SIXTH AMENDMENT TO OPERATING
LEASE AGREEMENT AND FIFTH AMENDMENT TO
EXPANSION OPERATING LEASE AGREEMENT
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
Lessor,
with
THE CLARIDGE AT PARK PLACE, INCORPORATED
Lessee
Dated: As of September 30, 1998
LOCATION OF PREMISES
Street Address: Indiana Avenue and Boardwalk
City: Atlantic City
County: Atlantic
State: New Jersey
This document was prepared by:
Leonard B. Mackey, Jr.
SIXTH AMENDMENT TO OPERATING
LEASE AGREEMENT AND FIFTH AMENDMENT TO
EXPANSION OPERATING LEASE AGREEMENT
THIS SIXTH AMENDMENT TO OPERATING LEASE AGREEMENT AND FIFTH AMENDMENT TO
EXPANSION OPERATING LEASE AGREEMENT (this "Sixth Amendment & Fifth Expansion
Amendment"), dated as of the 30th day of September, 1998, to (a) that certain
OPERATING LEASE AGREEMENT, dated as of the 31st day of October, 1983, by and
between ATLANTIC CITY BOARDWALK ASSOCIATES, L.P., a New Jersey limited
partnership having a place of business at 2880 West Meade Avenue, Suite 201, Las
Vegas, Nevada 89102 ("Lessor"), and THE CLARIDGE AT PARK PLACE, INCORPORATED, a
New Jersey corporation having its principal place of business at The Claridge
Hotel and Casino, Indiana Avenue and the Boardwalk, Atlantic City, New Jersey
08401 ("Lessee"), a Memorandum of which was recorded in the Atlantic County
Clerk's office on October 31, 1983, in Book 3850 Page 204 (the "Operating
Lease") and (b) that certain EXPANSION OPERATING LEASE AGREEMENT, dated as of
the 17th day of March, 1986 by and between Lessor and Lessee, a Memorandum of
which was recorded in the Atlantic County Clerk's office on March 18, 1986 in
Book 4215 Page 128 (the "Expansion Operating Lease").
W I T N E S S E T H:
WHEREAS, pursuant to the Operating Lease and the Expansion Operating
Lease, Lessor is leasing to Lessee certain land and air rights more particularly
described in Exhibits "A" and "B" respectively, annexed hereto and made a part
hereof, and the buildings and improvements located thereon, situate, lying and
being in the County and City of Atlantic, State of New Jersey, all as more
particularly defined in the Operating Lease and the Expansion Operating Lease;
and
WHEREAS, pursuant to that certain Amendment to Operating Lease
Agreement and the Expansion Operating Lease Agreement dated June 15, 1989,
between Lessor and Lessee (the "First Amendment"), Lessor and Lessee amended
certain terms and provisions of the Operating Lease and Expansion Operating
Lease; and
WHEREAS, pursuant to that certain Second Amendment to Operating Lease
Agreement and Expansion Operating Lease Agreement dated March 27, 1990 between
Lessor and Lessee (the "Second Amendment"), Lessor and Lessee further amended
certain terms and provisions of the Operating Lease and the Expansion Operating
Lease; and
WHEREAS, pursuant to that certain Third Amendment to Operating Lease
Agreement and Expansion Operating Lease Agreement dated as of August 1, 1991,
between Lessor and Lessee (the "Third Amendment"), Lessor and Lessee further
amended certain terms and provisions of the Operating Lease and the Expansion
Operating Lease; and
WHEREAS, pursuant to that certain Fourth Amendment to Operating Lease
Agreement dated as of January 31, 1994, between Lessor and Lessee (the "Fourth
Amendment"), Lessor and Lessee further amended certain terms and provisions of
the Operating Lease; and
WHEREAS, pursuant to that certain Fifth Amendment to Operating Lease
Agreement and Fourth Amendment to Expansion Operation Lease Agreement, dated as
of March 1, 1997, between Lessor and Lessee (the "Fifth Amendment"), Lessor and
Lessee further amended certain terms and provisions of the Operating Lease; and
WHEREAS, Lessor and Lessee have entered into an Expandable Wraparound
Mortgage Agreement, dated October 31, 1983, and amended as of March 17, 1986 and
as of June 15, 1989 (the Wraparound Mortgage Agreement, as so amended, is
hereinafter referred to as the "Wraparound Mortgage Agreement"), which
contemplated the execution and delivery by Lessor to Lessee of a Wraparound
Mortgage Note, dated October 31, 1983, which has been amended on several
occasions prior to the date hereof (such Wraparound Mortgage Note, as so
