any building included in the
Trust Estate or any new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in this Section 5.12
set forth.
Unless an Event of Default shall have occurred and be continuing, the
Mortgagor shall have the right at all times to make or permit such alterations,
improvements or new constructions, structural or otherwise (herein sometimes
called collectively "alterations"), of or on the Trust Estate, to be made in all
cases subject to the conditions set forth in Section 5.12 of the Note Mortgage.
Section 5.13. LEASES. The Mortgagor shall not:
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(a) subject to the provisions of Section 5.13(d), enter into any
Lease, or renew, modify, extend, terminate, or amend any Lease, except in
the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection of,
any rental payments under any Lease more than one year in advance of the
respective periods in respect of which they are to accrue, except that, in
connection with the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected and received in
advance in an amount not in excess of three months' rent and/or a security
deposit may be required thereunder in an amount not exceeding one year's
rent;
(c) collaterally assign, transfer or hypothecate (other than to
the Mortgagee hereunder, to the mortgagee under the Note Mortgage or to the
holder of any Working Capital Facility Lien) any rental payment under any
Lease whether then due or to accrue in the future, the interest of the
Mortgagor as landlord under any Lease or the rents, issues or profits of
the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any
Lease unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder
shall be subject and subordinate to the rights of the Mortgagee under
this Mortgage, the mortgagee under the Note Mortgage and the holders
of any Superior Mortgage,
(2) the Lease may be assigned by the landlord thereunder to
the Mortgagee,
(3) the rights and remedies of the tenant in respect of any
obligations of the landlord thereunder shall be nonrecourse as to any
assets of the landlord other than its equity in the building in which
the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee under any new lease entered
into in the event of a termination of a Ground Lease;
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(e) modify any Lease with respect to the matters described in
clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate of
the Mortgagor) for a term of not less than 3 nor more than 10 years, the
Mortgagee shall deliver a non-disturbance and attornment agreement substantially
in the form of Schedule 4 hereto, following receipt of a certificate of a
leasing broker (who is not an Affiliate of the Mortgagor or the broker involved
in such transaction) experienced with respect to leases of commercial space in
the Atlantic City area stating that the rent under the Lease is not less than
fair market rent and that the other terms of the Lease are fair and reasonable
in the commercial leasing market. The Mortgagor shall, upon demand, reimburse
the Mortgagee for any costs and expenses (including reasonable attorney's fees)
incurred by the Mortgagee in connection with the preparation, review and
delivery of such non-disturbance and attornment agreements.
Promptly after the execution and delivery hereof, the Mortgagor will
cause the lessee under each Lease now in effect and promptly after each Lease is
executed or becomes effective after the date of the execution and delivery
hereof, the Mortgagor will cause the lessee under each such Lease, to be duly
notified in writing (unless the substance and effect of such notice shall be
contained in such Lease) of the subjection of the owner's interest, as lessor,
in and to such Lease to the lien of this Mortgage and of the name and address of
the Mortgagee. Each such notice shall state that the lease of such lessee is a
Lease as herein defined. If a new Mortgagee is at any time appointed hereunder
or the address of the Mortgagee shall at any time be changed, the Mortgagor will
cause each lessee under each Lease to be promptly notified in writing of the
name address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur any
expenditure other than DE MINIMIS amounts) to obtain from each lessee under each
Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of
receipt of such notice, and the Mortgagor will promptly deliver to the
Mortgagee, upon request, a copy of each such acknowledgment of receipt which it
is able to obtain. The Mortgagee shall not be responsible for securing or
causing the Mortgagor to secure any such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
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Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to
Article Four, the Mortgagor will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation, and
its rights (both statutory and under its articles of incorporation) and
franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor
will keep proper books of record and account in accordance with Section 12.05 of
the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Notes, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Guaranty.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law or any other law which
would prohibit or forgive the Mortgagor from paying all or any portion of the
obligations under the Guaranty as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect the covenants or
the performance of this Mortgage; and the Mortgagor (to the extent that it may
lawfully do so) 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 Mortgagee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the
provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any
Taking affecting the Trust Estate.
Section 5.21. GROUND LEASES.
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(a) The Mortgagor covenants and agrees that it will do or cause to be
done all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall
at all times fully perform and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all taxes,
assessments and other charges mentioned therein) prior to the expiration of any
notice and/or cure period provided in each such Ground Lease. Upon receipt by
the Mortgagee from a Lessor of any written notice of default by the lessee
thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems
necessary in its sole discretion to prevent or to cure any default by the
Mortgagor in the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the Mortgagor as
lessee under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by the Mortgagor or by any
party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore
delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a
copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall
not take any such action unless and until the Mortgagor and/or the Mortgagee no
longer has the benefit of any tolling or stay referred to in Section 3.01(g).
Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby
expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any part
thereof to such extent and as often as the Mortgagee, in its sole discretion,
deems necessary or desirable for the purpose permitted by the immediately
preceding sentence, subject only to applicable Legal Requirements. Subject to
the preceding and without limiting the Mortgagee's other remedies under this
Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee
in its sole discretion deems necessary for any such purpose, and the Mortgagor
hereby agrees to pay to the Mortgagee, immediately and without demand, all such
sums so paid and expended by the Mortgagee, together with interest thereon from
the date of each such payment at the highest rate of interest set forth in the
Notes. All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and that
it will not without the express written consent of the Mortgagee modify,
change,
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supplement, alter or amend such Ground Leases either orally or in writing
and, as further security for the repayment of the indebtedness secured
hereby and for the performance of the covenants herein and in such Ground
Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its
rights, privileges and prerogatives as lessee under such Ground Leases to
terminate, cancel, modify, change, supplement, alter or amend such Ground
Leases, and any such termination, cancellation, modification, change,
supplement, alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing and
(2) either (A) there has been an acceleration of maturity of the Notes
pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee
exercises its rights under Section 3.09 hereof, the Mortgagee shall have no
right to terminate, cancel, modify, change, supplement, alter or amend the
Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of the
Mortgagor's obligations under such Ground Leases, pursuant to such Ground
Leases or otherwise, shall release the Mortgagor from any of its
obligations under this Mortgage, including its obligations with respect to
the payment of rent as provided for in such Ground Leases and the
performance of all of the terms, provisions, covenants, conditions and
agreements contained in such Ground Leases, to be kept, performed and
complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest in
the improvements on the Leased Land and the leasehold estates shall not
merge by and shall always remain separate and distinct, notwithstanding the
union of such estates either in the Lessor or in the lessee, or in a third
party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in writing
of any request made by the Mortgagor, as lessee under each of the Ground
Leases, or any of the Lessors, for arbitration proceedings pursuant to the
Ground Leases and of the institution of any arbitration proceedings, as
well as all proceedings thereunder. In addition, the Mortgagor shall
promptly deliver to the Mortgagee a copy of the determination of the
arbitrators in each such arbitration proceeding. The Mortgagee shall have
the right to participate in such arbitration proceedings in association
with the Mortgagor
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or on its own behalf as an interested party in accordance with the terms of
the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the Mortgagor
shall deliver a copy of its election to exercise such option within 5 days
after the Mortgagor has delivered notice of such election to the Lessor or
(B) the Mortgagor acquires fee simple title or any other estate, title or
interest in the Leased Land, the Mortgagor shall promptly notify the
Mortgagee of such acquisition and shall cause to be executed and recorded
all such other and further assurances or other instruments in writing as
may be required by law or, in the opinion of the
Mortgagee, be reasonably desirable to carry out the intent and meaning of
clause (x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease by
any Lessor or any trustee arising from or in connection with any case,
proceeding or other action commenced or pending by or against any Lessor
under the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation, the Mortgagor shall give notice thereof to the Mortgagee. The
Mortgagor hereby (A) assigns to the Mortgagee any and all of the
Mortgagor's rights as lessee under Section 365(h) of the Code or any
comparable provision contained in any present or future federal, state,
local, foreign or other statute, law, rule or regulation ("Comparable
Provision") and (B) covenants that it shall not elect to treat any Ground
Lease as terminated pursuant to Section 365(h) of the Code or any
Comparable Provision without the prior written consent of the Mortgagee and
(C) agrees that any such election by the Mortgagor without such consent
shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to the
Mortgagee all of the Mortgagor's claims and rights to the payment of
damages arising from any rejection by Lessor of any Ground lease under the
Code or any Comparable Provision. The Mortgagee shall have the right to
proceed in its own name or in the name of the Mortgagor in respect of any
claim, suit, action or proceeding relating to the rejection of
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any Ground Lease, including, without limitation, the right to file and
prosecute, in cooperation with the Mortgagor, any proofs of claim,
complaints, motions, applications notices and other documents, in any case
in respect of Lessor under the Code or any Comparable Provision. This
assignment constitutes a present, irrevocable and unconditional assignment
of the foregoing claims, rights and remedies, and shall continue in effect
until all of the indebtedness and obligations secured by this Mortgage
shall have been satisfied and discharged in full. Any amounts received by
the Mortgagee in damages arising out of the rejection of any Ground Lease
as aforesaid shall be applied first to all reasonable costs and expenses of
the Mortgagee (including, without limitation, reasonable attorneys' fees)
incurred in connection with the exercise of any of its rights or remedies
under this Section 5.21, and thereafter as provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor, as
lessee under the Ground Leases, shall determine to reject any or all of the
Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days'
prior notice of the date on which the Mortgagor shall apply to the
Bankruptcy Court or other judicial body with appropriate jurisdiction for
authority to reject the lease. The Mortgagee shall have the right, but not
the obligation, to serve upon the Mortgagor within such 10 day period a
notice stating that (a) the Mortgagee demands that the Mortgagor assume and
assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the
Code or any Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s). If
the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a) of the
preceding sentence within 30 days after the notice shall have been given
subject to the performance by the Mortgagee of the covenant provided for in
clause (b) of the preceding sentence. Effective upon the entry of an order
for relief in respect of the Mortgagor under Chapter 7 of the Code or Any
Comparable Provision the Mortgagor hereby assigns and transfers to the
Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other
judicial body with appropriate jurisdiction for an order extending the
period during which the Ground Lease may be rejected or assumed;
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(x) the Mortgagor shall promptly give to the Mortgagee copies of
(A) all notices of default or (B) any other communications or notices with
respect to events which relate to the possible impairment of the security
of this Mortgage, which it shall give or receive under the Ground Leases
and shall promptly notify the Mortgagor of any default under any Ground
lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all of the
rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed net
rent, taxes and assessments, payable under the Ground Leases have been paid to
the extent they were due and payable to the date hereof and that the Mortgagor
has not received notice of its failure to pay any other amounts payable under
the Ground Leases which have not been cured.
(d) If both the Lessor's and lessee's estates under any of the Ground
Leases or any portion thereof shall at any time become vested in one owner, this
Mortgage and the lien created hereby shall nevertheless not be merged,
extinguished, destroyed or terminated by application of the doctrine of merger
and, in such event, Mortgagee shall continue to have all of the rights and
privileges of the a leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease shall
be terminated prior to the natural expiration of its term due to default by the
lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its
designee shall acquire from the Lessor a new lease of the Leased land or any
portion thereof, the Mortgagor shall have no right, title or interest in or to
such lease or the leasehold estate created thereby, or the options therein
contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
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(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to
the expiration of any notice and/or cure period provided in each such Superior
Mortgage. If a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior Mortgage
has been accelerated as a result thereof, the Mortgagee may rely thereon and
take any action the Mortgagee deems necessary in its sole discretion to prevent
or to cure any default by the Mortgagor in the performance of or compliance with
any of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as mortgagor under each of the Superior Mortgages even though the
existence of such default or the nature thereof may be questioned or denied by
the Mortgagor or by any party on behalf of the Mortgagor provided that if the
Mortgagor has heretofore taken such actions as described in Section 3.01(h), the
Mortgagee shall not take any such action unless and until the Mortgagor and/or
the Mortgagee no longer has the benefit of any such tolling or stay referred to
in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the
Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such
acceleration the Mortgagee shall have, the absolute and immediate right to enter
in and upon the Premises or any part thereof to such extent and as often as the
Mortgagee, in its sole discretion, deems necessary for the purpose permitted by
the immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money as the
Mortgagee in its sole discretion deems necessary for any such purpose and (ii)
in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby
agrees to pay to the Mortgagee, immediately and without demand, all such sums
referred to in (i) and (ii) above so paid and expended by the Mortgagee,
together with interest thereon from the date of each such payment at the rate of
interest set forth in the Note. All sums so paid and expended by the Mortgagee
and the interest thereon shall be added to and be secured by the lien of this
Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first satisfying the
conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A)
modify any of the terms, covenants or conditions of any Superior Mortgage,
and without limiting the foregoing, the Mortgagor shall not, without
satisfying such conditions, enter into or obtain any agreement whereby the
holder of any Superior Mortgage waives, postpones, extends, reduces or
modifies the payment of the installment of principal or interest or
56
<PAGE>
any other item or amount now required to be paid under the terms of any
Superior Mortgage or modifies any other provision thereof, or (B) acquire
or permit or suffer any Affiliate of the Mortgagor to acquire any Superior
Mortgage or any interest therein. Notwithstanding anything in clause (A)
to the contrary, the Mortgagor shall have the right to amend, supplement or
modify any Superior Mortgage, if (x) the then outstanding principal balance
of the indebtedness secured by such Superior Mortgage is not increased
thereby, and (y) in the case of any After-Acquired Fee Mortgage, such
amendment, supplement or agreement does not increase the property covered
thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each Superior
Mortgage, the note secured thereby and any other instrument evidencing or
securing the indebtedness owing to any holder of any Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to obtain
an estoppel certificate or letter addressed to the Mortgagee from holders
of the Superior Mortgages, such certificate or letter to be in such form as
the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication with
respect to events which relate to the possible impairment of the security
of this Mortgage, which it shall give or receive under the Superior
Mortgages and shall promptly notify the Mortgagor of any default under any
Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing Encumbrances
and any mortgage, assignment, security agreement, financing statement or other
lien securing any Working Capital Facility (the "Working Capital Facility Lien")
encumbering Mortgagor's interest in the affected portions of the Trust Estate or
any part thereof.
The foregoing provisions of this Section 5.22(c) shall be
self-operative with respect to Existing Encumbrances and shall be self-operative
with respect to any Working Capital Facility Lien, and no further instrument
shall be required to give effect to such subordination. Mortgagee shall,
however, from time to time, execute instruments in form
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<PAGE>
and substance reasonably satisfactory to the holder of the Working Capital
Facility Lien, confirming such subordination and agreeing to such other matters
reasonably required by the holder of the Working Capital Facility Lien which do
not, in the aggregate, materially adversely reduce or impair the rights of
Trustee under the Mortgage, and Mortgagor and others may rely conclusively
thereon, provided that Mortgagee shall have no liability thereunder and all
costs and expenses (including reasonable attorneys' fees) shall be paid by
Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing Encumbrances.
The provisions of this Section 5.22(d) shall be self-operative, and no further
instrument shall be required to give effect to such subordination.
Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey
Clerk's Office after the recordation of the Note Mortgage, the lien of this
Mortgage ranks pari passu with, and not junior to, the lien created by the Note
Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges
that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien
upon the Trust Estate which is PARI PASSU with the lien of this Mortgage.
Mortgagee further acknowledges and agrees that whenever it is provided in the
Note Mortgage that the Mortgagor shall deliver any notice or document, or is
required to make any payment thereunder, the delivery of such notice or document
or the making of such payment pursuant to the terms of the Note Mortgage shall
also constitute the delivery of such notice or document or the making of such
payment in satisfaction of the terms, conditions and provisions of this Mortgage
to the same extent as the same constitutes satisfaction of the terms, conditions
and provisions of the Note Mortgage.
Section 6.02. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
Section 6.03. MODIFICATION. This Mortgage is subject to
"modification" within the meaning of N.J.S.A. 46:9-
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8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority
provisions of such statute. Such modification may include, without limitation,
a change in the interest rate, maturity date or other terms and conditions of
this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF
THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be
duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
59
<PAGE>
Exhibit F
Mortgage Securing Guaranty of Mortgage
Notes between Resorts International Hotel,
Inc. and State Street Bank and Trust
Company of Connecticut, National Association
<PAGE>
NA932230075 - GUARANTY MORTGAGE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING GUARANTY
OF MORTGAGE NOTES
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
a national banking association,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING GUARANTY
OF MORTGAGE NOTES
-----------------
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association having an address at 750 Main Street, Suite 1114 Hartford,
Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain
Indenture dated as of even date herewith (the "Indenture") among Mortgagor,
Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of
the payments of principal and interest due on the 11% Mortgage Notes due
2003 in an aggregate principal amount of $125,000,000, issued pursuant to the
provisions of the Indenture (defined therein, and hereinafter collectively
referred to herein, as the "Notes"), in accordance with the terms and conditions
of Article Fourth of the Indenture; and performance and observance of all of the
provisions herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and
confirmed unto Mortgagee and its successors hereunder and assigns forever, all
of its right, title and interest in, to and under any of the following described
property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause as
fully as if set forth in this Granting Clause at length.
<PAGE>
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the "Ground
Leases") particularly described in Schedule 2, which Schedule is hereby made a
part of, and deemed to be described in, this Granting Clause as fully as if set
forth in this Granting Clause at length, which Ground Leases cover the real
property described in Schedule 2 (the "Leased Land") and in and to any and all
modifications, extensions and renewals of the Ground Leases and all options set
forth therein, together with (i) all credits, deposits, privileges and rights of
the Mortgagor as lessee under the Ground Leases, now or at any time existing,
(ii) the leaseholds and the leasehold estates created by the Ground Leases and
(iii) all of the estates, rights, titles, claims or demands whatsoever of
Mortgagor, either in law or in equity, in possession or in expectancy, of, in
and to the Ground Leases and the Leased Land, together with (x) any and all
other, further or additional title, estates, interests or rights which may at
anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or any other
greater estate to the Leased Land pursuant to the Ground Leases, or otherwise,
the lien of this Mortgage shall attach, extend to, cover and be a lien upon such
fee simple title or other greater estate and thereupon the lien of this Mortgage
shall be prior to the lien of any mortgage or deed of trust placed on such
acquired title, estate, interest or right subsequent to the date of this
Mortgage and (y) any right to possession or statutory term of years derived
from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S.
Bankruptcy Code (the "Code") or any comparable provision contained in any
present or future federal, state, local, foreign or other statute, law, rule or
regulation.
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and proceeds
of the property subjected or required to be subjected to the lien of this
Mortgage, including, without limitation, the property described in Granting
Clauses First, Second, and Sixth (such property is hereinafter collectively
referred to as the "Premises") and all the estate, right, title and interest of
every nature whatsoever of the Mortgagor in and to the same and every part
thereof. The collective metes and bounds description of the Owned Land and the
Leased Land is set forth in annexed Schedule 3.
2
<PAGE>
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the date of
execution of this Mortgage or hereafter entered into by the Mortgagor, if any,
including extensions, renewals or amendments of all of the same, and the
immediate and continuing right as security in accordance with an Assignment of
Leases and Rents of even date herewith between Mortgagor and Mortgagee, and,
after the occurrence of an Event of Default, to make claim for, collect, receive
and receipt for (and to apply the same as provided herein) any and all rents,
income, revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof, whether
payable as rent, insurance proceeds, condemnation awards, security or otherwise
and whether payable prior to or subsequent to the maturity date of the Notes, to
receive and give notices and consents thereunder, to bring actions and
proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any Lease,
including the commencement, conduct and consummation of any proceedings at law
or in equity as shall be permitted by any provision of any Lease, and to do any
and all things which the Mortgagor or any lessor is or may become entitled to do
under the Leases; provided, that the assignment made by this granting Clause
Fourth shall not impair or diminish any obligation of the Mortgagor under the
Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting Clause
Third, the Mortgagor's rights, privileges and franchises in and to the
following, to the extent of the Mortgagor's interest therein and thereto and to
the extent assignable (collectively, "Operating Assets"):
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including guaranties
and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties and
other items of
3
<PAGE>
intangible personal property relating to the ownership or operation of the
Casino-Hotel, including, without limitation, (1) telephone and other
communication numbers, (2) all software licensing agreements as are
required to operate computer software systems at the Casino-Hotel, all
transferable proprietary interest in software required to operate the
computer systems at the Casino Hotel and books and records relating to the
software programs, and (3) lessee's interest under leases of Tangible
Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor
or which have been assigned to the Mortgagor, for the design and
construction, and for the equipping and furnishing, of the Casino-Hotel,
including architect's agreements, engineering agreements, construction
contracts, consulting agreements and agreements or purchase orders for all
items of Tangible Personal Property and payment and performance bonds in
favor of the Mortgagor in connection with the Trust Estate (and all
warranties and guaranties thereunder and warranties and guaranties of any
subcontractor and bond issued in connection with the work to be performed
by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other articles of
tangible personal property which are, or are to be located on, or used
in connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the operation
thereof;
(iii) all cards, dice, gaming chips and placques, tokens,
chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles,
roulette balls and other consumable supplies and items to be used in
connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether
4
<PAGE>
in use or held in reserve storage for future use, in connection with
the operation of the Casino-Hotel, which are on hand or on order
whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind
and nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on any
of the Owned Land, including without limitation, accounting supplies,
guest supplies, forms, printing, stationery, food and beverage stock,
bar supplies, laundry supplies and brochures to existing purchase
orders;
(vi) all sets and scenery, costumes, props and other items
of tangible personal property on hand or on order for use in the
production of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by
the architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to
time;
(h) any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high roller"
lists; and
(j) all of the goodwill in connection with the operation of the
Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on
5
<PAGE>
which such facilities are shared are not detrimental to the operations of the
Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular
operation of the Casino-Hotel would not be materially impaired upon the
separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair or
diminish any obligation of the Mortgagor with respect to the Operating Assets,
nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures and
articles of personal property now or hereafter attached to or contained in and
used in connection with such buildings and improvements, including, but not
limited to, all apparatus, furniture, furnishings, machinery, motors, elevators,
fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and hot water
boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath
tubs, water closets, gas and electrical fixtures, awnings, shades, screens,
blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and
other furnishings, and all plumbing, heating, lighting, cooking, laundry,
ventilating, incinerating, air-conditioning and sprinkler equipment or other
fire prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or articles in
substitution therefor, whether or not the same are or shall be attached to the
Owned Land, the Leased Land or to any such buildings and improvements thereon,
in any manner; and
(b) All of the Mortgagor's right, title and interest in and to (i)
the Leased Land, if the Mortgagor acquires the fee simple title to the Leased
Land or any part thereof (subject to the provisions of Section 2.06 hereof),
(ii) all air rights and rights to maintain supporting columns
6
<PAGE>
and all rights to construct and maintain bridges, and to create private rights
of way over streets now or hereafter owned or enjoyed by the Mortgagor and
appurtenant to the Owned Land or Leased Land, and (iii) all right, title and
interest of Mortgagor as grantee or licensee in and to the following to the
extent necessary for the use and enjoyment of the Owned Land or the Leased Land:
(A) all those plots, pieces or parcels of land and air rights, more particularly
described on Schedule 5, attached hereto and made a part hereof (the "Bridge
Easement Parcels"), with respect to which Mortgagor has easements, licenses or
other rights of possession or use pursuant to these certain easement and license
agreements more particularly described on Schedule 5 (the "Bridge Easements"),
(B) all those plots, pieces or parcels of land and air rights, more particularly
described on Schedule 6 attached hereto and made a part hereof (the "Elevator
Easement Parcels"), with respect to which Mortgagor has easements, licenses or
other rights of possession or use pursuant to those certain license agreements
more particularly described on Schedule 6 (the "Elevator Easements"), and; (C)
all that plot, piece or parcel of land and air rights more particularly
described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around
Easement Parcel") with respect to which Mortgagor has easements, licenses, or
other rights of possession or use pursuant to that certain easement more
particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge
Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement
Parcel are collectively referred to herein as the "Easement Parcels"; and the
Bridge Easements, the Elevator Easements and the Turn-Around Easement are
collectively referred to as the "Easements"), together with all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining to such estates, it being the intention hereof that all
property, interests, rights and privileges and franchises pertaining to the
Premises (other than Excepted Property) shall be as fully embraced within and
subjected to the lien hereof as if such property were specifically described
herein.
To the extent the grant of a security interest in any portion of the Trust
Estate is governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be as well a security agreement under the Uniform Commercial Code for
the purpose of creating hereby a security interest in all of the Mortgagor's
right, title and interest in and to such property, securing the obligations
secured hereby, for the benefit of the Mortgagee.
* * *
TOGETHER with all of the Mortgagor's right, title and interest in and
to all mineral and water rights and any title or reversion, in and to the beds
of the ways, streets, avenues and alleys adjoining the Premises to the center
line thereof and in and to all strips, gaps and gores adjoining the premises on
all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to and
singular the tenements, hereditaments, easements, appurtenances, passages, water
courses, riparian rights, other rights, liberties and privileges thereof or in
7
<PAGE>
any way appertaining to the Premises, including any other claim at law or in
equity as well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore or
hereafter to be made to the present and all subsequent owners of the Trust
Estate for any taking by eminent domain, either permanent or temporary, of all
or any part of the Trust Estate or any easement or appurtenances thereof,
including severance and consequential damage and change in grade of streets, all
in accordance with and subject to the provisions of the Superior Instrument
Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any insurance
policies described in Section 5.11, and the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Trust Estate or otherwise, all in accordance with and subject to
the provisions of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted property,
rights, title, interest, privileges and franchises, the Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating
Assets, Easements, properties, options, credits, deposits, rights, privileges
and franchises of every kind and description, real, personal or mixed, granted
hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or
covenanted so to be, together with all the appurtenances thereto appertaining
(the Premises, Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its successors
and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and,
after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and
the Noteholder as set forth in that certain Intercreditor Agreement dated as of
the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust
Company ("Fidelity"), as trustee under that certain note purchase agreement
dated as of the date hereof among Fidelity, RIH and RIHF, and
8
<PAGE>
U.S. Trust Company of California, N.A. ("U.S. Trust"), as trustee under that
certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF
(and such other parties that may from time to time become a party thereto).
BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of
the Noteholders without any priority of any of the Notes over any other of the
Notes.
UPON CONDITION that, until the happening of an Event of Default and
subject to the provisions of Article Two, the Mortgagor shall be permitted to
possess and use the Trust Estate, and to receive and use the rents, issues,
profits, revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to
be held and applied by the Mortgagee, subject to the further covenants,
conditions and trusts hereinafter set forth, and the Mortgagor does hereby
covenant and agree to and with the Mortgagee, for the Ratable Benefit of the
Noteholders as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall
be made in accordance with generally accepted accounting principles
consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Mortgage as a whole and not to any particular
Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
9
<PAGE>
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section
2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good standing of
the American Institute of Real Estate Appraisers) who is (i) of recognized
standing among appraisers of properties similar to the Casino-Hotel and (ii)
experienced in the appraisals of properties of a similar size and scope to that
of the Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section
1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01
of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture, fixtures and
equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which
results in damage, loss or destruction to any buildings or improvements on the
Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of
the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of Default
or an event which, after notice or lapse of time or both, would become an Event
of Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds
or a condemnation award is paid to be held in trust for restoration pursuant to
the provisions of a Ground Lease or Superior Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event
of Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
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<PAGE>
(1) subject to the provisions of the Assignment of Leases and Rents,
any cash held by the Mortgagor from rents, issues, profits, revenues and
other proceeds of the Trust Estate to the extent that such cash may be, but
has not been, distributed or paid out in accordance with the Services
Agreement or in accordance with the provisions of Section 12.07 the
Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior
Mortgage secured by or imposing a lien on all or a portion of the Trust Estate
on a parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any
Tangible Personal Property and other items constituting Operating Assets, such
as computer software, which are financed, purchased or leased by the Mortgagor,
provided that, except as set forth on Schedule 3, the principal amount of the
indebtedness secured by such lien shall not exceed eighty-five (85%) percent of
the cost to the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
"GUARANTY" has the meaning set forth in Article Fourteen of the
Indenture.
"HOTEL" means that portion of the Casino-Hotel not included within the
Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
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"INDENTURE" means that certain Indenture - 11% Mortgage Notes
due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and Mortgagee, as trustee, as it may from time to time be supplemented, modified
or amended by one or more trust indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Mortgagor
or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or
of such other obligor and (c) is not connected with the Mortgagor or such other
obligor or any Affiliate of the Mortgagor or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions. Whenever it is herein provided that any Independent Person's
opinion or certificate shall be furnished to the Mortgagee, such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof. A Person who is performing or
who has performed services as an independent contractor to any specified Person
shall not be considered not Independent merely by reason of the fact that such
Person is or has performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy
covering or applicable to the Trust Estate or any part thereof, all requirements
of the issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Trust Estate or any
part thereof or any use or condition of the Trust Estate or any other part
thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects,
any bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected by the
Mortgagor authorized to issue insurance in the State of New Jersey with an A.M.
Best rating as high or higher than the rating of insurance companies insuring
other casino-hotels in Atlantic City, New Jersey.
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"LEASE" means each lease or sublease demising all or any portion of
the Owned Land, the Leased Land or the buildings or improvements thereon and
made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces
in any building or buildings which constitute a part of the Trust Estate,
including every agreement relating thereto or entered into in connection
therewith and every guaranty of the performance and observance of the covenants,
conditions and agreements to be performed by the lessee under any such lease.
Notwithstanding the foregoing, the term "Lease" shall not include any transient
room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements (including,
without limitation, the New Jersey Environment Cleanup Responsibility Act and
the New Jersey Spill Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, of governments, federal, state and municipal (including, without
limitation, the New Jersey Department of Environmental Protection, the Atlantic
City Bureau of Investigations, Division of Protection, the Atlantic City Bureau
of Investigations, Division of Gaming Enforcement of the State of New Jersey,
and the Casino Control Commission of the State of New Jersey), foreseen or
unforeseen, ordinary or extraordinary, which now is or at any time hereafter
becomes applicable to the Trust Estate or any part thereof, or any of the
adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling
facility or any other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Notes means the date on which
the principal of such Notes becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration or
prepayment or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
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to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDERS" has the meaning set forth in Section 1.01 of the
Indenture.
"NOTE MORTGAGE" means that certain Mortgage Securing RIH
Promissory Note dated as of the date hereof from Mortgagor to RIHF, which
secures the RIH Promissory Note (as defined in the Indenture), the lien
of which shall be PARI PASSU with the lien of this Mortgage.
"NOTES" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of
the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires
that an Officers' Certificate be signed also by an Architect or an Accountant or
other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Mortgage) be an employee of the
Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise
specifically provided in this Mortgage, such counsel may rely, as to any state
of facts not personally known to such counsel and relating to such opinions, on
an Officers' Certificate to the extent not rejected by the Trustee and its
counsel (which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list
title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material portion
of the Premises whether held by the Mortgagor or any other Person
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(which may be temporary or permanent) (including, without limitation, those
required for the use of the Casino-Hotel as a licensed casino facility), in
accordance with all applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet due
and payable or if due and payable are not delinquent to the extent that any
fine, penalty, interest or cost may be added for nonpayment thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien; and
(9) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
any other entity or government or any agency or political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RATABLE BENEFIT" has the meaning stated in Section 1.01 of the
Indenture.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made in
accordance with Section 5.13 of this Mortgage.
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"RIHF" shall mean Resorts International Hotel Financing, Inc., a
Delaware corporation.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"STATED MATURITY" when used with respect to a note means the date
specified in such note as the fixed date on which the principal of such note is
due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms,
conditions and provisions of (i) the Ground Leases with respect to the Leased
Land; and (ii) Superior Mortgages with respect to the portion of the Trust
Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility
Lien and any After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of
the whole or any part of the Premises, by a competent authority, for any public
or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause
Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the Granting
Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of
the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section
5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice (including,
without limitation, a notice of default), consent, waiver or other document
provided or permitted by this Mortgage to be made upon, given or furnished to,
or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be
deemed given when either (i) delivered by hand or
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(ii) two days after sending by registered or certified mail, postage prepaid,
addressed as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
State Street Bank and Trust Company
of Connecticut, National Association
750 Main Street,
Suite 1114
Hartford, Connecticut
Attention: Corporate Trust Department
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any
party may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE.
Whenever several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such Officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Officer or Officers of the Mortgagor stating that
the information with respect to such factual matters is in the possession of the
Mortgagor, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. If appropriate to
the matter being opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of creditors and
the availability of equitable remedies.
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Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor shall
deliver any document as a condition of the granting of such application, or as
evidence of the Mortgagor's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Mortgagor to have such application granted or to
the sufficiency of such certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Mortgagor to the Mortgagee to take any action
under any provision of this Mortgage, the Mortgagor shall furnish to the
Mortgagee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Mortgage relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Mortgage
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Mortgage shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such condition
or covenant has been complied with; and
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(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each case
named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged, released
nor any of its provisions waived except by agreement in writing executed by the
Mortgagor and the Mortgagee and in accordance with the provisions of this
Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this
Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in
the Guaranty, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns, any benefit or any legal or
equitable right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the
provisions of this Mortgage and the provisions of the Indenture shall be
inconsistent, the provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is
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subject to and shall be enforced in compliance with the provisions of the New
Jersey Casino Control Act. This Mortgage shall not be transferred, assigned
or amended without prior approval of the New Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause
to be paid, or there shall otherwise be paid, to the Mortgagee all amounts
required to be paid by the Mortgagor pursuant to the Guaranty, or the Note
Mortgage and the Notes, and the conditions precedent for the Indenture to cease,
determine and become null and void in accordance with Section 5.01 of the
Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge
this Mortgage, and execute and deliver to the Mortgagor all such instruments as
may be necessary, required or appropriate to evidence such discharge and
satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject in
each instance to the giving of any notice and the expiration of any grace period
provided for in Section 3.01 as a condition to such Default making it an Event
of Default, unless the Trust Indenture Act requires otherwise, in which case the
Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an event
which does not materially diminish the value of the Mortgagee's interest in the
Trust Estate shall not be deemed an "impairment of security", as that phrase is
used in this Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE.
So long as there shall have been no demand for payment under the Guaranty
pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and
permitted, with power freely and without let or hindrance on the part of the
Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to
possess, use, manage, operate and enjoy the Trust Estate and every part thereof
and to collect, receive, use, invest and dispose of the rents, issues, tolls,
profits, revenues and other income from the Trust Estate or any part hereof, to
use, consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
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Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to
time, unless an Event of Default shall have occurred and be continuing, without
any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right
to pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to
the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any
provisions contained in this Mortgage or
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the Indenture to the contrary, including, without limitation, the provisions of
Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the
Mortgagor acquires Tangible Personal Property and other items constituting
operating assets, such as computer software subject to any FF&E Financing
Agreement, or becomes the lessee under a lease for any of the same and if the
document evidencing such FF&E Financing Agreement prohibits subordinate liens or
the provisions of any such lease prohibits any assignment thereof by the lessee,
and if any such prohibition is customary with respect to similar transactions of
the lender or lessor, as the case may be, then the property so purchased or the
lessee's interest in the lease, as the case may be, shall be deemed to be
Excepted Property. If any such FF&E Financing Agreement permits subordinate
liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the
Mortgagor's expense, such documents as the holder of such FF&E Financing
Agreement may reasonably request to evidence the subordination of the lien of
this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part of the Released Fee Land (the land to be so conveyed is hereinafter
referred to as the "Released Land"), free from the lien of the Mortgage,
provided that the conditions set forth in Section 2.05(a) of the Note Mortgage
have been satisfied.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.05 and, if
applicable, Section 2.05 of the Note Mortgage, PROVIDED, that the Mortgagee
shall have no liability thereunder and all costs and expenses (including
reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be
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continuing, to have an Affiliate exercise such options(s) or for the Mortgagor
to exercise such options(s) on behalf of an Affiliate and in connection
therewith to cause fee simple title to the Leased Land or any part thereof to be
conveyed to an Affiliate of the Mortgagor (provided that no portion of the
purchase price of the Leased Land or part thereof is paid by Mortgagor), free
from the lien of this Mortgage (the land to be so conveyed is hereinafter
referred to as the "Released Fee Land"), provided that the Mortgagor furnishes
the Mortgagee with the following:
(i) an Officers' Certificate requesting the release of the
Released Fee Land from the Trust Estate and stating that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain all
Permits and in order to comply with the provisions of all material
contracts to which the Mortgagor is a party or by which the Mortgagor is
bound, (B) such Affiliate has received all Permits necessary to own the
Released Fee Land (including without limitation all approvals required by
the Casino Control Commission of the State of New Jersey), (C) there has
been delivered to the Mortgagor and the Mortgagee a true copy of an
instrument executed by such Affiliate stating that (i) such Affiliate may
only engage in the activity of owning the Released Fee Land and (ii) such
Affiliate shall not convey the Released Fee Land to another Affiliate of
the Mortgagor, unless such other Affiliate executes and delivers to the
Mortgagor and the Mortgagee, the instruments that would have been required
to be delivered pursuant to clause (C) if the Mortgagor conveyed the
Released Fee Land to such other Affiliate (provided that this restriction
shall only be effective until such time as this Mortgage shall be satisfied
of record) and (D) the deed conveying the Released Fee Land to such
Affiliate shall state that such conveyance is made subject to the terms,
provisions and conditions of the applicable Ground Lease and that the fee
and leasehold interests in the Released Fee Land shall not merge by reason
of the Mortgagor and/or any Affiliate owning both the leasehold and fee
estate therein, and that such estates shall always remain separate and
distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to which
the Mortgagor is a party or by which it is bound to own the Released Fee
Land and (B) the instruments described in clause (C) of subparagraph (i)
were duly executed by and are binding upon such Affiliate; and
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(iii) an endorsement to the Original Policy, confirming that
no merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, and agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgago's compliance with this Section 2.06, PROVIDED
that the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if
no Event of Default has occurred and is continuing and (ii) if the Mortgagor
shall acquire Released Fee Land, then simultaneously with the acquisition
thereof, the Mortgagor shall have the right to encumber such fee simple title
with a mortgage (such mortgage and any refinancing thereof permitted by the
Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The
lien of this Mortgage on the Released Fee Land shall be subordinated to the lien
of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of
other Superior Mortgages which shall become a lien thereon in accordance with
the terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
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(ii) the indebtedness secured by the After-Acquired Fee Mortgage
(A) does not exceed 75% of the cost to the Mortgagor of such fee simple
title at the time of the acquisition and (B) satisfies the criteria set
forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers
fee simple title to the Leased Land or any part thereof, such
After-Acquired Fee Mortgage contains provisions binding on the holder of
the After-Acquired Fee Mortgage and its successors and assigns confirming
the provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire Released
Fee Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstanding, the subordination of this Mortgage to
any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall
not be self-operative but shall be effective only upon the execution and
delivery by the Mortgagee of an instrument in writing effecting such
subordination. The Mortgagee shall deliver such instrument of subordination on
the following conditions: (x) the Mortgagee shall have received an Officers'
Certificate confirming that the conditions of (i) through (vi) of paragraph (a)
have been satisfied, together with a true and correct copy of the After-Acquired
Fee Mortgage and all other instruments securing the indebtedness evidenced
thereby and (y) the instrument of subordination shall specifically state that
this Mortgage is being subordinated not with respect to the lien of this
Mortgage on the Ground Lease or on the leasehold estate created thereby, but
only with respect to the fee simple title to the Leased Land or applicable part
thereof and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
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ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default by the Mortgagor under the Guaranty and continuance
of such default for a period of 10 days after there has been given a
written notice to the Mortgagor specifying such default and stating that
such notice is a "Notice of Default" hereunder; or
(b) an "Event of Default," as defined in Section 3.01 of the
Note Mortgage, shall occur; or
(c) default in the performance, or breach, of any of the
provisions of Article Four and the continuance of such default or breach
for a period of 60 days after there has been given a written notice to the
Mortgagor specifying that such notice is a "Notice of Default" hereunder;
or
(d) any representation or warranty of the Mortgagor set forth in
this Mortgage shall prove to be incorrect as of the time when made and the
facts constituting such incorrectness impairs the Mortgagee's security and
such impairment continues for a period of 30 days, unless such impairment
is curable, but not susceptible of cure within such 30-day period (for
reasons other than lack of funds), provided that the conditions set forth
in Section 3.01(l) of the Note Mortgage have been satisfied.
Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default
occurs and is continuing, and the Mortgagee has declared the Outstanding Amount
of the Note to be due and payable immediately pursuant to Section 3.02 of the
Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty
to be due and payable immediately.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any
moneys received by the Mortgagee pursuant to the provisions of this Article
Three (including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the
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Mortgagee in accordance with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this Mortgage
and such proceeding has been discontinued or abandoned for any reason or has
been determined adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such proceeding
had been instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect under the Guaranty secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, then, to the extent it has not already done so pursuant to the terms
of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all
expenses, including reasonable attorneys' fees and expenses, incurred by the
Mortgagee in connection therewith, together with interest at the rate then
payable on the Notes, from the date of payment less the net amount received by
the Mortgagee or the Trustee, as their interests may appear under any title
insurance policy, and, until paid, all such expenses, together with interest as
aforesaid, shall be a lien on the Trust Estate.
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Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time insist
upon, plead, claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law now or hereafter in force, in order
to prevent or hinder the enforcement of this Mortgage or the absolute sale of
the Trust Estate, or any part hereof, or the possession thereof by any purchaser
at any sale under this Article Three; and the Mortgagor, for itself and all who
may claim under it, so far as it or they now or hereafter may lawfully do so,
hereby waives the benefit of all such laws. The Mortgagor, for itself and all
who may claim under it, waives, to the extent that it may lawfully do so, all
right to have the property in the Trust Estate marshalled upon any foreclosure
hereof, and agrees that any court having jurisdiction to foreclose this Mortgage
may order the sale of the Trust Estate as an entirety.
If any law in this Section 3.08 referred to and now in force, of which
the Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence
of an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
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Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event
of Default shall occur and be continuing, the Mortgagee, with or without entry,
in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee
may determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Mortgage or in
aid of the execution of any power granted in this Mortgage or for the
foreclosure of this Mortgage or for the enforcement of any other legal,
equitable or other remedy, as the Mortgagee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of the
Mortgagee; the failure to join tenants shall not be asserted as a defense
to any foreclosure or proceeding to enforce the rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust
Estate, whether made under the power of sale hereby given or pursuant to
judicial proceedings, to the extent permitted by law:
(a) all obligations owing under the Guaranty, if not previously
due, shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt of
any required prior approvals of the New Jersey Casino Control Commission,
the Mortgagee may bid for and purchase the property offered for sale, and
upon compliance with the terms of sale may hold, retain and possess and
dispose of such property, without further accountability, and may, in
paying the purchase money therefor, delivery any notes or claims for
interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned to the
holders
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thereof after being appropriately stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and instrument of
assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and
lawful attorney of the Mortgagor, in its name and stead, to make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold; and for that purpose it may execute all
necessary deeds, bills of sale and instruments of assignment and transfer,
and may substitute one or more persons, firms or corporations with like
power, the Mortgagor hereby ratifying and confirming all that its attorney
or such substitute or substitutes shall lawfully do by virtue hereof; but
if so requested by the Mortgagee or by any purchaser, the Mortgagor shall
ratify and confirm any such sale or transfer by executing and delivering to
the Mortgagee or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment and transfer and releases as may be
designated in any such request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of, in and to the
property so sold shall be divested and such sale shall be a perpetual bar
both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such
sale shall be a sufficient discharge to the purchaser or purchasers at such
sale for his or their purchase money and such purchaser or purchasers and
his or their assigns or personal representatives shall not, after paying
such purchase money and receiving such receipt, be obliged to see to the
application of such purchase money, or be in anywise answerable for any
loss, misapplication or non-application thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default
and commencement of judicial proceedings by the Mortgagee to enforce any right
under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security for
the Guaranty or the solvency of the Mortgagor, to
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the appointment of a receiver of the Trust Estate, and of the rents, issues,
profits, revenues and other income thereof, PROVIDED, HOWEVER, that the
Mortgagee's rights under this Section 3.12 shall be subject to the provisions of
the New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have
power to institute and maintain such proceedings as it may deem necessary and
appropriate to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its interests in the
Trust Estate and in the rents, issues, profits, revenues and other income
arising therefrom, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any 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 the security
hereunder or be materially prejudicial to the interests of the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the contrary, following an Event of Default
and the taking of possession of the Trust Estate or any part thereof by the
Mortgagee and/or the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized, in addition to
the rights and powers of the Mortgagee and such receiver set forth elsewhere in
this Mortgage, to retain one or more experienced operators of hotels and/or
casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have
all necessary legal qualifications, including all Permits, to manage the
Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the
Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation
or combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the successor entity
formed
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by such consolidation or into which the Mortgagor is combined or to which such
conveyance or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Mortgagor under this Mortgage with the
same effect as if such successor entity had been named as the Mortgagor herein;
PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate
substantially as an entirety, unless such conveyance or transfer is in
compliance with the provisions of Article Ten of the Indenture, shall have the
effect of releasing the Person named as "the Mortgagor" in the first paragraph
of this instrument or any successor entity which shall theretofore have become
such in the manner prescribed in such Article Ten from its liability as
guarantor.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as
otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor
shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or
otherwise transfer all or any part of the Trust Estate or any interest therein
(including without limitation any interest in the Ground Leases). Without
limiting the generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground Leases from its
ownership of the buildings constituting the Casino-Hotel or any part thereof.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. [Reserved]
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing Agreements before the expiration of any applicable notice and cure
periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create,
incur, suffer or permit to be created or incurred or to exist any mortgage,
lien, charge or encumbrance on or pledge of any of the Trust Estate, other than
(i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with
indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section
12.08(a) of the Indenture, and (iii) a building contract or a notice of
intention filed by a mechanic, materialman or laborer under the New Jersey lien
law. Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the Mortgagor shall
not be deemed to have breached the provisions of the foregoing sentence by
virtue of the
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existence of a lien for Impositions or mechanics liens so long as the Mortgagor
is in good faith contesting the validity of the same in accordance with the
provisions of Section 5.09 to the extent that the matters described in (i) and
(ii) do not constitute a default under any Ground Lease or Superior Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on behalf of the
Mortgagor, (a) to appear in and defend any action or proceeding brought with
respect to the Trust Estate or any part thereof and (b) upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgage), to commence any action or
proceeding to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor
represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to execute and deliver this Mortgage, and all
corporate action on its part necessary for the valid execution and delivery
of this Mortgage has been duly and effectively taken;
(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the Mortgage
Documents, any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than the
lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has been
given to or by the lessee, (iii) the Mortgagor has delivered true and
correct copies of the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in full
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force and effect and has not been modified, amended or supplemented, except
as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to execute
this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer,
hypothecate, pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the Operating Assets
and the Ground Leases, without the consent of any third party, other than
governmental authorities but any applicable or necessary consent or
approval of any such governmental authority has been given or waived at or
prior to the execution and delivery of this Mortgage), and this Mortgage
constitutes a valid second mortgage lien and second priority security
interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage,
subject only to Working Capital Facility Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend (x) the
title to Trust Estate (including without limitation, its leasehold estates under
the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances)
and (y) the priority of the lien of this Mortgage (subject to Permitted
Encumbrances other than Restricted Encumbrances), against the claims and demands
of all persons whomsoever, at the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as
provided in Section 5.13, from time to time subject its right, title and
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments of
further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, and will execute and file such financing statements and cause to be
issued and filed such continuation statements, all in such manner and in such
places as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party under the
Uniform Commercial Code to all property comprising the Trust Estate (to the
extent a grant of a security interest therein is governed by the Uniform
Commercial Code) and to perfect, preserve and protect the lien
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of this Mortgage as a valid mortgage lien of record and a valid security
interest on the Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all expenses
incident to the execution and delivery of this Mortgage, and any instrument of
further assurance, and all federal, state, county and municipal stamp taxes and
other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Mortgage, any financing
statement or continuation statement with respect to the personal property
constituting part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH
LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to
contests, pay or cause to be paid promptly (or when installments of the
same shall become due and payable, if, by law or by agreement or
arrangement with the applicable governmental agency or authority, the same
may be paid in installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are payable by the
Mortgagor pursuant to any Superior Instrument Requirement), all taxes
(including, without limitation, real estate taxes, personal or other
property taxes and all sales, value added, use and similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
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profits or revenue tax upon the income of the Mortgagee, the Trustee or the
Noteholders nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholders nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed in substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Guaranty;
(b) except for such property which the Mortgagor may dispose of
or replace pursuant to Section 2.02, maintain and keep all its properties
used or useful in the conduct of its business (other than obsolete
equipment), including, without limitation, the Casino-Hotel and all
Tangible Personal Property, in such good repair, working order and
condition, except for reasonable wear and use, and make or cause to be made
all such needful and proper repairs, renewals and replacements thereto
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey;
(c) occupy and continuously operate the Casino-Hotel and keep
the Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to
contests, the Mortgagor at its sole expense will timely (1) comply with all
Legal Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if
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the failure to comply with the same would impair the Mortgagee's security
hereunder. Without limiting the generality of the foregoing, the Mortgagor
represents and warrants that at the time of the execution of this Mortgage,
the Mortgagor is in compliance with the requirements of clauses (1), (2)
and (3);
(e) in the event of the passage after the date of this Mortgage
of any law of the State of New Jersey, or any other governmental entity,
changing in any way the laws now in force for the taxation of mortgages, or
debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of the Mortgagee,
then and in such event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for any reason payment by the Mortgagor of any
such new or additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured hereby wholly or
partially usurious under any of the terms or provisions of the Note, or
this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option,
declare the whole sum secured by this Mortgage, with interest thereon, to
be due and payable 90 days after notice of election thereof has been given
by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that
amount or portion of such taxes as renders the loan or indebtedness secured
hereby unlawful or usurious, in which event the Mortgagor shall
concurrently therewith pay the remaining lawful and nonusurious portion or
balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole
expense, contest by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part
of any Imposition or lien therefor or any Legal Requirement or Insurance
Requirement or the application of any instrument of record affecting the Trust
Estate or any part thereof or any claims of mechanics, materialmen, suppliers,
or vendors or lien therefore, and may withhold payment of the same pending such
proceedings if permitted by law, or make payment under protest, or defer
compliance with any such Legal Requirement, any such Insurance Requirement or
the terms of any such instrument, and the same shall not be a Default hereunder,
provided that (a) in the case of any Impositions or lien therefor or any claims
of mechanics, materialmen, suppliers or vendors or lien therefor, such
proceedings shall suspend the collection thereof from each of the Mortgagor, the
Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the
Trust Estate nor any interest therein would be in any danger of being sold,
forfeited, or lost, (c) such action
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would not result in or constitute a default under any Ground Lease or Superior
Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor
the Mortgagee shall be in any danger of any civil or any criminal liability, and
the failure of the Mortgagor to comply with such Legal Requirement shall not
affect the continuance in good standing of any Permit or result in the
suspension, termination, non-renewal or material adverse modification of any
permit, and (e) in the case of an Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any insurance
required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the
generality of the first sentence of Section 5.03 and notwithstanding the
provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed,
either by payment, or bonding or otherwise, all claims and demands of mechanics,
materialmen, laborers, and others which, if unpaid, might result in, or permit
the creation of, a lien on the Premises and/or Trust Estate or any part thereof,
or on the revenues, rents, issues, income and profits arising therefrom and in
general will do or cause to be done everything necessary so that the lien hereof
shall be fully preserved, at the cost of the Mortgagor, without expense to the
Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable properties,
in amounts at all times sufficient to prevent the Mortgagor from becoming a
coinsurer within the terms of the applicable policies, but in any event
such insurance shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the "Insurance
Amount"): (i) 100% of the then full insurable value of such insurable
properties, the term "full insurable value" to mean the actual replacement
cost (excluding the costs of foundation, footing, excavation, paving,
landscaping and other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36 calendar months),
by an Architect, contractor, appraiser, or an Insurer, or
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(ii) the amount required to be maintained pursuant to the Superior
Instrument Requirements;
(2) war risk insurance as and when such insurance is obtainable from
the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then be
so obtainable;
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the cost
of such insurance, for personal injury and property damage with respect to
any one occurrence, which may be under an umbrella policy. Anything
contained in this clause (3) to the contrary notwithstanding, the Superior
Instrument Requirements with respect to the kinds and amount of insurance
described in this clause (3) shall be satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already covered
by other policies of insurance maintained by the Mortgagor) on or about
such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time that the
Mortgagor is renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates determined
by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable size
in the boardwalk area of Atlantic City, New Jersey and
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(ii) required to be maintained pursuant to the Superior Instrument
Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1), (2),
(6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, $100,000 with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
$1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self
insured retention under the general liability policy described in clause (3)
and a deductible with respect to the other insurance policies described in
clause (3) in an amount not to exceed the amount of deductible as is customarily
maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii)
the Mortgagor shall not reduce its insurance coverage for the matters described
in clause (3) (which for purposes of this paragraph means a reduction in single
limits or an increase in deductible) unless and until the Mortgagor delivers to
the Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained at rates determined
by the Mortgagor to be reasonable for such coverage, (x) the amount of the
proposed reduction, (y) the premium for the existing and the proposed reduced
coverage, and (z) that the proposed deductible satisfied the criteria set forth
in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clause (5) in the
forms of and in an amount not to exceed the amount of deductible as is
customarily maintained by casino-hotels of similar size in Atlantic City, New
Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of workers'
compensation insurance, name as additional insureds the Mortgagee, in both its
individual and fiduciary capacities, and, to the extent required by the Superior
Instrument Requirements, the Lessors and the holders of the Superior Mortgages,
(2) provide that all insurance proceeds for losses, except in the case of public
liability insurance and workers' compensation insurance or as otherwise provided
in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the
Mortgagee or such other party as is required to receive such proceeds under a
Superior Mortgage, (3) except in the case of workers' compensation, include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all lost payees and
named insureds (other than the Mortgagor) and all rights of subrogation against
any named insured, (4) except in the case of public liability and
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workers' compensation insurance, provide that any losses shall be payable
notwithstanding (i) any act, failure to act, negligence of, or violation or
breach of warranties, declarations or conditions contained in such policy by the
Mortgagor or the Mortgagee or any other named insured or loss payee (including,
without limitation, with respect to the Released Fee Land, the holders of any
After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable
properties for purposes more hazardous than permitted by the terms of the
policy, (iii) any foreclosure or other proceeding or notice of sale relating to
the insurable properties or (iv) any change in the title to or ownership or
possession of the insurable properties, (5) contain a non-contributory mortgagee
clause in favor of the Mortgagee, and (6) provide that if all or any part of
such policy is cancelled, terminated or expires, the insurer will forthwith give
notice thereof to each named insured an loss payee and that no cancellation,
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by each named insured and loss payee of
written notice thereof.
(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate
originals of all insurance policies that the Mortgagor is required to maintain
pursuant to this Section 5.11 and (2) within 30 days after each reduction in
insurance required to be maintained by the Mortgagor hereunder, an Officers'
Certificate setting forth the particulars as to all such insurance policies and
certifying that the same comply with the requirements of this Section 5.11, that
all premiums or installments thereof then due thereon have been paid and that
the same are in full force and effect. The Mortgagee shall not be responsible
for effecting or renewing any insurance or for the responsibility or solvency of
the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x) results in
damage, loss or destruction in an amount in excess of $5,000,000 to any
buildings or improvements on the Premises and/or any Tangible Personal Property
or (y) pursuant to any Superior Instrument Requirement, would require the
deposit of insurance proceeds with the Depositary, or action or proceeding with
respect thereto. Whenever the Superior Instrument Requirements require or
permit the selection of the Depositary by the Mortgagor, the Mortgagor shall
select the Insurance Trustee as the Depositary. Within 30 days after any
Casualty which results in any damage, loss or destruction in an amount in excess
of $10,000,000 to any buildings or improvements of the Premises and/or any
Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a
certificate of an Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit
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the Restoration of such buildings and improvements for the same uses and to the
same size and quality in all material respects, as existed immediately prior to
the Casualty (and if such certificate states the Legal Requirements do not
permit such Restoration, such certificate shall describe the manner closest
approximating such criteria to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of Appraised Value dated not
more than 10 days prior to delivery setting forth the Appraised Value
immediately prior to the Casualty and the estimated Appraised Value immediately
after the Restoration). If the Mortgagor is required to deliver such
Certificates of Appraised Value and if based on such Certificates of Appraised
Value immediately after Restoration, the aggregate Outstanding Amount of First
Mortgage Debt immediately after such Restoration shall exceed the greater of (i)
66 2/3% of the Appraised Value immediately after such Restoration or (ii) the
quotient of the Outstanding Amount of First Mortgage Debt immediately prior to
such Casualty divided by the Appraised Value immediately prior to the Casualty
multiplied by the Appraised Value immediately after such Restoration, then the
proceeds of any insurance shall, at the election of Mortgagee, either be applied
to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and
delivered to the Mortgagee to the extent of the then Outstanding Amount of the
Note and any other interest or other sums due hereunder or thereunder to be
applied to the satisfaction of the Mortgage to the extent proceeds are available
for such purpose and provided that no additional sums are due to the Trustee or
the Noteholder under the Indenture, the balance of any net insurance proceeds
shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such
Certificates of Appraised Values indicates that the Outstanding Amount of First
Mortgage Debt immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of
insurance will be made available for Restoration (subject to paragraphs, (e),
(h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a
nationally recognized financial institution having a combined capital and
surplus of at least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor as additions
to capital in an amount equal to the Outstanding Amount of First Mortgage Debt
in excess of the Appraised Value necessary to be paid down so that the
Outstanding Amount of First Mortgage Debt will not exceed either of the two
amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such
commitment may only be released if, upon an Appraisal at any time following
completion of such Restoration, the aggregate Outstanding Amount of the First
Mortgage Debt does not exceed 66-2/3% of the Appraised Value.
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(e) Subject to the provisions of Subsection (d) above, in case a
Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of $10,000,000, the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to
the Insurance Trustee (or other Depositary required by the Superior
Instrument Requirements, provided that such Depositary holds such proceeds
in trust for purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable promptness under the
circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair,
replacement or rebuilding of the damage or destruction resulting from the
Casualty (all of which restoration, repair, replacement or rebuilding are
referred to as the "Restoration") in accordance with the plans and
specifications submitted to the Insurance Trustee, in conformance with all
Legal Requirements and Superior Instrument Requirements, and in accordance
with the further provisions of this Subsection (e), regardless of the
extent of any such Casualty and whether or not net insurance proceeds, if
any, shall be available or, if available, shall be sufficient, for the
purpose of the Restoration (provided, however, that if the Mortgagor does
not receive any net insurance proceeds within 30 days after any Casualty
because the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration shall be deferred
until such proceeds are made available to the Mortgagor, provided that (i)
Mortgagor delivers to the Mortgagee an Officers' Certificate certifying
that the Mortgagor is diligently and continuously adjusting such loss with
the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers'
Certificate within such 30-day period requesting the extension of such
period, estimating the date on which such proceeds will be available and
describing the Mortgagor's efforts to adjust such loss and certifying that
such extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach
has been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter updating the
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information contained in the certificate described in Clause (ii)). All
Restoration work shall be performed in accordance with the applicable
provisions of Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements and, prior to
commencing any Restoration, the Mortgagor shall obtain all Permits
necessary in connection therewith, and shall obtain, and keep in full force
and effect until the completion of such Restoration, such additional
insurance as the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration shall be
accompanied by a certificate of the Mortgagor and an Opinion of Counsel to
the effect that upon the completion of the Restoration pursuant to the
plans and specifications the Premises, and all buildings and improvements,
thereon will comply with all superior Instrument Requirements, Legal
Requirements and Insurance Requirements. Notwithstanding anything in this
Section 5.11 to the contrary, if such Casualty is in an amount less than
$5,000,000, the Mortgagor shall not be required to perform and complete
such Restoration (unless the performance and completion of the Restoration
is necessary in order for the Mortgagor to be in compliance with any term,
provision or condition of this Mortgage (other than this Section 5.11(e))
or any Superior Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designate by Mortgagor (to the extent the Mortgagor
is permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds)
and shall be paid by the Insurance Trustee in reimburse the Mortgagor for,
or to make payment for, the Restoration, after the Insurance Trustee
deducts therefrom the amount of any reasonable costs and expenses incurred
in connection with the performance of its obligations under this Section
5.11. The Insurance Trustee shall make such payments not more frequently
than once every 30 days upon the written request of the Mortgagor (unless
more frequent payments are required by Superior Instrument Requirements),
by paying to the Mortgagor or the persons named in the certificate
described in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate
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from time to time as the Restoration progresses, provided the Mortgagor has
complied with the requirements of this Subsection (e) and such payment is
permitted by an applicable Superior Instrument Requirements. The
Mortgagor's written request shall be accompanied by (i) the certificate
described in Clause (6) of this Subsection (e) and (ii) a title company or
official search, or other evidence reasonably acceptable to the Insurance
Trustee, showing that there have not been filed with respect to the
Premises, any vendor's, contractor's mechanic's, laborer's or materialman's
statutory or similar lien which has not been discharged of record (or
bonded against or secured by other security) or any other encumbrance
irrespective of its priority (other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate, countersigned by the Architect in
charge of the Restoration with respect to the matters described in (i) and
(v) below, (B) be dated not more than 10 days prior to such request and (C)
set forth (in addition to any other requirements contained in any
applicable Superior Instrument Requirements) that:
(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance
Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered services or
furnished or contracted to deliver materials for the Restoration
therein specified, and the names and addresses of such persons, a
brief description of such services and materials and the several
amounts so paid or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net
insurance proceeds, and that the sum then requested does not exceed
the value of the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in
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such certificate to be due for services or materials, and except for
amounts in dispute and/or customary retainages, there is no
outstanding indebtedness known to the person signing such certificate,
after due inquiry, which is then due for labor, wages, materials,
supplies or services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if
such estimated cost does exceed such insurance proceeds such
certificate shall state the amount of any such deficiency. If the
certificate states that such deficiency will exist, the Mortgagor
shall deliver the amount of such deficiency in cash or cash equivalent
to the Insurance Trustee simultaneously with the delivery of such
certificate, which amount shall be deemed insurance proceeds for
purposes of this Section 5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the entire
cost of the Restoration, then, after completion of the Restoration, the
Mortgagor shall pay the deficiency. If all or any part of the net
insurance proceeds are not used for the restoration in accordance with this
Subsection (e) (because such proceeds exceed the amount required to
complete the Restoration), then upon completion of the Restoration in
accordance with this Subsection (e), such amount not so used, if held by
the Insurance Trustee, shall be paid to the Mortgagor (if permitted by
Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is continuing,
all net business interruption insurance proceeds shall be paid to the Mortgagor,
to be segregated from the other funds of Mortgagor and held in trust by
Mortgagor for the following purposes and in the following order of priority:
(i) for the payment of Impositions and amounts due under the Ground Leases and
Superior Mortgages; (ii) for debt service for the estimated period of
Restoration (for purposes of this Section 5.11(f), interest and principal
payments due on any payment date under the Notes will deemed to accrue in equal
daily installments beginning the day after the immediately preceding payment
date and ending on such payment date); and (iii) for any expense incurred in
connection with the operation or business of the Casino-Hotel.
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(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to be maintained
pursuant to this Section 5.11, unless the same are permitted by Superior
Instrument Requirements and the Mortgagee is included therein as a named
insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant
to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall promptly deliver to
the Mortgagee a duplicate original of the policy of such insurance, a copy
thereof certified by the insurer or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance claims by
reason of damage or destruction to any portion of the Trust Estate may be
adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the
obligation) to join the Mortgagor in adjusting, and approving the adjustment of,
any such loss except in the event of a loss where the amount of insurance
reasonably anticipated to be received with respect to such loss is less than
[Five Million Dollars ($5,000,000)], and the Mortgagor shall assist the
Mortgagee in any such adjustment at the request of the Mortgagee. If the
Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment
process, then the Mortgagee's approval of the
adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary, if an
Event of Default shall have occurred and be continuing, the Mortgagee may, at
its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee
any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case
may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or
make any demolition, alteration or improvement of any building included in the
Trust Estate or any new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in this Section 5.12
set forth.
Unless an Event of Default shall have occurred and be continuing, the
Mortgagor shall have the right at all times to make or permit such alterations,
improvements or new constructions, structural or otherwise (herein sometimes
called collectively "alterations"), of or on the Trust Estate, to be made in all
cases subject to the conditions set forth in Section 5.12 of the Note Mortgage.
