Exhibit 10.1
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("AGREEMENT") is made, executed,
delivered and entered into as of November 12, 2004, by and among ATLANTIC COAST
ENTERTAINMENT HOLDINGS, INC., a Delaware corporation ("BORROWER") and ACE
GAMING, LLC, a New Jersey limited liability company ("GUARANTOR"), and FORTRESS
CREDIT CORP., a Delaware corporation ("LENDER").
PRELIMINARY STATEMENT
1. Borrower, Guarantor and Lender have entered into this Agreement and
other Loan Documents (as hereinafter defined) to evidence and set forth the
terms and conditions of the Loan (as hereinafter defined), that Lender is making
available to Borrower, for up to the sum of TEN MILLION ($10,000,000.00) DOLLARS
in accordance with a revolving credit facility which shall be used by Guarantor
as working capital in the operation of The Sands Hotel and Casino ("THE SANDS"),
located at South Indiana Avenue and Brighton Park in Atlantic City New Jersey.
2. Borrower wholly owns all legal and beneficial right, title, and
interest in the equity of Guarantor and Guarantor is the casino licensee, owner
and operator of The Sands.
3. Borrower wishes to have a line of credit available for working
capital purposes to fund the working capital needs of Borrower and Guarantor has
agreed to guaranty the Loan made hereunder in order to obtain such proceeds for
its working capital.
4. Borrower and Guarantor are parties to an Indenture, dated as of July
22, 2004 (the "INDENTURE"), by and among Borrower, as issuer, Guarantor, as
guarantor, and Wells Fargo Bank, National Association, as trustee (the
"TRUSTEE"), pursuant to which Borrower issued 3% Notes due 2008 (the "3%
NOTES"), with an aggregate principal amount of $66,258,970 secured by liens,
security interests, and mortgages on all of the assets of each of Borrower and
Guarantor.
5. Borrower and Guarantor hereby agree that the Loan available pursuant
to the terms of this Agreement shall be used by the Borrower and Guarantor
solely for working capital purposes and that the Board of Directors of the
Borrower has designated the Loan as Working Capital Indebtedness (as such term
is defined in the Indenture).
6. Pursuant to the terms of the Indenture and the other Loan Documents,
the obligations of Borrower and Guarantor under the Indenture, the 3% Notes
issued thereunder, and the liens, security interest, and mortgages which secure
such obligations, shall be and are subordinated to the Indebtedness under this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which are hereby conclusively acknowledged, the parties
to this Agreement, intending to be legally bound, agree as follows:
SECTION 1
CERTAIN DEFINITIONS
1.1 Capitalized terms used in this Agreement or in any Loan Document
shall have the meanings set forth herein. Capitalized terms defined in the
introductory Preliminary Statement or elsewhere in this Agreement shall have the
meanings assigned to them at the place first defined. As used herein, the term
"this Agreement" or "Loan Agreement" shall include all exhibits, schedules and
addenda attached hereto, all of which shall be deemed incorporated herein and
made a part hereof. The definitions include the singular and plural forms of the
terms defined. Any defined term which relates to a document, instrument or
agreement shall include within its definition any amendments, modifications,
supplements, renewals, restatements, extensions, or substitutions which may be
hereafter executed in accordance with the terms hereof. Unless otherwise
specified, references to particular section numbers shall mean the respective
sections of this Agreement.
1.2 DEFINED TERMS.
ADMINISTRATIVE AGENT. Fortress Credit Corp.
ADVANCE(S). All or a portion of the proceeds of the Facility,
advanced or readvanced from time to time by Lender to Borrower pursuant to the
Agreement.
ADVANCE DATE. Defined in SECTION 2.5(B) of the Agreement.
AFFILIATE. Any individual, trust, estate, partnership, limited
liability company, corporation or any other incorporated or unincorporated
organization that directly controls or is controlled by or is under common
control with Borrower, or any member, officer, or partner of Borrower or any
relative of any of the foregoing; provided however that, in no event shall any
stockholder, director, officer, or any other Person that directly controls or is
controlled by or under common control with GB Holdings, Inc. be deemed to be an
Affiliate of the Borrower as a result of being an Affiliate of GB Holdings,
Inc.. The term "CONTROL" means possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
AGREEMENT. This Loan and Security Agreement (including all
Exhibits and Schedules and addenda thereto), as it may be amended in writing
from time to time.
APPLICABLE LAW. In respect of any Person, all provisions of
constitutions, statutes, rules, ordinances, regulations and orders of
governmental bodies or regulatory agencies applicable to such Person, and all
orders and decrees of all courts and arbitrators in proceedings or actions to
which the Person in question is a party or by which it or its properties are
bound.
AVAILABLE FUNDING or LOAN AVAILABILITY. With respect to the
Loan, an amount equal to the excess of (i) $10,000,000 over (ii) the aggregate
principal amount of all Advances then outstanding.
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BANKRUPTCY CODE. Defined in SECTION 10.14 of the Agreement.
BORROWER'S REPRESENTATIVE. Defined in SECTION 2.10 of the
Agreement.
BUSINESS DAY. Each day which is not a Saturday or Sunday or a
legal holiday under the laws of the State of New Jersey, or the United States.
CAPITAL LEASE. Means, with respect to any Person, any lease of
(or other agreement conveying the right to use) any real or personal property by
such Person that, in conformity with GAAP, is accounted for as a capital lease
on the balance sheet of such Person.
CAPITAL STOCK. Means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other Equity Interests in such Person.
CASINO. All land, improvements, Property, easements and
appurtenances comprising or benefiting The Sands Hotel and Casino, located at
South Indiana Avenue and Brighton Park, Atlantic City, New Jersey, including
without limitation the adjacent structured parking garage, all known as Lots 10,
19, and 20 in Block 49; Lot 10 in Block 48; Lots 1, 2, 3, 4, 5, 6, 7, 9, 10, 11,
12, and 19 in Block 47; Lot 5 in Block 46; Lot 8 in Block 48; and Lots 29 and 31
in Block 156 on the official tax map of Atlantic City, New Jersey.
CASINO ACT. The New Jersey Casino Control Act, N.J.S.A.
5:12-1, et seq., and the regulations promulgated thereunder, all as amended from
time to time.
CLOSING DATE. As of November 12, 2004, which is the effective
date of the Agreement.
CODE. The Uniform Commercial Code as adopted and in effect in
the State of New Jersey (with respect to Collateral located in or subject to the
Code in that State), and, with respect to Collateral located in any other State,
or for filings made in the State in which Borrower or Guarantor were
incorporated or formed, the Uniform Commercial Code as adopted and in effect in
that State, as amended from time to time.
COLLATERAL. Collectively, all of the right, title and interest
of Borrower and Guarantor, now owned or existing or hereafter arising, acquired
or reacquired, in, to and under all of the following:
(a) The Property, including without limitation the Casino;
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(b) All systems, devices, machinery, apparatus, equipment,
fittings, appliances and fixtures of every kind and nature whatsoever whether or
not located on land that is the subject of the Mortgage (the "Land"), or the
structures or buildings and all additions thereto, now or hereafter erected upon
the Land (the "Improvements") including, but not limited to, all electrical,
anti-pollution, heating, lighting, laundry, incinerating, power,
air-conditioning, plumbing, lifting, cleaning, fire prevention, fire
extinguishing, refrigerating, ventilating, communication, garage and cooking
systems, devices, machinery, apparatus, equipment, fittings, appliances and
fixtures, and all engines, pipes, pumps, tanks, motors, conduits, ducts,
compressors and switchboards, and all storm doors and windows, dishwashers,
ranges, rugs and other floor coverings, attached cabinets and partitions not
included in the Improvements, and all renewals, replacements, substitutions and
proceeds thereof (collectively, the "Fixtures");
(c) All articles of personal property of every kind and nature
whatsoever, including, but not limited to, all equipment, tools, appliances,
shades, awnings, beds, screens, furniture and carpets, now or hereafter affixed
to, attached to, placed upon, used or usable in any way in connection with the
use, enjoyment, occupancy or operation (including the planning, development and
financing) of the Land or Improvements, and all renewals, replacements,
substitutions and proceeds thereof (collectively, the "Personal Property");
(d) All leases of the Land, Improvements and Personal
Property, or any part thereof, now or hereafter entered into, and all right,
title and interest of Borrower and Guarantor thereunder, including cash or
securities deposited thereunder to secure performance by the tenants of their
obligations, together with all renewals and extension of such leases that may
hereafter be entered into which cover all or any portion of the Land or
Improvements, and any and all guarantees of payment of the rent and other
obligations under any such leases, and, including further, the right to receive
and collect the rents thereunder (collectively, the "Leases");
(e) All revenues, income, rents, issues and profits of at
anytime becoming due arising or issuing out of the Land, Improvements, Personal
Property or Leases (collectively, the "Rents");
(f) All proceeds from the conversion, whether voluntary or
involuntary, of any part of the Land, Improvements or Personal Property into
cash or liquidated claims, including insurance proceeds, insurance premium
refunds and condemnation awards;
(g) All contracts and subcontracts relating to the Land or
Improvements, including, but not limited to, contracts and subcontracts for the
construction, design or development of any Improvements on the Land, and all
permits, building permits, licenses, franchises, certificates and other rights
and privileges obtained in connection with the Land or Improvements
(collectively, the "Contracts"); and
(h) All funds, accounts, contract rights, instruments,
documents, general intangibles (including fictitious, trade and other names,
trademarks and symbols used in connection with the Land or Improvements, whether
registered or not), and notes and chattel paper arising from or by virtue of any
transaction relating to the Land or Improvements (collectively, the
"Intangibles").
(i) All assets of Borrower and Guarantor now or hereafter
arising out of, affixed to, attached to, placed upon used or usable in any way
in connection with the use, enjoyment, occupancy or operation of the Land and
Improvements or Borrower's or Guarantor's respective business practices
including, without limitation, those assets and properties of Borrower or
Guarantor of the types described below, wherever located, however arising or
created, and whether now owned or existing or hereafter arising, created or
acquired:
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(j) All Accounts (as defined in the Code);
(i) all Chattel Paper (as defined in the Code);
(ii) all Equipment (as defined in the Code);
(iii) all Inventory (as defined in the Code) and
all accessions, attachments and other additions to,
substitutes for, replacements for, improvements to
and returns of such Inventory;
(iv) all Goods (as defined in the Code);
(v) all Instruments (as defined in the Code);
(vi) all General Intangibles (as defined in the
Code) (including, without limitation, all contract
rights, choses in action, causes of action,
corporate or other business records, inventions,
designs, patents, patent applications, trademarks,
trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, claims under
guaranties, security interests or other security
held or granted to secure payment of contracts by
account debtors, all rights to indemnification and
all other intangible property of every kind and
nature);
(vii) all Instruments, documents, Chattel Paper,
goods, moneys, securities, drafts, and other
property of Borrower or Guarantor now in the
possession of and at any time and from time to time
hereafter delivered to Lender or its agents,
whether for safekeeping, pledge, custody,
transmission, collection, or otherwise, and all of
Borrower's or Guarantor's deposits (general or
special), balances, sums, proceeds, and credits
with, and any of its claims against, Lender or any
accounts controlled by Lender, at any time existing
together with the increases and profits received
therefrom and the proceeds thereof, including
insurance payable because of loss or damage thereof
and all deposit accounts, as such term is defined
in the Code;
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(viii) all books, records, files, computer
programs, data processing records, computer
software, documents and other information,
property, or general intangibles, at any time
evidencing, describing, or pertaining to, and all
containers and packages for, the property described
or referred to in subsections (a) through (i) above
(the "Books and Records");
(ix) all products and proceeds (as defined in the
Code) of any of the property described above in any
form, and all proceeds of such proceeds, including,
without limitation, all cash and credit balances,
all payments under any indemnity, warranty or
guaranty with respect to any of such property, all
awards for taking by eminent domain, all proceeds
of fire or other insurance, including any refunds
of unearned premiums in connection with any
cancellation, adjustment, or termination of any
insurance policy, all proceeds obtained as a result
of any legal action or proceeding with respect to
any of such property, and claims by Borrower or
Guarantor against third parties for loss or damage
to, or destruction of, any of such property; and
(x) Proceeds and products of Collateral are also
covered.
Notwithstanding the foregoing, "Collateral" shall not include any property as to
which the grant of a security interest would violate the laws, rules or
regulations of the Gaming Authorities, including the Casino Reinvestment
Development Authority Rules and Regulations, unless and until any required
consents are obtained.
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COMMISSION. The New Jersey Casino Control Commission.
COMMITMENT. Means, with respect to the Lender, the obligation
of the Lender to make the Loan pursuant to the terms and conditions of this
Agreement, and which shall not exceed the Maximum Exposure. The amount of the
Commitment shall be reduced from time to time in accordance with the terms of
this Agreement.
CONTRACTUAL OBLIGATION. As to any Person, any provision of any
security issued by such Person or any agreement, instrument or other undertaking
to which such Person is a party or by which it or any of its property is bound.
DEBTOR RELIEF LAWS. Any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar law, proceeding or device providing for the relief of
debtors or insolvent Persons from time to time in effect and generally affecting
the rights of creditors.
DEFAULT. An event or condition the occurrence of which
immediately is, or with the lapse of time or the giving or notice or both would
become, an Event of Default.
DEFAULT RATE. The Interest Rate plus three (3%) percent per
annum, from the date imposed or imposable to the date of payment.
DISPOSITION. Means any transaction, or series of related
transactions, pursuant to which the Borrower or Guarantor sells, assigns,
transfers or otherwise disposes of any property or assets (whether now owned or
hereafter acquired) to any other Person, in each case whether or not the
consideration therefor consists of cash, securities or other assets owned by the
acquiring Person, excluding any sales of Inventory in the ordinary course of
business on ordinary business terms.
DISQUALIFICATION. With respect to any Lender:
(a) the failure of the Lender timely to file (or obtain a
waiver) pursuant to applicable Gaming Laws (i) any application requested of the
Lender by any Gaming Authority in connection with any licensing required of that
Person as a lender to the Borrower or (ii) any required application or other
papers in connection with determination of the suitability of the Lender as a
lender to the Borrower.
(b) the withdrawal by that Person (except where requested or
permitted by the Gaming Authority) of any such application or other required
papers; or
(c) any final determination by a Gaming Authority pursuant to
applicable Gaming Laws (i) that such Person is "unsuitable" as a lender to the
Borrower, (ii) that such Person shall be "disqualified" as a lender to the
Borrower or (iii) denying the issuance to that Person of any license required
under applicable Gaming Laws to be held by all lenders to the Borrower.
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DISQUALIFIED LENDER. Any Lender subject to Disqualification.
ELIGIBLE ASSIGNEE. Any (a) financial institution organized
under the laws of the United States or any state thereof; (b) commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, provided that such bank is acting
through a branch or agency located in the United States of America; and (c)
financial institution, insurance company, mutual fund or other fund that has
been approved by the Borrower and the Administrative Agent (which approvals
shall not be unreasonably withheld), and which in each such category is, to the
extent required under applicable Gaming Laws, registered with, approved by, or
not disapproved by (whichever may be required under applicable Gaming Laws), in
a final and non-appealable determination, all applicable Gaming Authorities;
provided that, the Lender shall provide notice to the Borrower and its counsel
prior to any assignment, but the failure of the Lender to timely provide such
notice shall not render any assignment void or voidable; further provided that,
in no event shall the Lender assign the Loan or any portion thereof or grant any
participation therein to any Person that, directly or indirectly through an
affiliate, at the time of the participation or assignment, has 10% or more of
its assets invested in entities which engage in the casino or gaming industries.
ENVIRONMENTAL LAWS. Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time ("CERCLA"),
the Resource Conservation and Recovery Act of 1976, as amended from time to time
("RCRA"), the Superfund Amendments and Reauthorization Act of 1986, as amended,
the federal Clean Air Act, the federal Clean Water Act, the federal Safe
Drinking Water Act, the federal Toxic Substances Control Act, the federal
Hazardous Materials Transportation Act, the Federal Emergency Planning and
Community Right to Know Act of 1986, the federal Endangered Species Act, the
federal Occupational Safety and Health Act of 1970, the federal Water Pollution
Control Act, as all of the foregoing legislation may be amended from time to
time, and any regulations promulgated pursuant to the foregoing; together with
any similar local, state or federal laws, rules, ordinances or regulations
either in existence as of the date hereof, or enacted or promulgated after the
date of the Agreement, that concern the management, control, storage, discharge,
treatment, containment, removal and/or transport of Hazardous Materials or other
substances that are or may become a threat to public health or the environment;
together with any common law theory involving Hazardous Materials or substances
which are (or alleged to be) hazardous to human health or the environment, based
on nuisance, trespass, negligence, strict liability or other tortuous conduct,
or any other federal, state or local statute, regulation, rule, policy, or
determination pertaining to health, hygiene, the environment or environmental
conditions.
EQUITY INTERESTS. With respect to any Person, any capital
stock issued by such Person, regardless of class or designation, any limited or
general partnership interest in such Person, or any limited liability membership
interest in such Person, regardless of designation.
EVENT OF DEFAULT. Defined in SECTION 8 of the Agreement.
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EXHIBITS. Refers to all of the addenda, exhibits or schedules
attached to the Agreement or any Loan Document.
EXISTING DEBT. As described in Schedule 1 attached to the
Agreement.
FACILITY. The revolving credit loan facility provided for in
this Agreement up to a maximum principal amount of $10,000,000.00, as calculated
and determined in accordance with the Available Funding.