amended, is hereinafter referred to as the "Wraparound Mortgage Note"), and a
Wraparound Mortgage, dated October 31, 1983, which has been amended on several
occasions prior to the date hereof; and
WHEREAS, the Fifth Amendment provides "in the event the Lessee is
awarded a judgment or receives a settlement in connection with the Lessee's
claim against the general contractor or any other parties arising out of the
self-parking garage accident, an amount of proceeds from such award or
settlement not to exceed the outstanding balance of the Deferred Rent under
clause (ii) of Paragraph 1(b)" of the Fifth Amendment shall be paid to the
Lessor;
WHEREAS, the Lessee is considering a settlement offer in respect of
the claim described in the preceding Recital; however, Lessee may be unwilling
to enter into such settlement because after payment to the Lessor in accordance
with the provision quoted in the preceding Recital, the portion of the proceeds
of the settlement left to Lessee after such payment would not provide a material
benefit to the Lessee;
WHEREAS, the Lessor is willing to delete the provision described in
the second preceding recital as an inducement to the Lessee's entering into such
a settlement; and
WHEREAS, the parties now desire to further modify certain terms and
provisions of the Operating Lease and the Expansion Operating Lease, as same
have been amended by the First Amendment, Second Amendment, Third Amendment,
Fourth Amendment and Fifth Amendment.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. (a) The following language appearing in Paragraph 1(b) of the Fifth
Amendment is hereby deleted in its entirety (but without thereby limiting the
effect of such language (i) to set forth the agreement of the parties from March
1, 1997 to the date hereof or (ii) to characterize $867,593 of reduction in
Basic Rent as a rent abatement):
"(i) The Basic Rent payable on March 1, 1997 shall be reduced to
an amount so that the total amount of Basic Rent payable on March 1, 1997
shall be $1,927,607;
(ii) The foregoing reduction in Basic Rent consist of $867,953 of
rent abatement and $1,300,000 of Deferred Rent (as that term is defined in
the Third Amendment);
(iii) The $1,300,000 of Deferred Rent referred to in clause (ii)
above shall be paid by the Lessee to the Lessor under the circumstances set
forth in the Third Amendment and as follows: $25,000 shall be payable each
month after March of 1997 for the remainder of 1997, $50,000 shall be
payable monthly for the year 1998 and thereafter until the foregoing rent
deferral is paid in full, provided, however, that in the event the Lessee
is awarded a judgment or receives a settlement in connection with the
Lessee's claim against the general contractor or any other parties arising
out of the self-parking garage accident, an amount of proceeds from any
such award or settlement not to exceed the outstanding balance of the
Deferred Rent under clause (ii) above shall be paid to the Lessor;
(iv) For the period commencing on April 1, 1997 and ending on
December 31, 1997, and for each calendar year thereafter through and
including the calendar year ending on December 31, 2003, Basic Rent payable
during each such calendar year shall be abated in amounts to be determined
by Lessee (the "Abatement") in its reasonable discretion, provided that:
(A) Lessor shall have the right to limit the Abatement allocated
to any particular calendar year or to require the Lessee to pay
Additional Rent, to the extent required to cover the payments
described in subsections (1) and (2) of the last paragraph of
Section 1 of the First Amendment (which includes all payment due
under the Expandable Wraparound Mortgage Loan Agreement dated
October 31, 1983, as amended); and
(B) the Abatement, determined without reference to this clause
(B), shall be reduced by $83,333 for each month of the period
commencing on January 1, 1999 and ending on December 31, 2000;
$125,000 for each month of the calendar year 2001 and; $166,667
for each month of each calendar year thereafter through and
including the calendar year ending on December 31, 2003.
