SUBORDINATION AND INTERCREDITOR AGREEMENT
This Subordination and Intercreditor Agreement (this AAgreement@) made
this 29th day of July, 1999, by and among Commerce Bank, N.A., a national
banking association having an address at 1701 Route 70 East, Cherry Hill, New
Jersey 08034 (the ASenior Lender@),Penn National Gaming, Inc., a Pennsylvania
corporation having an address at 825 Berkshire Boulevard, Suite 200, Wyomissing,
Pennsylvania, 19620 ( the ASubordinate Lender@), and FR Park Racing, L.P., a New
Jersey limited partnership having an office at 3001 Street Road, Bensalem,
Pennsylvania 19010, Attention: Harold G. Handel, President (ABorrower@).
Recitals
A. Borrower is the owner of the fee estate in the premises located in
Monmouth County, New Jersey, commonly known as Freehold Raceway and more
particularly described on Schedule A annexed hereto and made a part hereof, and
the buildings and improvements located thereon (collectively, the AProject@).
B. Senior Lender and Borrower, together with GS Park Racing, L.P.
(ACo-Borrower@), entered into that certain Loan Agreement dated of even date
herewith (as hereinafter amended, modified, restated or supplemented from time
to time, the ASenior Loan Agreement@), pursuant to which Senior Lender made a
loan to Borrower and Co-Borrower in the original principal amount of
Twenty-Three Million and 00/100 Dollars ($23,000,000.00) (the ASenior Loan@),
all of which remains outstanding as of the date hereof, on the terms and
conditions set forth in the Loan Agreement.
C. The Senior Loan is evidenced by a certain Term Loan Note dated of
even date herewith made by Borrower and Co-Borrower in favor of Senior Lender
(the ASenior Note@) in the original principal amount of Twenty-Three Million and
00/100 Dollars ($23,000,000.00), which is secured by, among other things, a
first priority security interest in all of Borrower=s existing and future
personal property (including, without limitation, accounts, inventory,
equipment, general intangibles, fixtures, investment property, deposit accounts
and all proceeds thereof (collectively, AUCC Collateral@)), a certain Mortgage,
Security Agreement, and Fixture Filing dated of even date herewith made by
Borrower in favor of Senior Lender and encumbering the Project which shall be
forthwith recorded in the Clerk/Register of Monmouth County, New Jersey (the
AClerk=s Office@) (the ASenior Mortgage@) and an Assignment of Rents and Leases
of even date herewith given by Borrower in favor of Senior Lender which shall be
forthwith recorded in the Clerk=s Office (the ASenior Assignment of Rents@) (the
Senior Mortgage, together with the Senior Loan Agreement, the Senior Note, the
Senior Assignment of Rents and any other Loan Document (as said term is defined
in the Senior Loan Agreement), as any of the same hereafter may be modified,
extended or restated from time to time, collectively, the ASenior Loan
Documents@).
D. On January 28, 1999, Subordinate Lender made a loan to Borrower in
the original principal amount of Eleven Million Two Hundred Fifty Thousand and
00/100 Dollars ($11,250,000.00) (the ASubordinate Loan@), which Subordinate Loan
is evidenced by a certain Subordinated Secured Promissory Note dated January 28,
1999, made by Borrower in favor of Subordinate Lender (the ASubordinate Note@)
in the principal amount of Eleven Million Two Hundred Fifty Thousand and 00/100
Dollars ($11,250,000.00).
E. The Subordinate Note is secured by, among other things, a certain
Mortgage and Security Agreement dated January 28, 1999, made by Borrower in
favor of Subordinate Lender and encumbering the Project which was recorded in
the Clerk=s Office on February 4, 1999, in Mortgage Book 6694, Page 638 (the
ASubordinate Mortgage@) (the Subordinate Mortgage, together with the Subordinate
Note and any other instruments or agreements executed in connection with any of
the same may be modified, extended or restated from time to time, collectively,
the ASubordinate Loan Documents@).