FINAL MATURITY DATE. The day immediately prior to the one-year
anniversary of this Agreement, or any earlier date on which the entire Loan is
required to be paid in full, by acceleration or otherwise, pursuant to the
Agreement or any Loan Document.
FINANCIAL COVENANTS. As set forth in SECTION 6.23 of the
Agreement.
FINANCIAL STATEMENTS. The balance sheet and statement of
income and expense of the Borrower and Guarantor, and the related notes,
schedules and certifications, including those delivered by Borrower and
Guarantor, prior to the Closing Date and provided for in the Agreement; and the
financial statements, reports and tax returns required to be provided to the
Lender pursuant to SECTION 6.5 of the Agreement or pursuant to any Loan
Document.
FISCAL YEAR. The fiscal year of the Borrower, which period
shall be the 52 week period ending on December 31st of each year. References to
a Fiscal Year with a number corresponding to any calendar year (e.g., "Fiscal
Year 2004") refer to the Fiscal Year ending on December 31st of the immediately
succeeding calendar year.
GAAP. Generally accepted accounting principles, applied on a
consistent basis, set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board which are applicable in the
circumstances as of the date in question; and the requisite that such principles
be applied on a consistent basis means that the accounting principles in a
current period are comparable in all material respects to those applied in a
preceding period, with any exceptions thereto noted.
GAMING AUTHORITIES. Any governmental instrumentality that
holds regulatory, licensing or permitting authority over gambling, gaming or
casino activities conducted by Borrower and Guarantor within its jurisdiction,
or before which an application for licensing to conduct such activities is
pending.
GAMING LAW. All laws pursuant to which any Gaming Authority
possesses regulatory, licensing or permitting authority over gambling, gaming or
casino activities conducted by Borrower and Guarantor within its jurisdiction,
and all regulations promulgated under such laws.
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GAMING LICENSE. Any and all duly issued and valid licenses,
approvals, regulations, findings of suitability and authorizations relating to
gaming at the Casino under the Gaming Laws or required by the Gaming Authority
or necessary for the operation of gaming at substantially all of the gaming
space at the Casino.
GOVERNMENTAL AUTHORITY. The Commission and any federal, state,
county, municipal or other governmental or quasi-governmental department,
commission, board, bureau, authority, court, agency, or instrumentality having
jurisdiction over the Property, the Casino, the Borrower, or the Guarantor,
including without limitation the Commission.
GUARANTOR. ACE Gaming, LLC, a New Jersey limited liability
company. The term Guarantor also refers to and includes any other Person now or
hereafter guarantying all or any portion of the Loan or providing indemnities or
sureties with respect to the Loan from time to time.
GUARANTY OR GUARANTIES. The Guaranty executed and delivered by
the Guarantor on the Closing Date, dated as of November 12, 2004, and any other
guaranty or guaranties of the Loan in favor of Lender from time to time,
including without limitation cross-guaranties from Borrower.
HAZARDOUS MATERIALS. "Hazardous substances", "hazardous waste"
or "hazardous constituents", "toxic substances", or "solid waste", as defined in
the Environmental Laws, and any other contaminant or any material, waste or
substance which is petroleum or petroleum based, asbestos, polychlorinated
biphenyls, flammable explosives, or radioactive materials.
INDEBTEDNESS. All payment Obligations of Borrower to Lender
under the Loan Documents and, as applied to any other Person at any time, (a)
all indebtedness, obligations or other liabilities of such Person (i) for
borrowed money or evidenced by debt securities, debentures, acceptances, notes
or other similar instruments, and any accrued interest, fees and charges
relating thereto, (ii) under profit payment agreements or in respect of
obligations to redeem, repurchase or exchange any Securities or Equity Interests
of such Person, or to pay dividends in respect of any stock (iii) with respect
to letters of credit issued and banker's acceptances issued for such Person's
account, (iv) to pay the deferred purchase price of property or services, except
accounts payable, trade payables and accrued expenses arising in the ordinary
course of business, (v) in respect of Capital Leases which have been, should be
recorded as liabilities on a balance sheet of such Person in accordance with
GAAP; (b) all indebtedness, obligations or other liabilities of such Person or
others secured by a Lien on any property of such Person, whether or not such
indebtedness, obligations or liabilities are assumed by such Person, all as of
such time; (c) all preferred stock subject (upon the occurrence of any
contingency or otherwise) to mandatory redemption; (d) all indebtedness of any
partnership of which such Person is a general partner.
INDEMNIFIED LENDER PARTIES. Defined in SECTION 10.9 of the
Agreement.
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INTEREST PERIOD. The one-month period commencing on the date
or nearest the date the Loan is made and ending one month later, provided that:
(a) any Interest Period which would otherwise end on a day which is not a
Business Day shall end on the next preceding or succeeding Business Day as is
the custom in the London interbank market to which such advance relates; and (b)
each Interest Period which commences before and would otherwise end after the
Maturity Date shall end on the Maturity Date.
INTEREST RATE. A fixed interest rate to be set for each
respective Interest Period during the term of the Loan, to be set on the first
day of each month, equal to LIBOR plus eight (8%) percent per annum; provided,
that for purposes of the Loan, in no event shall the LIBOR Rate be less than one
and one-half (1.5%) percent.
LENDER. Fortress Credit Corp., a Delaware corporation, and
additional Lenders as may be designated in accordance with the Agreement, and
their respective successors or replacements.
LIBOR OR LIBOR RATE. (London Interbank Offered Rate). The rate
per annum (rounded upward, if necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for deposits in U.S. dollars, for a
period of one (1) month duration which appears on the Telerate page 3750 as of
11:00 A.M. London time on the day that is two (2) Business Days preceding the
first day of the Interest Period; provided, however, if the rate described above
does not appear on the Telerate System on any applicable interest determination
date, the LIBOR rate shall be the rate (rounded upwards as described above, if
necessary), for deposits in dollars for a period substantially equal to the
Interest Period on the Reuters Page "LIBO" (or such other page as may replace
the LIBO Page on that service for the purpose of displaying such rates), as of
11:00 A.M. (London time), on the day that is two (2) Business Days prior to the
beginning of such Interest Period. If both the Telerate System described above
and the offered rates for deposits in U.S. dollars for a period of time of one
(1) month duration are not available, four major banks in the London banks will
be requested to provide a quotation of its U.S. dollar deposit offered rate. If
at least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis of the rates
quoted for loans in U.S. dollars to leading European banks for a period of time
of one (1) month duration offered by major banks in New York City at
approximately 11:00 A.M. New York City time, on the day that is two Business
Days preceding the first day of each month. In the event that Lender is unable
to obtain any such quotation as provided above, it will be deemed that LIBOR
cannot be determined in which event the interest payable on the Loan hereunder
shall be equal to the sum of (a) the Prime Rate of LaSalle National Bank and (b)
525 basis points. In the event that the Board of Governors of the Federal
Reserve System shall impose a Reserve Percentage with respect to LIBOR deposits
of Lender, then for any period during which such Reserve Percentage shall apply,
LIBOR shall be equal to the amount determined above divided by an amount equal
to 1 minus the Reserve Percentage. As used herein, "Reserve Percentage" shall
mean the rate (expressed as a decimal) at which Lender would be required to
maintain reserves under REGULATION D of the Board of Governors of the Federal
Reserve System ("Federal Reserve") against Eurodollar Liabilities (as defined by
the Federal Reserve) if such Liabilities were outstanding.
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LICENSE REVOCATION. Revocation, failure to renew or suspension
of, or the appointment of a receiver, supervisor or similar official with
respect to any casino, gambling or gaming license issued by the Gaming
Authorities with respect to the Casino.
LIEN. A security interest, or mortgage or collaterally
assigned interest or pledge, or any interest in tangible or intangible property
securing an obligation owed to, or claimed by, a Person other than the owner of
such property, whether such interest arises in equity or is based on the common
law, statute, or contract. The plural of the foregoing shall be referred to as
the LIENS.
LOAN. The Facility
LOAN COSTS. All expenditures and expenses, which may be paid
or incurred by or on behalf of Lender in connection with the documentation,
negotiation, closing, modification, workout, payment, collection or enforcement
of the Loan. Loan Costs include, but shall in no way be limited to, reasonable
legal fees, expenses and disbursements of Lender's counsel, all of Lender's
out-of-pocket expenses, the cost of preparing reproducing and binding this
Agreement and the other Loan Documents and Lender's expenses in connection with
(i) any petitions to or proceedings with any Gaming Authorities in respect of
the negotiation, execution, or delivery of the Loan Documents, or the payment
and performance thereunder, and (ii) any audit or inspection of the Borrower and
the Collateral.
LOAN DOCUMENTS. Collectively, the Agreement, including all
addenda hereto, the Note, the Guaranty, the Mortgage, Financing Statements as
provided under the Code, and the other documents, agreements and instruments
relating to the Loan, including those listed on SCHEDULE 1 attached to the
Agreement, and including any agreements entered into between Borrower and
Lender, all as previously amended and/or restated, and as they may be amended or
supplemented in writing from time to time.
LOAN TERM. Effective from and after the Closing Date, the
period from the Closing Date until the Final Maturity Date.
MANDATORY PREPAYMENTS. All payments denoted as such in this
Agreement, all of which are and shall be required to be remitted directly to
Lender by or on behalf of Borrower immediately upon their receipt by, or
availability to, Borrower, and all of which shall reduce the Commitment by the
amount prepaid, and the amount thereof may not be re-borrowed by Borrower.
MATERIAL ADVERSE EFFECT. Shall mean, an outcome that
comprises: (a) a material adverse change in the business, results of operations,
assets, liabilities or condition (financial or otherwise) of the Borrower and
Guarantor taken as a whole, or (b) the material impairment of (i) the rights and
remedies of the Lender under any of the Loan Documents, including without
limitation the Lender's ability to enforce the Obligations or realize upon any
material portion of the Collateral, or (ii) the priority of the liens with
respect to any material portion of the Collateral, or (c) a determination by a
Governmental Authority, that is final and nonappealable, of any illegality,
invalidity, or unenforceability of this Agreement or any of the Loan Documents,
including without limitation the validity, perfection, or priority of any Lien
in favor of the Lender in respect of any Collateral.
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MATERIAL PARTY. Defined in SECTION 4.21 of the Agreement.
MAXIMUM EXPOSURE. $10,000,000.00 in the aggregate.
MORTGAGE. A properly recorded, first lien priority Mortgage
and Security Agreement executed and delivered by Guarantor and encumbering the
Property and all easements and appurtenances benefiting the Property.
NET INCOME. With respect to any Person for any period, the net
income (loss) of such Person for such period, determined in accordance with
GAAP.
NET PROCEEDS. (i) with respect to any Disposition by any
Person, the amount of cash received (directly or indirectly) from time to time
(whether as initial consideration or through the payment of deferred
consideration) by or on behalf of such Person or any of its Subsidiaries or
Affiliates, in connection therewith after deducting therefrom, only (A) the
actual expenses related thereto if reasonably incurred by such Person or such
Affiliate in connection therewith and without limitation brokerage or similar
fees, (B) transfer taxes paid by such Person or such Affiliate in connection
therewith and (C) the principal amount of, and any accrued and unpaid interest
on, any Indebtedness (and any costs and expenses related thereto) secured by any
Lien on any asset that is the subject of the Disposition (other than
Indebtedness assumed by the purchaser of such asset) which is required to be,
and is, repaid in connection with such Disposition, and (ii) with respect to the
issuance or incurrence of any Indebtedness by any Person, or the sale or
issuance by any Person of any shares of its Capital Stock, the aggregate amount
of cash received (directly or indirectly) from time to time (whether as initial
consideration or through the payment of deferred consideration) by or on behalf
of such Person or any of its Subsidiaries or Affiliates in connection therewith
after deducting therefrom only reasonable brokerage commissions, underwriting
fees and discounts, legal fees and other reasonable customary fees and expenses
and commissions.
NOTE. A secured Promissory Note in a principal amount of
$10,000,000 of the Borrower evidencing the Loan made by the Lender hereunder
(and any promissory note of the Borrower issued in addition thereto or in
substitution therefor that evidences the Loan) dated as of the Closing Date and
executed and delivered by the Borrower to the order of Lender.
OBLIGATIONS. All amounts due or becoming due to Lender in
respect of the Loan, and all amounts due or becoming due to Lender under any of
the Loan Documents, now existing or hereafter created or arising, joint or
several, direct or indirect, arising out of contract or tort or under law, and
whether created directly or acquired or accruing by assignment, assumption or
otherwise, and including principal, interest, prepayment premiums,
contributions, taxes, insurance, loan charges, advance fees, commitment fees,
administrative fees, servicing fees, arrangement fees, renewal fees, release
fees, reasonable attorneys' and paralegals' fees and expenses and other fees or
expenses incurred by Lender or advanced by Lender to or on behalf of Borrower or
pursuant to any of the Loan Documents, and amounts payable to or for the benefit
of Lender under any subrogation rights, indemnities or guaranties in connection
with the Loan.
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OFFICER'S CERTIFICATE. Defended in SECTION 6.5(B) of the
Agreement.
OPERATING CONTRACTS. Defined in SECTION 5.17 of the Agreement.
ORGANIZATIONAL DOCUMENTS. Defined in SECTION 5.2(B) of the
Agreement.
OTHER LOANS. Defined in SECTION 5.19 of the Agreement.
PARTICIPANT. Defined in SECTION 10.3(B) of the Agreement.
PARTICIPATION. Defined in SECTION 10.3(B) of the Agreement.
PERMITTED EXCEPTIONS. The exceptions to title listed on
EXHIBIT B, as may be changed from time to time upon the Lender's prior written
approval.
PERSON. An individual, partnership, corporation, joint
venture, limited liability company, trust, trustee, association, joint stock
company, estate, unincorporated organization, real estate investment trust,
syndication, other entity, or a government or agency or political subdivision
thereof.
PRIME RATE. A variable per annum interest rate equal to the
prime rate announced from time to time by LaSalle National Bank as its prime
rate. Such prime rate is determined from time to time by LaSalle National Bank
as a means of pricing some loans to its customers and is neither tied to any
external rate of interest or index, nor does it necessarily reflect the lowest
rate of interest actually charged by LaSalle National Bank to any particular
class or category of customer.
PROPERTY or PROPERTIES. Any interest in any kind of property
or asset, whether real, personal or mixed, tangible or intangible, including
without limitation the property that is the subject of the Mortgage.
PUBLIC RECORDS. The filing office in any jurisdiction where
record notice of matters affecting real property is required to be recorded in
accordance with Applicable Laws.
PUBLIC REPORTS. Any public reports now or hereafter filed with
and approved by any Governmental Authority having jurisdiction over Borrower,
Guarantor, the Collateral, and the Casino.
REQUEST FOR ADVANCE. Defined in SECTION 2.5 of the Agreement.
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REQUIREMENTS. All federal, state and local rules, regulations,
ordinances, laws and statutes which affect Borrower and Guarantor, the Casino,
and Borrower's and Guarantor's business generally.
REVOLVING CREDIT PERIOD. With respect to the Loan, the period
commencing on the Closing Date and ending on the earlier of: (a) the occurrence
of an Event of Default, or (b) the Final Maturity Date.
SCHEDULES. Refers to any schedules attached to the Agreement
or any Loan Document.
SECURITIES. Any stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or any certificates of
interest, shares, or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire
any of the foregoing, but shall not include any evidence of the Obligations.
SECURITY. Shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
SUBORDINATED DEBT. Any Indebtedness of the Borrower which has
subordination terms, covenants, pricing and other terms which have been approved
in writing by the Administrative Agent and is evidenced by a subordination
agreement reflecting all such approved terms, in form and substance acceptable
to the Administrative Agent.
SUBORDINATED INDEBTEDNESS. Defined in SECTION 6.14 of the
Agreement.
SUBSIDIARY. With respect to any Person at any date, any
corporation, limited or general partnership, limited liability company, trust,
association or other entity (i) the accounts of which would be consolidated with
those of such Person in such Person's consolidated financial statements if such
financial statements were prepared in accordance with GAAP or (ii) of which more
than 50% of (A) the outstanding Capital Stock having (in the absence of
contingencies) ordinary voting power to elect a majority of the board of
directors of such corporation, (B) the interest in the capital or profits of
such partnership or limited liability company or (C) the beneficial interest in
such trust or estate is, at the time of determination, owned or controlled
directly or indirectly through one or more intermediaries, by such Person.
TAXES. Defined in SECTION 4.18 of the Agreement.
TITLE COMPANY. As to the Title Policies issued in respect of
Collateral, Stewart Title Guaranty Company by and through its agent, The Title
Company of Jersey.
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SECTION 2
THE LOAN
ESTOPPEL. Borrower and Guarantor jointly and severally represent,
warrant and confirm that (i) they have reviewed with counsel of their choice
this Agreement and all other Loan Documents; (ii) they have received or will
receive material benefit and valuable consideration as a result of the
transactions provided for or contemplated hereunder or under any other Loan
Documents; (iii) the Obligations encompass and apply to all Advances to be made
under this Agreement and in respect of the Loan; (iv) Guarantor has the sole
legal and beneficial ownership interest in and to the Casino, and the Borrower
holds sole legal and beneficial ownership interest in and to all interests in
Guarantor, and they are executing and delivering this Agreement and the other
Loan Documents based solely upon their own independent investigation and not
upon any representation or statement of Lender; (v) there are no Defaults or
Events of Default pursuant to any Loan Documents; and (vi) neither Borrower nor
Guarantor has any defenses, set-offs, claims, counterclaims or recoupments
against Lender or with respect to the Loan.
