Exhibit 4.36
INDENTURE OF MORTGAGE AND SECURITY AGREEMENT
XXXXX XXX XXXXX ASSOCIATES
Mortgagor
and
U.S. BANK NATIONAL ASSOCIATION,
AS COLLATERAL AGENT
Mortgagee
Dated as of December 10, 1997
____________________________________________________
Record and return to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.1. Definitions............................................... 10
Section 1.2. Notices................................................... 19
Section 1.3. Form and Contents of Documents
Delivered to Mortgagee.................................. 19
Section 1.4. Compliance Certificates and Opinions...................... 20
Section 1.5. Effect of Headings and Table of Contents.................. 20
Section 1.6. Successors and Assigns; Amendments........................ 20
Section 1.7. Separability Clause....................................... 20
Section 1.8. Benefits of Mortgage...................................... 21
Section 1.9. Governing Law............................................. 21
Section 1.10. Limitation on Liability................................... 21
Section 1.11. Provisions Required by Trust Indenture.................... 21
Section 1.12. Rights of Mortgagee....................................... 21
Section 1.13. Mortgage Subject to Casino Control Act.................... 23
Section 1.14. Discharge of Lien......................................... 23
Section 1.15. General Application....................................... 23
Section 1.16. Mortgage Deemed to be Security Agreement.................. 24
ARTICLE TWO
RELEASE; SUBORDINATION
Section 2.1. Possession by Mortgagor................................... 24
Section 2.2. Obsolete Property......................................... 24
Section 2.3. F,F&E Financing Agreements................................ 25
Section 2.4. Intentionally Omitted..................................... 25
ARTICLE THREE
REMEDIES
Section 3.1. Events of Default......................................... 26
Section 3.2. Application of Moneys Received by
Mortgagee............................................... 26
Section 3.3. Restoration of Rights and Remedies........................ 26
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Section 3.4. Rights and Remedies Cumulative............................ 26
Section 3.5. Delay or Omission Not Waiver.............................. 26
Section 3.6. Undertaking for Costs..................................... 27
Section 3.7. Waiver of Appraisement and Other Laws .................... 27
Section 3.8. Entry..................................................... 28
Section 3.9. Power of Sale; Suits for Enforcement...................... 28
Section 3.10 Incidents of Sale......................................... 29
Section 3.11. Receiver.................................................. 30
Section 3.12. Suits to Protect the Trust Estate......................... 30
Section 3.13. Management of the Premises................................ 31
ARTICLE FOUR
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 4.1. Consolidation, Merger, Conveyance
or Transfer only on Certain Terms........................ 31
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.1. Performance of Obligations................................ 31
Section 5.2. F,F&E Financing Agreements................................ 31
Section 5.3. Limitations on Liens and Transfers........................ 32
Section 5.4. Environmental............................................. 33
Section 5.5. Pari Passu Liens.......................................... 37
Section 5.6. Warranty of Leasehold Estate and Title.................... 37
Section 5.7. After-Acquired Property; Further Assurances; Recording.... 39
Section 5.8. Payment of Taxes and Certain Claims; Maintenance of
Properties; Compliance with Legal Requirements and
Insurance Requirements.................................. 41
Section 5.9. Permitted Contests........................................ 43
Section 5.10. Mechanics' and Other Liens................................ 44
Section 5.11. To Insure................................................. 45
Section 5.12. Limitations on Building Demolition, Alterations,
Improvements and New Construction....................... 47
Section 5.13. Leases.................................................... 49
Section 5.14. Compliance Certificates................................... 51
Section 5.15. .......................................................... 51
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Section 5.16. To Keep Books; Inspection by Mortgagee.................... 52
Section 5.17. Advances by Mortgagee..................................... 52
Section 5.18. Waiver of Stay, Extension or Usury Laws................... 52
Section 5.19. .......................................................... 53
Section 5.20. Facility Leases........................................... 53
Section 5.21. .......................................................... 59
Section 5.22. Indemnification........................................... 59
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SCHEDULES AND EXHIBITS
Schedule 1 - Owned Land
Schedule 2 - Ground Leases and Ground Lease Land
Schedule 3 - Parking Leases and Parking Lease Land
Schedule 4 - Intentionally Omitted
Schedule 5 - Form of Non-Disturbance and Attornment
Agreement
Exhibit A - Form of Trust Indenture
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INDENTURE OF MORTGAGE AND SECURITY AGREEMENT
INDENTURE OF MORTGAGE AND SECURITY AGREEMENT ("Mortgage"), dated as
of December __, 1997, between XXXXX XXX XXXXX ASSOCIATES, a New Jersey
partnership ("Mortgagor"), having an office at Mississippi Avenue and Xxx
Xxxxxxxxx, Xxxxxxxx Xxxx, Xxx Xxxxxx 00000, and U.S. BANK NATIONAL
ASSOCIATION, a national banking association having an office at 000 Xxxx Xxxxx
Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000, as Collateral Agent ("Mortgagee"), on
behalf of the Designated Representatives (as hereinafter defined) for the
benefit of the Secured Beneficiaries (as hereinafter defined) under the
Collateral Agency Agreement (as hereinafter defined).
W I T N E S S E T H:
In consideration of $10.00 in hand paid by Mortgagee to Mortgagor
and for other good and valuable consideration, the receipt and sufficiency
whereof is hereby acknowledged, and in order to secure (i) the punctual
payment and performance when due of all of Guarantors' obligations under the
Guarantee; (ii) the punctual payment and performance when due of all of the
Company's, the Issuers', the Guarantors' and the Mortgagor's obligations under
the Mortgage Notes, the Trust Indenture, the Secured Loans, the Debt Documents
and, to the extent not otherwise included, any other Obligations in the
aggregate initial principal sum of $100,000,000, which lien created hereby
with respect to such initial principal sum shall be pari passu with the lien
of the Initial Mortgage to form a single lien in the aggregate amount of
$1,300,000,000 pursuant to the terms of the Initial Trust Indenture, the Trust
Indenture and the Collateral Agency Agreement; (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 contained; (v) all costs and
expenses, including, without limitation, reasonable counsel fees and expenses
as provided in Section 3.6, which may arise in respect of 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, alienated, 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 all of the
following described property:
GRANTING CLAUSES
Granting Clause First
All of 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 Mortgagor as lessee under (a) all Facility Leases and (b) all
Parking Leases, together with (i) all credits, deposits, privileges and rights
of Mortgagor as lessee under the Facility Leases and the Parking Leases, now
or at any time existing, (ii) the leaseholds and the leasehold estates created
by the Facility Leases and the Parking 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 Facility Leases, the
Leased Facilities, the Parking Leases and the Parking Lease Land, together
with (x) any and all other, further or additional title, estates, interests or
rights which may at any time be acquired by Mortgagor in or to the Leased
Facilities or the Parking Lease Land or any part thereof, and Mortgagor
expressly agrees that if 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 Facilities (including, without limitation, to the
Ground Lease Land pursuant to the terms of the Ground Leases) or the Parking
Lease Land, the Lien of this Mortgage shall attach, extend to, cover and be a
Lien upon such fee simple title or other greater estate and (y) any right to
possession or statutory term of years derived from, or incident to, the
Facility Leases or the Parking Leases pursuant to Section 365(h) of the Code
or any Comparable Provision.
Except as otherwise set forth herein and in the other Mortgage
Documents, the assignment made by this Granting Clause Second shall not impair
or diminish any right, privilege or obligation of Mortgagor with respect to
the Facility Leases or the Parking Leases, nor shall any such obligation be
imposed on Mortgagee.
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Granting Clause Third
All of the rents, issues, profits, revenues accounts, accounts
receivable and other income and proceeds (including, without limitation, all
rents, fees, charges, accounts, issues, profits, revenues and payments for or
from (a) the use or occupancy of the rooms and other public facilities in the
Hotel and (b) the operation of the Casino) 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
(said property described in Granting Clauses First, Second and Sixth and
similar other property subjected or required to be subjected to the Lien of
this Mortgage, together with all such rents, issues, profits, revenues,
accounts, accounts receivable and other income and proceeds therefrom is
hereinafter collectively referred to as the "Premises") and all of the estate,
right, title and interest of every nature whatsoever of Mortgagor in and to
the same and every part thereof.
Granting Clause Fourth
All of the rights of Mortgagor as lessor under the Leases in effect
on the date of execution of this Mortgage or hereafter entered into by
Mortgagor, including modifications, extensions and renewals of all of the
same, and the immediate and continuing right as security in accordance with
the Assignment of Leases and Rents, and, after the occurrence, and during the
continuance, of an Event of Default, to (a) make claim for, collect, receive
and receipt for (and to apply the same as provided herein) any and all rents,
fees, charges, 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 Stated
Maturity of any of the Debt Documents, (b) receive and give notices and
consents thereunder, (c) bring actions and proceedings thereunder or for the
enforcement thereof, (d) make waivers and agreements thereunder or with
respect thereto, (e) 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 (f) do any and all things which Mortgagor or any lessor is or may
become entitled to do under the Leases; provided, that, except as may be set
forth to the contrary in the Assignment of Leases and
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Rents, the assignment made by this Granting Clause Fourth shall not impair or
diminish any right, privilege or obligation of Mortgagor under the Leases nor
shall any such obligation be imposed upon Mortgagee.
Granting Clause Fifth
Without limiting the generality of the provisions of Granting Clause
Third, all of Mortgagor's rights, title, interest, privileges and franchises
in and to the following, now owned or hereafter acquired by Mortgagor, to the
extent of Mortgagor's interest therein and thereto and to the extent
assignable (collectively, "Operating Assets"):
(a) bookings for the use of guest rooms, banquet facilities,
meeting rooms at the Casino Hotel or at any other improvements now or
hereafter located on any of the Land;
(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 (whether with respect to real
property, personal property or both real and personal property, excluding the
Facility Leases and the Parking Leases), concessions, trademarks, trade names,
service marks, logos, copyrights, warranties and other items of intangible
personal property, and any and all good will associated with the same relating
to the ownership or operation of the Casino Hotel or of any other improvements
now or hereafter located on any of the Land, 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 or at any other improvements now or hereafter located on any of the Land
and books and records relating to the software programs and (3) lessee's
interest under leases of Tangible Personal Property;
(e) all contracts, purchase orders, requisitions and agreements
entered into by or on behalf of Mortgagor or which have been assigned to
Mortgagor, for the design, construction, and furnishing of the Casino Hotel or
of any other improvements now or hereafter located on any of the Land,
including, without limitation, architect's agreements, engineering agreements,
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construction contracts, consulting agreements and agreements or purchase
orders for all items of Tangible Personal Property and payment and performance
bonds in favor of Mortgagor in connection with the Trust Estate (and all
warranties and guarantees thereunder and warranties and guarantees 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 Mortgagor (directly or by way of
lease) which are located on, or to be located on, or which are in use or held
in reserve storage for future use in connection with the gaming or other
operations of, the Casino Hotel or of any other improvements now or hereafter
located on any of the Land, which are on hand or on order whether stored
on-site or off-site:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other articles of
tangible personal property;
(ii) all slot machines, electronic gaming devices, crap tables,
blackjack tables, roulette tables, baccarat tables, big six wheels and
other gaming tables, 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;
(iv) all china, glassware, linens, kitchen utensils, silverware
and uniforms;
(v) all consumables and operating supplies of every kind and
nature, 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 upholstery material, carpets and rugs, beds, bureaus,
chiffonniers, chairs, chests, desks, bookcases, tables, curtains,
hangings, pictures, divans, couches, ornaments, bars, bar fixtures,
safes, stoves, ranges, refrigerators, radios, televisions, clocks,
electrical equipment, lamps, mirrors, heating and lighting fixtures and
equipment, ice machines, air conditioning machines, fire
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prevention and extinguishing apparatus, laundry machines, and all similar
and related articles used in bedrooms, sitting rooms, bathrooms,
boudoirs, halls, closets, kitchens, dining rooms, offices, lobbies,
basements and cellars in the Casino Hotel and in any other improvements
now or hereafter located on any of the Land;
(vii) 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 any showroom, convention space, exhibition hall, or sports
and entertainment arena of the Casino Hotel or in any other improvements
now or hereafter located on any of the Land; and
(viii) all cars, limousines, vans, buses, trucks and other
vehicles owned or leased by Mortgagor for use in connection with the
operation of the Premises, 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
architects, engineers, interior designers, landscape designers and any other
professionals or consultants for the design, development, construction and/or
improvement of the Casino Hotel, or for any other development of the Premises,
as amended from time to time;
(h) any administrative and judicial proceedings initiated by
Mortgagor, or in which Mortgagor has intervened, concerning the Premises, and
agreements, if any, which are the subject matter of such proceedings;
(i) any customer lists utilized by Mortgagor including lists of
transient guests and restaurant and bar patrons and "high roller" lists; and
(j) all of the good will in connection with the assets listed in
this Granting Clause Fifth and in connection with the operation of the
Premises.