F. Under the terms of the Senior Loan Agreement, it is a condition
precedent to Senior Lender=s obligation to make the Senior Loan that Subordinate
Lender agree to subordinate any lien now held by Subordinate Lender in respect
of the Project, and to subordinate its rights and interests under the
Subordinate Loan Documents, to the Senior Lender in respect to all or any assets
of Borrower, all in accordance with the terms and conditions of this Agreement.
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NOW, THEREFORE, in consideration of the premises and of the mutual
promises and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, Senior Lender, the Subordinate Lender and the Borrower
hereby agree as follows:
1. The Subordinate Loan Documents and all advances and amounts (for
principal, interest, or otherwise) owing thereunder are hereby, and shall
continue to be, subject and subordinate in lien and in payment to the lien and
payment of the Senior Loan Documents and all advances and amounts owing
thereunder, together with all interest, commitment fees, termination fees and
all other sums due under the Senior Loan Documents. The foregoing shall apply,
notwithstanding the availability of other collateral to the Senior Lender or the
actual date and time of execution, delivery, recordation, filing or perfection
of any Senior Loan Documents, or the actual date and time of execution,
delivery, recordation, filing or perfection of a lien or priority of payment
thereof, and notwithstanding the fact that the Senior Loan or any other claim
for the Senior Loan is subordinated, avoided or disallowed, in whole or in part,
under Title 11 of the United States Code (herein called the ABankruptcy Code@)
or other applicable federal or state law. In the event of a proceeding, whether
voluntary or involuntary, for insolvency, liquidation, reorganization,
dissolution, bankruptcy, or other similar proceeding pursuant to the Bankruptcy
Code or other applicable federal or state law, the Senior Loan shall be deemed
to include all interest accrued thereon, in accordance with and at the interest
rates specified in the Senior Loan Documents, both for periods before and for
periods after the commencement of any such proceedings, even if the claim for
such interest is not allowed pursuant to applicable law.
2. In addition, without limiting the foregoing, the Subordinate Lender
agrees that all rights of the Subordinate Lender under the Subordinate Loan
Documents in and to the UCC Collateral, the Project and the proceeds thereof
(including, without limitation, principal repayment, interest, issues and
profits and rights with respect to insurance proceeds, condemnation awards and
foreclosure proceeds), if any, shall be expressly subject and subordinate to:
(a) the rights of the Senior Lender in and to the UCC Collateral, the Project
and the proceeds thereof (including, without limitation, principal repayment,
interest, issues and profits and rights with respect to insurance proceeds,
condemnation awards and foreclosure proceeds) on the terms now or hereafter set
forth in the Senior Loan Documents; and (b) any and all advances made and other
expenses incurred under, and as permitted in, the Senior Loan Documents or any
permitted extensions or modifications of the Senior Loan Documents.
3. Subordinate Lender and Borrower hereby covenant, warrant and
represent that: (a) Borrower has delivered to Senior Lender true, complete and
correct copies of all of the Subordinate Loan Documents; (b) Subordinate Lender
is now the sole owner and holder of any and all interests in, to or under the
Subordinate Loan Documents except that the Subordinate Loan Documents have been
assigned by Subordinate Lender to First Union National Bank (AFirst Union@),
including an assignment of mortgage recorded in the Clerk=s Office in Mortgage
Book 818, Page 375; (c) the Subordinate Loan Documents are now in full force and
effect; (d) the Subordinate Loan Documents have not been modified or amended and
will not be modified, amended or restated without the prior written consent of
the Senior Lender which consent shall not be unreasonably withheld; provided
that in no event may any such amendment increase the principal amount of the
Subordinate Loan, increase the interest rate of the Subordinate Loan, increase
the principal amortization of the Subordinate Loan or shorten any maturity date
under the Subordinate Loan Documents; (e) Borrower has not at any time made any
drawings, or received any loans or other advances under the Subordinate Loan
Documents, and no sums are owed by Borrower to the Subordinate Lender, in each
instance, other than as set forth in the Subordinate Loan Documents; (f) the
maximum principal balance of the Subordinate Loan may not exceed $11,500,000.00
and (g) the Subordinate Lender=s rights in and to the lien, estate or other
interest in the Project, if any, is not subject to the rights of any third
parties by way of subrogation, indemnification or otherwise.