2.1 EXTENSION OF THE LOAN. During the Revolving Credit Period, and upon
the terms and subject to the conditions set forth in this Agreement, Lender
shall advance to Borrower, and Borrower may borrow, and repay and re-borrow,
principal under the Loan in an aggregate amount not to exceed the Maximum
Exposure. The Advances shall be funded as a revolving line of credit in one or
more Advances made under the Facility. Advances will be made pursuant to this
Agreement and amounts repaid under the Facility may be reborrowed by Borrower
during the Revolving Credit Period.
(a) On the Closing Date, Borrower shall authorize, execute and
deliver to Lender the Note made payable to the order of Lender, which shall
evidence Advances to Borrower and Borrower's Obligations under the Available
Funding.
2.2 USE OF LOAN PROCEEDS. Borrower agrees to use the proceeds of the
Facility solely for working capital. If the proceeds of the Loan and any other
monies paid by Borrower are insufficient to satisfy the costs and liens with
respect to Collateral against which Advances are made, as further described
above, or the use of proceeds of the Loan varies materially (as determined by
Lender in its sole discretion) from the uses described above, Lender shall have
no obligation to fund the Loan.
2.3 UNUSED LINE FEE. Borrower shall pay quarterly to Lender a fee for
each preceding three (3) month period during the term of the Loan in an amount
equal to thirty-five (35) basis points per annum (.35%) of the excess of (i) the
Maximum Exposure, reduced on a dollar for dollar basis by any reductions of
Commitment made in accordance with the terms of this Agreement over (ii) the
average outstanding monthly balance of Loan during such preceding three (3)
month period.
2.4 ADVANCES; FACILITY AND LOAN AVAILABILITY. Advances will be
calculated and made in accordance with the Available Funding. Provided there
does not exist a Default or Event of Default, and upon the terms and subject to
the conditions set forth herein, during the Revolving Credit Period, Lender
shall advance to Borrower, and Borrower may borrow, repay and reborrow,
principal in an amount not to exceed at any time, the Available Funding.
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(A) The Loan shall be funded as a revolving line of credit in
one or more Advances. Amounts repaid by Borrower may be re-borrowed during the
Revolving Credit Period.
(B) Unless sooner terminated upon an Event of Default, the
Revolving Credit Period shall expire on the Final Maturity Date. No Advances or
readvances of the Loans will be made after the expiration or termination of the
Revolving Credit Period.
(C) All Advances shall be calculated and made in accordance
with the Available Funding criteria and borrowing limits for the Loan. Each
Advance and the aggregate of all Advances under the Facility shall not exceed
the Available Funding borrowing limits at the time of each Advance or at any
other time.
(D) The obligation of Lender to make any Advance under the
Facility shall be subject to the ongoing satisfaction or continuing performance
of all of the conditions set forth in the Agreement, as well as compliance with
all conditions and covenants in the Loan Documents, including without
limitation, compliance with the financial covenants set forth in the Loan
Documents, and compliance with the Available Funding borrowing limits , and
timely delivery of the Financial Statements and other reports required in the
Loan Documents, and satisfaction and performance of all of the conditions
precedent set forth in the Agreement:
(E) OFFSETS. With respect to any Advances, Lender may in its
discretion, offset from the net amount of any Advance, and retain or disburse as
appropriate (i) the unpaid interest, if any, due in respect of the Loan in the
month in which such Advance occurs or due in prior months, (ii) amounts required
to be paid or prepaid pursuant to the Loan Documents, (iii) Loan Costs,
including attorneys' fees and costs, due and payable in accordance with this
Agreement or the Loan Documents, and (iv) other sums reflected on the Borrower's
Request for Advance, a closing statement or disbursements schedule, or as
otherwise agreed by Borrower.
(F) REVOLVING CREDIT PERIOD. Unless sooner terminated upon an
Event of Default, no Advances or readvances of the Loan will be made after the
Final Maturity Date.
2.5 REQUESTS FOR ADVANCES. Each request for an Advance shall be in
writing and completed on the Borrower's Certificate and Request for Advance
substantially in the form of EXHIBIT A (in each case, a "REQUEST FOR ADVANCE").
(A) CERTIFICATIONS. Each Request for Advance shall:
(I) specify whether the requested Advance is sought
under the Facility or under another Section or provision of this Agreement;
(II) certify the amount of the then-current Available
Funding;
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(III) specify the principal amount of the Advance
requested, and designate the account to which the Net Proceeds of such Advance
are to be disbursed and transferred;
(IV) state that the representations and warranties of
the Borrower contained in this Agreement and in any closing or funding related
certifications are true and correct in all material respects as of the date of
the request and, after giving effect to the making of such requested Advance,
will be true and correct in all material respects as of the date on which the
requested Advance is to be made;
(V) state that no Default or Event of Default exists
as of the date of the request and, after giving effect to the making of such
requested Advance, no Default or Event of Default would exist as of the date on
which the requested Advance is to be made; and
(VI) specify both the (a) then outstanding principal
amounts of, and (b) after giving effect to (a) of this subsection (vi), then
remaining available principal amounts that may be borrowed pursuant to
restrictions pertaining to, Working Capital Indebtedness (as such term is
defined in the Indenture).
(B) PROCEDURE, TIMING AND ADVANCE DATE. Each Request for
Advance shall be signed by an authorized officer of Borrower or Borrower's
Representative. Requests for Advances will be delivered to the Lender at least
three (3) Business Days prior to the date of the requested Advance ("ADVANCE
DATE"). Any fees and expenses that are due and required under this Agreement to
be paid to the Lender at the time of a Request for Advance, whether in
connection with such requested Advance or otherwise, shall be deemed to be added
to and included as a part of each Request for Advance and, without further act
or prior notice, shall be paid directly from the proceeds of such Advance;
provided, that the foregoing shall not be deemed to be in limitation of the
rights of Lender under Sections 2.13, 2.14,_9, 10.4, 10.9, 10.10, and 12.9_of
this Agreement. Alternatively, in the absence of a Request for Advance from
Borrower following the declaration of an Event of Default, Lender may deem such
fees and expenses, when due and payable, to comprise a Request for Advance
without any submission from Borrower and Lender shall be paid therefrom.
2.6 INTEREST RATE. The outstanding principal balance of the Facility
will accrue interest at the Interest Rate. Changes in the Interest Rate based on
changes in the LIBOR Rate will be effective as of the first day of each calendar
month after such change is announced or becomes effective. Interest shall be
calculated on the basis of a fraction, the denominator of which is three hundred
sixty (360) and the numerator of which with respect to the first Interest Period
is the actual number of days elapsed from the date of the initial Advance and in
the case of subsequent Interest Periods, the number of days which have elapsed
since the immediately preceding interest payment was due. Interest will accrue
and be payable on the outstanding principal balance of the Loan (including any
amounts added to principal under the Loan Documents) as of Lender's wiring of
funds or other disbursement of funds, through the Lender's receipt of repayment
(if received by the Lender later than 12:00 noon eastern time, then interest
accrual shall be through the next Business Day following such receipt unless
payment is actually credited to Lender such that Lender has the use of the
received payment on the same date as the date of payment). Immediately upon the
occurrence of an Event of Default and after the Final Maturity Date (if the Loan
is not paid in full on or before the Final Maturity Date), at the Lender's
election in its discretion, the Loan will bear interest at the Default Rate.
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2.7 USURY SAVINGS CLAUSE. Lender and Borrower intend to comply at all
times with applicable usury laws. All agreements between Lender and Borrower,
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason of demand or
acceleration of the maturity of the Loan or otherwise, shall the interest
contracted for, charged, received, paid or agreed to be paid to Lender exceed
the highest lawful rate permissible under applicable usury laws. If, from any
circumstance whatsoever fulfillment of any provision hereof, of the Note or of
any other Loan Documents shall involve transcending the limit of such validity
prescribed by any law which a Court of competent jurisdiction may deem
applicable hereto, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and if from any circumstance Lender shall
ever receive anything of value deemed interest by applicable law which would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of the principal of the Loan and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal of the Loan, such excess shall be refunded to Borrower. All interest
paid or agreed to be paid to Lender shall, to the extent permitted by Applicable
Law, be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal so that the interest on the Loan for such
full period shall not exceed the highest lawful rate. Borrower agrees that in
determining whether or not any interest payment under the Loan Documents exceeds
the highest lawful rate, any non-principal payment (except payments specifically
described in the Loan Documents as "interest") including without limitation,
prepayment fees and late charges, shall to the maximum extent not prohibited by
law, be an expense, fee, premium or penalty rather than interest. Lender hereby
expressly disclaims any intent to contract for, charge or receive interest in an
amount which exceeds the highest lawful rate. The provisions of the Note, this
Agreement, and all other Loan Documents are hereby modified to the extent
necessary to conform with the limitations and provisions of this Section, and
this Section shall govern over all other provisions in any document or agreement
now or hereafter existing. This Section shall never be superseded or waived
unless there is a written document executed by the Lender and the Borrower,
expressly declaring the usury limitation of this Agreement to be null and void,
and no other method or language shall be effective to supersede or waive this
paragraph.
2.8 PAYMENTS AND PREPAYMENTS.
(a) All payments made in respect of the Facility (in good,
collected funds in legal tender of the United States of America) will be applied
by Lender in the following order: (a) to the payment of Loan Costs or expenses
incurred by Lender pursuant to this Agreement or any Loan Document in respect of
the Facility, as quantified by Lender, including reasonable costs and expenses
incurred in creating, maintaining, perfecting, protecting or enforcing Lender's
Liens in and to the Collateral and in collecting any amounts due to Lender in
connection with the Facility; (b) to the payment of any interest accrued on the
Facility at the Interest Rate or Default Rate, as applicable; (c) to the
reduction of the principal balance of the Facility; and (d) to any other
monetary Obligations remaining due and unpaid to Lender.
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(b) Borrower agrees punctually to pay or cause to be paid to
Lender all principal and interest due in connection with all Advances and all
Obligations. Borrower shall make or cause to be made payments on the Loan in the
manner and at times as provided in this Agreement. Without limitation of the
foregoing, Borrower shall make or cause to be made the following payments in the
Facility:
(i) Interest on the aggregate outstanding principal
balance of Advances, at the Interest Rate, shall be due and payable monthly in
arrears on the first Business Day of each month, and shall be paid as set forth
in this Agreement.
(ii) The entire Facility shall be payable in full by
no later than the Final Maturity Date together with any accrued interest thereon
then remaining unpaid and any other amounts due thereunder; and
(iii) All Mandatory Prepayments.
(c) Except for regular payments of interest as provided
hereunder, prepayments of the Facility may be made in whole, but not in part,
upon five (5) days prior written notice to the Lender at any time without
penalty or premium.
2.9 TAXES. Borrower and/or Guarantor have paid and will pay or cause to
be paid, on or before the last day when they may be paid without interest or
penalty, in full all real property, personal property, income, sales, ad valorem
and other taxes and assessments against the Casino, the Property and the
Collateral or otherwise payable by Borrower or Guarantor, except for those
contested in good faith by appropriate proceedings and with respect to which
adequate reserves in conformity with GAAP and reasonably satisfactory to the
Lender have been provided on Borrower's or Guarantor's books and records.
Borrower and Guarantor know of no basis for any additional taxes or assessments
against the Property, the Collateral or the Borrower or Guarantor. Borrower and
Guarantor have filed all tax returns required to have been filed by them and
have paid all taxes shown to be due and payable on such returns, including
interest and penalties, and all other taxes which are payable by each, to the
extent the same have become due and payable, except for those contested in good
faith by appropriate proceedings and with respect to which adequate reserves in
conformity with GAAP and reasonably satisfactory to the Lender have been
provided on Borrower's or Guarantor's books and records. Upon request by Lender,
Borrower and Guarantor shall deliver to Lender receipts or other satisfactory
proof of payments of any taxes or other impositions against the Casino, the
Collateral or the Borrower. If any Taxes, including, but not limited to, real
property, personal property, income, sales, excise, documentary stamp taxes or
intangibles taxes are determined to be due and payable on any other Loan
Documents or with respect to any Advances, Borrower shall be responsible for
such payment, together with any penalties or late charges. Any such payment
Obligations on the part of Borrower will be included among the Obligations, and
if determined to be due, will be immediately due and payable upon demand from
the Lender or applicable Governmental Authority, and will, at the Lender's
option, bear interest at the Default Rate until paid. Borrower and Guarantor
shall indemnify Lender and hold Lender harmless from any such taxes, penalties,
late charges or fines as may actually be or become due and payable. If Borrower
or Guarantor shall determine to seek a refund of any taxes previously paid in
respect of any Loan Documents, Borrower shall, from time to time as events
warrant, provide the Lender with complete copies of all relevant filings,
correspondence and documentation.
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2.10 BORROWER'S REPRESENTATIVE. The Borrower hereby irrevocably
designates and appoints Denise Barton, Chief Financial Officer of the Borrower,
or the then President of Borrower, as its agent and the "BORROWER'S
REPRESENTATIVE", for the purposes set forth herein. Denise Barton hereby accepts
such designation and appointment, and agrees to serve as Borrower's
Representative in connection with the Loan and actions required under the Loan
Documents. Borrower or Borrower's Representative may change the person or
persons authorized to act as Borrower's Representatives from time to time by
written notice given to Lender, provided, however, that any notice given or
action taken by a person that was designated a Borrower's Representative, and
any action commenced, taken, or not taken by Lender at the request or direction
of a person that was designated a Borrower's Representative, in each case prior
to the time that Lender receives a written notice from Borrower or the
Borrower's Representative or any subsequently appointed Borrower's
Representative removing such person as a Borrower's Representative, shall be
binding upon Borrower. All representations, warranties, certifications,
deliveries and actions taken by or through the Borrower's Representative, shall
be deemed taken by and binding upon the Borrower, and each of them, and are
hereby ratified, adopted and reaffirmed by the Borrower. Notwithstanding the
foregoing, if the Lender so requires, each Borrower shall provide the Lender
with evidence that all actions taken by Borrower's Representative on behalf of a
Borrower have been properly authorized.
2.11 ACCOUNTINGS. Lender is hereby authorized to record in its manual
or data processing records the date and gross amount of each Advance made in
favor of the Borrower, payments of principal and each payment of interest on
account of such Advances; provided, that the failure to make any such record
entry with respect to any Advance or payment or source of payment shall not
limit or otherwise affect the Borrower's Obligations under the Loan Documents.
Each and every such accounting shall, absent manifest error, be deemed prima
facie correct.
2.12 LENDER LOAN LIMITS AND AVAILABILITY.
All Advances made and outstanding under the Loan shall reduce,
dollar for dollar, the remaining Available Funding for the Loan.
2.13 MAXIMUM EXPOSURE. The aggregate principal balance outstanding
under the Loan at any time shall not exceed $10,000,000.00.
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Upon the occurrence and during the continuation of an Event of Default,
notwithstanding the limitations on Available Funding set forth herein or in any
Loan Documents, Lender shall have the right, but not the Obligation, to fund
amounts in excess of the maximum loan amounts from time to time to pay accrued
and unpaid interest, Loan Costs, and fees and expenses due hereunder, to pay
Taxes, to protect and preserve the Collateral, to address Defaults or Events of
Default, or to enforce rights or remedies (Borrower agreeing that such action by
Lender shall not cure any Event of Default unless Lender agrees to such cure in
writing). Any excess amounts so funded by Lender shall be evidenced by the
Borrower Note and this Agreement, and by all Loan Documents, and secured by all
Collateral, and guaranteed by the Guarantor. Borrower and the Guarantor agree to
execute additional notes, mortgages, guarantees or other Loan Documents as may
be reasonably requested by the Lender.
2.14 FUTURE LOANS. In the event of any change in any existing or future
law, regulation, ruling or other interpretation that applies to Lender which
shall either: (i) impose, modify or make applicable any reserve, special
deposit, capital requirement, assessment or similar requirement against the
Loan; or (ii) impose on Lender any other condition regarding the Loan, and the
result of any event referred to in clause (i) or (ii) above shall be to increase
the cost (including a reasonable allocation of resources) or decrease the yield
to Lender of issuing or maintaining the Loan (which increase in cost shall be
the result of Lender's reasonable allocation of the aggregate of such cost
increases or yield decreases resulting from such events to all of its borrowers
similarly situated), then, upon demand by Lender, accompanied by a written
explanation of Lender's increase in cost or decreased yield (which shall be the
result of Lender's reasonable allocation of the aggregate of such cost increases
or yield decreases resulting from such event to all of its borrowers similarly
situated) Borrower shall immediately pay to Lender, from time to time as
specified by Lender, additional amounts which shall be sufficient to compensate
Lender for such increased cost or decreased yield. A statement of charges
submitted by Lender shall be prima facie correct, absent manifest error, as to
the amount owed.
SECTION 3
COLLATERAL
3.1 GRANT OF SECURITY INTEREST. To secure the prompt and complete
payment and performance (a) by the Borrower of all of its Obligations and (b) by
Borrower and Guarantor of the Facility and Obligations, for value received,
Borrower and Guarantor, respectively, unconditionally and irrevocably assign,
pledge and grant to Lender, and hereby confirm the granting to Lender of, a
continuing first priority Lien, mortgage and security interest in and to the
Collateral, whether now owned or existing or hereafter acquired, reacquired or
arising, and regardless of where located. Borrower and Guarantor, respectively,
acknowledge and confirm that Lender has been granted and continues to hold, a
continuing security interest and Lien in, to and upon, and right of set-off with
respect to, the Collateral, with attachment, perfection and priority as to
various components thereof unchanged from the time such Liens first arose. The
above-described Lien and security interest shall not be rendered void by the
fact that no Obligations exist as of any particular date, but shall continue in
full force and effect until all Obligations have been fully and finally paid,
performed and satisfied.