(b) The following language is hereby inserted in place of the language
deleted pursuant to subparagraph (a) above:
"(i) (A) If all of the conditions set forth in Sub-clauses (A)
and (B) of Paragraph 4 hereof are satisfied on February 1, 1999 (treating
each reference to "March 2, 1999" in those Sub-clauses as "February 1,
1999"), then the Basic, Additional and Expansion Rent payable on
February 1, 1999 shall be reduced to an amount so that the total amount of
Basic, Additional and Expansion Rent payable on February 1, 1999 shall be
$684,123.03, and (B) if all of such conditions are not satisfied on
February 1, 1999 but are satisfied on or before March 2, 1999, then the
Basic, Additional and Expansion Rent due on March 1, 1999 shall be reduced
to an amount so that the total amount of Basic, Additional and Expansion
Rent payable on March 1, 1999 shall be $665,198.50.
(ii) The foregoing reduction, if any, in Basic, Additional and
Expansion Rent payable on February 1, 1999 or March 1, 1999 consists of
$1,100,000, of Deferred Rent (as that term is defined in the Third
Amendment);
(iii) On the earlier of (x) the Maturity Date of the Wraparound
Mortgage Note, (y) such earlier date, if any, as the entire principal
amount of the Wraparound Mortgage Note becomes due and payable or (z) the
date on which any merger, consolidation or similar transaction to which the
Lessee or The Claridge Hotel and Casino Corporation ("CHCC") is a party or
any sale of all or substantially all of the assets of the Lessee or CHCC is
consummated or any change of control in the Lessee or CHCC occurs, the
Lessee shall pay the Lessor $3,500,000 in additional Basic Rent;
(iv) The $1,100,000 of Deferred Rent, if any, referred to in
clause (ii) above shall be paid by the Lessee to the Lessor under the
circumstances set forth in clause (vii) below and as follows: $25,000 shall
be payable monthly commencing January 1, 2000 and thereafter until the
foregoing rent deferral is paid in full;
(v) For the period commencing on April 1, 1997 and ending on
December 31, 1997, and for each calendar year thereafter through and
including the calendar year ending on December 31, 2004, Basic Rent payable
during each such calendar year shall be abated in amounts to be determined
by Lessee (the "Abatement") in its reasonable discretion, provided that:
(A) Lessor shall have the right to limit the Abatement allocated
to any particular calendar year or to require the Lessee to pay
Additional Rent, to the extent required to cover the payments
described in subsections (1) and (2) of the last paragraph of
Section 1 of the First Amendment (which includes all payment due
under the Expandable Wraparound Mortgage Loan Agreement dated
October 31, 1983, as amended); and
(B) the Abatement, determined without reference to this clause
(B), shall be reduced by $83,333 for each month of the period
commencing on January 1, 2000 and ending on December 31, 2000;
$130,000 for each month of the calendar year 2001; $180,000 for
each month of each calendar year thereafter through and including
the calendar year ending on December 31, 2003; and $130,000 for
each month of the period commencing on January 1, 2004 and ending
on December 31, 2004 (it being understood that it is the
intention of the parties that the purpose of this Sub-clause (B)
is to permit the Lessor to retain, out of the payments of Basic
Rent made by the Lessee to the Lessor for each month set forth in
this Sub-clause and after payment by the Lessor of its
obligations for such month but before giving effect to any
Deferred Rent payable to the Lessor for such month under clause
(ii) above and clause (vi) below or otherwise, the amount for
such month set forth in this Sub-clause);
(vi) The $1,300,000 of Deferred Rent referred to in clause (ii)
of Paragraph 1(b) of the Fifth Amendment shall be paid by the Lessee to the
Lessor under the circumstances set forth in clause (vii) below and as
follows: $25,000 shall be payable each month after March of 1997 for the
remainder of 1997, $50,000 shall be payable monthly for the year 1998 and
thereafter until the foregoing rent deferral is paid in full; and
(vii) Any portion of the $1,100,000 of Deferred Rent, if any,
referred to in clause (ii) above or of the $1,300,000 of Deferred Rent
referred to in clause (vi) above that at the time has not been paid shall
become due and payable (A) in full upon (x) the consummation of any merger,
consolidation or similar transaction to which the Lessee or CHCC is a party
or of any sale of all or substantially all the assets of the Lessee or of
CHCC, or (y) any change of control of the Lessee or of CHCC, and (B) in the
event the Lessee is awarded a judgment or receives a settlement in the
connection with Lessee's claim against the general contractor or any other
parties arising out of its self - parking garage accident in an amount
exceeding $4,000,000, in an amount up to 75% of such excess (but not
exceeding the aggregate amount of such Deferred Rent that has not been
paid).