4. Borrower shall not make to or for the benefit of the Subordinate
Lender any payment or prepayment of principal, interest, default rate interest,
or any other payment whatsoever due or to become due under the Subordinate Loan
Documents, in each case, unless and until all obligations of Borrower to the
Senior Lender in respect of the Senior Loan Documents shall have been paid in
full, excepting only that Borrower may, unless and until any of the matters
described in clauses (i), (ii) or (iii) of Section 6(c) hereof occurs, or unless
giving effect to such payment and with the giving of any required notice and the
passage of any applicable grace period an Event of Default (as said term is
defined in the Senior Loan Agreement) would occur under the Senior Loan
Agreement, a) pay the regular scheduled interest payments due under the
Subordinate Loan Documents and b) may also reimburse Subordinate Lender for
reasonable and necessary business expenses incurred by Subordinate Lender on
Borrower=s behalf.
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5. The Subordinate Lender hereby acknowledges and agrees that the
Subordinate Lender shall not accept from or on behalf of Borrower any payment of
sums whatsoever due under the Subordinate Loan Documents unless and until the
Senior Loan has been paid in fully, except as expressly permitted under Section
4 above.
6. The Subordinate Lender hereby further agrees that, so long as any
sum shall remain outstanding under any of the Senior Loan Documents
(collectively, the ASenior Loan Obligations@):
(a) the Subordinate Lender shall simultaneously send to the
Senior Lender due notice of all defaults under the Subordinate Loan Documents
and copies of all notices relating to the Subordinate Lender=s intention to
exercise remedies under the Subordinate Loan Documents. Notice under the
Subordinate Loan Documents shall not be deemed effective until such notice has
been delivered to the Senior Lender in the same manner as notices are required
to be delivered to Borrower under the Subordinate Loan Documents. The Senior
Lender shall have the right, but shall not have any obligation whatsoever, to
cure any default on the part of Borrower under the Subordinate Loan Documents
within thirty (30) days after the expiration of the applicable grace period
permitted to Borrower under the Subordinate Loan Documents. Nothing contained in
this Agreement shall be deemed or construed to require the Senior Lender to
commence or continue to prosecute any such cure to completion or prevent the
Senior Lender from discontinuing such cure;
(b) Subordinate Lender shall not commence any Enforcement
Action (as hereinafter defined) for a period of two hundred seventy (270) days
after written notice to Senior Lender that a default has occurred under the
Subordinate Loan Documents and any grace period has expired. As used herein, the
term AEnforcement Action@ shall mean the acceleration of all or any part of the
Subordinate Loan, any foreclosure or enforcement proceeding under any of the
Subordinate Loan Documents, the exercise of any power of sale, the conduct of a
Uniform Commercial Code sale, the execution upon any judgment, the acceptance by
the Subordinate Lender of an assignment in lieu of foreclosure, the obtaining of
a receiver, the taking of possession or control of the UCC Collateral, the
Project, the commencement of any lawsuit, action or proceeding on the
Subordinate Note and/or any of the other Subordinate Loan Documents, the
exercising of any banker=s lien or rights of set-off or recoupment, or the
taking of any other enforcement action against the UCC Collateral, the Project,
Borrower, any other collateral for the Subordinate Loan, and/or any other person
under any Subordinate Loan Document;
(c) in the event (i) the Subordinate Lender receives any
payment of principal or interest or any other payment, in part or in whole,
under the Subordinate Loan Documents, other than as expressly permitted under
the terms of this Agreement and does not turn over such payments to Senior
Lender in accordance with the terms of this Agreement, (ii) there shall have
occurred and be continuing beyond any applicable grace and/or notice periods
under the Senior Loan Documents an Event of Default (as defined in the Senior
Loan Documents), or (iii) of any distribution or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of the Project or the proceeds thereof, in whatever form, to any
creditor or creditors of Borrower or to any holder of indebtedness of Borrower
by reason of any liquidation, dissolution or other winding up of Borrower or its
business, or of any receivership or custodianship for Borrower of all or
substantially all of its property, or of any insolvency or bankruptcy
proceedings or assignment for the benefit of creditors or any proceeding by or