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Notwithstanding the foregoing, "Collateral" shall not include any
property as to which the grant of a security interest would violate the laws,
rules or regulations of the Commission or the Gaming Authorities unless and
until any required consents are obtained. Borrower and Guarantor agree to use
their reasonable efforts to obtain any such required consent.
3.2 GUARANTOR'S MORTGAGE. As additional collateral security for the
Loan and the Guaranty of Guarantor, Guarantor shall deliver to Lender the
following:
(A) a first lien mortgage and security agreement (the
"Mortgage") covering the Property, together with all easements and appurtenances
benefiting the Property, all the improvements thereon, and all fixtures,
machinery and equipment necessary or incidental to the general operation and
maintenance thereof and all renewals and replacements thereof or additions
thereto, all as more specifically described in the Mortgage. The Mortgage shall
be a continuing first lien in the full amount of the Loan, on good and
marketable fee simple title to the Property, free and clear of all prior liens
(including without limitation lien claims and notices of unpaid balance and
right to file lien), restrictions, easements and other encumbrances and title
objections that are not approved by Lender, subject to Permitted Exceptions as
set forth on EXHIBIT B, and shall be insured as such at Borrower's expense by a
reputable title insurance company satisfactory to Lender.
(B) an Intercreditor and Subordination Agreement from the
Trustee, in the form of EXHIBIT C attached hereto and with such changes as the
Lender and the Trustee shall approve in writing.
(C) An assignment of leases and of agreements affecting real
estate, and such additional security agreements financing statements and other
security instruments creating a valid first lien upon the aforesaid fixtures,
machinery, equipment and other property now or hereafter located upon the
Mortgaged Property as Lender may reasonably require.
3.3 FINANCING STATEMENTS. Borrower and Guarantor hereby authorize
Lender or Lender's counsel, Cooper Levenson April Niedelman & Wagenheim, P.A.,
to file with the appropriate state authorities financing statements (including
amendments and continuation statements) provided for by the Code together with
any and all other instruments or documents and take such other action as may be
required to perfect and to continue the perfection of Lender's security
interests in the Collateral. At any time and from time to time, upon request by
Lender, Borrower and Guarantor shall duly execute, acknowledge, and deliver to
Lender any assignment, financing statement, instrument, document or other
agreement, and take any other action that Lender may reasonably request, to
create, preserve, continue, perfect or ratify the security granted in this
Agreement, or that Lender may deem reasonably necessary to protect, exercise or
enforce its rights with respect to the Collateral, or that may otherwise be
necessary to effect for Lender the benefit of the security intended to be
granted herein. All documents to be executed and/or delivered to Lender shall be
in form and substance reasonably satisfactory to Lender.
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3.4 LOCATION OF COLLATERAL. All tangible Collateral which is personal
Property is to remain, at all times, on the premises in which it is now located,
and Borrower and Guarantor may not transfer the Collateral from such premises
without the prior written approval of the Lender.
3.5 INSURANCE AND PROTECTION OF COLLATERAL. Borrower and Guarantor
agree to maintain and pay for insurance upon all Collateral wherever located
(including whether in storage or in transit) covering risks in such amounts and
with such insurance companies as is provided in Section 6.2 hereof. To the
extent any casualty insurance coverage required under this Agreement with
respect to the Casino is provided by Guarantor, and to the extent any portion of
the Collateral is covered by such insurance, with respect to such portion of the
Collateral only, the Borrower's obligation under this Section 3.5 shall be to
cause Guarantor to maintain such casualty insurance coverage.
3.6 INTENTIONALLY OMITTED.
3.7 SECURITY AGREEMENT. This Agreement shall be deemed a security
agreement as defined in the Code, and the remedies for any violation of the
covenants, terms and conditions of the agreements herein contained shall be
cumulative and be as prescribed (a) herein or in any Loan Document, or (b) by
law, or (c) as to such part of the Collateral which is also reflected in any
filed assignment or financing statement, by the specific provisions of the Code
or other applicable law now or hereafter enacted, all at the Lender's sole
election, as may be exercised on one or more occasions.
3.8 CROSS-COLLATERALIZATION/CROSS-DEFAULT. Advances by Lender made to
Borrower or Guarantor under the Loan, or made in respect of Collateral pledged
by Borrower or Guarantor or in respect of the Casino, are and shall be
cross-collaterlized and cross-defaulted.
SECTION 4
CONDITIONS PRECEDENT TO CLOSING AND ADVANCES
The obligation of Lender to fund any Advances shall be subject to the
satisfaction of each of the following conditions precedent, in addition to all
of the conditions precedent set forth elsewhere in the Loan Documents:
A. AT OR BEFORE CLOSING:
4.1 OPINIONS OF COUNSEL. Lender shall have received from Sterns and
Weinroth, New Jersey counsel for the Borrower and Guarantor, an opinion
effective as of the Closing Date which shall be in form and substance reasonably
acceptable to the Lender.
4.2 CLOSING DELIVERIES. Lender shall have received, in form and
substance satisfactory to the Lender, all documents, instruments and information
reasonably required by the Lender and each agreement required to be delivered
shall be in full force and effect unless otherwise agreed in writing by Lender.
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4.3 SECURITY INTERESTS. Lender shall have received satisfactory
evidence that all security interests and liens granted to Lender pursuant to
this Agreement or the other Loan Documents have been duly perfected and
constitute first priority liens on the Collateral.
4.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained herein and in the other Loan Documents shall be true, correct and
complete in all material respects on and as of the Closing Date.
4.5 PROCEEDINGS SATISFACTORY. All actions taken in connection with the
execution or delivery of the Loan Documents, and all documents and papers
relating thereto, shall be reasonably satisfactory to Lender and its counsel.
Lender and its counsel shall have received copies of such documents and papers
as Lender or such counsel may reasonably request in connection therewith, all in
form and substance satisfactory to Lender and its counsel.
4.6 GOVERNMENT PERMITS. Lender shall have received and approved true,
correct and complete copies of all applicable governmental permits, approvals,
consents, licenses, and certificates for the establishment of the Casino as a
licensed casino hotel in New Jersey to be owned and operated by Guarantor, and
with respect to Borrower, in accordance with Applicable Laws and, if required,
in accordance with other laws, for the ownership, occupancy and use and
operation of the Casino.
B. PRIOR TO ADVANCES:
4.7 NO DEFAULT. No Default or Event of Default shall exist immediately
prior to the Closing Date hereunder or prior to the making of a requested
Advance, or after giving effect to such Closing Date and after giving effect to
any Advance made hereunder.
4.8 FUNDING LIMITS. Lender shall have determined that the requested
Advance, when added to the aggregate outstanding principal amount of all
previous Advances, if any, does not exceed the total amount of the Available
Funding.
4.9 ADVANCES DO NOT CONSTITUTE A WAIVER. No Advance shall constitute a
waiver of any condition of Lender's obligations to make further Advances.
4.10 SECURITY INTERESTS. Lender shall have received satisfactory
evidence that all security interests and liens granted to Lender pursuant to
this Agreement or the other Loan Documents continue to be duly perfected and
remain first priority liens on the Collateral.
4.11 REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained herein and in the other Loan Documents shall be true, correct and
complete in all material respects as of the date of each Advance.
4.12 PERFORMANCE OF AGREEMENTS. Borrower shall have performed in all
material respects all agreements, paid all fees, costs and expenses and
satisfied all conditions which any Loan Document provides are due to be paid or
performed by it as of such date, and each agreement required to have been
executed and delivered in connection with any prior Advance shall be consistent
with the terms of this Agreement and shall be in full force and effect.
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C. AS TO BOTH CLOSING AND ADVANCES:
4.13 GOVERNMENTAL APPROVALS. All material approvals, licenses, permits
and consents in connection with the execution, delivery, and performance of and
under the Loan, the Note, and the Loan Documents shall have been obtained and
shall be in good standing and full force and effect.
4.14 TAXES. Lender shall have received satisfactory evidence that all
taxes and assessments owed by or for which Borrower or Guarantor are responsible
for collection, relating to the Casino, the Property, or otherwise, have been
paid to the extent due, or will be paid when due, which taxes and assessments
include, without limitation, sales taxes, room occupancy taxes, payroll taxes,
personal property taxes, excise taxes, intangibles taxes, real property taxes,
and income taxes, and any assessments related to the Casino (collectively,
"TAXES"), except for those contested in good faith by appropriate proceedings
and with respect to which adequate reserves in conformity with GAAP and
reasonably satisfactory to the Lender have been provided on Borrower's or
Guarantor's books and records.
4.15 FINANCIAL STATEMENTS. Lender shall have received and approved the
Financial Statements required for the Borrower, all in form and substance
satisfactory to Lender.
4.16 EXPENSES. Borrower shall have paid the Loan Costs, fees and
expenses required to be paid prior to or at closing hereunder. Lender shall have
no obligation to make any Advance hereunder unless the amount of the initial
Advance together with any monies paid by Borrower is sufficient to satisfy all
fees and expenses required to be paid pursuant to this Agreement and repay all
prior liens and mortgages on the Collateral.
4.17 LITIGATION. Except as may be disclosed on the Litigation Summary
described in SCHEDULE 2, there shall be no bankruptcy, foreclosure action or
other material litigation or judgments pending or outstanding against the
Property, the Casino, any portion of the Collateral, the Borrower or Guarantor
(each a "MATERIAL Party"). The term "other material litigation" as used herein
shall not include matters in which (i) a Material Party is plaintiff and no
material counterclaim is pending or (ii) which Lender determines, in its sole
discretion, are immaterial due to settlement, insurance coverage, frivolity, or
amount or nature of claim. Lender may require updated litigation searches and
explanations in its discretion.
SECTION 5
GENERAL REPRESENTATIONS AND WARRANTIES
As a material inducement to Lender to enter into this Agreement,
Borrower represents and warrants to Lender as follows, which representations and
warranties, as may be updated, supplemented, modified and recertified by
Borrower in writing, shall remain true throughout the term of the Loan Term:
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5.1 FORMATION, EXISTENCE, QUALIFICATION AND COMPLIANCE.
(A) Borrower is a Delaware corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
shareholders of and the percentage of owned interest in the Borrower are:
Name Percent Owned
---- -------------
GB Holdings, Inc. 100%
Borrower's principal place of business and chief executive office is located at
Indiana Avenue and Brighton Park, Atlantic City, New Jersey 08401.
(B) Guarantor is a New Jersey limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. The members of and the percentage of each owned interest in the
Guarantor are:
Name Percent Owned
---- -------------
Atlantic Coast Entertainment Holdings Inc. 100%
Guarantor's principal place of business and chief executive office is
located at Indiana Avenue and Brighton Park, Atlantic City, New Jersey 08401.
(C) Borrower and Guarantor (a) have all requisite authority
and power to conduct their respective businesses and own and lease their
properties and assets, and to perform their Obligations under the Loan Documents
and (b) are qualified and in current good standing in every jurisdiction in
which the nature of their businesses make qualification necessary or where
failure to qualify could have a Material Adverse Effect on its financial
condition or the performance of its Obligations under the Loan Documents.
(D) Borrower and Guarantor are in compliance in all respects
with all Applicable Laws, their respective businesses and the Casino, the
violation of which would have a Material Adverse Effect on its ability to
perform its Obligations, and each has obtained all approvals, licenses,
consents, exemptions and other authorizations from, and has accomplished all
filings, registrations, and qualifications with all Governmental Authorities
that are necessary for the transaction of Borrower's and Guarantor's businesses,
the absence of which would have a Material Adverse Effect on its ability to
conduct such businesses.
5.2 AUTHORIZATION, EXECUTION AND ENFORCEABILITY.
(A) EXECUTION AND PERFORMANCE. The Loan Documents have been
duly authorized by all necessary action, and executed and delivered, and
constitute the duly authorized, valid and legally binding obligations of
Borrower (and as applicable to it, the Guarantor), enforceable (except as may be
limited by applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, conservatorship, rehabilitation, liquidation, receivership,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity (regardless of whether
such principles are considered in a proceeding in equity or at law)) against
Borrower or the Guarantor, as applicable, in accordance with their respective
terms.. Borrower and Guarantor have and will have all requisite power and
authority to execute and deliver the Loan Documents and to perform its or their
obligations thereunder.
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(B) OTHER AGREEMENTS. The execution, delivery, performance
under and compliance with the terms and provisions of the Loan Documents will
not (i) require any consent or approval not heretofore obtained of any Person
having an interest in, or jurisdiction or control over, Borrower or Guarantor
including without limitation under the Indenture but excluding such approvals as
may be necessary before the exercise of remedies under the Loan Documents, (ii)
violate any provisions of, or require any consent or approval not heretofore
obtained under, the Certificate of Incorporation or Bylaws, or other governing
document applicable to Borrower and Guarantor (collectively, "ORGANIZATIONAL
DOCUMENTS"), (iii) result in the creation or imposition of any lien, claim,
charge or other rights in others or restrictions (other than as provided in the
Loan Documents), which could materially adversely affect Borrower or Guarantor
or its or their ability to perform its or their obligations (including without
limitation the Obligations), (iv) violate any law, writ, order, regulation,
injunction, decree, determination or award which might materially adversely
affect Borrower or Guarantor or its or their ability to perform their
obligations (including without limitation the Obligations), and/or (v) conflict
or be inconsistent with, or result in any breach or default under, or permit
acceleration or cancellation of, any contract, agreement, lease, or commitment
to which Borrower or a Guarantor is a party or is bound.
(C) NO APPROVALS. No approval, authorization, order, license,
permit, franchise or consent of, or registration, declaration, qualification or
filing with, any Governmental Authority or other Person, including without
limitation, the Gaming Authorities or any Person involved in the operations or
financing of the Casino or the Property, is required and not obtained and fully
issued in connection with the execution, delivery and performance by Borrower
(or Guarantor) of any of the Loan Documents or the enforcement by Lender of any
of the Loan Documents, except that the parties recognize that certain approvals
of the Gaming Authorities will be necessary before the exercise of remedies
under the Loan Documents.
5.3 FINANCIAL STATEMENTS AND BUSINESS CONDITION. The Financial
Statements are true, correct, and complete in all material respects as of the
dates specified therein and the balance sheets, profit and loss statements and
statements of cash flow present fairly, the financial condition and results of
operations of Borrower and Guarantor as of the dates and for the periods
specified. There were no material liabilities, direct or indirect, fixed or
contingent, of Borrower or Guarantor as of the dates of such Financial
Statements which were not reflected therein or in the notes thereto, which have
not otherwise been disclosed to Lender in writing. Except for any such changes
heretofore expressly disclosed in writing to Lender, there has been no material
adverse change in the respective financial conditions of Borrower or Guarantor
from the financial conditions shown in their respective Financial Statements,
nor has Borrower or Guarantor incurred any material liabilities, direct or
indirect, fixed or contingent, which are not shown in its Financial Statements.
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All Financial Statements were and will be prepared in accordance with
GAAP. No Material Adverse Effect has resulted or occurred in the financial
condition of Borrower or Guarantor since the dates of the Financial Statements.
At all times prior to, as of, and after the date hereof, and after
giving effect to the transactions contemplated under the Loan Documents,
including without limitation, the borrowing of the Loan to the full extent
provided in the Loan Documents, and the granting of Liens to Lender in all of
the Collateral, and the incurring of all of the Obligations, the total fair
value of the Borrower's and Guarantor's assets and properties exceeds the total
amount of their debts and other liabilities. Borrower and Guarantor are able to
pay all of their debts as they become due, and they shall maintain such solvent
financial condition, giving effect to all obligations, absolute and contingent,
of Borrower, Guarantor. Borrower's and Guarantor's obligations under this
Agreement and under the Loan Documents will not render them unable to pay their
respective debts as they become due.
5.4 TAXES. All ad valorem taxes and other Taxes and assessments against
Borrower, Guarantor, the Casino and the Collateral, to the extent that the same
are due and payable, have been paid and Borrower and Guarantor know of no basis
for any additional taxes (other than ad valorem taxes and excise taxes that
become due in the ordinary course of business) or assessments against Borrower,
Guarantor, the Casino or the Collateral, except for those contested in good
faith by appropriate proceedings and with respect to which adequate reserves in
conformity with GAAP and reasonably satisfactory to the Lender have been
provided on Borrower's or Guarantor's books and records. As of the date of this
Agreement, Borrower and Guarantor have filed all required tax returns and have
paid all taxes shown to be due and payable on such returns, including interest
and penalties, and all other taxes which are payable by them, to the extent the
same have become due and payable, except for those extensions permitted by
Applicable Law and for those contested in good faith by appropriate proceedings
and with respect to which adequate reserves in conformity with GAAP and
reasonably satisfactory to the Lender have been provided on Borrower's or
Guarantor's books and records. Borrower and Guarantor shall account for, collect
and pay any applicable sales tax, and Borrower and/or Guarantor shall account
for, collect and withhold and pay all employment taxes. Without limiting the
foregoing, Borrower and Guarantor represent, warrant and covenant that all Taxes
against them, the Casino and the Collateral have been and will continue to be
paid until such time as all Obligations owed to Lender are satisfied. Borrower
and Guarantor shall indemnify Lender and hold Lender harmless from any such
taxes, penalties, late charges or fines as may actually be or become due and
payable; such indemnity to survive final payment of the monetary Obligations.