Except as otherwise set forth herein and in the other Mortgage
Documents, the assignment made by this Granting Clause Fifth shall not impair
or diminish any right, privilege or obligation of Mortgagor with respect to
the Operating Assets, nor shall any such obligation be imposed on Mortgagee.
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Granting Clause Sixth
(a) All of Mortgagor's rights, title, interest, privileges and
franchises in and to all buildings, structures (surface and subsurface), and
other improvements of every kind and description, including, without
limitation, all pedestrian bridges, entrance-ways, parking lots, plazas,
curb-cuts, walkways, driveways and landscaping and such fixtures as constitute
real property, now or hereafter erected or placed on the Land or on any other
land or any interest therein hereafter acquired by Mortgagor and all of
Mortgagor's rights, title, interest, privileges and franchises in and to 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, without limitation, 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 Land, any other land
or any interest therein hereafter acquired by Mortgagor or to any such
buildings and improvements thereon, in any manner.
(b) All of Mortgagor's rights, title, interest, privileges and
franchises in and to all other property, real, personal or mixed (other than
Excepted Property), of every kind and description and wheresoever situate, now
owned or which may be hereafter acquired by Mortgagor (including, without
limitation, (i) the Ground Lease Land, if Mortgagor acquires the fee simple
title to the Ground Lease Land or any part thereof whether by exercise of any
or all of the options contained in the Ground Leases or otherwise, and/or the
Parking Lease Land or any part thereof and/or any other Leased Facilities, if
Mortgagor acquires fee simple title to such Leased Facilities or any part
thereof, (ii) all air rights and rights to maintain supporting columns, all
rights to construct and maintain tunnels and bridges and other
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elevated structures, all rights to create private rights of way over streets
now or hereafter owned or enjoyed by Mortgagor appurtenant to real property,
including, without limitation, those rights, if any, granted by (x) any
Ordinance granted by the City of Atlantic City, New Jersey (the "City"), (y)
deeds from the City and (z) easements from the City, and (iii) to the extent
assignable, all easements, licenses, rights of way, gores of land, streets,
ways, alleys, passages, sewer rights, waters, water courses, water rights and
powers, and all estates, rights, titles, interests, privileges, franchises,
liberties, tenements, hereditaments and appurtenances of any nature
whatsoever, in any way for the benefit of, or belonging, relating or
pertaining to, the Trust Estate), it being the intention hereof that all
property, interests, rights, privileges and franchises now owned by Mortgagor
or acquired by Mortgagor after the date hereof (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 Mortgagor's right, title and interest in and to
any and all mineral and water rights and any title or reversion, in and to the
beds of xxx xxxx, xxxxxxx, xxxxxxx 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 any and all of Mortgagor's right, title and interest
in and to the tenements, hereditaments, easements, appurtenances, passages,
waters, water courses, riparian rights, other rights, liberties and privileges
thereof or in any way now or hereafter appertaining to the Premises,
including, without limitation, 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 any and 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; and
TOGETHER with any and all proceeds of any unearned premiums on any
insurance policies described in
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Sections 5.11 and 5.12, 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, Article IV of the Trust Indenture, and the
Superior Instrument Requirements.
EXCLUDING, with respect to all of the hereinabove granted property,
rights, title, interest, privileges and franchises described in Granting
Clauses First through Sixth and/or in the four immediately preceding
paragraphs, all Excepted Property now or hereafter existing.
TO HAVE AND TO HOLD all of said Premises, Leases, Facility Leases,
Operating Assets, properties, options, credits, deposits, rights, privileges
and franchises of every kind and description, real, personal or mixed, hereby
and hereafter granted, bargained, sold, alienated, 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 (said Premises, Leases, Facility Leases,
Operating Assets, properties, options, credits, deposits, rights, privileges
and franchises, other than Excepted Property now or hereafter existing, being
herein collectively called the "Trust Estate") unto Mortgagee and its
successors and assigns forever.
SUBJECT, HOWEVER, to Permitted Liens (other than Restricted
Encumbrances) and Section 1.14.
BUT IN TRUST, NEVERTHELESS, for the benefit and security of the
Secured Beneficiaries.
UPON CONDITION that, until the happening of an Event of Default,
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 Mortgagee, subject to the further covenants, conditions
and trusts hereinafter set forth, and Mortgagor does hereby covenant and agree
to and with Mortgagee, for the benefit of the Secured Beneficiaries, as
follows:
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ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.1. 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 in effect on
the date hereof 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 1.1 of the Trust
Indenture.
"Alterations" has the meaning set forth in Section 5.12.
"Architect" means an Independent Person selected by Mortgagor and
licensed as an architect or engineer in the State of New Jersey.
"Assignment of Leases and Rents" means the Assignment of Leases and
Rents of even date herewith made by Mortgagor, as assignor, in favor of
Mortgagee, as assignee.
"Bankruptcy Law" has the meaning set forth in Section 1.1 of the
Trust Indenture.
"Casino" means that portion of the Casino Hotel used for gaming and
related activities.
"Casino Hotel" means the casino and hotel complex currently known as
the "Xxxxx Xxx Xxxxx Casino Resort" in Atlantic City, New Jersey and ancillary
structures and facilities located on the Premises and all furniture, fixtures
and equipment at any time contained
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therein in each case owned by or leased to Mortgagor and covered by the Lien
of the Mortgage Documents.
"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" means the Federal Bankruptcy Code, Title 11 of the United
States Code, as amended.
"Collateral Agency Agreement" means the Collateral Agency Agreement,
dated as of April 17, 1996 by and among Mortgagee, Trustee, the Issuers, the
Guarantors and such other persons as may be permitted to become parties
thereunder in accordance with its terms and the terms of the Trust Indenture
or the Initial Trust Indenture, as the same has been or may be amended from
time to time in accordance with its terms.
"Company" means Xxxxx Atlantic City Associates, a New Jersey
partnership.
"Comparable Provision" has the meaning set forth in Section
5.20(b)(viii).
"Debt Documents" has the meaning set forth in Section 1 of the
Collateral Agency Agreement.
"Default" means any event which is, or after notice or lapse of time
or both would be, an Event of Default. Without limiting the generality of the
previous provisions of this definition, the term "Default" shall include the
occurrence of an event as to which a notice of default has been given to
Mortgagor under any Facility Lease by a Lessor, which has not yet been cured.
"Designated Representatives" has the meaning set forth in Section 1
of the Collateral Agency Agreement.
"Event of Default" has the meaning set forth in Section 3.1.
"Excepted Property" means:
(1) the personal property owned by lessees under Leases and
the personal property of any Hotel guests;
(2) counterchecks and any other property to the extent that
the granting of a security interest therein is prohibited by the New
Jer-
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sey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the regulations
promulgated thereunder;
(3) tradenames, intellectual property rights and interests in
and to the use of the terms "Xxxxx Xxx Mahal Casino Resort",
"Xxxxx", "Xxxxxx X. Xxxxx",", "Xxxxxx Xxxxx" or related variations
thereof;
(4) all cash and Cash Equivalents (as defined in the Trust
Indenture) to the extent such cash and Cash Equivalents are not
required to be pledged to the Collateral Agent as security for the
Obligations pursuant to the terms of the Trust Indenture; and
(5) any property deemed to be Excepted Property pursuant to
the provisions of Section 2.3.
"Existing Encumbrances" means the Liens existing as of the date
hereof.
"Facility Leases" means, collectively:
(1) the Ground Leases;
(2) any other lease now existing or hereafter entered into or
assumed by Mortgagor as lessee with respect to any real property,
whether it be land, land and buildings and improvements thereon or
only buildings and improvements (excluding the Parking Leases),
which is material to the operation of the Mortgagor or which is
necessary for the normal operation of the Casino Hotel in accordance
with all Legal Requirements and all Permits; and
(3) any and all modifications, extensions and renewals of the
leases described in clauses (1) and (2) above, to the extent the
same are permitted under Section 5.20.
"F,F&E Financing Agreement" has the meaning set forth in Section 1.1
of the Trust Indenture.
"Full Insurable Value" means the actual replacement cost (excluding
the costs of foundation, footing, excavation, paving, landscaping and other
similar, noninsurable improvements) of the insurable properties in question.
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"Ground Lease Land" means the real property described in Schedule 2.
"Ground Leases" means the leases described in Schedule 2 as amended
or supplemented to the extent permitted by Section 5.20.
"Guarantee" means collectively, each guarantee made from time to
time by the Guarantors of the Issuers' Indenture Obligations (as defined in
the Trust Indenture) pursuant to Article Thirteen of the Trust Indenture.
"Guarantors" has the meaning set forth in Section 1.1 of the Trust
Indenture.
"Holder" has the meaning set forth in Section 1.1 of the Trust
Indenture.
"Hotel" means that portion of the Casino Hotel not included within
the Casino.
"Impositions" has the meaning set forth in Section 5.8.
"Indebtedness" has the meaning set forth in Section 1.1 of the Trust
Indenture.
"Independent" when used with respect to any specified Person means
such a Person who (i) is in fact independent, (ii) does not have any direct
financial interest or any material indirect financial interest in Mortgagor or
in any Affiliate of Mortgagor and (iii) is not connected with Mortgagor or any
Affiliate of Mortgagor 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 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 performing or
has performed such services.
"Initial Mortgage" means that certain Indenture of Mortgage and
Security Agreement dated as of April 17, 1996 between Mortgagor, as mortgagor,
and First Bank National Association, a national banking association, as
Collateral Agent, as mortgagee, in the initial principal sum of $1,200,000,000
and recorded April 18, 1996 in
13
Mortgage Book 5874 Page 1 in the Atlantic County Clerk's Office, State of New
Jersey.
"Initial Trust Indenture" means that certain Indenture dated April
17, 1996 among Mortgagor, the Issuers, Guarantors and First Bank National
Association, as Trustee as it may from time to time be supplemented, modified
or amended in accordance with its terms by one or more trust indentures or
other instruments supplemental thereto entered into pursuant to the applicable
provisions thereof.
"Insurance Amount" has the meaning set forth in Section 5.11(a)(i).
"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 part thereof.
"Insurer" means (i) an insurance company or companies selected by
Mortgagor authorized to issue insurance in the State of New Jersey with an
A.M. Best & Company, Inc. rating level of A minus or better and an A.M. Best &
Company, Inc. financial size category of X or better or, if such carrier is
not rated by A.M. Best & Company, Inc., having the financial stability and
size deemed appropriate by an opinion from a reputable insurance broker.
"Issuers" has the meaning set forth in Section 1.1 of the Trust
Indenture or the Initial Trust Indenture, as applicable.
"Land" means, collectively, the Owned Land and the Leased Land.
"Lease" means each lease or sublease (made by Mortgagor as lessor or
sublessor, as the case may be) of any space in any building or buildings, an
interest in which building or buildings constitutes a part of the Trust
Estate, including every agreement relating thereto or entered into in
connection therewith and every guarantee of the performance and observance of
the covenants, conditions and agreements to be performed by the lessee or
sublessee under any such lease or sublease. For purposes hereof, the term
"Lease" shall include any license agreement, concession agreement or other
occupan-
14
cy agreement. Notwithstanding the foregoing, the term "Lease" shall not
include any transient room rentals.
"Leased Facilities" means, collectively, the Leased Land and any
buildings and improvements now or hereafter located thereon.
"Leased Land" means, collectively, the Ground Lease Land and any
other land that is now or hereafter subject to a Facility Lease.