against Borrower for any relief under any bankruptcy, reorganization or
insolvency law or laws, federal or state, or any law, federal or state, relating
to the relief of debtors, then, and in any such event, any payment or
distribution of any kind or character, whether in cash, property or securities,
which shall be payable or deliverable with respect to the Subordinate Loan or
any of the Subordinate Loan Documents or which has been received by the
Subordinate Lender, shall be held in trust by the Subordinate Lender and shall
forthwith be paid or delivered directly to the Senior Lender for application to
the payment of the Senior Loan Obligations. In any such event, the Senior Lender
may, but shall not be obligated to, demand, claim and collect any such payment
or distribution that would, but for these subordinate provisions, be payable or
deliverable with respect to the Subordinate Loan. In the event of the occurrence
and continuation of any matter described in clauses (i), (ii) or (iii) above and
until the Senior Loan Obligations shall have been fully paid and satisfied and
all of the obligations of Borrower to the Senior Lender have been performed in
full, no payment whatsoever shall be made to or accepted by the Subordinate
Lender in respect of the Subordinate Loan;
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(d) in the event the Senior Lender shall release, for purposes
of restoration of all or any part of the improvements located at the Project,
Senior Lender=s right, title and interest in and to the proceeds under the
policies of insurance thereon, and/or its right, title and interest in and to
any awards, or its right, title and interest in and to other compensation made
for any damages, losses or compensation for other rights by reason of a taking
in eminent domain, the Subordinate Lender shall release for such purpose all of
the Subordinate Lender=s right, title and interest, if any, in and to all such
insurance proceeds, awards or compensation and the Subordinate Lender agrees
that the balance of such proceeds remaining shall be applied as set forth in the
Senior Loan Agreement, and if the Senior Lender holds such proceeds, awards or
compensation and/or monitors the disbursement thereof, the Subordinate Lender
agrees that the Senior Lender shall also hold and monitor the disbursement of
such proceeds, awards and compensation to which the Subordinate Lender is
entitled. Nothing contained in this Agreement shall be deemed to require the
Senior Lender to act for or on behalf of the Subordinate Lender or to hold or
monitor any proceeds, awards, or compensation in trust for or on behalf of the
Subordinate Lender, in any way whatsoever, and all or any of such sums so held
or monitored may be commingled with any funds of the Senior Lender;
(e) except for its lien on the Project pursuant to the
Subordinate Mortgage, and so long as the Senior Loan Obligations remain unpaid,
the Subordinate Lender hereby subordinates any lien, estate, right or other
interest in the Project and/or in Borrower, including any rights or interests in
the Project or Borrower which may arise by way of indemnification, subrogation
or otherwise, and, in furtherance thereof, agrees not to exercise any of such
rights unless and until all of the Senior Obligations have been unconditionally
pain in full;
(f) intentionally omitted;
(g) the Subordinate Lender hereby expressly consents to and
authorizes, at the option of the Senior Lender, the release of all or any
portion of the UCC Collateral and/or the Project from any lien of the Senior
Loan Documents and hereby waives any equitable right the Subordinate Lender may
have in respect of marshaling, in connection with any release of all or any
portion of the UCC Collateral and/or the Project by the Senior Lender from the
lien of the Senior Loan Documents to require the separate sale of any portion of
the UCC Collateral and/or the Project or to require the Senior Lender to exhaust
its remedies against any portion of the UCC Collateral and/or the Project or any
combination of the portions of the UCC Collateral and/or the Project or any
other collateral, or to require the Senior Lender to proceed against any portion
of the UCC Collateral and/or the Project or combination of the portions of the
UCC Collateral and/or the Project or any other collateral, before proceeding
against any other portion of the UCC Collateral and/or the Project or
combination of the portions of the UCC Collateral and/or the Project or any
other collateral, and further, in the event of foreclosure or other enforcement
proceeding by the Senior Lender, the Subordinate Lender hereby expressly
consents and authorizes, at the option of the Senior Lender, the sale, either
separately or together, of all or any portion of the UCC Collateral and/or the