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5.5 COMPLIANCE WITH LAW. The Borrower and Guarantor:
(A) are not in violation, nor are the Property or the business
operations in respect of the Casino or the Collateral in violation, of any
Applicable Law in any material respect; and
(B) to the best of their knowledge, have not received written
notice of any complaints or claims from a Governmental Authority which has not
been resolved to the satisfaction of such Governmental Authority; and
(C) have not failed to obtain any consents or joinders, or any
approvals, licenses, permits, franchises or other governmental authorizations,
or to make or cause to be made any filing, submissions, registrations or
declarations with any government or agency or department thereof necessary to
the establishment, ownership or operation of the Casino, the Property or any of
Borrower's or Guarantor's other assets, or to the conduct of Borrower's or
Guarantor's businesses, which violation or failure to obtain or register
materially adversely affects the Borrower, Guarantor, the Casino, the Property
or the business, properties or condition (financial or otherwise) of the
Borrower, Guarantor or the Property.
5.6 BROKER'S FEES. Borrower has not made any commitment or taken any
action which will result in a claim for any brokers', finders' or other similar
fees or commitments with respect to the transactions described in this
Agreement. Borrower shall defend Lender and save and hold it harmless from all
claims of any Persons for any such fees which indemnity shall include reasonable
attorneys' fees and legal expenses.
5.7 TAX IDENTIFICATION/SOCIAL SECURITY NUMBERS. The Borrower's and
Guarantor's respective federal taxpayer's identification numbers are as follows:
Borrower - 54-2131349
Guarantor - 54-2131351
5.8 LITIGATION AND PROCEEDINGS. Except as set forth on the attached
Litigation Summary, there are no actions, suits, proceedings, claims or disputes
pending or, to the knowledge of the Borrower or Guarantor, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Borrower or Guarantor or against any of their properties
or revenues that (a) purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby, or (b) either
individually or in the aggregate, if determined adversely, could reasonably be
expected to have a Material Adverse Effect.
5.9 LICENSES AND PERMITS. Borrower, the Guarantor, Borrower's
Affiliates involved in the operation of the Casino, each possess all requisite
franchises, certificates of convenience and necessity, operating rights,
approvals, licenses, permits, consents, authorizations, exemptions and orders as
are necessary to carry on Borrower's and Guarantor's business and the ownership
of and operations at the Casino.
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5.10 FULL DISCLOSURE. No information, exhibit or written report
furnished by or on behalf of Borrower or Guarantor to Lender in connection with
the Loan, the Collateral or the Casino and no representation or statement made
by Borrower or Guarantor in any Loan Document contains any material misstatement
of fact or omits any material fact necessary to make the statement contained
herein or therein in light of the circumstance in which they were made not
misleading.
5.11 EMPLOYEE BENEFIT PLANS. Borrower and Guarantor are in compliance
in all material respects with all applicable provisions of the Employee
Retirement Income Security Act, the Internal Revenue Code and all other
applicable laws and the regulations and interpretations thereof with respect to
all employee benefit plans adopted by Borrower and Guarantor for the benefit of
its employees. To Borrower's and Guarantor's best knowledge, no material
liability has been incurred by Borrower or Guarantor for any benefit plan
funding obligation, taxes or penalties which has not been satisfied and which
therefore is violative of the provisions governing such plan.
5.12 USE OF PROCEEDS/MARGIN STOCK. None of the proceeds of the Loan
will be used to purchase or carry any "margin stock" (as defined under
Regulation U of the Board of Governors of the Federal Reserve System, as in
effect from time to time), and no portion of the proceeds of the Loan will be
extended to others for the purpose of purchasing or carrying margin stock. None
of the transactions contemplated in the Agreement (including, without
limitation, the use of the proceeds from the Loan) will violate or result in the
violation of Section 7 of the Securities Exchange Act of 1934, as amended, or
any regulations issued pursuant thereto, including, without limitation,
Regulations T, U and X of the Board of Governors of the Federal Reserve System,
12 C.F.R., Chapter 11. Neither Borrower nor Guarantor is an investment company
as defined by the Investment Company Act of 1940, as amended, and is neither
required to register under said Act.
5.13 REPRESENTATIONS AS TO THE COLLATERAL.
(A) ACCESS. The Casino has direct access to a publicly
dedicated road.
(B) UTILITIES. Electric, gas, sewer, water facilities and
other necessary utilities are lawfully available in sufficient capacity to
service the Casino and any easements necessary to the furnishing of such utility
service have been obtained and duly recorded.
(C) IMPROVEMENTS. All costs arising from the acquisition,
installation, construction and completion of any improvements and the purchase
of any equipment, inventory, or furnishings located in or on the Casino have
been paid, if due.
(D) ZONING LAWS, BUILDING CODES, ETC. The Casino and Property
are in compliance in all material respects with all Applicable Laws, including
without limitation all applicable zoning codes, building codes, health codes,
fire and safety codes, and other applicable laws, including without limitation
Environmental Laws. All inspections, licenses, permits required to be made or
issued in respect of such buildings and amenities will be made or issued by the
appropriate authorities. The use and occupancy of such buildings for their
intended purposes is and will be lawful under all Applicable Laws. Final
certificates of occupancy have been issued by the New Jersey Department of
Community Affairs or the municipal building and zoning officer. The use and
occupancy of the Casino does not and will not violate or constitute a
non-conforming use under any private covenant or restriction or any zoning, use
or similar law, ordinance or regulation affecting the use or occupancy of the
Casino.
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5.14 COLLATERAL.
(A) TITLE. Borrower and Guarantor have good and marketable
title to the Collateral and the Casino. There are no liens, security interests,
or encumbrances against the Collateral and the Casino other than the Permitted
Exceptions. Except for the Liens in favor of Lender and those under this
Agreement, the Indenture or otherwise created in favor of Lender, Borrower will
not grant other liens or security interests or agree to encumbrances on the
Casino or the Collateral without Lender's prior written consent except for such
liens as are incurred in the ordinary course of business by operation of law,
provided that such liens do not exceed the sum of $10,000,000.00 in the
aggregate. No financing statement or other instrument similar in effect covering
all or any part of the Casino, Property, and Collateral is on file in any
recording office, except such as may have been filed in favor of Lender and the
Trustee.
(B) PERFECTION OF SECURITY INTEREST. The execution and
delivery of this Agreement and the other Loan Documents, the filing or recording
of UCC-1 Financing Statements in the office of the Secretary of State of New
Jersey, and the recording in the Public Records of Atlantic County, New Jersey,
create in favor of Lender a valid and perfected continuing first priority
security interest in the Collateral which may be perfected under the Code and a
first lien mortgage and security agreement on the Property and Casino. The
Collateral secures and shall secure the full payment and performance of the
Obligations under this Agreement.
5.15 CONTRACTUAL OBLIGATION. Neither the Borrower nor Guarantor have
received notice of any default under or with respect to any Contractual
Obligation that either individually or in the aggregate, has or would be
reasonably likely to result in a Material Adverse Effect. No Event of Default
has occurred and is continuing or would result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document.
5.16 SUBSIDIARIES, AFFILIATES AND CAPITAL STRUCTURE. The Borrower has
no subsidiaries, other than Guarantor, which have any interest in the Casino in
any way. The Guarantor is the owner and operator of the Casino, is licensed in
such capacity by the Commission, and derives substantial financial benefit from
the business of the Casino. Other than the Indenture, and the documents required
thereto, no Guarantor, or Borrower, or Affiliates, are parties to any stock or
partnership pledges, proxies, voting trusts, member or shareholder agreements or
similar arrangements pursuant to which shareholder or partnership rights, or
voting authority, or rights or discretion with respect to a Borrower or
Guarantor or Affiliate is vested or subject to rights in any other Person.
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5.17 ENVIRONMENTAL MATTERS. The Property and Casino do not and will not
contain any Hazardous Materials and are not in violation of Environmental Laws,
or subject to any existing, pending or threatened investigation by any
Governmental Authority under any Environmental Laws. Neither Borrower nor the
Property, nor any manager thereof, have ever used the Property as a facility for
the storage, treatment or disposition of any Hazardous Materials or have
received notice from any governmental agency, entity or other person with regard
to Hazardous Materials on, under or affecting the Property.
5.18 NO DEFAULTS. No Default or Event of Default exists, and there is
no violation in any material respect of any term of any Organizational Document
of Borrower or Guarantor.
5.19 OTHER LOAN. Borrower and Guarantor are parties to the Indenture
and the 3% Notes and the other documents related thereto (collectively the
"OTHER LOAN"). Borrower represents and warrants that (a) the execution and
delivery of the Loan Documents and performance of the transactions provided for
thereunder do not constitute a default under the Other Loan, (b) the Collateral
securing the Loan is not and will not be subject to any superior Liens in favor
of any other party (including without limitation the Other Loan), other than
Permitted Liens (as defined in the Indenture), and (c) the execution, delivery
and performance of the Other Loan will not cause Borrower to be in Default under
any of the Loan Documents. If Lender shall so require, the Lender and Trustee
shall enter into inter-creditor agreements or such other documents as may be
necessary in form and substance acceptable to Lender in connection with the Loan
and the Other Loan. Borrower and the Guarantor covenant to comply with and fully
and timely perform the covenants and agreements pertaining to the Other Loans.
5.20 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
Borrower and Guarantor shall survive the Closing Date. Except to the extent they
relate solely to facts or circumstances as of the Closing Date, and except as
amended in writing by a Borrower or Guarantor to Lender, and reasonably approved
by Lender, all such representations and warranties shall be deemed to be
incorporated into each Request for Advance, and shall be deemed repeated and
confirmed with respect to each Advance and as of the time of each Advance.
5.21 GUARANTOR REPRESENTATIONS AND WARRANTIES. The Guarantor:
(A) has reviewed with counsel of its choice the Loan
Documents, and Guarantor accepts and consents to the terms of this Agreement and
the other Loan Documents and the transactions provided for herein or therein;
(B) acknowledges and agrees that it will receive material
benefit and valuable consideration as a result of the transactions provided for
herein or contemplated under the Loan Documents;
(C) acknowledges and confirms its continuing obligations under
the Guaranty and agreement to be bound by the terms thereof, and that it is
liable as a surety and principal debtor with respect to the obligations set
forth and described in the Guaranty (the "Guaranteed Obligations");
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(D) acknowledges and agrees that the Guaranteed Obligations
encompass and apply to the Loan and to all Obligations;
(E) is fully aware of the financial and other condition of the
Borrower and is executing and delivering the Guaranty and other Loan Documents
based solely upon its own independent investigation and not upon any
representation or statement of Lender;
(F) acknowledges and confirms as of the date hereof, and after
giving effect to the transactions contemplated under the Loan Documents
including without limitation, the borrowing of the Loan to the full extent
provided in the Loan Documents, and the granting of Liens to Lender in all of
the Collateral, and the incurring of all of the Obligations, the total fair
value of the Borrower's and Guarantor's Properties exceeds the total amount of
their debts, and the Borrower and Guarantor are able to pay and are paying their
debts as they become due; and
(G) acknowledges that its agreements, consents and
acknowledgments contained herein, and the provisions of the Guaranty are a
material inducement to Lender to close under the Loan Documents, and that, but
for the Guaranty, and the Guarantor's agreements as set forth herein, Lender
would decline to enter into the Loan Documents.
SECTION 6
AFFIRMATIVE COVENANTS
So long as any portion of the Obligations under the Loan Documents
remain unpaid or Lender is committed to make Advances hereunder, Borrower and
Guarantor covenant and agree as follows:
6.1 PAYMENT OF INDEBTEDNESS AND PERFORMANCE OF OBLIGATIONS. Borrower
and/or Guarantor shall pay the Loan and promptly perform all of their respective
Obligations hereunder and under the Loan Documents. Borrower and Guarantor will
do all things necessary which are not prohibited by law to ensure that the
representations and warranties set forth herein or in any Loan Documents remain
true and correct, and to prevent the occurrence of any Event of Default.
Borrower and Guarantor will promptly advise Lender if any representations or
warranties become materially untrue, materially incorrect or materially
misleading. Borrower and Guarantor will maintain their chief executive office
and principal place of business in Atlantic City, New Jersey where notices,
presentations and demands in respect of the Loan Documents may be made upon the
Borrower. Such office and the books and records of Borrower shall be maintained
at The Sands Hotel & Casino, Indiana Avenue and Brighton Park, Atlantic City,
New Jersey 08401, until such time as Borrower and/or Guarantor shall so notify
the Lender, in writing, of any change of location of such chief executive office
and principal place of business. The Obligations of Borrower shall inure to the
benefit of Lender, and its successors, assigns and Participants, if any.
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6.2 MAINTENANCE OF INSURANCE.
(A) POLICIES. Borrower and Guarantor shall maintain (or the
Borrower shall cause to be maintained) at all times during the term of this
Agreement, policies of insurance with premiums being paid when due, and shall
deliver to Lender certificates of insurance or originals of insurance policies
issued by insurance companies, in amounts, in form and in substance, and with
expiration dates, all acceptable to Lender and containing a waiver of
subrogation rights by the insuring company, a non-contributory standard mortgage
benefit clause, or their equivalents, and a mortgagee loss payable endorsement
in favor of and reasonably satisfactory to Lender, providing the following types
of insurance on and with respect to the Borrower (or, as appropriate, the
Guarantor) and the Property and Casino:
(I) Fire and extended coverage insurance (including
lightning, hurricane, tornado, wind and water damage, vandalism, malicious
mischief and rent loss or business interruption coverage) covering the
improvements at the Property and Casino and any personal property located in or
on the Property and Casino, in an amount not less than the full replacement
value of such improvements and personal property, and said policy of insurance
shall provide for a deductible acceptable to Lender, breach of warranty
coverage, replacement cost endorsements satisfactory to lender, and shall not
permit co-insurance;
(II) Public liability and property damage insurance
covering the Property and Casino in amounts and on terms satisfactory to Lender;
and
(III) Such other insurance on the Property and Casino
or any replacements or substitutions therefor including, without limitation,
flood insurance (if the property is or becomes located in an area which is
considered a flood risk by the U.S. Emergency Management Agency or pursuant to
the National Flood Insurance program), in such amounts and upon terms as may
from time to time be reasonably required by Lender.
In addition, to the extent any mortgagee other than Lender has any
rights to approve the form of insurance policies with respect to the Property or
Casino, the amounts of coverage thereunder, the insurers under such policies, or
the designation of an insurance trustee or an attorney-in-fact for purposes of
dealing with damage to any part of the Property or Casino or insurance claims or
matters related thereto, or any successor to such attorney-in-fact, or any
changes with respect to any of the foregoing, or disbursements of insurance
proceeds for repair or restoration, Borrower and Guarantor shall ensure that
Lender shall at all times have a superior right, with such other mortgagees to
approve all such matters and any proposed changes in respect thereof; and
Borrower shall not cause or permit any changes with respect to any insurance
policies, insurers, coverage, attorney-in-fact, or insurance trustee, if any,
without Lender's prior written approval.
All insurance policies required pursuant to this Agreement shall
provide that the coverage afforded thereby shall not expire or be amended,
canceled, modified or terminated without at least thirty (30) days prior written
notice to Lender. At least thirty (30) days prior to the expiration date of each
policy maintained pursuant to this SECTION 6.2 a renewal or replacement thereof
satisfactory to Lender shall be delivered to Lender. Borrower and Guarantor
shall deliver or cause to be delivered to Lender receipts evidencing the payment
for all such insurance policies and renewals or replacements. The delivery of
any insurance policies hereunder shall constitute an assignment of all unearned
premiums as further security for the Obligations.
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(B) PROOFS OF CLAIM. In case of loss or damage or other
casualty, Borrower and Guarantor shall give immediate written notice thereof to
the insurance carrier(s) and to Lender. Borrower and Guarantor are authorized
and empowered, subject to the terms of subsection (c) below, and Lender is also
authorized and empowered, to make or file proofs of loss or damage and to settle
and adjust any claim under insurance policies which insure against such risks,
or to direct Borrower and Guarantor, in writing, to agree with the insurance
carrier(s) on the amount to be paid to Lender in regard to such loss, and to be
paid all such insurance proceeds directly from the insurance carrier(s).