"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 Casino Control Act, the New Jersey
Industrial Site Recovery 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, the 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 are or at any time hereafter
become applicable to the Trust Estate or any part thereof, or any of the
adjoining sidewalks, or any use or condition of the Trust Estate or any part
thereof, including, without limitation, the use of the Casino Hotel as a
gaming or gambling facility.
"Lessors" means the lessors under the Facility Leases.
"Lien" has the meaning set forth in Section 1.1 of the Trust
Indenture.
"Material Instrument Requirements" means the applicable terms,
conditions and provisions of (i) the Ground Leases with respect to the Ground
Lease Land, (ii) the Parking Leases with respect to the Parking Lease Land
and (iii) any other Facility Lease with respect to the portion of the Premises
covered thereby.
"Maturity" when used with respect to any Indebtedness means the date
on which the principal (or any portion thereof) of such Indebtedness becomes
due and payable as therein or herein provided, whether at the Stated Maturity,
upon acceleration, optional redemption, required repurchase, scheduled
principal payment or otherwise.
15
"Mortgage" means this Indenture of Mortgage and Security Agreement,
as amended or supplemented from time to time in accordance with the terms
hereof.
"Mortgage Documents" has the meaning set forth in Section 1.1 of the
Trust Indenture.
"Mortgage Notes" means the Issuers' First Mortgage Notes (TAC II)
due 2006, in an aggregate principal amount of $75,000,000, and the Issuers'
First Mortgage Notes (TAC III) due 2006 in an aggregate principal amount of
$25,000,000, issued pursuant to the Trust Indenture, including the guarantees
thereof by the Guarantors.
"Mortgagee" means the Persons named as "Mortgagee" in the first
paragraph of this instrument including any successor entity which shall have
become such pursuant to the applicable provisions of the Collateral Agency
Agreement and this Mortgage.
"Mortgagor" means the Person named as "Mortgagor" in the first
paragraph of this instrument including any successor entity which shall have
become such pursuant to the applicable provisions of this Mortgage.
"Mortgagor Request" means a written request of the Mortgagor in the
form of an Officers' Certificate.
"Notices" has the meaning set forth in Section 1.2.
"Obligations" has the meaning set forth in Section 1 of the
Collateral Agency Agreement.
"Offering Memorandum" has the meaning set forth in Section 1.1 of
the Trust Indenture.
"Officer" has the meaning set forth in Section 1.1 of the Trust
Indenture.
"Officers' Certificate" has the meaning set forth in Section 1.1 of
the Trust Indenture.
"Operating Assets" has the meaning set forth in Granting Clause
Fifth.
"Opinion of Counsel" has the meaning set forth in Section 1.1 of the
Trust Indenture.
"Original Policy" means the ALTA Loan Policies of Title Insurance
issued by Commonwealth Land Title Insurance Company, First American Title
Insurance Co. and
16
Chicago Title Insurance Company, pursuant to Commonwealth Land Title Insurance
Company Title Commitment No. L970801(A) and Commonwealth Land Title Insurance
Company Title Commitment No. L970801, redated the date hereof, insuring
Mortgagee as to the Liens of this Mortgage and the Plaza Mortgage in an
aggregate amount of not less than $100,000,000.
"Outstanding Amount" has the meaning set forth in Section 1.1 of the
Trust Indenture.
"Owned Land" has the meaning set forth in Granting Clause First.
"Parking Lease Land" means the real property described in
Schedule 3.
"Parking Leases" means the leases and licenses described in
Schedule 3.
"Permits" has the meaning set forth in Section 1.1 of the Trust
Indenture.
"Permitted Liens" has the meaning set forth in Section 1.1 of the
Trust Indenture. All references to the subsections of the definition of
Permitted Liens shall mean the subsections of the definition of Permitted
Liens as set forth in the Trust Indenture.
"Person" means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or any other entity or government or any agency or
political subdivision thereof.
"Plaza Mortgage" means the Indenture of Mortgage and Security
Agreement, dated as of the date hereof, made by Xxxxx Plaza Associates for the
benefit of Mortgagee, as amended or supplemented from time to time in
accordance with the terms thereof.
"Premises" has the meaning set forth in Granting Clause Third.
"Refinancing Indebtedness" has the meaning set forth in Section 1.1
of the Trust Indenture.
"Restricted Encumbrances" means (i) Leases which are subordinate to
or shall be subordinate to the Lien of this Mortgage pursuant to Section 5.13,
(ii) the Mortgage Documents, and any other instrument now or hereafter
executed, as additional security for the obligations secured by this Mortgage,
(iii) any Lien which
17
pursuant to the terms of the Trust Indenture, the Collateral Agency Agreement
and the terms hereof is to be subordinate to, or pari passu with, the Lien of
this Mortgage and (iv) the leases and licenses which as of the date hereof are
subordinate to the Lien of this Mortgage pursuant to their terms or the terms
of any non-disturbance agreement executed in connection therewith; it being
intended that Restricted Encumbrances constitute those Permitted Liens which
are subordinate to, or pari passu with, the Lien of this Mortgage.
"Securities Act" has the meaning set forth in Section 1.1 of the
Trust Indenture.
"Secured Beneficiaries" has the meaning set forth in Section 1 of
the Collateral Agency Agreement.
"Secured Loans" has the meaning set forth in Section 1 of the
Collateral Agency Agreement.
"Security Agreement" means the Security Agreement, dated as of the
date hereof, among the Issuers, Guarantors and Mortgagee.
"Stated Maturity" has the meaning set forth in Section 1.1 of the
Trust Indenture.
"Subsidiaries" has the meaning set forth in Section 1.1 of the Trust
Indenture.
"Tangible Personal Property" has the meaning set forth in Granting
Clause Fifth.
"Trust Estate" has the meaning stated in the habendum to the
Granting Clauses.
"Trust Indenture" means, individually or collectively as the context
may require, those certain Indentures of even date herewith among Mortgagor,
the Issuers, Guarantors and U.S. Bank National Association, as Trustee, as
they may from time to time be supplemented, modified or amended in accordance
with their respective terms by one or more trust indentures or other
instruments supplemental thereto entered into pursuant to the applicable
provisions thereof, a form of each of which (without exhibits) is attached
hereto as Exhibit A.
"Trust Indenture Act" has the meaning set forth in Section 1.1 of
the Trust Indenture.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of the Trust Indenture and any successor thereto.
18
"Uniform Commercial Code" means the New Jersey Uniform Commercial
Code N.J.S.A. 12A:1-101 et seq.
Section 1.2. Notices.
(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, Mortgagor or Mortgagee (collectively, "Notices")
shall be in writing and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
To Mortgagor:
Xxxxx Xxx Mahal Associates
Mississippi Avenue and Xxx Xxxxxxxxx
Xxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Chief Financial Officer
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
To Mortgagee:
U.S. Bank National Association
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attn: Corporate Trust Department
(b) Mortgagee or Mortgagor by notice in accordance with the terms
hereof to the other party may designate additional or different addresses as
shall be furnished in writing by such party. Any notice or communication to
the Mortgagee or Mortgagor shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and 5 Business Days (as
defined in the Trust Indenture) after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address
shall not be deemed to have been given until actually received by the
addressee).
Section 1.3. Form and Contents of Documents
Delivered to Mortgagee.
19
Any Officers' Certificate or Opinion of Counsel delivered to
Mortgagee in connection with this Mortgage shall be in compliance with the
provisions of Section 12.5 of the Trust Indenture.
Every application, certificate, report, affidavit, opinion, consent,
statement or other instrument required to be delivered to Mortgagee under this
Mortgage or under any other Mortgage Document shall be in writing and shall be
prepared and delivered without cost or expense to Mortgagee.
Section 1.4. Compliance Certificates and Opinions.
Upon any application or request by Mortgagor to Mortgagee to take
any action under any provision of this Mortgage, Mortgagor shall furnish to
Mortgagee an Officers' Certificate and an Opinion of Counsel in compliance
with the provisions of Section 12.4 of the Trust Indenture.
Section 1.5. 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 1.6. Successors and Assigns; Amendments.
(a) Subject to the provisions of Section 1.10 hereof and Section
6.2 of the Trust Indenture, and without limiting the generality of Section
1.12 hereof, 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 Mortgagor and Mortgagee and in accordance with the provisions of
this Mortgage and the Trust Indenture.
Section 1.7. 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.
20
Section 1.8. Benefits of Mortgage.
Without limiting the generality of Section 1.12, 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 1.9. 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. Limitation on Liability.
A direct or indirect partner, director, officer, employee or
stockholder, as such, past, present or future of the Mortgagor or any
successor entity shall not have any personal liability in respect of the
obligations under this Mortgage by reason of his or its status as such
partner, director, officer, employee or stockholder except to the extent such
is an Issuer or a Guarantor. Each Holder by accepting a Security (as defined
in the Trust Indenture) waives and releases all such liability. Such waiver
and release are part of the consideration for the issuance of the Securities.
Section 1.11. Provisions Required by Trust Indenture.
Whenever the provisions of this Mortgage and the provisions of the
Trust Indenture shall be inconsistent, the provisions of the Trust Indenture
shall govern.
Section 1.12. Rights of Mortgagee.
(a) Except as otherwise provided in Section 5 of the Collateral
Agency Agreement:
(i) 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, note, 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;
(ii) any request or direction of Mortgagor mentioned herein
shall be sufficiently evidenced by a Mortgagor Request;
21
(iii) whenever in the administration of this Mortgage,
Mortgagee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, Mortgagee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate;
(iv) Mortgagee may consult with counsel and any 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 Mortgagee hereunder in good faith and in reliance thereon;
(v) 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,
approval, appraisal, bond, debenture, note, coupon, security or other
paper or document but Mortgagee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if 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 Mortgagor, personally or by agent or attorney;
(vi) Mortgagee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and 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;
(vii) 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
(viii) no provision of this Mortgage shall require 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
any of its rights or powers.
(b) The provisions of this Section 1.12 shall apply to all Mortgage
Documents.
22
Section 1.13. Mortgage Subject to Casino Control 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 Mortgagor shall pay or cause to be paid, or there shall otherwise
be paid, to Mortgagee all amounts required to be paid by Mortgagor pursuant to
the this Mortgage and all Obligations pursuant to the Debt Documents,
including, without limitation, the Mortgage Notes and the Guarantee, shall
have been satisfied and (a) the conditions precedent for the Trust Indenture
to cease, determine and become null and void (except for any surviving rights
of transfer or exchange of the Mortgage Notes provided in the Trust Indenture
and for the obligation to pay the Trustee's fees and expenses provided in
Section 8.7 of the Trust Indenture) in accordance with Article Nine of the
Trust Indenture shall have occurred, or (b) there shall have occurred a Legal
Defeasance (as defined in Section 9.2 of the Trust Indenture) of the Mortgage
Notes, or (c) there shall have occurred a Covenant Defeasance (as defined in
Section 9.3 of the Trust Indenture), then in any such case Mortgagee shall
promptly cancel and discharge the Mortgage Documents, including, without
limitation, this Mortgage, and any financing statements filed in connection
herewith and execute and deliver to Mortgagor all such instruments as may be
necessary, required or appropriate to evidence such discharge and satisfaction
of said Lien or Liens. In connection with the disposition of all or any
portion of the Trust Estate free and clear of the Lien of this Mortgage in
accordance with the terms of Section 4.3 of the Trust Indenture, Mortgagee
shall promptly execute and deliver to Mortgagor all such instruments as may be
necessary, required or appropriate to evidence the release of such portion of
the Trust Estate from the Lien of this Mortgage. Upon such release, the
terms, conditions and obligations hereunder shall no longer apply to the
portion of the Trust Estate so released and all defined terms hereunder shall
be deemed appropriately modified.
Section 1.15. General Application.
(a) The remedies of Mortgagee upon any default by Mortgagor in the
fulfillment of any of its obligations hereunder shall be limited in each
instance by the provisions of Section 1.10, whether or not the provisions
providing for such remedies explicitly refer to such Section.
23
(b) The assertion of any rights upon any Default shall be subject
in each instance to, if required, the giving of any notice and the expiration
of any grace period provided for in Section 3.1 as a condition to such Default
becoming an Event of Default, unless the Trust Indenture Act requires
otherwise, in which case the Trust Indenture Act shall control.