Project;
(h) after request by the Senior Lender from time to time, the
Subordinate Lender shall, within thirty (30) days following any such request,
furnish the Senior Lender with a statement, duly acknowledged and certified,
setting forth the original principal amount of such Subordinate Loan, the unpaid
balance, all accrued but unpaid interest, and any other sums due and owing
thereunder, the rate of interest, the monthly payments and other payments, and
that there exists no default (or describing any existing defaults) under the
Subordinate Loan Documents;
(i) the Subordinate Lender shall not commence or join in any
case by or against Borrower under the Bankruptcy Code or any similar provision
thereof or any similar federal or state statute (herein called a AReorganization
Proceeding@), however nothing shall prevent Subordinate Lender from filing a
claim in any Reorganization Proceeding or, subject to the terms of this
Agreement, seeking to protect its rights after a Reorganization Proceeding has
been filed by or against Borrower;
(j) intentionally omitted;
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(k) without limiting the generality of the foregoing Section
6(i), in any Reorganization Proceeding with respect to Borrower, (i) the
Subordinate Lender may file a proof of claim in respect of the Subordinate
Lender=s claims against Borrower and shall send the Senior Lender a copy thereof
together with evidence of the filing with the appropriate court or other
authority, (ii) if the Subordinate Lender should fail to file such proof of
claim by the tenth (10th) business day before the last day for filing of proofs
of claim, or if the Senior Lender reasonably believes that the proof of claim so
filed is less than the proper amount thereof, then the Senior Lender may file
such proof of claim, or corrected proof of claim, on behalf of the Subordinate
Lender, and (iii) if objection is made to the allowance of any claim of the
Subordinate Lender, the Senior Lender shall have the right to intervene and
fully participate in such proceedings and if such rights are denied and the
Subordinate Lender fails to defend such claim in the name of the Subordinate
Lender; and
(l) to the extent any payment under the Senior Loan Documents
(whether by or on behalf of Borrower, as proceeds of security or enforcement of
any right of setoff or otherwise) is declared to be fraudulent or preferential,
set aside or required to be paid to a trustee, receiver or other similar party
under any bankruptcy, insolvency, receivership or similar law, then if such
payment is recovered by, or paid over to, such trustee, receiver or other
similar party, the Senior Loan Obligations or part thereof originally intended
to be satisfied shall be deemed to be reinstated and outstanding as if such
payment had not occurred.
7. The Senior Lender, the Subordinate Lender and Borrower shall
cooperate fully with each other in order to promptly and fully carry out the
terms and provisions of this Agreement. Each party hereto shall from time to
time execute and deliver such other agreements, documents or instruments and
take such other actions as may be reasonably necessary to effectuate the terms
of this Agreement.
8. No failure or delay on the part of any party hereto in exercising
any right, power or remedy hereunder shall operate as a waver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy hereunder.
9. Each party hereto acknowledges that to the extent that no adequate
remedy of law exists for breach of such party=s obligations under this
Agreement, in the event any party fails to comply with such party=s obligations
hereunder, the other parties shall have the right to obtain specific performance
of the obligations of such defaulting party, injunctive relief or such other
equitable relief as may be available.
10. Any notice, report, demand or other instrument authorized or
required to be given or furnished hereunder (ANotices@) shall be in writing and
shall be given as follows: (a) by hand delivery; (b) by deposit in the United
States mail as first class certified mail, return receipt requested, postage
paid; (c) by overnight nationwide commercial courier service; or (d) by telecopy
transmission with a confirmation copy to be delivered by duplicate notice in
accordance with either of clauses (a) or (c) above, in each case addressed to
the party intended to receive same to the following address(es):Senior Lender:
Commerce Bank, N.A.1701 Route 70 East
Cherry Hill, New Jersey 08034
Attention: Gerard Grady
Phone No.: (609) 751-9000
Facsimile No.: (609) 751-6884
with a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Attention: Steven M. Miller, Esquire
Phone No.: (215) 569-5500
Facsimile No.: (215) 569-5522
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Borrower: FR Park Racing, L.P.