2. This Sixth Amendment & Fifth Expansion Amendment is subject to
prior approval by the New Jersey Casino Control Commission (the "Commission")
and shall not become effective until approval by the Commission has been
granted. Lessee shall use its best efforts to obtain such consent as promptly as
practical.
3. This Sixth Amendment & Fifth Expansion Amendment shall not become
effective unless and until the Lessor and Lessee have entered into (a) an
amendment to the Restructuring Agreement, dated March 1, 1997, in the form
attached hereto as Exhibit A and (b) an amendment to the Wraparound Mortgage
Agreement and Wraparound Mortgage Note in the form attached hereto as Exhibit B.
4. This Agreement, other than clause (iii) of Paragraph 1(b), shall be
null and void ab initio unless (A) both of the following events have occurred on
or prior to March 2, 1999: (i) the Lessee shall have received at least
$2,200,000 (net of associated unpaid legal expenses) in connection with its
settlement of the parking garage litigation, and (ii) the Lessee or its parent
corporation shall have paid all amounts due to its public noteholders,
including, but not limited to, a payment of approximately $5,000,000 interest on
such notes due on February 1, 1999, and (B) no defaults shall exist under the
notes or under the first mortgage on the Lessee's premises at March 2, 1999 and
no events, acts or omissions have occurred (unless cured on or prior to March 2,
1999) or exist at March 2, 1999 which, with the passage of time, the giving of
notice or both, could result in such a default.
5. All of the obligations, terms and conditions set forth in the
Operating Lease and the Expansion Operating Lease, as same have been amended by
the First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment, and the Fifth Amendment, shall remain unchanged and in full force and
effect, except as specifically modified herein.
6. This Sixth Amendment & Fifth Expansion Amendment may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Sixth
Amendment & Fifth Expansion Amendment the day and year first above written.
Signed, Sealed and Delivered
the Presence of or Attested by:
/s/Barbara Constantine
_________________________________
Name:Barbara Constantine
Signed, Sealed and Delivered
in the Presence of or Attested
by:
/s/Frank A. Bellis, Jr.
_________________________________
Name: Frank A. Bellis, Jr.
Senior Vice President and General Counsel
LESSOR:
ATLANTIC CITY BOARDWALK
ASSOCIATES, L.P.
By:/s/Anthony C. Atchley
______________________________
Name: Anthony C. Atchley
Title: General Partner
LESSEE:
THE CLARIDGE AT PARK PLACE,
INCORPORATED
By: /s/Albert T. Britton
_____________________________
Name: Albert T. Britton
Title:President/Chief Operating Officer
STATE OF NEVADA )
: ss.:
COUNTY OF CLARK )
BE IT REMEMBERED, that before me, the subscriber, a Notary Public of
the State of Nevada, personally appeared ANTHONY C. ATCHLEY OF ATLANTIC CITY
BOARDWALK ASSOCIATES, L.P., a limited partnership, who, I am satisfied, is the
person who has signed the within instrument; and having first made known to me
the contents thereof, he thereupon acknowledged that he signed and delivered the
said instrument as his voluntary act and deed and as the voluntary act and deed
of ATLANTIC CITY BOARDWALK ASSOCIATES, L.P., a limited partnership.
/s/Barbara A. Constantine
__________________________________
Notary Public
My Commission Expires: January 7, 2000
STATE OF NEW JERSEY)
: ss.:
COUNTY OF ATLANTIC )
BE IT REMEMBERED, that before me, the subscriber, a Notary Public of
the State of New Jersey, personally appeared ALBERT T. BRITTON of THE CLARIDGE
AT PARK PLACE, INCORPORATED, a New Jersey corporation, and he thereupon
acknowledged that he signed the foregoing instrument as officer, that the seal
affixed to said instrument is the corporate seal of said corporation, and that
said instrument is the voluntary act and deed of said corporation, made by
virtue of authority from its Board of Directors, and as the voluntary act and
deed of THE CLARIDGE AT PARK PLACE, INCORPORATED, a corporation.
/s/Kathryn Loftus
__________________________________
Notary Public
My Commission Expires: October 26, 2003