(c) For the purposes of this Mortgage, it is understood that an
event which does not materially diminish the value of Mortgagee's interest in
the Trust Estate shall not be deemed an "impairment of security," as that
phrase is used in this Mortgage.
Section 1.16. Mortgage Deemed to be Security Agreement.
To the extent that 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 Mortgagor's right, title and interest in and to said property, securing the
obligations secured hereby, for the benefit of Mortgagee.
ARTICLE TWO
RELEASE; SUBORDINATION
Section 2.1. Possession by Mortgagor.
So long as there shall have been no acceleration of maturity of any
Indebtedness secured hereby, including, without limitation, the Mortgage
Notes, Mortgagor shall be suffered and permitted, with power freely and
without let or hindrance on the part of Mortgagee, subject to the provisions
of this Mortgage and the Trust Indenture, 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 thereof, 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 2.2. Obsolete Property.
Mortgagor shall have the rights granted to it with respect to the
disposition of certain Tangible Personal Property secured hereby pursuant to
Section 4.3 of
24
the Trust Indenture (but subject to all restrictions pertaining thereto), the
terms of which are incorporated herein by reference.
Mortgagee shall, from time to time, promptly execute any written
instrument in form satisfactory to Mortgagee to confirm the propriety of any
action taken by Mortgagor under this Section 2.2, upon receipt by Mortgagee of
a Mortgagor Request requesting the same, together with an Officers'
Certificate stating that the action so to be confirmed was duly taken in
conformity with this Section 2.2, and that the execution of such written
instrument is appropriate to confirm the propriety of such action under this
Section 2.2; provided, that Mortgagee shall have no liability thereunder and
all costs and expenses (including, without limitation, reasonable attorneys'
fees and disbursements) shall be paid by Mortgagor.
Section 2.3. F,F&E Financing Agreements.
Notwithstanding any provision contained in this Mortgage or the
Trust Indenture to the contrary, if Mortgagor has acquired or hereafter
acquires Tangible Personal Property and/or other items constituting operating
assets subject to any F,F&E Financing Agreement, or becomes the lessee under a
lease for any of the same and if the document evidencing such F,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
evidenced by an Officers' Certificate delivered to Mortgagee, together with
such other evidence as Mortgagee may reasonably request), 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 F,F&E
Financing Agreement permits subordinate Liens then Mortgagee shall execute and
deliver to Mortgagor, at Mortgagor's expense, such documents as the holder of
such F,F&E Financing Agreement may reasonably request to evidence the
subordination of the Lien of this Mortgage and the Mortgage Documents to the
Lien of such F,F&E Financing Agreement.
Section 2.4. Intentionally Omitted.
ARTICLE THREE
REMEDIES
25
Section 3.1. Events of Default.
"Event of Default," whenever used herein, means an "Event of
Default," as defined in Section 7.1 of the Trust Indenture, shall occur and be
continuing (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).
Section 3.2. Application of Moneys Received by Mortgagee.
Any moneys received by Mortgagee pursuant to the provisions of this
Article Three (including moneys received after any action or act by Mortgagee
under Section 3.10) shall be applied by Mortgagee in accordance with the
provisions of Section 7.6 of the Trust Indenture.
Section 3.3. Restoration of Rights and Remedies.
If 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 Mortgagee, then
and in every such case Mortgagor and Mortgagee shall, subject to any
determination in such proceeding, be restored to their respective former
positions hereunder, and thereafter all rights and remedies of Mortgagee shall
continue as though no such proceeding had been instituted.
Section 3.4. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to 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 3.5. Delay or Omission Not Waiver.
No delay or omission of 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
26
therein. Every right and remedy given by this Article Three or by applicable
law to Mortgagee may be exercised, from time to time, and as often as may be
deemed expedient, by Mortgagee.
Section 3.6. 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 or under the Guarantee secured hereby) to which action or
proceeding Mortgagee is made or becomes a party, or in which it becomes
necessary in the opinion of Mortgagee to defend or uphold the Lien of this
Mortgage, then Mortgagor shall pay to Mortgagee all expenses, including,
without limitation, reasonable attorneys, fees, disbursements and court costs
incurred by Mortgagee in connection therewith, together with interest at the
rate then payable on such Indebtedness, from the date of payment less the net
amount received by Mortgagee, as its interest may appear under any title
insurance policy, and, until paid, all such expenses, together with interest
as aforesaid, shall be secured by the Lien of this Mortgage.
Section 3.7. Waiver of Appraisement and Other Laws.
To the full extent that it may lawfully so agree, 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 thereof, or the possession
thereof by any purchaser at any sale under this Article Three; and Mortgagor,
for itself and all who may claim under Mortgagor, so far as Mortgagor or they
now or hereafter may lawfully do so, hereby waives the benefit of all such
laws. Mortgagor, for itself and all who may claim under Mortgagor, waives, to
the extent that Mortgagor 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 3.7 referred to and now in force, of
which Mortgagor or its successor or successors might take advantage despite
this Section 3.7, 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 3.7.
27
Section 3.8. Entry.
Mortgagor agrees that upon the occurrence, and during the
continuance, of an Event of Default, Mortgagor, upon demand of Mortgagee,
shall forthwith surrender to Mortgagee the actual possession of, and it shall
be lawful for 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
Mortgagor), and to hold, operate and manage the Trust Estate (including the
making of all needful repairs, and such alterations, additions and
improvements as 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 3.2;
provided, however, that Mortgagee's rights under this Section 3.8 shall be
subject to the provisions of the New Jersey Casino Control Act and Section
3.13. Whenever all that is then due upon the Debt Documents, including without
limitation, the Mortgage Notes and under any of the terms of this Mortgage
shall have been paid and all defaults hereunder shall have been cured,
Mortgagee shall surrender possession to Mortgagor.
Section 3.9. Power of Sale; Suits for Enforcement.
If an Event of Default shall occur and be continuing, 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 Mortgagee may
determine, to the highest bidder at public auction at such place and at such
time (which sale may be adjourned by 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 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
28
remedy, as Mortgagee shall deem most effectual to protect and enforce any of
the rights of Mortgagee; the failure to join tenants shall not be asserted as
a defense to any foreclosure or proceeding to enforce the rights of Mortgagee.
Section 3.10 Incidents 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) subject to the provisions of Section 3.13 and the receipt of
any required prior approvals of the New Jersey Casino Control Commission,
Mortgagee may bid for and purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain, possess and dispose of
such property, without further accountability, and may, in paying the purchase
money therefor, deliver the Mortgage Notes or any other Debt Document 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 the
Mortgage Notes or any other Debt Document, in case the amounts so payable
thereon shall be less than the amount due thereon, shall be returned to
Mortgagee after being appropriately stamped to show partial payment;
(b) Mortgagee may make and deliver to the purchaser or purchasers a
good and sufficient deed, xxxx of sale and instrument of assignment and
transfer of the property sold;
(c) Mortgagee is hereby irrevocably appointed the true and lawful
attorney of 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, Mortgagor hereby ratifying and
confirming all that its said attorney or such substitute or substitutes shall
lawfully do by virtue hereof; but if so requested by Mortgagee or by any
purchaser, Mortgagor shall ratify and confirm any such sale or transfer by
executing and delivering to 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;
(d) all right, title, interest, claim and demand whatsoever, either
at law or in equity or other-
29
wise, of 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
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 Mortgagor, its successors and assigns; and
(e) the receipt of 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 3.11. Receiver.
Upon the occurrence of an Event of Default and commencement of
judicial proceedings by Mortgagee to enforce any right under this Mortgage,
Mortgagee shall be entitled, as against Mortgagor, without notice or demand
and without regard to the adequacy of the security for the Mortgage Notes, the
Guarantee or any other Debt Document or the solvency of 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
Mortgagee's rights under this Section 3.11 shall be subject to the provisions
of the New Jersey Casino Control Act and Section 3.13 hereof.
Section 3.12. Suits to Protect the Trust Estate.
Mortgagor hereby acknowledges the right of Mortgagee, in the name
and on behalf of 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 notice to Mortgagor (or such shorter period or without
notice if deemed necessary and appropriate by Mortgagee), Mortgagee shall have
power to institute and to maintain such proceedings as Mortgagee may deem
necessary and appropriate, but in the case of (a) and (b) to prevent any
impairment of security or any impairment of the Trust Estate in all cases by
any acts which may be unlawful or in violation of this Mortgage and to protect
Mortgagee's interests in the Trust Estate and in the rents, issues, profits,
revenues and other income arising therefrom, including the right 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,
30
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
Mortgagee.
Section 3.13. Management of the Premises.
Without limiting the generality of any other provision of this
Article Three, following an Event of Default and the taking of possession of
the Trust Estate or any part thereof by Mortgagee and/or the appointment of a
receiver of the Trust Estate or any part thereof, Mortgagee or any such
receiver shall be authorized, in addition to the rights and powers of
Mortgagee and such receiver set forth elsewhere in this Mortgage, to take any
action permitted under Article Seven of the Trust Indenture.
ARTICLE FOUR
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 4.1. Consolidation, Merger, Conveyance
or Transfer only on Certain Terms.
Mortgagor shall be bound by all provisions applicable to Mortgagor
in Section 13.6 of the Trust Indenture, the terms of which are incorporated
herein by reference.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.1. Performance of Obligations.
Mortgagor shall duly and punctually pay and perform the Obligations
in accordance with the terms of the Debt Documents to which it is a party
(including, without limitation, Article Thirteen of the Trust Indenture).
Section 5.2. F,F&E Financing Agreements.
Mortgagor shall comply with all of the terms and conditions set
forth in any F,F&E Financing Agreements before the expiration of any
applicable notice and cure periods contained in any such F,F&E Financing
Agreements.
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Section 5.3. Limitations on Liens and Transfers.
(a) Except as otherwise expressly permitted under this Mortgage and
the Trust Indenture (including, without limitation, Article Five of the Trust
Indenture), Mortgagor shall not create, incur, suffer or permit to be created
or incurred or to exist any Lien on all or any portion of the Trust Estate,
other than Permitted Liens.
(b) The Lien of this Mortgage shall be subject and subordinate to
the Lien of any Existing Encumbrances and the Permitted Liens described in
subsections (a) (other than with respect to Refinancing Indebtedness of the
Securities (as defined in the Trust Indenture)), (c)(but only to the extent
that such F,F&E Financing Agreement requires the Lien of this Mortgage to be
subordinate thereto), (i) and (j) (but only to the extent that such Acquired
Indebtedness (as defined in the Trust Indenture) requires the Lien of this
Mortgage to be subordinate thereto) of the definition of Permitted Lien, to
the extent that each thereof encumbers Mortgagor's interest in the Trust
Estate or any part thereof. The foregoing provisions of this Section 5.3(b)
shall be self-operative and no further instrument shall be required to give
effect to such subordination.
(c) Mortgagor shall not sell, assign, lease or otherwise transfer
all or any portion of the Trust Estate or any interest therein (including,
without limitation, any interest in the Ground Leases) in violation of the
terms of this Mortgage or the terms of the Trust Indenture (including, without
limitation, Sections 4.3 and 13.6 of the Trust Indenture). Without limiting
the generality of the foregoing, Mortgagor 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.
Notwithstanding the foregoing, 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 Mortgagee, to grant
Permitted Liens; provided, (i) that none of the same will reduce or impair, in
any material respect, (A) the value or usefulness of the Trust Estate or (B)
the normal operation of the Casino Hotel in accordance with all Legal
Requirements and all Permits, (ii) no Event of Default has occurred and is
continuing and (iii) Mortgagor shall promptly deliver to Mortgagee a duplicate
original of the instrument, if any, pursuant to which such grant is to be
made, and such other instruments, certificates and opinions as Mortgagee may
reasonably request. The foregoing provisions of this Section 5.3(c) shall be
self-operative and no further instrument shall be re-
32
quired to evidence the consent of Mortgagee to the grant or other conveyance
of such rights-of-way or easements. Mortgagee shall, however, from time to
time, after receipt of a Mortgagor Request therefor (accompanied by an
Officers' Certificate stating that said conditions have been satisfied)
execute instruments in form and substance reasonably satisfactory to Mortgagee
confirming the permissibility of such grant or other conveyance but only with
respect to the Permitted Liens incurred after the date hereof described in
subsections (a) (but only with respect to Refinancing Indebtedness), (d), (e),
(i), (j) and (k) of the definition of Permitted Liens.