Section 5.13. LEASES. The Mortgagor shall not:
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(a) subject to the provisions of Section 5.13(d), enter into any
Lease, or renew, modify, extend, terminate, or amend any Lease, except in
the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection of,
any rental payments under any Lease more than one year in advance of the
respective periods in respect of which they are to accrue, except that, in
connection with the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected and received in
advance in an amount not in excess of three months' rent and/or a security
deposit may be required thereunder in an amount not exceeding one year's
rent;
(c) collaterally assign, transfer or hypothecate (other than to
the Mortgagee hereunder, to the mortgagee under the Note Mortgage or to the
holder of any Working Capital Facility Lien) any rental payment under any
Lease whether then due or to accrue in the future, the interest of the
Mortgagor as landlord under any Lease or the rents, issues or profits of
the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any
Lease unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder
shall be subject and subordinate to the rights of the Mortgagee under
this Mortgage, the mortgagee under the Note Mortgage and the holders
of any Superior Mortgage,
(2) the Lease may be assigned by the landlord thereunder to
the Mortgagee,
(3) the rights and remedies of the tenant in respect of any
obligations of the landlord thereunder shall be nonrecourse as to any
assets of the landlord other than its equity in the building in which
the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee under any new lease entered
into in the event of a termination of a Ground Lease;
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(e) modify any Lease with respect to the matters described in
clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate of
the Mortgagor) for a term of not less than 3 nor more than 10 years, the
Mortgagee shall deliver a non-disturbance and attornment agreement substantially
in the form of Schedule 4 hereto, following receipt of a certificate of a
leasing broker (who is not an Affiliate of the Mortgagor or the broker involved
in such transaction) experienced with respect to leases of commercial space in
the Atlantic City area stating that the rent under the Lease is not less than
fair market rent and that the other terms of the Lease are fair and reasonable
in the commercial leasing market. The Mortgagor shall, upon demand, reimburse
the Mortgagee for any costs and expenses (including reasonable attorney's fees)
incurred by the Mortgagee in connection with the preparation, review and
delivery of such non-disturbance and attornment agreements.
Promptly after the execution and delivery hereof, the Mortgagor will
cause the lessee under each Lease now in effect and promptly after each Lease is
executed or becomes effective after the date of the execution and delivery
hereof, the Mortgagor will cause the lessee under each such Lease, to be duly
notified in writing (unless the substance and effect of such notice shall be
contained in such Lease) of the subjection of the owner's interest, as lessor,
in and to such Lease to the lien of this Mortgage and of the name and address of
the Mortgagee. Each such notice shall state that the lease of such lessee is a
Lease as herein defined. If a new Mortgagee is at any time appointed hereunder
or the address of the Mortgagee shall at any time be changed, the Mortgagor will
cause each lessee under each Lease to be promptly notified in writing of the
name address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur any
expenditure other than DE MINIMIS amounts) to obtain from each lessee under each
Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of
receipt of such notice, and the Mortgagor will promptly deliver to the
Mortgagee, upon request, a copy of each such acknowledgment of receipt which it
is able to obtain. The Mortgagee shall not be responsible for securing or
causing the Mortgagor to secure any such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
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Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to
Article Four, the Mortgagor will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation, and
its rights (both statutory and under its articles of incorporation) and
franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor
will keep proper books of record and account in accordance with Section 12.05 of
the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Notes, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Guaranty.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law or any other law which
would prohibit or forgive the Mortgagor from paying all or any portion of the
obligations under the Guaranty as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect the covenants or
the performance of this Mortgage; and the Mortgagor (to the extent that it may
lawfully do so) 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 Mortgagee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the
provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any
Taking affecting the Trust Estate.
Section 5.21. GROUND LEASES.
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(a) The Mortgagor covenants and agrees that it will do or cause to be
done all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall
at all times fully perform and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all taxes,
assessments and other charges mentioned therein) prior to the expiration of any
notice and/or cure period provided in each such Ground Lease. Upon receipt by
the Mortgagee from a Lessor of any written notice of default by the lessee
thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems
necessary in its sole discretion to prevent or to cure any default by the
Mortgagor in the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the Mortgagor as
lessee under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by the Mortgagor or by any
party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore
delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a
copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall
not take any such action unless and until the Mortgagor and/or the Mortgagee no
longer has the benefit of any tolling or stay referred to in Section 3.01(g).
Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby
expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any part
thereof to such extent and as often as the Mortgagee, in its sole discretion,
deems necessary or desirable for the purpose permitted by the immediately
preceding sentence, subject only to applicable Legal Requirements. Subject to
the preceding and without limiting the Mortgagee's other remedies under this
Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee
in its sole discretion deems necessary for any such purpose, and the Mortgagor
hereby agrees to pay to the Mortgagee, immediately and without demand, all such
sums so paid and expended by the Mortgagee, together with interest thereon from
the date of each such payment at the highest rate of interest set forth in the
Notes. All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and that
it will not without the express written consent of the Mortgagee modify,
change,
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supplement, alter or amend such Ground Leases either orally or in writing
and, as further security for the repayment of the indebtedness secured
hereby and for the performance of the covenants herein and in such Ground
Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its
rights, privileges and prerogatives as lessee under such Ground Leases to
terminate, cancel, modify, change, supplement, alter or amend such Ground
Leases, and any such termination, cancellation, modification, change,
supplement, alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing and
(2) either (A) there has been an acceleration of maturity of the Notes
pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee
exercises its rights under Section 3.09 hereof, the Mortgagee shall have no
right to terminate, cancel, modify, change, supplement, alter or amend the
Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of the
Mortgagor's obligations under such Ground Leases, pursuant to such Ground
Leases or otherwise, shall release the Mortgagor from any of its
obligations under this Mortgage, including its obligations with respect to
the payment of rent as provided for in such Ground Leases and the
performance of all of the terms, provisions, covenants, conditions and
agreements contained in such Ground Leases, to be kept, performed and
complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest in
the improvements on the Leased Land and the leasehold estates shall not
merge by and shall always remain separate and distinct, notwithstanding the
union of such estates either in the Lessor or in the lessee, or in a third
party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in writing
of any request made by the Mortgagor, as lessee under each of the Ground
Leases, or any of the Lessors, for arbitration proceedings pursuant to the
Ground Leases and of the institution of any arbitration proceedings, as
well as all proceedings thereunder. In addition, the Mortgagor shall
promptly deliver to the Mortgagee a copy of the determination of the
arbitrators in each such arbitration proceeding. The Mortgagee shall have
the right to participate in such arbitration proceedings in association
with the Mortgagor
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or on its own behalf as an interested party in accordance with the terms of
the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the Mortgagor
shall deliver a copy of its election to exercise such option within 5 days
after the Mortgagor has delivered notice of such election to the Lessor or
(B) the Mortgagor acquires fee simple title or any other estate, title or
interest in the Leased Land, the Mortgagor shall promptly notify the
Mortgagee of such acquisition and shall cause to be executed and recorded
all such other and further assurances or other instruments in writing as
may be required by law or, in the opinion of the
Mortgagee, be reasonably desirable to carry out the intent and meaning of
clause (x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease by
any Lessor or any trustee arising from or in connection with any case,
proceeding or other action commenced or pending by or against any Lessor
under the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation, the Mortgagor shall give notice thereof to the Mortgagee. The
Mortgagor hereby (A) assigns to the Mortgagee any and all of the
Mortgagor's rights as lessee under Section 365(h) of the Code or any
comparable provision contained in any present or future federal, state,
local, foreign or other statute, law, rule or regulation ("Comparable
Provision") and (B) covenants that it shall not elect to treat any Ground
Lease as terminated pursuant to Section 365(h) of the Code or any
Comparable Provision without the prior written consent of the Mortgagee and
(C) agrees that any such election by the Mortgagor without such consent
shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to the
Mortgagee all of the Mortgagor's claims and rights to the payment of
damages arising from any rejection by Lessor of any Ground lease under the
Code or any Comparable Provision. The Mortgagee shall have the right to
proceed in its own name or in the name of the Mortgagor in respect of any
claim, suit, action or proceeding relating to the rejection of
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any Ground Lease, including, without limitation, the right to file and
prosecute, in cooperation with the Mortgagor, any proofs of claim,
complaints, motions, applications notices and other documents, in any case
in respect of Lessor under the Code or any Comparable Provision. This
assignment constitutes a present, irrevocable and unconditional assignment
of the foregoing claims, rights and remedies, and shall continue in effect
until all of the indebtedness and obligations secured by this Mortgage
shall have been satisfied and discharged in full. Any amounts received by
the Mortgagee in damages arising out of the rejection of any Ground Lease
as aforesaid shall be applied first to all reasonable costs and expenses of
the Mortgagee (including, without limitation, reasonable attorneys' fees)
incurred in connection with the exercise of any of its rights or remedies
under this Section 5.21, and thereafter as provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor, as
lessee under the Ground Leases, shall determine to reject any or all of the
Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days'
prior notice of the date on which the Mortgagor shall apply to the
Bankruptcy Court or other judicial body with appropriate jurisdiction for
authority to reject the lease. The Mortgagee shall have the right, but not
the obligation, to serve upon the Mortgagor within such 10 day period a
notice stating that (a) the Mortgagee demands that the Mortgagor assume and
assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the
Code or any Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s). If
the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a) of the
preceding sentence within 30 days after the notice shall have been given
subject to the performance by the Mortgagee of the covenant provided for in
clause (b) of the preceding sentence. Effective upon the entry of an order
for relief in respect of the Mortgagor under Chapter 7 of the Code or Any
Comparable Provision the Mortgagor hereby assigns and transfers to the
Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other
judicial body with appropriate jurisdiction for an order extending the
period during which the Ground Lease may be rejected or assumed;
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(x) the Mortgagor shall promptly give to the Mortgagee copies of
(A) all notices of default or (B) any other communications or notices with
respect to events which relate to the possible impairment of the security
of this Mortgage, which it shall give or receive under the Ground Leases
and shall promptly notify the Mortgagor of any default under any Ground
lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all of the
rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed net
rent, taxes and assessments, payable under the Ground Leases have been paid to
the extent they were due and payable to the date hereof and that the Mortgagor
has not received notice of its failure to pay any other amounts payable under
the Ground Leases which have not been cured.
(d) If both the Lessor's and lessee's estates under any of the Ground
Leases or any portion thereof shall at any time become vested in one owner, this
Mortgage and the lien created hereby shall nevertheless not be merged,
extinguished, destroyed or terminated by application of the doctrine of merger
and, in such event, Mortgagee shall continue to have all of the rights and
privileges of the a leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease shall
be terminated prior to the natural expiration of its term due to default by the
lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its
designee shall acquire from the Lessor a new lease of the Leased land or any
portion thereof, the Mortgagor shall have no right, title or interest in or to
such lease or the leasehold estate created thereby, or the options therein
contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
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(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to
the expiration of any notice and/or cure period provided in each such Superior
Mortgage. If a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior Mortgage
has been accelerated as a result thereof, the Mortgagee may rely thereon and
take any action the Mortgagee deems necessary in its sole discretion to prevent
or to cure any default by the Mortgagor in the performance of or compliance with
any of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as mortgagor under each of the Superior Mortgages even though the
existence of such default or the nature thereof may be questioned or denied by
the Mortgagor or by any party on behalf of the Mortgagor provided that if the
Mortgagor has heretofore taken such actions as described in Section 3.01(h), the
Mortgagee shall not take any such action unless and until the Mortgagor and/or
the Mortgagee no longer has the benefit of any such tolling or stay referred to
in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the
Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such
acceleration the Mortgagee shall have, the absolute and immediate right to enter
in and upon the Premises or any part thereof to such extent and as often as the
Mortgagee, in its sole discretion, deems necessary for the purpose permitted by
the immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money as the
Mortgagee in its sole discretion deems necessary for any such purpose and (ii)
in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby
agrees to pay to the Mortgagee, immediately and without demand, all such sums
referred to in (i) and (ii) above so paid and expended by the Mortgagee,
together with interest thereon from the date of each such payment at the rate of
interest set forth in the Note. All sums so paid and expended by the Mortgagee
and the interest thereon shall be added to and be secured by the lien of this
Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first satisfying the
conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A)
modify any of the terms, covenants or conditions of any Superior Mortgage,
and without limiting the foregoing, the Mortgagor shall not, without
satisfying such conditions, enter into or obtain any agreement whereby the
holder of any Superior Mortgage waives, postpones, extends, reduces or
modifies the payment of the installment of principal or interest or
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any other item or amount now required to be paid under the terms of any
Superior Mortgage or modifies any other provision thereof, or (B) acquire
or permit or suffer any Affiliate of the Mortgagor to acquire any Superior
Mortgage or any interest therein. Notwithstanding anything in clause (A)
to the contrary, the Mortgagor shall have the right to amend, supplement or
modify any Superior Mortgage, if (x) the then outstanding principal balance
of the indebtedness secured by such Superior Mortgage is not increased
thereby, and (y) in the case of any After-Acquired Fee Mortgage, such
amendment, supplement or agreement does not increase the property covered
thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each Superior
Mortgage, the note secured thereby and any other instrument evidencing or
securing the indebtedness owing to any holder of any Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to obtain
an estoppel certificate or letter addressed to the Mortgagee from holders
of the Superior Mortgages, such certificate or letter to be in such form as
the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication with
respect to events which relate to the possible impairment of the security
of this Mortgage, which it shall give or receive under the Superior
Mortgages and shall promptly notify the Mortgagor of any default under any
Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing Encumbrances
and any mortgage, assignment, security agreement, financing statement or other
lien securing any Working Capital Facility (the "Working Capital Facility Lien")
encumbering Mortgagor's interest in the affected portions of the Trust Estate or
any part thereof.
The foregoing provisions of this Section 5.22(c) shall be
self-operative with respect to Existing Encumbrances and shall be self-operative
with respect to any Working Capital Facility Lien, and no further instrument
shall be required to give effect to such subordination. Mortgagee shall,
however, from time to time, execute instruments in form
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<PAGE>
and substance reasonably satisfactory to the holder of the Working Capital
Facility Lien, confirming such subordination and agreeing to such other matters
reasonably required by the holder of the Working Capital Facility Lien which do
not, in the aggregate, materially adversely reduce or impair the rights of
Trustee under the Mortgage, and Mortgagor and others may rely conclusively
thereon, provided that Mortgagee shall have no liability thereunder and all
costs and expenses (including reasonable attorneys' fees) shall be paid by
Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of
the Trust Estate shall be subject and subordinate to any Existing Encumbrances.
The provisions of this Section 5.22(d) shall be self-operative, and no further
instrument shall be required to give effect to such subordination.
Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey
Clerk's Office after the recordation of the Note Mortgage, the lien of this
Mortgage ranks pari passu with, and not junior to, the lien created by the Note
Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges
that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien
upon the Trust Estate which is PARI PASSU with the lien of this Mortgage.
Mortgagee further acknowledges and agrees that whenever it is provided in the
Note Mortgage that the Mortgagor shall deliver any notice or document, or is
required to make any payment thereunder, the delivery of such notice or document
or the making of such payment pursuant to the terms of the Note Mortgage shall
also constitute the delivery of such notice or document or the making of such
payment in satisfaction of the terms, conditions and provisions of this Mortgage
to the same extent as the same constitutes satisfaction of the terms, conditions
and provisions of the Note Mortgage.
Section 6.02. COUNTERPARTS. This instrument may be executed in any
number of counterparts, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
Section 6.03. MODIFICATION. This Mortgage is subject to
"modification" within the meaning of N.J.S.A. 46:9-
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8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority
provisions of such statute. Such modification may include, without limitation,
a change in the interest rate, maturity date or other terms and conditions of
this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF
THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be
duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
59
<PAGE>
Exhibit G
Intercreditor Agreement Terms
<PAGE>
Exhibit G
Outline of Material Terms of the
Intercreditor Agreement
for
Resorts International, Inc.
Subject Credit Senior Secured Loan due July 15, 2002 (the
Facilities "Senior Facility");
Senior Mortgage Notes due [March] 15,
2003 (the "Senior Mortgage Notes");
Junior Mortgage Notes due June 15, 2004
(the "Junior Mortgage Notes"); and
Any other credit facilities which may be
required by the Indentures for the
Senior Facility, the Senior Mortgage
Notes or the Junior Mortgage Notes to be
included in the Intercreditor Agreement
(the "Additional Facilities," and
together with the Senior Facility, the
Senior Mortgage Notes and the Junior
Mortgage Notes, the "Credit Facilities")
Creditor Parties Senior Facility Trustee;
Senior Mortgage Note Trustee;
Junior Mortgage Note Trustee; and any
lenders (or trustees or agents on behalf
of any lenders) which provide Additional
Facilities (collectively, the
"Trustees") Each Creditor Party, by its
execution of the Intercreditor Agreement
(whether directly or through its trustee
or agent), acknowledges the making of
the other Credit Facilities and the
intended uses of proceeds thereof and
waives any right to object to any
contemporaneous or existing Credit
Facility as having constituted a
fraudulent conveyance.
Classification of Initial Designations:Credit Facilities
Class 1 Facilities: Senior Facility,
all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
<PAGE>
Class 2 Facilities: Senior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Class 3 Facilities: Junior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Subsequent Designations - as indicated
on the signature page(s) to be executed
by the lenders (or any trustees or
agents on behalf of any lenders) which
provide Additional Facilities and
consented to by all other parties at
such time.
Borrower Parties Resorts International Hotel Financing,
Inc. ("RIHF"), as borrower under the
Secured Facilities;
Resorts International Hotel, Inc.
("RIH") as guarantor under the Secured
Facilities and issuer of the secured
intercompany notes to RIHF collaterally
assigned to each respective Trustee;
Resorts International, Inc. ("RII"), as
guarantor under the Senior Facility and
issuer of any intercompany notes which
may be issued to RIH; and
[GRI, Inc. ("GRI", and together with
RIHF, RIH and RII, the "Borrower
Parties") as guarantor under the Senior
Facility and issuer of any intercompany
notes which may be issued to RIH.]1*
The Borrower Parties will execute the
Intercreditor Agreement principally for
the purposes of (i) acknowledging the
relative rights of and relationships
among the Secured Facilities established
therein and (ii) agreeing not to take
any actions, including making any
payments, inconsistent therewith.
- -------------------
* Subject to discussion on structure
2
<PAGE>
Relative Priorities Liens:
Notwithstanding the time of filing,
recording or perfecting of the Security
Documents (which will be defined to
include the Mortgages and other liens
and encumbrances):
Each Lien created on behalf of a Class 1
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 1 Facility and (ii) senior
to any Lien created on behalf of any
Class 2 Facility or Class 3 Facility.
Each Lien created on behalf of a Class 2
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 2 Facility, (ii) senior to
any Lien created on behalf of any Class
3 Facility and (iii) junior to any Lien
created on behalf of any Class 1
Facility.
Each Lien created on behalf of a Class 3
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 3 Facility, and (ii) junior
to any Lien created on behalf of any
Class 1 Facility or Class 2 Facility.
Subrogation To be waived by all guarantors.
Mortgage Default Each Class 3 Creditor shall notify each
Cure Provisions Class 2 Creditor and each Class 1
Creditor of any Default or Event of
Default under its respective Class 3
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 1
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 3
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 2 Creditor shall notify each
Class 1 Creditor and each Class 3
Creditor of any Default or Event of
3
<PAGE>
Default under its respective Class 2
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 1 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 2
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 1 Creditor shall notify each
Class 2 Creditor and each Class 3
Creditor of any Default or Event of
Default under its respective Class 1
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 1
Facility or the Mortgage or other
Security Documents securing its
facility.
In addition, each Trustee will be
obligated to notify all other Trustees
prior to exercising any remedies with
respect to any shared collateral.
Application of Proceeds from dispositions of
Proceeds collateral, insurance proceeds,
condemnation awards and similar amounts
will be applied in accordance with
relative priorities of Liens.
Representations and Each party to the Intercreditor
Warranties Agreement will make appropriate
representations, including those
relating to its corporate existence,
power and authority, as well as to the
validity and enforceability of the
Intercreditor Agreement.
Amendments Intercreditor Agreement may not be
amended except pursuant to a writing
executed by all parties thereto.
Amendments for the sole purpose of
adding permitted parties may be executed
by the Trustees without the consent of
4
<PAGE>
the creditors for whom they serve if all
conditions precedent to the incurrence
of such indebtedness have been
satisfied. Amendments to sections [ ]
and [ ] may be executed by the
Trustees only with the approval of 100%
of the creditors for whom they serve and
amendments to sections [ ] and [ ]
may be executed by the Trustees only
with the approval of 66 2/3% of the
creditors for whom they serve.
Third Party Each party to the Intercreditor
Beneficiarie Agreement will acknowledge that such
agreement is being entered into for the
benefit of the lenders under the Credit
Facilities and their respective
successors and assigns, each of whom is
a direct intended third-party
beneficiary.
Certain Specific performance; no waivers;
Miscellaneous cooperation and further assurances.
Provisions
Governing Law New York
<PAGE>
[GD&C Draft--12/30/93]
[NA932820.031]
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RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
Issuer,
RESORTS INTERNATIONAL HOTEL, INC.,
Guarantor,
and
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Trustee
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I N D E N T U R E
Dated as of [ ], 1994
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11.375% JUNIOR MORTGAGE NOTES DUE 2004
<PAGE>
CROSS-REFERENCE TABLE
SECTION OF TRUST INDENTURE ACT OF 1939 SECTION OF INDENTURE
- -------------------------------------- --------------------
310(a)(1) . . . . . . . . . . . . . . . . . . . . 8.08; 8.09
(a)(2) . . . . . . . . . . . . . . . . . . . . 8.09
(a)(3) . . . . . . . . . . . . . . . . . . . . 8.14(b)
(a)(4) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b). . . . . . . . . . . . . . . . . . . . . . 8.08
(c). . . . . . . . . . . . . . . . . . . . . . Not Applicable
311(a). . . . . . . . . . . . . . . . . . . . . . 8.13
(b). . . . . . . . . . . . . . . . . . . . . . 8.13
(c). . . . . . . . . . . . . . . . . . . . . . Not Applicable
312(a). . . . . . . . . . . . . . . . . . . . . . 9.01; 9.02(a)
(b). . . . . . . . . . . . . . . . . . . . . . 9.02(b)
(c). . . . . . . . . . . . . . . . . . . . . . 9.02(c)
313(a). . . . . . . . . . . . . . . . . . . . . . 9.03(a)
(b). . . . . . . . . . . . . . . . . . . . . . 9.03(a)
(c). . . . . . . . . . . . . . . . . . . . . . 9.03(a)
(d). . . . . . . . . . . . . . . . . . . . . . 9.03(b)
314(a). . . . . . . . . . . . . . . . . . . . . . 9.04
(b). . . . . . . . . . . . . . . . . . . . . . 6.02
(c)(1) . . . . . . . . . . . . . . . . . . . . 1.06
(c)(2) . . . . . . . . . . . . . . . . . . . . 1.06
(c)(3) . . . . . . . . . . . . . . . . . . . . 9.04(c); 12.07(i)
(d). . . . . . . . . . . . . . . . . . . . . . 6.02
(e). . . . . . . . . . . . . . . . . . . . . . 1.06
(f). . . . . . . . . . . . . . . . . . . . . . Not Applicable
315(a). . . . . . . . . . . . . . . . . . . . . . 8.01(a)
(b). . . . . . . . . . . . . . . . . . . . . . 8.02
(c). . . . . . . . . . . . . . . . . . . . . . 8.01(b)
(d). . . . . . . . . . . . . . . . . . . . . . 8.01(c)
(e). . . . . . . . . . . . . . . . . . . . . . 7.14
316(a)(l)(A). . . . . . . . . . . . . . . . . . . 7.12(b)
(a)(l)(B). . . . . . . . . . . . . . . . . . . 7.13
(a)(2) . . . . . . . . . . . . . . . . . . . . Not Applicable
(b). . . . . . . . . . . . . . . . . . . . . . 7.08
317(a)(l) . . . . . . . . . . . . . . . . . . . . 7.03
(a)(2) . . . . . . . . . . . . . . . . . . . . 7.04
(b). . . . . . . . . . . . . . . . . . . . . . 12.03
318(a). . . . . . . . . . . . . . . . . . . . . . 1.07
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Note: This Cross-Reference Table shall not be deemed, for any
purpose, to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
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ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . . 16
Section 1.03. Notices, etc., to Trustee, RIH and the
Company. . . . . . . . . . . . . . . . . . . . . . 17
Section 1.04. Notices to Noteholders; Waiver.. . . . . . . . . . . 18
Section 1.05. Form and Contents of Documents Delivered
to Trustee.. . . . . . . . . . . . . . . . . . . . . 19
Section 1.06. Compliance Certificates and Opinions.. . . . . . . . 20
Section 1.07. Conflict with Trust Indenture Act. . . . . . . . . . 21
Section 1.08. Effect of Headings and Table of Contents.. . . . . . 21
Section 1.09. Successors and Assigns.. . . . . . . . . . . . . . . 21
Section 1.10. Separability Clause. . . . . . . . . . . . . . . . . 21
Section 1.11. Benefits of Indenture. . . . . . . . . . . . . . . . 21
Section 1.12. Governing Law. . . . . . . . . . . . . . . . . . . . 21
Section 1.13. Casino Control Act.. . . . . . . . . . . . . . . . . 22
Section 1.14. General Application. . . . . . . . . . . . . . . . . 22
ARTICLE TWO
NOTE FORM
Section 2.01. Form Generally.. . . . . . . . . . . . . . . . . . . 22
Section 2.02. Form of Notes. . . . . . . . . . . . . . . . . . . . 23
Section 2.03. Form of Trustee's Certificate of
Authentication.. . . . . . . . . . . . . . . . . . . 29
(i)
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Section 2.04. Form of the Guaranty.. . . . . . . . . . . . . . . . 29
ARTICLE THREE
THE NOTE
Section 3.01. General Title. . . . . . . . . . . . . . . . . . . . 30
Section 3.02. Form and Denominations.. . . . . . . . . . . . . . . 30
Section 3.03. Execution, Authentication, Delivery and
Dating . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.04. Temporary Notes. . . . . . . . . . . . . . . . . . . 31
Section 3.05. Registration, Transfer and Exchange. . . . . . . . . 31
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Notes. . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.07. Payment of Interest on Notes; Interest
Rights Preserved.. . . . . . . . . . . . . . . . . . 33
Section 3.08. Persons Deemed Owners. . . . . . . . . . . . . . . . 34
Section 3.09. Cancellation.. . . . . . . . . . . . . . . . . . . . 35
Section 3.10. Term and Form. . . . . . . . . . . . . . . . . . . . 35
Section 3.11. Payment of Interest in Additional Notes. . . . . . . 36
Section 3.12. Exchangeability. . . . . . . . . . . . . . . . . . . 37
Section 3.13. Redemption . . . . . . . . . . . . . . . . . . . . . 37
Section 3.14. Authentication and Delivery of Original
Issue. . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE FOUR
GUARANTY
Section 4.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.02. Execution and Delivery of Guaranty . . . . . . . . . 39
Section 4.03 Mortgage Securing Guaranty . . . . . . . . . . . . . 39
(ii)
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PAGE
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ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. Payment of Indebtedness; Satisfaction and
Discharge of Indenture . . . . . . . . . . . . . . . 40
Section 5.02. Application of Deposited Money . . . . . . . . . . . 41
Section 5.03. Repayment to the Company . . . . . . . . . . . . . . 42
ARTICLE SIX
SECURITY
Section 6.01. Assignment Agreement . . . . . . . . . . . . . . . . 42
Section 6.02. Recording, Etc.. . . . . . . . . . . . . . . . . . . 43
Section 6.03. Custody of Mortgage Documents. . . . . . . . . . . . 45
Section 6.04. Suits to Protect the Trust Estate and
Mortgage Documents . . . . . . . . . . . . . . . . . 45
ARTICLE SEVEN
REMEDIES
Section 7.01. Events of Default. . . . . . . . . . . . . . . . . . 46
Section 7.02. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . 50
Section 7.03. Covenant to Pay Trustee Amounts Due on Notes
and Right of Trustee to Judgment . . . . . . . . . . 51
Section 7.04. Trustee May File Proofs of Claim . . . . . . . . . . 52
Section 7.05. Trustee May Enforce Claims Without
Possession of Notes. . . . . . . . . . . . . . . . . 52
Section 7.06. Application of Money Collected . . . . . . . . . . . 53
Section 7.07. Limitation on Suits. . . . . . . . . . . . . . . . . 53
Section 7.08. Unconditional Right of Noteholders to
Receive Principal and Interest . . . . . . . . . . . 54
Section 7.09. Restoration of Rights and Remedies . . . . . . . . . 54
(iii)
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Section 7.10. Rights and Remedies Cumulative . . . . . . . . . . . 55
Section 7.11. Delay or Omission Not Waiver . . . . . . . . . . . . 55
Section 7.12. Other Rights . . . . . . . . . . . . . . . . . . . . 55
Section 7.13. Waiver of Past Defaults. . . . . . . . . . . . . . . 56
Section 7.14. Undertaking for Costs. . . . . . . . . . . . . . . . 56
Section 7.15. Enforcement. . . . . . . . . . . . . . . . . . . . . 57
Section 7.16. Management of Casino-Hotel . . . . . . . . . . . . . 57
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. Certain Duties and Responsibilities. . . . . . . . . 58
Section 8.02. Notice of Defaults . . . . . . . . . . . . . . . . . 59
Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . . . 59
Section 8.04. Not Responsible for Recitals or Issuance
of Notes or Application of Proceeds. . . . . . . . . 61
Section 8.05. May Hold Notes . . . . . . . . . . . . . . . . . . . 61
Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . . . 62
Section 8.07. Compensation and Reimbursement . . . . . . . . . . . 62
Section 8.08. Disqualification; Conflicting Interests. . . . . . . 63
Section 8.09. Corporate Trustee Required; Eligibility. . . . . . . 63
Section 8.10. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . 63
Section 8.11. Acceptance of Appointment by Successor . . . . . . . 65
Section 8.12. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . 65
Section 8.13. Preferential Collection of Claims Against
Company. . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.14. Co-trustees and Separate Trustees. . . . . . . . . . 66
(iv)
<PAGE>
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Section 8.15. Appointment of Authenticating Agent. . . . . . . . . 68
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 9.01. Company to Furnish Trustee Semi-Annual
Lists of Noteholders . . . . . . . . . . . . . . . . 69
Section 9.02. Preservation of Information;
Communications to Noteholders. . . . . . . . . . . . 69
Section 9.03. Reports by Trustee . . . . . . . . . . . . . . . . . 70
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 10.01. Consolidation, Merger, Conveyance or
Transfer Only on Certain Terms . . . . . . . . . . . 72
Section 10.02. Successor Entity Substituted . . . . . . . . . . . . 73
Section 10.03. Successor Management of Casino-Hotel . . . . . . . . 74
Section 10.04. Limitation on Sales of Trust Estate. . . . . . . . . 74
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. Without Consent of Noteholders . . . . . . . . . . . 74
Section 11.02. With Consent of Noteholders. . . . . . . . . . . . . 75
Section 11.03. Execution of Amendments and Supplements. . . . . . . 77
Section 11.04. Effect of Amendment or Supplement. . . . . . . . . . 77
Section 11.05. Conformity with Trust Indenture Act. . . . . . . . . 77
Section 11.06. Reference in Notes to Amendment or
Supplement . . . . . . . . . . . . . . . . . . . . . 78
(v)
<PAGE>
ARTICLE TWELVE
COVENANTS
Section 12.01. Payment of Principal and Interest. . . . . . . . . . 78
Section 12.02. Maintenance of Office or Agency. . . . . . . . . . . 79
Section 12.03. Money for Security Payments to Be Held in
Trust. . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.04. Corporate Existence. . . . . . . . . . . . . . . . . 81
Section 12.05. To Keep Books; Inspection by Trustee . . . . . . . . 81
Section 12.06. Reports and Compliance Certificates. . . . . . . . . 81
Section 12.07. Limitation on Dividends and Restricted
Payments . . . . . . . . . . . . . . . . . . . . . . 83
Section 12.08. Limitation on Additional Indebtedness and
Issuance of Notes. . . . . . . . . . . . . . . . . . 85
Section 12.09. Limitation on Repayment of Subordinated
Indebtedness . . . . . . . . . . . . . . . . . . . . 86
Section 12.10. Limitation on Certain Transactions . . . . . . . . . 86
Section 12.11. Restriction of Activities. . . . . . . . . . . . . . 86
Section 12.12. Limitation on Subsidiaries; Consolidated
Group. . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.13. Limitations on Liens . . . . . . . . . . . . . . . . 88
Section 12.14. Compliance with Laws . . . . . . . . . . . . . . . . 88
Section 12.15. Payment of Taxes and Other Claims. . . . . . . . . . 88
Section 12.16. Maintenance of Properties. . . . . . . . . . . . . . 89
Section 12.17. Insurance . . . . . . . . . . . . . . . . . . . . . 89
Section 12.18 Waiver of Stay, Extension or Usury Laws. . . . . . . 89
Section 12.19. Appointment to Fill a Vacancy in Office
of Trustee . . . . . . . . . . . . . . . . . . . . . 90
Section 12.20 Validity of Liens. . . . . . . . . . . . . . . . . . 90
(vi)
<PAGE>
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Section 12.21. Transactions with Stockholders and
Affiliates . . . . . . . . . . . . . . . . . . . . . 91
Section 12.22. Limitation on Open Market Purchases. . . . . . . . . 91
ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. General Applicability of Article . . . . . . . . . . 91
Section 13.02. Election to Redeem; Notice to Trustee. . . . . . . . 91
Section 13.03. Selection by Trustee of Notes to Be
Redeemed . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.04. Notice of Redemption . . . . . . . . . . . . . . . . 92
Section 13.05. Deposit of Redemption Price. . . . . . . . . . . . . 92
Section 13.06. Notes Payable on Redemption Date . . . . . . . . . . 93
Section 13.07. Notes Redeemed in Part . . . . . . . . . . . . . . . 93
Section 13.08. Redemption Pursuant to Casino Control
Act. . . . . . . . . . . . . . . . . . . . . . . . . 93
(vii)
<PAGE>
TABLE OF EXHIBITS
EXHIBITS DOCUMENT
- -------- --------
Exhibit A RIH Junior Promissory Note
Exhibit B Assignment Agreement from Resorts
International Hotel Financing, Inc.
Exhibit C Subordination Provisions
Exhibit D Mortgage securing RIH Junior Promissory Note
between Resorts International Hotel, Inc. and
Resorts International Hotel Financing, Inc.
Exhibit E Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
Exhibit F Mortgage securing Guaranty of Junior Mortgage
Notes between Resorts International Hotel,
Inc. and U.S. Trust Company of California, N.A.,
as Trustee
Exhibit G Intercreditor Agreement Terms
(vii)
<PAGE>
INDENTURE
THIS INDENTURE dated as of [ ], 1994, among Resorts International
Hotel Financing, Inc., a Delaware corporation (the "Company"), Resorts
International Hotel, Inc., a New Jersey corporation ("RIH"), and U.S. Trust
Company of California, N.A., a national banking association, as
trustee (together with its successors as such trustee, the "Trustee").
PRELIMINARY STATEMENT
The capitalized terms used in this Indenture which are not otherwise
defined herein have the meanings set forth in Article I.
The Company has duly authorized the creation, execution and delivery of
its 11.375% Junior Mortgage Notes due 2004 (the "Notes"), issuable in
accordance with the terms hereof, and RIH has duly authorized the guaranty of
the Company's obligations under this Indenture, and, to secure the Notes and to
provide therefor, each of the Company and RIH has duly authorized the execution
and delivery of this Indenture.
Each $1,000 principal amount of the Notes will be issued with one share
of Resorts International, Inc.'s Class B Redeemable Common Stock (the "Class B
Common Stock") (each $1,000 principal amount of the Notes and share of Class B
Common Stock are referred to collectively herein as a "Unit"). Each Note may
not be transfered separately from the share(s) of Class B Common Stock issued
in respect of such Note.
All things have been done which are necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee
hereunder and duly issued by the Company, the valid obligations of the Company,
and to constitute this Indenture a valid agreement of the Company and RIH, in
accordance with the terms of the Notes and this Indenture.
THEREFORE, for and in consideration of the premises and the purchase or
acceptance of the Notes by the Holders thereof, RIH and the Company do hereby
covenant and agree to and with the Trustee, for the Ratable Benefit of all
Holders of the Notes thereto appertaining, as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as well as
the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for
shall be made, in accordance with GAAP consistently applied; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"ACCOUNTANT" means a Person engaged in the practice of accounting
who (except as otherwise expressly provided in this Indenture) may
be employed by or affiliated with the Company or RIH.
"ACT" when used with respect to any Noteholder or Noteholders has
the meaning stated in Section 1.02(a).
"ADDITIONAL NOTES" means additional 11.375% Junior Mortgage Notes
due 2004 issued in payment of interest accrued on outstanding Notes
pursuant to Section 3.11.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, and, with
respect to any specified natural Person, any other Person having a
relationship by blood, marriage or adoption not more remote than
first cousin with such specified Person. For purposes of this
definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms
2
<PAGE>
"controlling" and "controlled" have meanings correlative to the
foregoing; PROVIDED, HOWEVER, that, except as may be required under
the TIA, the term "Affiliate" shall not include, with respect to
the Company or RIH, any of Fidelity Management & Research Company,
TCW Special Credits or funds or accounts managed or advised by
either of them.
"AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured
by an After-Acquired Fee Mortgage.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section
2.07 of the Mortgage.
"ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of
the date hereof, providing for the assignment of the RIH Junior
Promissory Note and other Mortgage Documents to the Trustee by the
Company, and acknowledgment thereof by RIH, a copy of which is
attached hereto as Exhibit B.
"ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and
Rents dated as of the date hereof, from RIH to the Company securing
the RIH Junior Promissory Note, a copy of which is attached hereto
as Exhibit E.
"AUTHENTICATING AGENT" means any Person named as Authenticating
Agent for the Notes in accordance with the provisions of this
Indenture until a successor Authenticating Agent becomes such
pursuant thereto, and thereafter Authenticating Agent shall mean
such successor.
"AUTHORIZED SIGNATURE" means the signatures of the chairman of the
board, the president or a Vice President and of the treasurer, an
assistant treasurer, the controller, an assistant controller, the
secretary or an assistant secretary of the Company or RIH, as the
case may be.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person,
any lease of any property (whether real, personal or mixed) by such
Person as lessee which, in conformity with GAAP consistently
applied, is accounted for as a capitalized lease on the balance
sheet of such Person.
"CASINO" means that portion of the Casino-Hotel used for gaming and
related activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary
structures and facilities located on the Premises and furniture,
fixtures and equipment at any time contained therein.
3
<PAGE>
"CASINO CONTROL ACT" means the New Jersey Casino Control Act and
the regulations promulgated thereunder, as amended.
"CASINO CONTROL COMMISSION" means the New Jersey Casino Control
Commission, as from time to time constituted, or if at any time
after the execution of this Indenture such Commission is not
existing and performing the duties theretofore assigned to it,
then the body performing such duties at such time.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act
of 1934, or if at any time after the execution of this instrument
such Commission is not existing and performing the duties
theretofore assigned to it under the TIA, then the body
performing such duties at such time.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor entity shall have
become such pursuant to the applicable provisions of this
Indenture, and thereafter, except to the extent otherwise
contemplated by Section 10.02, "Company" shall mean such
successor entity exclusively.
"COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean,
respectively, a written consent, order or request signed with an
Authorized Signature and delivered to the Trustee.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, an amount equal to the sum of (i) the consolidated net
income (or loss) of such Person for such period determined in
accordance with GAAP consistently applied, excluding interest
income, interest expense and gains or losses from extraordinary or
nonrecurring items, plus (ii) all amounts deducted in computing such
consolidated net income (or loss) in respect of depreciation and
amortization, plus (iii) non-cash charges arising from the reduction
of CRDA Deposits to market value, minus (iv) taxes based upon or
measured by income which are payable in cash, minus (v) CRDA
Deposits.
"CONSOLIDATED INTEREST CHARGES" means, with respect to any Person
for any period, the consolidated interest expense (not including
the non-cash amortization of discount on the original issuance of
(a) the RIH Promissory Note, (b) any intercompany indebtedness
of RIH issued in connection with Indebtedness represented by the Junior
4
<PAGE>
Mortgage Facility and (c) any intercompany indebtedness of
RIH issued in connection with Indebtedness represented by the
Working Capital Facility), whether payable in cash or in-kind (and
with respect to RIH, including, without limitation, the interest
paid or accrued (without duplication) on (i) the RIH
Promissory Note, (ii) any intercompany indebtedness of RIH issued
in connection with Indebtedness represented by the Junior Mortgage
Facility and (iii) any intercompany indebtedness of RIH issued in
connection with Indebtedness represented by the Working Capital
Facility), without deduction for interest income (other than cash interest
income received from RII in payment of its interest cost
on any Working Capital Facility), in each case for such Person
and its consolidated Subsidiaries for such period
determined in accordance with GAAP consistently applied.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of
calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH
and its consolidated Subsidiaries for the immediately preceding
four consecutive fiscal quarters to (b) Consolidated Interest
Charges of RIH and its consolidated Subsidiaries for such period.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, an amount equal to consolidated net income (or loss) of
such Person for such period determined in accordance with GAAP
consistently applied, minus (a) federal and state taxes based upon
or measured by income which are payable in cash, plus (b) non-cash
charges arising from federal and state taxes based upon or measured
by income.
"CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the
Casino Reinvestment Development Authority in an amount equal to
1.25% of RIH's gross revenue in order to satisfy its investment
obligation pursuant to the Casino Control Act, and (b) the amounts
invested in qualified investments in lieu of any of the quarterly
deposits (or portion thereof) referred to in clause (a) above.
"CRDA DISPUTE" means the dispute existing on the date hereof
between RIH and the New Jersey Casino Reinvestment Development
Authority regarding CRDA Deposits and New Jersey Casino
Reinvestment Authority Notes, which dispute involves an amount
of approximately $30,000,000.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both,
would become an Event of Default.
"DEFAULTED INTEREST" has the meaning stated in Section 3.07.
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"EFFECTIVE DATE" means the date on which the prepackaged plan of
reorganization of RII and GRI becomes effective.
"EVENT OF DEFAULT" has the meaning stated in Section 7.01. An
Event of Default shall "exist" if an Event of Default shall have
occurred and be continuing.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
"FAIR MARKET VALUE" of any Notes means (a) the average of the
closing sales price of the Notes for the 30 trading days
immediately prior to the date of determination of such value on
the largest national securities exchange on which such Notes shall
have traded on such trading days, or (b) if no such sales of such
Notes occurred during such 30-day period or if the Notes are not so
listed but are traded in the over-the-counter market with
quotations available in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), the average of the
means between the "bid" and "asked" prices on such national
securities exchange or as quoted on NASDAQ, as the case may be,
during such 30-day period, or (c) if the Notes are not traded on a
national securities exchange or quoted on NASDAQ, the fair market
value of such Notes as of the date of determination as determined
by agreement of two nationally recognized Independent investment
banking firms, one to be chosen by the Company and the other by the
Holder of the Notes being valued, with the costs of each such firm
being the responsibility of the Person selecting such firm. If
such firms cannot agree upon such fair market value, such firms
shall select a third nationally recognized Independent investment
banking firm, which shall determine such fair market value, the
costs of such third firm being shared equally by the Company and
such Holder.
"F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01
of the Mortgage.
"GAAP" means United States generally accepted accounting
principles.
"GRI" means GGRI, Inc., a Delaware corporation.
"GROUND LEASES" has the meaning stated in Granting Clause Second of
the Mortgage.
"GUARANTY" means the guaranty contained in Article Four.
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"GUARANTY MORTGAGE" means the Mortgage securing Guaranty of Junior
Mortgage Notes dated as of the date hereof, between RIH, as
mortgagor, and the Trustee, as mortgagee, securing the Guaranty,
a copy of which is attached hereto as Exhibit F.
"HOTEL" means that portion of the Casino-Hotel not included within
the Casino.
"INDEBTEDNESS" means, as applied to any Person, without
duplication, any indebtedness, exclusive of deferred taxes,
(a) in respect of borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to
a portion thereof); (b) evidenced by bonds, notes, debentures or
similar instruments or letters of credit; (c) representing the
balance deferred and unpaid of the purchase price of any property,
if and to the extent such indebtedness would appear as a liability
upon a balance sheet of such Person prepared in accordance with
GAAP (but excluding trade accounts payable arising in the ordinary
course of business that are not overdue by more than 90 days or are
being contested by such Person in good faith); (d) any Capitalized
Lease Obligations (other than, with respect to RIH or the Company,
the Ground Leases) of such Person; and (e) Indebtedness of others
guaranteed by such Person, including, without limitation, every
obligation of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or
to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness, (ii) to purchase
property, securities or services for the purpose of assuring the
holder of such Indebtedness of the payment of such Indebtedness, or
(iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; PROVIDED,
HOWEVER, that the guaranty by any Person shall not include
endorsements by such Person for collection or deposit, in either
case in the ordinary course of business. The term "INDEBTEDNESS"
does not include: (1) any of the types of indebtedness described in
clauses (a) through (e) above (inclusive) owed by the Company to
RIH or any of their Subsidiaries, by RIH to the Company or any of
their Subsidiaries or by any such Subsidiary to RIH, the Company or
any other such Subsidiary (including, without limitation, the RIH
Promissory Note and the RIH Junior Promissory Note); (2) the
Guaranty, the Junior Guaranty, the Senior Guaranty and the Working
Capital Facility Guaranty; (3) matters relating to the CRDA
Dispute, New Jersey Casino Reinvestment Development Authority
Notes or CRDA Deposits; and (4) any payments made by the Company
or RIH under the RII Management Agreement, the RII Tax Sharing
Agreement or the Services Agreement.
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"INDENTURE" means this instrument as originally executed or as it
may from time to time be supplemented, modified or amended by one
or more indentures or other instruments supplemental hereto entered
into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified
Person means such a Person who (a) is in fact independent, (b) does not
have any direct financial interest or any material indirect financial
interest in the Company or in any other obligor upon the Notes or
in any Affiliate of the Company or of such other obligor and (c) is
not connected with the Company or such other obligor or any
Affiliate of the Company or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate
shall be furnished to the Trustee, such Person shall be appointed
by a Company Order, and such opinion or certificate shall state
that the signer has read this definition and that the signer is
Independent within the meaning hereof. A Person who is performing
or who has performed services as an independent contractor to any
specified Person shall not be considered not Independent merely by
reason of the fact that such Person is or has performed such
services.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated
as of the date hereof, among the Trustee, the trustee under the
Senior Mortgage Note Indenture and such other parties that may
from time to time become a party thereto, which shall incorporate
the terms set forth in Exhibit G.
"INTEREST PAYMENT DATE" means the date on which an installment of
interest on the Notes is due and payable.
"JUNIOR GUARANTY" means the Guaranty and any other guaranty of the
Junior Mortgage Facility by RIH.
"JUNIOR MORTGAGE FACILITY" means the Notes and any secured or
unsecured facility or facilities entered into by RIH or the
Company providing for the making of loans to RIH or the Company
on a revolving or term basis, or the issuance of notes, debentures
or bonds by RIH or the Company, as such agreement, indenture or
instrument may be amended, supplemented or modified from time to
time, or any refinancing thereof, in an aggregate principal amount
up to $35,000,000 plus additional notes, debentures or bonds issued
in payment of interest accrued on outstanding notes, debentures or
bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if
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any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of
the Mortgage and the Guaranty Mortgage. The term "Junior Mortgage
Facility" does not include the Junior Guaranty.
"LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the
Mortgage.
"MATURITY" when used with respect to any Note means the date on
which the principal (or any portion thereof) of such Note becomes
due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration or call for
redemption or otherwise.
"MORTGAGE" means the Mortgage securing the RIH Junior Promissory
Note dated as of the date hereof, between the Company, as successor
mortgagee, and RIH, as mortgagor.
"MORTGAGE DEBT" means, at any point in time, the RIH
Promissory Note, the RIH Junior Promissory Note and any secured
Indebtedness outstanding under any Working Capital Facility.
"MORTGAGE DOCUMENTS" means (a) the Mortgage, the Guaranty Mortgage,
the RIH Junior Promissory Note, the Assignment of Leases and Rents
and any other security document to which either RIH or the Company
is a party relating to the Notes, which is executed and delivered
pursuant to or in connection with the Mortgage, the Guaranty
Mortgage or the Assignment Agreement, and (b) any mortgage, deed
of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of
operating assets and any other security document to which either
RIH or the Company is a party relating to the Junior Mortgage
Facility.
"NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a).
"NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall
mean bonds issued by the Casino Reinvestment Development Authority,
a public authority created under the Casino Control Act.
"NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in
connection with the acquisition, purchase, improvement or
development of property or assets (other than the Trust Estate)
used by the Company, RIH or any Subsidiary of RIH or the Company to
engage in the casino business, the hotel business or related or
ancillary business or purpose and which is secured only by such
assets and without recourse to RIH, the Company or any Subsidiary
of RIH or the Company or the Trust Estate for such indebtedness.
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<PAGE>
"NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is
registered in the Note Register.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
stated in Section 3.05.
"NOTES" has the meaning stated in the Preliminary Statement of this
instrument and more particularly includes any Note authenticated
and delivered hereunder, including, without limitation, any
Additional Notes. The term "Notes" does not include the
Guaranty.
"OFFICER" of the Company or RIH means any Person authorized to
execute an Authorized Signature.
"OFFICERS' CERTIFICATE" delivered by the Company or RIH means a
certificate signed with an Authorized Signature and delivered to
the Trustee. Whenever this Indenture requires that an Officers'
Certificate be signed also by an Accountant or other expert, such
Accountant or other expert may (except as otherwise expressly
provided in this Indenture) be in the general employ of the
Company or RIH.
"OPINION OF COUNSEL" means a written opinion of counsel who may
(except as otherwise expressly provided in this Indenture) be an
employee of the Company or RIH. Unless otherwise specifically
provided in this Indenture, such counsel may rely as to any
statement of facts not personally known to such counsel and
relating to such opinion on an Officers' Certificate, to the
extent not rejected by the Trustee and its counsel (which
rejection shall not be unreasonably given).
"OUTSTANDING" when used with respect to Notes means, as of the date
of determination, all Notes theretofore authenticated and delivered
under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying
Agent in trust for the Holders of such Notes;
(c) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered under this Indenture; and
(d) Notes alleged to have been destroyed, lost or stolen which
have been paid as provided in Section 3.06;
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PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of Notes Outstanding have given any
request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor
upon the Notes or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be outstanding. In
determining whether the Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice,
consent or waiver, only Notes which the Trustee actually knows
to be so owned shall be so disregarded.
"OUTSTANDING AMOUNT" of any Indebtedness at any time means the
principal amount outstanding of such Indebtedness at such time.
"PAYING AGENT" means any Person now or hereafter authorized by the
Company to pay the principal of or interest on any Notes on behalf
of the Company.
"PERMITS" has the meaning stated in Section 1.01 of the Mortgage.
"PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of
the Mortgage.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or any other entity or government or any agency or
political subdivision thereof.
"PLACE OF PAYMENT" when used with respect to the Notes means a city
or any political subdivision thereof in which the Company is by
this Indenture required to maintain an office or agency for the
payment of the principal of or interest on the Notes.
"PLAN" means the Plan of Reorganization of RII and GRI dated [ ],
1994.
"PREDECESSOR NOTES" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for purposes of this
definition, any Note authenticated and delivered under Section 3.06
in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the lost, destroyed or stolen Note.
"PREMISES" has the meaning stated in Granting Clause Third of the
Mortgage.
"RATABLE BENEFIT" means, for any class or classes of Indebtedness
at any time, in proportion to the total Outstanding Amount of such
class or classes held by each holder thereof at such time.
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Outstanding Amount of such class or classes held by each holder
thereof at such time.
"REDEMPTION DATE" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to this
Indenture.
"REDEMPTION PRICE" when used with respect to any Note to be
redeemed means the price at which it is to be redeemed pursuant
to this Indenture. It does not include installments of interest
due on or before the Redemption Date.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Notes means the date specified in the
provisions of this Indenture.
"RESPONSIBLE OFFICER" means any Vice President, any Assistant Vice
President or any other officer of assistant officer of the Trustee assigned
by the Trustee to administer its corporate trust matters.
"RESTRICTED PAYMENT" means (a) any declaration or payment of any
dividend or the making of any distribution to holders of capital
stock of RIH or the Company or any Subsidiary of RIH or the Company
in respect of such capital stock (other than to RIH or the Company
or a direct or indirect wholly owned Subsidiary of RIH or the
Company), (b) any purchase, redemption or other acquisition or
retirement for value of any capital stock (or warrants, rights or
options to acquire any capital stock or Indebtedness convertible
into or exchangeable for any capital stock) of RIH or the Company
or any Subsidiary of RIH or the Company (other than purchases,
redemptions, acquisitions or retirement solely from RIH or the
Company or a direct or indirect wholly owned Subsidiary of RIH or
the Company); PROVIDED, HOWEVER, that any such purchase, redemption
or other acquisition or retirement that is required by the Casino
Control Commission or under the Casino Control Act shall not
constitute a Restricted Payment. The term "Restricted Payment"
also shall not include any loan or advance to RII of all or any
portion of the proceeds of the Indebtedness represented by the
Working Capital Facility.
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"RIH" means the person named as "RIH" in the first paragraph of
this instrument until a successor entity shall have become such
pursuant to the applicable provisions of the Indenture, and
thereafter, except to the extent otherwise contemplated by
Section 10.02, "RIH" shall mean such successor entity
exclusively.
"RIH JUNIOR PROMISSORY NOTE" means the secured junior promissory
note, dated the date hereof, made by RIH in the principal amount of
$35,000,000, plus any additional junior promissory notes issued in
connection with the payment of interest accrued on outstanding
Notes payable to the order of the Company, a copy of which is
attached hereto as Exhibit A.
"RIH SALE" means (a) a consolidation, combination or merger
involving RIH and any other Person, (b) a sale, assignment,
conveyance or transfer or RIH's interest in the Trust Estate,
substantially as an entirety, to any other Person or group of
Persons in one transaction or a series of related transactions, or
(c) any transaction as a result of which RIH ceases to be a direct
or indirect wholly owned Subsidiary of RII; PROVIDED, HOWEVER, that
any of the transactions described in clauses (a), (b) and (c) above
shall not constitute an RIH Sale if the other party or parties to
the transaction consists of only one or more of the following
Persons: the Company or any wholly owned direct or indirect
subsidiary of RIH or the Company; PROVIDED, FURTHER, HOWEVER, that
notwithstanding any other provision of this definition, if the
primary effect of any of the aforesaid transactions is the
redemption of the Notes, then such transaction shall not be
considered to be an RIH Sale.
"RIH PROMISSORY NOTE" means the secured promissory note,
amended and restated as of the date hereof, made by RIH in the
principal amount of $125,000,000 payable to the order of the
Company, a copy of which is attached to the Senior Mortgage Note
Indenture as Exhibit A.
"RIHF SENIOR FACILITY" means the senior secured note facility
contemplated by the purchase agreement dated as of the date
hereof, among the Company, RIH, RII and funds managed by Fidelity
Management and Research Company, which allows the Company to borrow
up to $20,000,000 in aggregate principal amount through the
issuance of RIHF Senior Facility Notes. The term "RIHF Senior
Facility" does not include the Working Capital Facility Guaranty.
"RIHF SENIOR FACILITY NOTES" means, collectively, the notes
executed and delivered by the Company under the RIHF Senior
Facility.
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"RII" means Resorts International, Inc., a Delaware corporation.
"RII MANAGEMENT CONTRACT" means the Management Contract dated as of
the date hereof, between RII and RIH pursuant to which RII provides
certain management services to RIH for an annual fee of 3% of the
gross revenues of RIH.
"RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated
as of the date hereof between RII and RIH pursuant to which (i) RIH
will not make any payments to RII or any other Affiliate in respect
of taxes, other than to reimburse RII for any cash payments
actually made by RII in respect of any federal, state or local
income or alternative minimum taxes arising from the earnings or
operations of RIH; PROVIDED, HOWEVER, that RIH shall not be
required to reimburse RII for cash payments in respect of
federal, state or local income or alternative minimum taxes that
would not have been owed but for the reduction, if any, of the
amount of the consolidated net operating loss carryforwards or
consolidated current losses of the affiliated group of which RII
is a common parent which resulted from the inclusion in the
consolidated return filed for such group for any taxable year
ending after the Effective Date of the income of any entity other
than RIH, other than income directly attributable to the
consummation of the Plan, including but not limited to the
transfer of the stock of RIB (as defined in the Plan) and the
assets of the U.S. Paradise Island Subsidiaries (as defined in the
Plan), and (ii) RIH will be entitled to any refund (plus the
interest thereon) of any taxes for which RIH is required to
reimburse RII.
"SENIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of
Leases and Rents dated as of the date hereof, from RIH to the
Company securing the RIH Promissory Note.
"SENIOR GUARANTY" means the guaranty of the 11% Senior Mortgage
Notes due 2003 by RIH contained in Article Four of the Senior
Mortgage Note Indenture.
"SENIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty
of Senior Mortgage Notes dated as of the date hereof, between RIH,
as mortgagor, and State Street Bank and Trust Company of
Connecticut, N.A., as mortgagee.
"SENIOR MORTGAGE" means the Mortgage securing the RIH
Promissory Note dated as of the date hereof, between the Company,
as successor mortgagee, and RIH, as mortgagor.
"SENIOR MORTGAGE DOCUMENTS" means the Senior Mortgage, the Senior
Guaranty Mortgage, the RIH
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Promissory Note, the Senior Assignment of Leases and Rents and any
other security document to which either RIH or the Company is
a party relating to the Senior Mortgage Notes, which is executed
and delivered pursuant to or in connection with the Senior Mortgage,
the Senior Guaranty Mortgage or the Senior Assignment Agreement.
"SENIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of
the date hereof, among the Company, RIH and State Street Bank and
Trust Company of Connecticut, N.A., as trustee, pursuant to which
the Senior Mortgage Notes were issued, as originally executed or as
it may from time to time be supplemented, modified or amended by
one or more indentures or other instruments supplemental thereto
entered pursuant to the applicable provisions thereof.
"SENIOR MORTGAGE NOTES" means the 11% Mortgage Notes due
2003 of the Company issued pursuant to the Senior Mortgage Note
Indenture.
"SERVICES AGREEMENT" means the Services Agreement dated as of
September 17, 1992, between RII, RIH and The Griffin Group, Inc.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on
Notes means a date fixed by the Trustee pursuant to Section 3.07.
"STATED MATURITY" when used with respect to any Note means the date
specified in such Note as the fixed date on which the principal of
such Note is due and payable.
"SUBSIDIARY" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly,
by such Person or one or more Subsidiaries of such Person.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of
1939, as amended.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this
Indenture, and thereafter Trustee shall mean such successor
Trustee.
"TRUST ESTATE" has the meaning stated in the Granting Clauses to
the Mortgage.
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"VICE PRESIDENT" when used with respect to the Company, RIH or the
Trustee means any vice president, whether or not designated by a
number or a word added to the title.
"WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the
RIHF Senior Facility Notes issued thereunder) and any other secured
or unsecured facility or facilities entered into by RIH and/or the Company
providing for the making of working capital loans to RIH or
the Company (with RII [and GRI] as a guarantor[s] thereunder) on a
revolving or term basis, or the issuance of notes, debentures or
bonds by RIH, the Company or RII, as such agreement may be amended,
supplemented or modified from time to time, or any refinancing
thereof, in an aggregate principal amount up to $20,000,000;
PROVIDED, HOWEVER, that the lender or lenders thereunder (or
any trustee or agent acting on behalf of such lender or lenders)
shall have executed an intercreditor agreement covering the matters
set forth on Exhibit G. The liens, if any, securing the Working
Capital Facility may be senior to the lien of the Mortgage, the
Guaranty Mortgage, the Senior Mortgage and the Senior Guaranty
Mortgage. The term "Working Capital Facility" does not include
the Working Capital Facility Guaranty.
"WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage,
deed of trust, guaranty, promissory note, collateral assignment
agreement, assignment of leases and rents, assignment of operating
assets and any other security document to which either RIH or the
Company is a party relating to the Working Capital Facility.
"WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the
Working Capital Facility by RIH, including, without limitation,
the guaranty of the RIHF Senior Facility Notes.
Section 1.02. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Noteholders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Noteholders signing such instrument
or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in
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favor of the Company and (subject to Section 8.01(c)) in favor of the
Trustee, if made in the manner provided in this Section 1.02.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness
of such execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds,certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a corporation
or a member of a partnership on behalf of such corporation or partnership,
such certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) The fact and date of execution of any such instrument or writing
and the authority of any Person executing the same may also be
proved in any other manner which the Trustee deems sufficient; and
the Trustee may in any instance require further proof with respect
to any of the matters referred to in this Section 1.02.
(d) The ownership of Notes shall be proved by the Note Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind every
future Holder of the same Note and the Holder of every Note issued
upon the transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Note.
(f) The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holder of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this
Indenture to be given or taken by holders of Notes. With regard
to any record date set pursuant to this Section 1.02(f) the holders
of Outstanding Notes on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to give or take
the relevant action, whether or not such Persons remain holders
after such record date.
(g) Until a waiver or consent becomes effective, such a waiver or
consent by a Holder is a continuing waiver or consent by the Holder
and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note, even if
notation of the waiver or consent is not made on any Note.
However, any such Holder or
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subsequent Holder may, until such waiver or consent becomes effective,
revoke the waiver or consent as to his Note or portion of his Note.
Such revocation shall be effective only if the Trustee receives the notice
of such revocation before the date on which the waiver or consent has
become effective.
Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH AND THE COMPANY.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with, the Company,
RIH or the Trustee shall be deemed given when either (i) delivered
by hand or (ii) two days after sending by registered or certified
mail, postage prepaid, in either case, addressed as follows:
To the Company:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
To RIH:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attn.: Secretary
To the Trustee:
U.S. Trust Company of California, N.A.
555 S. Flower Street
Suite 2700
Los Angeles, California 90071
Attn.: Corporate Trust Department
To Casino Control Commission:
New Jersey Casino Control Commission
Arcade Building
Tenessee Avenue & Boardwalk
Atlantic City, New Jersey 08401
Attn.: Chairman
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To Director of Division of Gaming Enforcement:
New Jersey Division of Gaming Enforcement
140 E. Front Street
CN 047
Trenton, New Jersey 08625
Attn.: Director
(b) By notice to the Company, RIH and/or the Trustee, Casino
Control Commission and/or Director of Division of Gaming Enforcement,
given as provided above, any party may designate additional or substitute
addresses for such notices, which, notwithstanding Section 1.03(a),
shall be deemed given when received.
Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER.
Where this Indenture provides for notice to Noteholders of any
event, such notice shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder of such Notes, at the address of
such Holder as it appears in the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for
the provision of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular
Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by Noteholders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impracticable to give such
notice by mail, then such notification may be given by any other
method that the Trustee shall consider to be reasonable and shall
be deemed to be a sufficient giving of such notice for every
purpose hereunder.
Section 1.05. FORM AND CONTENTS OF
DOCUMENTS DELIVERED TO TRUSTEE.
Whenever several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or
give an opinion with respect to
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some matters and one or more other such Persons as to such matters in
one or several documents.
Any certificate or opinion of an Officer of the Company or of RIH
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an Officer
or Officers of the Company or RIH stating that the information with
respect to such factual matters is in the possession of the Company
or RIH, unless such counsel knows that the certificate or opinion
or representations with respect to such matters are erroneous. If
appropriate to the matter being opined upon and to the extent not
prohibited by the TIA, any Opinion of Counsel may be subject to
rights of creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Company
or RIH shall deliver any document as a condition of the granting of
such application, or as evidence of the Company's or RIH's compliance
with any term hereof, it is intended that the truth and accuracy, at the
time of the granting of such application or at the effective date of such
certificate or report (as the case may be), of the facts and opinions
stated in such document shall in such case be conditions precedent
to the right of the Company or RIH to have such application granted
or to the sufficiency of such certificate or report.
Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company or RIH to the
Trustee to take any action under any provision of this Indenture or
any Mortgage Document, the Company or RIH shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture or such Mortgage Document relating
to the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent,
if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such
documents is specifically
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required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture or any Mortgage
Document shall include:
(a) a statement that each individual signing such certificate
or opinion has read such condition or covenant and the definitions
herein relating thereto;
(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 each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
condition or covenant has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.07. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof or of the Mortgage Documents or the
Assignment Agreement limits, qualifies or conflicts with another
provision hereof or of the Mortgage Documents or the Assignment
Agreement which is required to be included herein or therein by
any of the provisions of the TIA, such required provision shall
control.
Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and in the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 1.09. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company or
RIH shall, subject to Section 10.02, bind its successors and
assigns, whether so expressed or not.
Section 1.10. SEPARABILITY CLAUSE.
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
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provisions shall not in any way be affected or impaired thereby.
Section 1.11. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied,
shall give to any Person other than the parties hereto and their
successors hereunder, any separate trustee or co-trustee appointed
under Section 8.14 and the Holders of Notes, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 1.12. GOVERNING LAW.
This Indenture and each Note shall be deemed to be a contract under
the laws of the State of New York and shall be construed in
accordance with and governed by the internal laws of the State of
New York.
Section 1.13. CASINO CONTROL ACT.
Each of the provisions of this Indenture is subject to and shall be
enforced in compliance with the provisions of the Casino Control
Act, unless such provisions are in conflict with the TIA, in which case
the TIA shall control.
Section 1.14. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject
in each instance to the giving of any notice and the expiration of
any grace period provided for in Section 7.01 as a condition to
such Default becoming an Event of Default, unless the TIA requires
otherwise, in which case the TIA shall control.
(b) For the purposes of this Indenture, it is understood that an
event which does not materially diminish the value of the
Trustee's interest in the Trust Estate shall not be deemed an
impairment of security, as that phrase is used in this Indenture.
(c) This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company, other than the Mortgage and
the Guaranty Mortgage. Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.
(d) In the event of a conflict between any provision of this
Indenture and any provision of a Mortgage Document, the provision
of this Indenture shall prevail.