(C) LOSS OR CASUALTY. In the event of any fire or other
casualty to or with respect to the improvements on or at the Property or Casino,
or any other Collateral, Borrower and Guarantor shall give immediate written
notice thereof to the insurance carrier(s) and to Lender. To the extent payable
to Borrower or Guarantor under the terms of this Agreement, Borrower and
Guarantor covenant that they will use the proceeds of any insurance claim to
restore or repair the damaged improvements and repair or replace any other
personal property to the same condition as immediately prior to such fire or
other casualty and, with respect to the improvements and personal property on
the Property or Casino, in accordance with applicable Requirements, provided
that prior written notice is given with respect thereto to the Lender and the
scope and plans for the repair and restoration and the budget and payment terms,
have been approved by Lender. The insufficiency of any net insurance proceeds
shall in no way relieve the Borrower or, as applicable, Borrower and Guarantor,
of the obligation to restore, repair or replace such improvements and other
personal property in accordance with the terms hereof or of applicable
Requirements, and Borrower and Guarantor covenant that Borrower or, as the case
may be, the Guarantor shall promptly comply and cause compliance with the
provisions of applicable Requirements relating to such restoration, repair or
replacement. Borrower and Guarantor shall provide evidence satisfactory to
Lender that Borrower or the Guarantor can timely and fully pay all costs of
restoration or repair in excess of the net insurance proceeds available for such
purpose. In addition, Borrower and Guarantor shall ensure that sufficient
business interruption insurance is maintained in effect at all times. Borrower
and Guarantor shall also take actions to maximize the value of Lender's security
and to ensure that the Loan will be paid when due; and Borrower and Guarantor
will provide reasonable assurances to Lender in respect of Lender's security and
repayment. In the event of any insured damage to or destruction of the Property,
Casino, or other Collateral, or any part thereof (an "Insured Casualty") where
the reasonably estimated cost of restoration of such insured damage or
destruction is less than $10,000,000.00 and: (a) the proceeds of insurance (plus
the amount of any deductible) are sufficient to enable Borrower or Guarantor to
achieve a full restoration the Property; (b) the term of, and proceeds derived
from, Borrower's or Guarantor's business interruption insurance (or other
similar insurance) shall be sufficient to fully cover the period of restoration;
(c) Lender determines that the restoration is reasonably capable of being
completed, and is actually completed, at least 30 days prior to the Final
Maturity Date; and (d) the restoration can be completed, and is actually
36
completed, within 150 days from the date that the Insured Casualty occurred,
then, if no Event of Default shall have occurred and be continuing, the proceeds
of insurance shall be applied to reimburse Borrower or Guarantor for the cost of
restoring, repairing, replacing or rebuilding the Property, Casino, or other
Collateral, or the part thereof that is the subject of the Insured Casualty; and
Borrower or Guarantor, as may be applicable, hereby covenants and agrees
forthwith to commence and diligently to prosecute to completion such restoring,
repairing, replacing or rebuilding within a commercially reasonable period of
time. On or before the date that is 60 days after the receipt of those insurance
proceeds that are permitted to be paid to Borrower or Guarantor, as may be
applicable, pursuant to the terms of this subsection, Borrower or Guarantor
shall provide notice to Lender confirming that such insurance proceeds shall be
applied to the restoration, repairs, replacements, and rebuilding that are the
subject of the Insured Casualty, and describing in reasonable detail the work
that is to be performed. As to the losses and proceeds that are described in the
immediately preceding sentence, Lender may (y) settle and adjust any claim
without the consent of Borrower or Guarantor, as may be applicable, or (z) allow
Borrower or Guarantor to agree with the insurance company or companies on the
amount to be paid upon the loss; provided, however, that Borrower or Guarantor,
as may be applicable, may adjust and collect losses aggregating not in excess of
$10,000,000.00 if such adjustment is carried out in a competent and timely
manner, and provided in any case that Lender shall be, and is hereby, authorized
to collect and receipt for any such insurance proceeds in excess of
$10,000,000.00. The expenses incurred by Lender in the adjustment and collection
of insurance proceeds shall become part of the Indebtedness, shall be secured by
the Mortgage and shall be reimbursed by Lender to Borrower on demand. Except as
is otherwise provided in this Section 6.2(c), all proceeds from insurance claims
shall be paid to the Lender, which shall have the option, in its absolute
discretion, to declare such proceeds to be Mandatory Prepayments, or to transfer
such proceeds to the Borrower or Guarantor, as may be applicable, to restore,
repair, or replace the Property, Casino, or other Collateral. To the extent
Lender actually receives any insurance proceeds described in this Section that
equal or exceed the cost of repair or restoration as provided herein and such
amounts exceed the amount necessary to pay and satisfy the Loan in full, then,
except as may be required by law and subject to the rights of any insurer having
paid such insurance proceeds, Lender shall transfer such excess insurance
proceeds to the Borrower.
6.3 CONDEMNATION. In the event that all or a substantial portion of the
Casino or Property is condemned, seized or appropriated by a Governmental
Authority, Lender may, at its option, upon written notice to Borrower, declare
its Commitment to lend hereunder terminated, whereupon its Commitment to lend
shall immediately terminate. Any award, payment or claim for damages, direct or
consequential, in connection with any condemnation or other taking of any
portion of the Casino or Property which is mortgaged to Lender, or for
conveyances in lieu of condemnation, are hereby assigned to and shall be paid to
Lender to the extent of Lender's interests. Lender is authorized (but is under
no obligation) to collect any such proceeds. Upon receipt of such proceeds,
Lender may, in its sole discretion, elect to (a) apply the Net Proceeds of any
such condemnation award as a Mandatory Prepayment in reduction of the
Obligations to the Lender in such order and manner as the Lender may elect,
whether due or not or (b) pay all, or a portion, of such proceeds to Borrower to
be used solely, and to the extent necessary, for the restoration or repair of
the Property.
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6.4 INSPECTIONS AND AUDITS. Borrower shall during normal business hours
permit any agents or representatives of Lender to inspect the Casino and any of
Borrower's or Guarantor's assets (including financial and accounting books and
records), to examine and make copies of and abstracts from the records and books
of account of Borrower or the Guarantor and to discuss their affairs, finances
and accounts with any of their officers, employees or independent public
accountants. Borrower and Guarantor acknowledge that Lender intends to conduct
such audits and inspections on at least an annual basis, but Lender reserves its
rights to conduct audits and inspections on a more frequent basis if it, in its
reasonable commercial discretion, determines such action to be necessary or
desirable. Borrower and Guarantor shall make available to Lender all credit
information in Borrower's and Guarantor's possession or under Borrower's and
Guarantor's control as Lender may request. All inspections, audits and credit
investigations shall be at Borrower's expense including all travel expenses of
Lender's employees.
6.5 REPORTING AND NOTICE REQUIREMENTS. So long as the Indebtedness
under the Loan Documents remains unpaid,
(A) YEAR END FINANCIALS. Borrower and Guarantor shall furnish
to the Lender, simultaneous with but not later than the date that annual filings
are legally required to be submitted to the Securities and Exchange Commission
(the "SEC"): (i) the balance sheets, profit and loss statements and statements
of sources and uses of cash of the Borrower and Guarantor as of the end of such
year and the related statements of income and cash flow for such fiscal year;
(ii) a schedule of all outstanding Indebtedness of the Borrower and Guarantor
describing in reasonable detail each such debt or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt or loan; and (iii) with respect to the Financial Statements of the
Borrower and Guarantor, copies of reports from a firm of independent certified
public accountants selected by Borrower, which report shall be unqualified as to
going concern and scope of audit and shall state that such Financial Statements
present fairly the financial position of the Guarantor and Borrower as of the
dates indicated and the results of its operations and cash flow for the periods
indicated in conformity with GAAP.
(B) QUARTERLY FINANCIAL REPORTS. Borrower and Guarantor shall
furnish to the Lender, simultaneous with but not later than the date that
quarterly filings are legally required to be submitted to the SEC, unaudited
financial statements of Borrower and Guarantor certified by the chief financial
officer of each.
(C) OFFICER'S CERTIFICATE. Each set of annual Financial
Statements or reports delivered to the Lender pursuant to this Agreement will be
accompanied by a certificate of the President, Chief Executive Officer or Chief
Financial Officer of the Borrower (or Guarantor as applicable), setting forth
that the signers have reviewed the relevant terms of this Agreement (and all
other agreements and exhibits between the parties) and have made, or caused to
be made, under their supervision, a review of the transactions and conditions of
the Borrower or Guarantor from the beginning of the period covered by the
Financial Statements or reports being delivered therewith to the date of the
certificate and that such review has not disclosed the existence during such
period of any condition or event which constitutes a Default or Event of Default
or, if any such condition or event existed or exists or will exist, specifying
the nature and period of existence thereof and what action the Borrower or
Guarantor has taken or proposes to take with respect thereto. Such certificate
shall be in a form that is reasonably acceptable to Lender.
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(D) AUDIT REPORTS. Promptly upon receipt thereof, Borrower and
Guarantor shall furnish to the Lender one (1) copy of each other report
submitted to Borrower and Guarantor by independent public accountants in
connection with any annual, interim or special audit made by them of the books
of Borrower and Guarantor, and a copy of each auditor's letter sent to
management.
(E) TAX RETURNS AND TAX RECEIPTS. Promptly upon request,
Borrower and Guarantor will furnish to the Lender copies of filed tax returns
and tax statements and evidence of payment of all taxes levied on the Property
and Casino prior to the date such taxes become delinquent.
(F) NOTICE OF DEFAULT OR EVENT OF DEFAULT. Immediately upon
becoming aware of the existence of any condition or event which constitutes a
Default or an Event of Default, Borrower shall furnish to the Lender a written
notice specifying the nature and period of existence thereof and what action the
Borrower is taking or proposes to take with respect thereto.
(G) NOTICE OF CLAIMED DEFAULT. Immediately upon becoming aware
that the holder of any material obligation or of any evidence of material
Indebtedness of Borrower or Guarantor has given notice or taken any other action
with respect to a claimed default or event of default thereunder, Borrower
and/or Guarantor shall furnish to the Lender a written notice specifying the
notice given or action taken by such holder and the nature of the claimed
default or event of default and what action the Borrower or Guarantor is taking
or proposes to take with respect thereto.
(H) MATERIAL ADVERSE DEVELOPMENTS. Immediately upon becoming
aware of any development or other information which may materially and adversely
affect the Borrower, Guarantor, the Collateral, the Casino, or the business, or
condition (financial or otherwise) of the Borrower or Guarantor or the ability
of either to perform their Obligations under this Agreement, Borrower and
Guarantor shall provide the Lender with telephonic or telefaxed notice, followed
by mailed written confirmation, specifying the nature of such development or
information and such anticipated effect.
(I) OPERATING PLAN. As soon as practicable, and in any event
within thirty (30) days following to the beginning of each Fiscal Year, an
operating plan for the Borrower and Guarantor for such Fiscal Year (including an
operating budget) prepared in a manner consistent with the projections delivered
by the Borrower and Guarantor on or prior to the Closing Date or otherwise in a
manner reasonably satisfactory to the Administrative Agent, accompanied by a
certificate of the chief financial officer, the controller or the treasurer of
the Borrower and Guarantor on behalf of the Borrower and Guarantor,
respectively, to the effect that (i) such projections were prepared by the
Borrower in good faith, (ii) the Borrower has a reasonable basis for the
assumptions contained in such projections and (iii) such projections have been
prepared in accordance with such assumptions; provided however that, no
representation or warranty of any kind is made or implied that such projections
or operating plan will be attained.
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(J) OTHER REPORTS. The Borrower and Guarantor shall promptly
deliver to the Lender copies of each written notice or request, financial
statement, budget or other information received by the Borrower or Guarantor and
such other reports, statements, notices or written communications relating to
the Borrower, the Casino or the Guarantor as the Lender may require, in its
reasonable discretion.
6.6 RECORDS. Borrower and Guarantor shall keep adequate records and
books of account reflecting all financial transactions of Borrower and
Guarantor, in which complete entries will be made in accordance with GAAP.
6.7 INTENTIONALLY OMITTED.
6.8 MAINTENANCE. Borrower shall maintain the Casino and the Properties
in good repair, working order and condition, except for wear and tear incurred
in the ordinary course of business, and shall make or cause to be made all
necessary replacements to the Casino and the Properties.
6.9 PAYMENT OF TAXES AND CLAIMS. Borrower and/or Guarantor will pay
when due, all ad valorem and other Taxes and assessments imposed upon the
Property, the Casino, the Collateral, the Borrower, Guarantor, or any of its or
their property, or with respect to any of its franchises, businesses, income or
profits, or with respect to the Loan or any of the Loan Documents and all other
charges and assessments against Borrower, Guarantor, the Collateral and the
Casino which Borrower is legally obligated to pay before any claim (including,
without limitation, claims for labor, services, materials and supplies) arises
for sums which have become due and payable, except for those contested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on Borrower's and Guarantor's books and
records. If the Guarantor fails to make such payments, Borrower shall promptly
pay such amounts. Except for the Liens in favor of Lender granted pursuant to
the Loan Documents, and except as otherwise specifically provided for herein,
Borrower covenants that no statutory or other Liens whatsoever (including,
without limitation, mechanics', material men's, judgment or tax liens) shall
attach to any of the Collateral, the Property, or the Casino, which shall, in
any event, be subordinate to the Lien of Lender. In the event any such Lien
attaches to any of the Collateral, the Property, or the Casino, Borrower shall,
within thirty (30) days after any such Lien attaches, either: (i) cause such
Lien to be released of record; or (ii) provide Lender with a bond in accordance
with the Applicable Laws of the State, issued by a corporate surety acceptable
to Lender, in an amount and form reasonably acceptable to Lender.
6.10 APPLICATION OF PROCEEDS. The Lender shall be entitled to the
direct receipt of proceeds from (i) any insurance carrier not required to be
used to replace any Collateral, (ii) the sale of any of the Collateral, except
in the ordinary course of business and only to the extent replaced with new
Collateral of at least equal quality and value, (iii) all Net Proceeds arising
or generated from any debt or subordinated debt hereafter issued by Borrower or
Guarantor, and (iv) all Net Proceeds from any condemnation awards, and similar
events that are not in the ordinary course of Borrower's and Guarantor's
respective businesses. Borrower and Guarantor shall execute and deliver to
Lender such written authorization and confirmations as Lender may require to
implement the terms of this Section. Alternatively, Lender's submission of a
copy of this Agreement, or portions thereof, shall be sufficient evidence of
Borrower's and Guarantor's authorization for the direct payment of the foregoing
proceeds to Lender, and Borrower and Guarantor both expressly and irrevocably
confirm such authorization and direction by their execution of this Agreement.
Other than as provided in this Agreement, in the event that any of the foregoing
proceeds are paid to Borrower or Guarantor, they shall deliver such proceeds
immediately to Lender in their original form and, pending delivery to Lender,
Borrower and Guarantor will hold such proceeds as agent for Lender and in trust
for Lender. All such proceeds shall constitute Mandatory Prepayments at the
Lender's sole election.
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6.11 RELEASE AND BONDING OF LIENS. In the event any lien attaches to
the Property or any other Collateral, other than pursuant to the Indenture or
the documents entered into thereto, Borrower shall, within thirty (30) days
after such attachment, at Borrower's option either (a) cause such lien to be
released of record, or (b) provide Lender with a bond in accordance with the
applicable laws of the state in which the Casino is located, issued by a
corporate surety acceptable to Lender, in an amount acceptable to Lender and in
form acceptable to Lender, or (c) provide Lender with such other security as
Lender may reasonably require.
6.12 CLAIMS. Borrower and Guarantor shall (a) promptly notify Lender of
(i) any claim, action or proceeding affecting the Casino, the Property, or the
Collateral, or any part thereof, or any of the security interests granted
hereunder which would have a Material Adverse Effect, and (ii) any action, suit,
proceeding, order or injunction of which Borrower or Guarantor become aware
after the date hereof pending or threatened against or affecting Borrower, or
Guarantor which would have a Material Adverse Effect; (b) at the request of
Lender, appear in and defend, at Borrower's expense, any such claim, action or
proceeding; and (c) comply in all respects, and shall cause all Affiliates to
comply in all respects, with the terms of any orders imposed on such Person by
any Governmental Authority.
6.13 CONTROLLED ACCOUNT. Borrower has entered into a Deposit Account
Control Agreement which shall contain such terms and conditions as Lender in its
sole discretion may require and shall provide that (a) the depository bank shall
disburse payments to Lender as provided therein, (b) the Borrower shall have no
rights to such payments after the declaration of an Event of Default, and (c)
the depository bank shall have no right of setoff with respect to funds held by
depository bank pursuant to the Deposit Account Control Agreement.
6.14 SUBORDINATED OBLIGATIONS. All Indebtedness or liabilities, direct
or indirect, contingent or non-contingent, now or hereafter created, between
Borrower and Guarantor, or by and among Borrower, Guarantor, and any
shareholder, partner, or Affiliate of Borrower, and all liens therefor
(collectively, "SUBORDINATED INDEBTEDNESS"), are hereby and shall be
subordinated to the Loan.
Upon an Event of Default, Borrower will not, directly or indirectly,
(a) permit any payment to be made in respect of any Subordinated Indebtedness,
which payments shall be and are hereby made subordinate to the payment of
principal of, and interest on the Loan and any other loan outstanding from
Borrower to Lender at the time, or (b) make or permit any payment to be made in
respect of the Indebtedness, liabilities or Obligations, direct or contingent,
which, by separate agreement are made subordinate to the payment of principal of
the Loan, or (c) make or permit the amendment, rescission or other modification
of any of Borrower's or Guarantor's Subordinated Indebtedness in such a manner
as to affect adversely the priority of Lender's right to payment and collection
or the lien priority of the Collateral. As additional security for this
Agreement and Borrower's Obligations, Borrower and Guarantor, for value
received, hereby assigns to Lender and grants to Lender a security interest in
its right, title and interest in and with respect to their debt, liens or claims
which are, or by other agreement are made, subordinate to the Loan and/or
Collateral in favor of Lender.
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6.15 COMPLIANCE WITH LAWS. Borrower and Guarantor shall comply with,
conform to and obey all Applicable Laws, and Borrower, Guarantor, and the
ownership and operation of the Casino shall comply with all applicable
Requirements, and each indenture, order, instrument, agreement or document to
which Borrower or the Guarantor is a party or by which either are bound.
Borrower, Guarantor, and the Casino shall maintain in full force and effect, at
all times and without any suspension, moratoria, or termination, each Gaming
License that is or may be required by any applicable Gaming Law to be and remain
licensed and to conduct casino gaming and to own and operate a casino in New
Jersey, including without limitation, the Casino.