Section 5.4. Environmental.
Without limiting the generality of any other provision of this
Mortgage, Mortgagor covenants, represents and warrants to Mortgagee as
follows:
(a) Mortgagor shall comply with any and all federal, state and
local environmental legislation, rules, and regulations in effect as of the
date of this Mortgage and subsequent thereto, including, without limitation,
the Spill Compensation and Control Act (N.J.S.A. 58:10-23.11 et seq.) (the
"Spill Act"); the Industrial Site Recovery Act (N.J.S.A. 13:lK-6 et seq.)
("ISRA"); the Solid Waste Management Act (N.J.S.A. 13:E-1 et seq.); the
Resource, Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.)
("RCRA"); the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"), each as amended, and such
other environmental legislation, rules and regulations, as are in or may come
into effect and apply to (i) Mortgagor and/or Mortgagee with respect to the
Premises or (ii) the transactions contemplated hereby, and as to any occupants
or users of the collateral, whether as lessees, tenants, licensees or
otherwise, Mortgagor shall use its best efforts to cause same to comply with
said legislation, rules and regulations. Mortgagor agrees to pay all costs
required in connection with compliance with the foregoing legislation, rules
and regulations.
(b) Mortgagor has not used in the past, nor shall Mortgagor use in
the future, the Premises for the purpose of refining, producing, storing,
handling, transferring, processing or transporting "Hazardous Substances", as
such term is defined in ISRA, the Spill Act, CERCLA or the regulations
relating thereto, except that Mortgagor and its subsidiaries have used, and
Mortgagor may continue in the future to use, substances in the operation and
maintenance of the Premises, including, without limitation, heating oil,
gasoline and cleaning
33
chemicals which could be considered as "Hazardous Substances" under the
preceding definition.
(c) To the best of Mortgagor's knowledge, after due inquiry and
investigation, none of the real property owned, leased and/or occupied by
Mortgagor and located in the State of New Jersey, including, without
limitation, the Premises, has been or is now being used as a "Major Facility"
as such term is defined in N.J.S.A. 58:10-23.llb(l). Mortgagor will not use
the Premises in the future as a "Major Facility".
(d) To the best of Mortgagor's knowledge, after due inquiry and
investigation, no Lien has been attached to any revenues or any real or
personal property owned by Mortgagor or the Premises, as a result of the Chief
Executive of the New Jersey Spill Compensation Fund expending monies from said
fund to pay for "Cleanup Costs", as such term is defined in N.J.S.A.
58:10-23.llb(d), arising from an intentional or unintentional action or
omission of Mortgagor or any previous owner and/or operator of such real
property.
(e) There is no asbestos or asbestos containing material on the
Premises currently owned, operated or leased by Mortgagor, other than
asbestos-containing materials located at the Virginia Avenue warehouse owned
by Mortgagor and the Terrace Building located on Pennsylvania Avenue, which
are in good condition and in compliance with applicable law. To the best of
Mortgagor's knowledge, after due inquiry and investigation, there are no
underground storage tanks located at or on the Premises, with the exception of
three (3) underground storage tanks located at the Pleasantville Warehouse (as
defined in the Trust Indenture), all of which are in compliance with
applicable law. Mortgagor has not installed or placed, or permitted to be
installed or placed, any underground storage tanks at or on the Premises.
Underground storage tanks shall have the definition as set forth in N.J.S.A.
58:10A-22(p).
(f) Except as previously provided to Mortgagee, Mortgagor has not
received a summons, citation, directive, letter, other written communication,
or, to the best of its knowledge, any oral communication ("Communication"),
and in any event, no such Communication remains outstanding, from the New
Jersey Department of Environmental Protection or from any other person, firm
or corporation concerning any intentional or unintentional action or omission
on Mortgagor's part resulting in the releasing, spilling, leaking, pumping,
pouring, emitting, emptying or dumping of "Hazardous Substances", as such term
is defined in N.J.S.A. 58:10-23.llb(k), into
34
the waters or onto the lands of the State of New Jersey, or into the waters
outside the jurisdiction of the State of New Jersey, in either case resulting
in damage to the lands, waters, fish, shellfish, wildlife, biota, air and
other resources owned, managed, held in trust or otherwise controlled by the
State of New Jersey.
(g) In connection with any purchase of the Premises or any business
or assets located thereon or any closing, terminating or transferring of
ownership or operations of any "industrial establishment", as that term is
defined in ISRA or in the predecessor statute to ISRA, occurring on or after
December 31, 1983, Mortgagor required that the owner and or operator of the
industrial establishment comply with the provisions of ISRA or in the
predecessor statute and the owner and or operator did comply therewith.
(h) Upon the occurrence of an Event (as hereinafter defined),
Mortgagee shall have the right to have its consultants perform a comprehensive
environmental audit of the Premises. Such audit shall be conducted by an
environmental consultant chosen by Mortgagee and may include a visual survey,
a record review, an area reconnaissance assessing the presence of hazardous or
toxic waste or substances, PCBs or storage tanks at the Premises, an asbestos
survey of the Premises, which may include random sampling of the improvements
and air quality testing, and such further site assessments as Mortgagee may
reasonably require due to the results obtained from the foregoing. Mortgagor
grants Mortgagee, its agents, consultants and contractors the right to enter
the Premises as reasonable or appropriate for the circumstances for the
purposes of performing such studies and the reasonable cost of such studies
shall be due and payable by Mortgagor to Mortgagee upon demand and shall be
secured by the Lien of this Mortgage. Mortgagee shall direct the
environmental consultant to use its best efforts not to hinder Mortgagor's or
any tenant's operations when conducting such audit, sampling or inspections.
For purposes of this paragraph, the term "Event" shall mean (i) the occurrence
of any Event of Default, (ii) the issuance of any summons, citation, directive
or similar written notice from the New Jersey Department of Environmental
Protection or from any other local, state or federal entity or from any other
person, firm or corporation concerning any alleged material violation of any
and all federal, state and local environmental legislation, rules and
regulations in effect as of the date of this Mortgage and subsequent thereto
or (iii) the initiation of any legal action, suits or other legal or
administrative proceedings relating to or in connection with any alleged
violation of any and all federal, state and
35
local environmental legislation, rules and regulations in effect as of the
date of this Mortgage and subsequent thereto. By undertaking any of the
measures identified in and pursuant to this subsection (h), Mortgagee shall
not be deemed to be exercising any control over the operations of Mortgagor or
the handling of any environmental matter or hazardous wastes or substances of
Mortgagor for purposes of incurring or being subject to liability therefor.
(i) If a Lien shall be filed against the Premises by the New Jersey
Department of Environmental Protection, pursuant to and in accordance with the
provisions of N.J.S.A. 58:10-23.llf(f), as a result of the Chief Executive of
the New Jersey Spill Compensation Fund having expended monies from said fund
to pay for "Damages", as such term is defined in N.J.S.A. 58:10-23.llg, and/or
"Cleanup and Removal Costs", as such term is defined in N.J.S.A. 58:10-23(b),
arising from an intentional or unintentional action or omission of Mortgagor
resulting in the releasing, spilling, pumping, pouring, emitting, emptying or
dumping of "Hazardous Substances", as such term is defined in N.J.S.A.
58:10-23.11(b)k into waters of the State of New Jersey or onto lands from
which it might flow or drain into said waters, then, unless there is a good
faith basis for contesting such Lien and Mortgagor is so contesting such Lien
in accordance with Section 5.9, Mortgagor shall, within 30 days from the date
that Mortgagor is given notice that the Lien has been placed against the
Premises or within such shorter period of time if the State of New Jersey has
commenced steps to cause the Premises to be sold pursuant to the Lien, either
(i) pay the claim and remove the Lien from the Premises, or (ii) furnish (A) a
bond satisfactory to a title company selected by Mortgagee (the "Title
Insurer") in the amount of the claim out of which the Lien arises, (B) to the
Trustee, a cash deposit (which may be disbursed by the Trustee in its sole
discretion) in the amount of the claim out of which the Lien arises, or (C)
other security reasonably satisfactory to Mortgagee in an amount sufficient to
discharge the claim out of which the Lien arises.
(j) Mortgagor shall use its best efforts to cause compliance by all
lessees with all applicable Legal Requirements relating to environmental
protection.
(k) Mortgagor shall promptly provide Mortgagee with copies of all
notices which allege or identify any actual or potential violation or
noncompliance received by or prepared by or for Mortgagor in connection with
ISRA, CERCLA, the Spill Act, RCRA or any other environmental law, rule or
regulation relating to the Premises.
36
For purposes of this paragraph, the term "notice" shall mean any summons,
citation, directive, order, claim, pleading, letter, application, filing,
report, findings, declarations or other materials pertinent to compliance of
the Trust Estate and Mortgagor with such environmental laws, rules or
regulations.
(l) If this Mortgage is foreclosed, Mortgagor shall deliver the
Premises in compliance with all applicable federal, state and local
environmental laws, ordinances, rules and regulations, including, without
limitation, ISRA.
(m) Without limiting the generality of Section 5.22, Mortgagor
agrees to defend, indemnify and save Mortgagee harmless from and against any
loss or liability, cost or expense (including, without limitation, reasonable
attorneys' fees, consultants' fees, disbursements and court costs) arising out
of, or incurred in connection with, Mortgagor's misrepresentation, or failure
promptly (but in no event to exceed the time period permitted by law) to
comply with and perform its obligations, under this Section 5.4. The
provisions of this subsection (m) shall survive any transfer of the Premises,
including a transfer after a foreclosure of this Mortgage.
Section 5.5. Pari Passu Liens.
Any Liens permitted by the terms of the Trust Indenture and the
Collateral Agency Agreement to be on a parity with the Lien of this Mortgage
may be on a parity with the Lien of this Mortgage only if such Lien and the
Indebtedness, if any, secured thereby shall in all respects be in accordance
with the provisions of the Collateral Agency Agreement and the Trust
Indenture.
Section 5.6. Warranty of Leasehold Estate and Title.
Mortgagor represents and warrants that as of the date hereof:
(a) Mortgagor is duly authorized under the laws of the State of New
Jersey and all other applicable laws to execute and deliver the Mortgage
Documents, and all corporate and partnership action on Mortgagor's part
necessary for the valid execution and delivery of the Mortgage Documents has
been duly and effectively taken;
(b) Mortgagor 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
37
Liens, charges or encumbrances, other than the Mortgage Documents and the
Existing Encumbrances;
(c) Mortgagor is the holder of and has good and marketable title to
the leasehold interests and leasehold estates under all existing Facility
Leases, subject to no Lien, encumbrance or charge other than the Mortgage
Documents and the Existing Encumbrances;
(d) (i) each existing Facility Lease is a valid and subsisting
demise of the respective Leased Land for the term therein set forth, and
without limiting the generality of the foregoing, all conditions to the
effectiveness of the Ground Leases have been either waived or satisfied, (ii)
there are no defaults under any Facility Lease by any lessor or the lessee as
to which written notice has been given to or by the lessee, (iii) Mortgagor
has delivered to Mortgagee a true and correct copy of each existing Facility
Lease, and all modifications, amendments and supplements thereto, and (iv)
each existing Facility Lease is in full force and effect and has not been
modified, amended or supplemented, except as described on Schedule 2;
(e) Mortgagor has good title to the Operating Assets, subject to no
Lien, encumbrance or charge, other than the Mortgage Documents and the
Existing Encumbrances;
(f) 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
Facility Leases), without the consent of any third party, other than
governmental authorities and other secured Persons but any applicable or
necessary consent or approval of any such governmental authority and other
such Persons has been given or waived in accordance with applicable law at or
prior to the execution and delivery of this Mortgage, and upon the proper
recording and indexing hereof, this Mortgage constitutes a valid first
mortgage Lien and first priority security interest in the Trust Estate,
subject only to Existing Encumbrances.