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ARTICLE TWO
NOTE FORM
Section 2.01. FORM GENERALLY.
The Notes and the Trustee's certificate of authentication shall be
substantially in the forms set forth in this Article Two, with such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and
may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to
comply with the rules of any securities exchange, or as may,
consistently herewith, be determined by the officers executing
such Notes as evidenced by their execution thereof. Any portion of
the text of any Note may be set forth on the reverse thereof.
The definitive Notes shall be printed, lithographed or engraved or
produced by any combination of these methods or produced in any
other manner permitted by the rules of any securities exchange on
which the Notes may be listed, all as determined by the officers
executing such Notes as evidenced by their execution thereof.
Section 2.02. FORM OF NOTES.
The form of the Notes shall be substantially as follows:
[FACE OF NOTES]
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
11.375% Junior Mortgage Note
due 2004
THIS NOTE HAS BEEN ISSUED AS PART OF A UNIT WITH A
NUMBER OF SHARES OF CLASS B STOCK OF RESORTS
INTERNATIONAL, INC. SUCH THAT ONE SHARE OF CLASS B
STOCK HAS BEEN ISSUED IN RESPECT OF EACH $1,000
PRINCIPAL AMOUNT OF NOTES. THIS NOTE MAY NOT BE
TRANSFERRED SEPARATELY FROM THE SHARES OF CLASS B STOCK
ISSUED IN RESPECT OF THIS NOTE.
No. $
------------- -------------
Resorts International Hotel Financing, Inc., a Delaware corporation
(hereinafter called the "Company", which term includes any
successor entity under the Indenture referred to on the reverse),
for value received, hereby promises to pay to______________, or registered
assigns, on December 15, 2004 the sum of _____________ Dollars (or so much
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thereof as shall not have been paid upon prior redemption) and to
pay interest (computed on the basis of a 360-day year of twelve
30-day months based on the actual number of days elapsed) thereon
from [ ], 1994 [the Effective Date], or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, semi-annually at June 15 and December 15 in each year
(commencing December 15, 1994), at the rate of 11.375% per annum,
until the principal hereof is paid or made available for payment.
Interest also shall accrue on Additional Notes (as defined below)
at such rates from and including the date of issuance thereof until
the principal amount thereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in said Indenture,
be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date. Any such interest not so punctually paid
or duly provided for (including by issuance of Additional Notes in
lieu of cash interest payment) shall forthwith cease to be payable
to the Holder on such Regular Record Date, and may be paid to the
Person in whose name this Note (or one or more Predecessor Notes)
is registered at the close of business on a Special Record Date for
the payment of such defaulted interest to be fixed by the Trustee,
notice thereof being given to Noteholders not less than ten days
prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed and upon
such notice as may be required by such exchange, all as more fully
provided in said Indenture. The principal of and interest on this
Note shall be payable at the corporate trust office of the Trustee,
as defined on the reverse, or at an office or agency of the Company
in the Borough of Manhattan, City and State of New York. All such
payments shall be made in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts, or by check or, at the option
of the Company, on any Interest Payment Date, if Consolidated Cash
Flow of RIH and its consolidated Subsidiaries for the period of
four fiscal quarters ended on the last day of the last quarter
ended prior to such Interest Payment Date was less than
$35,000,000, all or any portion of such interest may be paid in
additional Notes in a principal amount equal to the amount of
accrued interest so paid ("Additional Notes"), PROVIDED, HOWEVER,
that Additional Notes shall be issued in minimum denominations of
$100 (but not fractions thereof) in a principal amount equal to
such interest payment, or portion thereof, which the Company
elects to so pay. The Company shall pay cash in lieu of issuing
any fractional Additional Notes. The issuance of such Additional
Notes shall constitute
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full payment of interest in respect of which such Additional
Notes are issued in the principal amount so issued.
All interest payments made in Additional Notes must be made PRO
RATA in respect of all outstanding Notes, on the basis of the
respective dollar amounts of accrued and unpaid interest on such
Notes. The Additional Notes shall be issued as Units such that one
share of Class B Common Stock shall be issued in respect of each
$1,000 principal amount of Additional Notes. The Additional Notes
may not be transferred separately from the shares of Class B Common
Stock issued in respect of such Additional Notes. All interest
payments made in cash (other than cash
payments made in lieu of issuance of fractional Additional Notes)
shall be made PRO RATA in respect of all outstanding Notes, on the
basis of the respective dollar amounts of accrued and unpaid
interest on such Notes. The Company may deliver any such
interest payment to the Paying Agent or may mail any such
interest payment to a Holder at the Holder's registered address.
"Consolidated Cash Flow" means, with respect to any period, an
amount equal to the sum of (i) the consolidated net income (or
loss) of RIH for such period determined in accordance with GAAP
consistently applied, excluding interest income, interest expense
and gains or losses from extraordinary or nonrecurring items, plus
(ii) all amounts deducted in computing such consolidated net income
(or loss) in respect of depreciation and amortization, plus (iii)
non-cash charges arising from the reduction of CRDA Deposits to
market value, minus (iv) taxes based upon or measured by income
which are payable in cash, minus (v) CRDA Deposits.
Unless the certificate of authentication hereon has been executed
by the Trustee or the Authenticating Agent by manual signature,
this Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the Company has caused this Note to be
executed.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Dated: By:
----------------- -------------------------
Attest:
-----------------
[BACK OF NOTES]
This Note is one of a duly authorized issue of Notes of the Company
designated as "11.375% Junior Mortgage Notes due 2004" (the
"Notes"), issued under an Indenture dated as of __________ __,
1994 (the "Indenture"), among the Company, Resorts International
Hotel, Inc., a New Jersey corporation, as guarantor ("RIH"), and
U.S. Trust Company of California, N.A., a national
banking association, as Trustee (the "Trustee", which term
includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is
hereby made for a description of the nature and extent of the
security, the respective rights thereunder of the Holders of the
Notes, the Trustee and the Company and the terms upon which the
Notes are, and are to be, authenticated and delivered. Payment of
principal and interest (including interest on overdue principal)
and performance of all obligations under the Indenture is
guaranteed by RIH (the "Guaranty"). The Notes are secured by an
assignment of one or more secured junior promissory notes of RIH,
which owns and operates the property known as Merv Griffin's
Resorts Casino Hotel, and of a mortgage on the Trust Estate made
by RIH (the "Mortgage"). Additionally, the Guaranty is secured by
a separate direct mortgage of the Trust Estate made by RIH to the
Trustee (the "Guaranty Mortgage"). All terms in this Note defined
in the Indenture shall have the same meaning herein as therein.
The lien of the Mortgage is pari passu with the lien of the
Guaranty Mortgage and junior to the lien securing payment of the
RIHF Senior Facility Notes, the lien, if any, securing any other
secured Working Capital Facility, the lien (if any) securing the
Working Capital Facility Guaranty, to the lien securing payment of
the Senior Mortgage Notes and to the lien securing the Senior
Mortgage Guaranty.
The Notes may be redeemed at the option of the Company, as a whole
or from time to time in part, on or after
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the fifth anniversary of the Effective Date on notice as provided in
the Indenture, at par together with interest accrued and unpaid thereon
to the date fixed for redemption. In the event of an RIH Sale, all the
Notes shall be redeemed by the Company, whether such RIH Sale occurs before,
on or after the fifth anniversary of the Effective Date, at par
together with interest, if any, accrued and unpaid thereon to the
Redemption Date; PROVIDED, HOWEVER, that such obligation of the
Company to redeem the Notes in the event of a proposed RIH Sale
shall cease to exist if the Holders of not less than 66-2/3% in
Outstanding Amount of the Outstanding Notes have consented to such
proposed RIH Sale.
Notwithstanding the foregoing, each Holder by accepting a Note
agrees that if the Casino Control Commission does not waive the
qualification requirement as to the Holder (whether the record
owner or beneficial owner) of this Note and requires that the
Holder be qualified under the Casino Control Act, then, in such
event, the Holder must qualify under the Casino Control Act. If
the Holder does not so qualify, the Holder must dispose of its
interest in this Note, within 30 days after the Company's receipt
of notice of such finding, or the Company may repurchase this Note
at the lower of the Holder's original cost and the Fair Market
Value of this Note, plus accrued interest thereon to the date of
such repurchase. Commencing on the date the Casino Control
Commission serves notice upon either RIH or the Company that
any Holder is disqualified, it shall be unlawfull for any such
disqualified Holder: (i) to receive any dividends or interest upon
this Note; (ii) to exercise, directly or through any trustee or
nominee, any right conferred by this Note; or (iii) to receive any
remuneration in any form from either the Company or RIH for services
rendered or otherwise.
It is provided in the Indenture that Notes of a denomination larger
than $1,000 may be redeemed in part ($1,000 or a multiple thereof)
and that upon any partial redemption of any such Note the same
shall be surrendered in exchange for one or more new Notes in
authorized form for the unredeemed portion of principal. Notes
(or portions thereof as aforesaid) for whose redemption and payment
provision is made in accordance with the Indenture shall thereupon
cease to be entitled to the lien of the Indenture and the Mortgage
and shall cease to bear interest from and after the date fixed for
redemption.
If an Event of Default shall occur, the principal of the Notes and
all accrued and unpaid interest thereon may become or be declared due and
payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereto and the modification
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<PAGE>
of the rights and obligations of the Company and the rights of the Holders
of the Notes under the Indenture at any time by the Company with the
consent of the Holders of a majority or 66-2/3%, as the case may
be, in aggregate Outstanding Amount of the Notes at the time
Outstanding affected by such modification. The Indenture also
contains provisions permitting the Holders of specified percentages
in Outstanding Amount of Notes at the time Outstanding on behalf of
the Holders of all the Notes to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of
any Note issued upon the transfer hereof or in exchange hereof or
in lieu hereof, in respect of anything done or offered to be done
by the Trustee in the Company in reliance thereon, whether or not
notation of such action is made upon this Note.
The Company may, in the circumstances permitted by the Trust
Indenture Act, set any day as the record date for the purpose of
determining the holders of Outstanding Notes entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by the
Indenture to be given or taken by holders of Notes. With regard
to any such record date, the holders of Outstanding Notes on such
record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action,
whether or not such Persons remain holders after such record date.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal
of and interest on this Note at the times, places and rates, and in
the coin or currency, or, in the case of interest payments, by
issuance of Additional Notes in lieu of cash interest payment,
herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable on the Note Register
of the Company, upon surrender of this Note for transfer at the
corporate trust office of the Trustee, or at an office or agency
of the Company in the Borough of Manhattan, City and State of New
York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
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<PAGE>
The Notes are issuable only as registered Notes without coupons in
denominations of $1,000 and integral multiples thereof, except that
Additional Notes may be in denominations of $100 and integral
multiples of $100. As provided in the Indenture, and subject to
certain limitations therein set forth, Notes are exchangeable for a
like aggregate principal amount of Notes of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any transfer or exchange
hereinbefore referred to, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is
registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or
not this Note be overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary.
Section 2.03. FORM OF TRUSTEE'S
CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
U.S. Trust Company of California, N.A.
as Trustee
By:
-------------------------
Authorized Signature
Section 2.04. FORM OF THE GUARANTY.
The form of the Guaranty of RIH shall be substantially as follows
and shall appear on the reverse of each Note:
GUARANTY OF
RESORTS INTERNATIONAL HOTEL, INC.
For value received, Resorts International Hotel, Inc., a New Jersey
corporation, hereby unconditionally guarantees, as more fully set
forth in Article Four of the Indenture, to the Holder of this Note
the payment of the principal of and interest on this Note in the amounts
and at the time when due and interest on the overdue principal and
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interest, if any, of this Note, if lawful, and the payment or performance
of all other obligations of the Company to the Holder or the Trustee,
all in accordance with and subject to the terms and limitations of
this Note and Article Four of the Indenture, the foregoing Guaranty
being a guaranty of payment and not of collectibility and being absolute
and in no way conditional or contingent. This Guaranty will not become
effective until the Trustee or the Authenticating Agent signs the certificate
of authentication on such Note. As more fully described in the
Indenture, this Guaranty is secured by a mortgage of the Trust
Estate made by RIH to the Trustee.
RESORTS INTERNATIONAL HOTEL,
INC.
Dated: By:
----------------- ----------------------------
Attest:
-----------------
ARTICLE THREE
THE NOTES
Section 3.01. GENERAL TITLE.
The general title of the Notes shall be "11.375% Junior Mortgage
Notes due 2004".
Section 3.02. FORM AND DENOMINATIONS.
The form of the Notes shall be as provided by the provisions of
this Indenture.
The Notes shall be issuable only in registered form and in such
denominations as shall be provided in the provisions of this
Indenture. The Notes shall be of the denominations of $1,000 and
any integral multiple thereof except that Additional Notes may be
in denominations of $100 and integral multiples of $100.
Section 3.03. EXECUTION, AUTHENTICATION,
DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its
chairman of the board, vice chairman of the board, its president,
or one of its Vice Presidents and attested to by an Officer of the
Company other than an Officer who has executed the Notes.The signature
of any of these Persons on the Notes
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may be manual or facsimile. Notes bearing the manual or facsimile signatures
of individuals who were at any time Officers of the Company shall
bind the Company, notwithstanding that such individuals or any of
them shall have ceased to be such prior to the authentication and
delivery of such Notes.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Notes executed by the
Company to the Trustee for authentication and the Trustee shall
authenticate and deliver such Notes as in this Indenture provided
and not otherwise. All Notes shall be dated the date of their
authentication.
No Note shall be secured by, or be entitled to any lien, right or
benefit under, this Indenture or be valid or obligatory for any
purpose, unless there appears on such Note a certificate of
authentication substantially in the form provided for herein,
executed by the Trustee or the Authenticating Agent by manual
signature, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 3.04. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may
execute, and upon Company Request the Trustee shall authenticate
and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any
denomination, substantially of the tenor of the definitive Notes
in lieu of which they are issued, in registered form, without
coupons, with provision for registration as to principal and with
such appropriate insertions, omissions, substitutions and other
variations as the Officers executing such Notes may determine, as
evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive
Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be
exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company in a Place of Payment
therefor, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Notes, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Notes of authorized denominations. Until so exchanged, temporary
Outstanding Notes shall in all respects be entitled to the security
and benefits of this Indenture.
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Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE.
The Company shall cause to be kept at one of the offices or
agencies maintained by the Company as provided in Section 12.02 a
register (herein sometimes referred to as the "Note Register") in
which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Notes and
registration of transfers of Notes entitled to be registered or
transferred as herein provided. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers
of Notes as herein provided.
Upon surrender for transfer of any Note at the office or agency of
the Company in a Place of Payment therefor, the Company shall
execute and, upon request of the Company, the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees,
one or more new Notes of any authorized denominations and of a like
aggregate principal amount. The Trustee has no obligation to determine that
any Note has been properly transferred and may conclusively rely on
instructions given to the Company pursuant to this Section 3.05.
All Notes surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly canceled by the Trustee and
thereafter disposed of as directed by a Company Request.
All Notes issued upon any transfer or exchange of Notes shall be
the valid obligations of the Company, evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as
the Notes surrendered upon such transfer or exchange.
Every Note presented or surrendered for transfer, exchange or
discharge from registration shall (if so required by the Company
or the Note Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company
and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration, discharge
from registration, transfer or exchange of Notes, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Notes, other than exchanges under Section 3.04 or 11.06
not involving any transfer.
The Company shall not be required (i) to issue, transfer or exchange
any Note during a period beginning at the
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opening of business 15 days before the day of the mailing of a notice of
redemption of Notes under Section 13.04 and ending at the close of business on
the day of such mailing, or (ii) to transfer or exchange any Note so
selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
Section 3.06. MUTILATED, DESTROYED,
LOST AND STOLEN NOTES.
If (a) any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Note and (b) there is
delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a new Note of like tenor
and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 3.06, the
Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith.
Every new Note issued pursuant to this Section 3.06 in lieu of any
destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the security and benefits
of this Indenture equally and ratably with all other Notes.
The provisions of this Section 3.06 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or
stolen Notes.
Section 3.07. PAYMENT OF INTEREST ON
NOTES; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Note (or
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one or more Predecessor Notes) is registered at the close of business
on the Regular Record Date for such interest specified in the provisions of
this Indenture.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date ("Defaulted
Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date solely by virtue of such Holder having
been such Holder; and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in subsection
(a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest on the Notes to the Persons in whose names such
Notes (or their respective Predecessor Notes) are registered
at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee
in writing of the amount of Defaulted Interest proposed to be
paid on each Note and the date of the proposed payment (which
date shall be such as will enable the Trustee to comply with
the next sentence hereof), and at the same time the Company
shall deposit with the Trustee an amount of money equal to,
or Additional Notes having a principal amount equal to, the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money or Additional Notes when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as provided in this
subsection (a) and not to be deemed part of the Trust
Estate. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall
be not more than 15 nor less than ten days prior to the date
of the proposed payment and not less than ten days after the
receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of a Note
at his address as it appears in the Note Register not less
than ten days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered on such Special Record
Date and shall no longer be payable pursuant to subsection
(b) of this Section 3.07.
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(b) The Company may make payment of any Defaulted Interest
on the Notes in any other lawful manner not inconsistent with
the requirements of any securities exchange in which the Notes
may be listed and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this subsection (b), such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.07, each Note
delivered under this Indenture upon transfer of or in exchange for
or in lieu of any other Note shall carry all the rights to interest
accrued and unpaid, and to accrue, which were carried by such other
Note.
Section 3.08. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Note is registered
as the owner of such Note for the purpose of receiving payment of
principal of, and interest on, such Note and for all other purposes
whatsoever whether or not such Note be overdue, and, to the extent
permitted by law, neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
Section 3.09. CANCELLATION.
All Notes surrendered for payment, redemption, transfer, exchange
or conversion, if surrendered to the Trustee, shall be promptly
canceled by it, and, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee and, if not already
canceled, shall be promptly canceled by it. The Company shall
deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Notes so delivered shall
be promptly canceled by the Trustee. No Note shall be
authenticated in lieu of or in exchange for any Note canceled as
provided in this Section 3.09, except as expressly provided by this
Indenture. All canceled Notes held by the Trustee shall be
disposed of as directed by a Company Request.
Section 3.10. TERM AND FORM.
The Stated Maturity of the Notes shall be December 15, 2004. The
aggregate principal amount of Notes that may be authenticated,
delivered and outstanding is limited to $35,000,000, plus
Additional Notes, if any, issued by the Company pursuant to the
terms hereof. The Notes shall bear interest from [ ], 1994 [the
Effective Date] or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, payable semi-
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annually on June 15 and December 15 of each year, commencing
December 15, 1994. The Notes shall bear interest at the rate of
11.375% per annum until the principal thereof shall become due and
payable, and at the rate of 14.375% per annum on any overdue
principal and, to the extent permitted by law, overdue interest.
Interest shall be computed on the basis of a 360-day year of twelve
30-day months based on the actual number of days elapsed.
The principal and the Redemption Price of the Notes and interest on
the Notes on each Interest Payment Date shall be payable at a Place
of Payment, and, in addition to any other lawful means of such
payment, may be paid by check payable to the order of the
Noteholder.
The Regular Record Date referred to in Section 3.07 for the payment
of the interest on the Notes payable, and punctually paid or duly
provided for, on any Interest Payment Date shall be the first day
(whether or not a business day) of the calendar month of such
Interest Payment Date.
Section 3.11. PAYMENT OF INTEREST IN ADDITIONAL NOTES
(a) Notwithstanding any other provision of this Indenture or the
Notes, the Company, at its option and in its sole discretion, on
any Interest Payment Date, if Consolidated Cash Flow of RIH and its
consolidated Subsidiaries for the period of four consecutive fiscal
quarters of RIH ended on the last day of the last quarter ended
prior to such Interest Payment Date was less than $35,000,000, may
pay all or any portion of interest accrued on the Outstanding Notes
(including without limitation any Additional Notes previously
issued to pay interest) in Additional Notes. The Additional Notes
shall have a principal amount equal to the amount of such interest
payment, or portion thereof, which the Company elects to so pay.
The Company shall pay cash in lieu of issuing any fractional Additional
Notes. The issuance of such Additional Notes shall constitute full
payment of interest in respect of which such Additional Notes are
issued in the principal amount so issued.
(b) All interest payments made in Additional Notes pursuant to
Section 3.11(a) shall be made PRO RATA in respect
of all outstanding Notes, on the basis of the respective dollar amounts
of accrued and unpaid interest on such Notes. All interest
payments made in cash (other than cash payments made in lieu of
issuance of fractional Additional Notes) shall be so made PRO RATA
in respect of all outstanding Notes, on the basis of the respective
dollar amounts of accrued and unpaid interest on such Notes.
(c) Prior to the issuance of any Additional Notes, a Trust Officer of
the Trustee and any Paying Agent shall have
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received an Officers' Certificate from the Company at least five Business
Days prior to the relevant Regular Record Date stating that the Company will
pay such interest in Additional Notes, together with a resolution of
the Board of Directors authorizing the issuance of the appropriate
principal amount of Additional Notes. On or before the date that
is three Business Days following the relevant Regular Record Date,
the Company will deliver an Officers' Certificate to the Trustee
demonstrating the computation of the principal amount of Additional
Notes issuable to the Holders and an Opinion of Counsel that the
issuance of such Additional Notes is in compliance with all federal
securities laws, and that such Additional Notes will be binding
obligations of the Company, enforceable according to their terms.
(d) THE ADDITIONAL NOTES SHALL BE ISSUED AS UNITS SUCH THAT
ONE SHARE OF CLASS B STOCK SHALL BE ISSUED IN RESPECT OF EACH
$1,000 PRINCIPAL AMOUNT OF ADDITIONAL NOTES. THE ADDITIONAL
NOTES MAY NOT BE TRANSFERRED SEPARATELY FROM THE SHARES OF
CLASS B COMMON STOCK ISSUED IN RESPECT OF SUCH ADDITIONAL NOTES.
Section 3.12. EXCHANGEABILITY.
Subject to Section 3.05, all Notes and Additional Notes shall be
fully interchangeable with other Notes and Additional Notes, and,
upon surrender at the office or agency of the Company in a Place of
Payment therefor, all Notes shall be exchangeable for other Notes
of a different authorized denomination or denominations, as
requested by the Holder surrendering the same. The Company will
execute, and the Trustee shall authenticate and deliver, Notes
whenever the same are required for any such exchange.
Section 3.13. REDEMPTION.
The Company may, at its option, redeem, in accordance with Article
Thirteen, all or from time to time any part of the Notes on or
after the fifth anniversary of the Effective Date, at par
together, in each case, with interest, if any, accrued and unpaid
thereon to the Redemption Date. In the event of an RIH Sale, all
Notes shall be redeemed by the Company, whether such RIH Sale occurs
before, on or after the fifth anniversary of the Effective Date, at par
together with interest, if any, accrued and unpaid thereon to the
Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company
to redeem the Notes in the event of a proposed RIH Sale shall cease to
exist if the Holders of not less than 66-2/3% in Outstanding Amount
of the Outstanding Notes have consented to such proposed RIH Sale.
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Section 3.14. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE.
Forthwith upon the execution and delivery of this Indenture, Notes
up to an aggregate principal amount of $35,000,000 may be executed
by the Company and delivered to the Trustee for authentication, and
shall thereupon be authenticated and delivered by the Trustee upon
Company Order, without any further action by the Company.
ARTICLE FOUR
GUARANTY
Section 4.01. GUARANTY.
RIH hereby guarantees (such guaranty to be referred to herein as
the "Guaranty") to each Holder 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 hereunder or
thereunder, that: (a) the principal of and interest on the Notes
will be promptly paid in the amounts and at the times when due,
whether at the maturity or Interest Payment Date, by acceleration,
call for redemption or otherwise, and interest on the overdue
principal, if any, of the Notes, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will
be promptly paid in full or performed, all in accordance with the
terms hereof and thereof; and (b) in case of any extension of time
of payment or renewal of any Notes or payment or performance of any
of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension
or renewal, whether at Stated Maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed
for whatever reason, RIH will be obligated to pay the same
immediately. RIH hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of
the Notes with respect to any provisions hereof or thereof, any
releases of collateral, any delays in obtaining or realizing upon or
failures to obtain or realize upon collateral, the recovery of
any judgment against the Company, any action to enforce the same or
any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. This Guaranty is a
guaranty of payment and not of collectibility, and is secured by
the Guaranty Mortgage, as described therein. RIH hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event
of insolvency or bankruptcy of the Company, any right to
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require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Guaranty
will not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture. If any
Noteholder or the Trustee is required by any court or otherwise to
return to either RIH or the Company, or any custodian, trustee,
liquidator or other similar official acting in relation to either
RIH or the Company, any amount paid by either RIH or the Company to
the Trustee or such Noteholder, this Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and
effect. RIH agrees that it shall not be entitled to, and hereby
irrevocably waives, any right of subrogation in relation to the
Company in respect of any obligations guaranteed hereby. RIH
further agrees that, as between RIH, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Section 7.02 for the purposes of this Guaranty, notwithstanding
any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of such
obligations as provided in Section 7.02, such obligations
(whether or not due and payable) shall forthwith become due and
payable by RIH for the purpose of this Guaranty.
Section 4.02. EXECUTION AND DELIVERY OF GUARANTY.
To evidence its Guaranty set forth in Section 4.01, RIH hereby
agrees to execute its Guaranty substantially in the form set forth
in Section 2.04, to be endorsed on each Note authenticated and
delivered by the Trustee and that this Indenture shall be executed
on behalf of RIH by an Authorized Signature.
RIH hereby agrees that its Guaranty set forth in Section 4.01 shall
remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Guaranty; PROVIDED,
HOWEVER, that the Trustee or the Authenticating Agent has
signed the certificate of authentication on such Note.
If an Officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates a Note on which a Guaranty
is endorsed, the Guaranty shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of RIH.
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Section 4.03 MORTGAGE SECURING GUARANTY.
In order to secure the due and punctual payment of all amounts
which may ever become owing under the Guaranty, when and as the
same shall be due and payable, and performance of all other
obligations of RIH to the Holders or the Trustee under the
Guaranty, according to the terms hereof, RIH has mortgaged and
encumbered all of its right, title and interest in and to the Trust
Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has
the full right, power and authority to grant, bargain, sell,
release, convey, hypothecate, assign, mortgage, pledge, transfer
and confirm the property constituting the Trust Estate, in the
manner and form done, or intended to be done, in the Guaranty
Mortgage, free and clear of all liens, pledges, charges and
encumbrances, whatsoever, except for the items described in
clauses (a) through (d) (inclusive) of Section 12.13, and (a) will
forever warrant and defend the title to the same against the claims
of all Persons whatsoever in accordance with the terms of the
Guaranty Mortgage, (b) will execute, acknowledge and deliver to
the Trustee such further instruments as the Trustee may require or
request, and (c) will do or cause to be done all such acts and
things as may be reasonably necessary or proper, or as may be
required by the Trustee (other than obtaining a loan title
insurance policy or title policy endorsement pertaining to the
Guaranty Mortgage), to assure and confirm to the Trustee its
interest in the Trust Estate and the right, title and interest in
and to the Guaranty Mortgage, so as to render the same available
for the security and benefit of this Guaranty secured thereby,
according to the intent and purposes herein expressed. The
Guaranty Mortgage creates and vests in the Trustee a direct and
valid lien, which lien is pari passu with the lien of the Mortgage
and junior to the liens securing payment of the RIHF Senior
Facility Notes, any other secured Working Capital Facility, the
Working Capital Facility Guaranty, the Senior Mortgage Notes and
the Senior Guaranty. To the extent that any security interest in
the Trust Estate or the Guaranty Mortgage is deemed to be granted
and to be governed by the Uniform Commercial Code, the Guaranty
Mortgage is deemed to be a security agreement.
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01. PAYMENT OF INDEBTEDNESS;
SATISFACTION AND DISCHARGE OF INDENTURE.
Whenever the following conditions exist, namely:
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(a) all Notes theretofore authenticated and delivered have been
canceled by the Trustee or delivered to the Trustee for cancellation,
excluding, however,
(1) Notes for the payment of which money has theretofore been
deposited in trust with the Trustee or a Paying Agent (other than the
Company) or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust as provided in
Section 12.03,
(2) Notes alleged to have been destroyed, lost or stolen which
have been replaced or paid as provided in Section 3.06, except for any
such Note which, prior to the satisfaction and discharge of this
Indenture, has been presented to the Trustee with a claim of ownership
and enforceability by the Holder thereof and where enforceability has
not been determined adversely against such Holder by a court of
competent jurisdiction, and
(3) other than any Notes excluded by clauses (1) and (2) of this
Section 5.01(a), Notes which have become due and payable, Notes which
will become due and payable at their Stated Maturity within one year
and Notes which have been or are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name and at the expense
of the Company, provided the Company, in the case of such Notes, has
deposited or caused to be deposited with the Trustee in trust for the
purpose an amount sufficient to pay and discharge the entire
indebtedness on such Notes for principal and interest to the date of
maturity thereof in the case of Notes which have become due and
payable or to the Stated Maturity or Redemption Date, as the case may
be;
(b) the Company or RIH has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company or RIH has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each of which shall state that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with;
then this Indenture and the lien, rights and interests created hereby shall
cease, terminate and become null and void (except as to any surviving rights of
transfer or exchange of Notes herein or therein provided for and any right to
receive payments of principal and interest as provided in
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Section 5.01(a)(3)) and the Trustee and each co-trustee and
separate trustee, if any, then acting as such hereunder shall,
at the expense of the Company, execute and deliver a
termination statement prepared by the Company in form reasonably satisfactory
to the Trustee and such instruments of satisfaction and discharge as may
be necessary and pay, assign, transfer and deliver to the Company or upon
Company Order all cash, securities and other personal property then held by it
hereunder, other than pursuant to Section 5.01(a)(3).
In the absence of satisfaction of all of the above conditions, the
payment of all Outstanding Notes shall not render this Indenture inoperative.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 8.07 shall survive.
Section 5.02. APPLICATION OF DEPOSITED MONEY.
Money deposited with the Trustee pursuant to Section 5.01 shall
constitute a separate trust fund for the benefit of the Persons entitled
thereto. Subject to the provisions of Section 12.03, such money shall be
applied by the Trustee to the payment (either directly or through any Paying
Agent, as the Trustee may determine) to the Persons entitled thereto, of the
principal and interest for whose payment such money has been deposited with the
Trustee.
Section 5.03. REPAYMENT TO THE COMPANY.
The Trustee and any Paying Agent shall promptly pay to the Company
upon request any excess money or securities held by them at any time. Any
money (or, with respect to interest to be paid in Additional Notes, such
Additional Notes) deposited with the Trustee or any Paying Agent, or then
held by the Company, in Trustee or any Paying Agent, or then held by the
Company, in trust, for the payment of the principal of, or interest on,
any Note and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Company on its
request, or (if then held by the Company) shall be discharged from such
trust, unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property law, and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with regard to such money (or Additional Notes), and all liability
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of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may at the expense
of the Company cause to be published once, in a newspaper published
in the English language, customarily published on each business day and
of general circulation in the City of New York, State of New York, or
mailed to each such Holder, or both, notice that such money (or
Additional Notes) remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of
such publication or mailing, as the case may be, any unclaimed
balance of such money then remaining will be paid to the Company.
ARTICLE SIX
SECURITY
Section 6.01. ASSIGNMENT AGREEMENT.
In order to secure the due and punctual payment of the principal of
and interest on the Notes, when and as the same shall be due and payable,
whether at Maturity or at an Interest Payment Date, by acceleration, call for
redemption or otherwise, of the Notes and performance of all other obligations
of the Company to the Holders or the Trustee under this Indenture, according to
the terms hereof, the Company has made an assignment of all of its right, title
and interest in and to the Mortgage Documents (other than the Guaranty Mortgage)
to the Trustee pursuant to the Assignment Agreement. RIH has the full right,
power and authority to grant, bargain, sell, release, convey, hypothecate,
assign, mortgage, pledge, transfer and confirm the property constituting the
Trust Estate, in the manner and form done, or intended to be done, in the
Mortgage Documents, and the Company has the full right, power and authority to
grant, bargain, sell, release, re-convey, assign, transfer and confirm,
absolutely, all of its right, title and interest in and to the Mortgage
Documents, in each case free and clear of all liens, pledges, charges and
encumbrances, whatsoever, except for the items described in clauses (a) through
(d) (inclusive) of Section 12.13, and (a) each will forever warrant and defend
the title to the same against the claims of all persons whatsoever in accordance
with the terms of the Mortgage Documents and the Assignment Agreement, (b) each
will execute, acknowledge and deliver to the Trustee such further assignments,
transfers, assurances or other instruments as the Trustee may require or
request, and (c) each will do or cause to be done all such acts and things as
may be reasonably necessary or proper, or as may be required by the Trustee, to
assure and confirm to the Trustee its interest in the Trust Estate and the
right, title and interest in and to the Mortgage Documents, so as to render the
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same available for the security and benefit of this Indenture and of the Notes
secured hereby, according to the intent and purposes herein expressed. The
Mortgage Documents (other than the Guaranty Mortgage) and the Assignment
Agreement together create and vest in the Trustee a direct and valid lien, which
is pari passu with the Guaranty Mortgage, junior to the liens securing payment
of the RIHF Senior Facility Notes, any other secured Working Capital Facility,
the Working Capital Facility Guaranty, the Senior Mortgage Notes and the Senior
Guaranty on the property constituting the Trust Estate and the interest in the
Mortgage Documents which they purport to create. To the extent that any
security interest in the Trust Estate or the Mortgage Documents are deemed to be
granted and to be governed by the Uniform Commercial Code, the Mortgage and the
Assignment Agreement are deemed to be security agreements.
Section 6.02. RECORDING, ETC.
The Company will cause, at its own expense, the Assignment Agreement,
the Mortgage Documents, this Indenture and all amendments or supplements
thereto, 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 in order fully to preserve and protect the lien of the Mortgage Documents
and the Assignment Agreement on all parts of the Trust Estate and the Mortgage
Documents and the interest in the RIH Junior Promissory Note and to effectuate
and preserve the security of the Noteholders and all rights of the Trustee.
The Company shall furnish to the Trustee:
(a) promptly after the execution and delivery of this Indenture or
other instrument of further assurance or amendment, including any
supplemental indenture, an Opinion or Opinions of Counsel either (1)
stating that, in the opinion of such counsel, this Indenture, the Mortgage
Documents and the assignment to the Trustee of the Mortgage Documents
intended to be made by the Assignment Agreement and all other instruments
of further assurance or amendment have been properly recorded, registered
and filed to the extent necessary to make effective the liens intended to
be created by the Mortgage Documents and the Assignment Agreement, 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 the
Mortgage Documents and the Assignment Agreement 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
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been executed and filed that are necessary fully to preserve and protect
the rights of the Noteholders and the Trustee hereunder and under the
Mortgage Documents and the Assignment Agreement, or (2) stating that, in
the opinion of such counsel, no such action is necessary to make such liens
and assignments effective; and
(b) within 60 days after June 30 in each year beginning with the year
1995, an Opinion or Opinions of Counsel, dated as of such date, either (1)
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 all supplemental indentures, financing
statements, continuation statements or other instruments of further
assurance as is necessary to maintain the liens of the Mortgage Documents
and the assignment of the Mortgage Documents to the Trustee made by the
Assignment Agreement 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 Noteholders and the Trustee
hereunder and under the Mortgage Documents and the Assignment Agreement, or
(2) stating that, in the opinion of such counsel, no such action is
necessary to maintain such liens and assignments.
The Company and RIH shall cause TIA SECTION 314(d) relating to the
release of property from the liens of the Mortgage to be complied with. Any
certificate or opinion required by TIA SECTION 314(d) may be made by an Officer
of the Company or RIH, unless otherwise required by TIA SECTION 314(d).
Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS.
The Trustee shall hold in its possession the Mortgage Documents,
except as it from time to time may be required for actions, suits or proceedings
relating to the Mortgage Documents or for the purpose of enforcing or realizing
upon any right or value thereby represented. The Trustee may, from time to
time, in its sole discretion, for the purpose of convenient location of the
Mortgage Documents, appoint one or more agents to hold physical custody, for the
account of the Trustee, of the Mortgage Documents.
Section 6.04. SUITS TO PROTECT THE TRUST
ESTATE AND MORTGAGE DOCUMENTS.
Upon five days' prior written notice to the Company (or such shorter
period or without notice if deemed necessary and appropriate by the Trustee),
the Trustee shall have the
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power, but not the obligation, to institute and to maintain such suits and
proceedings as it may deem necessary or appropriate
to prevent any impairment of the Trust Estate by any acts which may be
unlawful or in violation of the Mortgage Documents, the Assignment
Agreement or this Indenture, and such suits and proceedings as the Trustee
may deem necessary or appropriate to preserve or protect its interest and
the interests of the Noteholders in the Trust Estate and the Mortgage Documents
and the principal, interest, issues, profits, rents, revenues and other income
arising therefrom (including 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 result in an impairment of security hereunder or be
materially prejudicial to the interests of the Noteholders or of the Trustee).
The Trustee shall also have authority to exercise any rights or powers conferred
on the Trustee as the holder of the Note.
ARTICLE SEVEN
REMEDIES
Section 7.01. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", whenever used herein, means any one of the
following events (including any applicable notice requirement and any period of
grace as specified in this Section 7.01) (whatever the reason for such event and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Note when such
interest becomes due and payable and continuance of such default (the
deposit with the Trustee pursuant to Section 3.07 of funds or Additional
Notes sufficient to make such interest payment in full being deemed to cure
any such default for the purposes hereof) for a period of ten days; or
(b) default in the payment of all or any portion of the principal
of any Note at its Maturity; or
(c) default in the performance or breach of any covenant of the
Company or RIH in this Indenture (other than a covenant a default in the
performance or breach of which is elsewhere in this Section 7.01
specifically dealt with), the Assignment Agreement or any of the
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Mortgage Documents and continuance of such default or breach for a
period of 30 days (or such shorter or longer cure period, if any, as
may be specified in respect of such default or breach in the Assignment
Agreement or the applicable Mortgage Document, as the case may be), and
(other than with respect to Sections 12.07, 12.08, 12.09, 12.10, 12.11,
12.12, 12.13 or 12.21) after there has been given (i) to the Company by
the Trustee or (ii) to the Company and the Trustee by the Holders of at
least 25% in Outstanding Amount of the Outstanding Notes, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; PROVIDED,
HOWEVER, that, if such default or breach is of a covenant set forth in
Section 12.02, 12.04, 12.05, 12.11, 12.13 or 12.21, and if such default or
breach is of such a nature that is curable but is not susceptible of being
cured with due diligence within such 30-day period (or such shorter or
longer cure period) (for reasons other than lack of funds), then such
period shall be extended for such further period of time as may reasonably
be required to cure such default or breach, so long as (i) RIH delivers an
Officers' Certificate to the Trustee within such period stating (A) the
applicability of the provisions of this proviso to such default or breach,
(B) the Company's or RIH's intention to remedy such default or breach with
reasonable diligence and (C) the steps which the Company or RIH has
undertaken to remedy such default or breach, and (ii) RIH delivers to the
Trustee additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate described in clause
(i) above, in which case such period shall be extended for such further
period of time as may reasonably be required to cure such default or
breach, provided that the Company or RIH is then proceeding and
thereafter continues to proceed to cure such default or breach with
reasonable diligence; PROVIDED FURTHER, HOWEVER, that such additional
period of time shall not in any case exceed 60 days; or
(d) a proceeding or case shall be commenced, without the application
or consent of the Company or RIH, in any court of competent jurisdiction,
seeking (i) its liquidation, reorganization, dissolution or winding-up, or
the composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Company or RIH
or of all or any substantial part of its assets, or (iii) similar relief in
respect of the Company or RIH under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing
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shall be entered and continue unstayed and in effect, for a period
of 60 consecutive days; or
(e) the commencement by the Company or RIH of a voluntary case under
the federal bankruptcy laws or any other applicable federal or state law,
or the consent or acquiescence by any of them to the filing of any such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or other similar
official) of the Company or RIH or any substantial part of any of their
property, or the making by any of them of an assignment for the benefit of
creditors, or the taking of action by the Company or RIH in furtherance of
any such action; or
(f) the revocation, suspension or involuntary loss of any Permit
which results in the cessation of a substantial portion of the operations
of the Casino-Hotel for a period of more than 90 consecutive days; or
(g) (i) a default by the Company, RIH or any of their Subsidiaries
under any Indebtedness (other than the Indebtedness represented by the
Working Capital Facility and the Junior Mortgage Facility) in an aggregate
principal amount in excess of $5,000,000, which default results in the
acceleration of the maturity of any such Indebtedness under the evidence of
indebtedness, indenture or other instrument governing such Indebtedness;
provided, however, that, if such default under such evidence of
indebtedness, indenture or other instrument shall be cured by the obligor,
or be waived by the holders of such Indebtedness, in each case as may be
permitted by such evidence of indebtedness, indenture or other instrument
and in each case resulting in rescission of such acceleration thereunder,
then the Event of Default hereunder by reason of such default shall be
deemed likewise to have been thereupon cured or waived; or (ii) a default
by the Company, RIH or any of their Subsidiaries under any Indebtedness
represented by the Working Capital Facility or the Junior Mortgage
Facility, the effect of which default (after the expiration of any
applicable notice or grace periods) is to permit the holder or holders of
any such Indebtedness represented by the Working Capital Facility or the
Junior Mortgage Facility in an aggregate principal amount in excess of
$5,000,000 (or a trustee or agent on behalf of such holder or holders) to
cause the acceleration of the maturity of such Indebtedness represented by
the Working Capital Facility or the Junior Mortgage Facility under the
evidence of indebtedness, indenture or other instrument governing such
Indebtedness; provided, however, that if such default under such evidence
of indebtedness, indenture or other instrument shall be
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cured by the obligor, or be waived by the holders of such Indebtedness,
in each case as may be permitted by such evidence of indebtedness,
indenture or other instrument and, if such default resulted in the
acceleration of the maturity of such Indebtedness, such acceleration
shall have been rescinded thereunder, then the Event of Default hereunder
by reason of such default shall be deemed likewise to have been thereupon
cured or waived; or (iii) the existence of a final judgment of a court of
competent jurisdiction in an amount in excess of $3,000,000 against the
Company, RIH or the Trust Estate, which judgment has not been satisfied
or otherwise provided for, for a period of 30 days (during which execution
shall not be effectively stayed) following the date on which such judgment
becomes a lien against the Trust Estate or any
part thereof (unless the lawsuit in question was commenced without
effective service of process upon either the Company or RIH in which case
such 30-day period shall not commence until the Company or RIH receives
notice of such final judgment); or (iv) the existence of a final judgment
of a court of competent jurisdiction in an amount in excess of $15,000,000
against the Company, RIH or the Trust Estate, which judgment has not been
satisfied or otherwise provided for, for a period of 60 days (during which
execution shall not be effectively stayed) following the date of such final
judgment; or (v) the existence of a final judgment of a court of competent
jurisdiction, regardless of amount, against the Company, RIH or the Trust
Estate, which judgment has not been satisfied or otherwise provided for,
for a period of 60 days (during which execution shall not be effectively
stayed) following the date of such final judgment, if such judgment, by
itself or upon recordation or other action of the judgment creditor,
imposes or would impose a lien on the Trust Estate or any part thereof
senior to the lien of the Mortgage; or
(h) default in the performance, or breach, of any covenant of the
Company or RIH in Article Ten; or
(i) the existence of a judgment of a court of competent jurisdiction
in an amount in excess of $3,000,000 against RIH regarding the CRDA
Dispute, which judgment has not been stayed, satisfied or otherwise
provided for, for a period of 30 days (during which execution shall not be
effectively stayed) (unless the lawsuit in question was commenced without
effective service of process upon RIH in which case such 30-day period
shall not commence until RIH receives notice of such final judgment); or
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(j) if RII fails to pay or discharge or cause to be paid or
discharged, within 30 days before the same shall become delinquent, all
taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of
Default or Default shall be deemed to exist hereunder with respect to any
tax liability not paid or discharged by RII if and to the extent that the
amount, applicability or validity of such tax liabilities is being
contested in good faith by appropriate proceedings if adequate reserves
therefor have been established in accordance with GAAP; provided further,
however, that this clause (j) shall not apply to amounts due with respect
to any period during which neither the Company, RIH nor any of their
Subsidiaries is included in RII's consolidated group for federal income tax
purposes.
No action, event, claim, liability or judgment regarding the CRDA
Dispute shall constitute a Default or an Event of Default under this
Section 7.01 unless and until a judgment shall have been entered against
RIH which constitutes an Event of Default pursuant to clause (i) of this
Section 7.01.
Section 7.02. ACCELERATION OF MATURITY;
RESCISSION AND ANNULMENT.
If an Event of Default (other than one referred to in clause (d) or
(e) of Section 7.01) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes
Outstanding may declare the Outstanding Amount of all the Notes and all accrued
interest to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee, if given by any Noteholders), and upon any such
declaration such Outstanding Amount shall become immediately due and payable.
If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs,
then the Outstanding Amount of all the Notes shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company.
At any time after such a declaration of acceleration has been made,
but before any judgment or decree for payment of money due on any Notes has been
obtained by the Trustee as hereinafter provided in this Article Seven, the
Holders of a majority in Outstanding Amount of the Notes may, by written notice
to the Company and the Trustee, rescind and annul such declaration and its
consequences if:
(a) the Company has deposited with the Trustee a sum sufficient to
pay:
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(1) all overdue installments of interest on all Notes,
(2) the principal of any Notes which have become due otherwise
than by such declaration of acceleration and interest thereon at the
rate or rates prescribed therefor in the Notes, and
(3) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(b) all Events of Default, other than the non-payment of the
Outstanding Amount of Notes which have become due solely by such
declaration of acceleration, have been cured, or have been waived as
provided in Section 7.13.
No such rescission and annulment shall affect any subsequent default
or impair any right consequent thereon.
Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON
NOTES AND RIGHT OF TRUSTEE TO JUDGMENT.
The Company covenants that, if:
(a) default is made in the payment of any interest upon any Note
when such interest becomes due and payable and such default continues
for a period of 10 days (the deposit with the Trustee during such 10 day
period pursuant to Section 3.07 of funds or Additional Notes (if
permitted hereby) sufficient to make such interest payment in full
being deemed to cure any such default for the purposes hereof), or
(b) default is made in the payment of the principal of any
Note at its Maturity,
then, upon demand of the Trustee, the Company will pay to the Trustee for the
benefit of the Holders of such Notes, the whole amount then due and payable on
such Notes for principal and interest, with interest at the rate prescribed
therefor in the Notes on overdue principal and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel. If the Company fails to pay
such amounts forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled to sue for and recover judgment
against the Company, RIH and any other obligor on the Notes for the whole amount
so due and unpaid. The Trustee shall be entitled to institute such suit either
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before, after or during the pendency of any proceedings for the enforcement of
this Indenture or of the Mortgage Documents or of the Assignment Agreement, but
only after the occurrence of an Event of Default.
Subject to the Intercreditor Agreement, in the case of a foreclosure
of the Mortgage and a sale of the Trust Estate and application of the proceeds
as provided in Section 7.06, the Trustee, in its own name and as trustee of an
express trust, shall be entitled to enforce payment of, and to receive, all
amounts then remaining due and unpaid upon the Notes, for the benefit of the
Holders thereof, and shall be entitled to recover judgment for any portion of
the same remaining unpaid, with interest as aforesaid. No recovery of any such
judgment upon any property of the Company shall affect or impair the security
provided by this Indenture and the Assignment Agreement or the lien of the
Mortgage upon the Trust Estate or any rights, powers or remedies of the Holders
of the Notes.
Section 7.04. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or RIH or any other obligor upon the
Notes or the property of the Company or RIH or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal (or any portion
thereof) of the Notes shall then be due and payable, as therein expressed or by
declaration or otherwise, and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Outstanding Notes and to file
such 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 of the Noteholders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to the Trustee, and in the event that the
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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 8.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or compensation affecting the Notes
or the rights of any Holder thereof, or to authorize the Trustee to vote on the
claim of any Noteholder in any such proceeding.
Section 7.05. TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture, the Notes, the
Assignment Agreement or the Mortgage Documents may be prosecuted and enforced by
the Trustee without the possession of any of the Notes or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the Ratable Benefit of the Holders of the Notes in respect
of which such judgment has been recovered.
Section 7.06. APPLICATION OF MONEY COLLECTED.
Subject to the Intercreditor Agreement, any money collected by the
Trustee pursuant to this Article Seven or pursuant to Article Three or Section
5.11 or 5.20 of the Mortgage which is not required to be paid to the Mortgagor
thereunder shall be applied in the following order, at the date or dates fixed
by the Trustee and upon such date interest shall cease to accrue, and, in case
of the distribution of such money on account of principal upon presentation
of the Notes, and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
(a) FIRST: To the payment of all amounts due the Trustee under
Section 8.07;
(b) SECOND: To the payment of the whole amount then due upon the
Outstanding Notes, for principal and interest, in respect of which or for
the benefit of which such money has been collected, with interest (to the
extent that such interest has been collected by the Trustee or a sum
sufficient therefor has been so collected and payment thereof is legally
enforceable at the respective rate or rates prescribed therefor in the
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Notes) on overdue principal; and in case such proceeds shall be
insufficient to pay in full the whole amount so due and unpaid upon such
Notes, then first, payment of accrued but unpaid interest (with interest
thereon as aforesaid), and second, to outstanding principal, in each case,
ratably according to the aggregate amount so due; and
(c) THIRD: To the payment of the remainder, if any, to the
Company or to whomever may be lawfully entitled to receive the same or as
a court of competent jurisdiction may direct.
Section 7.07. LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute any
proceeding, judicial or otherwise, under or with respect to this Indenture, the
Assignment Agreement or the Mortgage Documents, or for the appointment of a
receiver or trustee or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in Outstanding Amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holder of a
majority in Outstanding Amount of the Outstanding Notes;
it being understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of, or
by availing of, any provision of this Indenture, the Assignment
Agreement or the Mortgage Documents, to affect, disturb or
prejudice the right of any other Holders of Notes, or to obtain
or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, the Assignment
Agreement or the Mortgage Documents,
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except in the manner herein and therein provided and for the Ratable
Benefit of all Notes.
Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS
TO RECEIVE PRINCIPAL AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note on the Stated Maturity or
Interest Payment Dates expressed in such Note (or, in the case of redemption,
on the Redemption Date) and to institute suit for the enforcement of any such
payment and such rights shall not be impaired without the consent of such
Holder.
Section 7.09. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Noteholder has instituted any proceeding to
enforce any right or remedy under this Indenture, the Assignment Agreement
or the Mortgage Documents and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee
or to such Noteholder, then and in every such case the Company, the Trustee
and the Noteholders shall, subject to any determination in such proceeding,
be restored to their former positions hereunder, and thereafter all rights
and remedies of the Trustee and the Noteholders shall continue as though
no such proceeding had been instituted.
Section 7.10. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the Trustee or
to the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 7.11. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon an Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article Seven or by
law to the Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the Noteholders, as
the case may be.
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Section 7.12. OTHER RIGHTS.
Subject to Section 8.03(e), the Holders of a majority in Outstanding
Amount of the Outstanding Notes shall have the right, during the continuance
of an Event of Default,
(a) to require the Trustee to proceed to enforce this Indenture,
either by judicial proceedings for the enforcement of the payment of the
Notes by the foreclosure of the Mortgage and exercise of any remedies under
the Mortgage Documents and the Assignment Agreement and the sale of the
Trust Estate or otherwise or, at the election of the Trustee, by the
exercise of the power of entry and/or sale conferred by the Mortgage; and
(b) to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee hereunder, provided that
(1) such direction shall not be in conflict with any rule of law
or this Indenture or any applicable Mortgage Document or the
Assignment Agreement;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) the Trustee shall not be required to determine if any
action so directed would be unjustly prejudicial to the Holders
not taking part in such direction.
Section 7.13. WAIVER OF PAST DEFAULTS.
Before any judgment or decree for payment of money due has been
obtained by the Trustee as provided in this Article Seven, the Holders of not
less than 66-2/3% in Outstanding Amount of the Outstanding Notes may, by Act of
such Noteholders delivered to the Trustee and the Company, on behalf of the
Holders of all the Notes waive any past Default hereunder and its consequences,
except a Default
(a) in the payment of the principal of or interest on any Note, or
(b) in respect of a covenant or provision hereof which under Article
Eleven cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
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Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right subsequent thereon.
Section 7.14. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, the Assignment Agreement or the Mortgage Documents, or in any
suit against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claim or defense made by
such party litigant; but the provisions of this Section 7.14 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Noteholders, or group of Noteholders, holding in the aggregate more than 10% in
Outstanding Amount of the Outstanding Notes, or to any suit instituted by any
Noteholder for the enforcement of the payment of the principal of or interest on
any Note on or after the Stated Maturity expressed in such Note (or, in the case
of redemption, on or after the Redemption Date) or the relevant Interest Payment
Date.
Section 7.15. ENFORCEMENT.
In case an Event of Default shall occur and be continuing, the
Trustee, in it discretion may, subject to the provisions of Section 7.12,
proceed to protect and enforce its rights and the rights of the Noteholders
under this Indenture by a suit, action or proceeding in equity or at law or
otherwise, whether for the specific performance of any covenant or agreement
contained in this Indenture or in aid of the execution of any power granted in
this Indenture or for the enforcement of any other legal, equitable or other
remedy, as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Noteholders
hereunder.
In case an Event of Default shall occur and be continuing under the
Mortgage, the Trustee, as assignee of the Mortgage Documents, in its discretion
may, subject to the provisions of Section 7.12, proceed to enforce its rights
under the Mortgage Documents and the Assignment Agreement.
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Section 7.16. MANAGEMENT OF CASINO-HOTEL.
Notwithstanding any provision of this Article Seven to the contrary,
(a) following an Event of Default under the Mortgage and the taking
of possession of the Trust Estate by the Trustee and/or the appointment of
a receiver of the Trust Estate or any part thereof, the Trustee or any such
receiver shall be authorized, in addition to the rights and power of the
Trustee and such receiver set forth elsewhere in this Indenture, the
Assignment Agreement and the Mortgage Documents, to retain one or more
experienced operators of hotels and/or casinos to manage and operate
the Casino-Hotel on behalf of the Noteholders, provided that any such
operator shall have all necessary legal qualifications, including all
Permits, to manage the Casino-Hotel; and
(b) no Noteholder shall have any right to take possession of, operate
or manage all or any portion of the Casino-Hotel, individually or as a
member of a group, unless such Noteholder shall have all necessary legal
qualifications, including all Permits, to do so and shall otherwise be
qualified to be retained to manage the Casino-Hotel under subsection (a) of
this Section 7.16.
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and the Mortgage
Documents, and no implied covenants or obligations shall be read into
this Indenture and the Mortgage Documents against the Trustee; and
(2) 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 expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture or the
Mortgage Documents; but in the case of any such certificates or opinions
which by any provision hereof or thereof are specifically required to be
furnished to the Trustee, the Trustee shall be
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under a duty to examine the same to determine whether or not they conform
to the requirements of this Indenture and the Mortgage Documents.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture or the Mortgage Documents, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(c) No provision of this Indenture or any Mortgage Document shall
be construed to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct,
except that
(1) this Section 8.01(c) shall not be construed to limit the effect
of Section 8.01(a);
(2) the Trustee shall not be liable for any error of judgment made
in good faith by it, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in Outstanding Amount of the
Outstanding Notes relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture or any
Mortgage Document; and
(4) no provision of this Indenture or the Mortgage Documents
shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture or the Mortgage Documents relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to
the provisions of this Section 8.01.
Section 8.02. NOTICE OF DEFAULTS.
Within 45 days after the occurrence of any Default hereunder of which
a Responsible Officer of the
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Trustee has actual knowledge, the Trustee shall transmit by mail to all
Holders of Notes as their names and addresses appear in the Note Register,
notice of such Default hereunder known to the Trustee, unless such
Default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the
case of a default in the payment of the principal of or interest on any Note,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the best interests of the Noteholders.
Section 8.03. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 8.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by the Trustee 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 or any of the Mortgage
Documents at the request or direction
of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Trustee reasonable security or
indemnity reasonably satisfactory to the Trustee against the costs,
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expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) 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, direction, consent, order,
bond, debenture, other evidence of indebtedness or other paper or 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 RIH, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(h) the Trustee shall not be deemed to have knowledge of and shall
not be required to take any action with respect to any event of Default
(other than an Event of default described in Sections 7.01(a) and (b) or
any event which would, with the giving of notice or the passage of time
or both, constitute an Event of Default, unless the Trustee shall have
actual knowledge of such event or shall have been notified in writing of
such event by Noteholders holding in the aggregate more than 25% in
Outstanding Amount of the Outstanding Notes;
(i) subject to Section 8.01(c), the Trustee shall not be personally
liable, in case of entry by it upon the Trust Estate, for debts contracted
or liabilities or damages incurred in the management or operation of the
Trust Estate; and
(j) in addition to and not in limitation of its other powers
hereunder, the Trustee shall have such power and authority as may be
necessary to enter into and accept delivery of any document as may be
necessary to effect on behalf of the Holders of the Notes the
subordination of the indebtedness in respect of the Notes to any secured
Working Capital Facility (in accordance with the provisions of the
Mortgage), and upon written request of the Company, the Trustee shall enter
into such agreements on behalf of the holders of the Notes.
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Section 8.04. NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS.
The recitals contained herein and in the Notes, except in a
certificate of authentication on the Notes, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representation as to the validity or sufficiency of this
Indenture, the Notes or the Mortgage Documents. The Trustee shall not be
accountable for the use or application by the Company of Notes or the proceeds
thereof or of any money paid to the Company or by a Company Order under any
provision hereof.
Section 8.05. MAY HOLD NOTES.
The Trustee, any Paying Agent, Note Registrar, Authenticating Agent or
any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Notes and, subject to Sections 8.08 and 8.13, if
operative, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent
or such other agent.
Section 8.06. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 8.07. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder and under the Mortgage Documents
(which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein and in the Mortgage
Documents, to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
the Trustee's negligence or bad faith; and
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(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this Indenture or the trust created hereunder or the
performance of its duties hereunder, including the reasonable costs and
expenses of defending itself against or investigaing any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder (including reasonable attorneys' fees and
expenses).
As security for the performance of the obligations of the Company and
RIH under this Section 8.07, the Trustee shall be secured under this Indenture
and the Mortgage Documents by a lien prior to the Mortgage upon all property
and funds held or collected by the Trustee, and for the payment of such
compensation, expenses, reimbursements and indemnity the Trustee shall
have the right to use and apply any money held by it pursuant hereto.
Notwithstanding the satisfaction of this Indenture, the obligations
of the Company and RIH under this Section 8.07 shall survive.
Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The Trustee
shall comply with TIA SECTION 310(b) including the second sentence
of TIA SECTION 310(b)(9).
Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the law of the United States of
America or of any state, authorized under such laws to exercise corporate trust
powers, having (or in the case of a corporation included in a bank holding
company system, the related bank holding company having) a combined capital and
surplus of at least $100,000,000, subject to supervision or examination by
federal or state authority. In addition, if the Trustee is a corporation
included in a bank holding company system, the Trustee, independently of such
bank holding company, shall meet the capital requirements of TIA 310(a)(2).
The Trustee shall comply with TIA 310(b); PROVIDED, HOWEVER, that there shall
be excluded from the operation of TIA 310(b)(1) any indenture or indentures
under which other securities, or certificates of interest or participation in
other securities of the Company are outstanding, if the requirements for such
exclusion set forth in TIA 310(b)(1) are met. If such
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corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of such supervising or examining authority,
then for the purposes of this Section 8.09, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 8.09, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article Eight.
Section 8.10. RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article Eight shall become effective until
the acceptance of appointment by the successor Trustee under Section 8.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in Outstanding Amount of the Outstanding Notes, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 8.08 after written
request therefor by the Company or by any Noteholder who is a bona fide
Holder of a Note, or
(2) the Trustee shall cease to be eligible under Section 8.09 and
shall fail to resign after written request therefor by the Company or by
any Noteholder who is a bona fide Holder of a Note, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (i) the Company by a Company Order may remove the
Trustee, or (ii) subject to Section 7.14, any Noteholder who is a bona fide
Holder of a Note may, on behalf
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of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Company, by a Company Order, shall promptly appoint a successor Trustee.
In case all or substantially all of the Trust Estate shall be in the possession
of a receiver or trustee lawfully appointed, such receiver or trustee, by
written instrument, may similarly appoint a successor to fill such vacancy
until a new Trustee shall be so appointed by the Noteholders. If, within one
year after such resignation, removal or incapacity or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in Outstanding Amount of the Outstanding Notes delivered to the
Company and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede the successor Trustee appointed by the Company or by such
receiver or trustee. If no successor Trustee shall have been so appointed by
the Company or the Noteholders and accepted appointment in the manner
hereinafter provided, subject to Section 7.14, any Noteholder who is a bona fide
Holder of a Note may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give written notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to each
Noteholder by mailing such notice by first-class mail, postage prepaid, to each
Noteholder as such Noteholder's name and address appears in the Note Register;
provided, however, that failure of the Company to give such notice shall not
affect the resignation or removal of such Trustee. Each notice shall include
the name of the successor Trustee and the address of its principal corporate
trust office.
Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall became effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the estates, properties,
rights, powers, trusts and duties of the retiring Trustee; but, on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument conveying and transferring to
such successor Trustee all the estates,
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properties, rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder, subject nevertheless
to its lien, if any, provided for in Section 8.07. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such estates, properties, rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article Eight.
Section 8.12. MERGER, CONVERSION, CONSOLIDATION
OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article Eight, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.
Section 8.13. PREFERENTIAL COLLECTION
OF CLAIMS AGAINST COMPANY.
The Trustee will comply with TIA SECTION 311(a). A Trustee who has
resigned or been removed shall be subject to TIA SECTION 311(a) to the extent
indicated.
Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES.
At any time or times, for the purpose of meeting the legal
requirements of the TIA or of any jurisdiction in which any of the Trust Estate
may at the time be located or in which it shall be necessary or desirable for
the Trustee to act, the Company and the Trustee shall have power to appoint,
and, upon the written request of the Trustee or of the Holders of at least 25%
in Outstanding Amount of the Notes Outstanding, the Company shall for such
purpose join with the Trustee in the execution, delivery and performance of all
instruments and
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agreements necessary or proper to appoint, one or more Persons
approved by the Trustee either to act as co-trustee, jointly with the Trustee,
of all or any part of the Mortgage Documents or of the Trust Estate covered by
such Mortgage Documents, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section 8.14. If the Company does not join in such
appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default has occurred and is continuing, the Trustee alone shall
have power to make such appointment.
Should any written instrument from the Company be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Company within three business days of such request.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) the Notes shall be authenticated and delivered, and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised
solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed
by the Trustee or by the Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee
or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Trustee
shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee;
(c) the Trustee, at any time, by an instrument in writing executed by
it may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section 8.14. A successor to any co-trustee
or
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separate trustee so resigned or removed may be appointed in the manner
provided in this Section 8.14;
(d) the Trustee, or any other such trustee hereunder, shall not be
personally liable by reason of any act or omission of any co-trustee or
separate trustee hereunder, and no co-trustee or separate trustee hereunder
shall be personally liable by reason of any act or omission of the Trustee,
or any other such trustee hereunder;
(e) any Act of Noteholders delivered to the Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee; and
(f) any co-trustee or separate trustee appointed hereunder shall be
entitled to compensation and indemnification from the Company under Section
8.07 hereunder and shall be entitled to all such other rights and
protections afforded the Trustee hereunder.
Section 8.15. APPOINTMENT OF AUTHENTICATING AGENT.
Upon the request of the Company, the Trustee shall appoint an
Authenticating Agent with power to act on its behalf and subject to its
direction in the authentication and delivery of the Notes designated for such
authentication by the Company and containing provisions therein for such
authentication in connection with transfers and exchanges under Sections 3.04,
3.05, 3.06 and 13.07, as fully to all intents and purposes as though the
Authenticating Agent had been expressly authorized by those Sections to
authenticate and deliver such Notes. For all purposes of this Indenture, the
authentication and delivery of Notes by the Authenticating Agent pursuant to
this Section 8.15 shall be deemed to be the authentication and delivery of Notes
"by the Trustee". Such Authenticating Agent shall at all times be a bank or
trust company having its principal office in the Borough of Manhattan, City and
State of New York, and shall at all times be a corporation organized and doing
business under the laws of the United States or of any State with a combined
capital and surplus of at least $50,000,000 and authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authority. If such corporation publishes reports of condition
at least annually pursuant to law or the requirements of such authority, then
for the purposes of this Section 8.15 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be
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consolidated, or any corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation succeeding to the corporate trust business of any Authenticating
Agent, shall be the successor of the Authenticating Agent hereunder,
if such successor corporation is otherwise eligible under this Section 8.15,
without the execution or filing of any further act on the part of
the parties hereto or the Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section 8.15, the
Trustee shall promptly appoint a successor Authenticating Agent, and shall give
written notice of such appointment to the Company.
The Company agrees to pay to the Authenticating Agent from time to
time reasonable compensation for its services. The provisions of
Sections 3.10, 8.04 and 8.05 shall be applicable to any Authenticating Agent.