6.16 MAINTENANCE OF EXISTENCE, QUALIFICATION AND ASSETS. Borrower and
Guarantor shall at all times (a) maintain their legal existence in current
active status, (b) maintain their qualifications to transact business and good
standing in the State of New Jersey and in any jurisdiction where it conducts
business in connection with the Casino, (c) maintain its casino license under
the Casino Act, and (d) comply or cause compliance with all Applicable Laws,
including without limitation, the Casino Act.
6.17 INTENTIONALLY OMITTED.
6.18 FICA, WORKERS' COMPENSATION AND UNEMPLOYMENT TAX. Upon request of
Lender, Borrower and Guarantor shall promptly furnish to Lender proof reasonably
satisfactory to Lender that Borrower's obligations to make deposits for
F.I.C.A., social security and withholding taxes, and workers' compensation and
unemployment tax obligations have been satisfied.
6.19 FURTHER ASSURANCES. Borrower and Guarantor will execute and
deliver, or cause to be executed and delivered, such other security agreements,
financing statements and assignments and such other agreements, documents,
instruments, certificates and assurances as, in the judgment of Lender exercised
in good faith, may be necessary or appropriate to more effectively evidence or
secure, and to ensure the performance of, the Obligations under the Loan
Documents and to maintain as valid, enforceable and perfected first priority
liens and security interests, all Liens and security interests in the Collateral
granted to lender to secure the Obligations under the Loan Documents.
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6.20 PERFORMANCE UNDER OTHER LOAN. Borrower and Guarantor will pay
their respective Indebtedness in accordance with the terms of the Indenture and
perform their respective obligations thereunder, with respect to which a default
could have a Material Adverse Effect, and Borrower and Guarantor will take
actions as may be necessary to prevent a default or acceleration of Indebtedness
thereunder.
6.21 UTILITIES. Guarantor shall provide to make available electric,
gas, sanitary and storm water sewer, water facilities, drainage facilities,
solid waste disposal, telephone and other necessary utilities for the Casino in
sufficient capacity to service the Casino.
6.22 MAINTENANCE AND AMENITIES. Borrower will maintain, or will cause
the Guarantor, as applicable, to maintain the Casino in good condition and
repair, except wear and tear incurred in the ordinary course of business.
6.23 FINANCIAL COVENANTS. At all times any Obligations are outstanding
or Lender is obligated to make Advances, Borrower and Guarantor agree to the
following (to be maintained on a consolidated basis):
(A) EBITDA. Borrower and Guarantor agree to maintain a minimum
EBITDA of Twelve Million Five Hundred Thousand ($12,500,000.00) Dollars, which
shall be measured and confirmed as of the twelve (12) month period ended each
respective January 1, April 1, July 1, and October 1 of each year until the full
and final satisfaction of the Loan.
(B) MINIMUM LEVERAGE RATIO. Borrower shall not permit its
ratio of Total Debt to EBITDA, as measured and confirmed annually on a trailing
twelve (12) month basis to Lender's satisfaction, to exceed 6.25:1.
(C) FINANCIAL COVENANT DEFINITIONS. As used herein:
(I) TOTAL DEBT shall mean, for any period, the
aggregate amount (determined in accordance with GAAP) of principal due and
interest required to be accrued in cash during such period by the Borrower and
Guarantor in respect of, without duplication, (i) borrowed money, including
without limitation the Loan and the Other Loan, and other Indebtedness, (ii) the
Other Loan, and (iii) any Subordinated Debt (including without limitation the
Subordinated Indebtedness) now or at any time created or incurred by Borrower or
Guarantor.
(II) EBITDA shall mean, for any period, the net
income of Borrower and Guarantor on a consolidated basis and as determined in
accordance with GAAP, before interest expense and provision for taxes, and
without giving effect to any extraordinary gains or losses or gains or losses
from sales of assets other than inventory sold in the ordinary course of
business, plus the amount of all amortization of intangibles and depreciation
and all non-cash charges in respect of pension and retiree benefits that were
deducted in arriving at net income, and minus distributions to Borrower.
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SECTION 7
NEGATIVE COVENANTS
So long as any portion of the Indebtedness under the Loan Documents
remains unpaid or Lender is committed to lend hereunder, Borrower, and to the
extent applicable to it, Guarantor, hereby covenant and agree with Lender as
follows:
7.1 CONSOLIDATION AND MERGER. Borrower and Guarantor will not, without
the prior written consent of Lender, consolidate with or merge into any other
Person or permit any other Person to consolidate with or merge into either
entity unless Borrower or Guarantor is the surviving entity and (a) continues to
comply with the financial covenants contained herein, and (b) after giving
effect to such consolidation or merger on a pro-forma basis (subject to Lender's
reasonable analysis), Borrower and Guarantor are in compliance with all of their
covenants under this Agreement and the other Loan Documents.
7.2 RESTRICTIONS ON TRANSFERS.
(a) Guarantor shall not, without the prior written consent of Lender,
change the ownership interests of the Guarantor, or add an additional member of
Guarantor, or transfer, sell, pledge, convey, lease, license, assign or encumber
all or any portion of the Casino or the Collateral (or contract to do any of the
foregoing, including options to purchase).
(b) Without limiting the generality of the foregoing and subject to the
terms of this Agreement, the prior written consent of Lender shall be required
for: (i) any transfer of the Casino or the Collateral to a subsidiary or any
Affiliate or otherwise; (ii) except to the extent provided in Section 7.1 above,
any merger or consolidation, disposition or other reorganization of Guarantor;
and (iii) any change in the ownership interest of the Borrower or Guarantor that
exceeds twenty (20%) percent, whether in a single transaction or cumulatively,
other than changes in the ownership interest of the Borrower resulting from (A)
the sale (or distribution) of the outstanding common stock of the Borrower that
is owned by GB Holdings, Inc., (B) the conversion of the 3% Notes, (C) the
exercise of warrants of the Borrower, or (D) any transfer or disposition of
common stock, warrants, or 3% Notes of the Borrower by an existing holder of
common stock, warrants, or 3% Notes of the Borrower, to one or more of its
affiliates. In the event that Lender, in Lender's sole discretion, is willing to
consent to a transfer which would otherwise be prohibited by this Section,
Lender may condition its consent on such terms as it desires, including, without
limitation, an increase in the applicable Interest Rate and the requirement that
Borrower pay a transfer fee, together with any expenses incurred by Lender in
connection with the granting of such consent (including, without limitation,
attorneys' fees and expenses). If Borrower or Guarantor violate the terms of
this Section, in addition to any other rights or remedies which Lender may have
herein, in any other Loan Document, or at law or in equity, Lender may by
written notice to Borrower increase, effective immediately as of the date of
such violation, the applicable Interest Rate to the applicable Default Rate.
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7.3 CASINO REGIMEN. Borrower and Guarantor shall not as owner or
otherwise, take actions that could or do cause a Material Adverse Effect that
may lead to impairment or disruption of Guarantor's ability to own and operate
the Casino, including without limitation proceedings filed under the Casino Act.
7.4 USE AS CASINO. The Borrower shall not, as the owner of Guarantor,
and Guarantor shall not as owner, or otherwise, without the prior written
consent of the Lender, request or otherwise initiate, consent to or acquiesce in
any zoning classification or reclassification of the Property or the adoption,
issuance, imposition or amendment of any other law, ordinance, rule, regulation,
order, judgment, injunction or decree relating to the use, occupancy, operation,
development or disposition of the Property or which would limit the casino hotel
use thereof or reduce its fair market value. Borrower and Guarantor shall not
enter into, consent to or otherwise cause, permit or suffer the Casino to become
subject to any covenant, agreement or other arrangement restricting or limiting
the use, occupancy, operation, development or disposition thereof (other than
any covenant contained in this Agreement or the other Loan Documents).
7.5 MODIFICATION OF ORGANIZATIONAL DOCUMENTS. The Borrower and Guarantor
shall not amend, modify or otherwise change their certificate of incorporation
or bylaws, certificate of formation or operating agreement (or other similar
organizational documents), including, without limitation, by the filing or
modification of any certificate of designation, or any agreement or arrangement
entered into by it, with respect to any of its Capital Stock or Equity Interests
(including any shareholders' and members' agreements) except any such
amendments, modifications or changes pursuant to this clause that either
individually or in the aggregate would not be materially adverse to the
interests of the Lenders.
7.6 COLLATERAL. Borrower and Guarantor shall not take any action (nor
permit or consent to the taking of any action) which might reasonably be
anticipated to impair the value of the Collateral or any of the rights of Lender
in the Collateral.
7.7 OTHER LOAN. Borrower and Guarantor shall not permit any material
default by the Borrower under the Other Loan, which is not timely cured, if cure
is permitted, and which results in the formal declaration of a default or
acceleration of Indebtedness as provided in the documents evidencing or securing
the Other Loan.
7.8 USE OF LENDERS' NAMES. Other than as my be required by the SEC,
other Governmental Authorities, or Applicable Law, Borrower will not, and will
not permit any Affiliate to, without the prior written consent of Lender, use
the name of Lender or the name of any Affiliates of Lender in connection with
any of their respective businesses or activities, except in connection with
internal business matters, administration of the Loan and as required in
dealings with Governmental Authorities.
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SECTION 8
EVENTS OF DEFAULT
An "EVENT OF DEFAULT" shall exist if any of the following shall occur:
8.1 PAYMENTS. Borrower shall fail to make any principal payment on the
Loan on or before the date such payment is due or Borrower shall fail to pay any
interest on the Loan or any other amount payable hereunder within three (3) days
after such interest or other amount becomes due.
8.2 FAILURE TO PERMIT INSPECTIONS. Borrower shall fail to comply with
the provisions of SECTION 6.4 of this Agreement and such failure continues for a
period of five (5) days.
8.3 COVENANT DEFAULTS. Borrower or Guarantor shall fail to perform or
observe any covenant, agreement or obligation contained in this Agreement or in
any of the Loan Documents (other than any covenant or agreement obligating
Borrower to maintain insurance, pay taxes, or pay any other indebtedness of
Borrower or Guarantor beyond any cure period provided in respect thereof,
whether under the Indenture, the 3% Notes, or otherwise, as to which there shall
be no cure period under this Agreement or the Loan Documents), and such failure
shall continue for thirty (30) days after Lender delivers written notice thereof
to Borrower; provided, however, if the failure is incapable of cure within such
thirty (30) day period and Borrower shall be diligently pursuing a cure, such
thirty (30) day cure period shall be extended by an additional period not to
exceed thirty (30) days.
8.4 WARRANTIES OR REPRESENTATIONS. Any statement, representation or
warranty made by or on behalf of Borrower or any Guarantor in the Loan
Documents, any Financial Statements or any other writing delivered to Lender in
connection with the Loan is false, misleading or erroneous in any material
respect as of the date made or reaffirmed.
8.5 BANKRUPTCY. A petition under any Chapter of Title 11 of the United
States Code or any similar law or regulation is filed by or against Borrower or
Guarantor (and in the case of an involuntary petition in bankruptcy, such
petition is not discharged within forty five (45) days of its filing), or a
custodian, receiver or trustee for Borrower, Guarantor or the Casino is
appointed and not discharged in forty five (45) days, or Borrower or Guarantor
makes an assignment for the benefit of creditors, or any of them are adjudged
insolvent by any state or federal court of competent jurisdiction, or any of
them admit their insolvency or inability to pay their debts as they become due.
8.6 ATTACHMENT, JUDGMENT, TAX LIENS. The issuance, filing or levy or
seizure against Borrower or Guarantor of one or more attachments, executions,
tax liens or judgments for the payment of money cumulatively in excess of
$500,000.00, which is not discharged in full or stayed within forty-five (45)
days after issuance or filing, or the issuance by a court of competent
jurisdiction of an injunction or similar restraint that is reasonably likely to
cause a Material Adverse Effect.
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8.7 MATERIAL ADVERSE EFFECT; SALE OF OWNERSHIP INTEREST THEREIN; CHANGE
OF MANAGEMENT. The occurrence of a Material Adverse Effect or upon the transfer
of any ownership interest in Guarantor from that existing on the date of this
Agreement without the prior written consent of Lender, and except to the extent
permitted in Section 7.2 above.
8.8 CRIMINAL PROCEEDINGS. The indictment of Borrower or Guarantor under
any criminal felony statute, or the commencement of felony criminal proceedings
or the commencement of civil proceedings against Borrower or Guarantor, pursuant
to which statute or proceedings the penalties or remedies sought or available
include forfeiture of any Collateral, or a criminal investigation has been
commenced, for any adversary proceeding has been commenced by the State of New
Jersey or any agency thereof under the Casino Act with respect to the
termination of the license of Borrower or Guarantor, or the occurrence of an
event described in clause (c) of Disqualification.
8.9 LOSS OF LICENSE. The loss, revocation, suspension, or failure to
renew or file for renewal of any material registration, approval, license,
permit or franchise now held or hereafter acquired by the Borrower and/or
Guarantor, or with respect to the ownership and operation of the Casino, or the
failure to pay any fee, which is necessary for the continued operation of the
Casino or the Borrower's or Guarantor's business as presently conducted, or
which creates a Material Adverse Effect on either Borrower or Guarantor.
8.10 DEFAULT BY BORROWER OR GUARANTOR IN OTHER AGREEMENTS. Any default
by Borrower or Guarantor resulting in a declared event of default in connection
with the Other Loan, or in respect of any other loan in favor of any creditor of
Borrower or the Guarantor after the expiration of any applicable grace or cure
period which accelerates the maturity of such Indebtedness; or any default
resulting in a declared Event of Default which permits the holders of such
Indebtedness to elect a majority of the voting control of Borrower or Guarantor
or any Event of Default by Borrower or Guarantor.
8.11. DEPOSIT ACCOUNT CONTROL AGREEMENT. The failure of Borrower or
Guarantor to comply with the terms and provisions of that certain Deposit
Account Control Act Agreement between Lender, Borrower, and Guarantor, which,
notwithstanding anything in this Agreement to the contrary, shall be subject to
a cure period of one (1) Business Day only.
8.12. ADDITIONAL NOTICE. Except as provided in Section 8.11 above, as to
which no additional notice or cure period shall be required, Lender shall
provide two (2) Business Days' advance notice to Borrower and Guarantor of its
determination to declare an Event of Default upon the expiration of previous
notice provisions and cure periods that are contained in this Agreement.
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SECTION 9
REMEDIES
9.1 REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuance of an Event of Default, Lender may take any one or more of the
following actions, all without notice to Borrower:
(A) ACCELERATION. Without demand or notice of any nature
whatsoever, declare the unpaid balance of the Indebtedness under the Loan
Documents, or any part thereof, immediately due and payable, whereupon the same
shall be due and payable.
(B) TERMINATION OF OBLIGATION TO ADVANCE. Without demand or
notice of any nature whatsoever, terminate any commitment (or any portion of any
such commitment) of Lender to perform or to lend under this Agreement in its
entirety, or any other agreement or agreements between Lender and Borrower, to
the extent Lender shall deem appropriate.
(C) JUDGMENT. Reduce Lender's claim to judgment, foreclose or
otherwise enforce Lender's security interest in all or any part of the
Collateral by any available judicial or other procedures under law. Lender's
right to sue and recover a judgment either before, after or during the pendency
of any proceeding for the enforcement of any Lien in favor or Lender, including
without limitation the Mortgage, and the right of Lender to recover such
judgment shall to the fullest extent permitted by law not be affected by any
taxing, possession or foreclosure sale hereunder or by the exercise of any other
right, power or remedy for the enforcement of the terms of any Lien in favor of
Lender.
(D) SALE OF COLLATERAL. Subject to the Casino Act and related
rules and regulations, exercise all the rights and remedies of a secured party
upon default under the Code (whether or not the Code applies to the affected
Collateral) including (i) require Borrower and Guarantor to, and Borrower and
Guarantor hereby agree that they will, at their expense and upon request of
Lender forthwith, assemble all or part of the Collateral as directed by Lender
and make it available to Lender at a place to be designated by Lender which is
reasonably convenient to both parties; (ii) enter upon any premises of Borrower
and Guarantor and take possession of the Collateral; and (iii) sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Lender's offices or elsewhere, at such time or times, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as Lender may deem commercially reasonable. Borrower agrees that, to the
extent notice of sale shall be required by law, ten (10) business days notice of
the time and place of any sale shall constitute reasonable notification. At any
sale of the Collateral, if permitted by law, Lender may bid (which bid may be,
in whole or in part, in the form of cancellation of Indebtedness) for the
purchase of the Collateral or any portion thereof for the account of Lender.
Borrower and Guarantor shall remain liable for any deficiency. Lender shall not
be required to proceed against any Collateral but may proceed against Borrower
and/or Guarantor directly. To the extent permitted by law, Borrower and
Guarantor hereby specifically waive all rights of redemption, stay or appraisal
which either has or may have under any law now existing or hereafter enacted.
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(E) LENDER'S RIGHT TO TAKE POSSESSION, OPERATE AND APPLY
INCOME.
(I) Upon Lender's demand, and subject to the Casino Act
and related rules and regulations, Borrower shall forthwith surrender to Lender
the actual possession of the Collateral and, Lender may enter and take
possession of all the Collateral and may exclude Borrower, Guarantor, and their
agents and employees wholly therefrom and may have joint access with Borrower
and Guarantor to their books, papers and accounts. If Borrower or Guarantor fail
to surrender or deliver all or any portion of the Collateral to Lender upon
demand, Lender may obtain a judgment or decree conferring on Lender the right to
immediate possession and Borrower and Guarantor hereby specifically consent to
the entry of such a judgment or decree.