Mortgagor hereby does and shall forever warrant and defend (a) the
title to the Trust Estate (including, without limitation, Mortgagor's
leasehold estate under, and the lessee's interests in, each existing Facility
Lease) (subject to Permitted Liens) and (b) the priority of the Lien of the
Mortgage Documents thereon (subject to Permitted Liens other than Restricted
Encumbrances),
38
against the claims and demands of all persons whomsoever, at Mortgagor's sole
cost and expense. No title company may rely on any of the foregoing
representations or warranties or make any claim in connection therewith by way
of subrogation or otherwise.
Section 5.7. After-Acquired Property; Further Assurances; Recording.
All property, real, personal or mixed or any interest therein (other
than Excepted Property), of every kind and description and wheresoever
situate, which may be hereafter acquired by Mortgagor, the Company or any of
its Subsidiaries (including, without limitation, fee title to any Leased Land)
which shall be used or materially useful in connection with the Trust Estate
or any part thereof or shall otherwise materially relate to the operation of
the Casino Hotel or which shall be acquired by Mortgagor or the Company or any
of its Subsidiaries from proceeds due to an Event of Loss with respect to the
Premises in accordance with the provisions of Section 5.15 of the Trust
Indenture, shall immediately upon the acquisition thereof by Mortgagor, the
Company or any of its Subsidiaries, and without any further mortgage,
conveyance or assignment, become subject to the Lien of this Mortgage as fully
as though now owned by Mortgagor and covered by the Granting Clauses.
Nevertheless, Mortgagor, the Company or any of its Subsidiaries, as
applicable, shall do, execute, acknowledge and deliver all and every such
further acts, conveyances, mortgages, financing statements and assurances as
Mortgagee shall require for accomplishing the express purposes of this
Mortgage and the Trust Indenture.
Mortgagor shall, as provided in Section 5.13, from time to time
subject to the Lien of this Mortgage its right, title and interest under all
Leases.
Mortgagor shall use reasonable efforts to ensure that all Operating
Assets or any interest therein hereafter acquired by Mortgagor, the Company or
any of its Subsidiaries shall be assignable to Mortgagee, and to the extent
such assignment to Mortgagee requires the consent of any governmental
authority or any other Person, Mortgagor shall use all reasonable efforts to
obtain such consent or a waiver thereof.
Mortgagor, the Company or any of its Subsidiaries, as applicable,
shall cause this instrument (or other appropriate instruments) 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
39
and filed, and at all times to be kept recorded, registered and filed, and
shall 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 Mortgagee to fully preserve and
protect the rights of 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 first, (other than with respect to Acquired Indebtedness permitted by
the terms of Section 5.11 of the Trust Indenture) mortgage Lien of record and
a valid first (other than with respect to Acquired Indebtedness permitted by
the terms of Section 5.11 of the Trust Indenture) priority security interest
on the Trust Estate subject to Permitted Liens, other than Restricted
Encumbrances.
Mortgagor shall pay all filing or recording fees, and all expenses
incident to 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, 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.
Mortgagor shall furnish to Mortgagee promptly after the acquisition
hereafter by Mortgagor, the Company or any of its Subsidiaries of any fee
interest or leasehold interest in real property (i) material to the operation
of Mortgagor, (ii) which is necessary for the normal operation of the Casino
Hotel in accordance with all Legal Requirements and all Permits or (iii) which
shall be acquired by Mortgagor or the Company or any of its Subsidiaries from
proceeds due to an Event of Loss with respect to the Premises in accordance
with the provisions of Section 5.15 of the Trust Indenture, (a) a mortgagee
policy of title insurance on the most recent form of American Land Title
Association standard loan policy, extended coverage, which policy shall (i)
contain all such endorsements and affirmative insurance, to the extent
reasonably applicable and available at the then standard published rates for
the State of New Jersey (or if there shall be no such published rates, at
commercially reasonable premiums), as is contained in the Original Policy and
(ii) evidence that title to such real property
40
is subject to no Liens or encumbrances, other than Permitted Liens, which
would (A) render title unmarketable or (B) violate any other provision of this
Mortgage or the Trust Indenture, (b) an as-built survey meeting the "Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys", certified
within 60 days prior to the acquisition date by a surveyor licensed in the
State of New Jersey using the same form of certification as that contained in
the surveys of the Premises delivered to Mortgagee on the date of this
Mortgage and (c) an Officers' Certificate certifying that the mortgagee policy
of title insurance and survey delivered pursuant to clauses (a) and (b)
comply, respectively, with the provisions of such clauses (a) and (b).
Notwithstanding anything contained herein or in the Trust Indenture
to the contrary, neither Mortgagor, the Company nor any of its Subsidiaries
may acquire any property, real, personal or mixed or any interest therein
(other than Excepted Property), of every kind and description and wheresoever
situate (including, without limitation, fee title to any Leased Land), which
shall be used or materially useful in connection with the Trust Estate or any
part thereof or shall otherwise materially relate to the operation of the
Casino Hotel or which shall be acquired by Mortgagor or the Company or any of
its Subsidiaries from proceeds due to an Event of Loss with respect to the
Premises in accordance with the provisions of Section 5.15 of the Trust
Indenture, unless Mortgagor, the Company or any of its Subsidiaries, as
applicable, shall comply with the provisions of this Section 5.7.
Section 5.8. Payment of Taxes and Certain Claims; Maintenance of Properties;
Compliance with Legal Requirements and Insurance Requirements.
Mortgagor shall:
(a) subject to the provisions of Section 5.9, pay or cause to be
paid before the date on which any fine, penalty, interest or cost may be added
for nonpayment (but no later than when the same are payable by 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,
41
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, foreseen or unforeseen, of every character
(including, without limitation, 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 (i) 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 (ii) 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 or the Trust Indenture, Mortgagor shall not be required to pay any
income, profits or revenue tax upon the income of Mortgagee or the Holders nor
any franchise, excise, corporate, estate, inheritance, succession, capital
levy or transfer tax of Mortgagee or the Holders nor any interest, additions
to tax or penalties in respect thereof, unless such tax is imposed, levied or
assessed in substitution for any Imposition that Mortgagor is required to pay
pursuant to this Section 5.8. Mortgagor shall deliver to Mortgagee, at
Mortgagee's request, official receipts or other proof evidencing payments of
any Impositions in accordance with the requirements of this Section 5.8.
Mortgagor shall not be entitled to any credit for taxes or assessments paid
against the Mortgage Notes;
(b) except for such property which Mortgagor may dispose of or
replace pursuant to Section 2.2 and the terms of the Trust Indenture, maintain
and keep all of Mortgagor's properties used or useful in the conduct of
Mortgagor's business, 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 shall make or cause to be made all
such needful and proper repairs, renewals and replacements thereto consistent
with the standards of first-class casino and hotel complexes 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 first-class casino and hotel complexes in
Atlantic City, New Jersey;
(d) subject to the provisions of Section 5.9, (i) comply with all
Legal Requirements and Insurance
42
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,
(ii) procure, maintain and comply with all Permits required for (1) the use of
the Casino as a gaming and gambling facility, (2) the on-premises consumption
of alcoholic beverages at the Casino Hotel and (3) 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, (iii) comply with all obligations of Mortgagor under, and keep in
full force and effect, all easements which in any respect inure to the benefit
of, or otherwise affect, the Trust Estate or any part thereof, if the failure
to comply with the same would impair Mortgagee's security hereunder, and (iv)
without limiting the generality of clause (iii), 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 Mortgagee's security
hereunder. Without limiting the generality of the foregoing, Mortgagor
represents and warrants that at the time of the execution of this Mortgage,
Mortgagor is in compliance with the requirements of clauses (i), (ii), (iii)
and (iv) above; and
(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 federal, state or local purposes, or the manner of the
operation of any such taxes, so as to affect the interest of Mortgagee, pay
the full amount of such new or additional taxes.
Section 5.9. Permitted Contests.
Notwithstanding anything in this Mortgage to the contrary,
Mortgagor, at Mortgagor's expense, may 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 (including, without limitation, any Superior
Instrument Requirement) affecting the Trust Estate or any part thereof or any
claims of holders of F,F&E Financing Agreements, mechanics, materialmen,
suppliers, or vendors or Lien therefor, 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
43
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 Mortgagor,
Mortgagee, the Holders, the Secured Beneficiaries and the Trust Estate, (b)
neither the Trust Estate nor any interest therein would be in any significant
danger of being sold, forfeited, or lost, (c) such action will not result in
the termination of any Facility Lease, (d) in the case of a Legal Requirement,
neither the Secured Beneficiaries, including, without limitation, the Holders,
nor the Mortgagee shall be in any significant danger of any civil liability or
any danger of any criminal liability, and the failure of 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 Mortgagor to comply therewith shall not
affect the validity of any insurance required to be maintained by Mortgagor
hereunder.
Section 5.10. Mechanics' and Other Liens.
Mortgagor shall cause to be removed, all statutory Liens of
carriers, warehousemen, mechanics, landlords, laborers, materialmen, repairmen
or other like Liens arising by operation of law in the ordinary course of
business and consistent with industry practices and Liens on deposits made to
obtain the release of such Liens if (i) the underlying obligations are overdue
for a period of more than 60 days or (ii) such Liens are not being contested
in good faith and by appropriate proceedings by the Company or any of its
Subsidiaries and adequate reserves with respect thereto are maintained on the
books of the Company or any of its Subsidiaries, as the case may be, in
accordance with GAAP and the provisions of Section 5.9 and in general shall do
or cause to be done everything necessary so that the Lien hereof shall be
fully preserved, at the cost of Mortgagor, without expense to Mortgagee.
Section 5.11. To Insure.
(a) Mortgagor, at Mortgagor's expense, shall maintain with
Insurers:
(i) insurance with respect to 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
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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 boilers and similar apparatus located
on such insurable properties, in amounts at all times sufficient to
prevent Mortgagor from becoming a coinsurer within the terms of the
applicable policies, but in any event such insurance shall be maintained
in not less than the greatest of the following (the "Insurance Amount"):
(A) 100% of the then Full Insurable Value of such insurable properties,
determined from time to time (but not less frequently than once in any 36
calendar months), by an Independent appraiser or Insurer, (B) the then
outstanding principal amount of Indebtedness under the Debt Documents or
(C) the amount required to be maintained pursuant to the Material
Instrument Requirements;
(ii) 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, if such insurance
cannot be obtained in an amount not less than the Insurance Amount, in
such lesser amount as may then be so obtainable;
(iii) comprehensive general liability insurance, including,
without limitation, blanket contractual liability coverage, broad form
property damage, independent contractor's coverage and personal injury
coverage against any and all claims arising out of or connected with the
possession, use,, leasing, operation or condition of such insurable
properties, in an amount not less than $100,000,000 combined single limit
coverage for personal injury and property damage with respect to any one
occurrence, which may be under an umbrella policy. Anything contained in
this clause (iii) to the contrary notwithstanding, the Material
Instrument Requirements with respect to the kinds and amount of insurance
described in this clause (iii) shall be satisfied by Mortgagor;
(iv) workers' compensation insurance to the extent required by
law;
(v) business interruption insurance covering not less than 6
months of loss;
(vi) to the extent available for a commercially reasonable
premium, flood insurance in an
45
amount not less than the Insurance Amount, or, if such insurance cannot
be obtained in an amount not less than the Insurance Amount, such lesser
amount as may then be so obtainable but in no event less than
$100,000,000; and
(vii) such other insurance with respect to such insurable
properties against loss or damage of the kinds (A) from time to time
customarily insured against by persons owning or using first-class casino
and hotel complexes in Atlantic City, New Jersey and (B) required to be
maintained pursuant to any Material Instrument Requirements.
Notwithstanding the foregoing, to the extent not violative of any
Material Instrument Requirements, Mortgagor may maintain deductibles with
respect to the insurance policies described in clauses (i), (ii), (iii), (v),
(vi) and (vii) above in accordance with standard industry practice with
respect to the operation of a first-class casino hotel.