ARTICLE NINE
NOTEHOLDERS' LISTS AND REPORTS
BY TRUSTEE
Section 9.01. COMPANY TO FURNISH TRUSTEE
SEMI-ANNUAL LISTS OF NOTEHOLDERS.
The Company will furnish or cause to be furnished to the Trustee
semi-annually, not less than 45 days nor more than 60 days after each date
(month and day) specified as a semi-annual Interest Payment Date for the Notes
(whether or not any Notes are then Outstanding), and at such other times as the
Trustee may request in writing, within 60 days after receipt by the Company of
any such request, a list in such form as the Trustee may reasonably require
containing all the information in the possession or control of the Company, or
any of its Paying Agents other than the Trustee, as to the names and addresses
of the Holders of Notes, obtained since the date as of which the next previous
list, if any, was furnished, excluding from any such list the names and
addresses received by the Trustee in its capacity as Note Registrar. Any such
list may be dated as of a date not more than 15 days prior to
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the time such information is furnished and need not include
information received after such date.
Section 9.02. PRESERVATION OF INFORMATION;
COMMUNICATIONS TO NOTEHOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Notes (1) contained in the
most recent list furnished to the Trustee as provided in Section 9.01, (2)
received by the Trustee in the capacity of Paying Agent (if so acting)
hereunder or (3) received by the Trustee in its capacity as Note Registrar.
The Trustee may destroy any list furnished or provided in Section 9.01 upon
receipt of a new list so furnished.
(b) Holders may communicate pursuant to TIA SECTION 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Note Registrar and any other Person shall have
the protection of TIA SECTION 312(c).
(c) Every Holder of Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any Paying Agent shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders of Notes in
accordance with Section 9.02(b), regardless of the source from which information
was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 9.02(b).
Section 9.03. REPORTS BY TRUSTEE.
(a) Within 60 days after each May 15 beginning with May 15, 1995, the
Trustee shall transmit to each Noteholder a report dated as of such May 15 that
complies with TIA SECTION 313(a). The Trustee shall also comply with TIA
SECTION 313(b) and SECTION 313(c).
(b) A copy of each such report shall, at the time of such
transmission to Noteholders, be filed by the Trustee with any stock exchange on
which the Notes are listed and also with the Commission. The Company will
notify the Trustee when the Notes are listed on any stock exchange.
(c) The Trustee will provide the Casino Control Commission and the
Director of the Division of Gaming Enforcement of New Jersey with:
(1) copies of all notices, reports and other written communications
which the Trustee gives to Noteholders;
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(2) a list of Noteholders promptly after the original issuance of the
Notes and a list of Noteholders annually on December 1 of each year,
or such other time as requested by the Casino Control Commission or
Director of the Division of Gaming Enforcement;
(3) notice of any Event of Default under this Indenture actually
known by the Trustee or of any event, occurrence or condition actually
known by the Trustee which, with the giving of notice or lapse of time
or both would constitute an Event of Default under this Indenture
(including the Guaranty), the RIH Junior Promissory Note or the
Mortgage Documents (as such term is defined in such instruments),
any acceleration of the Indebtedness evidenced or secured hereby or
thereby, the institution of any legal actions or proceedings before
any court or governmental authority in respect of this Indenture
(including the Guaranty) or the Mortgage Documents, the entering
into or taking possession of any property constituting the Trust
Estate and any rescission, annulment or waiver in respect of an
Event of Default under any instruments described in this
clause (3);
(4) notice of the removal or resignation of the Trustee;
(5) notice of any transfer or assignment of rights under this
Indenture (including the Guaranty) (but not in respect of the Notes) or the
Mortgage Documents after a Responsible Officer of the Trustee becomes aware
of the same; and
(6) a copy of any amendment to the Notes, this Indenture (including
the Guaranty) or the Mortgage Documents immediately;
PROVIDED, HOWEVER, that the Trustee shall not be liable to any Person (other
than the Casino Control Commission and the Director of the Division of
Gaming Enforcement of New Jersey) for any failure to provide any of the
above-mentioned documents to the Casino Control Commission and the Director
of the Division of Gaming Enforcement of New Jersey.
The notice specified in Section 9.03(c) above shall be in writing and, except
as set forth below, shall be given immediately after the Trustee has
actual knowledge of any circumstances requiring such notice. In the case of any
notice in respect of any Default or Event of Default under any instrument
described in Section 9.03(c), such notice shall be accompanied by a copy of
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any notice from the Holders of Notes, or a representative thereof or the
Trustee, to the defaulting Person and, if accompanied by any such notice to the
defaulting Person, shall be given simultaneously with the giving of any such
notice to the defaulting Person. In the case of any legal actions or
proceedings, such notice shall be accompanied by a copy of the complaint or
other initial pleading or document.
The Trustee and its Responsible Officers shall cooperate with the
Casino Control Commission and the Director of the Division of Gaming
Enforcement of New Jersey in order to provide such Commission and Director
with information and documentation relevant to compliance with Section 9.03(c)
above and as otherwise required by the Casino Control Act.
The expiration date of the current gaming Permit held by RIH is
February 26, 1994. Subsequent gaming Permits held by RIH are scheduled to
expire every two years on February 26th, commencing February 26, 1996 unless
and until the Trustee is advised otherwise. RIH will advise the Trustee of
any change in such expiration date within five business days of knowledge
thereof.
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE
OR TRANSFER ONLY ON CERTAIN TERMS.
Neither the Company nor RIH shall consolidate, combine or merge with
or into any other Person or permit any other Person to consolidate, combine or
merge with or into the Company or RIH, as the case may be; and neither the
Company with respect to its assets nor RIH with respect to the Trust Estate
shall sell, assign, convey or transfer its interest in such assets or the Trust
Estate, as the case may be, substantially as an entirety (and notwithstanding
anything to the contrary contained herein (including the proviso at the end of
this sentence), but subject to the provisions of the Mortgage regarding
dispositions of the Trust Estate, neither the Company with respect to its assets
nor RIH with respect to the Trust Estate may sell, assign, convey or transfer
such assets or the Trust Estate, as the case may be, other than substantially as
an entirety) to any other Person or group of Persons in one transaction or a
series of related transactions, or permit any other Person or group of Persons
to convey or transfer all or substantially all of its assets, subject to
liabilities other than DE MINIMIS liabilities, to
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the Company or RIH; and the Company and RIH shall not transfer,
convey, sell or otherwise dispose of to any
other Person, or issue to any Person, any equity interest in the Company or RIH,
as the case may be (each of the aforesaid transactions described in this Section
10.01 is referred to herein as a "Combination Transaction"); PROVIDED, HOWEVER,
that (i) the Company may engage in a Combination Transaction in which the only
other party or parties is RIH or a direct or indirect wholly owned Subsidiary of
the Company or RIH, and (ii) the Company or RIH may engage in any other
Combination Transaction (either independently or at the same time as other
Combination Transactions), subject to the following with respect to each such
Combination Transaction:
(a) the conditions set forth in Section 10.03 are satisfied;
(b) in the event the Company or RIH shall consolidate, combine or
merge with or into another Person or sell, assign, convey or transfer its
interest in its assets or in the Trust Estate, as the case may be,
substantially as an entirety (but not less than
substantially as an entirety) to another Person in one transaction or a
series of related transactions, the entity which is formed by or survives
such consolidation, combination or merger or the Person to which such
assets or the Trust Estate are conveyed or transferred:
(1) shall be organized and existing under the laws of the United
States of America, any state thereof, or the District of Columbia;
(2) shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form reasonably satisfactory
to the Trustee, the performance and observance
of every covenant, obligation and condition of this Indenture to be
performed or observed by the Company or RIH, whichever the case may
be;
(3) shall expressly assume, by an instrument executed and
delivered to the Trustee, in form reasonably satisfactory to the
Trustee, the due and punctual performance of every covenant,
obligation and condition of the Mortgage Documents and Assignment
Agreement to be performed by the Company or RIH, whichever the case
may be; and
(4) immediately after and giving effect to such transaction
could incur at least $1.00 of additional Indebtedness under Section
12.08;
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(c) immediately after giving effect to such transaction, no Event of
Default, or Default hereunder or under the Mortgage shall have occurred and
be continuing;
(d) such Combination Transaction shall be on such terms as shall not
impair the lien and security and priority hereof or of the Mortgage
Documents or of the Assignment Agreement and the rights and powers of the
Trustee and the Holders of the Notes hereunder and thereunder; and
(e) the Company or RIH, as the case may be, shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each of
which shall state that such Combination Transaction and such supplemental
indenture comply with this Article Ten and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Section 10.02. SUCCESSOR ENTITY SUBSTITUTED.
Upon any consolidation, combination or merger or any conveyance or
transfer of an interest in the assets of the Company or in the Trust Estate
permitted by Section 10.01, the successor entity formed by such consolidation or
into which the Company or RIH is combined or to which such conveyance or
transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, and shall be bound by every obligation and liability
of, the Company or RIH, whichever the case may be, under this Indenture with the
same effect as if such successor entity had been named as the Company or RIH
herein; PROVIDED, HOWEVER, that no such consolidation or combination involving
the Company or RIH, unless such transaction is in compliance with the provisions
of this Article Ten, shall have the effect of releasing the Person named as "the
Company" or "RIH", as the case may be, in the first paragraph of this
instrument, or any successor entity which shall theretofore have become such in
the manner prescribed in this Article Ten, from its liability as obligor and
maker on the RIH Junior Promissory Note or any of the Notes.
Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL.
Neither the Company nor RIH shall engage in any Combination
Transaction unless, immediately following such Combination Transaction, (a) RIH
(or any successor entity) shall be eligible for and shall meet all relevant
Legal Requirements, including holding all permits, required for the normal
operation of the business of owning and operating the Casino-Hotel, and (b) RIH
(or any successor entity) shall be controlled by a Person that is, or shall
retain to manage the
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Casino-Hotel one or more Persons that are, experienced in
the operation and management of casino-hotels.
Section 10.04. LIMITATION ON SALES OF TRUST ESTATE.
Except as otherwise expressly permitted by the Mortgage and this
Indenture, neither the Company nor RIH shall sell, assign, lease, sublease,
hypothecate, pledge, mortgage or otherwise transfer all or any part of the
assets of the Company or the Trust Estate or any interest therein (including,
without limitation, any interest in the Ground Leases). Without limiting the
generality of the foregoing, RIH shall not separate, or attempt to separate, its
ownership of its interest in the Ground Leases from the ownership of the
buildings constituting the Casino-Hotel or any part thereof.
ARTICLE ELEVEN
AMENDMENTS, SUPPLEMENTS AND WAIVER
Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS.
Without the consent of the Holders of any Notes, the parties hereto
may from time to time amend or supplement this Indenture, the Assignment
Agreement, the Notes or the Mortgage Documents, as long as the form of such
amendment or supplement is satisfactory to the Trustee, for any of the
following purposes:
(a) to correct or amplify the description of the Trust
Estate or better to assure, convey and confirm unto the Trustee the
assignment of the Mortgage Documents; or
(b) to add additional conditions, limitations and restrictions
thereafter to be observed to the conditions, limitations and restrictions
on the authorized amount, terms of issue, authentication and delivery of
Notes as herein set forth; or
(c) to comply with Article Ten; or
(d) to add to the covenants of the Company for the benefit of the
Holders of all Notes or to surrender any right or power herein conferred
upon the Company; or
(e) to cure any ambiguity, defect or inconsistency in any of the
enumerated documents, provided such action shall not adversely affect the
interests of the Holders of the Notes; or
(f) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to
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effect the qualification of this Indenture under the TIA or under
any similar federal statute hereafter enacted, and to add to this
Indenture such other provisions as may be expressly permitted by the TIA,
EXCLUDING, HOWEVER, the provisions referred
to in TIA SECTION 316(a)(2) as in effect at the date as of which
this instrument was executed or any corresponding provision in any similar
federal statute hereafter enacted; or
(g) to effectuate any subordination contemplated in Section 8.03(i);
or
(h) to comply with the requirements of the Casino Control Act.
The terms of any such enumerated document entered into pursuant to
this Section 11.01 shall be subject to prior approval of the Casino Control
Commission in consultation with the New Jersey Division of Gaming Enforcement.
Section 11.02. WITH CONSENT OF NOTEHOLDERS.
With the consent of the Holders of not less than 66-2/3% in Outstanding Amount
of the Notes then Outstanding, by Act of such Holders delivered to the Company
and the Trustee, the parties hereto may amend or supplement this Indenture, the
Mortgage Documents, the Assignment Agreement or the Notes, provided that the
form of such amendment or supplement is reasonably satisfactory to the Trustee.
The Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding
may waive compliance by the Company or RIH with any provision of this
Indenture, the Mortgage Documents, the Assignment Agreement or the Notes,
except a default in the payment of principal of or interest on any Note,
without notice to any Noteholder. Notwithstanding
the foregoing, no modification, waiver, consent or amendment to the Notes or
this Indenture shall permit the redemption of the Notes prior to the fifth
anniversary of the Effective Date (other than pursuant to an RIH Sale) unless
the same also shall have ben approved by the holders of 66-2/3% in Outstanding
Amount (as such term is defined in the Senior Mortgage Note Indenture) of the
Senior Mortgage Notes then Outstanding (as such terms are defined in the Senior
Mortgage Note Indenture). Without the consent of the Holder of each
Outstanding Note affected thereby, an amendment, supplement or waiver,
including a waiver pursuant to Section 7.13, may not:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal amount
thereof or the interest thereon or the amount payable upon the redemption
thereof, or change any Place of Payment where, or the coin or currency in
which, any Note, or the interest thereon, is payable, or
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impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date); or
(b) reduce the percentage in Outstanding Amount of the Outstanding
Notes, the consent of whose Holders is required for any amendment,
supplement or waiver; or
(c) modify or alter the provisions of the proviso to the definition
of the term Outstanding; or
(d) modify any of the provisions of this Section or Section
7.13, except to increase any percentage provided thereby or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Note affected thereby; or
(e) permit the creation of any lien ranking prior to the lien of the
Mortgage (except for such liens expressly permitted pursuant to Section
12.13).
In determining whether to execute any amendment or supplement, subject
to Sections 11.02(a) through (e), the Trustee may in its discretion determine
whether or not any Notes would be affected by any such amendment or supplement
and any such determination shall be conclusive upon the Holders of all Notes,
whether theretofore or thereafter authenticated and delivered hereafter. The
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such Act shall approve the substance
thereof.
In connection with any amendment, supplement or waiver under this
Indenture, the Company or RIH may, but shall not be obligated to, offer to any
Holder who consents to such amendment, supplement or waiver, or to all Holders,
at the discretion of the Company or RIH, consideration for such Holder's consent
to such amendment, supplement or waiver. The terms of any such enumerated
document entered into pursuant to this Section 11.02 shall be subject to the
prior approval of the Casino Control Commission in consultation with New Jersey
Division of Gaming Enforcement.
Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS.
In executing, or accepting the additional trusts created by, any
amendment or supplement permitted by this Article or the modification thereby of
the trusts already created by this Indenture, the Trustee shall be entitled to
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receive from the Company, and, subject to Section 8.01(c), shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution
of such amendment or supplement is authorized or permitted by this Indenture.
The Trustee may, but shall not, except to the extent required in the case of
a supplemental indenture entered into under Section 11.01(e), be obligated
to, enter into any such amendment or supplement which affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise.
Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT.
Upon the execution of any amendment or supplement under this Article,
every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the TIA and Casino Control Act as then in effect.
Section 11.06. REFERENCE IN NOTES TO
AMENDMENT OR SUPPLEMENT.
In the absence of a direction from the Company, Notes authenticated
and delivered after the execution of any amendment
or supplement pursuant to this Article may, and if required by the Trustee
shall, bear a notation in form approved by the Trustee as to any matter provided
for in such amendment or supplement. If the Company shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Company,
to any such amendment or supplement may be prepared and executed by the Company
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
ARTICLE TWELVE
COVENANTS
Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay or cause to be paid the
principal of and interest on each of the Notes at the place or places, at the
respective times and in the manner provided in the Notes and this Indenture.
Each installment of interest on the Notes may be paid by mailing checks for such
interest payable to or upon the written order of (or, with respect to interest
to be paid in Additional Notes, such
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Additional Notes) the Holders of Notes entitled thereto, to such address and in
such name as they shall appear on the Note Register. Any installment of
principal and interest shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Company or a Subsidiary of the Company
or any Affiliate thereof) holds on that date money in immediately available
funds designated exclusively for and sufficient to pay the installment (or, with
respect to interest to be paid in Additional Notes, such Additional Notes)
and the Trustee and/or the Paying Agent has not received instructions from
the Company not to make such payment or is not prohibited from making such
payment to the Noteholders pursuant to the terms of this Indenture.
The Company shall pay interest (including post-petition interest in
any proceeding under any applicable bankruptcy law) to the extent legally
permitted on overdue principal at the rate set forth in the Notes; and it shall
pay interest (including post-petition interest in any proceeding under any
applicable bankruptcy law) on unpaid interest otherwise payable under the first
clause of this sentence at the same rate to the extent legally permitted.
Section 12.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain, in the Borough of Manhattan, the City of
New York, State of New York, an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company initially
appoints the Trustee as its agent for presentation or surrender of Notes for
payment or registration, transfer or exchange. The Trustee (or its corporate
parent) will maintain an office in the Borough of Manhattan, the City of New
York, State of New York, for such purposes.
The Company may from time to time designate one or more other offices
or agencies (in or outside the City of New York, State of New York) where the
Notes may be presented or surrendered for any or all such purposes, and may from
time to time rescind such designations; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York, State of New York, for such purposes as stated in this Section
12.02. The Company will give prompt written notice to the Trustee of any such
designation and any change in the location of any such office or agency.
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If at any time the Company shall fail to maintain such an office or
agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may
be made or served at the principal corporate trust office of the
Trustee, and the Company hereby appoints the Trustee its agent to
receive all such presentations, surrenders, notices and demands.
Section 12.03. MONEY FOR SECURITY
PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of, or interest on, any of the
Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum, sufficient to pay the principal or interest so becoming due until
such sums shall be paid or issued to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of such action or any
failure so to act.
The Company will, on or before each due date of the principal of or
interest on, any Notes, deposit with a Paying Agent a sum in same day funds (or,
with respect to interest to be paid in Additional Notes, such Additional Notes),
sufficient to pay the principal or interest so becoming due, such sum, as the
case may be, to be held in trust for the benefit of the Persons entitled to such
principal or interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums received by it as such agent for the payment of
the principal of or interest on Notes (whether such sums have been paid
to it by the Company or by any other obligor on the Notes) in trust
for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;
(b) promptly give the Trustee notice of any failure by the Company
(or any other obligor upon the Notes) to make any payment of the principal
of, or interest on, the Notes when the same shall be due and payable; and
(c) at any time during the continuance of any such failure, upon the
written request of the Trustee,
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forthwith pay to the Trustee all sums so held in trust by such Paying
Agent.
Any money (or, with respect to interest to be paid in Additional
Notes, such Additional Notes) deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, or
interest on, any Note and remaining unclaimed for two years after such principal
or interest has become due and payable shall be paid to the Company on its
request, or (if then held by the Company) shall be discharged from such trust,
unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property law, and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
regard to such money (or Additional Notes), and all liability of the Company as
trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each business day and of general
circulation in the City of New York, State of New York, or mailed to each such
Holder, or both, notice that such money (or Additional Notes) remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, as the case may be, any unclaimed
balance of such money then remaining will be paid to the Company.
Section 12.04. CORPORATE EXISTENCE.
Subject to Article Ten, each of the Company and RIH 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 existence of each of its Subsidiaries
in accordance with the respective organizational documents of the Company, RIH
and each such Subsidiary and the rights (charter and statutory), licenses,
permits, approvals and governmental franchises of it and each of its
Subsidiaries necessary to the conduct of its and their respective businesses,
including, without limitation, all licenses, permits, approvals and franchises
necessary to assure the continued operation of RIH's gaming operations at
the Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned
subsidiary of RIH may consolidate with, merge into or
transfer or distribute all or part of its properties and assets to RIH or the
Company or as otherwise provided in Section 10.01.
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Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE.
The Company and RIH will each keep proper books of record and account,
in which full and correct entries shall be made of all material dealings or
transactions of or in relation to the Notes and the properties, business and
affairs of the Company and RIH in accordance with GAAP. The Company and RIH
will at any and all times, upon the written request of the Trustee and at the
expense of RIH, permit the Trustee by its representatives to inspect the
Casino-Hotel and the books of account, records, reports and other papers of the
Company and RIH, and to make copies and extracts therefrom, and will afford and
procure a reasonable opportunity to make any such inspection (provided that the
Company and RIH shall have received reasonable advance notice of such inspection
and that any such inspection shall not unreasonably interfere with the business
operations of the Company and RIH). The Company and RIH will furnish to the
Trustee any and all information as the Trustee may reasonably request with
respect to the performance by the Company and RIH of their covenants in this
indenture.
Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES.
(a) RIH shall furnish or cause to be furnished to the Trustee, within
105 days after each fiscal year of RIH: (i) a copy of annual audited financial
statements of RIH prepared in conformity with GAAP, accompanied by a report of
Ernst & Young or of another firm of independent certified public accountants of
recognized national standing selected by RIH (the "National Accountants"),
together with a certificate from such National Accountants stating that their
audit examination has included a review of the terms of this Indenture and that
the National Accountants have not become aware of any Event of Default or that a
Default has occurred and is continuing, and if they have become aware of any
such Event of Default or Default, describing it; PROVIDED, HOWEVER, that the
National Accountants shall not be liable to any Person for any failure to
discover any Event of Default or Default in connection with such review; and
(ii) a copy of annual unaudited financial statements of RIH, including notes to
such financial statements and corresponding management's discussion and
analysis, in form and substance comparable to that which would be required to be
filed with the Commission in an Annual Report on Form 10-K under the
Exchange Act, prepared in the same manner as the audited financial
statements referred to in clause (i) of this Section 12.06(a), signed
by a proper accounting officer of RIH. RIH, contemporaneously with
the furnishing of such audited financial statements to the Trustee
under clause (i) of this Section 12.06(a), shall mail copies of such
audited financial statements to the Holders (which need not include the
certificate referred to in such clause (i)).
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(b) RIH shall furnish or cause to be furnished to the Trustee, within
60 days after each quarter of each fiscal year of RIH, except the final quarter
of such fiscal year, a copy of unaudited financial statements of RIH prepared on
a consistent basis with the audited financial statements referred to in clause
(i) of Section 12.06(a), signed by a proper accounting officer of RIH and
consisting of at least a balance sheet as at the close of such quarter and
statements of operations and cash flow for such quarter and for the period from
the beginning of such fiscal year to the close of such quarter, including notes
to such financial statements and corresponding management's discussion and
analysis, in form and substance comparable to that which would be required to be
filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange
Act. RIH, contemporaneously with the furnishing of such unaudited financial
statements to the Trustee under this Section 12.06(b), shall mail copies of such
unaudited financial statements to the Holders (which need not be signed by a
proper accounting officer of RIH).
(c) RIH shall furnish or cause to be furnished to the Trustee,
contemporaneously with the furnishing of a copy of the annual financial
statements and of the quarterly financial statements referred to in Section
12.06(a) and Section 12.06(b), an Officers' Certificate dated the date of such
annual financial statement or such quarterly financial statements to the effect
that no Default or Event of Default has occurred and is continuing, or, if there
is any such Default or Event of Default, describing it and the steps, if any,
being taken to cure it.
(d) RIH shall furnish or cause to be furnished to the Trustee,
copies of each filing and report made by RIH or the Company with the Commission
pursuant to the reporting and filing requirements of Section 13 or 15(d) of the
Exchange Act, within 15 days after RIH or the Company, as applicable, is
required to file the same.
(e) RIH agrees that, if RIH becomes exempt from the Commission
reporting and filing requirements of Section 13 or 15(d) of the Exchange Act,
RIH shall prepare such periodic reports as it would otherwise have been required
to file with the Commission and (i) at its own expense, cause all such periodic
reports to be filed with the Commission, the Trustee and any exchange
upon which the Notes then are listed, in each case on the date when such
periodic report would have been required to be filed with the Commission under
Section 13 or 15(d) of the Exchange Act, if either of such provisions were
applicable, and (ii) keep copies of such periodic reports available at its
office and promptly provide any Person who so requests with a copy of any such
periodic report, at the Company's expense.
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(f) Each of the Company and RIH shall comply with the provisions of
SECTION 314(a) of the Trust Indenture Act.
(g) The Company shall deliver to the Trustee, promptly upon becoming
aware of any Default or Event of Default (but in no event later than five
business days thereafter) in the performance of any covenant or agreement of the
Company contained in this Indenture or any of the Mortgage Documents, an
Officers' Certificate specifying with particularity such event.
Section 12.07. LIMITATION ON DIVIDENDS
AND RESTRICTED PAYMENTS.
(a) The Company hereby covenants that, on and after the date of this
Indenture, it will not, directly or indirectly, make, or permit any Subsidiary
of the Company to make, any Restricted Payment.
(b) RIH hereby covenants that, on or after the date of this Indenture,
it will not, directly or indirectly, make, or permit any Subsidiary of RIH to
make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's
Consolidated Interest Coverage Ratio, as certified to the Trustee by an
Officers' Certificate, calculated at the time of the declaration of the dividend
or distribution is equal to or exceeds two, then RIH may declare and pay cash
dividends or make cash distributions in respect of any class of capital stock of
RIH in an amount not to exceed in the aggregate with any other such cash
dividends or distributions declared or made from and after the date hereof, 50
percent of RIH's Consolidated Net Income from and after the date hereof; and
(ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the
Trustee by an Officer's Certificate, calculated at the time of the declaration
of the dividend or distribution is equal to or exceeds two; and (2) RIH has cash
in excess of the amount required to pay interest on the Notes and the Junior
Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may
declare and pay cash dividends or make cash distributions in respect of any
class of capital stock of RIH in an amount not to exceed such excess cash
amount.
(c) The Company and RIH will not, and will not permit any of their
respective Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction of any kind on the ability of
any Subsidiary of RIH or the Company: (i) to pay dividends or make any other
distribution on the capital stock of such Subsidiary that is owned by RIH, the
Company or a wholly owned Subsidiary of the Company or RIH, as applicable; (ii)
to pay any Indebtedness owed by such Subsidiary to RIH, the Company or any
wholly owned Subsidiary of the Company or RIH, as
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applicable; (iii) to make loans or advances to RIH, the Company or any wholly
owned Subsidiary of the Company or RIH, as applicable; or (iv) to transfer any
of its property or assets to the Company, RIH or any wholly owned Subsidiary of
the Company or RIH, as applicable, except (A) any restrictions existing on or
prior to the date hereof, or in connection with agreements in effect, or entered
into, on the date hereof, or any permitted amendments, renewals, refundings,
refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and
conditions of any such amendments, renewals, refundings, refinancings or
extensions are no more restrictive with respect to the matters set forth
in clauses (i) through (iv) of this Section 12.07(c) than the agreements
being amended, refunded, renewed, refinanced or extended; (B) any restrictions
or encumbrances existing or arising pursuant to the terms of Indebtedness
of a Person outstanding at the time such Person becomes a Subsidiary
of the Company or RIH and not incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary of the Company
or RIH or any permitted amendments, renewals, refinancings or extensions
thereof; PROVIDED, HOWEVER, that the terms and conditions of any such
amendments, renewals, refundings, refinancings or extensions are no more
restrictive with respect to the matters set forth in clauses (i) through (iv) of
this Section 12.07(c) than the agreements being amended, renewed, refunded,
refinanced or extended; (c) encumbrances or restrictions existing under or by
reason of applicable law or regulation (including, without limitation, the
Casino Control Act) or this Indenture; (d) customary provisions restricting
assignment of contracts or subletting or assignment of any lease governing a
leasehold interest of any Subsidiary of the Company or RIH; or (e) net worth
maintenance requirements imposed by any governmental authority.
Section 12.08. LIMITATION ON ADDITIONAL
INDEBTEDNESS AND ISSUANCE OF NOTES.
(a) The Company and RIH shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to,
including, without limitation, through any merger or consolidation to which
the Company, RIH or any of their respective Subsidiaries is a party
or through any other acquisition of any such Subsidiary
(collectively, "incur"), or have outstanding, any Indebtedness other than,
without duplication, the following:
(i) the Notes and the Senior Mortgage Notes;
(ii) Indebtedness represented by the Junior Mortgage Facility;
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(iii) Indebtedness represented by the Working Capital Facility;
(iv) Indebtedness represented by Capitalized Lease Obligations in an
amount not in excess of $5,000,000 in the aggregate at any time
outstanding;
(v) Indebtedness represented by F,F&E Financing Agreements in an
amount not in excess of $10,000,000 in the aggregate at any time
outstanding;
(vi) unsecured Indebtedness in an amount not in excess of $5,000,000
in the aggregate at any time outstanding that is subordinated and junior to
the Notes at least to the extent set forth in the Subordination Provisions
attached hereto as Exhibit C and which Indebtedness does not have any
requirements for amortization payments, mandatory redemption or sinking
fund payments prior to the stated maturity of the Notes and does not
provide for the payment of interest in cash at any time when the most
recent installment of interest on the Notes was not paid in cash;
(vii) Non-Recourse Indebtedness in an amount not in excess of
$25,000,000 in the aggregate at any time outstanding;
(viii) After-Acquired Fee Mortgage Debt in an amount not in
excess of $3,000,000 in the aggregate at any time outstanding; and
(ix) Intercompany advances between RIH, the Company or any of their
direct or indirect Subsidiaries on the one hand, and RII, on the other
hand, in an aggregate amount not to exceed $1,000,000.
(b) The Company and RIH shall not permit any of their respective
Subsidiaries to issue (other than to the Company, RIH or a direct or indirect
wholly owned Subsidiary of the Company or RIH) any capital stock which has
voting rights or has a preference as to any distribution over its common stock.
Section 12.09. LIMITATION ON REPAYMENT
OF SUBORDINATED INDEBTEDNESS.
Neither the Company nor RIH shall, and neither the Company nor RIH
shall permit any Subsidiary to, directly or indirectly, purchase, redeem,
defease (including, but not limited to, in-substance or legal defeasance) or
otherwise acquire or retire for value prior to the stated maturity of,
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or prior to any scheduled mandatory redemption or sinking fund payment with
respect to (collectively, to "repay" or a "repayment"), the principal of
any Indebtedness of the Company, RIH or any Subsidiary of the Company or
RIH which is subordinated (whether pursuant to its terms or by operation
of law) in right of payment to the Notes.
Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS.
Each of the Company and RIH covenants that it will not, and will not
permit any Subsidiary to, repurchase any Notes in the open market if an Event of
Default shall have occurred and shall be continuing hereunder, under the Senior
Mortgage Note Indenture or under the Senior Facility Note Indenture.
Section 12.11. RESTRICTION OF ACTIVITIES.
(a) RIH shall not, on or after the date of execution of this
Indenture, until the date that is 91 days after the payment in full by the
Company of the principal of (and interest, if any, on) all Outstanding Notes,
engage in any business or investment activities other than those necessary for,
incident to, connected with or arising out of acquiring, financing, owning and
operating the Casino-Hotel or additional hotels or casinos or related or
ancillary businesses.
(b) Neither the Company nor RIH shall make any loans to any
Affiliate or any other Person other than (i) Indebtedness of the type described
in clause (ix) of Section 12.08(a), and (ii) loans to RII from the proceeds of
the Indebtedness represented by the Working Capital Facility; PROVIDED,
HOWEVER, that RIH shall have the right to make loans to employees of RIH
actively involved in the operation of the Casino-Hotel or to engage in credit
transactions in the operation of the Casino-Hotel, if such loans or credit
transactions are in the ordinary course of business of operating a casino-hotel.
(c) The Company shall not engage in any business (and shall not have
any Subsidiaries) other than (i) to collect principal, interest (and any
interest on overdue principal and interest) and other amounts under any
intercompany notes or guaranties made to the order of or otherwise in favor of
the Company, (ii) to preserve its rights under this Indenture and the Mortgage
Documents and otherwise to comply with its obligations thereunder and under the
Notes, (iii) to do or cause to be done all things necessary or appropriate to
protect the Trust Estate, (iv) to preserve its rights under the Senior Mortgage
Indenture and the Senior Mortgage Documents and otherwise to comply with its
obligations thereunder and under the Senior Mortgage Notes,
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(v) to issue Indebtedness represented by the Working Capital
Facility, (vi) to preserve its rights under the Working Capital
Facility and otherwise comply with its obligations under the Working
Capital Facility, (vii) to incur any other Indebtedness permitted under
this Indenture, (viii) to do all such acts and deeds necessary in
connection with the Junior Mortgage Facility and the documents and
instruments relating thereto and the Working Capital Facility and
the documents and instruments relating thereto, (ix) to declare, issue and pay
dividends on, or make any redemptions or repurchases of, the Company's capital
stock as contemplated by its Certificate of Incorporation (to the extent
permitted hereby) and otherwise to comply with and perform the provisions of its
Certificate of Incorporation and By-laws, and (x) to do such further acts and
deeds to effectuate any of the matters listed in the foregoing clauses of this
Section 12.11(c).
Section 12.12. LIMITATION ON SUBSIDIARIES;
CONSOLIDATED GROUP.
The Company and RIH shall not have any Subsidiaries except the
Subsidiaries existing on the date of this Indenture and Subsidiaries acquired by
the Company or RIH in transactions not prohibited by the other provisions of
this Indenture which are and shall at all times be wholly owned (directly or
indirectly) by the Company or RIH.
Section 12.13. LIMITATIONS ON LIENS.
Neither the Company nor RIH will create, incur, suffer to exist or
permit to be created or incurred any mortgage, lien, charge or encumbrance on or
pledge of the Mortgage Documents or any of the Trust Estate, other than (a) the
lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the
Trust Estate in connection with Indebtedness permitted by clauses (i), (ii),
(iii), (iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on the
Trust Estate, and (d) a notice of intention or building contract filed by a
mechanic, materialman or laborer under the New Jersey lien law. Without
limiting the generality of the previous sentence, but notwithstanding the
provisions of such sentence, RIH shall not be deemed to have breached such
provisions by virtue of the existence of liens for Impositions (as defined in
the Mortgage) or mechanics' liens so long as RIH is in good faith
contesting the validity of such liens in accordance with
the provisions of Section 5.09 of the Mortgage.
Section 12.14. COMPLIANCE WITH LAWS.
Each of the Company and RIH shall comply, and shall cause
each of its Subsidiaries to comply, with the Casino Control Act and
all other applicable statutes (including,
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without limitation, ERISA), rules, regulations, orders and
restrictions of the United States of America, states and municipalities, and of
any governmental department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing in respect of the conduct of its
business and the ownership of its properties and assets, including, without
limitation, the Trust Estate, except such as are being contested in good faith
by appropriate proceedings in accordance with the Mortgage Documents (to the
extent applicable) and except for such non-compliances as will not in the
aggregate have a material adverse effect on the business, properties, operations
or financial condition of the Company, RIH or their respective Subsidiaries.
Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company or RIH shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes, assessments
and governmental charges levied or imposed upon the Company, RIH or any of their
respective Subsidiaries or upon the Trust Estate or any portion thereof or upon
the income, profits or property of the Company, RIH or any of their respective
Subsidiaries, and (b) all lawful claims for labor, materials and supplies which,
if unpaid, will by law become a Lien upon the Trust Estate or upon any other
property of the Company, RIH or any of their respective Subsidiaries; PROVIDED,
HOWEVER, that the Company and RIH shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessments, charge or claim the
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings in accordance with the Mortgage Documents (to the extent
applicable) if adequate reserves therefor have been established in accordance
with GAAP.
Section 12.16. MAINTENANCE OF PROPERTIES.
Each of the Company and RIH shall cause the Trust Estate and all other
properties (other than obsolete equipment) owned by or leased to it or any of
its Subsidiaries, and used or useful in the conduct of its business or the
business of the Company, RIH or such Subsidiary to be maintained and kept in
good condition, repair and working order, except for reasonable wear and use,
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as required by the Mortgage Documents
or, to the extent not governed by the Mortgage Documents, as in the reasonable
judgment of the Board of Directors of RII may be necessary so that
the business carried on in connection therewith may be properly
and advantageously conducted at all times.
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Section 12.17. INSURANCE.
Each of the Company and RIH shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable insurers,
appropriate insurance on each of their respective properties and businesses
against liabilities, casualties, risks and contingencies of the type and in
amounts required by the Mortgage Documents or, to the extent not governed by the
Mortgage Documents, as customarily maintained by corporations and other entities
engaged in the same or similar businesses and similarly situated; PROVIDED,
HOWEVER, that any such insurer shall be qualified to do business in the
jurisdiction where the insured property is located.
Section 12.18 WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each of the Company and RIH covenants (to the extent that it may
lawfully do so) that it will not, and will not cause or permit any of its
Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever
claim, and will resist any and all efforts to be compelled to take the benefit
or advantage of, any stay or extension law or any usury law or other law that
would prohibit or forgive the Company or RIH from paying all or any portion of
the principal of, or premium, if any, and interest on the Notes or the RIH
Junior Promissory Note or the Guaranty as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture or the RIH Junior Promissory Note or the Guaranty;
and (to the extent that it may lawfully do so) the Company and RIH hereby
expressly waive all benefit or advantage of any such law, and covenant that they
will not hinder, delay or impede the execution of any power granted to the
Trustee herein and in the Mortgage Documents, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 12.19. APPOINTMENT TO FILL A
VACANCY IN OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 8.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
Section 12.20 VALIDITY OF LIENS.
Each of the Company and RIH represents and warrants that it has, and
covenants that it shall continue to have, full corporate power and lawful
authority to grant, release, convey, assign, transfer, mortgage, pledge,
hypothecate and otherwise create the lien on the Trust Estate; and the Company
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and RIH shall warrant, preserve and defend the interest of the Trustee in and to
the Trust Estate against the claims of all Persons, except as otherwise
expressly permitted by the Mortgage Documents or this Indenture, and will take
all action necessary to maintain and preserve the lien on the Trust Estate
contemplated therein.
Section 12.21. TRANSACTIONS WITH
STOCKHOLDERS AND AFFILIATES.
Each of the Company and RIH covenants that it shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, enter into or permit
to exist any transaction (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company or RIH or with any Affiliate of any such holder, unless
(a) such transaction is upon fair and reasonable terms which are no less
favorable to the Company or such Subsidiary, as the case may be, than would be
available in an arm's-length transaction with an unrelated person and (b) if
over $250,000, such transaction is determined in the good faith judgment of a
majority of the members of the Board of Directors of either (i) RII, so long as
RII owns directly or indirectly a majority of the outstanding capital stock of
RIH, directly or indirectly, or (ii) RIH, to be in the best interests of the
Company, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this
provision shall not apply to (A) any agreements, documents, instruments or
transactions entered into in connection with the RIHF Senior Facility Notes, (B)
the Services Agreement, (C) the RII Management Contract, or (D) the RII Tax
Sharing Agreement.
Section 12.22. LIMITATION ON OPEN MARKET PURCHASES
The Company and RIH shall not, and shall not permit any of their
respective Subsidiaries to, purchase or otherwise acquire (other
than pursuant to Article Thirteen) any Notes unless all interest
accrued on the Notes and payable on the Interest Payment Date
immediately preceding the date of such repurchase was paid solely
in cash and not in Additional Notes.
ARTICLE THIRTEEN
REDEMPTION OF NOTES
Section 13.01. GENERAL APPLICABILITY OF ARTICLE.
Notes which are redeemable before their Stated Maturity shall be
redeemable in accordance with their terms and in accordance with this Article.
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Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes shall be evidenced by
a Company Order. Redemption of any Notes shall not take place earlier than 15
days after the corporate action taken to authorize the redemption. In case of
any redemption at the election of the Company of less than all the Outstanding
Notes, the Company shall, at least 60 days prior to the Redemption Date fixed by
the Company (unless a shorter notice shall be satisfactory to the Trustee),
notify the Trustee of such Redemption Date and of the principal amount of Notes
to be redeemed.
Section 13.03. SELECTION BY TRUSTEE
OF NOTES TO BE REDEEMED.
If less than all the Outstanding Notes are to be redeemed, the
particular Notes to be redeemed shall be selected by a random, automated
selection process or PRO RATA, as deemed appropriate by the Trustee, not more
than 60 days prior to the Redemption Date by the Trustee from the Outstanding
Notes which have not previously been called for redemption, and such selection
method may provide for the selection for redemption of portions (equal to the
greater of $1,000 and the smallest authorized denomination of the Notes of such
series, or a multiple thereof) of the principal of Notes of a denomination
larger than $1,000.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note which has been or is to be redeemed.
Section 13.04. NOTICE OF REDEMPTION.
Notice of redemption shall be given by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the Company
by first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Notes of such series to be
redeemed, at his address appearing in the Note Register.
Any notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives the notice. In any case, failure to duly give notice by mail,
or any defect in
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the notice to the Holder of any Notes designated for redemption in
whole or in part, shall not affect the validity of the proceedings for the
redemption of any other Notes.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the principal amount of Notes to be redeemed, and, if less than
all outstanding Notes are to be redeemed, the identification (and, in the
case of partial redemption, the respective principal amounts) of the Notes
to be redeemed;
(d) that on the Redemption Date, the Redemption Price of each of the
Notes to be redeemed will become due and payable and that the interest
thereon shall cease to accrue from and after such date; and
(e) the place or places where the Notes to be redeemed are to be
surrendered for payment of the Redemption Price.
Section 13.05. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 12.03) an amount of
money sufficient to pay the Redemption Price of all the Notes which are to be
redeemed on that date. Such money shall be held in trust for the benefit of the
Persons entitled to such Redemption Price and shall not be deemed to be part of
the Trust Estate.
Section 13.06. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price. Installments of interest due on or prior to the Redemption
Date shall be payable to the Holders of the Notes registered as such on the
relevant Record Dates according to the terms of such Notes and the provisions of
Section 3.07.
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If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate prescribed therefor in the Note.
Section 13.07. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by the Holder thereof or his attorney
duly authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note, without service charge, a
new Note or Notes of any authorized denomination or denominations as requested
by such Holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT.
Notwithstanding the provisions of this Article Thirteen, if the Casino
Control Commission does not waive the qualification requirements as to any
Noteholder (whether the record owner or beneficial owner) and requires that such
Noteholder be qualified under the Casino Control Act, then, in such event, such
Noteholder must qualify under such Act. If a Noteholder does not so qualify,
the Noteholder must dispose of its interest in the Notes, within 30 days after
the Company's receipt of notice of such finding, or the Company may repurchase
such Notes at the lower of the Outstanding Amount and the Fair Market Value of
such Notes, plus accrued interest to the date of such repurchase. Commencing
on the date the Casino Control Commission serves notice upon either RIH or the
Company that any Holder is disqualified, it shall be unlawful for any such
disqualified Holder: (i) to receive any dividends or interest upon this Note;
(ii) to exercise, directly or through any trustee or nominee, any right
conferred by this Note; or (iii) to receive any remuneration in any form from
either the Company or RIH for services rendered or otherwise.
------------------------------
This instrument may be executed in any number of counterparts or with
counterpart signatures, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and attested, all as of the day and year first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest: By:
------------------- ------------------------------
Name:
Title:
RESORTS INTERNATIONAL HOTEL, INC.
Attest: By:
------------------- ------------------------------
Name:
Title:
U.S. TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
Attest: By:
------------------- ------------------------------
Name:
Title:
95
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on __________, 1993, _______________ personally came before
me, and he acknowledged under oath, to my satisfaction, that: (a) he is the
______________ of Resorts International Hotel Financing, Inc., the corporation
named in this document; (b) he is the attesting witness to the signing of this
document by the proper corporate officer who is _______________ of Resorts
International Hotel Financing Inc.; (c) this document was signed and delivered
by the corporation as its voluntary act duly authorized by a proper resolution
of its Board of Directors; (d) he knows the proper seal of the corporation which
was affixed to this document; and (e) he signed this proof to attest to the
truth of these facts.
-------------------------
Signed and sworn to
before me on _________, 1993.
- ----------------------
Notary Public of the
State of New York
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ________, 1993, ________________ personally came before
me, and this person acknowledged under oath, to my satisfaction, that: (a) this
person is the __________________________ of Resorts International Hotel, Inc.,
the corporation named in this document; (b) this person is the attesting witness
to the signing of this document by the proper corporate officer who is
______________________, the __________________________ of Resorts International
Hotel, Inc.; (c) this document was signed and delivered by the corporation by
its voluntary act duly authorized by a proper resolution of its Board of
Directors; (d) this person knows the proper seal of the corporation which was
affixed to this document; and (e) this person signed this proof to attest to the
truth of these facts.
--------------------
Signed and sworn to
before me on _________, 1993.
- -------------------------
Notary Public
[seal]
<PAGE>
STATE OF NEW YORK :
: ss
COUNTY OF NEW YORK :
I certify that on ________, 1993, ________________ personally came before
me, and this person acknowledged under oath, to my satisfaction, that: (a) this
person is the __________________________ of U.S. Trust Company of California,
N.A., a national banking association named in this document; (b) this
person is the attesting witness to the signing of this document by the proper
corporate officer who is ______________________, the __________________________
of U.S. Trust Company of California, N.A., a national banking association; (c)
this document was signed and delivered by the corporation by its voluntary act
duly authorized by a proper resolution of its Board of Directors; (d)
this person knows the proper seal of the corporation which was affixed to this
document; and (e) this person signed this proof to attest to the truth of these
facts.
-------------------------
Signed and sworn to
before me on _________, 1993.
- -------------------------
Notary Public
[seal]
<PAGE>
Exhibit A
RIH Senior Promissory Note
<PAGE>
EXHIBIT A
AMENDED AND RESTATED SECURED PROMISSORY NOTE
$35,000,000 [ ], 1994
WHEREAS, in partial repayment of certain inter-company debt owed by
Resorts International Hotel, Inc., a New Jersey corporation
("RIH"), to Resorts International, Inc., a Delaware corporation ("RII"), RIH has
issued to RII a promissory note on the date hereof in the principal
amount of $35,000,000 (as the same may be amended or restated from
time to time, the "Note"), which Note is secured by a Mortgage
Securing RIH Junior Promissory Note dated as of the date hereof (the
"Mortgage"), by RIH, as Mortgagor, which Mortgage encumbers certain real
property owned or leased by
RIH together with all buildings and improvements erected thereon
(collectively, the "Property"); and
WHEREAS, RII has transferred the Note and the Mortgage to RIHF in
exchange for 11.375% Junior Mortgage Notes due 2004 (the "Junior
Notes") in an aggregate principal amount of $35,000,000, which
Junior Notes were issued pursuant to that certain Indenture dated
as of even date herewith (the "Indenture") among RIHF, as issuer,
RIH, as guarantor, and U.S. Trust Company of California, N. A., as trustee
(the "Trustee"); and
WHEREAS, RIHF has requested RIH to amend and restate the Note;
NOW, THEREFORE, RIH agrees to amend and restate the Note as
follows:
RIH, for value received hereby promises to pay to the order of RIHF
(RIHF and any subsequent holder of this Note being herein referred
to as the "Payee"), the principal sum of Thirty-Five Million
Dollars ($35,000,000), or such other principal sum as shall be
outstanding hereunder, on December 15, 2004 (the "Maturity Date") in
accordance with the provisions hereof, with interest on such
principal sum from time to time outstanding, computed from
[ ], 1994 [the Effective Date], in semi-annual installments of
interest on June 15 and December 15 of each year, commencing
initially on December 15, 1994, at a rate of 11.375% per annum on
the
<PAGE>
unpaid balance hereof, until the principal hereof is paid in
full. Payments of principal and interest on this Note shall be
made at [address of the Payee], or at such other
address as the Payee may designate in writing. Interest will be
computed on the basis of a 360-day year of twelve 30-day months based
on the actual number of days elapsed. Principal and interest shall
be paid in money of the United States that at the time of payment
is legal tender for public and private debts. The principal sum of
this Note shall be increased from time to time if any Additional
Notes (as defined in the Indenture) are issued under the Indenture
as of the date of their original issuance by the principal amount
of such Additional Notes.
l.(a) This Note shall be prepaid (i) in connection with, but only
to the extent of, any redemption of the Junior Notes of RIHF issued
pursuant to the Indenture (all prepayments of this Note are
hereinafter referred to as "Prepayments"), and/or (ii) by the
surrender to the Trustee of the principal amount of any Junior
Notes purchased or otherwise acquired by RIH or the Company (as
defined in the Indenture) other than pursuant to the redemption
provisions of the Junior Notes for cancellation in accordance with
the provisions of the Junior Notes or the Indenture (it being
expressly understood that the same Junior Notes shall reduce the
principal amount of this Note only once). Each Prepayment under
clause (i) above shall be made at the time that payment is required
or permitted to be made by the Company to the Trustee under the
Indenture in respect of any redemption of Junior Notes. Each
Prepayment under clause (ii) above shall be deemed to be made at
the time of surrender of such Junior Notes for cancellation. Each
Prepayment of this Note pursuant to clause (i) above shall be in an
amount equal to the aggregate amount paid to holders of Junior
Notes on account of the redemption thereof (other than interest),
together with accrued and unpaid interest on the amount of the
reduction in the principal amount of this Note as a result of such
Prepayment. The principal amount of this Note shall be reduced as
a result of such prepayment in an amount equal to the aggregate
principal amount of the Junior Notes so redeemed or surrendered.
(b)Except as set forth in Section 1(a), this Note may not be prepaid
in whole or in part.
2.RIH shall pay interest on overdue principal and prepayment
premium at the rate of 14.375% per annum.
3.This Note is secured by the Mortgage on the Property.
2
<PAGE>
4.If (i) RIH defaults in the payment of interest when
the same becomes due and payable and the default continues for a
period of ten days following receipt of a notice from the Payee or
the Trustee specifying such default and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder;
(ii) RIH defaults in the payment of the principal or any part
thereof when the same becomes due and payable at Maturity (as
defined in the Mortgage); (iii) there shall occur any other Event
of Default under the Mortgage or any other Note (as defined in the
Mortgage); or (iv) there shall occur any other Event of Default
under the Indenture, then on the happening of any such event, the
Payee may declare the entire Outstanding Amount (as defined in the
Indenture) of this Note and all accrued and unpaid interest thereon
and all sums due under Section 5 of this Note and the Mortgage
(collectively, the "Debt") to become immediately due and payable.
5. RIH hereby waives presentment and demand for payment, notice of
dishonor, protest and notice of protest of this Note and agrees to
pay all costs of collection when incurred, including reasonable
attorneys' fees, which costs may be added to the amount due under
this Note and be receivable therewith, and to perform and comply
with each of the terms, covenants and provisions contained in this
Note and the Mortgage on the part of RIH to be observed or
performed. Except as expressly provided herein, no release of
any security for the principal sum due under this Note or extension
of time for payment of this Note, or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note or
the Mortgage shall release, discharge, modify, change or affect the
liability of RIH under this Note or the Mortgage.
6. RIH covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury,
stay or extension law or any other law which would prohibit or
forgive RIH from paying all or any portion of the interest on this
Note, wherever enacted, now or at any time hereafter in force, or
which may otherwise affect the covenants or the performance of this
Note or the Mortgage; and RIH (to the extent that it may lawfully
do so) 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 Payee, but will
suffer and permit the execution of every such power as though no
such law had been enacted.
7. This Note shall be deemed to be a contract under the laws of the
State of New York and shall be construed
3
<PAGE>
in accordance with and
governed by the internal laws of the State of New York.
8. This Note may not be changed or terminated orally, but only by an
agreement in writing signed by the party against whom enforcement
of such change or termination is sought.
9. RIH shall not claim any credit or deduction from the interest or
principal due hereunder by reason of payment of any tax assessed
upon the Property.
10. Whenever the provisions of this Note and the provisions of the
Indenture shall be inconsistent, the provisions of the Indenture
shall govern.
11. This Note is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act. This note shall not be
transferred, assigned or amended without prior approval of the New Jersey Casino
Control Commission.
12. Whenever used herein, the singular number shall include the
plural, the plural the singular, and the words "Payee" and "RIH"
shall include their respective successors and assigns.
IN WITNESS WHEREOF, RIH has duly executed this Note as of the day
and year first above written.
RESORTS INTERNATIONAL HOTEL, INC.
By: ________________________
Name:
Title:
4
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this [ ] day of [ ], 1994, before
me, the subscriber, a Notary public of the State of New York,
personally appeared [ ], [ ] of RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation, and he
acknowledged that he signed, sealed and delivered the same as his
voluntary act and deed and the act and deed of said RESORTS
INTERNATIONAL HOTEL, INC., and that he received a true copy of
the within instrument on behalf of said corporation.
_____________________________________
Notary Public of the State of New York
[Seal]
5
<PAGE>
Exhibit B
Assignment Agreement from Resorts
International Hotel Financing, Inc.
<PAGE>
NA932810098 - JUNIOR MORTGAGE ASSIGNMENT
GD&C DRAFT DATED 12/17/93
==============================================================================
ASSIGNMENT OF AGREEMENTS
________________
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignor,
TO
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
a national banking association,
as Assignee
Dated as of _________________, 1994
===============================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware
corporation ("ASSIGNOR"), having an address at c/o Resorts
International, Inc., 1133 Boardwalk, Atlantic City, New Jersey
08401, to U. S. TRUST COMPANY OF CALIFORNIA, N.A.
a national banking association, having an address at
555 South Flower Street, Suite 2780 Los Angeles, California 90071,
in its capacity as Trustee ("ASSIGNEE"), under that certain Indenture
dated as of
even date herewith (the "INDENTURE") among Assignor, Assignee and
Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR").
WITNESSETH:
WHEREAS, in partial repayment of certain inter-company debt owed by
Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"),
Mortgagor has issued to RII a promissory note on the date hereof in the
principal amount of $35,000,000 (as the same may be amended or
restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof (the "MORTGAGE"), which Mortgage encumbers
certain real property owned or leased by Mortgagor as more
specifically described on SCHEDULE 1 hereto together with all
buildings and improvements erected thereon (collectively, the
"PROPERTY"); and
WHEREAS, RII has transferred the RIH Junior Promissory Note and the
Mortgage to Assignor in exchange for 11.375% Junior Mortgage Notes
due 2004 (the "NOTES") in an aggregate principal amount of
$35,000,000, which Notes were issued pursuant to the Indenture;
and
WHEREAS, as further security for the obligations of Mortgagor under
the RIH Junior Promissory Note, Mortgagor has executed and
delivered (i) an Assignment of Operating Assets and (ii) an
Assignment of Leases and Rents, each in favor of Assignor (as
assignee of RII) and each dated as of the
date hereof (said Assignments and the Mortgage collectively
referred to herein as the "RIH JUNIOR PROMISSORY NOTE MORTGAGE
DOCUMENTS"), pursuant to which Mortgagor granted
<PAGE>
a security interest in specified personal property, assigned certain other
rights and assigned all right, title and interest of Mortgagor in
leases and rents to Assignor, all as security for the performance
and observance of obligations of Mortgagor under the RIH Junior
Promissory Note; and
WHEREAS, the rights and obligations of the Assignee hereunder are
subject to the terms set forth in that certain Intercreditor
Agreement dated as of the date hereof among Assignor, Assignee,
Mortgagor, Fidelity Management and Trust Company, as trustee, and
State Street Bank and Trust Company of Connecticut, National
Association, as trustee (and such other parties that may from
time to time become a party thereto); and
WHEREAS, in order to secure payment of the Notes and all other
payments due to the holder(s) from time to time of the Notes
(collectively, the "HOLDERS") or the Trustee under the Indenture,
Assignor has agreed to execute this Assignment and to be bound by
its terms;
NOW, THEREFORE, THIS ASSIGNMENT
FURTHER WITNESSETH:
That Assignor in consideration of the purchase of the Notes by the
Holders, Ten Dollars ($10.00) lawful money of the United States of
America duly paid to Assignor by Assignee at or before the
execution and delivery of these presents and for other good and
valuable consideration, the receipt of which are hereby
acknowledged, does hereby sell, assign and transfer unto
Assignee and unto its successors and to its assigns forever, for
its benefit and for the benefit of the Holders, and does hereby
grant to Assignee a security interest in and to all of Assignor's
estate, right, title and interest in, to and under any and all of
the following described property, rights and interests
(collectively, the "ASSIGNED PROPERTIES"):
GRANTING CLAUSE FIRST
All right, title and interest of Assignor in and to the RIH Junior
Promissory Note, including all renewals, extensions, modifications
and replacements of the same, and without limiting the generality
of the foregoing, the present, continuing and future right to make
claim for, collect or cause to be collected, receive or cause to be
received directly from Mortgagor thereunder, all payments of
principal, interest and other sums of money payable thereunder.
GRANTING CLAUSE SECOND
All right, title and interest of Assignor in and to
the RIH Junior Promissory Note Mortgage Documents, including
2
<PAGE>
all extensions, renewals, modifications, supplements and replacements
of the same.
TO HAVE AND TO HOLD all said properties, rights and
interests unto Assignee and its successors and assigns forever.
THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and
covenants with Assignee as follows:
ARTICLE ONE
PARTICULAR COVENANTS OF ASSIGNOR
Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents,
warrants and covenants that it is duly authorized to enter into
this Assignment, and to grant and convey a lien on and security
interest in the Assigned Properties to Assignee in the manner and
to the extent herein set forth and that all action on its part
required for the execution and delivery of this Assignment has
been duly and effectively taken.
Section 1.02. FURTHER ACTION REQUIRED.
(a) Assignor covenants that it will, from time to time, execute and
deliver such further instruments and take such further actions as
may be required to carry out the purposes of this Assignment.
(b) Assignor hereby appoints Assignee as its lawful attorney-in-fact
(such power being coupled with an interest) in the name of Assignor
or Assignee or both to execute any instruments or to take any
actions to enforce all rights, powers and remedies of Assignor
under or pursuant to the Assigned Properties.
(c) Nothing contained herein shall limit the rights of Assignee
contained in the Mortgage or the Indenture.
(d) Until this Assignment is discharged in accordance with Section 5.01
hereof, no amendment, waiver, modification, discharge, release,
enforcement or satisfaction by Assignor of any of the rights or
remedies under the Assigned Properties shall be effective without
the prior consent and approval of Assignee, and Assignor shall have
no power or authority to take any such action without such consent
and approval.
ARTICLE TWO
OBLIGATIONS TO ASSIGNEE
Section 2.01. CONTINUING OBLIGATIONS.
3
<PAGE>
(a) Assignee shall have no obligation, duty or liability with
respect to the Assigned Properties or any of them (other than
those specifically assumed in its capacity as Trustee pursuant to
the Indenture).
(b) Assignor shall at all times remain liable to observe and perform
all of its covenants and obligations, if any, under the Assigned
Properties, and does hereby agree to indemnify and hold harmless
Assignee, its successors and assigns, from any liability, loss,
damage or expense it or they may incur under the Assigned
Properties or by reason of this Assignment.
ARTICLE THREE
PAYMENTS
Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due
and to become due under or pursuant to the Assigned Properties
shall be paid by Mortgagor directly to Assignee at the address set
forth in Section 6.02 hereof. Neither Assignor nor Assignee shall
have the right, without Mortgagor's prior written consent, to
instruct Mortgagor to pay Revenues to Assignor or in any manner or
to any party other than directly to Assignee.
Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins
in the execution of this Assignment to acknowledge (a) the
assignment by Assignor to Assignee of Assignor's right, title and
interest in, to and under the Assigned Properties, (b) Mortgagor's
agreement to make payment of all Revenues under the Assigned
Properties directly to Assignee at the address set forth in this
Assignment, and (c) the right of Assignee to exercise or enforce in
its own name, in the name of Assignor, or both, all of the rights,
powers and remedies of Assignor in, to and under the Assigned
Properties.
Section 3.03. REVENUES. As used herein, the term "REVENUES" shall
mean (a) all amounts paid or payable by Mortgagor under the RIH
Junior Promissory Note or the RIH Junior Promissory Note Mortgage
Documents, and (b) the net proceeds realized upon or as a result of
the enforcement of any mortgage lien or security interest granted
under the Assigned Properties or this Assignment or upon or as a
result of the exercise of any right or remedy under the Assigned
Properties or this Assignment.
Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor
hereby acknowledges, that Mortgagor may rely exclusively on
Assignee's directive that Assignee is entitled to take action
under this Assignment.
4
<PAGE>
ARTICLE FOUR
DEFAULT PROVISIONS AND REMEDIES
Section 4.01. ENFORCEMENT OF REMEDIES.
(a) Upon the occurrence of any default under the
Indenture or the Assigned Properties, or any of them (each, a
"DEFAULT"), not cured within the applicable grace period after the
applicable notice provision, if any, has been satisfied (each
called an "EVENT OF DEFAULT"), Assignee may, at its option, (i)
proceed directly to protect and enforce its rights and the rights
of any Holders under this Assignment or pursuant to the Assigned
Properties, or any one of them, by such suits, actions or special
proceedings in equity or at law, or by proceedings in the office of
any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein, or in
the Assigned Properties, or any of them, or in aid of execution of
any power granted herein or pursuant to the Assigned Properties, or
any one of them, or for the enforcement of any proper legal or
equitable remedy, including, without limitation, foreclosure of
the Mortgage and/or the sale of the collateral or part thereof
secured thereby at such foreclosure sale, subject to statutory and
other legal requirements, as Assignee shall deem most effective to
protect and enforce such rights, and Assignor hereby appoints
Assignee as its lawful attorney-in-fact (such power being coupled
with an interest) in the name of Assignor or Assignee or both to
effectuate such foreclosure and/or sale of such collateral or part
thereof; or (ii) instruct, direct and cause Assignor to effectuate
the foregoing on behalf of and for the benefit of Assignee and the
Holders, it being further understood that Mortgagor joins in the
execution of this Assignment in order to acknowledge its agreement
to promptly and duly execute and deliver any and all documents and
take any and all actions required by Assignee in order to permit
Assignee to foreclose and/or sell such collateral or part thereof,
and obtain the benefits of this Assignment, as aforesaid.
(b) Upon the occurrence of any Event of Default, Assignee shall be
entitled to sue for, enforce payment of and receive any and all
amounts then and at any time remaining due from Assignor or
Mortgagor for principal and interest on the RIH Junior Promissory
Note, or other sums due under the RIH Junior Promissory Note
Mortgage Documents, as the case may be, or otherwise under any of
the provisions of the Assigned Properties, or any of them, with
interest on overdue payments of such principal, at the rate set
forth in the RIH Junior Promissory Note, from the date of Default
to the date of such payment, together with any and all fees, costs
and expenses of collection (including reasonable attorneys' fees
and court costs), subject to statutory and other legal
requirements.
5
<PAGE>
(c) Regardless of the occurrence of an Event of Default, upon five
days' written notice to Mortgagor (or such shorter period or
without notice if deemed necessary and appropriate by Assignee),
Assignee may institute and maintain or cause in the name of
Assignor or Assignee or both to be instituted and maintained such
suits and proceedings as it may be advised by its counsel shall be
necessary and appropriate to prevent any impairment of the Assigned
Properties, or any of them, and to protect its interests in the
Assigned Properties, and in the rents, issues, rights, revenues
and other income arising therefrom, including power to institute
and maintain proceedings to restrain the enforcement or compliance
with any 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 the
security hereunder or would be materially prejudicial to the
interests of Assignee.
(d) Nothing contained in this Article Four is intended to grant
Assignee any greater remedies and rights than those allowed to
Assignor in the respective Assigned Properties. In the event of
any conflict between the remedies and rights contained in any of
the Assigned Properties and the remedies and rights contained in
this Article Four, then the remedies and rights set forth in the
applicable Assigned Property shall govern.
ARTICLE FIVE
DISCHARGE OF ASSIGNMENT
Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or
cause to be paid, or there shall otherwise be paid, to Assignee
and/or the Holders' all amounts required to be paid by Assignor
pursuant to the Indenture and the Notes, and the conditions
precedent for the Indenture shall cease, determine and become
null and void in accordance with Section 5.01 of the Indenture,
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statements filed in connection
herewith and execute and deliver to Assignor and to Mortgagor all
such instruments as may be appropriate to evidence such discharge
and satisfaction of said lien or liens, and Assignee shall pay over
or deliver to Assignor all other moneys and securities held by it
pursuant to this Assignment, which are not required for the payment
of (a) principal and redemption price, if applicable, of and
interest on, the Notes, and (b) all other amounts required to be
paid by Assignor pursuant to the Indenture and the Notes.
6
<PAGE>
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the
covenants, stipulations, obligations and agreements contained in
this Assignment shall be binding upon and inure to the benefit of
Assignor, Assignee and Mortgagor (to the extent applicable to
Mortgagor) and their respective successors and assigns.
Section 6.02. NOTICES.
(a) Any request, notice, demand, authorization, direction, request or
other instrument authorized or required by this Assignment to be
given to or filed with Assignor, Assignee or Mortgagor
(collectively, "NOTICES") shall be deemed given when either (i)
delivered by hand or (ii) five days after sending by registered or
certified mail, postage prepaid, in either case addressed as follows:
If to Assignor, at:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Assignee, at:
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
555 South Flower Street
Suite 2780
Los Angeles, California 90071
Attention: Corporate Trust Department
If to Mortgagor, at:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to Mortgagor, Assignor and/or Assignee, given as
provided above, any party may designate additional or substitute
addresses for Notices, which shall, notwithstanding Section
6.02(a), be deemed given with received.