3001 Street Road
Bensalem, Pennsylvania 19020
Attention: Harold G. Handel, President
Telecopier: (215) 639-8678
with a copy to: Fox, Rothschild, O=Brien & Frankel, LLP
2000 Market Street, 10th Floor
Philadelphia, Pennsylvania 19103
Attention: Theodore A. Young, Esq.
Telecopier: (215) 299-2150
Subordinate Lender: Penn National Gaming, Inc.
825 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
Attention: Joseph A. Lashinger
Telecopier: (610) 373-4966
with a copy to: Mesirov, Gelman, Jaffe, Cramer & Jamieson, LLP
1735 Market Street
Philadelphia, Pennsylvania, 19103
Attention: Robert P. Krauss, Esquire
Telecopier: (215) 994-1111
Any party may change the address to which any such Notice is
to be delivered or mailed, by furnishing ten (10) days written notice of such
change to the other parties in accordance with the provisions of this Section
10. Notices shall be deemed to have been rendered or given on the date they are
actually received; provided, that the inability to deliver Notices because of a
changed address of which no Notice was given, or rejection or refusal to accept
any Notice offered for delivery, shall be deemed to be receipt of the Notice as
of the date of such inability to deliver or rejection or refusal to accept
delivery. Notice for any party may be given by its respective counsel.
Additionally, notice from Lender may also be given by its servicer or agent, or
their respective counsel.
11. In the event of a conflict between the provisions of this
Agreement, on the one hand, and the provisions of the Subordinate Mortgage or
any of the other Subordinate Loan Documents, on the other hand, the provisions
of this Agreement shall prevail.
12. No person other than the parties hereto and their respective
successors and permitted assigns shall have any rights under this Agreement.
Subordinate Lender may assign its rights under the Subordinate Loan Documents
only if the assignee executes a subordination and intercreditor agreement
identical to this Agreement in favor of Senior Lender.
13. This Agreement may be executed in two or more counterparts each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
14. This Agreement may not be amended, supplemented, modified, waived
or terminated, in whole or in part, except in a written instrument executed by
the Senior Lender and the Subordinate Lender, it being understood and agreed
that no such amendment, supplement, modification, waiver or termination shall
require the signature or approval of Borrower in order to be fully enforceable.
15. In case any one or more of the provisions contained in this
Agreement, or any application thereof, shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and any other application thereof, shall
not in any way be affected or impaired thereby.
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16. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey applicable to contracts made and to be
performed therein (without giving effect to conflict of laws principles).
17. This Agreement shall bind and inure to the benefit of the Senior
Lender, the Subordinate Lender and Borrower and their respective successors,
permitted transferees and assigns.
18. BORROWER, THE SUBORDINATE LENDER AND THE SENIOR LENDER EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) , OR ACTIONS OF BORROWER, THE
SUBORDINATE LENDER OR THE SENIOR LENDER RELATING TO THE SUBJECT OF THIS
AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SENIOR LENDER
ENTERING INTO THIS AGREEMENT.
19. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT, AT SENIOR LENDER=S OPTION, IN THE COURTS OF THE STATE OF NEW JERSEY,
CAMDEN COUNTY OR MONMOUTH COUNTY, OR OF THE UNITED STATES OF AMERICA FOR THE
DISTRICT OF NEW JERSEY. EACH OF BORROWER AND THE SUBORDINATE LENDER HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UN
CONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH OF
BORROWER AND THE SUBORDINATE LENDER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO IT AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 10 HEREOF. EACH OF
BORROWER AND THE SUBORDINATE LENDER HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT BROUGHT IN THE COURTS REFERRED TO ABOVE AND HEREBY FURTHER IRREVOCABLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF SENIOR LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWER AND/OR THE SUBORDINATE LENDER IN ANY OTHER
JURISDICTION PERMITTED BY LAW.