(b) (i) Each policy of insurance maintained by Mortgagor pursuant
to Section 5.11(a) shall, (A) except in the case of workers' compensation
insurance, name Mortgagor as an insured and shall name as additional insureds
(1) Mortgagee and (2) to the extent required by the Material Instrument
Requirements, the lessors under any Facility Leases, (B) provide that all
insurance proceeds for losses, except in the case of comprehensive general
liability insurance and workers' compensation insurance, be payable solely to
Mortgagee, subject to any Material Instrument Requirements, include effective
waivers (whether under the terms of any such policy or otherwise) by the
insurer of all claims for insurance premiums against all loss payees and named
insureds (other than Mortgagor) and all rights of subrogation against any
named insured, (D) except in the case of comprehensive general liability and
workers' compensation insurance, provide that any losses shall be payable
notwithstanding (1) any act, failure to act, negligence of, or violation or
breach of warranties, declarations or conditions contained in such policy by
Mortgagor or Mortgagee or any other named insured or loss payee, (2) the
occupation or use of the insurable properties for purposes more hazardous than
permitted by the terms of the policy, (3) any foreclosure or other proceeding
or notice of sale relating to the insurable properties or (4) any change in
the title to or owners hip or possession of the insurable properties, (E)
contain a non-contributory mortgagee clause in favor of Mortgagee, and (F)
provide that if all or any part of such policy is cancelled, terminated or
expires, the insurer will forthwith give notice thereof
46
to each named insured and loss payee and that no cancellation, non-renewal,
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. Mortgagor may effect the insurance required under
this Section 5.11 under blanket and/or umbrella policies covering properties
owned or leased by Affiliates of Mortgagor; provided, that such policies
otherwise comply with this Mortgage and provide that the amount of coverage
afforded thereunder with respect to the Trust Estate shall not be reduced by
claims thereunder against such other properties.
(ii) Mortgagor may effect the insurance required under this
Section 5.11 under blanket and/or umbrella policies covering properties owned
or leased by Affiliates of Mortgagor; provided, that (A) such policies
otherwise comply with this Mortgage, (B) except with respect to flood
insurance and earthquake insurance, provide that the amount of coverage
afforded thereunder with respect to the Trust Estate shall not be reduced by
claims thereunder against such other properties' and (C) in the case of flood
insurance provide that the amount of coverage afforded thereunder with respect
to the Trust Estate shall not be reduced below $100,000,000 by reason of
claims thereunder against such other properties.
(c)Mortgagee shall not be responsible for effecting or renewing any
insurance or for the responsibility or solvency of the insurers.
(d) 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 is permitted by Material
Instrument Requirements.
Section 5.12. Limitations on Building Demolition, Alterations, Improvements
and New Construction.
Unless an Event of Default shall have occurred and be continuing,
Mortgagor shall have the right at all times to make or permit such demolition,
alterations, improvements or new construction, structural or otherwise (herein
sometimes called collectively "Alterations" and each, individually, an
"Alteration"), of or on the Trust Estate, to be made in all cases subject to
each of the following conditions:
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(a) No Alteration shall be undertaken or carried out except in
conformity with all Material Instrument Requirements, Legal Requirements and
Insurance Requirements.
(b) If any Alteration, together with other Alterations that
constitute a single construction plan or project (whether or not accomplished
in several stages or procedures) is material to the Premises taken as a whole
(a "Material Alteration"), the building or buildings, structures or other
improvements as so improved or altered, upon the completion of the work, shall
be of a value not less than the value of such building or buildings,
structures or other improvements immediately prior to the making of such
Material Alteration.
(c) Any Material Alteration shall be conducted under the
supervision of an Architect, and upon Mortgagee's request therefor, detailed
plans and specifications and cost estimates therefor, prepared and approved in
writing by such Architect and accompanied by a certificate of such Architect
stating that such plans and specifications are in compliance with all Legal
Requirements and Insurance Requirements shall be delivered to Mortgagee.
(d) No Alteration which is material to the operation of the Company
and its Subsidiaries taken as a whole shall be undertaken until Mortgagor has
furnished to Mortgagee, at 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 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, guaranteeing the performance and completion of
such construction, substantially in conformity with the said 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 Mortgagor, free and
clear of all Liens, claims and liabilities for the cost of such Alterations.
If such surety bond or bonds shall be unobtainable Mortgagor shall deliver to
Mortgagee security by cash, letter of credit or other guarantee, affording
substantially the same protection as would such bond or bonds. If Mortgagor
shall require any contractor performing a Material Alteration to deliver any
surety bonds or bonds, covering performance, and labor and material
48
payments with respect to the work to be so performed, naming Mortgagor as
obligee, such bond or bonds shall name Mortgagee as co-obligee.
(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, lock-outs, 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 Mortgagor excepted.
(f) No Alterations of any kind shall be made which shall change the
use of the Casino Hotel from its use as a gaming and hotel facility.
(g) Mortgagor shall maintain, or shall require its contractors to
maintain, at all times during the performance of Material Alterations, in
addition to any insurance required to be maintained under Section 5.11 hereof,
appropriate workers' compensation insurance covering all persons employed for
such Material Alterations to the extent required by applicable law, and
comprehensive general liability insurance expressly covering the additional
hazards due to such Material Alterations. Each such policy of insurance shall
comply with the provisions of Section 5.11(b), and Mortgagor shall comply with
Subsections (c) and (d) of Section 5.11 in connection with all such insurance.
Section 5.13. Leases.
Mortgagor shall not (except in accordance with the provisions of the
Trust Indenture):
(a) lease the Trust Estate substantially as an entirety to any
Person, nor shall Mortgagor lease either the Casino Hotel or the Casino or the
Hotel or any parking facilities located on the Parking Parcel or the Parking
Parcel substantially as an entirety to any Person;
(b) 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;
(c) receive or collect, or permit the receipt or collection of, any
rental payments under any Lease more than one month in advance of the
respective periods in respect of which they are to accrue, except that, in
49
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;
(d) collaterally assign, transfer or hypothecate (other than to
Mortgagee hereunder and except as permitted by the Trust Indenture) (i) any
rental payment under any Lease whether then due or to accrue in the future,
(ii) the interest of Mortgagor as landlord under any Lease or (iii) the rents,
issues or profits of the Trust Estate;
(e) after the date hereof, enter into any Lease, or renew any
Lease, unless such Lease contains terms to the effect as follows:
(i) the Lease and the rights of the tenants thereunder shall be
subject and subordinate to the rights of Mortgagee under this Mortgage,
(ii) the Lease may be assigned by the landlord thereunder to
Mortgagee,
(iii) 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, and
(iv) the rights of the tenant shall be subject and subordinate
to the rights of the lessee under any new Lease permitted by the terms of
the Ground Leases); or
(f) modify any Lease with respect to the matters described in
clauses (i) through (iv) of paragraph (e).
If Mortgagor enters into a Lease (other than with Affiliate of
Mortgagor) for a term of not less than 3 years, Mortgagee shall deliver a
non-disturbance and attornment agreement substantially in the form of Schedule
5 hereto, following receipt of a Mortgagor's Request. Mortgagor shall, upon
demand, reimburse Mortgagee for any costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by Mortgagee in connection with
the preparation, review and delivery of such non-disturbance and attornment
agreements. Mortgagee shall, from time to time, after receipt of a Mortgagor
Request therefor (accompanied by an Officers' Certificate stating
50
that said conditions have been satisfied) execute instruments in form and
substance reasonably satisfactory to Mortgagee confirming the permissibility
of a modification, termination or surrender of any Lease, other than a
modification described in paragraph (f) of this Section 5.13.
Promptly after the execution and delivery hereof, Mortgagor shall
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, Mortgagor shall 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 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 Mortgagee shall at any time be changed, Mortgagor
shall 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 Mortgagee.
Mortgagor shall 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 Mortgagor shall promptly deliver
to Mortgagee, upon request, a copy of each such acknowledgment of receipt
which it is able to obtain. Mortgagee shall not be responsible for securing
or causing Mortgagor to secure any such acknowledgment.
Section 5.14. Compliance Certificates.
Mortgagor shall comply with the provisions of Section 5.7 of the
Trust Indenture, the terms of which are incorporated herein by reference.
Section 5.15. Intentionally Omitted.
Section 5.16. To Keep Books; Inspection by Mortgagee.
Mortgagor will keep proper books of record and account, in which
full and correct entries shall be made of all dealings or transactions of or
in relation to the properties, business and affairs of Mortgagor in accordance
with generally accepted accounting principles consistently applied. Said
books shall be maintained in an office located either in Atlantic City, New
Jersey or in the Borough of Manhattan, City of New York, State of New York.
Mortgagor shall at any and all times, upon
51
request of Mortgagee and at the expense of Mortgagor, permit Mortgagee and its
representatives to inspect the Casino Hotel and any other buildings,
structures and improvements now or hereafter located on the Land and the books
of account, records, reports and other papers of Mortgagor, and to make copies
and extracts therefrom, and will afford and procure a reasonable opportunity
to make any such inspection (provided, that any such inspection shall not
unreasonably interfere with the business operations of Mortgagor), and
Mortgagor will furnish to Mortgagee any and all information as Mortgagee may
reasonably request, with respect to the performance by Mortgagor of its
covenants in this Mortgage.
Section 5.17. Advances by Mortgagee.
If Mortgagor shall fail to perform any of the covenants, terms,
provisions or conditions contained in this Mortgage and such failure shall
continue for 10 days following notice thereof given by Mortgagee (or at any
time, without notice, in case of emergency), 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, term, provision or
condition on behalf of Mortgagor; and all moneys so used, paid or advanced by
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 applicable Debt Documents, shall be immediately due
and payable by Mortgagor to Mortgagee and all such moneys, costs and expenses
shall be secured by the Lien of this Mortgage prior to any Indebtedness
secured hereby. No such advance or payment by Mortgagee shall relieve
Mortgagor from any default hereunder or impair any right or remedy of
Mortgagee.
Section 5.18. Waiver of Stay, Extension or Usury Laws.
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 wherever enacted which would prohibit or forgive Mortgagor from
paying all or any portion of the Obligations secured by this Mortgage,
wherever enacted, now or at any time hereafter in force, or which may
otherwise affect the covenants or the performance of this Mortgage; and
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 shall not
hinder, delay or impede the execution of any power herein granted to
Mortgagee, but shall suffer and permit
52
the execution of every such power as though no such law had been enacted.
Section 5.19. Intentionally Omitted.
Section 5.20. Facility Leases.
(a) Subject to the provisions of Sections 4.3 and 5.15 of the Trust
Indenture, Mortgagor shall do or cause to be done all things necessary to
preserve and keep unimpaired the rights of Mortgagor, as lessee under all
Facility Leases, and to prevent any termination, surrender, cancellation,
forfeiture or impairment of any thereof, except to the extent that the
underlying fee estate thereof has been mortgaged to Mortgagee as of the date
hereof. 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 Facility 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 Facility Lease. Upon receipt by Mortgagee from a Lessor of any
written notice of default by the lessee thereunder, Mortgagee may rely thereon
and take any action Mortgagee deems necessary in its sole discretion to
prevent or to cure any default by Mortgagor in the performance of or
compliance with any of the agreements, covenants, terms or conditions imposed
upon or assumed by Mortgagor as lessee under such Facility Lease, even though
the existence of such default or the nature thereof be questioned or denied by
Mortgagor or by any party on behalf of Mortgagor. Without limiting the
generality of Section 3.8, Mortgagor hereby expressly grants to Mortgagee, and
agrees that 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
Mortgagee, in its sole discretion, deems necessary or desirable for the
purpose permitted by the immediately preceding sentence, subject only to
applicable Legal Requirements. Without limiting Mortgagor's obligations or
Mortgagee's rights set forth above or limiting Mortgagee's other remedies
under this Mortgage, Mortgagee may pay and expend such sums of money as
Mortgagee in its sole discretion deems necessary for any such purpose, and
Mortgagor hereby agrees to pay to Mortgagee immediately and without demand,
all such sums so paid and expended by Mortgagee, together with interest
thereon from the date of each such payment at the highest rate of interest set
forth in the Mortgage Notes. All sums so paid and expended by Mortgagee, and
the interest thereon, shall be added to and be secured by the Lien of this
Mortgage.