Section 6.03. PARTIAL INVALIDITY. In case any one
or more of the provisions of this Assignment shall for any
7
<PAGE>
reason be held to be illegal or invalid, such illegality or
invalidity shall not affect any other provision of this
Assignment, but this Assignment shall be construed and
enforced at the time as if such illegal or invalid
provisions had not been contained herein or therein, nor shall such
illegality or invalidity or any application thereof affect any
legal and valid application herein or thereof from time to time.
Section 6.04. APPLICABLE LAW. This Assignment shall be governed
by and construed under the internal laws of the State of New
Jersey, without giving effect to the principles of conflicts of
law.
Section 6.05. NO AMENDMENT. For so long as the Notes shall remain
outstanding, the Assigned Properties may not be modified, amended
or terminated except in accordance with the provisions of the
Indenture or the Assigned Properties.
Section 6.07. CASINO CONTROL ACT. Each of the provisions of this
Assignment is subject to and shall be enforced in compliance with
the provisions of the New Jersey Casino Control Act. This Agreement
shall not be transferred, assigned or amended without prior approval
of the New Jersey Casino Control Commission.
IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed
this Assignment Agreement as of the date first above written.
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
Attest:
_________________________________ By:_______________________________
President
RESORTS INTERNATIONAL HOTEL, INC.
Attest:
_________________________________ By:_______________________________
President
8
<PAGE>
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Attest:
___________________________________ By:_________________________________
Title
9
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared
_______________, who, being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of U.S. TRUST COMPANY OF CALIFORNIA, N.A., the
corporation named in the within instrument; that
__________________ is the Vice President of said Corporation;
that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of
directors of the said corporation; that deponent well knows the
corporate seal of said corporation; and that the seal affixed to
said instrument is the proper corporate seal and was thereto
affixed and said instrument signed and delivered by said Vice
President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
10
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation named
in the within instrument; that ____________ is the Vice President of said
Corporation; that the execution, as well as the making of this instrument, has
been duly authorized by a proper resolution of the board of directors of
the said corporation; that deponent well knows the corporate seal
of said corporation; and that the seal affixed to said instrument
is the proper corporate seal and was thereto affixed and said
instrument signed and delivered by said Vice President as and for
the voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
11
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of Resorts International Hotel, Inc., the corporation
named in the within instrument; that ______________ is the Vice
President of said corporation; that the execution, as well as the
making of this instrument, has been duly authorized by a proper
resolution of the board of directors of the said corporation; that
deponent well knows the corporate seal of said corporation; and
that the seal affixed to said instrument is the proper corporate
seal and was thereto affixed and said instrument signed and
delivered by said Vice President as and for the voluntary act and
deed of said corporation. In presence of deponent who thereupon
subscribed his name thereto as attesting witness; and deponent
signed this proof to attest to the truth of these facts.
____________________________
[Name]
[Assistant] Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires: ____________________________
12
<PAGE>
EXHIBIT C
SUBORDINATION PROVISIONS
<PAGE>
EXHIBIT C
SUBORDINATION PROVISIONS
A. SUBORDINATION. Anything herein to the contrary notwithstanding,
Subordinated Debt, including principal, premium, if any, and interest, shall be
subordinate and junior to the extent set forth in subparagraphs (i) to (v),
inclusive, below, to all Senior Indebtedness.
(i) If the Company (as defined in this Exhibit C) shall default in
the payment of any principal of or interest on any Senior Indebtedness when
the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration of acceleration or otherwise, then, unless
and until such default shall have been remedied by payment in full in cash
or waived or shall have ceased to exist or all amounts then due and payable
in respect of Senior Indebtedness shall have been paid in full or provision
shall have been made for such payment in cash, no holder of the
Subordinated Debt shall accept or receive any direct or indirect payment
(in cash, property, by set-off or otherwise) of or on account of any
Subordinated Debt.
(ii) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Company, and in the
event of any proceedings for voluntary liquidation, dissolution or other
winding up of the Company, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Indebtedness shall first be paid in
full in cash, or such payment shall have been provided for in cash, before
any payment of or on account of principal or interest is made by the
Company upon the Subordinated Debt.
(iii) In any of the proceedings referred to in subparagraph (ii)
above, any payment or distribution of any kind or character, whether in
cash, property, stock or obligations, which may be payable or deliverable
by the Company in respect of the Subordinated Debt shall be paid or
delivered directly to the holders of Senior Indebtedness (or to a banking
institution selected by the court or Person making the payment or delivery
or designated by any holder of Senior Indebtedness) for application in
payment thereof in accordance with the priorities then existing among such
holders, unless and
<PAGE>
until all principal of and interest on all Senior Indebtedness shall have
been paid in full in cash or such payment shall have been provided for;
PROVIDED, HOWEVER, that no such delivery shall be made to holders of Senior
Indebtedness of stock or obligations which are issued pursuant to
reorganization proceedings or dissolution or liquidation proceedings, or
upon any merger, consolidation, sale, lease, transfer or other disposal not
prohibited by the provisions of the Subordinated Debt, by the Company, as
reorganized, or by the corporation succeeding to the Company or acquiring
its property and assets, if such stock or obligations are subordinate and
junior (whether by law or agreement) at least to the extent provided in
this Section ___ to the payment of all Senior Indebtedness then outstanding
and to the payment of any stock or obligations which are issued in exchange
or substitution for any Senior Indebtedness then outstanding.
(iv) Upon the occurrence and continuance of any Default Subordination
Event (other than under circumstances when the terms of subparagraph (ii)
above are applicable), no holder of the Subordinated Debt shall accept or
receive any direct or indirect payment (in cash, property, by set-off or
otherwise) of or on account of any indebtedness in respect of the
Subordinated Debt during the Applicable Stand-Still Period; PROVIDED,
HOWEVER, that in the case of any payment on or in respect of any
Subordinated Debt which would (in the absence of any such Default
Subordination Event) have been due and payable on any date (a "Scheduled
Payment Date") during such Applicable Stand-Still Period, the provisions of
this subparagraph (iv) shall not prevent such payment (a "Scheduled
Payment") on or after the date (the "Deferred Maturity Date") immediately
following the termination of such Applicable Stand-Still Period.
Notwithstanding the foregoing provisions of this subparagraph (iv), the
failure by the Company to make a Scheduled Payment on a Scheduled Payment
Date during an Applicable Stand-Still Period shall nevertheless constitute
an Event of Default.
(v) If any payment or distribution of any character, whether in cash,
securities or other property, shall be received by any holder of
Subordinated Debt in contravention of any of the terms of this Section ___
and before all the Senior Indebtedness shall have been paid in full, such
payment or distribution shall be received in trust for the benefit of the
holders of the Senior Indebtedness at the time outstanding in accordance
with the priorities then existing among such holders, and shall forthwith
be paid over or delivered and transferred to the holders of Senior
Indebtedness.
<PAGE>
B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions of this
Section ___ are for the purpose of defining the relative rights of the holders
of Senior Indebtedness on the one hand, and the holders of the Subordinated Debt
on the other hand, against the Company and its property; and nothing herein
shall impair, as between the Company and the holders of the Subordinated Debt,
the obligation of the Company, which is unconditional and absolute, to pay to
the holders thereof the principal thereof and premium, if any, and interest
thereon in accordance with their terms and the provisions hereof, nor shall
anything herein prevent the holders of the Subordinated Debt from exercising all
remedies otherwise permitted by applicable law or hereunder upon default
hereunder or under the Subordinated Debt (including, without limitation, the
right to demand payment and sue for performance hereof and of the Subordinated
Debt and to accelerate the maturity thereof as provided in Section ___), subject
to the rights, if any, under this Section ___ of holders of Senior Indebtedness
to receive cash, property, stock or obligations otherwise payable or deliverable
by the Company to the holders of the Subordinated Debt; PROVIDED, HOWEVER, that
upon the commencement and during the continuance of an Applicable Stand-Still
Period the holders of the Subordinated Debt, to the extent they are otherwise
entitled to do so, will not accelerate the maturity of the Subordinated Debt or
pursue any other remedy to enforce payment thereof or initiate any bankruptcy or
insolvency proceeding relative to the Company unless and until the earlier of
(i) the end of such Applicable Stand-Still Period and (ii) the acceleration of
the Senior Indebtedness related to such Applicable Stand-Still Period.
C. Subrogation. Upon payment in full of Senior Indebtedness, the
holders of the Subordinated Debt shall be subrogated to the rights of the
holders of the Senior Indebtedness to receive payments or distributions of
assets of the Company made on Senior Indebtedness until the principal of and
premium, if any, and interest on the Subordinated Debt shall be paid in full,
and, for the purposes of such subrogation, no payments to the holders of Senior
Indebtedness of any cash, property, stock or obligations to which the holders of
the Subordinated Debt would be entitled except for the provisions of
subparagraph (iii) of Section A above shall, as between the Company, its
creditors (other than the holders of the Senior Indebtedness) and the holders of
the Subordinated Debt, be deemed to be a payment by the Company to or on account
of the Senior Indebtedness.
D. DEFINITIONS.
"DEFAULT SUBORDINATION EVENT" means the existence of all of the
following: (i) an event of default shall have occurred and be continuing in
respect of the Senior
<PAGE>
Indebtedness, (ii) the holders of the Subordinated Debt shall have received a
notice from or on behalf of any holder of Senior Indebtedness specifying that
such event of default has occurred and is continuing and that such notice
constitutes a "Default Subordination Notice", and (iii) no other Default
Subordination Notice shall have been delivered by or on behalf of any holder of
Senior Indebtedness within the 365-day period immediately preceding the giving
of such notice.
The "APPLICABLE STAND-STILL PERIOD" relating to any Default
Subordination Event shall be deemed to continue until the event of default under
the Senior Indebtedness giving rise thereto shall have been cured (by payment or
otherwise) or waived or a period of 180 days shall have elapsed from the giving
of the Default Subordination Notice relating thereto, in any such case whichever
shall be the shorter period.
"SENIOR INDEBTEDNESS" shall mean and include all obligations (whether
now outstanding or hereafter incurred), for the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise, including, without
limitation, principal, interest, premium, fees, expenses and indemnities,
whether now owing or hereafter incurred (including any interest accruing
subsequent to the commencement of a proceeding described in Section 7.04,
regardless of whether the claims of holders of such payment obligations for such
interest are allowed in any such proceeding).
<PAGE>
NA932810086 - NOTE MORTGAGE
RIH JUNIOR PROMISSORY NOTE
GD&C DRAFT DATED 12/17/93
MORTGAGE SECURING
RIH JUNIOR PROMISSORY NOTE
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
RESORTS INTERNATIONAL HOTEL FINANCING, INC.
a Delaware corporation,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING
RIH JUNIOR PROMISSORY NOTE
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and
RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation
("RIHF"), having an address at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or
assigns which shall than be the Noteholder (as hereinafter defined),
being referred to herein as "Mortgagee").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to
Mortgagor and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and in order to
secure (i) the payment of the principal amount (and premium, if any)
of the secured junior promissory note by Mortgagor to Mortgagee in the
principal amount of $35,000,000 as amended and restated the date hereof
(hereinafter collectively referred to as the "Note"), in lawful money of the
United States, to be paid in accordance with the provisions thereof (and all
renewals, extensions, and modifications thereof) all of which are hereby made
an integral part hereof as though set forth at length herein; (ii) payment of
interest (including interest on all overdue principal and premium, if
any) becoming due under the provisions of the Note; (iii) payment by
Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee
pursuant to any term or provision of this Mortgage; (iv) performance
of each covenant, term, condition and agreement of Mortgagor herein or
in the Note contained; (v) all costs and expenses, including reasonable
counsel fees and expenses as provided in Section 3.07, which may arise
in respect of the Note and this Mortgage or of the obligations secured
hereby; and (vi) performance and observance of all of the provisions
herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released,
conveyed and confirmed unto Mortgagee and its successors hereunder and
assigns forever, all of its right, title and interest in, to and under
any of the following described property:
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GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and
franchises particularly described in annexed Schedule 1 (the "Owned
Land") which Schedule is hereby made a part of, and deemed to be
described in, this Granting Clause as fully as if set forth in this
Granting Clause at length.
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and
franchises of the Mortgagor as lessee in those certain leases (the
"Ground Leases") particularly described in Schedule 2, which Schedule
is hereby made a part of, and deemed to be described in, this Granting
Clause as fully as if set forth in this Granting Clause at length,
which Ground Leases cover the real property described in such Schedule
2 (the "Leased Land") and in and to any and all modifications,
extensions and renewals of the Ground Leases and all options set forth
therein, together with (i) all credits, deposits, privileges and rights
of the Mortgagor as lessee under the Ground Leases, now or at any time
existing, (ii) the leaseholds and the leasehold estates created by the
Ground Leases and (iii) all of the estates, rights, titles, claims or
demands whatsoever of Mortgagor, either in law or in equity, in
possession or in expectancy, of, in and to the Ground Leases and the
Leased Land, together with (x) any and all other, further or additional
title, estates, interests or rights which may at anytime be acquired by
the Mortgagor in or to the Leased Land, and the Mortgagor expressly
agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or
any other greater estate to the Leased Land pursuant to the Ground
Leases, or otherwise, the lien of this Mortgage shall attach, extend
to, cover and be a lien upon such fee simple title or other greater
estate and thereupon the lien of this Mortgage shall be prior to the
lien of any mortgage or deed of trust placed on such acquired title,
estate, interest or right subsequent to the date of this Mortgage
(except as otherwise provided herein) and (y) any right to possession
or statutory term of years derived from, or incident to, the Ground
Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the
"Code") or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation.
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GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and
proceeds of the property subjected or required to be subjected to the
lien of this Mortgage, including, without limitation, the property
described in Granting Clauses First, Second, and Sixth (such property
is hereinafter collectively referred to as the "Premises") and all the
estate, right, title and interest of every nature whatsoever of the
Mortgagor in and to the same and every part thereof. The collective
metes and bounds description of the Owned Land and the Leased Land is
set forth in annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the
date of execution of this Mortgage or hereafter entered into by the
Mortgagor, if any, including extensions, renewals or amendments of all
of the same, and the immediate and continuing right as security in
accordance with an Assignment of Leases and Rents of even date herewith
between Mortgagor and Mortgagee, and, after the occurrence of an Event
of Default, to make claim for, collect, receive and receipt for (and
to apply the same as provided herein) any and all rents, income,
revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof,
whether payable as rent, insurance proceeds, condemnation awards,
security or otherwise and whether payable prior to or subsequent to the
maturity date of the Note, to receive and give notices and consents
thereunder, to bring actions and proceedings thereunder or for the
enforcement thereof, to make waivers and agreements, to take such
action upon the happening of a default under any Lease, including the
commencement, conduct and consummation of any proceedings at law or in
equity as shall be permitted by any provision of any Lease, and to do
any and all things which the Mortgagor or any lessor is or may become
entitled to do under the Leases; provided, that the assignment made by
this granting Clause Fourth shall not impair or diminish any obligation
of the Mortgagor under the Leases, or shall any such obligation be
imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting
Clause Third, the Mortgagor's rights, privileges and franchises in and
to the following, to the extent of the Mortgagor's interest therein and
thereto and to the extent assignable (collectively, "Operating Assets"):
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(a) bookings and receipts for the use of guest rooms,
banquet facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including
guaranties and warranties relating thereto;
(c) the Permits;
(d) all contract rights, leases, concessions, trademarks,
trade names, service marks, service names, logos, copyrights,
warranties and other items of intangible personal property relating
to the ownership or operation of the Casino-Hotel, including, without
limitation, (1) telephone and other communication numbers, (2) all
software licensing agreements as are required to operate computer
software systems at the Casino-Hotel, all transferable proprietary
interest in software required to operate the computer systems at the
Casino Hotel and books and records relating to the software programs,
and (3) lessee's interest under leases of Tangible Personal Property;
(e) all agreements entered into by or on behalf of the
Mortgagor or which have been assigned to the Mortgagor, for the design
and construction, and for the equipping and furnishing, of the
Casino-Hotel, including architect's agreements, engineering agreements,
construction contracts, consulting agreements and agreements or
purchase orders for all items of Tangible Personal Property and payment
and performance bonds in favor of the Mortgagor in connection with the
Trust Estate (and all warranties and guaranties thereunder and
warranties and guaranties of any subcontractor and bond issued in
connection with the work to be performed by any subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other articles of
tangible personal property which are, or are to be located on, or
used in connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables, and big
six wheels, located or to be located in the Casino-Hotel, and all
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furnishings and equipment to be used in connection with the
operation thereof;
(iii) all cards, dice, gaming chips and placques,
tokens, chip racks, dealing shoes, dice cups, dice sticks,
layouts, paddles, roulette balls and other consumable supplies
and items to be used in connection with the gaming operations of
the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils,
silverware and uniforms, whether in use or held in reserve storage
for future use, in connection with the operation of the
Casino-Hotel, which are on hand or on order whether stored on-site
or off-site;
(v) all consumables and operating supplies of every
kind and nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on
any of the Owned Land, including without limitation, accounting
supplies, guest supplies, forms, printing, stationery, food and
beverage stock, bar supplies, laundry supplies and brochures to
existing purchase orders;
(vi) all sets and scenery, costumes, props and other
items of tangible personal property on hand or on order for use
in the production of shows in the showroom of the Casino-Hotel;
and
(vii) all cars, limousines, vans, buses, trucks and
other vehicles owned or leased by the Mortgagor for use in
Casino-Hotel operations, together with all equipment, parts and
supplies used to service, repair, maintain and equip the
foregoing;
(g) all drawings, designs, plans and specifications prepared
by the architects, interior designers, landscape designers and any
other consultants for the development of the Premises, as amended from
time to time;
(h) any administrative and judicial proceedings initiated by
the Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of
such proceedings;
(i) any customer lists utilized by the Mortgagor, including
lists of transient guests and restaurant and bar patrons and "high
roller" lists; and
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(j) all of the goodwill in connection with the operation of
the Premises.
The Mortgagor and Mortgagee acknowledge that notwithstanding
anything contained in this Mortgage to the contrary, the Mortgagor may
share facilities, operations and employees with any other hotel owned
by any Affiliate of the Mortgagor provided that (i) such sharing of
facilities is permitted by all applicable Legal Requirements, (ii)
terms on which such facilities are shared are not detrimental to the
operations of the Casino-Hotel or the financial condition of the
Mortgagor and (iii) the regular operation of the Casino-Hotel would
not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair
or diminish any obligation of the Mortgagor with respect to the
Operating Assets, nor shall any such obligation be imposed on the
Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and
to all buildings and improvements of every kind and description now or
hereafter erected or placed on the Owned Land and/or the Leased Land
and all fixtures and articles of personal property now or hereafter
attached to or contained in and used in connection with such buildings
and improvements, including, but not limited to, all apparatus,
furniture, furnishings, machinery, motors, elevators, fittings,
radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and
hot water boilers, lighting and power plants, pipes, plumbing,
radiators, sinks, bath tubs, water closets, gas and electrical
fixtures, awnings, shades, screens, blinds, dishwashers, freezers,
vacuum cleaning systems, office equipment and other furnishings, and
all plumbing, heating, lighting, cooking, laundry, ventilating,
incinerating, air-conditioning and sprinkler equipment or other fire
prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or
articles in substitution therefor, whether or not the same are or shall
be attached to the Owned Land, the Leased Land or to any such buildings
and improvements thereon, in any manner; and
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(b) All of the Mortgagor's right, title and interest in
and to (i) the Leased Land, if the Mortgagor acquires the fee simple
title to the Leased Land or any part thereof (subject to the
provisions of Section 2.06 hereof), (ii) all air rights and rights to
maintain supporting columns and all rights to construct and
maintain bridges, and to create private rights of way over
streets now or hereafter owned or enjoyed by the Mortgagor and
appurtenant to the Owned Land or Leased Land, and (iii) all right,
title and interest of Mortgagor as grantee or licensee in and to
the following to the extent necessary for the use and enjoyment of
the Owned Land or the Leased Land: (A) all those plots, pieces or
parcels of land and air rights, more particularly described on
Schedule 5, attached hereto and made a part hereof (the "Bridge
Easement Parcels"), with respect to which Mortgagor has easements,
licenses or other rights of possession or use pursuant to these
certain easement and license agreements more particularly
described on Schedule 5 (the "Bridge Easements"), (B) all those
plots, pieces or parcels of land and air rights, more particularly
described on Schedule 6 attached hereto and made a part hereof (the
"Elevator Easement Parcels"), with respect to which Mortgagor has
easements, licenses or other rights of possession or use pursuant
to those certain license agreements more particularly described on
Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece
or parcel of land and air rights more particularly described on
Schedule 7 attached hereto and made a part hereof (the
"Turn-Around Easement Parcel") with respect to which Mortgagor
has easements, licenses, or other rights of possession or use
pursuant to that certain easement more particularly described on
Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement
Parcels, the Elevator Easement Parcels and the Turn-Around
Easement Parcel are collectively referred to herein as the
"Easement Parcels"; and the Bridge Easements, the Elevator
Easements and the Turn-Around Easement are collectively referred
to as the "Easements"), together with all rights of way,
privileges, liberties, tenements, hereditaments and
appurtenances belonging or in any way appertaining to such
estates, it being the intention hereof that all property,
interests, rights and privileges and franchises pertaining to the
Premises (other than Excepted Property) shall be as fully embraced
within and subjected to the lien hereof as if such property were
specifically described herein.
To the extent the grant of a security interest in
any portion of the Trust Estate is governed by the Uniform
Commercial Code, this Mortgage is hereby deemed to be as well
a security agreement under the Uniform Commercial Code for the
purpose of creating hereby a security interest in all of the
Mortgagor's right, title and interest in and to such property,
securing the obligations secured hereby, for the benefit of
the Mortgagee;
* * *
TOGETHER with all of the Mortgagor's right, title and interest
in and to all mineral and water rights and any title or reversion, in
and to the beds of the ways, streets, avenues and alleys adjoining
the Premises to the center line
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thereof and in and to all strips, gaps and gores adjoining the premises
on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and
interest to and singular the tenements, hereditaments, easements,
appurtenances, passages, water courses, riparian rights, other
rights, liberties and privileges thereof or in any way appertaining
to the Premises, including any other claim at law or in equity as
well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore
or hereafter to be made to the present and all subsequent owners of
the Trust Estate for any taking by eminent domain, either permanent
or temporary, of all or any part of the Trust Estate or any
easement or appurtenances thereof, including severance and
consequential damage and change in grade of streets, all in
accordance with and subject to the provisions of the Superior
Instrument Requirements and Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on
any insurance policies described in Section 5.11, and the right to
receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Trust Estate
or otherwise, all in accordance with and subject to the provisions
of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted
property, rights, title, interest, privileges and franchises, the
Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases,
Operating Assets, Easements, properties, options, credits, deposits,
rights, privileges and franchises of every kind and description, real,
personal or mixed, granted hereby, bargained, sold, aliened, assigned,
transferred, hypothecated, pledged, released, conveyed, mortgaged, or
confirmed as aforesaid, or intended, agreed or covenanted so to be,
together with all the appurtenances thereto appertaining (the Premises,
Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being
herein collectively called the "Trust Estate") unto the Mortgagee and
its successors and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing
Encumbrances and, after the date hereof, to Permitted Encumbrances.
SUBJECT, FURTHER, to the rights and obligations of the
Mortgagee and the Noteholder as set forth in that certain
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Intercreditor Agreement dated as of the date hereof among RIH, RIHF,
Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee
under that certain note purchase agreement dated as of the date hereof
among Fidelity, RIH and RIHF, and State Street Bank and Trust Company
of Connecticut, National Association ("State Street"), as trustee under
that certain indenture dated as of the date hereof among State Street,
RIH and RIHF (and such other parties that may from time to time become
a party thereto).
BUT IN TRUST, NEVERTHELESS, for the benefit and security of
the Noteholder.
UPON CONDITION that, until the happening of an Event of
Default and subject to the provisions of Article Two, the Mortgagor
shall be permitted to possess and use the Trust Estate, and to receive
and use the rents, issues, profits, revenues and other income of the
Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust
Estate is to be held and applied by the Mortgagee, subject to the
further covenants, conditions and trusts hereinafter set forth, and the
Mortgagor does hereby covenant and agree to and with the Mortgagee,
for the benefit of the holder of the Note as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this
Mortgage, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural
as well as the singular;
(b) all accounting terms not otherwise defined herein have
the meanings assigned to them, and all computations herein
provided for shall be made in accordance with generally accepted
accounting principles consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Mortgage as a whole and not
to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the
Indenture.
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"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in
Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good
standing of the American Institute of Real Estate Appraisers) who is
(i) of recognized standing among appraisers of properties similar to
the Casino-Hotel and (ii) experienced in the appraisals of properties
of a similar size and scope to that of the Casino-Hotel, selected by
the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in
Section 1.01 of the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in
Section 1.01 of the Indenture.
"CASINO" means that portion of the Casino-Hotel used for
gaming and related activities.
"CASINO-HOTEL" means the casino and hotel complex and
ancillary structures and facilities located on the Premises and
furniture, fixtures and equipment at any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature
which results in damage, loss or destruction to any buildings or
improvements on the Premises and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section
10.01 of the Indenture.
"DEFAULT" means the occurrence and continuance of an Event of
Default or an event which, after notice or lapse of time or both,
would become an Event of Default.
"DEPOSITARY" means an Independent entity to which insurance
proceeds or a condemnation award is paid to be held in trust for
restoration pursuant to the provisions of a Ground Lease or Superior
Mortgage.
"EVENT OF DEFAULT" has the meaning stated in Section 3.01.
An Event of Default shall "exist" if an Event of Default shall have
occurred and be continuing.
"EXCEPTED PROPERTY" means:
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(1) subject to the provisions of the Assignment of Leases
and Rents, any cash held by the Mortgagor from rents, issues, profits,
revenues and other proceeds of the Trust Estate to the extent that such
cash may be, but has not been, distributed or paid out in accordance
with the Services Agreement or in accordance with the provisions of
Section 12.07 the Indenture;
(2) all personal property owned by lessees under Leases and
the personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to
the provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a
security interest in which is prohibited by the New Jersey Casino
Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated
thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in
Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a
Superior Mortgage secured by or imposing a lien on all or a portion of
the Trust Estate on a parity with or senior to the lien of this
Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon
any Tangible Personal Property and other items constituting Operating
Assets, such as computer software, which are financed, purchased or
leased by the Mortgagor, provided that, except as set forth on
Schedule 3, the principal amount of the indebtedness secured by
such lien shall not exceed eighty-five (85%) percent of the cost to
the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause
Second.
"GUARANTY MORTGAGE" means that certain Mortgage Securing
Guaranty of Junior Mortgage Notes dated as of the date hereof from
Mortgagor to U.S. Trust Company of California, N.A., a
national banking association, which secures the Notes (as defined in
the Indenture), the lien of which shall be PARI PASSU with the lien of
this Mortgage.
"HOTEL" means that portion of the Casino-Hotel not included
within the Casino.
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"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11.375% Junior
Mortgage Notes due 2004, dated as of even date herewith among the
Mortgagor, RIHF, as issuer, and U.S. Trust Company of California,
N.A., as trustee, as it may from time to time be
supplemented, modified or amended by one or more trust indentures
or other instruments supplemental thereto entered into pursuant to
the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person
means such a Person who (a) is in fact independent, (b) does not have
any direct financial interest or any material indirect financial
interest in the Mortgagor or in any other obligor upon the Note
or in any Affiliate of the Mortgagor or of such other obligor and
(c) is not connected with the Mortgagor or such other obligor or
any Affiliate of the Mortgagor or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate
shall be furnished to the Mortgagee, such opinion or certificate
shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof. A Person who is
performing or who has performed services as an independent
contractor to any specified Person shall not be considered not
Independent merely by reason of the fact that such Person is or has
performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section
5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance
policy covering or applicable to the Trust Estate or any part thereof,
all requirements of the issuer of any such policy, and all orders,
rules, regulations and other requirements of the National Board of
Fire Underwriters (or any other body exercising similar functions)
applicable to or affecting the Trust Estate or any part thereof or
any use or condition of the Trust Estate or any other part thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so
elects, any bank, trust company or insurance company with net worth in
excess of $100,000,000, designated by the Trustee.
"INSURER" means an insurance company or companies selected
by the Mortgagor authorized to issue insurance in the State of New
Jersey with an A.M. Best rating as high or higher than the rating of
insurance companies insuring other casino-hotels in Atlantic City,
New Jersey.
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"LEASE" means each lease or sublease demising all or any
portion of the Owned Land, the Leased Land or the buildings or
improvements thereon and made by the Mortgagor as lessor or sublessor,
as the case may be, or any spaces in any building or buildings which
constitute a part of the Trust Estate, including every agreement
relating thereto or entered into in connection therewith and every
guaranty of the performance and observance of the covenants,
conditions and agreements to be performed by the lessee under any
such lease. Notwithstanding the foregoing, the term "Lease" shall
not include any transient room rentals.
"LEASED LAND" has the meaning stated in Granting Clause
Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements (including, without limitation, the New Jersey
Environment Cleanup Responsibility Act and the New Jersey Spill
Compensation and Control Act of 1976) of all governments,
departments, commissions, boards, courts, authorities, agencies,
officials and officers, of governments, federal, state and
municipal (including, without limitation, the New Jersey
Department of Environmental Protection, the Atlantic City Bureau
of Investigations, Division of Protection, the Atlantic City Bureau
of Investigations, Division of Gaming Enforcement of the State of
New Jersey, and the Casino Control Commission of the State of New
Jersey), foreseen or unforeseen, ordinary or extraordinary, which
now is or at any time hereafter becomes applicable to the Trust
Estate or any part thereof, or any of the adjoining sidewalks, or
the use of the Casino-Hotel as a gaming or gambling facility or any
other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Note means the date
on which the principal of such Note becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration or prepayment or otherwise.
"MORTGAGE DOCUMENTS" has the meaning set forth in Section
1.01 of the Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the
first paragraph of this instrument until a successor entity shall have
become such pursuant to the applicable provisions of this Mortgage,
and thereafter, except to the extent otherwise contemplated by
Section 4.02, "Mortgagor" shall mean such successor entity exclusively.
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"NOTEHOLDER" shall mean the holder or holders of the Note.
"NOTE" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an
officer of the Mortgagor and delivered to the Mortgagee. Whenever this
Mortgage requires that an Officers' Certificate be signed also by
an Architect or an Accountant or other expert, such Architect,
Accountant or other expert may (except as otherwise expressly
provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause
Fifth.
"OPINION OF Counsel" means a written opinion of counsel who
may (except as otherwise expressly provided in this Mortgage) be an
employee of the Mortgagor or an employee of an Affiliate of the
Mortgagor. Unless otherwise specifically provided in this Mortgage,
such counsel may rely, as to any state of facts not personally known
to such counsel and relating to such opinions, on an Officers'
Certificate to the extent not rejected by the Trustee and its counsel
(which rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued
by [list title insurance companies], pursuant to Title Commitment No.
____________ redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01
of the Indenture.
"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of
compliance, certificates of operation, certificates of occupancy and
permits required for the lawful ownership, occupancy, operation and use
of all or a material portion of the Premises whether held by the
Mortgagor or any other Person (which may be temporary or permanent)
(including, without limitation, those required for the use of the
Casino-Hotel as a licensed casino facility), in accordance with all
applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges
not yet due and payable or if due and payable are not delinquent
to the extent that any fine, penalty, interest or cost may be
added for nonpayment thereof;
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(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights
granted as provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of
the Indenture;
(8) any Working Capital Facility Lien;
(9) liens created by the Senior Mortgage Documents; and
(10) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or any other entity or government or any agency or
political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made
in accordance with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing,
Inc., a Delaware corporation.
"SENIOR GUARANTY MORTGAGE" has the meaning set forth in
Section 1.01 of the Indenture.
"SENIOR MORTGAGE" has the meaning set forth in Section 1.01
of the Indenture.
"SENIOR MORTGAGE DOCUMENTS" has the meaning set forth in
Section 1.01 of the Indenture.
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"SERVICES AGREEMENT" has the meaning set forth in Section
1.01 of the Indenture.
"SETTLEMENT COSTS" has the meaning stated in Section 5.20.
"STATED MATURITY" when used with respect to a note means the
date specified in such note as the fixed date on which the principal of
such note is due and payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable
terms, conditions and provisions of (i) the Ground Leases with respect
to the Leased Land; and (ii) Superior Mortgages with respect to the
portion of the Trust Estate encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage,
the Senior Guaranty Mortgage, any Working Capital Facility Lien and any
After-Acquired Fee Mortgages.
"TAKING" means the acquisition or condemnation by eminent
domain of the whole or any part of the Premises, by a competent
authority, or any public or quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in
Granting Clause Fifth.
"TRUSTEE" means the Person named as the "Trustee" in the
first paragraph of the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the
Granting Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01
of the Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section
1.01 of the Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in
Section 5.22(c) of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Mortgage to
be made upon, given or furnished to, or filed with, the Mortgagor
or the Mortgagee (collectively, "Notices") shall be deemed given
when either (i) delivered by hand or (ii) two days after sending by
registered or certified mail, postage prepaid, addressed as
follows:
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To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
Resorts International Hotel Financing, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
(b) By Notice to the Mortgagor, the Mortgagee and the
Trustee, any party may designate additional or substitute address for
Notices which, notwithstanding Subsection (a) above, shall be deemed
given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO
MORTGAGEE. Whenever several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one
or more other such Persons as to such matters in one or several
documents.
Any certificate or opinion of an Officer of the Mortgagor
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such
Officer knows that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of,
or representations by, an Officer or Officers of the Mortgagor
stating that the information with respect to such factual matters
is in the possession of the Mortgagor, unless such counsel knows
that the certificate or opinion or representations with respect to
such matters are erroneous. If appropriate to the matter being
opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of
creditors and the availability of equitable remedies.
Whenever any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Mortgage, they may, but
need not, be consolidated and form one instrument.
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Whenever in this Mortgage, in connection with any application
or certificate or report to the Mortgagee, it is provided that the
Mortgagor shall deliver any document as a condition of the
granting of such application, or as evidence of the Mortgagor's
compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the
effective date of such certificate or report (as the case may be),
of the facts and opinions stated in such document shall in such
case be conditions precedent to the right of the Mortgagor to have
such application granted or to the sufficiency of such certificate
or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon
any application or request by the Mortgagor to the Mortgagee to take
any action under any provision of this Mortgage, the Mortgagor
shall furnish to the Mortgagee an Officers' Certificate stating
that all conditions precedent, if any, provided for in this
Mortgage relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied
with, except that in the case of any such application or request as
to which the furnishing of such documents is specifically required
by any provision of this Mortgage relating to such particular
application or request, no additional certificate or opinion need
be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Mortgage shall include:
(a) a statement that each individual signing
such certificate or opinion has read such condition
or covenant and the definitions herein relating
thereto;
(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 each
such individual, he has made such examination or
investigation as is necessary to enable him to
express an informed opinion as to whether or not
such condition or covenant has been complied with; and
(d) a statement as to whether, in the
opinion of each such individual, such condition
or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section
headings herein are for convenience only and shall not affect the
construction hereof.
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Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the
Indenture, this Mortgage shall be binding upon and inure to the benefit
of the parties hereto and of the respective successors and assigns of
the parties hereto to the same effect as if each such successor or
assign were in each case named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged,
released nor any of its provisions waived except by agreement in writing
executed by the Mortgagor and the Mortgagee and in accordance with
the provisions of this Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in
this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this
Mortgage, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns, any benefit or
any legal or equitable right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed
to be a contract under the laws of the State of New Jersey and shall be
construed in accordance with and governed by the laws of the State
of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever
the provisions of this Mortgage and the provisions of the Indenture
shall be inconsistent, the provisions of the Indenture shall
govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
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proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
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indemnity against such risk or liability is not reasonably assured to it.
Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT.
Each provision of this Mortgage is subject to and shall be enforced in
compliance with the provisions of the New Jersey Casino Control Act. This
Mortgage shall not be transferred, assigned or amended without prior approval
of the New Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall
pay or cause to be paid, or there shall otherwise be paid, to the
Mortgagee all amounts required to be paid by the Mortgagor
pursuant to the Note, and the conditions precedent for the
Indenture to cease, determine and become null and void in
accordance with Section 5.01 of the Indenture shall have occurred,
the Mortgagee shall promptly cancel and discharge this Mortgage,
and execute and deliver to the Mortgagor all such instruments as
may be necessary, required or appropriate to evidence such
discharge and satisfaction of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be
subject in each instance to the giving of any notice and the expiration
of any grace period provided for in Section 3.01 as a condition to
such Default making it an Event of Default, unless the Trust
Indenture Act requires otherwise, in which case the Trust
Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that
an event which does not materially diminish the value of the
Mortgagee's interest in the Trust Estate shall not be deemed an
"impairment of security", as that phrase is used in this Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE.
So long as there shall have been no acceleration of maturity of the Note under
Section 3.02, the Mortgagor shall be suffered and permitted, with power freely
and without let or hindrance on the part of the Mortgagee, subject to
the provisions of this Mortgage and the Guaranty Mortgage, to possess, use,
manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust
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and settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time
to time, unless an Event of Default shall have occurred and be continuing,
without any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Mortgagor's reasonable
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right
to pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to
the exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
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Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions
contained in this Mortgage or the Indenture to the contrary, including, without
limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles
Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and
other items constituting operating assets, such as computer software subject to
any FF&E Financing Agreement, or becomes the lessee under a lease for any of the
same and if the document evidencing such FF&E Financing Agreement prohibits
subordinate liens or the provisions of any such lease prohibits any assignment
thereof by the lessee, and if any such prohibition is customary with respect to
similar transactions of the lender or lessor, as the case may be, then the
property so purchased or the lessee's interest in the lease, as the case may be,
shall be deemed to be Excepted Property. If any such FF&E Financing Agreement
permits subordinate liens then the Mortgagee agrees to execute and deliver to
the Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination of
the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and from time to time, unless an
Event of Default shall have occurred and be continuing, to convey all or any
part of the Released Fee Land (the land to be so conveyed is hereinafter
referred to as the "Released Land"), free from the lien of the Mortgage,
provided that:
(i) the Mortgagor furnishes the Mortgagee with an Officers'
Certificate requesting the release of such property from the Trust Estate
and stating (w) so long as the Released Land is owned or used by an
Affiliate of the Mortgagor, the Released Land shall not be operated in a
manner in competition with the operation of the Casino-Hotel as a casino,
(x) that no permanent structures have been constructed on the Released
Land, (y) that the Mortgagor is not required to hold the Released Land in
order to maintain all Permits and in order to comply with the provisions of
all material contracts to which the Mortgagor is a party or by which the
Mortgagor is bound and either (A) the Mortgagor has made adequate provision
to maintain all Permits and to comply with such contractual requirements
by: (1) owning and using the
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balance of the Trust Estate; (2) acquiring fee title to any real property
that would enable Mortgagor to maintain all Permits and satisfy such
contractual requirements; or (3) acquiring a Qualified Leasehold Interest
in real property that would enable the Mortgagor to maintain such Permits
and satisfy such contractual requirements; or (B) neither the requirements
of such Permits nor such contracts require the Mortgagor to own the
Released Land or use or operate any land in the manner in which the
Released Land is intended to be used; or (C) such requirements have been
waived, and (z) that such conveyance will not materially interfere with the
operation of the Casino-Hotel;
(ii) the Mortgagor delivers to the Mortgagee an Opinion of
Counsel to the effect that the Mortgagor is not required to own and use the
Released Land in order to maintain in good standing all Permits or by the
provisions of any material contract to which the Mortgagor is a party or by
which it is bound to own and use the Released Land;
(iii) the Mortgagor delivers to the Mortgagee, if applicable, an
endorsement to the Original Policy in accordance with Section 2.05(d);
(iv) the Mortgagor delivers to the Mortgagee an executed
counterpart of the instruments of conveyance in recordable form, which
shall contain a covenant prohibiting the use of the Released Land by any
Affiliate of the Mortgagor (A) as a casino or (B) in a manner in
competition with the operation of the Casino-Hotel as a casino prior to the
latest Stated Maturity Date of the Note; and
(v) in the case of a conveyance or release described in (A) or
(B) above, if the Released Land is being conveyed to an Affiliate of the
Mortgagor, the cash consideration received by the Mortgagor for the
Released Land shall not be less than the product of the Release Price
multiplied by the area (in square feet) of the Released Land.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.05
and, if applicable, Section 2.05 of the Guaranty Mortgage,
PROVIDED, that the Mortgagee shall have no liability thereunder and all costs
and expenses (including reasonable attorneys' fees) shall be paid by the
Mortgagor.
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Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be continuing, to have
an Affiliate exercise such options(s) or for the Mortgagor to exercise such
options(s) on behalf of an Affiliate and in connection therewith to cause fee
simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with
the following:
(i) an Officers' Certificate requesting the release of the
Released Fee Land from the Trust Estate and stating that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain all
Permits and in order to comply with the provisions of all material
contracts to which the Mortgagor is a party or by which the Mortgagor is
bound, (B) such Affiliate has received all Permits necessary to own the
Released Fee Land (including without limitation all approvals required by
the Casino Control Commission of the State of New Jersey), (C) there has
been delivered to the Mortgagor and the Mortgagee a true copy of an
instrument executed by such Affiliate stating that (i) such Affiliate may
only engage in the activity of owning the Released Fee Land and (ii) such
Affiliate shall not convey the Released Fee Land to another Affiliate of
the Mortgagor, unless such other Affiliate executes and delivers to the
Mortgagor and the Mortgagee, the instruments that would have been required
to be delivered pursuant to clause (C) if the Mortgagor conveyed the
Released Fee Land to such other Affiliate (provided that this restriction
shall only be effective until such time as this Mortgage shall be satisfied
of record) and (D) the deed conveying the Released Fee Land to such
Affiliate shall state that such conveyance is made subject to the terms,
provisions and conditions of the applicable Ground Lease and that the fee
and leasehold interests in the Released Fee Land shall not merge by reason
of the Mortgagor and/or any Affiliate owning both the leasehold and fee
estate therein, and that such estates shall always remain separate and
distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor
is not required to own the Released Fee Land in order to maintain in good
standing all Permits or by the provisions of any material contract to which
the
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Mortgagor is a party or by which it is bound to own the Released Fee Land
and (B) the instruments described in clause (C) of subparagraph (i) were
duly executed by and are binding upon such Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, and agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any
written instrument in form reasonably satisfactory to the prospective purchaser
to confirm the release of the Released Fee Land, upon receipt by the Mortgagee
of an Officers' Certificate stating that the Mortgagor is entitled to such
release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED
that the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
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Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if
no Event of Default has occurred and is continuing and (ii) if the Mortgagor
shall acquire Released Fee Land, then simultaneously with the acquisition
thereof, the Mortgagor shall have the right to encumber such fee simple title
with a mortgage (such mortgage and any refinancing thereof permitted by the
Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The
lien of this Mortgage on the Released Fee Land shall be subordinated to the lien
of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of
other Superior Mortgages which shall become a lien thereon in accordance with
the terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple
title to such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee Mortgage
(A) does not exceed 75% of the cost to the Mortgagor of such fee simple
title at the time of the acquisition and (B) satisfies the criteria set
forth in Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers fee
simple title to the Leased Land or any part thereof, such After-Acquired
Fee Mortgage contains provisions binding on the holder of the
After-Acquired Fee Mortgage and its successors and assigns confirming the
provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an
Affiliate of the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents
shall contain a provision binding upon the holder of such After-Acquired
Fee Mortgage and other loan documents that all insurance proceeds in the
event of a Casualty and awards for Takings of less than the entire Released
Fee Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers'
Certificate requesting such subordination and certifying that the
requirements of (i) through (v) above have been satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this
Mortgage to the contrary notwithstanding, the subordination of this Mortgage to
any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall
not be
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self-operative but shall be effective only upon the execution and delivery by
the Mortgagee of an instrument in writing effecting such subordination. The
Mortgagee shall deliver such instrument of subordination on the following
conditions: (x) the Mortgagee shall have received an Officers' Certificate
confirming that the conditions of (i) through (vi) of paragraph (a) have been
satisfied, together with a true and correct copy of the After- Acquired Fee
Mortgage and all other instruments securing the indebtedness evidenced thereby
and (y) the instrument of subordination shall specifically state that this
Mortgage is being subordinated not with respect to the lien of this Mortgage on
the Ground Lease or on the leasehold estate created thereby, but only with
respect to the fee simple title to the Leased Land or applicable part thereof
and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of any interest on the Note when such
interest becomes due and payable and continuance of such default for a
period of 10 days after there has been given a written notice to the
Mortgagor specifying such default and stating that such notice is a "Notice
of Default" hereunder; or
(b) default in the payment of the principal of any Note at its
Maturity; or
(c) an "Event of Default" as defined in Section 3.01 of the Guaranty
Mortgage shall occur; or
(d) default in the payment of any other sum due under the Note or
this Mortgage and the continuance of such default for a period of 10 days
after there has been given to the Mortgagor a written notice specifying
such default and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(e) default in the performance, or breach, of any covenant of the
Mortgagor in this Mortgage (other than a
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covenant a default in the performance or breach of which is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 30 days after there has been given to the Mortgagor
a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder,
unless (i) the default or breach is of such a nature that is curable but
not susceptible of being cured with due diligence within such 30-day period
(for reasons other than the lack of funds), (ii) the Mortgagor delivers an
Officers' Certificate to the Mortgagee within such 30-day period stating
(A) the applicability of the provisions of Clause (i) to such default or
breach, (B) the Mortgagor's intention to remedy such default or breach with
reasonable diligence and (C) the steps which the Mortgagor has undertaken
to remedy such default or breach and (iii) the Mortgagor delivers to the
Mortgagee additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate described in Clause
(ii), in which case such 30 day period shall be extended for such further
period of time as may reasonably be required to cure the same, provided
that the Mortgagor is then proceeding and thereafter continues to proceed
to cure the same with reasonable diligence; or
(f) an "Event of Default" as defined in Section 7.01 of the
Indenture, shall occur; or
(g) default by the Mortgagor under any of the terms of any Ground
Lease which shall not be fully cured or waived prior to the expiration of
any grace period contained in such Ground Lease, unless prior to the
expiration of such grace period, the Mortgagor gives the Mortgagee an
Officers' Certificate, an Opinion of Counsel and a true copy of the
Injunction referred to below, which Certificate and Opinion state that (i)
a court of competent jurisdiction has issued an injunction (which is in
force and effect and has not been modified or reversed on appeal) tolling
or staying the expiration of the grace period set forth in such Ground
Lease with respect to such default, (ii) such injunction specifically
provides that in addition to the tolling or stay describe in (i) above,
such tolling or stay also applies to the Mortgagee for purposes of
determining the duration and expiration of the periods during which the
Mortgagee may exercise its rights under such Ground Lease (including
without limitation, periods to cure lessee defaults and delivering a
guarantee and the period during which the Mortgagee may elect to enter into
a new lease thereunder), (iii) such injunction further provides that the
tolling or stay under (i) and (ii) shall be effective until such time that
the Mortgagee is personally served
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with notice of the expiration of such injunction and (iv) the Mortgagee is
named as a party in any action or proceeding involving such injunction and
therefore entitled to notice of any modification or termination thereof;
and, if such injunction is issued, then so long as such injunction remains
in force and effect and the preceding provisions of this Section 3.01(g)
have been complied with, the grace period referred to in the third line of
this subparagraph (g) shall be deemed to mean the grace period after giving
effect to any such tolling or stay in (i) above; or
(h) default by the Mortgagor under any of the terms of any Superior
Mortgage which default results in the acceleration of the maturity of such
Superior Mortgage and which shall not be fully cured or waived prior to the
expiration of any grace period contained in such Superior Mortgage, unless
prior to the expiration of such grace period, the Mortgagor gives the
Mortgagee an Officers' Certificate and an Opinion of Counsel and a true
copy of the injunction referred to below, which Certificate and Opinion
shall state (i) that a court of competent jurisdiction has issued an
injunction (which is in force and effect and has not been modified or
reversed on appeal) tolling or staying the expiration of the grace period
set forth in such Superior Mortgage with respect to such default and (ii)
the Mortgagee is named a party in any action or proceeding relating to such
injunction and therefore is entitled to notice of any modification or
termination thereof; and if such injunction is issued, then so long as such
injunction remains in force and effect, and the preceding provisions of
this Section 3.01(h) have been complied with, the grace period referred to
in the third line of this subparagraph (h) shall be deemed to mean the
grace period after giving effect to any such tolling or stay; or
(i) any modification, amendment or supplement of any Ground Lease
without the prior written consent of the Mortgage; or
(j) any modification, amendment or supplement of any Superior
Mortgage without the prior written consent of the Mortgagee, except to the
extent that such modification, amendment or supplement is permitted by
Section 5.22(b)(i) hereof; or
(k) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a period
of 60 days after there has been given a written notice to the Mortgagor
specifying that such notice is a "Notice of Default" hereunder; or
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(l) any representation or warranty of the Mortgagor set forth in this
Mortgage or in any notice, certificate, demand or request delivered to the
Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the
time when made and the facts constituting such incorrectness impairs the
Mortgagee's security and such impairment continues for a period of 30 days
after there has been given to the Mortgagor a written notice specifying
that such notice is a "Notice of Default" hereunder, unless (i) such
impairment is curable, but not susceptible of cure within such 30-day
period (for reasons other than lack of funds), (ii) the Mortgagor gives an
Officers' Certificate to the Mortgagee within such 30-day period stating
(A) the applicability of the provisions of (i) to such impairment, (B) the
Mortgagor's intention to remedy the same with reasonable diligence and (C)
the steps which the Mortgagor has undertaken to remedy such default or
breach and (iii) the Mortgagor delivers to the Mortgagee additional
Officers' Certificates every 30 days thereafter updating the information
contained in the certificate described in (ii), in which case such 30-day
period shall be extended for such further period of time as may reasonably
be required to cure the same, provided that the Mortgagor is then
proceeding and thereafter continues to proceed to cure the same with
reasonable diligence.
Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is
continuing, then the Mortgagee may declare the Outstanding Amount of the Note to
be due and payable immediately, by a notice in writing to the Mortgagor and upon
any such declaration such principal shall become immediately due and payable.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys
received by the Mortgagee pursuant to the provisions of this Article Three
(including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance
with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee
has instituted any proceeding to enforce any right or remedy under this Mortgage
and such proceeding has been discontinued or abandoned for any reason or has
been determined adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall, subject to any determination in such
proceeding, be restored to its former position hereunder, and thereafter all
rights and remedies of the Mortgagee shall continue as though no such proceeding
had been instituted.
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Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Mortgagee is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding
shall be commenced (including, without limitation, an action to foreclose this
Mortgage or to collect the indebtedness secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of the Mortgagee to defend or uphold the lien of this
Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including
reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection
therewith, together with interest at the rate then payable on the Note, from the
date of payment less the net amount received by the Mortgagee or the Trustee, as
their interests may appear under any title insurance policy, and, until paid,
all such expenses, together with interest as aforesaid, shall be a lien on the
Trust Estate.
Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full
extent that it may lawfully so agree, the Mortgagor will not at any time insist
upon, plead, claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law now or hereafter in force, in order
to prevent or hinder the enforcement of this Mortgage or the absolute sale of
the Trust Estate, or any part hereof, or the possession thereof by any purchaser
at any sale under this Article Three; and the Mortgagor, for itself and all who
may claim under it, so far as it or they now or hereafter may lawfully do so,
hereby waives the benefit of all such laws. The Mortgagor, for itself and all
who may claim under it, waives, to the extent that it may lawfully do so, all
right to have the property in the Trust Estate marshalled upon any foreclosure
hereof, and agrees that any court having jurisdiction to foreclose this Mortgage
may order the sale of the Trust Estate as an entirety.
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If any law in this Section 3.08 referred to and now in force, of which
the Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the contract herein
contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of
an Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event
of Default shall occur and be continuing, the Mortgagee, with or without entry,
in its discretion may:
(a) sell, subject to any mandatory requirements of applicable
law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee
may determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this
Mortgage by sale pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Mortgage or in
aid of the execution of any power granted in this Mortgage or for the
foreclosure of this
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Mortgage or for the enforcement of any other legal,
equitable or other remedy, as the Mortgagee,
being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Mortgagee; the
failure to join tenants shall not be asserted as a defense to
any foreclosure or proceeding to enforce the rights of the
Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of
the Trust Estate, whether made under the power of sale hereby given or
pursuant to judicial proceedings, to the extent permitted by law:
(a) the principal of and accrued interest on the Note, if
not previously due, shall at once become and be immediately
due and payable;
(b) subject to the provisions of Section 3.14 and the
receipt of any required prior approvals of the New Jersey Casino Control
Commission, the Mortgagee may bid for and purchase the property offered for
sale, and upon compliance with the terms of sale may hold, retain and
possess and dispose of such property, without further accountability,
and may, in paying the purchase money therefor, delivery any notes or
claims for interest thereon in lieu of cash to the amount which shall, upon
distribution of the net proceeds of such sale, be payable thereon, and such
notes or claims for interest thereon, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned
to the holders thereof after being appropriately stamped to
show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and
instrument of assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true
and lawful attorney of the Mortgagor, in its name and stead,
to make all necessary deeds, bills of sale and instruments of
assignment and transfer of the property thus sold; and for
that purpose it may execute all necessary deeds, bills of
sale and instruments of assignment and transfer, and may
substitute one or more persons, firms or corporations with
like power, the Mortgagor hereby ratifying and confirming all
that its attorney or such substitute or substitutes shall
lawfully do by virtue hereof; but if so requested by the
Mortgagee or by any purchaser, the Mortgagor shall ratify and
confirm any such sale or transfer by executing and delivering
to the Mortgagee or to such purchaser or purchasers all proper
deeds, bills of sale, instruments
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of assignment and transfer and releases as may be designated in any such
request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of,
in and to the property so sold shall be divested and such sale
shall be a perpetual bar both at law and in equity against the
Mortgagor, its successors and assigns, and against any and all
persons claiming or who may claim the property sold or any
part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making
such sale shall be a sufficient discharge to the purchaser or
purchasers at such sale for his or their purchase money and
such purchaser or purchasers and his or their assigns or
personal representatives shall not, after paying such
purchase money and receiving such receipt, be obliged to see
to the application of such purchase money, or be in anywise
answerable for any loss, misapplication or non-application
thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of
Default and commencement of judicial proceedings by the Mortgagee
to enforce any right under this Mortgage, the Mortgagee shall be
entitled, as against the Mortgagor, without notice or demand and
without regard to the adequacy of the security for the Note or the
solvency of the Mortgagor, to the appointment of a receiver of the
Trust Estate, and of the rents, issues, profits, revenues and other
income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights
under this Section 3.12 shall be subject to the provisions of the
New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon
5 days' prior written notice to the Mortgagor (or such shorter
period or without notice if deemed necessary and appropriate by the
Mortgagee), the Mortgagee shall have power to institute and
maintain such proceedings as it may deem necessary and appropriate
to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its
interests in the Trust Estate and in the rents, issues, profits,
revenues and other income arising therefrom, including power to
institute and maintain proceedings to restrain the enforcement of
or compliance with any 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 the
security hereunder or be materially prejudicial to the interests of
the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any
provision of this Article Three to the
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contrary, following an Event of Default and the taking of possession
of the Trust Estate or any part thereof by the Mortgagee and/or
the appointment of receiver of the Trust Estate or any part
thereof, the Mortgagee or any such receiver shall be authorized,
in addition to the rights and powers of the Mortgagee and such
receiver set forth elsewhere in this Mortgage, to retain one or
more experienced operators of hotels and/or casinos to manage the
Casino-Hotel, PROVIDED that any such operator shall have all
necessary legal qualifications, including all Permits, to manage
the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR
TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with
all provisions applicable to the Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any
consolidation or combination or any conveyance or transfer of
the Trust Estate or any portion thereof in accordance with Section
10.01 of the Indenture, the successor entity formed by such
consolidation or into which the Mortgagor is combined or to which
such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the
Mortgagor under this Mortgage with the same effect as if such
successor entity had been named as the Mortgagor herein; PROVIDED,
HOWEVER, that no such conveyance or transfer of the Trust Estate
substantially as an entirety, unless such conveyance or transfer is
in compliance with the provisions of Article Ten of the Indenture,
shall have the effect of releasing the Person named as "the
Mortgagor" in the first paragraph of this instrument or any
successor entity which shall theretofore have become such in the
manner prescribed in such Article Ten from its liability as obligor
or maker of the Note.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE.
Except as otherwise expressly permitted by this Mortgage or the
Indenture, the Mortgagor shall not sell, assign, lease, sublease,
hypothecate, pledge, mortgage or otherwise transfer all or any part
of the Trust Estate or any interest therein (including without
limitation any interest in the Ground Leases). Without limiting the
generality of the foregoing, the Mortgagor shall not separate, or
attempt to separate, its ownership of its interest in the Ground
Leases from its ownership of the buildings constituting the Casino-Hotel
or any part thereof.
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ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Mortgagor will duly and punctually pay the principal of (and
premium, if any) and interest on the Note in accordance with the
terms of the Note and this Mortgage.
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants
and agrees to comply with all of the terms and conditions set forth
in any FF&E Financing Agreements before the expiration of any
applicable notice and cure periods contained in the FF&E Financing
Agreements.
Section 5.03. LIMITATIONS ON LIENS.
(a) The Mortgagor will not create, incur, suffer or permit to be
created or incurred or to exist any mortgage, lien, charge or
encumbrance on or pledge of any of the Trust Estate, other than
(i) Permitted Encumbrances, (ii) liens on the Trust Estate in
connection with indebtedness permitted by clauses (i), (ii),
(iii), (iv) or (v) of Section 12.08(a) of the Indenture, and
(iii) a building contract or a notice of intention filed by a
mechanic, materialman or laborer under the New Jersey lien law.
Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the
Mortgagor shall not be deemed to have breached the provisions of
the foregoing sentence by virtue of the existence of a lien for
Impositions or mechanics liens so long as the Mortgagor is in good
faith contesting the validity of the same in accordance with the
provisions of Section 5.09 to the extent that the matters described
in (i) and (ii) do not constitute a default under any Ground Lease
or Superior Mortgage.
(b) Mortgagee acknowledges that, contemporaneously with the
execution and delivery of this Mortgage, it has assigned this
Mortgage to the Trustee and that the Trustee is also the mortgagee
under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon
the same Trust Estate pari passu with the lien of this Mortgage.
Mortgagee further acknowledges and agrees that whenever it is
provided in the Guaranty Mortgage that the Mortgagor shall deliver
any notice or document, or is require to make any payment
thereunder, the delivery of such notice or document or the making
of such payment pursuant to the terms of the Guaranty Mortgage
shall also constitute the delivery of such notice or document or
the making of such payment in satisfaction of the terms, conditions
and provisions of this Mortgage to the same extent as the same
constitutes satisfaction of the terms, conditions and provisions
of the Guaranty Mortgage.
Section 5.04. [Reserved]
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Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby
acknowledges the right of the Mortgagee, in the name of and on
behalf of the Mortgagor, (a) to appear in and defend any action or
proceeding brought with respect to the Trust Estate or any part
thereof and (b) upon 5 days' prior written notice to the Mortgagor
(or such shorter period or without notice if deemed necessary and
appropriate by the Mortgage), to commence any action or proceeding
to protect the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The
Mortgagor represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of
New Jersey and all other applicable laws to execute and deliver
this Mortgage, and all corporate action on its part necessary
for the valid execution and delivery of this Mortgage has been
duly and effectively taken;
(b) it is the lawful owner and is lawfully seized
and possessed of the Owned Land and all buildings and
improvements thereon, free and clear of all liens, charges or
encumbrances, other than the lien of the Mortgage Documents,
any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable
title to the leasehold interests and leasehold estates
under the Ground Leases and to the Ground Leases, subject
to no lien, encumbrance or charge other than the lien of
the Mortgage Documents, any Working Capital Facility Lien
and Existing Encumbrances;
(d)(i) the Ground Leases are valid and subsisting demises of
the Leased Land for the terms therein set forth, (ii) there
are no defaults thereunder by any Lessor or the lessee as to
which written notice has been given to or by the lessee,
(iii) the Mortgagor has delivered true and correct copies of
the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in
full force and effect and has not been modified, amended or
supplemented, except as described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no
lien, encumbrance or charge, other than the lien of the
Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to
execute this Mortgage and to grant, bargain, sell, alien,
convey, assign, transfer, hypothecate,
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pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the
Operating Assets and the Ground Leases, without the consent of
any third party, other than governmental authorities but any
applicable or necessary consent or approval of any such governmental
authority has been given or waived at or prior to the
execution and delivery of this Mortgage), and this Mortgage
constitutes a valid third mortgage lien and third priority
security interest in the Trust Estate PARI PASSU with the
lien of the Guaranty Mortgage, subject only to Working
Capital Facility Liens and Existing Encumbrances.