20. None of the following shall in any manner impair, negate or affect
the agreements of the Subordinate Lender set forth herein, all of which may be
done in the Senior Lender=s sole discretion (with the consent of Borrower, to
the extent required under the Senior Loan Documents): (a) any amendment,
modification, restatement, extension or consolidation of any of the Senior Loan
Documents other than to increase the principal amount of the Senior Loan
Obligations, (b) any change in the payment terms of, the Senior Loan, (c) any
release of any collateral for the Senior Loan, (d) any release of any person or
entity liable, in whole or in part, for the Senior Loan, and/or (e) any other
act or omission which might, but for this provision, impair, negate or affect
any agreement of the Subordinate Lender set forth herein other than to increase
the principal amount of the Senior Loan Obligations.
21. Notwithstanding anything to the contrary contained herein or
elsewhere, Subordinate Lender agrees that in the event that the Project or any
portion thereof, or any other property of Borrower that is subject to security
interests, liens, mortgages or other security arrangements to secure the Senior
Loan, is sold, transferred or otherwise disposed of (i) as permitted by the
Senior Loan Documents (including by exercise of Senior Lender=s rights or
remedies under the Senior Loan Documents) or (ii) in connection with any sale,
transfer, conveyance or other disposition to a party other than Borrower that is
otherwise consented to by Senior Lender and Borrower, or subject to the rights
of
164
Subordinate Lender set forth in the immediately succeeding three (3)
sentences, for a price that Senior Lender determines is commercially reasonable
in light of the circumstances at the time, Subordinate Lender shall release,
without consideration, all rights in and interests to the UCC Collateral and/or
the Project or portion of the UCC Collateral and/or the Project or other
property so that the same may be transferred free and clear of all liens and
security interests in favor of Subordinate Lender, provided that Subordinate
Lender shall have a security interest in the proceeds of any property so sold,
transferred, conveyed or disposed to the extent that such proceeds exceed the
amount necessary to pay in full the Senior Loan Obligations. Senior Lender shall
promptly upon its receipt of any written offer (AInitial Offer@) to purchase the
UCC Collateral and/or the Project, provide a copy of the Initial Offer to
Subordinate Lender. If Senior Lender has not received a written offer from GRI
pursuant to Section 21 of the RV Subordination and Intercreditor Agreement (as
defined in the Loan Agreement), then Subordinate Lender shall have five (5)
Business Days from the expiration of GRI=s offer period under the RV
Subordination and Intercreditor Agreement, to submit an offer (ASubsequent
Offer@) that is for a purchase price at least five percent (5%) in excess of,
and on terms substantially similar to, the Initial Offer. If Subordinate Lender
submits a Subsequent Offer , the Senior Lender shall accept such Subsequent
Offer, it being understood that the requirement for commercial reasonableness as
to a Subsequent Offer is waived. If Subordinate Lender fails to consummate a
closing pursuant to a Subsequent Offer( it being understood that any closing
shall occur no more than ninety (90) days after the acceptance of the Subsequent
Offer), then Senior Lender=s obligation to grant any subsequent right of
purchase to Subordinate Lender is hereby waived. To effectuate the intent of
this Section 21, Subordinate Lender shall execute such termination and release
documents as Senior Lender may reasonably request to effectuate the terms
hereof, and Subordinate Lender hereby irrevocably appoints Senior Lender as
Subordinate Lender=s attorney in fact, which appointment is coupled with an
interest, to execute such termination and release documents.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
165
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
SENIOR LENDER:
Commerce Bank, N.A.
By: _/s/Jerry Grady____________
Name:Jerry Grady
Title:
SUBORDINATE LENDER:
Penn National Gaming, Inc.
By: _/s/Robert S. Ippolito_____________________________
Name:Robert S. Ippolito
Title: Secretary
BORROWER:
FR Park Racing, L.P.