53
(b) Subject to the provisions of Sections 4.3 and 5.15 of the Trust
Indenture, Mortgagor further covenants and agrees as follows:
(i) Mortgagor shall not without the consent of Mortgagee,
surrender, terminate or cancel modify, change, supplement, alter or amend
any Facility Lease, either orally or in writing, if an impairment of the
security granted under this Mortgage would result therefrom. As further
security for the repayment of the indebtedness secured hereby and for the
performance of the covenants herein and in each Facility Lease contained,
Mortgagor hereby assigns to Mortgagee all of Mortgagor's rights,
privileges and prerogatives as lessee under each Facility Lease to
terminate, cancel, modify, change, supplement, alter or amend such
Facility Lease, and any such termination, cancellation, modification,
change, supplement, alteration or amendment of a Facility Lease in
violation of the terms hereof, without the prior 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 any Indebtedness secured hereby or
(B) Mortgagee exercises its rights under Section 3.9, Mortgagee shall
have no right to terminate, cancel, modify, change, supplement, alter or
amend any Facility Lease. Mortgagee shall, from time to time, after
receipt of a Mortgagor Request therefor (accompanied by an Officers'
Certificate stating that said conditions have been satisfied) execute
instruments in form and substance reasonably satisfactory to Mortgagee
confirming the permissibility of the modification of any Facility Lease
described in this clause (i).
(ii) Solely for the benefit of Mortgagee, the Holders and no
other person, no release or forbearance of any of Mortgagor's obligations
under any Facility Lease, pursuant to such Facility Lease or otherwise,
shall release Mortgagor from any of Mortgagor's other obligations under
this Mortgage.
(iii) Unless Mortgagee shall otherwise expressly consent in
writing, the fee title to the Leased Facilities and Mortgagor's leasehold
estates therein shall not merge and shall always remain separate and
distinct, notwithstanding the union of said estates either in the Lessor
or in the lessee, or in a third party by purchase or otherwise.
54
(iv) Mortgagor shall not appoint or consent to the appointment
of an arbitrator pursuant to the terms of the Ground Leases without the
prior consent of Mortgagee. Mortgagor shall promptly notify Mortgagee in
writing of any request made by Mortgagor, as lessee under any Facility
Lease, or any of the Lessors, for arbitration proceedings under any
Facility Lease and of the institution of any arbitration proceedings, as
well as all proceedings thereunder. Mortgagor shall promptly deliver to
Mortgagee a copy of the determination of the arbitrators in each such
arbitration proceeding. Mortgagee shall have the right to participate in
such arbitration proceedings in association with Mortgagor or on its own
behalf as an interested party.
(v) Mortgagor shall not consent to the subordination of any
Facility Lease to any mortgage, deed of trust or other Lien on the fee
interest of the Lessor.
(vi) If (A) Mortgagor exercises its option(s) under the terms
of any Ground Lease to purchase any portion of the Ground Lease Land,
Mortgagor shall deliver a copy of its election to exercise such option
within 5 days after Mortgagor has delivered notice of such election to
the Lessor or (B) Mortgagor acquires fee simple title or any other
estate, title or interest in any Leased Facility (pursuant to the options
described in clause (A) or otherwise), Mortgagor shall promptly notify
Mortgagee of such acquisition and, on request by 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 Mortgagee be
required or desirable to carry out the intent and meaning of clause (x)
of Granting Clause Second.
(vii) Within 5 days after Mortgagor's receipt of any notice of
any motion, application or effort to reject any Facility 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 ("Comparable Provision"), Mortgagor shall give notice thereof
to Mortgagee. Mortgagor hereby (A) assigns to Mortgagee any and all of
Mortgagor's rights as lessee under Section 365(h) of the Code or any
Comparable Provision and (B) covenants that it shall not elect to
55
treat any Facility Lease as terminated pursuant to Section 365(h) of the
Code or any Comparable Provision without the prior consent of Mortgagee
and (C) agrees that any such election by Mortgagor without such consent
shall be null and void.
(viii) Without limiting the generality of the foregoing, to the
extent permitted by applicable law, Mortgagor hereby unconditionally
assigns, transfers and sets over to Mortgagee all of Mortgagor's claims
and rights to the payment of damages arising from any rejection by Lessor
of any Facility Lease under the Code or any Comparable Provision.
Mortgagee shall have the right to proceed in its own name or in the name
of Mortgagor in respect of any claim, suit, action or proceeding relating
to the rejection of any Facility Lease, including, without limitation,
the right to file and prosecute, in cooperation with 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 Mortgagee in damages arising
out of the rejection of any Facility Lease as aforesaid shall be applied
first to all reasonable costs and expenses of Mortgagee (including,
without limitation, reasonable attorneys' fees, disbursements and court
costs) incurred in connection with the exercise of any of its rights or
remedies under this Section 5.20, and thereafter as provided in Section
3.3.
(ix) If there shall be filed by or against Mortgagor a petition
under the Code or any Comparable Provision and Mortgagor, as lessee
under any Facility Lease, shall determine to reject such Facility Lease,
Mortgagor shall give Mortgagee not less than 10 days' prior notice of the
date on which Mortgagor shall apply to the Bankruptcy Court or other
judicial body with appropriate jurisdiction for authority to reject such
Facility Lease. Mortgagee shall have the right, but not the obligation,
to serve upon Mortgagor within such 10-day period a notice stating that
(a) Mortgagee demands that Mortgagor assume and assign such Facility
Lease to Mortgagee pursuant to Section 365 of the Code or any Comparable
Provision and (b) Mortgagee covenants to cure or provide adequate
assurance of prompt cure of
56
all defaults and provide adequate assurance of future performance under
such Facility Lease. If Mortgagee serves upon Mortgagor the notice
described in the preceding sentence, Mortgagor shall not seek to reject
such Facility Lease and shall comply with the demand provided for in
clause (a) of the preceding sentence within 30 days after the notice
shall have been given subject to the performance by Mortgagee of the
covenant provided for in clause (b) of the preceding sentence. The
foregoing provisions of this Section 5.20(x) shall not apply to the
extent not permitted by applicable law. Effective upon the entry of an
order for relief in respect of Mortgagor under Chapter 7 of the Code or
any Comparable Provision, Mortgagor hereby assigns and transfers to
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 such Facility Lease may be rejected or assumed.
(x) Mortgagor shall promptly give to Mortgagee copies of (A)
all notices of default and (B) any other communications or notices with
respect to events that relate to the possible impairment of the security
of this Mortgage, which Mortgagor shall give or receive under any
Facility Lease and shall promptly notify Mortgagee of any default under
any Facility Lease on the part of the Lessor or Mortgagor.
(xi) Mortgagor shall enforce with due diligence all of the
obligations of the Lessor under each Facility Lease, to the end that
Mortgagor may enjoy all of the rights and privileges granted to it under
the Facility Leases.
(xii) Mortgagor shall notify Mortgagee within 5 days after the
transfer of a fee interest in any Leased Facility or any portion thereof
to or from an Affiliate.
(xiii)The Company or any of its Subsidiaries shall not at any
time hereafter acquire fee title to the Leased Land or any portion
thereof unless simultaneously with such acquisition the Company or such
Subsidiary and Mortgagor execute and exchange (and deliver to Mortgagee
an executed counterpart of) an instrument in form and substance
satisfactory to Mortgagee providing that so long as the Company or such
Subsidiary owns such fee title (A) the Company or such Subsidiary shall
not terminate the applicable Facility Lease for any reason
57
whatsoever (including, without limitation, due to the default of
Mortgagor under such Facility Lease) and (B) the Company or such
Subsidiary shall not accept, and, if tendered by Mortgagor shall promptly
return to Mortgagor, any payment of rent or other charges payable under
such Facility Lease in excess of the amount required to pay the debt
service and other sums payable under any mortgage affecting the Company's
or such Subsidiary's fee interest in the applicable Leased Facility (and
the Company or such Subsidiary shall use such funds only to pay its debt
service obligations and other sums payable under such mortgage) at any
time that an Event of Default shall have occurred and be continuing under
this Mortgage or the Trust Indenture.
(c) Mortgagor hereby represents and warrants that all fixed rent
(as defined in the Ground Leases), 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 Mortgagor has not received notice of its failure to pay
any other amounts payable under the Ground Leases which has not been cured.
(d) Subject to the provisions of Section 5.20(b)(iii), if both the
lessor's and lessee's estates under any Facility Lease or any portion thereof
shall at any time become vested in one owner, this Mortgage and the Lien
created hereby shall nevertheless not be 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 a first leasehold
mortgagee.
(e) Mortgagor hereby acknowledges that if any Facility Lease shall
be terminated prior to the natural expiration of its term due to default by
the lessee thereunder, and if pursuant to such Facility Lease, Mortgagee or
its designee shall acquire from the Lessor a new lease of the Leased Facility
or any portion thereof, 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) Each Facility Lease hereafter entered into or assumed by
Mortgagor as lessee or sublessee shall contain provisions (i) permitting the
assignment of the same to Mortgagee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed; and (ii) providing protection
to Mortgagee, as leasehold mortgagee, not less favorable than the provisions
contained in the Ground Leases.
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Section 5.21. Intentionally Omitted.
Section 5.22. Indemnification.
Mortgagor shall reimburse Mortgagee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in accordance with
the terms hereof. Such expenses shall include the reasonable compensation,
disbursements and expenses of Mortgagee's agents, accountants, experts and
counsel.
Mortgagor shall indemnify Mortgagee (in its capacity as Mortgagee)
and each of its officers, directors, attorneys-in-fact and agents for, and
hold it harmless against, any claim, demand, expense (including but not
limited to reasonable compensation, disbursements and expenses of Mortgagee's
agents and counsel), loss or liability incurred by them without negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with the administration of this Mortgage and their rights or duties hereunder
including the reasonable costs and expenses of defending themselves against
any claim or liability in connection with the exercise or performance of any
of its powers or duties hereunder. Mortgagee shall notify Mortgagor promptly
of any claim asserted against the Mortgagee for which it may seek indemnity.
Mortgagor shall defend the claim and Mortgagee shall provide reasonable
cooperation at Mortgagor's expense in the defense. Mortgagee may have
separate counsel and Mortgagor shall pay the reasonable fees and expenses of
such counsel; provided, that Mortgagor will not be required to pay such fees
and expenses if it assumes Mortgagee's defense and there is no conflict of
interest between Mortgagor and Mortgagee in connection with such defense.
Mortgagor need not pay for any settlement made without its written consent.
Mortgagor need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by Mortgagee through its negligence, bad
faith or willful misconduct.
When Mortgagee incurs expenses or renders services after an "Event
of Default" specified in Section 7.1 (f) or (g) of the Trust Indenture occurs,
the expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
Mortgagor's obligations under this Section 5.22 shall survive the
resignation or removal of Mortgagee, the discharge of the Obligations and any
rejection or termination of this Mortgage under any Bankruptcy Law.
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Section 5.23. Acceptance. By Mortgagee's acceptance of this
Mortgage, Mortgagee agrees to be bound by the terms hereof.
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IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly
executed and attested, all as of the day and year first above written.
XXXXX XXX XXXXX ASSOCIATES
By: Xxxxx Atlantic City Corporation, a general
partner
Witness: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxxx X. Xxxxx
------------------- ------------------------
Xxxx X. Xxxxx Name: Xxxxxxxx X. Xxxxx
Title: Vice President
00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on December 10, 1997, before me, the
subscriber, a Notary Public of the State of New York, personally appeared
Xxxxxxxx X. Xxxxx, to me known, who, being by me duly sworn did depose
and say that he resides at Xxx Xxxxx Xxxx Xxx, Xxxxxxxxxx, X.X. 00000; that he
is Vice Presidentof Xxxxx Atlantic City Corporation, which is a general partner
of XXXXX XXX XXXXX ASSOCIATES, the partnership described in and which executed
the above instrument, and he acknowledged that he signed and delivered the
same on behalf of such managing general partner as his voluntary act and deed
and as the voluntary act and deed of said corporation on behalf of said
general partnership, pursuant to authority of the board of directors of said
corporation.
/s/ Xxxxxx Xxxxxxx
________________________________
Notary Public
XXXXXX XXXXXXX
Notary Public, State of New York
No. 01CH5086117
Qualified in New York County
Commission Expires Oct. 6, 1999