The Mortgagor hereby does and will forever warrant and defend
(x) the title to Trust Estate (including without limitation, its
leasehold estates under the lessee's interests in the Ground
Leases) (subject to Permitted Encumbrances) and (y) the priority
of the lien of this Mortgage (subject to Permitted Encumbrances
other than Restricted Encumbrances), against the claims and
demands of all persons whomsoever, at the Mortgagor's sole cost
and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will,
as provided in Section 5.13, from time to time subject its right,
title and interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments
of further assurance, including all financing statements and
continuation statements covering security interests in personal
property, to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, and will execute
and file such financing statements and cause to be issued and filed
such continuation statements, all in such manner and in such places
as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party
under the Uniform Commercial Code to all property comprising the
Trust Estate (to the extent a grant of a security interest therein
is governed by the Uniform Commercial Code) and to perfect,
preserve and protect the lien of this Mortgage as a valid
mortgage lien of record and a valid security interest on the
Trust Estate subject to Permitted Encumbrances (other than
Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all
expenses incident to the execution and delivery of this Mortgage,
and any instrument of further assurance, and all federal, state,
county and municipal stamp taxes and other taxes, duties, imposts,
assessments and charges arising out of or in connection with the
execution and delivery of the Note, this Mortgage, any financing
statement or continuation statement with respect to the personal
property constituting
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part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF
PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE
REQUIREMENTS. The Mortgagor will:
(a)subject to the provisions of Section 5.09 relating to
contests, pay or cause to be paid promptly (or when
installments of the same shall become due and payable, if,
by law or by agreement or arrangement with the applicable
governmental agency or authority, the same may be paid in
installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are
payable by the Mortgagor pursuant to any Superior Instrument
Requirement), all taxes (including, without limitation, real
estate taxes, personal or other property taxes and all sales,
value added, use and similar taxes), assessments (including,
without limitation, all assessments for public improvements
or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to
the satisfaction of this Mortgage), water, sewer or other
rents, rates and charges, excises, levies, license fees,
permit fees, inspection fees and other authorization fees and
other charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of
every character (including all interest, additions to tax and
penalties thereon), that may be assessed, levied, confirmed or
imposed on or in respect of or be a lien upon (1) the Trust
Estate (including without limitation the Leased Land) or any
part thereof or any rent therefrom or any estate, right or
interest therein, or (2) any acquisition, occupancy, use,
leasing, or possession of or activity conducted on the real
property or any part thereof included in the Trust Estate or
any gross receipts thereof or of the rent therefrom (all of
the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any
other provision of this Mortgage, the Mortgagor shall not be
required to pay any income, profits or revenue tax upon the
income of the Mortgagee, the Trustee or any Noteholder nor
any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee,
the Trustee or the Noteholder nor any interest, additions to
tax or penalties in respect thereof, unless such tax is
imposed, levied or assessed in substitution for any
Impositions that the Mortgagor is required to pay pursuant
to this Section 5.08. The Mortgagor will deliver to the
Mortgagee official receipts or other proof evidencing
payments of any Impositions in accordance with the
requirements of this Section 5.08. The Mortgagor shall
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not be entitled to any credit for taxes or assessments paid
against the Note;
(b) except for such property which the Mortgagor may dispose
of or replace pursuant to Section 2.02, maintain and keep all
its properties used or useful in the conduct of its business
(other than obsolete equipment), including, without
limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition,
except for reasonable wear and use, and make or cause to be
made all such needful and proper repairs, renewals and
replacements thereto consistent with the standards of other
casino-hotels in Atlantic City, New Jersey;
(c) occupy and continuously operate the Casino-Hotel and
keep the Casino-Hotel supplied with Tangible Personal
Property, all in a manner consistent with the standards of
other casino-hotels in Atlantic City, New Jersey (provided
that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section
3.01(f));
(d) subject to the provisions of Section 5.09 relating to
contests, the Mortgagor at its sole expense will timely
(1) comply with all Legal Requirements and Insurance
Requirements, whether or not compliance therewith shall
require structural changes in the buildings and improvements
included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof,
(2) procure, maintain and comply with all permits and other
authorizations required for (i) the use of the Casino as a
gaming and gambling facility, (ii) the on-premises consumption
of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made,
and for the proper erection, installation, operation and
maintenance of the improvements or any part thereof, and
(3) comply with any instruments of record at the time in
force affecting the Trust Estate or any part thereof, if the
failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the
foregoing, the Mortgagor represents and warrants that at the
time of the execution of this Mortgage, the Mortgagor is in
compliance with the requirements of clauses (1), (2) and (3);
(e) in the event of the passage after the date of this
Mortgage of any law of the State of New Jersey, or any other
governmental entity, changing in any way the laws now in force
for the taxation of mortgages, or debts secured thereby, for
state or local purposes, or the manner of the operation of
any such taxes, so as to affect the interest of the
Mortgagee, then and in such
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event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for
any reason payment by the Mortgagor of any such new or
additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured
hereby wholly or partially usurious under any of the terms or
provisions of the Note, or this Mortgage, or otherwise, the
Mortgagee may, at the Mortgagee's option, declare the whole
sum secured by this Mortgage, with interest thereon, to be
due and payable 90 days after notice of election thereof has
been given by the Mortgagee, or the Mortgagee may, at the
Mortgagee's option, pay that amount or portion of such taxes
as renders the loan or indebtedness secured hereby unlawful or
usurious, in which event the Mortgagor shall concurrently
therewith pay the remaining lawful and nonusurious portion or
balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may,
at its sole expense, contest by appropriate legal proceedings
conducted in good faith and with due diligence, the amount or validity
or application, in whole or in part of any Imposition or lien
therefor or any Legal Requirement or Insurance Requirement or the
application of any instrument of record affecting the Trust Estate
or any part thereof or any claims of mechanics, materialmen,
suppliers, or vendors or lien therefore, and may withhold payment
of the same pending such proceedings if permitted by law, or make
payment under protest, or defer compliance with any such Legal
Requirement, any such Insurance Requirement or the terms of any
such instrument, and the same shall not be a Default hereunder,
provided that (a) in the case of any Impositions or lien therefor
or any claims of mechanics, materialmen, suppliers or vendors or
lien therefor, such proceedings shall suspend the collection
thereof from each of the Mortgagor, the Mortgagee, the Trustee,
the Noteholder and the Trust Estate, (b) neither the Trust Estate
nor any interest therein would be in any danger of being sold,
forfeited, or lost, (c) such action would not result in or
constitute a default under any Ground Lease or Superior Mortgage,
(d) in the case of a Legal Requirement, neither the Noteholder nor
the Mortgagee shall be in any danger of any civil or any criminal
liability, and the failure of the Mortgagor to comply with such
Legal Requirement shall not affect the continuance in good
standing of any Permit or result in the suspension, termination,
non-renewal or material adverse modification of any permit, and
(e) in the case of an Insurance Requirement, the failure of the
Mortgagor to comply therewith shall not affect the validity of any
insurance required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without
limiting the generality of the first sentence of Section 5.03 and
notwithstanding the provisions of Section 5.03(a)(ii), the
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Mortgagor will cause to be removed, either by payment, or bonding
or otherwise, all claims and demands of mechanics, materialmen,
laborers, and others which, if unpaid, might result in, or permit
the creation of, a lien on the Premises and/or Trust Estate or any
part thereof, or on the revenues, rents, issues, income and profits
arising therefrom and in general will do or cause to be done
everything necessary so that the lien hereof shall be fully
preserved, at the cost of the Mortgagor, without expense to the
Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage
by fire, lightning, and other risks from time to time included
under "all-risk" policies and against loss or damage by
sprinkler leakage, water damage, collapse, malicious
mischief and explosion in respect of any steam and pressure
boiler and similar apparatus located on such insurable
properties, in amounts at all times sufficient to prevent
the Mortgagor from becoming a coinsurer within the terms of
the applicable policies, but in any event such insurance
shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the
"Insurance Amount"): (i) 100% of the then full insurable value
of such insurable properties, the term "full insurable value"
to mean the actual replacement cost (excluding the costs of
foundation, footing, excavation, paving, landscaping and
other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36
calendar months), by an Architect, contractor, appraiser, or
an Insurer, (ii) the amount required to be maintained pursuant
to the Superior Instrument Requirements;
(2) war risk insurance as and when such insurance is obtainable
from the United States of America or any agency thereof as
promptly as reasonably practicable after the same becomes so
obtainable, in an amount not less than the Insurance Amount,
or in such lesser amount as may then be so obtainable;
(3) public liability, including personal injury and property
damage and comprehensive general liability connected with the
possession, use, leasing, operation or condition of such
insurable properties in such amounts as, in the Mortgagor's
judgment, are prudent, considering the cost of such insurance,
for personal injury and
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property damage with respect to any one occurrence, which may
be under an umbrella policy. Anything contained in this clause
(3) to the contrary notwithstanding, the Superior Instrument Requirements
with respect to the kinds and amount of insurance described in
this clause (3) shall be satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to
any work (to the extent the risks to be covered thereby are
not already covered by other policies of insurance maintained
by the Mortgagor) on or about such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time
that the Mortgagor is renewing any policy for such insurance
or taking out any new or replacement such policy covering a
period of less than 12 months, the Mortgagor shall deliver to
the Mortgagee an Officers' Certificate certifying that the
period of coverage to be maintained by the Mortgagor under
such policy is the maximum that can be maintained at rates
determined by the Mortgagor to be reasonable for such
coverage;
(6) to the extent available, flood insurance in an amount not
less than the Insurance Amount, or such lesser amount as may
then be so obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time
customarily insured against by persons owning or using
casino-hotels of comparable size in the boardwalk area of
Atlantic City, New Jersey and (ii) required to be maintained
pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to
maintain a deductible with respect to the insurance policies
described in clauses (1), (2), (6) and (7) in an amount not to
exceed (x) for the twelve month period commencing the date hereof,
$100,000 with respect to the insurance policies described in
clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels
of a similar size and value in Atlantic City, New Jersey (but in no
event more than $1,000,000), (ii) the Mortgagor shall be
permitted to maintain a $200,000 self insured
retention under the general liability policy described in
clause (3) and a deductible with respect to the other insurance
policies described in clause (3) in an amount not to exceed the
amount of deductible as is customarily maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the Mortgagor
shall not reduce its insurance coverage for the matters described
in clause (3) (which for purposes of
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this paragraph means a reduction in single limits or an increase
in deductible) unless and until the Mortgagor delivers to the
Mortgagee an Officers' Certificate certifying (w) that the coverage the
Mortgagor was theretofore maintaining cannot be maintained at rates
determined by the Mortgagor to be reasonable for such coverage,
(x) the amount of the proposed reduction, (y) the premium for the
existing and the proposed reduced coverage, and (z) that the
proposed deductible satisfied the criteria set forth in this clause (iii), and
(iv) the Mortgagor shall be permitted to maintain a deductible with
respect to the insurance policies described in clause (5) in the
forms of and in an amount not to exceed the amount of deductible as
is customarily maintained by casino-hotels of similar size in
Atlantic City, New Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of
workers' compensation insurance, name as additional insureds the Mortgagee
and, to the extent required by the Superior Instrument
Requirements, the Lessors and the holders of the Superior
Mortgages, (2) provide that all insurance proceeds for losses,
except in the case of public liability insurance and workers'
compensation insurance or as otherwise provided in Subsections
(d), (e) and (f) of this Section 5.11, be payable solely to the
Mortgagee or such other party as is required to receive such
proceeds under a Superior Mortgage, (3) except in the case of workers'
compensation, include effective waivers
(whether under the terms of any such policy or otherwise) by the
insurer of all claims for insurance premiums against all lost
payees and named insureds (other than the Mortgagor) and all
rights of subrogation against any named insured, (4) except in the
case of public liability and workers' compensation insurance,
provide that any losses shall be payable notwithstanding (i) any
act, failure to act, negligence of, or violation or breach of
warranties, declarations or conditions contained in such policy by
the Mortgagor or the Mortgagee or any other named insured or loss
payee (including, without limitation, with respect to the Released
Fee Land, the holders of any After-Acquired Fee Mortgages), (ii)
the occupation or use of the insurable properties for purposes more
hazardous than permitted by the terms of the policy, (iii) any
foreclosure or other proceeding or notice of sale relating to the
insurable properties or (iv) any change in the title to or
ownership or possession of the insurable properties, (5) contain
a non-contributory mortgagee clause in favor of the Mortgagee, and
(6) provide that if all or any part of such policy is cancelled,
terminated or expires, the insurer will forthwith give notice
thereof to each named insured an loss payee and that no
cancellation, reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by
each named insured and loss payee of written notice thereof.
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(c) The Mortgagor will deliver to the Mortgagee, (1)
duplicate originals of all insurance policies that the Mortgagor is
required to maintain pursuant to this Section 5.11 and (2) within
30 days after each reduction in insurance required to be maintained
by the Mortgagor hereunder, an Officers' Certificate setting forth
the particulars as to all such insurance policies and certifying
that the same comply with the requirements of this Section 5.11,
that all premiums or installments thereof then due thereon have
been paid and that the same are in full force and effect. The
Mortgagee shall not be responsible for effecting or renewing any
insurance or for the responsibility or solvency of the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which (x)
results in damage, loss or destruction in an amount in excess of
$5,000,000 to any buildings or improvements on the Premises
and/or any Tangible Personal Property or (y) pursuant to any
Superior Instrument Requirement, would require the deposit of
insurance proceeds with the Depositary, or action or proceeding
with respect thereto. Whenever the Superior Instrument
Requirements require or permit the selection of the Depositary
by the Mortgagor, the Mortgagor shall select the Insurance Trustee
as the Depositary. Within 30 days after any Casualty which results
in any damage, loss or destruction in an amount in excess of
$10,000,000 to any buildings or improvements of the Premises
and/or any Tangible Personal Property, the Mortgagor shall deliver
to the Mortgagee a certificate of an Architect stating whether, in
such Architect's opinion, applicable Legal Requirements permit the
Restoration of such buildings and improvements for the same uses
and to the same size and quality in all material respects, as
existed immediately prior to the Casualty (and if such certificate
states the Legal Requirements do not permit such Restoration, such
certificate shall describe the manner closest approximating such
criteria to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of Appraised
Value dated not more than 10 days prior to delivery setting forth
the Appraised Value immediately prior to the Casualty and the
estimated Appraised Value immediately after the Restoration). If
the Mortgagor is required to deliver such Certificates of Appraised
Value and if based on such Certificates of Appraised Value
immediately after Restoration, the aggregate Outstanding Amount
of First Mortgage Debt immediately after such Restoration shall
exceed the greater of (i) 66 2/3% of the Appraised Value
immediately after such Restoration or (ii) the quotient of the
Outstanding Amount of First Mortgage Debt immediately prior to such
Casualty divided by the Appraised Value immediately prior to the
Casualty multiplied by the Appraised Value immediately after such
Restoration, then the proceeds of any insurance shall, at the
election of Mortgagee, either be applied to Restoration as set
forth in Subsections (e), (h) and (i)
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below) or paid and delivered to the Mortgagee to the extent of the then
Outstanding Amount of the Notes and any other interest or other sums due
hereunder or thereunder to be applied to the satisfaction of the Mortgage to
the extent proceeds are available for such purpose and provided
that no additional sums are due to the Trustee or the Noteholders
under the Notes or the Indenture, the balance of any net insurance
proceeds shall be paid to the Mortgagor. Notwithstanding the
foregoing sentence, if such Certificates of Appraised Values
indicates that the Outstanding Amount of First Mortgage Debt
immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the
proceeds of insurance will be made available for Restoration
(subject to paragraphs, (e), (h) and (i) below) if the Mortgagor
obtains an irrevocable commitment from a nationally recognized
financial institution having a combined capital and surplus of at
least $100,000,000, to supply, upon an acceleration under this
Mortgage as a result of an Event of Default, funds to the Mortgagor
as additions to capital in an amount equal to the Outstanding
Amount of First Mortgage Debt in excess of the Appraised Value
necessary to be paid down so that the Outstanding Amount of First
Mortgage Debt will not exceed either of the two amounts determined
pursuant to such clauses (i) and (ii), PROVIDED that such commitment
may only be released if, upon an Appraisal at any time following
completion of such Restoration, the aggregate Outstanding Amount of
the First Mortgage Debt does not exceed 66-2/3% of the Appraised
Value.
(e) Subject to the provisions of Subsection (d) above,
in case a Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined)
does not exceed the sum of $10,000,000, the net insurance proceeds
shall be paid by the Mortgagee to the Mortgagor (unless the
Superior Instrument Requirements provide that the same shall
be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more
or if the Superior Instrument Requirements provide that the same shall
be paid to the Depositary, the net insurance proceeds shall
be paid by the Mortgagee to the Insurance Trustee (or other
Depositary required by the Superior Instrument Requirements,
provided that such Depositary holds such proceeds in trust for
purposes of paying the costs of Restoration);
(3) the Mortgagor shall commence with reasonable
promptness under the circumstances and thereafter with due
diligence proceed to perform and complete in a good and
workmanlike manner the restoration, repair, replacement or
rebuilding of the damage or destruction
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resulting from the Casualty (all of which restoration, repair, replacement
or rebuilding are referred to as the "Restoration") in accordance with
the plans and specifications submitted to the Insurance Trustee, in
conformance with all Legal Requirements and Superior
Instrument Requirements, and in accordance with the further
provisions of this Subsection (e), regardless of the extent of
any such Casualty and whether or not net insurance proceeds,
if any, shall be available or, if available, shall be
sufficient, for the purpose of the Restoration (provided,
however, that if the Mortgagor does not receive any net
insurance proceeds within 30 days after any Casualty because
the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration
shall be deferred until such proceeds are made available to
the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an
Officers' Certificate certifying that the Mortgagor is diligently and
continuously adjusting such loss with the Insurer, (ii) the
Mortgagor delivers to the Mortgagee an Officers' Certificate
within such 30-day period requesting the extension of such
period, estimating the date on which such proceeds will be
available and describing the Mortgagor's efforts to adjust
such loss and certifying that such extension does not
constitute a default or a breach of any of the provisions of
any of the Ground Leases (or if so, such default or breach has
been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter
updating the information contained in the certificate
described in Clause (ii)). All Restoration work shall be
performed in accordance with the applicable provisions of
Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements
and, prior to commencing any Restoration, the Mortgagor shall
obtain all Permits necessary in connection therewith, and
shall obtain, and keep in full force and effect until the
completion of such Restoration, such additional insurance as
the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration
shall be accompanied by a certificate of the Mortgagor and an
Opinion of Counsel to the effect that upon the completion of
the Restoration pursuant to the plans and specifications the
Premises, and all buildings and improvements, thereon will
comply with all superior Instrument Requirements, Legal
Requirements and Insurance Requirements. Notwithstanding
anything in this Section 5.11 to the contrary, if such
Casualty is in an amount less than $5,000,000, the
Mortgagor shall not be required to perform and complete such
Restoration (unless the performance and completion of the
Restoration is necessary in order for the Mortgagor to be in
compliance with any term, provision or condition of this
Mortgage
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(other than this Section 5.11(e)) or any Superior
Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall
be held by the Mortgagor in trust for the purpose of paying
the cost of the Restoration, except as otherwise provided
herein;
(5) Any net insurance proceeds that the Insurance
Trustee holds pursuant to this Subsection (e), shall be deposited
in an interest-bearing investment reasonably designate by Mortgagor
(to the extent the Mortgagor is permitted to designate such
investment under the Superior Instrument Requirements) (and
the interest thereon shall be added to such proceeds) and
shall be paid by the Insurance Trustee in reimburse the
Mortgagor for, or to make payment for, the Restoration,
after the Insurance Trustee deducts therefrom the amount of
any reasonable costs and expenses incurred in connection with
the performance of its obligations under this Section 5.11.
The Insurance Trustee shall make such payments not more
frequently than once every 30 days upon the written request
of the Mortgagor (unless more frequent payments are required
by Superior Instrument Requirements), by paying to the
Mortgagor or the persons named in the certificate described
in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate from time to time as the
Restoration progresses, provided the Mortgagor has complied
with the requirements of this Subsection (e) and such payment
is permitted by an applicable Superior Instrument
Requirements. The Mortgagor's written request shall be
accompanied by (i) the certificate described in Clause (6) of
this Subsection (e) and (ii) a title company or official
search, or other evidence reasonably acceptable to the
Insurance Trustee, showing that there have not been filed
with respect to the Premises, any vendor's, contractor's
mechanic's, laborer's or materialman's statutory or similar
lien which has not been discharged of record (or bonded
against or secured by other security) or any other
encumbrance irrespective of its priority (other than
Permitted Encumbrances).
(6) The certificate required by Clause (5) of this
Subsection (e) shall (A) be an Officers' Certificate,
countersigned by the Architect in charge of the Restoration with
respect to the matters described in (i) and (v) below, (B) be dated
not more than 10 days prior to such request and (C) set forth (in
addition to any other requirements contained in any
applicable Superior Instrument Requirements) that:
(i) all of the Restoration work theretofore performed
is in substantial compliance with the
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plans and specifications theretofore submitted to the Insurance
Trustee and in compliance with all Superior Instrument Requirements,
Legal Requirements and Insurance Requirements;
(ii) the sum then requested either has been paid by the
Mortgagor or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered
services or furnished or contracted to deliver materials
for the Restoration therein specified, and the names and
addresses of such persons, a brief description of such
services and materials and the several amounts so paid
or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the
basis in any pervious or then pending request for the
withdrawal of net insurance proceeds, and that the sum
then requested does not exceed the value of the services
and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to
Subclause (ii) of this Clause (6) in such certificate
to be due for services or materials, and except for
amounts in dispute and/or customary retainages, there
is no outstanding indebtedness known to the person
signing such certificate, after due inquiry, which is
then due for labor, wages, materials, supplies or
services in connection with such Restoration; and
(v) the remaining cost, as estimated by the persons
signing such certificate, of the Restoration in order
to complete the same does not exceed the net insurance
proceeds remaining in the hands of Insurance Trustee
after payment of the sum requested in such certificate
or if such estimated cost does exceed such insurance
proceeds such certificate shall state the amount of any
such deficiency. If the certificate states that such
deficiency will exist, the Mortgagor shall deliver the
amount of such deficiency in cash or cash equivalent to
the Insurance Trustee simultaneously with the delivery
of such certificate, which amount shall be deemed
insurance proceeds for purposes of this Section
5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the
entire cost of the Restoration, then, after completion of the
Restoration, the Mortgagor shall pay the deficiency. If all
or any part of the net insurance proceeds are not used for
the restoration in accordance
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with this Subsection (e) (because such proceeds exceed the amount
required to complete the Restoration), then upon completion of the
Restoration in accordance with this Subsection (e), such
amount not so used, if held by the Insurance Trustee, shall
be paid to the Mortgagor (if permitted by Superior Instrument
Requirements).
(f) Provided that no Event of Default has occurred and is continuing,
all net business interruption insurance proceeds shall be paid to
the Mortgagor, to be segregated from the other funds of Mortgagor
and held in trust by Mortgagor for the following purposes and in
the following order of priority: (i) for the payment of Impositions
and amounts due under the Ground Leases and Superior Mortgages;
(ii) for debt service for the estimated period of Restoration (for
purposes of this Section 5.11(f), interest and principal payments
due on any payment date under the Note will deemed to accrue in
equal daily installments beginning the day after the immediately
preceding payment date and ending on such payment date); and (iii)
for any expense incurred in connection with the operation or
business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent
in form or contributing in the event of loss with that required to
be maintained pursuant to this Section 5.11, unless the same are
permitted by Superior Instrument Requirements and the Mortgagee is
included therein as a named insured, with loss payable to the
Mortgagee and the Insurance Trustee pursuant to Section 5.11(b)
hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall
promptly deliver to the Mortgagee a duplicate original of the
policy of such insurance, a copy thereof certified by the insurer
or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance
claims by reason of damage or destruction to any
portion of the Trust Estate may be adjusted by the Mortgagor, but the
Mortgagee shall have the right (but not the obligation) to join the
Mortgagor in adjusting, and approving the adjustment of, any such
loss except in the event of a loss where the amount of insurance
reasonably anticipated to be received with respect to such loss is
less than Five Million Dollars ($5,000,000), and the Mortgagor
shall assist the Mortgagee in any such adjustment at the request of
the Mortgagee. If the Mortgagee at its election as aforesaid joins
the Mortgagor in any adjustment process, then the Mortgagee's
approval of the adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary,
if an Event of Default shall have occurred and be continuing, the
Mortgagee may, at its option, (A) refrain from paying to the
Mortgagor or the Insurance Trustee any net insurance proceeds or
(B) instruct the Insurance Trustee to
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pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee,
as the case may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not
authorize, permit or make any demolition, alteration or
improvement of any building included in the Trust Estate or any
new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in
this Section 5.12 set forth.
Unless an Event of Default shall have occurred and be continuing,
the Mortgagor shall have the right at all times to make or permit
such alterations, improvements or new constructions, structural or
otherwise (herein sometimes called collectively "alterations"), of
or on the Trust Estate, to be made in all cases subject to the
following conditions:
(a) no alteration shall be undertaken or carried out except in
conformity with all Superior Instrument Requirements, Legal
Requirements and Insurance Requirements;
(b) if the estimated cost of any alteration, together with other
alterations that constitute a single construction plan or
project (whether or not accomplished in several stages or
procedures), exceeds $5,000,000, the building or buildings,
as so improved or altered, upon completion of the work shall
be of a value not less than the value of such building or
buildings immediately prior to the making of such
alterations;
(c) any alteration which is structural in nature or involves an
estimated cost of more than $5,000,000 shall be conducted
under the supervision of an Architect, and no such alteration
shall be undertaken until 10 days after there shall have been
filed with the Mortgagee detailed plans and specifications and
cost estimates therefor, stating that such plans and
specification conform to all, prepared and approved in
writing by such Architect and accompanied by a certificate of
such Architect stating that such plans and specifications
conform to all applicable provisions of this Section 5.12;
(d) no alteration involving an estimated cost of more than
$5,000,000 shall be undertaken until the Mortgagor has
furnished to the Mortgagee, at the Mortgagor's sole cost and
expense, a surety bond or bonds, covering performance, and
labor and material payments with respect to the work to be so
performed, naming the Mortgagee as obligee, issued by a
responsible surety company, authorized to do business in the
state of New Jersey, in a form generally and customarily used
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by such surety in an amount equal to the estimated cost of
construction of the work covered by the plans and
specifications therefor, guaranteed and conditioned upon
the performance and completion of such construction,
substantially in conformity with the such plans and
specifications and within a reasonable time, subject to
delays by fire, strikes, lock-out, acts of God, inability to
obtain labor or materials, governmental restrictions, enemy
action, civil commotion or unavoidable Casualty or other
similar causes beyond the control of the Mortgagor, free and
clear of all liens, claims and liabilities for the cost of
such alterations. In the event such surety bond or bonds
shall be unobtainable the Mortgagor shall deliver to the
Mortgagee security by cash, letter of credit or other
guarantee, affording substantially the same protection as
would such bond or bonds;
(e) all work done in connection with any alterations
shall be done promptly and in good and workmanlike manner.
The work in connection with any alteration shall be prosecuted with
reasonable dispatch, delays due to fire, strikes, lockouts,
acts of God, inability to obtain labor or materials,
governmental restrictions, enemy action, civil commotion or
unavoidable casualty or similar causes beyond the control of
the Mortgagor excepted;
(f) if the estimated cost of alterations exceed $5,000,000, the
Mortgagor shall have delivered to the Mortgagee (A) prior to
the commencement of such alterations, additions or
improvements copies of all Permits required for the
commencement of such work together with a certificate of the
Architect or an Opinion of Counsel to the effect that all
Permits required for the commencement of such alterations
have been obtained; and (B) within a reasonable period of
time after the completion of the alterations, copies of all
Permits required in connection with the completion thereof,
together with either an Opinion of Counsel or a certificate
of the Architect that all such Permits have been so obtained
by the Mortgagor and that the Mortgagor has complied with all
the requirements of this Section 5.12;
(g) no alterations of any kind shall be made to any building
which shall change the use or reduce the size or quality of
the building in any material respect; and
(h) no alterations costing in excess of
$5,000,000, together with other alterations that
constitute a single construction plan or project (whether or
not accomplished in several stages or procedures), shall be
made to any building if such alterations are not
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expected to be completed at least 120 days prior to the maturity
date of the Note (except if such alterations are required in
order to comply with Legal Requirements or Superior Instrument
Requirements).
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d),
enter into any Lease, or renew, modify, extend, terminate, or
amend any Lease, except in the ordinary course of business
of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or
collection of, any rental payments under any Lease more than
one year in advance of the respective periods in respect of
which they are to accrue, except that, in connection with
the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected
and received in advance in an amount not in excess of three months'
rent and/or a security deposit may be required thereunder in an
amount not exceeding one year's rent;
(c) collaterally assign, transfer or hypothecate
(other than to the Mortgagee hereunder, to the mortgagee under the
Guaranty Mortgage or to the holder of any Working Capital
Facility Lien) any rental payment under any Lease whether
then due or to accrue in the future, the interest of the
Mortgagor as landlord under any Lease or the rents, issues or
profits of the Trust Estate;
(d) after the date hereof, enter into any Lease,
or renew any Lease unless such Lease contains terms to the
effect as follows:
(1) the Lease and the rights of the tenants
thereunder shall be subject and subordinate to the
rights of the Mortgagee under this Mortgage, the
mortgagee under the Guaranty Mortgage and the holders
of any Superior Mortgage,
(2) the Lease may be assigned by the
landlord thereunder to the Mortgagee,
(3) the rights and remedies of the tenant in
respect of any obligations of the landlord thereunder
shall be nonrecourse as to any assets of the landlord
other than its equity in the building in which the
leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and
subordinate to the rights of the lessee
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under any new lease entered into in the event of a termination
of a Ground Lease;
(e) modify any Lease with respect to the matters described
in clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than
with any Affiliate of the Mortgagor) for a term of not
less than 3 nor more than 10 years, the Mortgagee shall deliver a
non-disturbance and attornment agreement substantially in the form of
Schedule 4 hereto, following receipt of a certificate of a leasing broker
(who is not an Affiliate of the Mortgagor or the broker involved in such
transaction) experienced with respect to leases of commercial space in the
Atlantic City area stating that the rent under the Lease is not less than
fair market rent and that the other terms of the Lease are fair and
reasonable in the commercial leasing market. The Mortgagor shall, upon
demand, reimburse the Mortgagee for any costs and expenses (including
reasonable attorney's fees) incurred by the Mortgagee in connection with
the preparation, review and delivery of such non-disturbance and attornment
agreements.
Promptly after the execution and delivery hereof, the Mortgagor
will cause the lessee under each Lease now in effect and promptly after
each Lease is executed or becomes effective after the date of the execution
and delivery hereof, the Mortgagor will cause the lessee under each such.
Lease, to be duly notified in writing (unless the substance and effect of
such notice shall be contained in such Lease) of the subjection of the
owner's interest, as lessor, in and to such Lease to the lien of this
Mortgage and of the name and address of the Mortgagee. Each such notice
shall state that the lease of such lessee is a Lease as herein defined.
If a new Mortgagee is at any time appointed hereunder or the address
of the Mortgagee shall at any time be changed, the Mortgagor will cause
each lessee under each Lease to be promptly notified in writing of the name
address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur
any expenditure other than de minimis amounts) to obtain from each lessee
under each Lease to whom any notice is sent pursuant to this paragraph an
acknowledgment of receipt of such notice, and the Mortgagor will promptly
deliver to the Mortgagee, upon request, a copy of each such acknowledgment
of receipt which it is able to obtain. The Mortgagee shall not be
responsible for securing or causing the Mortgagor to secure any such
acknowledgment.
Nothing contained in this Section 5.13 shall limit the
provisions of Section 4.04 hereof.
Section 5.14. [Reserved]
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Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject
to Article Four, the Mortgagor will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence
as a corporation, and its rights (both statutory and under its
articles of incorporation) and franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The
Mortgagor will keep proper books of record and account in accordance
with Section 12.05 of the Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall
fail to perform any of its covenants in this Mortgage and
such failure shall continue for 10 days following notice
thereof given by the Mortgagee (or at any time, without
notice, in case of emergency), the Mortgagee may (but is not
obligated to), at any time and from time to time, take any
action or make advances, to effect performance of any such
covenant on behalf of the Mortgagor; and all moneys so used
or advanced by the Mortgagee and all reasonable costs and
expenses incurred by Mortgagee in connection therewith,
together with interest on all of the same at the rate of
interest set forth in the Note, shall be repaid by the
Mortgagor upon demand and such advances shall be secured
under this Mortgage prior to the Note.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The
Mortgagor covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any usury, stay
or extension law or any other law which would prohibit or forgive the
Mortgagor from paying all or any portion of the obligations evidenced
by the Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may otherwise affect the covenants
or the performance of this Mortgage; and the Mortgagor (to the extent
that it may lawfully do so) 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
Mortgagee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN.
(a) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Taking affecting the Trust
Estate. If the Taking (i) is estimated to result in an award of more
than [$5,000,000] or (ii) the Taking would interfere with or adversely
affect the operation of the Casino-Hotel in accordance with Legal
Requirements then within 30 days after any such Taking, the Mortgagor
shall
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deliver to the Mortgagee a certificate of an Architect stating
whether, in such Architect's opinion, applicable Legal Requirements
permit the Restoration of any buildings and improvements for the same
uses and the same size and quality in all material respects as existed
immediately prior to the Taking (and if such certificate states that
Legal Requirements do not permit such Restoration, such certificate
shall describe the manner closest approximating such criteria to which
the buildings and improvements could be so restored and shall be
accompanied by a Certificate of Appraised Value dated not more than 10
days prior to delivery setting forth the Appraised Value immediately
prior to the Taking and the estimated Appraised Value immediately
after the permitted Restoration). If the Mortgagor is required to
deliver such Certificates of Appraised Value and if based on such
Certificates of Appraised Value immediately after Restoration, the
aggregate Outstanding Amount of First Mortgage Debt immediately after
such Restoration shall exceed the greater of (i) 66-2/3% of the
Appraised Value immediately after such Restoration or (ii) the
quotient of the Outstanding Amount of the First Mortgage Debt
immediately prior to such Taking divided by the Appraised Value
immediately prior to the Taking multiplied by the Appraised Value
immediately after such Restoration, then the Taking shall be deemed a
Taking of "the whole or substantially all of the Premises."
Notwithstanding the foregoing sentence, if such Certificates of
Appraised Value indicate that the Outstanding Amount of First Mortgage
Debt immediately after such Restoration exceeds the greater of the two
amounts determined pursuant to subclauses (i) and (ii) above, the
Taking will not be deemed a Taking of "the whole or substantially all
of the Premises", if the Mortgagor obtains an irrevocable commitment
from a nationally recognized financial institution having a combined
capital and surplus of at least [$100,000,000], to supply, upon an
acceleration under this Mortgage as a result of an Event of Default,
funds to the Mortgagor as additions to capital in an amount equal to
the Outstanding Amount of First Mortgage Debt in excess of the
Appraised Value necessary to be paid down so that the Outstanding
Amount of First Mortgage Debt will not exceed either of the two
amounts determined pursuant to such clauses (i) and (ii), PROVIDED
that such commitment may only be released if, upon an Appraisal at any
time following completion of such Restoration, the aggregate
Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3%
of the Appraised Value.
(b) If at any time there shall occur a Taking of less than the
whole or substantially all of the Premises and the award or
awards resulting therefrom payable to the Mortgagor (and not
to any Lessor or the holder of any Superior Mortgage) (after
there shall have been first deducted the fees and expenses
incurred in connection with the termination, settlement and
collection of such award or awards, including but not
limited to reasonable counsel fees and expenses,
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hereinafter referred to as "Settlement Costs") (i) shall not exceed
the sum of [$10,000,000] (except to the extent that the Insurance
trustee or a Depositary is required to hold such amount pursuant to a
Superior Instrument Requirement), the entire amount of such award
shall be paid to the Mortgagor; and (ii) if such award is
[$10,000,000] or more, the entire amount of such award shall be paid
to the Insurance Trustee (or other Depositary required by a Superior
Mortgage, provided that such Depositary holds such award in trust for
purposes of paying the cost of Restoration). In either event, such
awards shall be applied to the cost of demolition, repair, Restoration
and replacement of the Trust Estate to as nearly practicable to their
uses, value and condition immediately prior to the Taking (except to
the extent otherwise provided by Superior Instrument Requirements).
The Mortgagor shall promptly commence and with due diligence perform
that Restoration in accordance with clauses (3), (4) and (7) of
Section 5.11(e) (after substituting the words "Taking" of "Casualty"
and "award" for "not insurance proceeds"), at no cost to the
Mortgagee. All claims or suits arising out of any Taking may be
settled by the Mortgagor, except that the Mortgagee shall have the
right (but not the obligation) to participate in such claim or suit,
and not the obligation) to participate in such claim or suit, and to
approve settlement thereof (and notwithstanding anything in the Ground
Leases to the contrary, the Mortgagor shall not agree to any
settlement or compromise of the amount of any such claim or suit),
except a claim or suit where the amount reasonably anticipated to be
received by the Mortgagor is less than $5,000,000. If the Mortgagee
at its election as aforesaid joins such claim or suit, the Mortgagee's
approval of such settlement shall not be unreasonably withheld. The
Insurance Trustee shall promptly pay such sums as are received by it
from such Taking from time to time in accordance with the procedures
set forth in clauses (5) and (6) of Section 5.11(e) (after
substituting the words "Taking" for "Casualty" and "award" for "net
insurance proceeds").
(c) If at any time there shall occur a Taking of the whole or
substantially all of the Premises, then the award payable to the
Mortgagor shall not be applied to Restoration but shall instead be
paid and delivered to the Trustee (subject to the rights of the
Lessors under the Superior Leases and the holders of any Superior
Mortgages) to the extent of the then Outstanding Amount of the Note
and any other interest or other sums due hereunder or thereunder to be
applied to the satisfaction of this Mortgage to the extent proceeds
are available for such purpose and provided that no additional sums
are due the Trustee or the Noteholder under the Note or the Indenture,
the balance of any award shall be paid to the Mortgagor.
(d) Notwithstanding anything contained herein to the contrary,
if an Event of Default shall have occurred and
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is continuing, the Mortgagee may, at its option, (A) refrain from
paying to the Mortgagor or the Insurance Trustee any award or
(B) instruct the Insurance Trustee to pay to the Mortgagee any
award then held by the Insurance Trustee, as the case may be.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause
to be done all things necessary to preserve and keep unimpaired the
rights of the Mortgagor, as lessee under the Ground Lease, and to
prevent any termination, surrender, cancellation, forfeiture or
impairment thereof. The Mortgagor shall at all times fully perform
and comply with all agreements, covenants, terms and conditions
imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all
taxes, assessments and other charges mentioned therein) prior to the
expiration of any notice and/or cure period provided in each such
Ground Lease. Upon receipt by the Mortgagee from a Lessor of any
written notice of default by the lessee thereunder, Mortgagee may rely
thereon and take any action the Mortgagee deems necessary in its sole
discretion to prevent or to cure any default by the Mortgagor in the
performance of or compliance with any of the agreements, covenants,
terms or conditions imposed upon or assumed by the Mortgagor as lessee
under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by the Mortgagor
or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers'
Certificate, Opinion of Counsel and a copy of the injunction, all as
described in Section 3.01(g), the Mortgagee shall not take any such
action unless and until the Mortgagor and/or the Mortgagee no longer
has the benefit of any tolling or stay referred to in Section 3.01(g).
Without limiting the generality of Section 3.09 hereof, the Mortgagor
hereby expressly grants to the Mortgagee, and agrees that the
Mortgagee shall have, the absolute and immediate right to enter in and
upon the Premises or any part thereof to such extent and as often as
the Mortgagee, in its sole discretion, deems necessary or desirable
for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. Subject to the
preceding and without limiting the Mortgagee's other remedies under
this Mortgage, the Mortgagee may pay and expend such sums of money as
the Mortgagee in its sole discretion deems necessary for any such
purpose, and the Mortgagor hereby agrees to pay to the Mortgagee,
immediately and without demand, all such sums so paid and expended by
the Mortgagee, together with interest thereon from the date of each
such payment at the highest rate of interest set forth in the Note.
All sums so paid and expended by the Mortgagee, and the interest
thereon, shall be added to and be secured by the lien of this
Mortgage.
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(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and
that it will not without the express written consent of the Mortgagee
modify, change, supplement, alter or amend such Ground Leases either
orally or in writing and, as further security for the repayment of the
indebtedness secured hereby and for the performance of the covenants
herein and in such Ground Leases contained, the Mortgagor hereby
assigns to the Mortgagee all of its rights, privileges and
prerogatives as lessee under such Ground Leases to terminate, cancel,
modify, change, supplement, alter or amend such Ground Leases, and any
such termination, cancellation, modification, change, supplement,
alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing
and (2) either (A) there has been an acceleration of maturity of the
Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises
its rights under Section 3.09 hereof, the Mortgagee shall have no
right to terminate, cancel, modify, change, supplement, alter or amend
the Ground Leases;
(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of
the Mortgagor's obligations under such Ground Leases, pursuant to such
Ground Leases or otherwise, shall release the Mortgagor from any of
its obligations under this Mortgage, including its obligations with
respect to the payment of rent as provided for in such Ground Leases
and the performance of all of the terms, provisions, covenants,
conditions and agreements contained in such Ground Leases, to be kept,
performed and complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest
in the improvements on the Leased Land and the leasehold estates shall
not merge by and shall always remain separate and distinct,
notwithstanding the union of such estates either in the Lessor or in
the lessee, or in a third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in
writing of any request made by the Mortgagor, as lessee under each of
the Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any
arbitration proceedings, as well as all proceedings thereunder. In
addition, the Mortgagor shall promptly
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deliver to the Mortgagee a copy of the determination of the
arbitrators in each such arbitration proceeding. The Mortgagee shall
have the right to participate in such arbitration proceedings in
association with the Mortgagor or on its own behalf as an interested
party in accordance with the terms of the Ground Leases;
(v) the Mortgagor shall not consent to the subordination of
any Ground Lease to any mortgage deed of trust or other lien of the
fee interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option
under any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such
election to the Lessor or (B) the Mortgagor acquires fee simple title
or any other estate, title or interest in the Leased Land, the
Mortgagor shall promptly notify the Mortgagee of such acquisition and
shall cause to be executed and
recorded all such other and further assurances or other instruments in
writing as may be required by law or, in the opinion of the Mortgagee, be
reasonably desirable to carry out the intent and meaning of clause (x) of
Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease
by any Lessor or any trustee arising from or in connection with any
case, proceeding or other action commenced or pending by or against
any Lessor under the Code or any comparable provision contained in any
present or future federal, state, local, foreign or other statute,
law, rule or regulation, the Mortgagor shall give notice thereof to
the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any
and all of the Mortgagor's rights as lessee under Section 365(h) of
the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation ("Comparable Provision") and (B) covenants that it shall
not elect to treat any Ground Lease as terminated pursuant to Section
365(h) of the Code or any Comparable Provision without the prior
written consent of the Mortgagee and (C) agrees that any such election
by the Mortgagor without such consent shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to
the Mortgagee all of the Mortgagor's claims and rights to the payment
of damages arising from any rejection by Lessor of any Ground lease
under the Code or any Comparable Provision. The Mortgagee shall have
the right to proceed in its own name or in
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the name of the Mortgagor in respect of any claim, suit, action or
proceeding relating to the rejection of any Ground Lease, including,
without limitation, the right to file and prosecute, in cooperation
with the Mortgagor, any proofs of claim, complaints, motions,
applications notices and other documents, in any case in respect of
Lessor under the Code or any Comparable Provision. This assignment
constitutes a present, irrevocable and unconditional assignment of the
foregoing claims, rights and remedies, and shall continue in effect
until all of the indebtedness and obligations secured by this Mortgage
shall have been satisfied and discharged in full. Any amounts
received by the Mortgagee in damages arising out of the rejection of
any Ground Lease as aforesaid shall be applied first to all reasonable
costs and expenses of the Mortgagee (including, without limitation,
reasonable attorneys' fees) incurred in connection with the exercise
of any of its rights or remedies under this Section 5.21, and
thereafter as provided in Section 3.03 hereof;
(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or
all of the Ground Leases the Mortgagor shall give the Mortgagee not
less than 10 days' prior notice of the date on which the Mortgagor
shall apply to the Bankruptcy Court or other judicial body with
appropriate jurisdiction for authority to reject the lease. The
Mortgagee shall have the right, but not the obligation, to serve upon
the Mortgagor within such 10 day period a notice stating that (a) the
Mortgagee demands that the Mortgagor assume and assign such Ground
Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any
Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s).
If the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a)
of the preceding sentence within 30 days after the notice shall have
been given subject to the performance by the Mortgagee of the covenant
provided for in clause (b) of the preceding sentence. Effective upon
the entry of an order for relief in respect of the Mortgagor under
Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby
assigns and transfers to the Mortgagee a non-exclusive right to apply
to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
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(x) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other communications or
notices with respect to events which relate to the possible impairment
of the security of this Mortgage, which it shall give or receive under
the Ground Leases and shall promptly notify the Mortgagor of any
default under any Ground lease on the part of the Lessor or the
Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the
Lessor under each Ground Lease, to the end that the Mortgagor may
enjoy all of the rights granted to it under the Ground leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any portion
thereof to or from an Affiliate.
(c) The Mortgagor hereby represents and warrants that all fixed
net rent, taxes and assessments, payable under the Ground Leases have
been paid to the extent they were due and payable to the date hereof
and that the Mortgagor has not received notice of its failure to pay
any other amounts payable under the Ground Leases which have not been
cured.
(d) If both the Lessor's and lessee's estates under any of the
Ground Leases or any portion thereof shall at any time become vested
in one owner, this Mortgage and the lien created hereby shall
nevertheless not be merged, extinguished, destroyed or terminated by
application of the doctrine of merger and, in such event, Mortgagee
shall continue to have all of the rights and privileges of the a
leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease
shall be terminated prior to the natural expiration of its term due to
default by the lessee thereunder, and if pursuant to such Ground
Lease, the Mortgagee or its designee shall acquire from the Lessor a
new lease of the Leased land or any portion thereof, the Mortgagor
shall have no right, title or interest in or to such lease or the
leasehold estate created thereby, or the options therein contained.
(f) Any leases for parking purposes hereafter entered into by
the Mortgagor as lessee shall contain provisions permitting the
assignment of the same to the Mortgagee and the Trustee and permitting
assignment without the lessor's consent if this Mortgage is
foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times
fully perform and comply with all agreements,
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covenants, terms and conditions imposed upon or assumed by it as
mortgagor under the Superior Mortgages prior to the expiration of any
notice and/or cure period provided in each such Superior Mortgage. If
a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior
Mortgage has been accelerated as a result thereof, the Mortgagee may
rely thereon and take any action the Mortgagee deems necessary in its
sole discretion to prevent or to cure any default by the Mortgagor in
the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the
Mortgagor as mortgagor under each of the Superior Mortgages even
though the existence of such default or the nature thereof may be
questioned or denied by the Mortgagor or by any party on behalf of the
Mortgagor provided that if the Mortgagor has heretofore taken such
actions as described in Section 3.01(h), the Mortgagee shall not take
any such action unless and until the Mortgagor and/or the Mortgagee no
longer has the benefit of any such tolling or stay referred to in
Section 3.01(h). Without limiting the generality of Section 3.09
hereof, the Mortgagor hereby expressly grants to the Mortgagee, and
agrees that upon such acceleration the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any
part thereof to such extent and as often as the Mortgagee, in its sole
discretion, deems necessary for the purpose permitted by the
immediately preceding sentence, subject only to applicable Legal
Requirements. The Mortgagee may (i) pay and expend such sums of money
as the Mortgagee in its sole discretion deems necessary for any such
purpose and (ii) in its sole discretion prepay any Superior Mortgage,
and the Mortgagor hereby agrees to pay to the Mortgagee, immediately
and without demand, all such sums referred to in (i) and (ii) above so
paid and expended by the Mortgagee, together with interest thereon
from the date of each such payment at the rate of interest set forth
in the Note. All sums so paid and expended by the Mortgagee and the
interest thereon shall be added to and be secured by the lien of this
Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first obtaining the
written consent of the Mortgagee in each instance: (A) modify any of
the terms, covenants or conditions of any Superior Mortgage, and
without limiting the foregoing, the Mortgagor shall not, without
satisfying such conditions, enter into or obtain any agreement whereby
the holder of any Superior Mortgage waives, postpones, extends,
reduces or modifies the payment of the installment of principal or
interest or any other item or amount now required to be paid under the
terms of any Superior Mortgage or modifies any other provision
thereof, or (B) acquire or permit or suffer any Affiliate of the
Mortgagor to acquire any Superior
64
<PAGE>
Mortgage or any interest therein. Notwithstanding anything in clause
(A) to the contrary, the Mortgagor shall have the right to amend,
supplement or modify any Superior Mortgage, if (x) the then
outstanding principal balance of the indebtedness secured by such
Superior Mortgage is not increased thereby, and (y) in the case of any
After-Acquired Fee Mortgage, such amendment, supplement or agreement
does not increase the property covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the mortgagor under each
Superior Mortgage, the note secured thereby and any other instrument
evidencing or securing the indebtedness owing to any holder of any
Superior Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an estoppel certificate or letter addressed to the Mortgagee
from holders of the Superior Mortgages, such certificate or letter to
be in such form as the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any
default under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified
portions of the Trust Estate shall be subject and subordinate to any
Existing Encumbrances, to the liens created by the Senior Mortgage
Documents and any mortgage, assignment, security agreement, financing
statement or other lien securing any Working Capital Facility (the
"Working Capital Facility Lien") encumbering Mortgagor's interest in
the affected portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be
self-operative with respect to the liens created by the Senior
Mortgage Documents and any Working Capital Facility Lien, and no
further instrument shall be required to give effect to such
subordination. Mortgagee shall, however, from time to time, execute
instruments in form and substance reasonably satisfactory to the
holder of the liens created by the Senior Mortgage Documents and the
holder of the Working Capital Facility Lien, confirming such
subordination and agreeing to such other matters reasonably required
by the holders of such liens which do not, in the aggregate,
65
<PAGE>
materially adversely reduce or impair the rights of Trustee under the
Mortgage, and Mortgagor and others may rely conclusively thereon,
provided that Mortgagee shall have no liability thereunder and all
costs and expenses (including reasonable attorneys' fees) shall be
paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions
of the Trust Estate shall be subject and subordinate to any Existing
Encumbrances. The provisions of this Section 5.22(d) shall be
self-operative, and no further instrument shall be required to give
effect to such subordination.
Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE.
Notwithstanding recordation of this Mortgage in the Atlantic County,
New Jersey Clerk's Office prior to the recordation of the Guaranty
Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not
senior to, the lien created by the Guaranty Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. COUNTERPARTS. This instrument may be executed in
any number of counterparts, each of which as executed shall be deemed
to be an original, but all such counterparts shall constitute one and
the same instrument.
Section 6.02. MODIFICATION. This Mortgage is subject to
modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and
this Mortgage shall have the benefit of the lien priority provisions
of such statute. Such modification may include, without limitation, a
change in the interest rate, maturity date or other terms and
conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE
COPY OF THIS MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
66
<PAGE>
ATTEST:______________________ By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
RESORTS INTERNATIONAL HOTEL
FINANCING, INC.
ATTEST:______________________ By:_____________________________
Name: Name:
Title: (Asst.) Secretary Title: (Vice) President
67
<PAGE>
Exhibit E
Assignment of Leases and Rents from Resorts
International Hotel, Inc. to Resorts
International Hotel Financing, Inc.
<PAGE>
NA932810100 - ASSIGNMENT OF RENTS
(RIH JUNIOR PROMISSORY NOTE)
GD&C DRAFT DATED 12/17/93
=============================================================================
ASSIGNMENT
OF LEASES AND RENTS
________________
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Assignor,
TO
RESORTS INTERNATIONAL HOTEL FINANCING, INC.,
a Delaware corporation,
as Assignee
Dated as of _________________, 1994
==========================================================================
Prepared by:__________________________
D. Eric Remensperger, Esq.
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by
RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having
its principal office at c/o Resorts International, Inc., 1133
Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS
INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation,
having its principal office at c/o Resorts International, Inc.,
1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to
secure: (i) the obligations of Assignor under a promissory note
dated as of the date hereof made by Assignor to Assignee in the
principal amount of $35,000,000 (as the same may be amended or
restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"),
which note is secured by a Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof, between Assignor, as mortgagor,
and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used
and not otherwise defined herein shall have the meanings ascribed
to those terms in the Mortgage); and (ii) the performance and
observance of all of the provisions herein contained;
NOW, THEREFORE, Assignor has and does hereby bargain, sell,
transfer, assign, convey, set over and deliver unto Assignee, for
the purposes set forth above (subject, however, to the rights of
the holders of Superior Mortgages and other Existing Encumbrances),
all leases or occupancy agreements wherein it is lessor concerning
or affecting the use or occupancy of the certain real property
owned or leased by Assignor, which real property is described on
SCHEDULE 1 hereto and which real property, together with all
buildings and improvements erected thereon, is hereinafter
collectively referred to as the "PROPERTY", or any part thereof,
now existing or which may be executed at any time in the future,
and all amendments, extensions and renewals of such leases or
occupancy agreements, and any of them, all of which are
collectively referred to as the "LEASES", all rents and other
income which may now or hereafter be or become due or owing under
the Leases, and any of them, and any and all payments derived from
or relating to the Leases to which Assignor is entitled, including
but not limited to (a) claims for the recovery of damages done to
the Property, (b) claims for damages resulting from acts of
insolvency or acts of bankruptcy or otherwise, and (c) lump sum
payments for the
<PAGE>
cancellation of Leases or the waiver of any
obligation or term thereof prior to the expiration date;
PROVIDED, HOWEVER, that no Excepted Property is conveyed
hereby; it being intended hereby to establish a present and
complete transfer unto Assignee of all of Assignor's right,
title, interest and estate in and to the Leases and all the rents,
payments and other income arising thereunder; PROVIDED, HOWEVER,
that Assignor is hereby granted a license by Assignee to (i) collect
all of such rents, payments and other income herein assigned which
may become due during the life of this Assignment and (ii) enter
into, renew, modify, extend, terminate, amend, collectively
assign, transfer or hypothecate any or all of the Leases, in
accordance with the provisions of Sections 4.04 and 5.13 of the
Mortgage, each until an Event of Default under the Mortgage (an
"EVENT OF DEFAULT") shall have occurred and be continuing. Upon
the occurrence of an Event of Default, Assignor agrees to deposit
with Assignee upon demand such of the Leases and the rents payable
thereunder as may from time to time be designated by Assignee.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for
Assignor and in the name of Assignor and/or in its name, place
and stead, to demand, collect, receive and give receipts and
complete acquittance for any and all other rents and other
amounts herein assigned which may be or become due and payable
under the Leases, and at its discretion to file any claim or take
any other action or proceeding and make any settlement of any
claims, either in its own name or in the name of Assignor or
otherwise, which Assignee may deem necessary or desirable in order
to collect and enforce the payment of any and all rents and other
amounts herein assigned. No right shall be exercised by Assignee
under this paragraph until an Event of Default has occurred. All
lessees under the Leases are hereby expressly authorized and
directed, after the occurrence, and during the continuance, of an
Event of Default, to pay all rents and other sums herein assigned
to Assignee or such nominee as Assignee may designate in writing
delivered to and received by such lessees, who thereafter are
expressly relieved of any and all duty, liability or obligation to
Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by it necessary or proper to enforce
this Assignment and to collect the rents and other sums assigned
hereunder. Assignee shall be under no obligation to exercise any
of the rights or to press any of the claims assigned to it
hereunder, or to perform or carry out any of the obligations of
Assignor under any of the Leases, and does not assume any of the
liabilities in connection with or arising or growing out of the
covenants and agreements of Assignor in the Leases. It is further
2
<PAGE>
understood that this Assignment shall not operate to place
responsibility for the control, care, management or repair of
Assignor's estates or interests in and to the Property, or parts
thereof, upon Assignee, nor shall it operate to make Assignee
liable for the carrying out of any of the terms and conditions of
any of the Leases, or for any waste to Assignor's estates or
interests in and to the Property by any lessee or sublessee of
Assignor under any leases, or by any occupant of the Property, or
by any party whatsoever or for any dangerous or defective condition
of the Property or for any negligence in the management, upkeep,
repair or control of Assignor's estates or interests in and to the
Property resulting in loss or injury or death to any lessee,
licensee, employee or stranger thereat. No right shall be
exercised by Assignee under this paragraph until an Event of
Default has occurred.
Assignee hereby agrees promptly to remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those
applied to pay in full the aforesaid liabilities and indebtedness
at the time due.
Nothing herein contained is intended to limit or reduce the rights
of Assignee or the obligations of Assignor set forth in the
Mortgage, but rather all of the terms, provisions and conditions
of this Assignment are in addition to and in supplement of such
rights and obligations. If any provision contained in this
Assignment is in conflict with, or inconsistent with, any
provision in the Mortgage, the provisions contained in the
Mortgage shall govern and control.
Upon the release of any portion of the Property from the lien of
the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this
Assignment shall be null and void with respect to those Leases (the
"RELEASED LEASES") which cover exclusively the portion of the
Property so released (and no other portion of the Property) and
all estate, right, title and interest of Assignee in and to the
Released Leases shall revert to Assignor, but in all other
respects and for all other purposes, this Assignment shall remain
in full force and effect. Assignee shall, from time to time,
promptly execute any written instrument in form reasonably
satisfactory to the proposed purchaser of a portion of the
Property as aforesaid to confirm any reversion of Assignee's
right, title and interest in the Released Leases effectuated in
accordance with this paragraph, upon receipt by Assignee of an
Officer's Certificate stating that Assignor is entitled to such
reversion by virtue of the Mortgagor's compliance with the
provisions of this paragraph and Section 2.05 or 2.06 of the
Mortgage (as the case may be), provided that Assignee shall have
no liability thereunder and all costs and expenses shall be paid by
Assignor.
3
<PAGE>
Assignee acknowledges that (i) contemporaneously with the execution
and delivery of this Assignment, it has assigned this Assignment to U.S. Trust
Company of California, N.A. ("Trustee"), as trustee under an Indenture
of even date herewith among Assignor, Assignee and Trustee (the
"Indenture"), and (ii) that the Trustee is also the assignee under
an Assignment of Leases and Rents dated as of the date hereof from
Assignor to Trustee securing the obligations of Assignor in respect
of the Guaranty under and as defined in the Indenture (the "Other
Assignment"), which assignment creates a lien on the Leases and
rents and income due and owing thereunder PARI PASSU with the lien
of this Assignment. Assignee further acknowledges and agrees that
whenever it is provided in the Other Assignment that the Assignor
shall deliver any notice or document, or is require to make any
payment thereunder, the delivery of such notice or document or the
making of such payment pursuant to the terms of such Other
Assignment shall also constitute the delivery of such notice or
document or the making of such payment in satisfaction of the
terms, conditions and provisions of this Assignment to the same
extent as the same constitutes satisfaction of the terms,
conditions and provisions of the Other Assignment.
Upon the termination of the Mortgage and the payment in full of the
obligations secured thereby, this Assignment shall be and become
null and void, and all estate, right, title and interest of
Assignee in and to the Leases shall revert to Assignor and
Assignee shall promptly cancel and discharge of record this
Assignment and any financing statement filed in connection
herewith and execute and deliver to Assignor all such instruments
as may be appropriate to evidence such discharge and satisfaction
of this Assignment (provided that Assignee shall have no liability
hereunder or thereunder and all costs and expenses shall be paid by
Assignor); otherwise, this Assignment shall remain in full force
and effect as herein provided, shall inure to the benefit of
Assignee and its successors and assigns, and shall be binding
upon Assignor and its successors and assigns, and any subsequent
holder of Assignor's right, title and interest and estate in and to
the Property.
This Assignment shall be governed by and construed under the
internal laws of the State of New Jersey, without giving effect
to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Assignment
shall not be transferred, assigned or amended without the prior approval of
the New Jersey Casino Control Commission.
The rights and obligations of the Assignee hereunder are subject to
the terms set forth in that certain Intercreditor Agreement dated
as of the date hereof among
4
<PAGE>
Assignor, Assignee, Fidelity Management and Trust Company,
as trustee, Trustee and State Street Bank and Trust
Company of Connecticut, National Association, as trustee (and
such other parties that may from time to time become a party
thereto).
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed and attested, all as of the day and year first
above written.
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
RESORTS INTERNATIONAL HOTEL,
FINANCING, INC., a Delaware
corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on ______________, 1994, before me, the
subscriber, __________________, personally appeared _____________,
who, being by me duly sworn on his oath, deposes and makes proof to
my satisfaction, that he is the (Asst.) Secretary of RESORTS
INTERNATIONAL HOTEL, INC., the corporation named in the within
instrument; that ______________ is the (Vice) President of said
corporation; that the execution, as well as the making of this
instrument, has been duly authorized by a proper resolution of the
board of directors of the said corporation; that deponent well
knows the corporate seal of said corporation; and that the seal
affixed to said instrument is the proper corporate seal and was
thereto affixed and said instrument signed and delivered by said
Vice President as and for the voluntary act and deed of said
corporation. In presence of deponent who thereupon subscribed
his name thereto as attesting witness; and deponent signed this
proof to attest to the truth of these facts.
_____________________________
[Name]
Assistant Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
6
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
BE IT REMEMBERED that on _________________, 1994, before me, the
subscriber, __________________, personally appeared
___________________, who being by me duly sworn on his oath,
deposes and makes proof to my satisfaction, that he is the Asst.
Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the
corporation named in the within instrument; that ____________ is
the Vice President of said corporation; that the execution, as well
as the making of this instrument, has been duly authorized by a
proper resolution of the board of directors of the said
corporation; that deponent well knows the corporate seal of said
corporation; and that the seal affixed to said instrument is the
proper corporate seal and was thereto affixed and said instrument
signed and delivered by said Vice President as and for the
voluntary act and deed of said corporation. In presence of
deponent who thereupon subscribed his name thereto as attesting
witness; and deponent signed this proof to attest to the truth of
these facts.
__________________________
[Name]
Secretary
Sworn to and subscribed
before me, the date aforesaid
____________________________
Notary Public
My commission expires:_____________________________
7
<PAGE>
Exhibit F
Mortgage securing Guaranty of Junior
Mortgage Notes between Resorts International
Hotel, Inc. and U.S. Trust Company of
California, N.A.
<PAGE>
------------------------------------
: NA932810097 - GUARANTY MORTGAGE :
: JUNIOR NOTES :
: GD&C DRAFT DATED 12/17/93 :
------------------------------------
MORTGAGE SECURING GUARANTY
OF JUNIOR MORTGAGE NOTES
by and between
RESORTS INTERNATIONAL HOTEL, INC.,
a New Jersey corporation,
as Mortgagor,
and
U.S. Trust Company of California, N.A.,
a national banking association,
as Mortgagee
Dated as of ________ __, 1994
Prepared by:_______________________
D. Eric Remensperger
After recording return to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, New York 10166
Attention: D. Eric Remensperger
<PAGE>
MORTGAGE SECURING GUARANTY
OF JUNIOR MORTGAGE NOTES
THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and U.S.
Trust Company of California, N.A., a national banking association having an
address at 555 South Flower Street, Suite 2780, Los Angeles, California
90071 ("Mortgagee"), in its capacity as Trustee under that
certain Indenture dated as of even date herewith (the "Indenture") among
Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF").
WITNESSETH:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the
payments of principal and interest due on the 11.375% Junior Mortgage Notes due
2004 in an aggregate principal amount of $35,000,000, issued pursuant to the
provisions of the Indenture (defined therein, and hereinafter collectively
referred to herein, as the "Notes"), in accordance with the terms and conditions
of Article Fourth of the Indenture; and performance and observance of all of the
provisions herein contained, Mortgagor has executed and delivered this Mortgage
and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and
confirmed unto Mortgagee and its successors hereunder and assigns forever, all
of its right, title and interest in, to and under any of the following described
property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and franchises
particularly described in annexed Schedule 1 (the "Owned Land") which Schedule
is hereby made a part of, and deemed to be described in, this Granting Clause as
fully as if set forth in this Granting Clause at length.
<PAGE>
GRANTING CLAUSE SECOND
All of the property, rights, title, interest, privileges and franchises of
the Mortgagor as lessee in those certain leases (the "Ground Leases")
particularly described in Schedule 2, which Schedule is hereby made a part of,
and deemed to be described in, this Granting Clause as fully as if set forth in
this Granting Clause at length, which Ground Leases cover the real property
described in Schedule 2 (the "Leased Land") and in and to any and all
modifications, extensions and renewals of the Ground Leases and all options set
forth therein, together with (i) all credits, deposits, privileges and rights of
the Mortgagor as lessee under the Ground Leases, now or at any time existing,
(ii) the leaseholds and the leasehold estates created by the Ground Leases and
(iii) all of the estates, rights, titles, claims or demands whatsoever of
Mortgagor, either in law or in equity, in possession or in expectancy, of, in
and to the Ground Leases and the Leased Land, together with (x) any and all
other, further or additional title, estates, interests or rights which may at
anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor
expressly agrees that if the Mortgagor shall, at any time prior to payment in
full of all indebtedness secured hereby, acquire fee simple title or any other
greater estate to the Leased Land pursuant to the Ground Leases, or otherwise,
the lien of this Mortgage shall attach, extend to, cover and be a lien upon such
fee simple title or other greater estate and thereupon the lien of this Mortgage
shall be prior to the lien of any mortgage or deed of trust placed on such
acquired title, estate, interest or right subsequent to the date of this
Mortgage (except as otherwise provided herein) and (y) any right to possession
or statutory term of years derived from, or incident to, the Ground Leases
pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any
comparable provision contained in any present or future federal, state, local,
foreign or other statute, law, rule or regulation.
GRANTING CLAUSE THIRD
All the rents, issues, profits, revenues and other income and proceeds of
the property subjected or required to be subjected to the lien of this Mortgage,
including, without limitation, the property described in Granting Clauses First,
Second, and Sixth (such property is hereinafter collectively referred to as the
"Premises") and all the estate, right, title and interest of every nature
whatsoever of the Mortgagor in and to the same and every part thereof. The
collective
2
<PAGE>
metes and bounds description of the Owned Land and the Leased Land is set forth
in annexed Schedule 3.
GRANTING CLAUSE FOURTH
All of the rights as lessor under Leases in effect on the date of execution
of this Mortgage or hereafter entered into by the Mortgagor, if any, including
extensions, renewals or amendments of all of the same, and the immediate and
continuing right as security in accordance with an Assignment of Leases and
Rents of even date herewith between Mortgagor and Mortgagee, and, after the
occurrence of an Event of Default, to make claim for, collect, receive and
receipt for (and to apply the same as provided herein) any and all rents,
income, revenues, issues, profits, security and other sums of money payable or
receivable thereunder or pursuant thereto, and all proceeds thereof, whether
payable as rent, insurance proceeds, condemnation awards, security or otherwise
and whether payable prior to or subsequent to the maturity date of the Notes, to
receive and give notices and consents thereunder, to bring actions and
proceedings thereunder or for the enforcement thereof, to make waivers and
agreements, to take such action upon the happening of a default under any Lease,
including the commencement, conduct and consummation of any proceedings at law
or in equity as shall be permitted by any provision of any Lease, and to do any
and all things which the Mortgagor or any lessor is or may become entitled to do
under the Leases; provided, that the assignment made by this granting Clause
Fourth shall not impair or diminish any obligation of the Mortgagor under the
Leases, or shall any such obligation be imposed upon the Mortgagee.
GRANTING CLAUSE FIFTH
Without limiting the generality of the provisions of Granting Clause Third,
the Mortgagor's rights, privileges and franchises in and to the following, to
the extent of the Mortgagor's interest therein and thereto and to the extent
assignable (collectively, "Operating Assets"):
(a) bookings and receipts for the use of guest rooms, banquet
facilities and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations, or equipping of the Premises, including guaranties
and warranties relating thereto;
(c) the Permits;
3
<PAGE>
(d) all contract rights, leases, concessions, trademarks, trade
names, service marks, service names, logos, copyrights, warranties and
other items of intangible personal property relating to the ownership or
operation of the Casino-Hotel, including, without limitation, (1) telephone
and other communication numbers, (2) all software licensing agreements as
are required to operate computer software systems at the Casino-Hotel, all
transferable proprietary interest in software required to operate the
computer systems at the Casino Hotel and books and records relating to the
software programs, and (3) lessee's interest under leases of Tangible
Personal Property;
(e) all agreements entered into by or on behalf of the Mortgagor or
which have been assigned to the Mortgagor, for the design and construction,
and for the equipping and furnishing, of the Casino-Hotel, including
architect's agreements, engineering agreements, construction contracts,
consulting agreements and agreements or purchase orders for all items of
Tangible Personal Property and payment and performance bonds in favor of
the Mortgagor in connection with the Trust Estate (and all warranties and
guaranties thereunder and warranties and guaranties of any subcontractor
and bond issued in connection with the work to be performed by any
subcontractor);
(f) the following personal property (the "Tangible Personal
Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery, apparatus,
appliances, fixtures and fittings and other articles of tangible
personal property which are, or are to be located on, or used in
connection with the operation of, the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap tables,
blackjack tables, roulette tables, baccarat tables, and big six
wheels, located or to be located in the Casino-Hotel, and all
furnishings and equipment to be used in connection with the operation
thereof;
(iii) all cards, dice, gaming chips and placques, tokens, chip
racks, dealing shoes, dice cups, dice sticks, layouts, paddles,
roulette balls and other consumable supplies and items to be used
4
<PAGE>
in connection with the gaming operations of the Casino-Hotel;
(iv) all china, glassware, linens, kitchen utensils, silverware
and uniforms, whether in use or held in reserve storage for future
use, in connection with the operation of the Casino-Hotel, which are
on hand or on order whether stored on-site or off-site;
(v) all consumables and operating supplies of every kind and
nature for use in all of the operating departments of the
Casino-Hotel, or in the improvements now or hereafter located on any
of the Owned Land, including without limitation, accounting supplies,
guest supplies, forms, printing, stationery, food and beverage stock,
bar supplies, laundry supplies and brochures to existing purchase
orders;
(vi) all sets and scenery, costumes, props and other items of
tangible personal property on hand or on order for use in the
production of shows in the showroom of the Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by the Mortgagor for use in Casino-Hotel
operations, together with all equipment, parts and supplies used to
service, repair, maintain and equip the foregoing;
(g) all drawings, designs, plans and specifications prepared by the
architects, interior designers, landscape designers and any other
consultants for the development of the Premises, as amended from time to
time;
(h) any administrative and judicial proceedings initiated by the
Mortgagor, or in which the Mortgagor has intervened, concerning the
Casino-Hotel, and agreements, if any, which are the subject matter of such
proceedings;
(i) any customer lists utilized by the Mortgagor, including lists of
transient guests and restaurant and bar patrons and "high roller" lists;
and
(j) all of the goodwill in connection with the operation of the
Premises.