By: Pennwood Racing, Inc., its General Partner
By: /s/Hal Handel________________________
Name:Hal Handel
Title:President
166
JOINDER AND CONSENT
The undersigned First Union National Bank (AFirst Union@), being the
Assignee of the Subordinate Loan Documents, which Assignment is evidenced in
part by that certain Assignment of Mortgage dated ___________, 1999, and
recorded in the Clerk=s Office in Mortgage Book 818, page 375, for good and
valuable consideration, and with intent to be legally bound hereby, hereby joins
in and consents to all of the provisions of the foregoing Subordination and
Intercreditor Agreement, and hereby agrees to be bound by all of the provisions
of the foregoing Subordination and Intercreditor Agreement with the same force
and effect as if First Union had executed and been a party to the foregoing
Subordination and Intercreditor Agreement as owner and holder of the Subordinate
Loan Documents.
The provisions of this Joinder and Consent shall be binding upon First
Union and its successors and assigns, and shall inure to the benefit of Senior
Lender and Borrower and their respective successors and assigns. First Union
hereby represents and warrants to Senior Lender that First Union has not amended
any of the Senior Loan Documents nor has First Union assigned, pledged or
hypothecated any of the Senior Loan Documents.
All terms used in this Joinder and Consent shall have the same respective
meanings given to such terms in the foregoing Subordination and Intercreditor
Agreement.
IN WITNESS WHEREOF, First Union has executed this Joinder and Consent the
__29__ day of July, 1999.
First Union National Bank
By: _/s/Lynn Eagleson______
Name:Lynn Eagleson
Title: Vice President
Attest: __________________________
Name:
167
NOTARY ACKNOWLEDGMENT
COMMONWEALTH OF PENNSYLVANIA :
: ss
COUNTY OF :
On the ___ day of ________________, 1999, before me, the subscriber, a
Notary Public in and for the Commonwealth and County aforesaid, personally
appeared _____________________________, who acknowledged himself/herself to be
the ________________ of Penn National Gaming, Inc., a _____________ corporation,
and that he/she, as such officer, being authorized to do so, executed the
foregoing Subordination and Intercreditor Agreement for the purposes therein
contained by signing the name of the corporation by himself/herself as such
officer, and desired that this Subordination and Intercreditor Agreement be
recorded as such as the act and deed of said corporation.
WITNESS my hand and seal the day and year aforesaid.
Notary Public
My Commission Expires:
168
NOTARY ACKNOWLEDGMENT
- --------------------- :
_____________________ : SS
- --------------------- :
On the ___ day of ________________, 1999, before me, the subscriber, a
Notary Public in and for the Commonwealth and County aforesaid, personally
appeared _____________________________, who acknowledged himself/herself to be
the _______ President of Pennwood Racing, Inc., a New Jersey corporation, the
said Pennwood Racing, Inc. being the sole general partner of FR Park Racing,
L.P., a New Jersey limited partnership, and that he/she, as such officer, being
authorized to do so, executed the foregoing Subordination and Intercreditor
Agreement for the purposes therein contained by signing the name of the
corporation by himself/herself as such officer, and desired that this
Subordination and Intercreditor Agreement be recorded as such as the act and
deed of said limited partnership.
WITNESS my hand and seal the day and year aforesaid.
Notary Public
My Commission Expires:
169
NOTARY ACKNOWLEDGMENT
- --------------------- :
_____________________ : SS
- --------------------- :
On the ___ day of ________________, 1999, before me, the subscriber, a
Notary Public in and for the Commonwealth and County aforesaid, personally
appeared Gerard Grady, who acknowledged himself to be the Vice President of
Commerce Bank, N.A., a national banking association, and that he, as such
officer, being authorized to do so, executed the foregoing Subordination and
Intercreditor Agreement for the purposes therein contained by signing the name
of the association by himself as such officer, and desired that this
Subordination and Intercreditor Agreement be recorded as such as the act and
deed of said association.
WITNESS my hand and seal the day and year aforesaid.
Notary Public
My Commission Expires:
170