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The Mortgagor and Mortgagee acknowledge that notwithstanding anything
contained in this Mortgage to the contrary, the Mortgagor may share facilities,
operations and employees with any other hotel owned by any Affiliate of the
Mortgagor provided that (i) such sharing of facilities is permitted by all
applicable Legal Requirements, (ii) terms on which such facilities are shared
are not detrimental to the operations of the Casino-Hotel or the financial
condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel
would not be materially impaired upon the separation of such facilities.
The assignment made by this Granting Clause Fifth shall not impair or
diminish any obligation of the Mortgagor with respect to the Operating Assets,
nor shall any such obligation be imposed on the Mortgagee.
GRANTING CLAUSE SIXTH
(a) All of the Mortgagor's right, title and interest in and to all
buildings and improvements of every kind and description now or hereafter
erected or placed on the Owned Land and/or the Leased Land and all fixtures and
articles of personal property now or hereafter attached to or contained in and
used in connection with such buildings and improvements, including, but not
limited to, all apparatus, furniture, furnishings, machinery, motors, elevators,
fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses,
mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning
apparatus, wall cabinets, machinery, generators, partitions, steam and hot water
boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath
tubs, water closets, gas and electrical fixtures, awnings, shades, screens,
blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and
other furnishings, and all plumbing, heating, lighting, cooking, laundry,
ventilating, incinerating, air-conditioning and sprinkler equipment or other
fire prevention or extinguishing apparatus and material, and fixtures and
appurtenances thereto; and all renewals or replacements thereof or articles in
substitution therefor, whether or not the same are or shall be attached to the
Owned Land, the Leased Land or to any such buildings and improvements thereon,
in any manner; and
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(b) All of the Mortgagor's right, title and interest in and to (i) the
Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land
or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all
air rights and rights to maintain supporting columns and all rights to construct
and maintain bridges, and to create private rights of way over streets now or
hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or
Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or
licensee in and to the following to the extent necessary for the use and
enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or
parcels of land and air rights, more particularly described on Schedule 5,
attached hereto and made a part hereof (the "Bridge Easement Parcels"), with
respect to which Mortgagor has easements, licenses or other rights of possession
or use pursuant to these certain easement and license agreements more
particularly described on Schedule 5 (the "Bridge Easements"), (B) all those
plots, pieces or parcels of land and air rights, more particularly described on
Schedule 6 attached hereto and made a part hereof (the "Elevator Easement
Parcels"), with respect to which Mortgagor has easements, licenses or other
rights of possession or use pursuant to those certain license agreements more
particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all
that plot, piece or parcel of land and air rights more particularly described on
Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement
Parcel") with respect to which Mortgagor has easements, licenses, or other
rights of possession or use pursuant to that certain easement more particularly
described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement
Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are
collectively referred to herein as the "Easement Parcels"; and the Bridge
Easements, the Elevator Easements and the Turn-Around Easement are collectively
referred to as the "Easements"), together with all rights of way, privileges,
liberties, tenements, hereditaments and appurtenances belonging or in any way
appertaining to such estates, it being the intention hereof that all property,
interests, rights and privileges and franchises pertaining to the Premises
(other than Excepted Property) shall be as fully embraced within and subjected
to the lien hereof as if such property were specifically described herein.
To the extent the grant of a security interest in any portion of the Trust
Estate is governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be as well a security agreement under the Uniform Commercial Code
for the purpose of creating hereby a security interest in all of the Mortgagor's
right, title and interest in and to such property, securing the obligations
secured hereby, for the benefit of the Mortgagee;
* * *
TOGETHER with all of the Mortgagor's right, title and interest in and to
all mineral and water rights and any title or reversion, in and to the beds of
the ways, streets,
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avenues and alleys adjoining the Premises to the center line thereof and in and
to all strips, gaps and gores adjoining the premises on all sides thereof; and
TOGETHER with all of the Mortgagor's right, title and interest to and
singular the tenements, hereditaments, easements, appurtenances, passages, water
courses, riparian rights, other rights, liberties and privileges thereof or in
any way appertaining to the Premises, including any other claim at law or in
equity as well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof; and
TOGETHER with all awards and other compensation heretofore or hereafter to
be made to the present and all subsequent owners of the Trust Estate for any
taking by eminent domain, either permanent or temporary, of all or any part of
the Trust Estate or any easement or appurtenances thereof, including severance
and consequential damage and change in grade of streets, all in accordance with
and subject to the provisions of the Superior Instrument Requirements and
Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any insurance
policies described in Section 5.11, and the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof, for
damage to the Trust Estate or otherwise, all in accordance with and subject to
the provisions of Section 5.11 and the Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted property, rights,
title, interest, privileges and franchises, the Excepted Property.
TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating
Assets, Easements, properties, options, credits, deposits, rights, privileges
and franchises of every kind and description, real, personal or mixed, granted
hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or
covenanted so to be, together with all the appurtenances thereto appertaining
(the Premises, Leases, Ground Leases, Operating Assets, Easements, properties,
options, credits, deposits, rights, privileges and franchises, being herein
collectively called the "Trust Estate") unto the Mortgagee and its successors
and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after
the date hereof, to Permitted Encumbrances.
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SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the
Noteholder as set forth in that certain Intercreditor Agreement dated as of the
date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company
("Fidelity"), as trustee under that certain note purchase agreement dated as of
the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust
Company of Connecticut, National Association ("State Street"), as trustee under
that certain indenture dated as of the date hereof among State Street, RIH and
RIHF (and such other parties that may from time to time become a party thereto).
BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the
Noteholders without any priority of any of the Notes over any other of the
Notes.
UPON CONDITION that, until the happening of an Event of Default and subject
to the provisions of Article Two, the Mortgagor shall be permitted to possess
and use the Trust Estate, and to receive and use the rents, issues, profits,
revenues and other income of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be
held and applied by the Mortgagee, subject to the further covenants, conditions
and trusts hereinafter set forth, and the Mortgagor does hereby covenant and
agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings assigned
to them in this Article One and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them, and all computations herein provided for shall
be made in accordance with generally accepted accounting principles
consistently applied; and
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Mortgage
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as a whole and not to any particular Article, Section or other subdivision.
"AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture.
"AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07.
"ALTERATIONS" has the meaning set forth in Section 5.12.
"APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the
American Institute of Real Estate Appraisers) who is (i) of recognized standing
among appraisers of properties similar to the Casino-Hotel and (ii) experienced
in the appraisals of properties of a similar size and scope to that of the
Casino-Hotel, selected by the Mortgagor.
"ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of
the Indenture.
"CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of
the Indenture.
"CASINO" means that portion of the Casino-Hotel used for gaming and related
activities.
"CASINO-HOTEL" means the casino and hotel complex and ancillary structures
and facilities located on the Premises and furniture, fixtures and equipment at
any time contained therein.
"CASUALTY" means any act or occurrence of any kind or nature which results
in damage, loss or destruction to any buildings or improvements on the Premises
and/or Tangible Personal Property.
"CODE" has the meaning stated in Granting Clause Second.
"COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the
Indenture.
"DEFAULT" means the occurrence and continuance of an Event of Default or an
event which, after notice or lapse of time or both, would become an Event of
Default.
"DEPOSITARY" means an Independent entity to which insurance proceeds or a
condemnation award is paid to be held in trust for restoration pursuant to the
provisions of a Ground Lease or Superior Mortgage.
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"EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of
Default shall "exist" if an Event of Default shall have occurred and be
continuing.
"EXCEPTED PROPERTY" means:
(1) subject to the provisions of the Assignment of Leases and Rents,
any cash held by the Mortgagor from rents, issues, profits, revenues and
other proceeds of the Trust Estate to the extent that such cash may be, but
has not been, distributed or paid out in accordance with the Services
Agreement or in accordance with the provisions of Section 12.07 of the
Indenture;
(2) all personal property owned by lessees under Leases and the
personal property of any guests staying in the Hotel;
(3) any property deemed to be Excepted Property pursuant to the
provisions of Section 2.03 hereof;
(4) Tangible Personal Property subject to an FF&E Financing
Agreement; and
(5) counterchecks and any other property the granting of a security
interest in which is prohibited by the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder.
"EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8.
"FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage
secured by or imposing a lien on all or a portion of the Trust Estate on a
parity with or senior to the lien of this Mortgage.
"FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible
Personal Property and other items constituting Operating Assets, such as
computer software, which are financed, purchased or leased by the Mortgagor,
provided that, except as set forth on Schedule 3, the principal amount of the
indebtedness secured by such lien shall not exceed eighty-five (85%) percent of
the cost to the Mortgagor of such property at the time of acquisition.
"GROUND LEASES" has the meaning stated in Granting Clause Second.
"GUARANTY" has the meaning set forth in Article Fourteen of the Indenture.
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"HOTEL" means that portion of the Casino-Hotel not included within the
Casino.
"IMPOSITIONS" has the meaning stated in Section 5.08.
"INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes
due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer,
and Mortgagee, as trustee, as it may from time to time be supplemented, modified
or amended by one or more trust indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"INDEPENDENT" when used with respect to any specified Person means such a
Person who (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in the Mortgagor or in any
other obligor upon the Notes or in any Affiliate of the Mortgagor or of such
other obligor and (c) is not connected with the Mortgagor or such other obligor
or any Affiliate of the Mortgagor or such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions. Whenever it is herein provided that any Independent Person's opinion
or certificate shall be furnished to the Mortgagee, such opinion or certificate
shall state that the signer has read this definition and that the signer is
Independent within the meaning thereof. A Person who is performing or who has
performed services as an independent contractor to any specified Person shall
not be considered not Independent merely by reason of the fact that such Person
is or has performed such services.
"INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1).
"INSURANCE REQUIREMENTS" means all terms of any insurance policy covering
or applicable to the Trust Estate or any part thereof, all requirements of the
issuer of any such policy, and all orders, rules, regulations and other
requirements of the National Board of Fire Underwriters (or any other body
exercising similar functions) applicable to or affecting the Trust Estate or any
part thereof or any use or condition of the Trust Estate or any other part
thereof.
"INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any
bank, trust company or insurance company with net worth in excess of
$100,000,000, designated by the Trustee.
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"INSURER" means an insurance company or companies selected by the Mortgagor
authorized to issue insurance in the State of New Jersey with an A.M. Best
rating as high or higher than the rating of insurance companies insuring other
casino-hotels in Atlantic City, New Jersey.
"LEASE" means each lease or sublease demising all or any portion of the
Owned Land, the Leased Land or the buildings or improvements thereon and made by
the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any
building or buildings which constitute a part of the Trust Estate, including
every agreement relating thereto or entered into in connection therewith and
every guaranty of the performance and observance of the covenants, conditions
and agreements to be performed by the lessee under any such lease.
Notwithstanding the foregoing, the term "Lease" shall not include any transient
room rentals.
"LEASED LAND" has the meaning stated in Granting Clause Second.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements (including, without limitation, the
New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill
Compensation and Control Act of 1976) of all governments, departments,
commissions, boards, courts, authorities, agencies, officials and officers, of
governments, federal, state and municipal (including, without limitation, the
New Jersey Department of Environmental Protection, the Atlantic City Bureau of
Investigations, Division of Protection, the Atlantic City Bureau of
Investigations, Division of Gaming Enforcement of the State of New Jersey, and
the Casino Control Commission of the State of New Jersey), foreseen or
unforeseen, ordinary or extraordinary, which now is or at any time hereafter
becomes applicable to the Trust Estate or any part thereof, or any of the
adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling
facility or any other use or condition of the Trust Estate or any part thereof.
"LESSORS" means the lessors under the Ground Leases.
"MATURITY" when used with respect to the Notes means the date on which the
principal of such Notes becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration or prepayment
or otherwise.
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"MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the
Indenture.
"MORTGAGOR" means the Person named as the "Mortgagor" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Mortgage, and thereafter, except
to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean
such successor entity exclusively.
"NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture.
"NOTE MORTGAGE" means that certain Mortgage Securing RIH Junior Promissory
Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH
Junior Promissory Note (as defined in the Indenture), the lien of which shall be
pari passu with the lien of this Mortgage.
"NOTES" has the meaning set forth in the Preamble.
"NOTICES" has the meaning stated in Section 1.02.
"OFFICERS' CERTIFICATE" means a certificate signed by an officer of the
Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that
an Officers' Certificate be signed also by an Architect or an Accountant or
other expert, such Architect, Accountant or other expert may (except as
otherwise expressly provided in this Mortgage) be in the general employ of the
Mortgagor.
"OPERATING ASSETS" has the meaning stated in Granting Clause Fifth.
"OPINION OF COUNSEL" means a written opinion of counsel who may (except as
otherwise expressly provided in this Mortgage) be an employee of the Mortgagor
or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically
provided in this Mortgage, such counsel may rely, as to any state of facts not
personally known to such counsel and relating to such opinions, on an Officers'
Certificate to the extent not rejected by the Trustee and its counsel (which
rejection shall not be unreasonably given).
"ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list
title insurance companies], pursuant to Title Commitment No. ____________
redated to the date hereof.
"OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the
Indenture.
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"OWNED LAND" has the meaning stated in Granting Clause First.
"PERMITS" means all licenses, franchises, statements of compliance,
certificates of operation, certificates of occupancy and permits required for
the lawful ownership, occupancy, operation and use of all or a material portion
of the Premises whether held by the Mortgagor or any other Person (which may be
temporary or permanent) (including, without limitation, those required for the
use of the Casino-Hotel as a licensed casino facility), in accordance with all
applicable Legal Requirements.
"PERMITTED ENCUMBRANCES" means:
(1) liens for taxes, assessments, or governmental charges not yet due
and payable or if due and payable are not delinquent to the extent that any
fine, penalty, interest or cost may be added for nonpayment thereof;
(2) Existing Encumbrances;
(3) FF&E Financing Agreements;
(4) After-Acquired Fee Mortgages;
(5) the lien of the Mortgage Documents and any rights granted as
provided therein;
(6) Restricted Encumbrances;
(7) the lien of the Trustee provided for by Section 8.07 of the
Indenture;
(8) any Working Capital Facility Lien;
(9) liens created by the Senior Mortgage Documents; and
(10) Capitalized Lease Obligations.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or any
other entity or government or any agency or political subdivision thereof.
"PREMISES" has the meaning set forth in Granting Clause Third.
"RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture.
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"RELEASED LAND" has the meaning stated in Section 2.05.
"RELEASED FEE LAND" has the meaning stated in Section 2.06.
"RESTORATION" has the meaning stated in Section 5.11(e).
"RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance
with Section 5.13 of this Mortgage.
"RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware
corporation.
"SENIOR GUARANTY MORTGAGE" has the meaning stated in Section 1.01 of the
Indenture.
"SENIOR MORTGAGE" has the meaning stated in Section 1.01 of the Indenture.
"SENIOR MORTGAGE DOCUMENTS" has the meaning stated in Section 1.01 of the
Indenture.
"SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the
Indenture.
"STATED MATURITY" when used with respect to a note means the date specified
in such note as the fixed date on which the principal of such note is due and
payable.
"SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions
and provisions of (i) the Ground Leases with respect to the Leased Land; and
(ii) Superior Mortgages with respect to the portion of the Trust Estate
encumbered thereby.
"SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior
Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee
Mortgages.
"TAKING" means the acquisition or condemnation by eminent domain of the
whole or any part of the Premises, by a competent authority, for any public or
quasi-public use or purpose.
"TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause
Fifth.
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"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of
the Indenture and any successor thereto.
"TRUST ESTATE" has the meaning stated in the habendum to the Granting
Clauses.
"TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the
Indenture.
"WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c)
of this Mortgage.
Section 1.02. NOTICES, ETC.
(a) Any request, demand, authorization, direction, notice (including,
without limitation, a notice of default), consent, waiver or other document
provided or permitted by this Mortgage to be made upon, given or furnished to,
or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be
deemed given when either (i) delivered by hand or (ii) two days after sending by
registered or certified mail, postage prepaid, addressed as follows:
To the Mortgagor:
Resorts International Hotel, Inc.
c/o Resorts International, Inc.
1133 Boardwalk
Atlantic City, New Jersey 08401
Attention: Christopher D. Whitney
If to Mortgagee:
U.S. Trust Company of California, N.A.
555 South Flower Street, Suite 2780
Los Angeles, California 90071
Attention: Corporate Trust Department
(b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party
may designate additional or substitute address for Notices which,
notwithstanding Subsection (a) above, shall be deemed given when received.
Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE.
Whenever several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified
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by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Mortgagor may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Officer or Officers of the Mortgagor stating that
the information with respect to such factual matters is in the possession of the
Mortgagor, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. If appropriate to
the matter being opined upon and to the extent not prohibited by the Trust
Indenture Act, any Opinion of Counsel may be subject to rights of creditors and
the availability of equitable remedies.
Whenever any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Mortgage, they may, but need not, be consolidated and
form one instrument.
Whenever in this Mortgage, in connection with any application or
certificate or report to the Mortgagee, it is provided that the Mortgagor shall
deliver any document as a condition of the granting of such application, or as
evidence of the Mortgagor's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Mortgagor to have such application granted or to
the sufficiency of such certificate or report.
Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application
or request by the Mortgagor to the Mortgagee to take any action under any
provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Mortgage relating to the proposed action have been complied with and
an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except
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that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Mortgage
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Mortgage shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(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 each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS.
(a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture,
this Mortgage shall be binding upon and inure to the benefit of the
parties hereto and of the respective successors and assigns of the parties
hereto to the same effect as if each such successor or assign were in each case
named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged, released nor
any of its provisions waived except by agreement in writing executed by the
Mortgagor and the Mortgagee and in accordance with the provisions of this
Mortgage and the Indenture.
Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of
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the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the
Guaranty, express or implied, shall give to any Person, other than the parties
hereto and their successors and assigns, any benefit or any legal or equitable
right, remedy or claim under this Mortgage.
Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a
contract under the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New Jersey.
Section 1.10. [Reserved]
Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions
of this Mortgage and the provisions of the Indenture shall be inconsistent, the
provisions of the Indenture shall govern.
Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee
is the Mortgagee hereunder, except as otherwise provided in Section 8.01
of the Indenture:
(a) the Mortgagee may rely, and shall be protected in acting
or refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) whenever in the administration of this Mortgage the
Mortgagee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(c) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by the Mortgagee
hereunder in good faith and in reliance thereon;
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(d) the Mortgagee shall be under no obligation to
exercise any of the rights or powers vested in it by this Mortgage
at the request or direction of any Noteholder pursuant to the
Indenture, unless such holder shall have offered to the
Mortgagee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, or other paper or document but the Mortgagee, in
its discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Mortgagee shall determine to make such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage) to examine the books, records and
premises of the Mortgagor, personally or by agent or attorney;
(f) the Mortgagee may execute any of the trusts or
power hereunder or perform any duties hereunder either directly
or by or through agents or attorneys, and the Mortgagee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(g) the Mortgagee shall not be personally liable, in
case of entry by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate; and
(h) no provision of this Mortgage shall require the
Mortgagee to expend or risk its own funds or otherwise incur any
financial liability in the performance of its obligations
hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of
such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
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Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each
provision of this Mortgage is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act. This Mortgage shall
not be transferred, assigned or amended without the prior approval of the New
Jersey Casino Control Commission.
Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to
be paid, or there shall otherwise be paid, to the Mortgagee all amounts required
to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and
the Notes, and the conditions precedent for the Indenture to cease, determine
and become null and void in accordance with Section 5.01 of the Indenture shall
have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage,
and execute and deliver to the Mortgagor all such instruments as may be
necessary, required or appropriate to evidence such discharge and satisfaction
of such lien or liens.
Section 1.15. GENERAL APPLICATION.
(a) The assertion of any rights upon any Default shall be subject in each
instance to the giving of any notice and the expiration of any grace period
provided for in Section 3.01 as a condition to such Default making it an Event
of Default, unless the Trust Indenture Act requires otherwise, in which case the
Trust Indenture Act shall control.
(b) For the purposes of this Mortgage, it is understood that an event
which does not materially diminish the value of the Mortgagee's interest in the
Trust Estate
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shall not be deemed an "impairment of security", as that phrase is used in this
Mortgage.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION
Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So
long as there shall have been no demand for payment under the Guaranty pursuant
to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted,
with power freely and without let or hindrance on the part of the Mortgagee,
subject to the provisions of this Mortgage and the Note Mortgage, to possess,
use, manage, operate and enjoy the Trust Estate and every part thereof and to
collect, receive, use, invest and dispose of the rents, issues, tolls, profits,
revenues and other income from the Trust Estate or any part hereof, to use,
consume and dispose of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and contracts.
Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE
MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to
time, unless an Event of Default shall have occurred and be continuing, without
any release from or consent by the Mortgagee:
(a) to sell or dispose of, free from the lien of this Mortgage, any
Tangible Personal Property which, in its reasonable opinion, may have
become obsolete or unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust Estate, and no
purchaser of any such property shall be bound to inquire into any question
affecting the Mortgagor's right to sell or otherwise dispose of the same,
free from the lien of this Mortgage;
(b) to alter, repair, replace, change the location (provided notice
shall be given to Mortgagee as to any new location) or position of and add
to any Tangible Personal Property; provided, however, that no change shall
be made in the location of any such property subject to the lien of this
Mortgage which would in any respect impair the security of this Mortgage
upon such property; or
(c) to renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when,
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in the Mortgagor's reasonable opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds (subject to the right to
pay dividends or make cash distributions pursuant to Section 12.07 of the
Indenture) received from the sale or disposition of any Tangible Personal
Property under Subsection (a) of this Section 2.02, in the business of operating
the Casino-Hotel.
The Mortgagee shall be under no responsibility or duty with respect to the
exercise of the rights of the Mortgagor under this Section 2.02 or the
application of the proceeds of any sale or disposition of any Tangible Personal
Property.
The Mortgagee shall, from time to time, promptly execute any written
instrument in form satisfactory to it to confirm the propriety of any action
taken by the Mortgagor under this Section 2.02, provided that the conditions set
forth in Section 2.02 of the Note Mortgage have been satisfied.
Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions
contained in this Mortgage or the Indenture to the contrary, including, without
limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles
Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and
other items constituting operating assets, such as computer software subject to
any FF&E Financing Agreement, or becomes the lessee under a lease for any of the
same and if the document evidencing such FF&E Financing Agreement prohibits
subordinate liens or the provisions of any such lease prohibits any assignment
thereof by the lessee, and if any such prohibition is customary with respect to
similar transactions of the lender or lessor, as the case may be, then the
property so purchased or the lessee's interest in the lease, as the case may be,
shall be deemed to be Excepted Property. If any such FF&E Financing Agreement
permits subordinate liens then the Mortgagee agrees to execute and deliver to
the Mortgagor, at the Mortgagor's expense, such documents as the holder of such
FF&E Financing Agreement may reasonably request to evidence the subordination of
the lien of this Mortgage to the lien of such FF&E Financing Agreement.
Section 2.04. [Reserved]
Section 2.05. RELEASED LAND.
(a) Notwithstanding anything to the contrary herein contained, the
Mortgagor shall have the right, at any time and
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from time to time, unless an Event of Default shall have occurred and be
continuing, to convey all or any part of the Released Fee Land (the land to be
so conveyed is hereinafter referred to as the "Released Land"), free from the
lien of the Mortgage, provided that the conditions set forth in Section 2.05(a)
of the Note Mortgage have been satisfied.
(b) The Mortgagee shall, from time to time, promptly execute any written
instrument in form reasonably satisfactory to the prospective purchaser to
confirm the release of the Released Fee Land, upon receipt by the Mortgagee of
an Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the Mortgagor's compliance with this Section 2.05 and, if
applicable, Section 2.05 of the Note Mortgage, provided, that
the Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by the Mortgagor.
Section 2.06. RELEASED FEE LAND.
(a) Notwithstanding anything to the contrary herein contained, in the
event the Mortgagor intends to exercise an option to acquire fee title to Leased
Land under the provisions of any Ground Lease, the Mortgagor shall have the
right, unless an Event of Default shall have occurred and be continuing, to have
an Affiliate exercise such options(s) or for the Mortgagor to exercise such
options(s) on behalf of an Affiliate and in connection therewith to cause fee
simple title to the Leased Land or any part thereof to be conveyed to an
Affiliate of the Mortgagor (provided that no portion of the purchase price of
the Leased Land or part thereof is paid by Mortgagor), free from the lien of
this Mortgage (the land to be so conveyed is hereinafter referred to as the
"Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with
the following:
(i) an Officers' Certificate requesting the release of the Released
Fee Land from the Trust Estate and stating that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain all Permits and
in order to comply with the provisions of all material contracts to which
the Mortgagor is a party or by which the Mortgagor is bound, (B) such
Affiliate has received all Permits necessary to own the Released Fee Land
(including without limitation all approvals required by the Casino Control
Commission of the State of New Jersey), (C) there has been delivered to the
Mortgagor and the Mortgagee a true copy of an instrument executed by such
Affiliate stating that (i) such Affiliate may only engage in the activity
of owning the Released Fee Land and (ii) such Affiliate shall not convey
the Released Fee Land to another Affiliate of the Mortgagor,
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unless such other Affiliate executes and delivers to the Mortgagor and the
Mortgagee, the instruments that would have been required to be delivered
pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to
such other Affiliate (provided that this restriction shall only be
effective until such time as this Mortgage shall be satisfied of record)
and (D) the deed conveying the Released Fee Land to such Affiliate shall
state that such conveyance is made subject to the terms, provisions and
conditions of the applicable Ground Lease and that the fee and leasehold
interests in the Released Fee Land shall not merge by reason of the
Mortgagor and/or any Affiliate owning both the leasehold and fee estate
therein, and that such estates shall always remain separate and distinct;
(ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not
required to own the Released Fee Land in order to maintain in good standing
all Permits or by the provisions of any material contract to which the
Mortgagor is a party or by which it is bound to own the Released Fee Land
and (B) the instruments described in clause (C) of subparagraph (i) were
duly executed by and are binding upon such Affiliate; and
(iii) an endorsement to the Original Policy, confirming that no
merger of the fee and leasehold estates in the Released Fee Land has
resulted from such conveyance.
In addition, simultaneously with such acquisition, the Affiliate and Mortgagor
shall enter into an instrument in form and substance reasonably satisfactory to
Mortgagee, amending the applicable Ground Lease to provide such mortgagee
protections as are customary and to the extent reasonably required by Mortgagee,
including, without limitation, (A) a covenant of the landlord not to terminate
the Ground Lease for any reason whatsoever (including without limitation, due to
any default by tenant of its obligations under such Ground Lease), and (B) an
agreement by the landlord not to accept payment of any fixed or base rent from
the tenant (and, if tendered by the Mortgagor, an agreement to return same to
the Mortgagor) or any other charges payable thereunder at any time that an Event
of Default shall have occurred and shall be continuing.
(b) The Mortgagee shall, from time to time, promptly execute any written
instrument in form reasonably satisfactory to the prospective purchaser to
confirm the release of the Released Fee Land, upon receipt by the Mortgagee of
an Officers' Certificate stating that the Mortgagor is entitled to such release
by virtue of the
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Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall
have no liability thereunder and all costs and expenses (including reasonable
attorneys' fees) shall be paid by the Mortgagor.
Section 2.07. AFTER-ACQUIRED FEE MORTGAGES.
(a) Notwithstanding anything contained herein to the contrary (i) if no
Event of Default has occurred and is continuing and (ii) if the Mortgagor shall
acquire Released Fee Land, then simultaneously with the acquisition thereof, the
Mortgagor shall have the right to encumber such fee simple title with a mortgage
(such mortgage and any refinancing thereof permitted by the Indenture is
hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this
Mortgage on the Released Fee Land shall be subordinated to the lien of the
After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other
Superior Mortgages which shall become a lien thereon in accordance with the
terms thereof), provided the following conditions are satisfied:
(i) the After-Acquired Fee Mortgage encumbers the fee simple title to
such real property and no other property;
(ii) the indebtedness secured by the After-Acquired Fee Mortgage (A)
does not exceed 75% of the cost to the Mortgagor of such fee simple title
at the time of the acquisition and (B) satisfies the criteria set forth in
Section 12.08 of the Indenture;
(iii) in the event the After-Acquired Fee Mortgage encumbers fee
simple title to the Leased Land or any part thereof, such After-Acquired
Fee Mortgage contains provisions binding on the holder of the
After-Acquired Fee Mortgage and its successors and assigns confirming the
provisions of Section 5.21(d) of this Mortgage;
(iv) the Released Fee Land is not being acquired from an Affiliate of
the Mortgagor;
(v) the After-Acquired Fee Mortgage and other loan documents shall
contain a provision binding upon the holder of such After-Acquired Fee
Mortgage and other loan documents that all insurance proceeds in the event
of a Casualty and awards for Takings of less than the entire Released Fee
Land shall be used for purposes of Restoration; and
(vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate
requesting such subordination and
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certifying that the requirements of (i) through (v) above have been
satisfied.
(b) Anything contained in this Section 2.07 or elsewhere in this Mortgage
to the contrary notwithstanding, the subordination of this Mortgage to any
After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not
be self-operative but shall be effective only upon the execution and delivery by
the Mortgagee of an instrument in writing effecting such subordination. The
Mortgagee shall deliver such instrument of subordination on the following
conditions: (x) the Mortgagee shall have received an Officers' Certificate
confirming that the conditions of (i) through (vi) of paragraph (a) have been
satisfied, together with a true and correct copy of the After-Acquired Fee
Mortgage and all other instruments securing the indebtedness evidenced thereby
and (y) the instrument of subordination shall specifically state that this
Mortgage is being subordinated not with respect to the lien of this Mortgage on
the Ground Lease or on the leasehold estate created thereby, but only with
respect to the fee simple title to the Leased Land or applicable part thereof
and only if and to the extent that the After-Acquired Fee Mortgage being
subordinated to is subject and subordinate to the Ground Lease and the leasehold
estate created thereby.
ARTICLE THREE
REMEDIES
Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used
herein, means any one of following events (including any applicable notice
requirement and any period of grace as specified in this Section 3.01) (whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) default by the Mortgagor under the Guaranty and continuance of
such default for a period of 10 days after there has been given a written
notice to the Mortgagor specifying such default and stating that such
notice is a "Notice of Default" hereunder; or
(b) an "Event of Default," as defined in Section 3.01 of the Note
Mortgage, shall occur; or
(c) default in the performance, or breach, of any of the provisions
of Article Four and the continuance of such default or breach for a period
of 60 days after there has been given a written notice to the Mortgagor
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specifying that such notice is a "Notice of Default" hereunder; or
(d) any representation or warranty of the Mortgagor set forth in this
Mortgage shall prove to be incorrect as of the time when made and the facts
constituting such incorrectness impairs the Mortgagee's security and such
impairment continues for a period of 30 days, unless such impairment is
curable, but not susceptible of cure within such 30-day period (for reasons
other than lack of funds), provided that the conditions set forth in
Section 3.01(l) of the Note Mortgage have been satisfied.
Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs
and is continuing, and the Mortgagee has declared the Outstanding Amount of the
Note to be due and payable immediately pursuant to Section 3.02 of the Note
Mortgage, then the Mortgagee may declare all obligations under the Guaranty to
be due and payable immediately.
Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys
received by the Mortgagee pursuant to the provisions of this Article Three
(including moneys received by the Trustee after any action or act by the
Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance
with the provisions of Section 7.06 of the Indenture.
Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has
instituted any proceeding to enforce any right or remedy under this Mortgage and
such proceeding has been discontinued or abandoned for any reason or has been
determined adversely to the Mortgagee, then and in every such case the Mortgagor
and the Mortgagee shall, subject to any determination in such proceeding, be
restored to its former position hereunder, and thereafter all rights and
remedies of the Mortgagee shall continue as though no such proceeding had been
instituted.
Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Mortgagee is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
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Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
Mortgagee to exercise any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article Three by law to the Mortgagee may be exercised, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be
commenced (including, without limitation, an action to foreclose this Mortgage
or to collect under the Guaranty secured hereby) to which action or proceeding
the Mortgagee is made or becomes a party, or in which it becomes necessary in
the opinion of the Mortgagee to defend or uphold the lien of this Mortgage,
then, to the extent it has not already done so pursuant to the terms of Section
3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses,
including reasonable attorneys' fees and expenses, incurred by the Mortgagee in
connection therewith, together with interest at the rate then payable on the
Notes, from the date of payment less the net amount received by the Mortgagee or
the Trustee, as their interests may appear under any title insurance policy,
and, until paid, all such expenses, together with interest as aforesaid, shall
be a lien on the Trust Estate.
Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent
that it may lawfully so agree, the Mortgagor will not at any time insist upon,
plead, claim or take the benefit or advantage of, any appraisement, valuation,
stay, extension or redemption law now or hereafter in force, in order to prevent
or hinder the enforcement of this Mortgage or the absolute sale of the Trust
Estate, or any part hereof, or the possession thereof by any purchaser at any
sale under this Article Three; and the Mortgagor, for itself and all who may
claim under it, so far as it or they now or hereafter may lawfully do so, hereby
waives the benefit of all such laws. The Mortgagor, for itself and all who may
claim under it, waives, to the extent that it may lawfully do so, all right to
have the property in the Trust Estate marshalled upon any foreclosure hereof,
and agrees that any court having jurisdiction to foreclose this Mortgage may
order the sale of the Trust Estate as an entirety.
If any law in this Section 3.08 referred to and now in force, of which the
Mortgagor or its successor or successors might take advantage despite this
Section 3.08, shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to constitute any part of the
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contract herein contained or to preclude the application of this Section 3.08.
Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an
Event of Default the Mortgagor, upon demand of the Mortgagee during the
continuance thereof, shall forthwith surrender to the Mortgagee the actual
possession of, and it shall be lawful for the Mortgagee by such officers or
agents as it may appoint to enter and take possession of, the Trust Estate (and
the books and papers of the Mortgagor), and to hold, operate and manage the
Trust Estate (including the making of all needful repairs, and such alterations,
additions and improvements as the Mortgagee shall deem wise) and to receive the
rents, issues, tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession, holding,
operating and managing the Trust Estate, as well as payments for taxes,
insurance and other proper charges upon the Trust Estate and reasonable
compensation to itself, its agents and counsel, to apply the same as provided in
Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section
3.09 shall be subject to the provisions of the New Jersey Casino Control Act and
Section 3.14. Whenever all that is then due upon the Note and under any of the
terms of this Mortgage shall have been paid and all defaults hereunder shall
have been made good, the Mortgagee shall surrender possession to the Mortgagor.
Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of
Default shall occur and be continuing, the Mortgagee, with or without entry, in
its discretion may:
(a) sell, subject to any mandatory requirements of applicable law,
the Trust Estate as an entirety, or in such parcels, as the Mortgagee may
determine, to the highest bidder at public auction at such place and at
such time (which sale may be adjourned by the Mortgagee from time to time
in its discretion by announcement at the time and place fixed for such
sale, without further notice) and upon such terms as the Mortgagee may fix
and briefly specify in a notice of sale to be published as required by law;
or
(b) proceed to protect and enforce its rights under this Mortgage by
sale pursuant to judicial proceedings or by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Mortgage or in aid of the execution
of any power granted in this Mortgage or for the foreclosure of this
Mortgage or for the enforcement of any other legal, equitable or other
remedy, as the Mortgagee, being advised by counsel, shall deem most
effectual to protect
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and enforce any of the rights of the Mortgagee; the failure to join tenants
shall not be asserted as a defense to any foreclosure or proceeding to
enforce the rights of the Mortgagee.
Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate,
whether made under the power of sale hereby given or pursuant to judicial
proceedings, to the extent permitted by law:
(a) all obligations owing under the Guaranty, if not previously due,
shall at once become and be immediately due and payable;
(b) subject to the provisions of Section 3.14 and the receipt of any
required prior approvals of the New Jersey Casino Control Commission, the
Mortgagee may bid for and purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain and possess and dispose
of such property, without further accountability, and may, in paying the
purchase money therefor, delivery any notes or claims for interest thereon
in lieu of cash to the amount which shall, upon distribution of the net
proceeds of such sale, be payable thereon, and such notes or claims for
interest thereon, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the holders thereof after
being appropriately stamped to show partial payment;
(c) the Mortgagee may make and deliver to the purchaser or purchasers
a good and sufficient deed, bill of sale and instrument of assignment and
transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true and lawful
attorney of the Mortgagor, in its name and stead, to make all necessary
deeds, bills of sale and instruments of assignment and transfer of the
property thus sold; and for that purpose it may execute all necessary
deeds, bills of sale and instruments of assignment and transfer, and may
substitute one or more persons, firms or corporations with like power, the
Mortgagor hereby ratifying and confirming all that its attorney or such
substitute or substitutes shall lawfully do by virtue hereof; but if so
requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify
and confirm any such sale or transfer by executing and delivering to the
Mortgagee or to such purchaser or purchasers all proper deeds, bills of
sale, instruments of assignment and transfer and releases as may be
designated in any such request;
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(e) all right, title, interest, claim and demand whatsoever, either
at law or in equity or otherwise, of the Mortgagor of, in and to the
property so sold shall be divested and such sale shall be a perpetual bar
both at law and in equity against the Mortgagor, its successors and
assigns, and against any and all persons claiming or who may claim the
property sold or any part thereof from, through or under the Mortgagor, its
successors and assigns; and
(f) the receipt of the Mortgagee or of the officer making such sale
shall be a sufficient discharge to the purchaser or purchasers at such sale
for his or their purchase money and such purchaser or purchasers and his or
their assigns or personal representatives shall not, after paying such
purchase money and receiving such receipt, be obliged to see to the
application of such purchase money, or be in anywise answerable for any
loss, misapplication or non-application thereof.
Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and
commencement of judicial proceedings by the Mortgagee to enforce any right under
this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor,
without notice or demand and without regard to the adequacy of the security for
the Guaranty or the solvency of the Mortgagor, to the appointment of a receiver
of the Trust Estate, and of the rents, issues, profits, revenues and other
income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this
Section 3.12 shall be subject to the provisions of the New Jersey Casino Control
Act and Section 3.14 hereof.
Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior
written notice to the Mortgagor (or such shorter period or without notice if
deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have
power to institute and maintain such proceedings as it may deem necessary and
appropriate to prevent any impairment of the Trust Estate by any acts which may
be unlawful or in violation of this Mortgage and to protect its interests in the
Trust Estate and in the rents, issues, profits, revenues and other income
arising therefrom, including power to institute and maintain proceedings to
restrain the enforcement of or compliance with any 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 the security
hereunder or be materially prejudicial to the interests of the Mortgagee.
Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision
of this Article Three to the
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contrary, following an Event of Default and the taking of possession of the
Trust Estate or any part thereof by the Mortgagee and/or the appointment of
receiver of the Trust Estate or any part thereof, the Mortgagee or any such
receiver shall be authorized, in addition to the rights and powers of the
Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one
or more experienced operators of hotels and/or casinos to manage the
Casino-Hotel, PROVIDED that any such operator shall have all necessary legal
qualifications, including all Permits, to manage the Casino-Hotel.
ARTICLE FOUR
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON
CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the
Mortgagor in Article Ten of the Indenture.
Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or
combination or any conveyance or transfer of the Trust Estate or any portion
thereof in accordance with Section 10.01 of the Indenture, the successor entity
formed by such consolidation or into which the Mortgagor is combined or to which
such conveyance or transfer is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Mortgagor under this Mortgage
with the same effect as if such successor entity had been named as the Mortgagor
herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust
Estate substantially as an entirety, unless such conveyance or transfer is in
compliance with the provisions of Article Ten of the Indenture, shall have the
effect of releasing the Person named as "the Mortgagor" in the first paragraph
of this instrument or any successor entity which shall theretofore have become
such in the manner prescribed in such Article Ten from its liability as
guarantor.
Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise
expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not
sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise
transfer all or any part of the Trust Estate or any interest therein (including
without limitation any interest in the Ground Leases). Without limiting the
generality of the foregoing, the Mortgagor shall not separate, or attempt to
separate, its ownership of its interest in the Ground Leases from its ownership
of the buildings constituting the Casino-Hotel or any part thereof.
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ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. [Reserved]
Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and
agrees to comply with all of the terms and conditions set forth in any FF&E
Financing Agreements before the expiration of any applicable notice and cure
periods contained in the FF&E Financing Agreements.
Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur,
suffer or permit to be created or incurred or to exist any mortgage, lien,
charge or encumbrance on or pledge of any of the Trust Estate, other than (i)
Permitted Encumbrances, (ii) liens on the Trust Estate in connection with
indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section
12.08(a) of the Indenture, and (iii) a building contract or a notice of
intention filed by a mechanic, materialman or laborer under the New Jersey lien
law. Without limiting the generality of the foregoing sentence but
notwithstanding the provisions of the foregoing sentence, the Mortgagor shall
not be deemed to have breached the provisions of the foregoing sentence by
virtue of the existence of a lien for Impositions or mechanics liens so long as
the Mortgagor is in good faith contesting the validity of the same in accordance
with the provisions of Section 5.09 to the extent that the matters described in
(i) and (ii) do not constitute a default under any Ground Lease or Superior
Mortgage.
Section 5.04. [Reserved]
Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges
the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a)
to appear in and defend any action or proceeding brought with respect to the
Trust Estate or any part thereof and (b) upon 5 days' prior written notice to
the Mortgagor (or such shorter period or without notice if deemed necessary and
appropriate by the Mortgage), to commence any action or proceeding to protect
the interest of the Mortgagee in the Trust Estate.
Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor
represents and warrants that as of the date hereof:
(a) it is duly authorized under the laws of the State of New Jersey
and all other applicable laws to
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execute and deliver this Mortgage, and all corporate action on its part
necessary for the valid execution and delivery of this Mortgage has been
duly and effectively taken;
(b) it is the lawful owner and is lawfully seized and possessed of
the Owned Land and all buildings and improvements thereon, free and clear
of all liens, charges or encumbrances, other than the lien of the Mortgage
Documents, any Working Capital Facility Lien and Existing Encumbrances;
(c) it is the holder of and has good and marketable title to the
leasehold interests and leasehold estates under the Ground Leases and to
the Ground Leases, subject to no lien, encumbrance or charge other than the
lien of the Mortgage Documents, any Working Capital Facility Lien and
Existing Encumbrances;
(d) (i) the Ground Leases are valid and subsisting demises of the
Leased Land for the terms therein set forth, (ii) there are no defaults
thereunder by any Lessor or the lessee as to which written notice has been
given to or by the lessee, (iii) the Mortgagor has delivered true and
correct copies of the Ground Leases and all modifications, amendments and
supplements thereto, and (iv) each of the Ground Leases is in full force
and effect and has not been modified, amended or supplemented, except as
described on Schedule 2;
(e) it has good title to the Operating Assets, subject to no lien,
encumbrance or charge, other than the lien of the Mortgage Documents, any
Working Capital Facility Lien and Existing Encumbrances; and
(f) the Mortgagor has good and lawful right and authority to execute
this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer,
hypothecate, pledge, mortgage and confirm the Trust Estate as provided
herein (including without limitation with respect to the Operating Assets
and the Ground Leases, without the consent of any third party, other than
governmental authorities but any applicable or necessary consent or
approval of any such governmental authority has been given or waived at or
prior to the execution and delivery of this Mortgage), and this Mortgage
constitutes a valid third mortgage lien and third priority security
interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage,
subject only to Working Capital Facility Liens and Existing Encumbrances.
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The Mortgagor hereby does and will forever warrant and defend (x) the title
to Trust Estate (including without limitation, its leasehold estates under the
lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and
(y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances
other than Restricted Encumbrances), against the claims and demands of all
persons whomsoever, at the Mortgagor's sole cost and expense.
Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as
provided in Section 5.13, from time to time subject its right, title and
interest under all Leases to the lien of this Mortgage.
The Mortgagor will cause this instrument and all other instruments of
further assurance, including all financing statements and continuation
statements covering security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be kept recorded, registered
and filed, and will execute and file such financing statements and cause to be
issued and filed such continuation statements, all in such manner and in such
places as may be required by law or as requested by the Mortgagee to fully
preserve and protect the rights of the Mortgagee as a secured party under the
Uniform Commercial Code to all property comprising the Trust Estate (to the
extent a grant of a security interest therein is governed by the Uniform
Commercial Code) and to perfect, preserve and protect the lien of this Mortgage
as a valid mortgage lien of record and a valid security interest on the Trust
Estate subject to Permitted Encumbrances (other than Restricted Encumbrances).
The Mortgagor will pay all filing or recording fees, and all expenses
incident to the execution and delivery of this Mortgage, and any instrument of
further assurance, and all federal, state, county and municipal stamp taxes and
other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Mortgage, any financing
statement or continuation statement with respect to the personal property
constituting part of the Trust Estate or any instrument of further assurance.
Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL
REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to contests,
pay or cause to be paid promptly (or when installments of the same shall
become due and payable, if, by law or by agreement or arrangement with the
applicable governmental agency or authority, the same
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may be paid in installments) before any fine, penalty, interest or cost may
be added for nonpayment (but no later than when the same are payable by the
Mortgagor pursuant to any Superior Instrument Requirement), all taxes
(including, without limitation, real estate taxes, personal or other
property taxes and all sales, value added, use and similar taxes),
assessments (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed prior to the
satisfaction of this Mortgage), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and
other authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties thereon),
that may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon (1) the Trust Estate (including without limitation the
Leased Land) or any part thereof or any rent therefrom or any estate, right
or interest therein, or (2) any acquisition, occupancy, use, leasing, or
possession of or activity conducted on the real property or any part
thereof included in the Trust Estate or any gross receipts thereof or of
the rent therefrom (all of the foregoing being referred to collectively as
"Impositions"). Notwithstanding the foregoing or any other provision of
this Mortgage, the Mortgagor shall not be required to pay any income,
profits or revenue tax upon the income of the Mortgagee, the Trustee or the
Noteholders nor any franchise, excise, corporate, estate, inheritance,
succession, capital levy or transfer tax of the Mortgagee, the Trustee or
the Noteholders nor any interest, additions to tax or penalties in respect
thereof, unless such tax is imposed, levied or assessed in substitution for
any Impositions that the Mortgagor is required to pay pursuant to this
Section 5.08. The Mortgagor will deliver to the Mortgagee official
receipts or other proof evidencing payments of any Impositions in
accordance with the requirements of this Section 5.08. The Mortgagor shall
not be entitled to any credit for taxes or assessments paid against the
Guaranty;
(b) except for such property which the Mortgagor may dispose of or
replace pursuant to Section 2.02, maintain and keep all its properties used
or useful in the conduct of its business (other than obsolete equipment),
including, without limitation, the Casino-Hotel and all Tangible Personal
Property, in such good repair, working order and condition, except for
reasonable wear and use, and make or cause to be made all
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such needful and proper repairs, renewals and replacements thereto
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey;
(c) occupy and continuously operate the Casino-Hotel and keep the
Casino-Hotel supplied with Tangible Personal Property, all in a manner
consistent with the standards of other casino-hotels in Atlantic City, New
Jersey (provided that nothing contained in this Section 5.08(c) shall be
deemed to reduce the time period set forth in Section 3.01(f));
(d) subject to the provisions of Section 5.09 relating to contests,
the Mortgagor at its sole expense will timely (1) comply with all Legal
Requirements and Insurance Requirements, whether or not compliance
therewith shall require structural changes in the buildings and
improvements included in the Trust Estate or interfere with the use and
enjoyment of the Trust Estate or any part thereof, (2) procure, maintain
and comply with all permits and other authorizations required for (i) the
use of the Casino as a gaming and gambling facility, (ii) the on-premises
consumption of alcoholic beverages at the Casino-Hotel and (iii) any other
use of the Trust Estate or any part thereof then being made, and for the
proper erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any instruments of
record at the time in force affecting the Trust Estate or any part thereof,
if the failure to comply with the same would impair the Mortgagee's
security hereunder. Without limiting the generality of the foregoing, the
Mortgagor represents and warrants that at the time of the execution of this
Mortgage, the Mortgagor is in compliance with the requirements of clauses
(1), (2) and (3);
(e) in the event of the passage after the date of this Mortgage of
any law of the State of New Jersey, or any other governmental entity,
changing in any way the laws now in force for the taxation of mortgages, or
debts secured thereby, for state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of the Mortgagee,
then and in such event, the Mortgagor shall bear and pay the full amount of
such taxes, provided that if for any reason payment by the Mortgagor of any
such new or additional taxes would be unlawful or if the payment thereof
would constitute usury or render the indebtedness secured hereby wholly or
partially usurious under any of the terms or provisions of the Note, or
this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option,
declare the whole sum secured by this Mortgage, with interest
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thereon, to be due and payable 90 days after notice of election thereof has
been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's
option, pay that amount or portion of such taxes as renders the loan or
indebtedness secured hereby unlawful or usurious, in which event the
Mortgagor shall concurrently therewith pay the remaining lawful and
nonusurious portion or balance of such taxes.
Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense,
contest by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part of any
Imposition or lien therefor or any Legal Requirement or Insurance Requirement or
the application of any instrument of record affecting the Trust Estate or any
part thereof or any claims of mechanics, materialmen, suppliers, or vendors or
lien therefore, and may withhold payment of the same pending such proceedings if
permitted by law, or make payment under protest, or defer compliance with any
such Legal Requirement, any such Insurance Requirement or the terms of any such
instrument, and the same shall not be a Default hereunder, provided that (a) in
the case of any Impositions or lien therefor or any claims of mechanics,
materialmen, suppliers or vendors or lien therefor, such proceedings shall
suspend the collection thereof from each of the Mortgagor, the Mortgagee, the
Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor
any interest therein would be in any danger of being sold, forfeited, or lost,
(c) such action would not result in or constitute a default under any Ground
Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the
Noteholders nor the Mortgagee shall be in any danger of any civil or any
criminal liability, and the failure of the Mortgagor to comply with such Legal
Requirement shall not affect the continuance in good standing of any Permit or
result in the suspension, termination, non-renewal or material adverse
modification of any permit, and (e) in the case of an Insurance Requirement, the
failure of the Mortgagor to comply therewith shall not affect the validity of
any insurance required to be maintained by the Mortgagor hereunder.
Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality
of the first sentence of Section 5.03 and notwithstanding the provisions of
Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment,
or bonding or otherwise, all claims and demands of mechanics, materialmen,
laborers, and others which, if unpaid, might result in, or permit the creation
of, a lien on the Premises and/or Trust Estate or any part thereof, or on the
revenues, rents, issues, income and profits arising therefrom and in general
will do or cause to be done everything necessary so
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that the lien hereof shall be fully preserved, at the cost of the Mortgagor,
without expense to the Mortgagee.
Section 5.11. INSURANCE.
(a) The Mortgagor will, at its expense, maintain with Insurers:
(1) insurance with respect to the Mortgagor's insurable properties
constituting a part of the Trust Estate against loss or damage by fire,
lightning, and other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler leakage, water damage,
collapse, malicious mischief and explosion in respect of any steam and
pressure boiler and similar apparatus located on such insurable properties,
in amounts at all times sufficient to prevent the Mortgagor from becoming a
coinsurer within the terms of the applicable policies, but in any event
such insurance shall be maintained in such insurable amounts not less than
the greatest of the following (hereinafter referred to as the "Insurance
Amount"): (i) 100% of the then full insurable value of such insurable
properties, the term "full insurable value" to mean the actual replacement
cost (excluding the costs of foundation, footing, excavation, paving,
landscaping and other similar, non-insurable improvements) determined from
time to time (but not less frequently than once in any 36 calendar months),
by an Architect, contractor, appraiser, or an Insurer, or (ii)
the amount required to be maintained pursuant to the Superior Instrument
Requirements;
(2) war risk insurance as and when such insurance is obtainable from
the United States of America or any agency thereof as promptly as
reasonably practicable after the same becomes so obtainable, in an amount
not less than the Insurance Amount, or in such lesser amount as may then be
so obtainable;
(3) public liability, including personal injury and property damage
and comprehensive general liability connected with the possession, use,
leasing, operation or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent, considering the cost
of such insurance, for personal injury and property damage with respect to
any one occurrence, which may be under an umbrella policy. Anything
contained in this clause (3) to the contrary notwithstanding, the Superior
Instrument Requirements with respect to the
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kinds and amount of insurance described in this clause (3) shall be
satisfied by the Mortgagor;
(4) appropriate workers' compensation insurance with respect to any
work (to the extent the risks to be covered thereby are not already covered
by other policies of insurance maintained by the Mortgagor) on or about
such insurable properties;
(5) business interruption insurance covering not less than 12
months of loss, provided that, at any time that the
Mortgagor is renewing any policy for such insurance or taking out any new
or replacement such policy covering a period of less than 12 months, the
Mortgagor shall deliver to the Mortgagee an Officers' Certificate
certifying that the period of coverage to be maintained by the Mortgagor
under such policy is the maximum that can be maintained at rates determined
by the Mortgagor to be reasonable for such coverage;
(6) to the extent available, flood insurance in an amount not less
than the Insurance Amount, or such lesser amount as may then be so
obtainable; and
(7) such other insurance with respect to such insurable properties
against loss or damage of the kinds (i) from time to time customarily
insured against by persons owning or using casino-hotels of comparable size
in the boardwalk area of Atlantic City, New Jersey and (ii) required to be
maintained pursuant to the Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent permitted by Superior
Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a
deductible with respect to the insurance policies described in clauses (1), (2),
(6) and (7) in an amount not to exceed (x) for the twelve month period
commencing the date hereof, $100,000 with respect to the insurance policies
described in clause (1), (2), (6) and (7) thereafter, the customary deductible
(if any) with respect to the insurance maintained by casino-hotels of a similar
size and value in Atlantic City, New Jersey (but in no event more than
$1,000,000), (ii) the Mortgagor shall be permitted to maintain a
$200,000 self insured retention under the general liability policy
described in clause (3) and a deductible with respect
to the other insurance policies described in clause (3) in an amount not
to exceed the amount of deductible as is customarily maintained by casino-hotels
of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not
reduce its insurance coverage for the matters described in clause (3) (which for
purposes of this paragraph means a reduction in single limits or an increase in
deductible) unless and until the Mortgagor
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delivers to the Mortgagee an Officers' Certificate certifying (w) that the
coverage the Mortgagor was theretofore maintaining cannot be maintained at rates
determined by the Mortgagor to be reasonable for such coverage, (x) the amount
of the proposed reduction, (y) the premium for the existing and the proposed
reduced coverage, and (z) that the proposed deductible satisfied the criteria
set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to
maintain a deductible with respect to the insurance policies described in clause
(5) in the forms of and in an amount not to exceed the amount of deductible as
is customarily maintained by casino-hotels of similar size in Atlantic City, New
Jersey.
(b) Each policy of insurance maintained by the Mortgagor pursuant to
Subsection (a) of this Section 5.11 shall, (1) except in the case of workers'
compensation insurance, name as additional insureds the Mortgagee, in both
its individual and fiduciary capacities, and, to the extent
required by the Superior Instrument Requirements, the Lessors and the
holders of the Superior Mortgages, (2) provide that all insurance proceeds for
losses, except in the case of public liability insurance and workers'
compensation insurance or as otherwise provided in Subsections (d), (e) and (f)
of this Section 5.11, be payable solely to the Mortgagee or such other party as
is required to receive such proceeds under a Superior Mortgage, (3)
except in the case of workers' compensation, include
effective waivers (whether under the terms of any such policy or otherwise) by
the insurer of all claims for insurance premiums against all lost payees and
named insureds (other than the Mortgagor) and all rights of subrogation against
any named insured, (4) except in the case of public liability and workers'
compensation insurance, provide that any losses shall be payable notwithstanding
(i) any act, failure to act, negligence of, or violation or breach of
warranties, declarations or conditions contained in such policy by the Mortgagor
or the Mortgagee or any other named insured or loss payee (including, without
limitation, with respect to the Released Fee Land, the holders of any
After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable
properties for purposes more hazardous than permitted by the terms of the
policy, (iii) any foreclosure or other proceeding or notice of sale relating to
the insurable properties or (iv) any change in the title to or ownership or
possession of the insurable properties, (5) contain a non-contributory mortgagee
clause in favor of the Mortgagee, and (6) provide that if all or any part of
such policy is cancelled, terminated or expires, the insurer will forthwith give
notice thereof to each named insured and loss payee and that no cancellation,
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by each named insured and loss payee of
written notice thereof.
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(c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals
of all insurance policies that the Mortgagor is required to maintain pursuant to
this Section 5.11 and (2) within 30 days after each reduction in insurance
required to be maintained by the Mortgagor hereunder, an Officers' Certificate
setting forth the particulars as to all such insurance policies and certifying
that the same comply with the requirements of this Section 5.11, that all
premiums or installments thereof then due thereon have been paid and that the
same are in full force and effect. The Mortgagee shall not be responsible for
effecting or renewing any insurance or for the responsibility or solvency of the
insurers.
(d) The Mortgagor shall give written notice to the Mortgagee immediately
upon obtaining knowledge of any Casualty which (x) results in damage, loss or
destruction in an amount in excess of [$5,000,000] to any buildings or
improvements on the Premises and/or any Tangible Personal Property or (y)
pursuant to any Superior Instrument Requirement, would require the deposit of
insurance proceeds with the Depositary, or action or proceeding with respect
thereto. Whenever the Superior Instrument Requirements require or permit the
selection of the Depositary by the Mortgagor, the Mortgagor shall select the
Insurance Trustee as the Depositary. Within 30 days after any Casualty which
results in any damage, loss or destruction in an amount in excess of
$10,000,000 to any buildings or improvements of the Premises and/or any
Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a
certificate of an Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit the Restoration of such buildings and
improvements for the same uses and to the same size and quality in all material
respects, as existed immediately prior to the Casualty (and if such certificate
states the Legal Requirements do not permit such Restoration, such certificate
shall describe the manner closest approximating such criteria to which the
buildings and improvements could be so restored and shall be accompanied by a
Certificate of Appraised Value dated not more than 10 days prior to delivery
setting forth the Appraised Value immediately prior to the Casualty and the
estimated Appraised Value immediately after the Restoration). If the Mortgagor
is required to deliver such Certificates of Appraised Value and if based on such
Certificates of Appraised Value immediately after Restoration, the aggregate
Outstanding Amount of First Mortgage Debt immediately after such Restoration
shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after
such Restoration or (ii) the quotient of the Outstanding Amount of First
Mortgage Debt immediately prior to such Casualty divided by the Appraised Value
immediately prior to the Casualty multiplied by the Appraised Value immediately
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after such Restoration, then the proceeds of any insurance shall, at the
election of Mortgagee, either be applied to Restoration as set forth in
Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to
the extent of the then Outstanding Amount of the Note and any other interest or
other sums due hereunder or thereunder to be applied to the satisfaction of the
Mortgage to the extent proceeds are available for such purpose and provided that
no additional sums are due to the Trustee or the Noteholder under the Indenture,
the balance of any net insurance proceeds shall be paid to the Mortgagor.
Notwithstanding the foregoing sentence, if such Certificates of Appraised Values
indicates that the Outstanding Amount of First Mortgage Debt immediately after
such Restoration exceeds the greater of the two amounts determined pursuant to
subclauses (i) and (ii) above, the proceeds of insurance will be made available
for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor
obtains an irrevocable commitment from a nationally recognized financial
institution having a combined capital and surplus of at least $100,000,000, to
supply, upon an acceleration under this Mortgage as a result of an Event of
Default, funds to the Mortgagor as additions to capital in an amount equal to
the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value
necessary to be paid down so that the Outstanding Amount of First Mortgage Debt
will not exceed either of the two amounts determined pursuant to such clauses
(i) and (ii), PROVIDED that such commitment may only be released if, upon an
Appraisal at any time following completion of such Restoration, the aggregate
Outstanding Amount of the First Mortgage Debt does not exceed 66-
2/3% of the Appraised Value.
(e) Subject to the provisions of Subsection (d) above, in case a Casualty
occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter defined) does not
exceed the sum of $10,000,000, the net insurance proceeds shall be paid
by the Mortgagee to the Mortgagor (unless the Superior Instrument
Requirements provide that the same shall be paid to the Depositary);
(2) if the cost of Restoration is $10,000,000 or more or if the
Superior Instrument Requirements provide that the same shall be paid to the
Depositary, the net insurance proceeds shall be paid by the Mortgagee to
the Insurance Trustee (or other Depositary required by the Superior
Instrument Requirements, provided that such Depositary holds such proceeds
in trust for purposes of paying the costs of Restoration);
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(3) the Mortgagor shall commence with reasonable promptness under the
circumstances and thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the restoration, repair,
replacement or rebuilding of the damage or destruction resulting from the
Casualty (all of which restoration, repair, replacement or rebuilding are
referred to as the "Restoration") in accordance with the plans and
specifications submitted to the Insurance Trustee, in conformance with all
Legal Requirements and Superior Instrument Requirements, and in accordance
with the further provisions of this Subsection (e), regardless of the
extent of any such Casualty and whether or not net insurance proceeds, if
any, shall be available or, if available, shall be sufficient, for the
purpose of the Restoration (provided, however, that if the Mortgagor does
not receive any net insurance proceeds within 30 days after any Casualty
because the adjustment of the loss has not yet occurred, then the
obligation of the Mortgagor to commence such Restoration shall be deferred
until such proceeds are made available to the Mortgagor, provided that (i)
Mortgagor delivers to the Mortgagee an Officers' Certificate
certifying that the Mortgagor is diligently and continuously
adjusting such loss with the Insurer, (ii) the Mortgagor
delivers to the Mortgagee an Officers' Certificate
within such 30-day period requesting the extension of such period,
estimating the date on which such proceeds will be available and describing
the Mortgagor's efforts to adjust such loss and certifying that such
extension does not constitute a default or a breach of any of the
provisions of any of the Ground Leases (or if so, such default or breach
has been waived) and (iii) the Mortgagor delivers to the Mortgagee
additional Officers' Certificates every 30 days thereafter updating the
information contained in the certificate described in Clause (ii)). All
Restoration work shall be performed in accordance with the applicable
provisions of Section 5.12 and in conformance with all Superior Instrument
Requirements, Legal Requirements and Insurance Requirements and, prior to
commencing any Restoration, the Mortgagor shall obtain all Permits
necessary in connection therewith, and shall obtain, and keep in full force
and effect until the completion of such Restoration, such additional
insurance as the Insurance Trustee and Superior Instrument Requirements may
require. The plans and specifications for the Restoration shall be
accompanied by a certificate of the Mortgagor and an Opinion of Counsel to
the effect that upon the completion of the Restoration pursuant to the
plans and specifications the Premises, and all buildings and improvements,
thereon will comply with all superior Instrument Requirements, Legal
Requirements and Insurance
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Requirements. Notwithstanding anything in this Section 5.11 to the
contrary, if such Casualty is in an amount less than $5,000,000, the
Mortgagor shall not be required to perform and complete such Restoration
(unless the performance and completion of the Restoration is necessary in
order for the Mortgagor to be in compliance with any term, provision or
condition of this Mortgage (other than this Section 5.11(e)) or any
Superior Instrument Requirements;
(4) Any insurance proceeds which the Mortgagor receives, shall be
held by the Mortgagor in trust for the purpose of paying the cost of the
Restoration, except as otherwise provided herein;
(5) Any net insurance proceeds that the Insurance Trustee holds
pursuant to this Subsection (e), shall be deposited in an interest-bearing
investment reasonably designated by Mortgagor (to the extent the Mortgagor
is permitted to designate such investment under the Superior Instrument
Requirements) (and the interest thereon shall be added to such proceeds)
and shall be paid by the Insurance Trustee to reimburse the Mortgagor for,
or to make payment for, the Restoration, after the Insurance Trustee
deducts therefrom the amount of any reasonable costs and expenses incurred
in connection with the performance of its obligations under this Section
5.11. The Insurance Trustee shall make such payments not more frequently
than once every 30 days upon the written request of the Mortgagor (unless
more frequent payments are required by Superior Instrument Requirements),
by paying to the Mortgagor or the persons named in the certificate
described in Clause (6) of this Subsection (e) the respective amounts
stated in such certificate from time to time as the Restoration progresses,
provided the Mortgagor has complied with the requirements of this
Subsection (e) and such payment is permitted by an applicable Superior
Instrument Requirements. The Mortgagor's written request shall be
accompanied by (i) the certificate described in Clause (6) of this
Subsection (e) and (ii) a title company or official search, or other
evidence reasonably acceptable to the Insurance Trustee, showing that there
have not been filed with respect to the Premises, any vendor's,
contractor's, mechanic's, laborer's or materialman's statutory or similar
lien which has not been discharged of record (or bonded against or secured
by other security) or any other encumbrance irrespective of its priority
(other than Permitted Encumbrances).
(6) The certificate required by Clause (5) of this Subsection (e)
shall (A) be an Officers' Certificate,
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countersigned by the Architect in charge of the Restoration with respect to
the matters described in (i) and (v) below, (B) be dated not more than 10
days prior to such request and (C) set forth (in addition to any other
requirements contained in any applicable Superior Instrument Requirements)
that:
(i) all of the Restoration work theretofore performed is in
substantial compliance with the plans and specifications theretofore
submitted to the Insurance Trustee and in compliance with all Superior
Instrument Requirements, Legal Requirements and Insurance
Requirements;
(ii) the sum then requested either has been paid by the Mortgagor
or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other persons who have rendered services or
furnished or contracted to deliver materials for the Restoration
therein specified, and the names and addresses of such persons, a
brief description of such services and materials and the several
amounts so paid or due to each of such persons in respect thereof;
(iii) no part of the amount requested has been or is the basis in
any pervious or then pending request for the withdrawal of net
insurance proceeds, and that the sum then requested does not exceed
the value of the services and materials described in the certificate;
(iv) except for the amount, if any, stated pursuant to Subclause
(ii) of this Clause (6) in such certificate to be due for services or
materials, and except for amounts in dispute and/or customary
retainages, there is no outstanding indebtedness known to the person
signing such certificate, after due inquiry, which is then due for
labor, wages, materials, supplies or services in connection with such
Restoration; and
(v) the remaining cost, as estimated by the persons signing such
certificate, of the Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the hands of Insurance
Trustee after payment of the sum requested in such certificate or if
such estimated cost does exceed such insurance proceeds such
certificate shall state the amount of any such deficiency. If the
certificate states that such deficiency will exist, the Mortgagor
shall deliver the amount of
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such deficiency in cash or cash equivalent to the Insurance Trustee
simultaneously with the delivery of such certificate, which amount
shall be deemed insurance proceeds for purposes of this Section
5.11(e); and
(7) If net insurance proceeds shall be insufficient to pay the entire
cost of the Restoration, then, after completion of the Restoration, the
Mortgagor shall pay the deficiency. If all or any part of the net
insurance proceeds are not used for the Restoration in accordance with this
Subsection (e) (because such proceeds exceed the amount required to
complete the Restoration), then upon completion of the Restoration in
accordance with this Subsection (e), such amount not so used, if held by
the Insurance Trustee, shall be paid to the Mortgagor (if permitted by
Superior Instrument Requirements).
(f) Provided that no Event of Default has occurred and is continuing, all
net business interruption insurance proceeds shall be paid to the Mortgagor, to
be segregated from the other funds of Mortgagor and held in trust by Mortgagor
for the following purposes and in the following order of priority: (i) for the
payment of Impositions and amounts due under the Ground Leases and Superior
Mortgages; (ii) for debt service for the estimated period of Restoration (for
purposes of this Section 5.11(f), interest and principal payments due on any
payment date under the Notes will deemed to accrue in equal daily installments
beginning the day after the immediately preceding payment date and ending on
such payment date); and (iii) for any expense incurred in connection with the
operation or business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance, concurrent in
form or contributing in the event of loss with that required to be maintained
pursuant to this Section 5.11, unless the same are permitted by Superior
Instrument Requirements and the Mortgagee is included therein as a named
insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant
to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee
whenever any such separate insurance is taken out and shall promptly deliver to
the Mortgagee a duplicate original of the policy of such insurance, a copy
thereof certified by the insurer or a certificate thereof.
(h) Subject to final adjustment by the insurer, insurance
claims by reason of damage or destruction to any portion of the Trust
Estate may adjusted by the Mortgagor, but the Mortgagee shall have the
right (but not the obligation) to join the Mortgagor in adjusting, and approving
the adjustment of, any such loss except in the event of a loss where the amount
of insurance reasonably anticipated
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to be received with respect to such loss is less than Five Million Dollars
($5,000,000), and the Mortgagor shall assist the Mortgagee in any such
adjustment at the request of the Mortgagee. If the Mortgagee at its election as
aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's
approval of the adjustment shall not be unreasonably withheld;
(i) Notwithstanding anything contained herein to the contrary, if an Event
of Default shall have occurred and be continuing, the Mortgagee may, at its
option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any
net insurance proceeds or (B) instruct the Insurance Trustee to pay to the
Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case
may be.
Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS,
IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or
make any demolition, alteration or improvement of any building included in the
Trust Estate or any new construction on any part of the Trust Estate, except in
conformity with and subject to the limitations hereinafter in this Section 5.12
set forth.
Unless an Event of Default shall have occurred and be continuing, the
Mortgagor shall have the right at all times to make or permit such alterations,
improvements or new constructions, structural or otherwise (herein sometimes
called collectively "alterations"), of or on the Trust Estate, to be made in all
cases subject to the conditions set forth in Section 5.12 of the Note Mortgage.
Section 5.13. LEASES. The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d), enter into any
Lease, or renew, modify, extend, terminate, or amend any Lease, except in
the ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection of, any
rental payments under any Lease more than one year in advance of the
respective periods in respect of which they are to accrue, except that, in
connection with the execution and delivery of any Lease or of any amendment
to any Lease, rental payments thereunder may be collected and received in
advance in an amount not in excess of three months' rent and/or a security
deposit may be required thereunder in an amount not exceeding one year's
rent;
(c) collaterally assign, transfer or hypothecate (other than to the
Mortgagee hereunder, to
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the mortgagee under the Note Mortgage or to the holder of any Working
Capital Facility Lien) any rental payment under any Lease whether then due
or to accrue in the future, the interest of the Mortgagor as landlord under
any Lease or the rents, issues or profits of the Trust Estate;
(d) after the date hereof, enter into any Lease, or renew any Lease
unless such Lease contains terms to the effect as follows:
(1) the Lease and the rights of the tenants thereunder shall be
subject and subordinate to the rights of the Mortgagee under this
Mortgage, the mortgagee under the Note Mortgage and the holders of any
Superior Mortgage,
(2) the Lease may be assigned by the landlord thereunder to the
Mortgagee,
(3) the rights and remedies of the tenant in respect of any
obligations of the landlord thereunder shall be nonrecourse as to any
assets of the landlord other than its equity in the building in which
the leased premises are located or the proceeds thereof,
(4) the rights of the tenant shall be subject and subordinate to
the rights of the lessee under any new lease entered into in the event
of a termination of a Ground Lease;
(e) modify any Lease with respect to the matters described in clauses
(1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any Affiliate of the
Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee
shall deliver a non-disturbance and attornment agreement substantially in the
form of Schedule 4 hereto, following receipt of a certificate of a leasing
broker (who is not an Affiliate of the Mortgagor or the broker involved in such
transaction) experienced with respect to leases of commercial space in the
Atlantic City area stating that the rent under the Lease is not less than fair
market rent and that the other terms of the Lease are fair and reasonable in the
commercial leasing market. The Mortgagor shall, upon demand, reimburse the
Mortgagee for any costs and expenses (including reasonable attorney's fees)
incurred by the Mortgagee in connection with the preparation, review and
delivery of such non-disturbance and attornment agreements.
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Promptly after the execution and delivery hereof, the Mortgagor will cause
the lessee under each Lease now in effect and promptly after each Lease is
executed or becomes effective after the date of the execution and delivery
hereof, the Mortgagor will cause the lessee under each such Lease, to be duly
notified in writing (unless the substance and effect of such notice shall be
contained in such Lease) of the subjection of the owner's interest, as lessor,
in and to such Lease to the lien of this Mortgage and of the name and address of
the Mortgagee. Each such notice shall state that the lease of such lessee is a
Lease as herein defined. If a new Mortgagee is at any time appointed hereunder
or the address of the Mortgagee shall at any time be changed, the Mortgagor will
cause each lessee under each Lease to be promptly notified in writing of the
name and address of such new Mortgagee or the new address of the Mortgagee. The
Mortgagor will use reasonable efforts (but shall not be obligated to incur any
expenditure other than de minimis amounts) to obtain from each lessee under each
Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of
receipt of such notice, and the Mortgagor will promptly deliver to the
Mortgagee, upon request, a copy of each such acknowledgment of receipt which it
is able to obtain. The Mortgagee shall not be responsible for securing or
causing the Mortgagor to secure any such acknowledgment.
Nothing contained in this Section 5.13 shall limit the provisions of
Section 4.04 hereof.
Section 5.14. [Reserved]
Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to
Article Four, the Mortgagor will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation, and
its rights (both statutory and under its articles of incorporation) and
franchises.
Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will
keep proper books of record and account in accordance with Section 12.05 of the
Indenture.
Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to
perform any of its covenants in this Mortgage and such failure shall continue
for 10 days following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is not obligated
to), at any time and from time to time, take any action or make advances, to
effect performance of any such covenant on behalf of the Mortgagor; and all
moneys so used or advanced by the Mortgagee and all reasonable costs and
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expenses incurred by Mortgagee in connection therewith, together with interest
on all of the same at the rate of interest set forth in the Notes, shall be
repaid by the Mortgagor upon demand and such advances shall be secured under
this Mortgage prior to the Guaranty.
Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law or any other law which
would prohibit or forgive the Mortgagor from paying all or any portion of the
obligations under the Guaranty as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may otherwise affect the covenants or
the performance of this Mortgage; and the Mortgagor (to the extent that it may
lawfully do so) 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 Mortgagee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 5.19. [Reserved]
Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions
of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking
affecting the Trust Estate.
Section 5.21. GROUND LEASES.
(a) The Mortgagor covenants and agrees that it will do or cause to be done
all things necessary to preserve and keep unimpaired the rights of the
Mortgagor, as lessee under the Ground Lease, and to prevent any termination,
surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall
at all times fully perform and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as lessee under each of the Ground
Leases (including without limitation the covenant to pay rent and all taxes,
assessments and other charges mentioned therein) prior to the expiration of any
notice and/or cure period provided in each such Ground Lease. Upon receipt by
the Mortgagee from a Lessor of any written notice of default by the lessee
thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems
necessary in its sole discretion to prevent or to cure any default by the
Mortgagor in the performance of or compliance with any of the agreements,
covenants, terms or conditions imposed upon or assumed by the Mortgagor as
lessee under each of the Ground Leases, even though the existence of such
default or the nature thereof be questioned or denied by
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the Mortgagor or by any party on behalf of the Mortgagor, provided that if the
Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate,
Opinion of Counsel and a copy of the injunction, all as described in Section
3.01(g), the Mortgagee shall not take any such action unless and until the
Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay
referred to in Section 3.01(g). Without limiting the generality of Section 3.09
hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that
the Mortgagee shall have, the absolute and immediate right to enter in and upon
the Premises or any part thereof to such extent and as often as the Mortgagee,
in its sole discretion, deems necessary or desirable for the purpose permitted
by the immediately preceding sentence, subject only to applicable Legal
Requirements. Subject to the preceding and without limiting the Mortgagee's
other remedies under this Mortgage, the Mortgagee may pay and expend such sums
of money as the Mortgagee in its sole discretion deems necessary for any such
purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately
and without demand, all such sums so paid and expended by the Mortgagee,
together with interest thereon from the date of each such payment at the highest
rate of interest set forth in the Notes. All sums so paid and expended by the
Mortgagee, and the interest thereon, shall be added to and be secured by the
lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) it will not surrender any leasehold estate and interest
hereinabove described, nor terminate or cancel any Ground Lease, and
that it will not without the express written consent of the Mortgagee
modify, change, supplement, alter or amend such Ground Leases either
orally or in writing and, as further security for the repayment of the
indebtedness secured hereby and for the performance of the covenants
herein and in such Ground Leases contained, the Mortgagor hereby
assigns to the Mortgagee all of its rights, privileges and
prerogatives as lessee under such Ground Leases to terminate, cancel,
modify, change, supplement, alter or amend such Ground Leases, and any
such termination, cancellation, modification, change, supplement,
alteration or amendment of such Ground Leases without the prior
written consent thereto by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred and is continuing
and (2) either (A) there has been an acceleration of maturity of the
Notes pursuant to Section 3.02 of the Note Mortgage or (B) the
Mortgagee exercises its rights under Section 3.09 hereof, the
Mortgagee shall have no right to terminate, cancel, modify, change,
supplement, alter or amend the Ground Leases;
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(ii) solely for the benefit of the Mortgagee, Trustee, the
Noteholders and no other person, no release or forbearance of any of
the Mortgagor's obligations under such Ground Leases, pursuant to such
Ground Leases or otherwise, shall release the Mortgagor from any of
its obligations under this Mortgage, including its obligations with
respect to the payment of rent as provided for in such Ground Leases
and the performance of all of the terms, provisions, covenants,
conditions and agreements contained in such Ground Leases, to be kept,
performed and complied with by the lessee therein;
(iii) unless the Mortgagee shall otherwise expressly consent
in writing, the fee title to the Leased Land, the Mortgagor's interest
in the improvements on the Leased Land and the leasehold estates shall
not merge by and shall always remain separate and distinct,
notwithstanding the union of such estates either in the Lessor or in
the lessee, or in a third party by purchase or otherwise;
(iv) the Mortgagor shall promptly notify the Mortgagee in writing
of any request made by the Mortgagor, as lessee under each of the
Ground Leases, or any of the Lessors, for arbitration proceedings
pursuant to the Ground Leases and of the institution of any
arbitration proceedings, as well as all proceedings thereunder. In
addition, the Mortgagor shall promptly deliver to the Mortgagee a copy
of the determination of the arbitrators in each such arbitration
proceeding. The Mortgagee shall have the right to participate in such
arbitration proceedings in association with the Mortgagor or on its
own behalf as an interested party in accordance with the terms of the
Ground Leases;
(v) the Mortgagor shall not consent to the subordination of any
Ground Lease to any mortgage deed of trust or other lien of the fee
interest of the Lessor;
(vi) in the event (A) the Mortgagor exercises its option under
any Ground Lease to purchase any portion of the Leased Land, the
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after the Mortgagor has delivered notice of such
election to the Lessor or (B) the Mortgagor acquires fee simple title
or any other estate, title or interest in the Leased Land, the
Mortgagor shall promptly notify the Mortgagee of such acquisition and
shall cause to be executed and recorded all such other and further
assurances or other instruments in writing as may be required by law
or, in the opinion of the Mortgagee, be reasonably
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desirable to carry out the intent and meaning of clause
(x) of Granting Clause Second;
(vii) within 5 days after the Mortgagor's receipt of any
notice of any motion, application or effort to reject the Ground Lease
by any Lessor or any trustee arising from or in connection with any
case, proceeding or other action commenced or pending by or against
any Lessor under the Code or any comparable provision contained in any
present or future federal, state, local, foreign or other statute,
law, rule or regulation, the Mortgagor shall give notice thereof to
the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any
and all of the Mortgagor's rights as lessee under Section 365(h) of
the Code or any comparable provision contained in any present or
future federal, state, local, foreign or other statute, law, rule or
regulation ("Comparable Provision") and (B) covenants that it shall
not elect to treat any Ground Lease as terminated pursuant to Section
365(h) of the Code or any Comparable Provision without the prior
written consent of the Mortgagee and (C) agrees that any such election
by the Mortgagor without such consent shall be null and void;
(viii) without limiting the generality of the foregoing, the
Mortgagor hereby unconditionally assigns, transfers and sets over to
the Mortgagee all of the Mortgagor's claims and rights to the payment
of damages arising from any rejection by Lessor of any Ground lease
under the Code or any Comparable Provision. The Mortgagee shall have
the right to proceed in its own name or in the name of the Mortgagor
in respect of any claim, suit, action or proceeding relating to the
rejection of any Ground Lease, including, without limitation, the
right to file and prosecute, in cooperation with the Mortgagor, any
proofs of claim, complaints, motions, applications notices and other
documents, in any case in respect of Lessor under the Code or any
Comparable Provision. This assignment constitutes a present,
irrevocable and unconditional assignment of the foregoing claims,
rights and remedies, and shall continue in effect until all of the
indebtedness and obligations secured by this Mortgage shall have been
satisfied and discharged in full. Any amounts received by the
Mortgagee in damages arising out of the rejection of any Ground Lease
as aforesaid shall be applied first to all reasonable costs and
expenses of the Mortgagee (including, without limitation, reasonable
attorneys' fees) incurred in connection with the exercise of any of
its rights or remedies under this Section 5.21, and thereafter as
provided in Section 3.03 hereof;
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(ix) if there shall be filed by or against the Mortgagor a
petition under the Code or any Comparable Provision and the Mortgagor,
as lessee under the Ground Leases, shall determine to reject any or
all of the Ground Leases the Mortgagor shall give the Mortgagee not
less than 10 days' prior notice of the date on which the Mortgagor
shall apply to the Bankruptcy Court or other judicial body with
appropriate jurisdiction for authority to reject the lease. The
Mortgagee shall have the right, but not the obligation, to serve upon
the Mortgagor within such 10 day period a notice stating that (a) the
Mortgagee demands that the Mortgagor assume and assign such Ground
Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any
Comparable Provision and (b) the Mortgagee covenants to cure or
provide adequate assurance of prompt cure of all defaults and provide
adequate assurance of future performance under such Ground Lease(s).
If the Mortgagee serves upon the Mortgagor the notice described in the
preceding sentence, the Mortgagor shall not seek to reject such Ground
Lease(s) and shall comply with the demand provided for in clause (a)
of the preceding sentence within 30 days after the notice shall have
been given subject to the performance by the Mortgagee of the covenant
provided for in clause (b) of the preceding sentence. Effective upon
the entry of an order for relief in respect of the Mortgagor under
Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby
assigns and transfers to the Mortgagee a non-exclusive right to apply
to the Bankruptcy Court or other judicial body with appropriate
jurisdiction for an order extending the period during which the Ground
Lease may be rejected or assumed;
(x) the Mortgagor shall promptly give to the Mortgagee copies of
(A) all notices of default or (B) any other communications or notices
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Ground Leases and shall promptly notify the Mortgagor of any default
under any Ground Lease on the part of the Lessor or the Mortgagor;
(xi) the Mortgagor shall enforce the obligations of the Lessor
under each Ground Lease, to the end that the Mortgagor may enjoy all
of the rights granted to it under the Ground Leases; and
(xii) the Mortgagor shall notify the Mortgagee within 5 days
after the transfer of a fee interest in the Leased Land or any
portion thereof to or from an Affiliate.
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(c) The Mortgagor hereby represents and warrants that all fixed net rent,
taxes and assessments, payable under the Ground Leases have been paid to the
extent they were due and payable to the date hereof and that the Mortgagor has
not received notice of its failure to pay any other amounts payable under the
Ground Leases which have not been cured.
(d) If both the Lessor's and Lessee's estates under any of the Ground
Leases or any portion thereof shall at any time become vested in one owner, this
Mortgage and the lien created hereby shall nevertheless not be merged,
extinguished, destroyed or terminated by application of the doctrine of merger
and, in such event, Mortgagee shall continue to have all of the rights and
privileges of the leasehold mortgagee.
(e) The Mortgagor hereby acknowledges that if any Ground Lease shall be
terminated prior to the natural expiration of its term due to default by the
Lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its
designee shall acquire from the Lessor a new lease of the Leased land or any
portion thereof, the Mortgagor shall have no right, title or interest in or to
such lease or the leasehold estate created thereby, or the options therein
contained.
(f) Any leases for parking purposes hereafter entered into by the
Mortgagor as lessee shall contain provisions permitting the assignment of the
same to the Mortgagee and the Trustee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed.
Section 5.22. SUPERIOR MORTGAGES.
(a) The Mortgagor covenants and agrees that it will at all times fully
perform and comply with all agreements, covenants, terms and conditions imposed
upon or assumed by it as mortgagor under the Superior Mortgages prior to the
expiration of any notice and/or cure period provided in each such Superior
Mortgage. If a notice of default has been given by the holder of any Superior
Mortgage and the maturity of the indebtedness secured by such Superior Mortgage
has been accelerated as a result thereof, the Mortgagee may rely thereon and
take any action the Mortgagee deems necessary in its sole discretion to prevent
or to cure any default by the Mortgagor in the performance of or compliance with
any of the agreements, covenants, terms or conditions imposed upon or assumed by
the Mortgagor as mortgagor under each of the Superior Mortgages even though the
existence of such default or the nature thereof may be questioned or denied by
the Mortgagor or by any party on behalf of the Mortgagor provided that if the
Mortgagor has heretofore taken such actions as
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described in Section 3.01(h), the Mortgagee shall not take any such action
unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of
any such tolling or stay referred to in Section 3.01(h). Without limiting the
generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the
Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the
absolute and immediate right to enter in and upon the Premises or any part
thereof to such extent and as often as the Mortgagee, in its sole discretion,
deems necessary for the purpose permitted by the immediately preceding sentence,
subject only to applicable Legal Requirements. The Mortgagee may (i) pay and
expend such sums of money as the Mortgagee in its sole discretion deems
necessary for any such purpose and (ii) in its sole discretion prepay any
Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee,
immediately and without demand, all such sums referred to in (i) and (ii) above
so paid and expended by the Mortgagee, together with interest thereon from the
date of each such payment at the rate of interest set forth in the Note. All
sums so paid and expended by the Mortgagee and the interest thereon shall be
added to and be secured by the lien of this Mortgage.
(b) The Mortgagor further covenants and agrees:
(i) the Mortgagor shall not, without first satisfying the
conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A)
modify any of the terms, covenants or conditions of any Superior
Mortgage, and without limiting the foregoing, the Mortgagor shall not,
without satisfying such conditions, enter into or obtain any agreement
whereby the holder of any Superior Mortgage waives, postpones,
extends, reduces or modifies the payment of the installment of
principal or interest or any other item or amount now required to be
paid under the terms of any Superior Mortgage or modifies any other
provision thereof, or (B) acquire or permit or suffer any Affiliate of
the Mortgagor to acquire any Superior Mortgage or any interest
therein. Notwithstanding anything in clause (A) to the contrary, the
Mortgagor shall have the right to amend, supplement or modify any
Superior Mortgage, if (x) the then outstanding principal balance of
the indebtedness secured by such Superior Mortgage is not increased
thereby, and (y) in the case of any After-Acquired Fee Mortgage, such
amendment, supplement or agreement does not increase the property
covered thereby;
(ii) the Mortgagor shall timely pay and perform all of the
obligations to be paid or performed by the Mortgagor under each
Superior Mortgage, the note secured thereby and any other instrument
evidencing or
59
<PAGE>
securing the indebtedness owing to any holder of any Superior
Mortgage;
(iii) at any time, and from time to time, the Mortgagor shall
upon request of the Mortgagee promptly use its reasonable efforts to
obtain an estoppel certificate or letter addressed to the Mortgagee
from holders of the Superior Mortgages, such certificate or letter to
be in such form as the Mortgagee shall request; and
(iv) the Mortgagor shall promptly give to the Mortgagee copies
of (A) all notices of default or (B) any other notice or communication
with respect to events which relate to the possible impairment of the
security of this Mortgage, which it shall give or receive under the
Superior Mortgages and shall promptly notify the Mortgagor of any
default under any Superior Mortgages on the part of the Mortgagor.
(c) The lien of this Mortgage in and to all or specified portions of the
Trust Estate shall be subject and subordinate to any Existing Encumbrances, the
liens created by the Senior Mortgage Documents and any mortgage, assignment,
security agreement, financing statement or other lien securing any Working
Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's
interest in the affected portions of the Trust Estate or any part thereof.
The foregoing provisions of this Section 5.22(c) shall be self-operative
with respect to the liens created by the Senior Mortgage Note Documents and any
Working Capital Facility Lien, and no further instrument shall be required to
give effect to such subordination. Mortgagee shall, however, from time to time,
execute instruments in form and substance reasonably satisfactory to the holder
of the Working Capital Facility Lien, confirming such subordination and agreeing
to such other matters reasonably required by the holder of the liens created by
the Senior Mortgage Documents and the holders of such liens which do not, in the
aggregate, materially adversely reduce or impair the rights of Trustee under the
Mortgage, and Mortgagor and others may rely conclusively thereon, provided that
Mortgagee shall have no liability thereunder and all costs and expenses
(including reasonable attorneys' fees) shall be paid by Mortgagor.
(d) The lien of the Mortgage in and to all or specified portions of the
Trust Estate shall be subject and subordinate to any Existing Encumbrances. The
provisions of this Section 5.22(d) shall be self-operative, and no further
instrument shall be required to give effect to such subordination.
60
<PAGE>
Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding
recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office
after the recordation of the Note Mortgage, the lien of this Mortgage ranks PARI
PASSU with, and not junior to, the lien created by the Note Mortgage.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it
is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon
the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee
further acknowledges and agrees that whenever it is provided in the Note
Mortgage that the Mortgagor shall deliver any notice or document, or is required
to make any payment thereunder, the delivery of such notice or document or the
making of such payment pursuant to the terms of the Note Mortgage shall also
constitute the delivery of such notice or document or the making of such payment
in satisfaction of the terms, conditions and provisions of this Mortgage to the
same extent as the same constitutes satisfaction of the terms, conditions and
provisions of the Note Mortgage.
Section 6.02. COUNTERPARTS. This instrument may be executed in any number
of counterparts, each of which as executed shall be deemed to be an original,
but all such counterparts shall constitute one and the same instrument.
Section 6.03. MODIFICATION. This Mortgage is subject to "modification"
within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have
the benefit of the lien priority provisions of such statute. Such modification
may include, without limitation, a change in the interest rate, maturity date or
other terms and conditions of this Mortgage.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS
MORTGAGE.
IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly
executed and attested, all as of the day and year first above written.
61
<PAGE>
RESORTS INTERNATIONAL HOTEL,
INC., a New Jersey corporation
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
By:_____________________________
Name:
Title: (Vice) President
ATTEST:_________________________
Name:
Title: (Asst.) Secretary
62
<PAGE>
Exhibit G
Intercreditor Agreement Terms
<PAGE>
Exhibit G
Outline of Material Terms of the
Intercreditor Agreement
for
Resorts International, Inc.
Subject Credit Senior Secured Loan due July 15, 2002 (the
Facilities "Senior Facility");
Senior Mortgage Notes due [March] 15,
2003 (the "Senior Mortgage Notes");
Junior Mortgage Notes due June 15, 2004
(the "Junior Mortgage Notes"); and
Any other credit facilities which may be
required by the Indentures for the
Senior Facility, the Senior Mortgage
Notes or the Junior Mortgage Notes to be
included in the Intercreditor Agreement
(the "Additional Facilities," and
together with the Senior Facility, the
Senior Mortgage Notes and the Junior
Mortgage Notes, the "Credit Facilities")
Creditor Parties Senior Facility Trustee;
Senior Mortgage Note Trustee;
Junior Mortgage Note Trustee; and any
lenders (or trustees or agents on behalf
of any lenders) which provide Additional
Facilities (collectively, the
"Trustees") Each Creditor Party, by its
execution of the Intercreditor Agreement
(whether directly or through its trustee
or agent), acknowledges the making of
the other Credit Facilities and the
intended uses of proceeds thereof and
waives any right to object to any
contemporaneous or existing Credit
Facility as having constituted a
fraudulent conveyance.
Classification of Initial Designations:Credit Facilities
Class 1 Facilities: Senior Facility,
all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
<PAGE>
Class 2 Facilities: Senior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Class 3 Facilities: Junior Mortgage
Notes, all guarantees thereof and all
intercompany obligations pledged as
collateral therefor.
Subsequent Designations - as indicated
on the signature page(s) to be executed
by the lenders (or any trustees or
agents on behalf of any lenders) which
provide Additional Facilities and
consented to by all other parties at
such time.
Borrower Parties Resorts International Hotel Financing,
Inc. ("RIHF"), as borrower under the
Secured Facilities;
Resorts International Hotel, Inc.
("RIH") as guarantor under the Secured
Facilities and issuer of the secured
intercompany notes to RIHF collaterally
assigned to each respective Trustee;
Resorts International, Inc. ("RII"), as
guarantor under the Senior Facility and
issuer of any intercompany notes which
may be issued to RIH; and
[GRI, Inc. ("GRI", and together with
RIHF, RIH and RII, the "Borrower
Parties") as guarantor under the Senior
Facility and issuer of any intercompany
notes which may be issued to RIH.]1*
The Borrower Parties will execute the
Intercreditor Agreement principally for
the purposes of (i) acknowledging the
relative rights of and relationships
among the Secured Facilities established
therein and (ii) agreeing not to take
any actions, including making any
payments, inconsistent therewith.
- -------------------
* Subject to discussion on structure
2
<PAGE>
Relative Priorities Liens:
Notwithstanding the time of filing,
recording or perfecting of the Security
Documents (which will be defined to
include the Mortgages and other liens
and encumbrances):
Each Lien created on behalf of a Class 1
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 1 Facility and (ii) senior
to any Lien created on behalf of any
Class 2 Facility or Class 3 Facility.
Each Lien created on behalf of a Class 2
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 2 Facility, (ii) senior to
any Lien created on behalf of any Class
3 Facility and (iii) junior to any Lien
created on behalf of any Class 1
Facility.
Each Lien created on behalf of a Class 3
Facility shall be (i) pari passu with
any other Lien created on behalf of any
other Class 3 Facility, and (ii) junior
to any Lien created on behalf of any
Class 1 Facility or Class 2 Facility.
Subrogation To be waived by all guarantors.
Mortgage Default Each Class 3 Creditor shall notify each
Cure Provisions Class 2 Creditor and each Class 1
Creditor of any Default or Event of
Default under its respective Class 3
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 1
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 3
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 2 Creditor shall notify each
Class 1 Creditor and each Class 3
Creditor of any Default or Event of
3
<PAGE>
Default under its respective Class 2
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 1 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 2
Facility or the Mortgage or other
Security Documents securing its
facility.
Each Class 1 Creditor shall notify each
Class 2 Creditor and each Class 3
Creditor of any Default or Event of
Default under its respective Class 1
Facility or the Mortgage or other
Security Documents securing its
facility, and promptly shall send to
each Class 2 Creditor and each Class 3
Creditor copies of all notices of
default and all notices relating to cure
and/or grace periods under such Class 1
Facility or the Mortgage or other
Security Documents securing its
facility.
In addition, each Trustee will be
obligated to notify all other Trustees
prior to exercising any remedies with
respect to any shared collateral.
Application of Proceeds from dispositions of
Proceeds collateral, insurance proceeds,
condemnation awards and similar amounts
will be applied in accordance with
relative priorities of Liens.
Representations and Each party to the Intercreditor
Warranties Agreement will make appropriate
representations, including those
relating to its corporate existence,
power and authority, as well as to the
validity and enforceability of the
Intercreditor Agreement.
Amendments Intercreditor Agreement may not be
amended except pursuant to a writing
executed by all parties thereto.
Amendments for the sole purpose of
adding permitted parties may be executed
by the Trustees without the consent of
4
<PAGE>
the creditors for whom they serve if all
conditions precedent to the incurrence
of such indebtedness have been
satisfied. Amendments to sections [ ]
and [ ] may be executed by the
Trustees only with the approval of 100%
of the creditors for whom they serve and
amendments to sections [ ] and [ ]
may be executed by the Trustees only
with the approval of 66 2/3% of the
creditors for whom they serve.
Third Party Each party to the Intercreditor
Beneficiarie Agreement will acknowledge that such
agreement is being entered into for the
benefit of the lenders under the Credit
Facilities and their respective
successors and assigns, each of whom is
a direct intended third-party
beneficiary.
Certain Specific performance; no waivers;
Miscellaneous cooperation and further assurances.
Provisions
Governing Law New Yor
<PAGE>
SCHEDULE "2"
SOFTWARE
1. Casino Customer Rating Software for Games and Slots.
2. Casino Tracking System for Field Agents, Junkets,
Special Events and Commissioned Agents.
3. Casino Player Marketing System.
4. Casino/Hotel Computer Interface.
5. Property - Player Interface.
6. Casino Purges.
7. Complimentary Slips.
8. Enhancements developed by _____________________
relating to the Hotel System computer software leased
from IBM.
9. Modifications and enhancements developed by
_______________________ with respect to the
Inventory/Purchasing System software licensed from
____________________________________
10. MVP Card software.
11. D-Card software for consolidation of debit information
concerning room, food and beverage charges.
12. Accounts Receivable System software.
13. Interactive Television Services software.
14. Maid Accounting System software.
15. Source Archive System software for monitoring each
programmer's use of each software unit.
46
<PAGE>
16. Income Journal System software.
17. Cross System Support software used for maintaining
back-up files.
18. Guest Refund Check System software.
19. Check Reconciliation System software used in connection
with payroll, guest refunds and accounts payable.
20. W-2 Program software.
21. W-2G/10425 Reporting System software used to generate
W-2G forms for slot winnings.
22. Shipment Management Tools software.
23. Software Tool Version software used to monitor the
version of software being used.
24. Worker Tracker System software used to monitor and
prioritize problem reports with respect to software and
hardware and requests for modifications.
25. Show Reservation & Ticket Box Office System software.
26. Payroll/Personnel System software.
27. Problem Management software used to monitor reports of
system problems, person assigned to repair, length of
time to respond, etc.
28. Employee Survey System software used to generate
information based on responses from guest comment
cards.
29. Gross Revenue Tip Reporting and Allocation System
software.
30. Surveillance Tracking System software. (Currently
under development).
31. Record Retention System software. (Currently under
development).
47
<PAGE>
32. Prospect Database software used for a direct mail
marketing system for prospective customers.
33. Job Accounting System software used to identify each
job and program running on the main system at any given
time.
34. Security Audit System software used to monitor security
codes assigned to employees.
48
<PAGE>
APPOINTMENT OF AGENT
FOR SERVICE OF PROCESS
Reference is made to that certain Registration Statement on Form S-4
(Registration Number 33-50733) under the Securities Act of 1933, as filed
with the Securities and Exchange Commission on October 25, 1993 (the
"REGISTRATION STATEMENT"). P. I. Resorts Limited, a Bahamas corporation
("PIRL"), hereby appoints The Prentice-Hall Corporation System, Inc.
("PHCS"), located at 15 Columbus Circle, New York, New York, 10023, as its
agent to receive service of process with respect to any action brought
against PIRL in the United States District Court for the Southern District
of New York under the securities laws of the United States or any State,
or any action brought against it in the Supreme Court in the State of New
York in the County of New York under the securities laws of the State of
New York. The appointment shall be effective from October 25, 1993,
through and including October 24, 1995 (the "TERM").
The responsibility of PHCS shall be to send the summons or any other legal
process received during the Term by Federal Express or hand delivery to
the address of PIRL set forth below under its signature (with copies as
indicated). PIRL will provide PHCS in writing with any changes to its
address, such changes to be mailed to the address of PHCS set forth below
under its signature. PHCS shall have no responsibility for the receipt or
non-receipt by PIRL of such summons or other legal process; should such
summons or legal process be returned to PHCS for any reason, PHCS shall
have no responsibility other than to return such summons or other legal
process to the sender by first class mail.
PIRL agrees to indemnify, hold harmless and defend PHCS from and against
any and all claims, damages, liabilities and causes of action (including
attorneys fees and costs) imposed upon, incurred by or asserted against
PHCS, directly or indirectly, relating to or arising out of the
Registration Statement; PROVIDED, HOWEVER, that the indemnification shall
not extend to willful misconduct or gross negligence by PHCS. This
paragraph will survive the expiration or termination of the Term.
PIRL agrees to pay PHCS a fee of $95.00 for the first year, and an annual
fee of $75.00 for each subsequent year, per party represented by PHCS for
services hereunder, payable in advance for the full Term. This
appointment will be irrevocable for the full Term upon payment of this
fee. The fee is not refundable, in full or in part, for any reason,
including the premature ending of this appointment.
<PAGE>
AGREED:
P. I. RESORTS LIMITED THE PRENTICE-HALL CORPORATION
SYSTEM, INC.
By:/s/ Christopher D. Whitney By:/s/ Delia Taliento
--------------------------- ---------------------------
Authorized Officer Delia Taliento,
Assistant Vice President
c/o Resorts International, Inc. Prentice-Hall Legal & Financial
1133 Boardwalk Services
Atlantic City, NJ 08401 Simon & Schuster Professional
Information Group
15 Columbus Circle
New York, New York 10023-7773
Address: Attn: Maris Kruze
City:
State:
Zip: (212) 373-7500 or (800) 221-077
Fax: (212) 373-7220
WITH COPIES TO:
Fidelity Management and
Research Co.
82 Devonshire Street
Boston, Massachusetts 02109
Attn: Judy Mencher, Esq.
TCW Special Credits
865 Figueroa Street
Suite 1800
Los Angeles, California 90017
Attn: Bruce Karsh
Weil, Gotshal & Manges
767 Fifth Avenue
Address: New York, New York 10153
City: Attn: Bruce R. Zirinsky, Esq.
State:
Zip:
2
<PAGE>
As of July l, 1993
Resorts International, Inc.
North Carolina Ave. & Boardwalk
Atlantic City, NJ 08404
Attention: Mr. David P. Hanlon
President & Chief Executive Officer
Gentlemen:
We are pleased to set forth the amended and restated terms of the
retention of Bear Stearns & Co. Inc. ("Bear Stearns") by Resorts
International, Inc. (collectively, with its affiliates, the "Company").
1. Bear Stearns will assist the Company as its financial advisor in
connection with a long term financial plan (the "Plan") for the Company,
which Plan must be adopted by the Company's Board of Directors, including the
development of short and long term financial alternatives and carrying out
any Restructuring or Transaction(s) (as such terms are defined below) which
may be appropriate to the execution of the Plan. In connection with Bear
Stearns' activities on the Company's behalf, Bear Stearns will familiarize
itself, to the extent reasonably necessary, with the business, operations,
properties, financial condition and prospects of the Company. In connection
with our role as your financial advisor, we would expect our services to
include:
(i) the analysis and development of financial alternatives for the
Company in connection with its financial structure following the
sale of the Bahamas or, if the Bahamas cannot be sold in the
near term;
(ii) the analysis and development of other alternatives for the
Company that take into account the short and long term
interests of the Company's stockholders, employees, management,
and bondholders; and
(iii) such other investment banking services as may be mutually
agreed upon by Bear Stearns and the Company
As used in this Agreement, the term "Transaction" shall mean any
Acquisition Transaction, any Sale Transaction or any Restructuring (as such
terms are defined below). As used in this Agreement, the term "Acquisition
Transaction" shall mean
<PAGE>
Page 2
(a) any merger, consolidation, reorganization, recapitalization, business
combination or other transaction pursuant to which the Company is combined
with or acquired by, any person, group of persons, partnership, corporation
or other entity (an "Acquiror") or (b) the acquisition, directly or
indirectly, by the Company, in a single transaction or series of
transactions, of (i) all or substantially all of the assets of a third party
or (ii) fifty percent or more of an third party's outstanding common stock or
(c) the acquisition, directly or indirectly, by an Acquiror (or by one or
more persons acting together with an Acquiror pursuant to a written agreement
or otherwise), in a single transaction or a series of transactions, of (i)
all or substantially all of the assets of the Company or (ii) fifty percent
or more of the Company's outstanding common stock.
2. In connection with Bear Stearns' activities on the Company's
behalf, the Company will cooperate with Bear Stearns and will furnish Bear
Stearns with all information and data concerning the Company and any
Transaction (the "Information") which Bear Stearns deems appropriate in
connection with the services to be rendered by it hereunder and, in that
connection, will provide Bear Stearns with access to the Company's officers,
directors, employees, independent accountants and legal counsel. The Company
represents that, to the best of its knowledge, all Information made available
to Bear Stearns by the Company will, at all times during the period of the
engagement of Bear Stearns hereunder, be complete and correct in all material
respects and will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein
not misleading in the light of the circumstances under which such statements
are made. The Company further represents and warrants that any projections
provided by it to Bear Stearns will have been prepared in good faith and will
be based upon assumptions which, in light of the circumstances under which
they are made, are reasonable. The Company acknowledges and agrees that, in
rendering its services hereunder, Bear Stearns will be using and relying on
the Information (and information available from public sources and other
sources deemed reliable by Bear Stearns) without independent verification
thereof by Bear Stearns or independent appraisal by Bear Stearns of any of
the Company's assets. Bear Stearns does not assume responsibility for the
accuracy or completeness of the Information or any other information
regarding the Company or any Transaction. Any advice rendered by Bear
Stearns pursuant to this Agreement may not be disclosed publicly without our
prior written consent, which will not be unreasonably withheld.
3. If the Company requires financing ("Financing") to complete its
Plan, then Bear Stearns shall have the first opportunity to agree to act as
the Company's sole managing underwriter or exclusive agent, as the case may
be, in connection with raising such Financing. The raising of such Financing
will be undertaken pursuant to a separate engagement letter on mutually
agreeable terms and subject to the approval of Bear Stearns' Commitment
Committee and the Company.
<PAGE>
Page 3
4. In consideration of our services pursuant to this Agreement and
subject to Paragraph 5 hereof, Bear Stearns shall be entitled to receive, and
the Company shall pay to Bear Stearns, the following compensation:
(a) Commencing on July 1, 1993, a monthly cash fee of $75,000
payable for the remainder of the term of this Agreement, in each
case on the first business day of each month.
(b) Upon the renegotiation, compromise, replacement or exchange of
any of the existing indebtedness or other liabilities of the
Company (a "Restructuring"), the Company shall pay to Bear
Stearns an additional cash fee of $1,633,000 upon the
Company's execution of the related loan documents, amendments,
exchange agreements, or other appropriate legal documents.
(c) If an Acquisition Transaction is consummated as part of the
execution of the Plan, then the Company shall pay Bear Stearns,
upon such consummation, an additional cash fee equal to 1.0% of
the value of the total consideration paid by an Acquiror or the
Company, as the case may be, in the Acquisition Transaction in
respect of (i) assets of the Company or third party, as the case
may be, (ii) capital stock of the Company or third party, as the
case may be, (and any securities convertible into, or options,
warrants or other rights to acquire, such capital stock) (such
capital stock and such other securities, options, warrants and
other rights being collectively referred to as "Subject
Securities") and (iii) the assumption, directly or indirectly
(by operation of law or otherwise), or repayment of indebtedness
(including, without limitation, indebtedness secured by assets
of the Company) and other liabilities of the Company or third
party, as the case may be. In the event an Acquisition
Transaction is consummated in one or more steps or if all or a
portion of the consideration paid in the Acquisition Transaction
is other than cash or securities, then the "Additional
Consideration" described in Appendix A shall apply.
(d) If an Acquisition Transaction is not consummated, but instead as
part of the execution of the Plan the Company acquires any
subsidiary, business segment or operation, division, assets or
securities of a third party, or an Acquiror acquires any
subsidiary, business segment or operation, division, assets or
securities of the Company other than the Paradise Island
operations and properties and Paradise Island Airlines,
<PAGE>
Page 4
Inc. (a -Sale Transaction"), then the Company shall pay to Bear
Stearns, upon consummation of such Sale Transaction, a cash fee
equal to 1.0% of the value (as determined in accordance with
subparagraph 4(c) of this Agreement) of the total consideration,
including the assumption, directly or indirectly (by operation
of law or otherwise), or repayment of indebtedness (including,
without limitation, indebtedness secured by assets of the
Company or third party, as the case may be, and other
liabilities of the Company or third party, as the case may be),
paid by the Company or the Acquiror, as the case may be, in
connection with such Sale Transaction.
(e) Any fees paid to Bear Stearns pursuant to subparagraph 4(a)
above shall be credited against amounts owed pursuant to
subparagraph 4(b) above.
(f) Any fees paid to Bear Stearns in the 90 days immediately
preceding consummation of any Acquisition Transaction or Sale
Transaction (i) pursuant to subparagraphs 4(a) and 4(b) above or
(ii) before July 1, 1993 shall be credited against any amounts
owed by the Company to Bear Stearns pursuant to subparagraphs
4(c) and 4(d) above.
5. Bear Stearns shall be entitled to the fees enumerated in
paragraph 4 upon the occurrence, during the term, or within nine months after
the date of termination, of this Agreement, if the Company accomplishes a
Transaction, on terms substantially similar to those proposed by Bear Stearns
or the Company prior to such termination.
6. In addition to the fees described in paragraph 4 above, the
Company agrees to promptly reimburse Bear Stearns, upon request from time to
time, for all reasonable (consistent with Bear Stearns' policies relating to
travel, subsistence and similar expenses, a copy of which has been provided
to the Company) and necessary out-of-pocket expenses incurred by Bear Stearns
(including, without limitation, fees of counsel, and other consultants and
advisors retained by Bear Stearns) in connection with the matters
contemplated by this Agreement, provided however that Bear Stearns will
notify the Company prior to incurring any legal fees that exceed $50,000 and,
if such fees should exceed $50,000, will further notify the Company of each
$20,000 increase in such expenditure and provided further that (a) the
Company shall not be responsible for legal fees in connection with any
transaction as to which such fees would not customarily be borne by the
Company and (b) all legal fees shall be based solely upon regular hourly
charges for time actually incurred and shall not include any fee based upon
success or value of the relevant transaction.
<PAGE>
Page5
7. The Company agrees to indemnify Bear Stearns in accordance with
the indemnification provisions (the "Indemnification Provisions") included in
Appendix B to this Agreement, which Indemnification Provisions are
incorporated herein and made a part hereof.
8. Except as may be otherwise required by applicable law, advised by
Bear Stearns' legal counsel (with reasonable prior notice to the Company) or
with the prior written consent of the Company: (a) neither Bear Stearns nor
its agents, representatives or employees shall disclose to any person other
than among themselves, the Company and their respective legal counsel the
existence of this Agreement or the nature of the services rendered hereunder;
and (b) Bear Stearns shall keep all Information and data concerning the
Company and its subsidiaries and affiliates confidential and shall not at any
time, without the prior written consent of the Company, publish, disclosed or
divulge to any person or entity or use, directly or indirectly, for its own
benefit or the benefit of any other person or entity other than the Company,
any of the Information or any other property, trade secrets or confidential
or proprietary information of the Company derived or obtained by Bear Stearns
in connection with the performance of its services hereunder.
The term "Information" does not include material which (i) was or
becomes generally available to the public other than as a result of a
disclosure by Bear Stearns (ii) was or becomes available to Bear Stearns on a
nonconfidential basis from a source other than the Company or their
representatives, provided that such source is not to the knowledge of Bear
Stearns bound by a confidentiality agreement with the Company or otherwise
prohibited from transmitting the material to Bear Stearns by a contractual,
legal or fiduciary obligation, or (iii) was within Bear Stearns' possession
prior to its being furnished to Bear, Stearns by or on behalf of the Company,
provided that the source of such material was not known by Bear Stearns to be
bound by a confidentiality agreement with the Company or to be otherwise
prohibited from transmitting the material to Bear Stearns by a contractual,
legal or fiduciary obligation.
9. Bear Stearns understands and acknowledges that the Company is
subject to the requirements of the New Jersey Control Act, N.J.S.A. 5:12-1 et
seq., and the regulations promulgated by the New Jersey Casino Control
Commission ("Commission") thereunder, as a holding company of casino
licensee, Resorts International Hotel, Inc. Bear Stearns agrees to file for
licensure as a casino service industry, if required by the Commission. This
agreement may be subject to review and approval by the Commission.
10. Either party hereto may terminate this Agreement at any time
upon written notice, without liability or continuing obligation except as set
forth in the
<PAGE>
Page 6
following sentence. Neither termination nor completion of this assignment
shall affect: (i) any compensation earned by Bear Stearns up to the date of
termination or completion, as the case may be, ((ii)) any compensation to be
earned by Bear Stearns after termination pursuant to paragraph 5 hereof,
(iii) the reimbursement of expenses incurred by Bear Stearns up to the date
of termination or completion, as the case may be, (iv) the provisions of
paragraph 3 - 12, inclusive, of this Agreement and (v) the attached
Indemnification Provisions which are incorporated herein, all of which shall
remain operative and in full force and effect,
11. The validity and interpretation of this Agreement shall be
governed by the law of the State of New York applicable to agreements made
and to be fully performed therein.
12. The benefits of this Agreement shall inure to the respective
successors and assigns of the parties hereto and of the indemnified parties
hereunder and their successors and assigns and representatives, and the
obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns.
13. For the convenience of the parties hereto, any number of
counterparts of this Agreement may be executed by the parties hereto. Each
such counterpart shall be, and shall be deemed to be, an original instrument,
but all such counterparts taken together shall constitute one and the same
Agreement. This Agreement may not be modified or amended except in writing
signed by the parties hereto.
14. If the foregoing correctly sets forth our Agreement, we would
appreciate your signing the enclosed copy of this letter in the space
provided and returning it to us.
Very truly yours,
BEAR STEARNS & CO. INC.
By: __________________________
Managing Director
Confirmed and Agreed to
this ____ day of ____________ 1993
RESORTS INTERNATIONAL, INC.
By: ________________________________
Name:
Title:
APPENDIX A
ADDITIONAL CONSIDERATION
In the event an Acquisition Transaction is consummated in one or more
steps, including, without limitation, by way of a second-step merger, any
additional consideration paid or to be paid in any subsequent step in the
Acquisition Transaction in respect of (x) assets of the Company or third
party, as the case may be, (y) Subject Securities and (z) the assumption,
directly or indirectly (by operation of law or otherwise), or repayment of
indebtedness and other liabilities of the Company or third party, as the case
may be, shall be included for purposes of calculating Bear Stearns' fee
pursuant to subparagraph 4(d) of this Agreement. If all or a portion of the
consideration paid in the Acquisition Transaction is other than cash or
securities, then the value of such non-cash consideration shall be then the
fair market value thereof on the date the Acquisition Transaction is
consummated as mutually agreed upon in good faith between the Company's Board
of Directors and Bear Stearns. If such non-cash consideration consists of
common stock, options, warrants or rights for which a public trading market
existed prior to the consummation of the Acquisition Transaction, then the
value of such securities shall be determined by the closing or last sales
price of thereof on the date of the consummation of the Acquisition
Transaction; PROVIDED, HOWEVER, that if such non-cash consideration consists
of newly-issued, publicly-traded common stock, options, warrants or other
rights for which no public trading market existed prior to the consummation
of the Acquisition Transaction, then the value of such securities shall be
the average of the closing prices for the 20 trading days subsequent to the
fifth trading day after the consummation of the Acquisition Transaction. In
such event, the fee payable to Bear Stearns pursuant to subparagraph 4(d) of
this Agreement shall be paid on the 30th trading day subsequent to
consummation of the Acquisition Transaction. If no public trading market
exists for the common stock, options, warrants or other rights issued in the
Acquisition Transaction, then the value of such securities shall be as
mutually agreed upon in good faith by the Company's Board of Directors and
Bear Stearns. If all or a portion of the consideration payable in connection
with the Acquisition Transaction includes contingent future payments, then
the Company shall pay to Bear Stearns, upon consummation of such Acquisition
Transaction, an additional cash fee, determined in accordance with
subparagraph 4(d) of this Agreement, based upon the present value of the
reasonably expected amount of such contingent future payments (as such amount
is determined in good faith between the Company's Board of Directors and Bear
Stearns) using a discount rate of 15%. However, in the event of an
installment purchase at a fixed price and a fixed time schedule, the Company
agrees to pay Bear Stearns, upon consummation of the Acquisition Transaction,
a cash fee determined in accordance with subparagraph 4(d) of this Agreement
based upon the present value of such installment payments using a discount
rate of 2% over the prime rate at the time of consummation of the Acquisition
Transaction.
<PAGE>
APPENDIX B
INDEMNIFICATION PROVISIONS
The Company (as such term is defined in the Agreement (as such term is
defined below)) agrees to indemnify and hold harmless Bear Stearns against
any and all losses, claims, damages, liabilities, obligations, penalties,
judgments, awards, costs, expenses and disbursements (and any and all
actions, suits, proceedings and investigations in respect thereof and any and
all legal and other costs, expenses or disbursement in giving testimony or
furnishing documents in response to a subpoena or otherwise), including,
without limitation, the costs, expenses and disbursements, as and when
incurred, of investigating, preparing or defending any such action, suit,
proceeding or investigation (whether or not in connection with litigation in
which Bear Stearns is a party), directly or indirectly, caused by, relating
to, based upon, arising out of or in connection with (a) Bear Stearns' acting
for the Company, including, without limitation, any act or omission by Bear
Stearns in connection with its acceptance of or the performance or non-
performance of its obligations under the agreement dated October 18, 1991
between Bear Stearns and Resorts International, Inc. as it may be amended
from time to time (the "Agreement"), (b) any Transaction (as such term is
defined in the Agreement), (c) any untrue statement or alleged untrue
statement of a material fact contained in, or omissions or alleged omissions
from, any filing with any Agency (as such term is defined in the Agreement)
or omissions in or from any information furnished by the Company to Bear
Stearns or to any party to a Transaction or Financing or (d) any Financing
(as such term is defined in the Agreement); PROVIDED, HOWEVER, such indemnity
agreement shall not apply to any portion of any such loss, claim, damage,
obligation, penalty, judgment, award, liability, cost, expense or
disbursement to the extent it is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the negligence or misconduct of Bear Stearns. The
Company also agrees that Bear Stearns shall not have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Company or to
any person (including, without limitation, Company shareholders) claiming
through the Company for or in connection with the engagement of Bear Stearns,
except to the extent that any such liability that is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
to have resulted primarily and directly from Bear Stearns' negligence or
misconduct.
These Indemnification Provisions shall be in addition to any liability
which the Company may otherwise have to Bear Stearns or the persons
indemnified below in this sentence and shall extend to the following: The
Bear Stearns Companies Inc., Bear Stearns & Co. Inc., their respective
affiliated entities, directors, officers, employees, legal counsel, agents
and controlling persons (within the meaning of the federal securities laws).
All references to Bear Stearns in these Indemnification Provisions shall be
understood to include any and all of the foregoing.
<PAGE>
If any action, suit, proceeding or investigation is commenced, as to
which Bear Stearns proposes to demand indemnification, it shall notify the
Company with reasonable promptness. Bear Stearns shall have the right to
retain counsel of its own choice to represent it, and the Company shall pay
the reasonable fees, expenses and disbursements of such counsel; and such
counsel shall, to the extent consistent with its professional
responsibilities, cooperate with the Company and any counsel designated by
the Company. The Company shall be liable for any settlement of any claim
against Bear Stearns made with the Company's written consent, which consent
shall not be unreasonably withheld.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these Indemnification Provisions is made but it
is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) that such indemnification may not be enforced in
such case, even though the express provisions hereof provide for
indemnification in such case, then the Company, on the one hand, and Bear
Stearns, on the other hand, shall contribute to the losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses and
disbursements to which the indemnified persons may be subject in accordance
with the relative benefits received by the Company, on the one hand, and Bear
Stearns, on the other hand, and also the relative fault of the Company, on
the one hand, and Bear Stearns on the other hand, in connection with the
statements, acts or omissions which resulted in such losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses and
disbursements and the relevant equitable considerations shall also be
considered. No person found liable for a fraudulent misrepresentation shall
be entitled to contribution from any person who is not also found liable for
such fraudulent misrepresentation. Notwithstanding the foregoing, Bear
Stearns shall not be obligated to contribute any amount hereunder that
exceeds the amount of fees previously received by Bear Stearns pursuant to
the Agreement.
Neither termination nor completion of the engagement of Bear Stearns
referred to above shall affect these Indemnifications Provisions which shall
then remain operative and in full force and effect.
<PAGE>
EXHIBIT 12.01
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1988 1990
-------------------------- ------------------------
THROUGH FROM THROUGH FROM
NOVEMBER 14 NOVEMBER 15 1989 AUGUST 31 SEPTEMBER 1 1991 1992
------------ ------------ ---------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings available for fixed charges:
Loss before income taxes and
extraordinary item................... $ (370,678 ) $ (17,752 ) $ (306,589) $ (171,594) $ (13,531 ) $(42,402) $(54,802)
Interest and amortization of debt
discount and expense................. 68,294 17,102 121,579 434 14,057 63,262 78,425
Portion (one-third) of rental
charges.............................. 1,427 181 2,464 1,443 561 2,152 2,535
------------ ------------ ---------- ---------- ------------ -------- --------
Earnings available for fixed
charges............................ $ (300,957 ) $ (469 ) $ (182,546) $ (169,717) $ 1,087 $ 23,012 $ 26,158
------------ ------------ ---------- ---------- ------------ -------- --------
------------ ------------ ---------- ---------- ------------ -------- --------
Fixed charges:
Interest and amortization of debt
discount and expense................. $ 68,294 $ 17,102 $ 121,579 $ 434 $ 14,057 $ 63,262 $ 78,425
Capitalized interest.................. 12,867 79 99
Portion (one-third) of rental
charges.............................. 1,427 181 2,464 1,443 561 2,152 2,535
------------ ------------ ---------- ---------- ------------ -------- --------
Total fixed charges................. $ 82,588 $ 17,362 $ 124,142 $ 1,877 $ 14,618 $ 65,414 $ 80,960
------------ ------------ ---------- ---------- ------------ -------- --------
------------ ------------ ---------- ---------- ------------ -------- --------
Ratio of earnings to fixed charges
(a).................................... -- -- -- -- -- -- --
------------ ------------ ---------- ---------- ------------ -------- --------
------------ ------------ ---------- ---------- ------------ -------- --------
<CAPTION>
FOR THE THREE
QUARTERS ENDED
SEPTEMBER 30,
------------------
1992 1993
-------- --------
<S> <C> <C>
Earnings available for fixed charges:
Loss before income taxes and
extraordinary item................... $(37,223) $(57,370)
Interest and amortization of debt
discount and expense................. 57,304 75,656
Portion (one-third) of rental
charges.............................. 1,902 1,870
-------- --------
Earnings available for fixed
charges............................ $ 21,983 $ 20,156
-------- --------
-------- --------
Fixed charges:
Interest and amortization of debt
discount and expense................. $ 57,304 $ 75,656
Capitalized interest..................
Portion (one-third) of rental
charges.............................. 1,902 1,870
-------- --------
Total fixed charges................. $ 59,206 $ 77,526
-------- --------
-------- --------
Ratio of earnings to fixed charges
(a).................................... -- --
-------- --------
-------- --------
<FN>
- -------------------
(a) Earnings were insufficient to cover fixed charges by $383,545,000 for the
period through November 14, 1988; $17,831,000 for the period from November
15, 1988; $306,688,000 for the year 1989; $171,594,000 for the period
through August 31, 1990; $13,531,000 for the period from September 1,
1990; $42,402,000 for the year 1991; $54,802,000 for the year 1992;
$37,223,000 for the three quarters ended September 30, 1992; and
$57,370,000 for the three quarters ended September 30, 1993.
</TABLE>
As explained in Note A to Selected Historical Financial Data for RII and
Note 2 of Notes to Consolidated Financial Statements for RII, changes in
control, management and accounting basis occurred on November 14, 1988 and
August 31, 1990.
<PAGE>
EXHIBIT 12.02
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1988 1990
-------------------------- ------------------------
THROUGH FROM THROUGH FROM
NOVEMBER 14 NOVEMBER 15 1989 AUGUST 31 SEPTEMBER 1 1991 1992
------------ ------------ ---------- ---------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings available for fixed charges:
Earnings (loss) before income taxes
and extraordinary item............... $ (44,785 ) $ (3,953 ) $ (152,442) $ (210,129) $ 5,000 $ 21,761 $ 27,356
Interest and amortization of debt
discount and expense................. 40,017 6,147 48,008 306 136 563 395
Portion (one-third) of rental
charges.............................. 747 109 902 749 243 938 942
------------ ------------ ---------- ---------- ------------ -------- --------
Earnings available for fixed
charges............................ $ (4,021 ) $ 2,303 $ (103,532) $ (209,074) $ 5,379 $ 23,262 $ 28,693
------------ ------------ ---------- ---------- ------------ -------- --------
------------ ------------ ---------- ---------- ------------ -------- --------
Fixed charges:
Interest and amortization of debt
discount and expense................. $ 40,017 $ 6,147 $ 48,008 $ 306 $ 136 $ 563 $ 395
Portion (one-third) of rental
charges.............................. 747 109 902 749 243 938 942
------------ ------------ ---------- ---------- ------------ -------- --------
Total fixed charges................. $ 40,764 $ 6,256 $ 48,910 $ 1,055 $ 379 $ 1,501 $ 1,337
------------ ------------ ---------- ---------- ------------ -------- --------
------------ ------------ ---------- ---------- ------------ -------- --------
Ratio of earnings to fixed charges
(a).................................... -- -- -- -- 14.19 15.50 21.46
------------ ------------ ---------- ---------- ------------ -------- --------
------------ ------------ ---------- ---------- ------------ -------- --------
<CAPTION>
FOR THE THREE
QUARTERS ENDED
SEPTEMBER 30,
------------------
1992 1993
-------- --------
<S> <C> <C>
Earnings available for fixed charges:
Earnings (loss) before income taxes
and extraordinary item............... $ 24,048 $ 19,666
Interest and amortization of debt
discount and expense................. 317 190
Portion (one-third) of rental
charges.............................. 716 694
-------- --------
Earnings available for fixed
charges............................ $ 25,081 $ 20,550
-------- --------
-------- --------
Fixed charges:
Interest and amortization of debt
discount and expense................. $ 317 $ 190
Portion (one-third) of rental
charges.............................. 716 694
-------- --------
Total fixed charges................. $ 1,033 $ 884
-------- --------
-------- --------
Ratio of earnings to fixed charges
(a).................................... 24.28 23.25
-------- --------
-------- --------
<FN>
- -------------------
(a) Earnings were insufficient to cover fixed charges by $44,785,000 for the
period through November 14, 1988; $3,953,000 for the period from November
15, 1988; $152,442,000 for the year 1989; and $210,129,000 for the period
through August 31, 1990.
</TABLE>
As explained in Note A to Selected Historical Financial Data for RIH and
Note 2 of Notes to Consolidated Financial Statements for RIH, changes in
control, management and accounting basis occurred on November 14, 1988 and
August 31, 1990.
<PAGE>
EXHIBIT 12.03
RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEAR ENDED QUARTERS ENDED
DECEMBER 31, 1992 SEPTEMBER 30, 1993
------------------ ------------------
<S> <C> <C>
Pro forma earnings available for fixed charges:
Earnings (loss) before income taxes and extraordinary item.............. $ 1,668 $ 3,006
Interest and amortization of debt discount and expense.................. 28,552 21,663
Portion (one-third) of rental charges................................... 856 628
-------- --------
Earnings available for fixed charges.................................. $ 31,076 $ 25,297
-------- --------
-------- --------
Pro forma fixed charges:
Interest and amortization of debt discount and expense.................. $ 28,552 $ 21,663
Portion (one-third) of rental charges................................... 856 628
-------- --------
Total fixed charges................................................... $ 29,408 $ 22,291
-------- --------
-------- --------
Pro forma ratio of earnings to fixed charges.............................. 1.06 1.13
-------- --------
-------- --------
</TABLE>
<PAGE>
EXHIBIT 12.04
RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES
COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEAR ENDED QUARTERS ENDED
DECEMBER 31, 1992 SEPTEMBER 30, 1993
------------------ ------------------
<S> <C> <C>
Pro forma earnings available for fixed charges:
Earnings (loss) before income taxes and extraordinary item.............. $ 3,020 $ 2,281
Interest and amortization of debt discount and expense.................. 18,855 14,092
Portion (one-third) of rental charges................................... 942 694
-------- --------
Earnings available for fixed charges.................................. $ 22,817 $ 17,067
-------- --------
-------- --------
Pro forma fixed charges:
Interest and amortization of debt discount and expense.................. $ 18,855 $ 14,092
Portion (one-third) of rental charges................................... 942 694
-------- --------
Total fixed charges................................................... $ 19,797 $ 14,786
-------- --------
-------- --------
Pro forma ratio of earnings to fixed charges.............................. 1.15 1.15
-------- --------
-------- --------
</TABLE>
<PAGE>
ERNST & YOUNG Two Commerce Square Phone: 215 448 5000
Suite 4000 Fax: 215 448 4069
2001 Market Street
Philadelphia
Pennsylvania 19103-7096
Consent
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports, as outlined in the following table, in the Registration
Statement (Form S-4 No. 33-50733 Amendment No. 1) and related Prospectus of
Resorts International, Inc., Resorts International Hotel Financing, Inc.,
Resorts International Hotel, Inc. and P.I. Resorts Limited dated January 5,
1994.
Resorts International, Inc. February 19, 1993 and
February 19, 1993 except for
Note 17, as to which the
date is December 29, 1993
Resorts International Hotel, February 19, 1993 and
Inc. February 19, 1993 except for
Note 14, as to which the date
is December 29, 1993
PIRL Group April 23, 1993 and April 23,
1993 except for Note 13, as
to which the date is December
29, 1993
Resorts International Hotel December 29, 1993
Financing, Inc.
P.I. Resorts Limited December 29, 1993
/s/ ERNST & YOUNG
Philadelphia, Pennsylvania
January 5, 1994