(II) Upon every such lawful entering upon or taking of
possession, Lender may hold, store, use, operate, manage and control the
Collateral, including without limitation the Property, and conduct Borrower's
and/or Guarantor's business on the property and, from time to time do any of the
following things as Lender may from time to time deem necessary, appropriate or
desirable:
(A) make all maintenance, repairs, renewals,
replacements, additions and improvements necessary and proper to the Property
and purchase or otherwise acquire additional fixtures, personalty and other
property;
(B) insure, manage and operate the Property and
exercise all of the rights and power of Borrower and/or Guarantor (in Lender's
name or otherwise) with respect to the insurance, management and operation of
the Property;
(C) enter into any and all agreements with respect to
the exercise by others of any of the powers herein granted to Lender.
(III) Lender may collect and receive all the income,
revenues, rents, issues and profits of the Property, including those past due as
well as those accruing thereafter. Lender shall apply such sums received by
Lender, first to the payment of accrued interest and then to the payment of
principal and all other sums or Indebtedness that may be due hereunder, after
deducting therefrom:
(A) All expenses of taking, holding, managing and
operating the Property (including compensation for the services of all persons
employed for such purposes);
(B) The cost of all such maintenance, repairs,
renewals, replacements, additions, betterments, improvements, purchases and
acquisitions;
(C) The cost of insurance;
(D) Such taxes, assessments and other charges, as
Lender may determine to pay;
49
(E) other proper charges upon the Property or any
part thereof; and
(F) The compensation, expenses and disbursements of
the attorneys and agents of Lender, including reasonable attorneys' fees and
costs for any appeal.
(IV) If an Event of Default giving rise to pursuit of the
foregoing remedy shall have been cured, Lender may, at its option, surrender
possession of the Collateral to Borrower or Guarantor, its or their successors
or assigns; provided, however, that Lender's right to take possession and to
pursue any other remedies hereunder or under any of the Loan Documents shall
exist if any subsequent Event of Default shall occur and be continuing.
(F) RECEIVER. Apply by appropriate judicial proceedings for
appointment of a receiver for the Collateral, or any part thereof, and Borrower
and Guarantor hereby consent to any such appointment.
(G) EXERCISE OF OTHER RIGHTS. Exercise any and all other
rights or remedies afforded by any Applicable Laws or by the Loan Documents as
Lender shall deem appropriate, at law, in equity or otherwise, including the
right to bring suit or other proceeding, either for specific performance of any
covenant or condition contained in the Loan Documents or in aid of the exercise
of any right or remedy granted to Lender in the Loan Documents.
9.2 APPLICATION OF COLLATERAL; TERMINATION OF AGREEMENTS. Upon the
occurrence and during the continuance of an Event of Default, Lender may offset
and apply against the Indebtedness under the Loan Documents any and all
Collateral in its possession, any and all balances, credits, deposits, accounts,
reserves, Indebtedness or other moneys due or owing to Borrower or Guarantor
held by Lender hereunder or under any other financing agreement or otherwise,
whether accrued or not.
9.3 WAIVERS. No waiver by Lender of any Event of Default shall be
deemed to be a waiver of any other or subsequent Event of Default. No delay or
omission by Lender in exercising any right or remedy under the Loan Documents
shall impair such right or remedy or be construed as a waiver thereof or an
acquiescence therein, nor shall any single or partial exercise of any such right
or remedy preclude other or further exercise thereof, or the exercise of any
other right or remedy under the Loan Documents or otherwise. Further, Borrower
and Guarantor waive notice of the occurrence of any Event of Default,
presentment and demand for payment, protest, and notice of protest, notice of
intention to accelerate, acceleration and nonpayment, and agree that its
liability shall not be affected by any renewal or extension in the time of
payment of the Loan, or by any release or change in any security for the payment
or performance of the Loan, regardless of the number of such renewals,
extensions, releases or changes. Borrower and Guarantor also hereby waive the
right to assert any statute of limitations as a bar to the enforcement of the
lien created by any of the Loan Documents or to any action brought to enforce
the Note or any other obligation secured by the Loan Documents.
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9.4 CUMULATIVE RIGHTS. All rights and remedies available to Lender
under the Loan Documents shall be cumulative and in addition to all other rights
and remedies granted to Lender at law or in equity, whether or not the
Indebtedness under the Loan Documents is due and payable and whether or not
Lender shall have instituted any suit for collection or other action in
connection with the Loan Documents.
SECTION 10
CERTAIN RIGHTS OF LENDER
10.1 PROTECTION OF COLLATERAL. The Lender may at any time and from time
to time take such actions as it deems necessary or appropriate to protect
Lender's liens and security interests in and to preserve the Collateral, and to
establish, maintain and protect the enforceability of Lender's rights with
respect thereto, all at the expense of Borrower. Borrower and Guarantor agree to
cooperate fully with all of the Lender's efforts to preserve the Collateral and
Lender's liens and security interests therein.
10.2 PERFORMANCE BY LENDER. If Borrower or Guarantor fail to perform
any agreement contained herein, Lender may, but shall not be obligated to, cause
the performance of, such agreement, and the expenses of Lender incurred in
connection therewith shall be payable by Borrower pursuant to SECTION 10.4
below.
10.3 LENDER SUCCESSORS AND ASSIGNS/LOAN PARTICIPANTS.
(A) The provisions of this Agreement shall be binding upon and
inure to the benefit of the Lender and its successors and assigns.
(B) Lender may at any time grant to one or more institutions
acceptable to Lender (each a "PARTICIPANT") participating interests in the Loan
(a "PARTICIPATION"); provided that, such institutions are Eligible Assignees,
except that a Participant must only be qualified and approved by the Gaming
Authorities and the Commission if legally required, subject to Lender's or any
Participant's rights to appeal any adverse determination; provided further that,
Lender shall provide notice to the Borrower and its counsel of any Participation
grant, but the failure of Lender to provide timely notice shall not render any
Participation void or voidable. In the event of any such grant of a
Participation, whether or not upon notice to Borrower, Lender shall remain
responsible for the performance of its Obligations hereunder.
10.4 FEES AND EXPENSES. Borrower agrees to promptly pay all reasonable
Loan Costs. After the declaration of an Event of Default, Loan Costs may, at
Lender's option and without prior notice to Borrower, be automatically paid in
the form of an Advance, whether or not a Request for Advance is then made by
Borrower or is pending disposition by Lender.
10.5 ASSIGNMENT OF LENDER'S INTERESTS/DISQUALIFIED LENDER. Subject to
the provisions of this Agreement, Lender shall have the right to assign all or
any portion of its rights in this Agreement, the Note, and the other Loan
Documents to any Eligible Assignee. Additionally, Borrower and Guarantor shall
have the right to remove a Disqualified Lender as a party to this Agreement, the
Note, and the other Loan Documents. In such event, the Lender being removed
shall within five (5) Business Days after notice of removal pursuant to this
Section 10.5 execute and deliver a Lender Assignment Agreement to Lender or one
or more Eligible Assignees designated by the Lender acceptable to the
Administrative Agent, subject to payment of a purchase price by such Eligible
Assignee in an amount not to exceed the principal, interest and fees owed to
such Lender. The interests of any Disqualified Lender under this Agreement shall
be subject to the regulatory jurisdiction of all Gaming Authorities.
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10.7 INTENTIONALLY OMITTED.
10.8 NO LIABILITY OF LENDER. Neither the acceptance of this Agreement
by Lender, nor the exercise of any rights hereunder by Lender, shall be
construed in any way as an assumption by Lender of any Obligations,
responsibilities or duties of Borrower or Guarantor arising in connection with
the Casino, or under any of the Operating Contracts, or in connection with any
other business of Borrower, Guarantor, or the Collateral, or otherwise bind
Lender to the performance of any Obligations with respect to the Casino or the
Collateral; it being expressly understood that Lender shall not be obligated to
perform, observe or discharge any obligation, responsibility, duty, or liability
of Borrower or Guarantor , including, but not limited to, appearing in or
defending any action, expending any money or incurring any expense in connection
therewith. Without limitation of the foregoing, neither this Agreement nor any
action or actions on the part of Lender taken hereunder, shall constitute an
assumption by Lender of any Obligations of Borrower or Guarantor with respect to
the Casino, the Collateral, or any documents or instruments executed in
connection therewith, and Borrower and/or Guarantor shall continue to be liable
for all of the Obligations thereunder or with respect thereto.
10.9 INDEMNIFICATION OF LENDER. Borrower and Guarantor shall jointly
and severally, indemnify Lender and hold Lender, and its subsidiaries,
affiliates, officers, directors, agents, employees, representatives,
consultants, contractors, servants, and attorneys, as well as the heirs,
personal representatives, successors or assigns of any or all of them (hereafter
collectively the "INDEMNIFIED LENDER PARTIES") harmless from and against any and
all liabilities, Indebtedness, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses, and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against any
Indemnified Lender Parties, in any way relating to or arising out of (a) this
Agreement and the other Loan Documents and/or (b) any of the transactions
contemplated herein, therein or thereby (including those in any way relating to
or arising out of the violation by Borrower of any Other Loans, or federal or
state laws including Environmental Laws. Without limiting the generality of the
foregoing, this indemnity shall include all liabilities, Indebtedness, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses, and
disbursements asserted against or incurred by any Indemnified Lender Parties by
reason of (i) any breach of any covenant obligation or agreement or the
incorrectness or inaccuracy of any representation and warranty of the Borrower
or the Guarantor contained in this Agreement or any of the Loan Documents
(including without limitation any certification of the Borrower or the Guarantor
delivered to Lender); (ii) any and all taxes, including real estate, personal
property, sales, mortgage, excise, intangible or transfer taxes, and any and all
fees or charges, including, without limitation under the Casino Act, which may
at any time arise or become due prior to the payment, performance and discharge
in full of the Obligations; (iii) the breach of any representation or warranty
52
as set forth herein regarding any Environmental Laws; (iv) the failure of
Borrower or Guarantor to perform any obligation or covenant herein required to
be performed pursuant to any Environmental Laws; (v) the use, generation,
storage, release, threatened release, discharge, disposal or presence on, under
or about the Casino of any Hazardous Materials; (vi) the removal or remediation
of any Hazardous Materials from the Casino required to be performed pursuant to
any Environmental Laws or as a result of recommendations of any environmental
consultant or as required by Lender; (vii) claims asserted by any Person
(including without limitation any Governmental Authority, in connection with or
any in any way arising out of the presence, use, storage, disposal, generation,
transportation, release, or treatment of any Hazardous Materials on, in, under
or affecting the Casino; (viii) the violation or claimed violation of any
Environmental Laws in regard to the Casino; or (ix) the preparation of an
environmental audit or report on the Casino, whether conducted by Lender,
Borrower or a third-party, or the implementation of environmental audit
recommendations. Such indemnification shall not give Borrower or Guarantor any
right to participate in the selection of counsel for Lender or the conduct or
settlement of any dispute or proceeding for which indemnification may be
claimed; provided, however, that Borrower and Guarantor shall not be required to
protect and indemnify Lender from the consequences of Lender's negligence, where
that negligence is finally adjudicated to constitute the sole cause of the
liability, obligation, loss, damage, penalty, action, judgment, suit, claim,
cost, expense or disbursement for which indemnification or protection would
otherwise be required. The provisions of this Section shall survive the full
payment, performance and discharge of the Obligations and the termination of
this Agreement, and shall continue thereafter in full force and effect.
10.10 EXPENDITURES BY LENDER. Any reasonable sums expended by or on
behalf of Lender pursuant to the exercise of any right or remedy provided in any
Loan Document or in accordance with applicable law shall become part of the
Indebtedness under the Loan Documents and shall bear interest at the Interest
Rate, from the date of such expenditure until the date repaid, except that the
Default Rate shall apply to the extent incurred or which remain unpaid after the
declaration of an Event of Default.
10.11 DIMINUTION IN VALUE OF COLLATERAL. Lender shall not have any
liability or responsibility whatsoever for any diminution or loss in value of
any of the Collateral, specifically including that which may arise from Lender's
negligence or inadvertence, whether such negligence or inadvertence is the sole
or concurring cause of any damage.
10.12 LENDER'S RIGHT OF SET-OFF. Following the occurrence of and during
the continuance of an Event of Default, Lender shall have the right to set-off
against any Collateral any Obligations then due and unpaid by Borrower and/or
Guarantor.
10.13 FEDERAL RESERVE SYSTEM/WIRE TRANSFERS. The obligation of Lender
to make any Advance by wire transfer of funds to Borrower or any Person shall be
subject to all Applicable Laws, including policies of the Board of Governors of
the Federal Reserve System on Reduction of Payments System Risk as in effect
from time to time. Borrower acknowledges that such laws, regulations and policy
may delay transmission of funds to or on behalf of Borrower. Borrower shall pay
Lender a fee reasonably determined by Lender for every wire transfer made by
Lender on behalf of Borrower.
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SECTION 11
TERM OF AGREEMENT
This Agreement shall continue in full force and effect and Liens and
the security interests granted hereby and the duties, covenants and liabilities
of the Borrower hereunder and all the terms, conditions and provisions hereof
relating thereto shall continue to be fully operative until all of the
Obligations have been satisfied in full. The Borrower shall have the right at
any time, at its election, by written notice to the Lender to terminate the
unused portion of the Commitment and upon such termination the Unused Line Fee
shall cease and, in addition, Borrower may in such notice give notice of payment
and termination of the Loan Facility and repay the principal amount of the Loan
then outstanding, the interest which has accrued on such principal amount prior
to the date of payment, all Loan Costs due hereunder, and any Unused Line Fee
which has accrued and is due hereunder prior to the date of such notice, and
upon the giving of such notice and such payments (a) this Agreement, the Loan
Documents, and the Inter-Creditor Agreement shall be terminated except to the
extent of those provisions that specifically survive such termination, (b) the
Borrower shall no longer have the right to make a Request for Advance or borrow
from the Lender pursuant to this Agreement, and (c) the Liens securing the
obligations set forth in this Agreement shall automatically terminate and be
released, and Lender shall, if requested execute any documents to effectuate
such release. The Borrower and Guarantor expressly agree that if either the
Borrower or the Guarantor makes a payment to the Lender, which payment or any
part thereof is subsequently invalidated, declared to be fraudulent or
preferential, or otherwise required to be repaid to a trustee, receiver or any
other party under any Debtor Relief Laws, state or federal law, common law or
equitable cause, then to the extent of such repayment, the Obligations or any
part thereof intended to be satisfied and the Liens provided for hereunder
securing the same shall be revived and continued in full force and effect as if
said payment had not been made.
SECTION 12
MISCELLANEOUS
12.1 NOTICE. Any notice or other communication required or permitted to
be given shall be in writing addressed to the respective party as set forth in
SCHEDULE 4 and may be personally served, telecopied or sent by overnight
courier, next business day delivery guaranteed, or by U.S. Certified or
Registered Mail, Return Receipt Requested, and shall be deemed given: (a) if
served in person, when served; (b) if telecopied, on the date of transmission if
before 3:00 p.m. (eastern time) on a Business Day, otherwise on the next
Business Day; provided that a hard copy of such notice is also sent pursuant to
(c) or (d) below and provided further that the transmission is shown as complete
by electronic verification; (c) if by overnight courier, next Business Day
delivery guaranteed, on the next Business Day on which delivery is guaranteed
after delivery to the courier; or (d) if by U.S. Mail, certified or registered
mail, return receipt requested on the fourth (4th) day after deposit in the
mail, postage prepaid, in a manner that permits the U.S. Postal Service to track
the communication.
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12.2 SURVIVAL. All representations, warranties, covenants and
agreements made by Borrower and Guarantor herein, in the other Loan Documents or
in any other agreement, document, instrument or certificate delivered by or on
behalf of Borrower and Guarantor under or pursuant to the Loan Documents shall
be considered to have been relied upon by Lender and shall survive the delivery
to Lender of such Loan Documents and the extension of the Loan (and each part
thereof), regardless of any investigation made by or on behalf of Lender. All
indemnities made by Borrower and Guarantor in favor of Lender shall survive
termination of this Agreement and payment of all Obligations.
12.3 GOVERNING LAW; CONSENTS TO JURISDICTION. THIS AGREEMENT AND THE
OTHER LOANS DOCUMENTS (EXCEPT AS MAY BE EXPRESSLY PROVIDED THEREIN TO THE
CONTRARY) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW JERSEY, WITHOUT GIVING EFFECT TO ITS CHOICE OF LAWS PRINCIPLES.
BORROWER AND GUARANTOR CONSENT TO PERSONAL JURISDICTION BEFORE THE SUPERIOR
COURT IN AND FOR ATLANTIC COUNTY, NEW JERSEY AND THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF NEW JERSEY. BORROWER AND GUARANTOR WAIVE ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO VENUE IN ATLANTIC COUNTY, NEW JERSEY OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT THE
OBLIGATIONS CREATED HEREUNDER OR ANY OF THE LOAN DOCUMENTS AND FURTHER WAIVE ANY
CLAIM THAT ATLANTIC COUNTY, NEW JERSEY IS NOT A CONVENIENT FORUM FOR ANY SUCH
SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS ON BORROWER IN ANY ACTION ARISING
OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS SHALL BE EFFECTIVE IF MAILED TO
THE BORROWER AT THE ADDRESS LISTED FOR THE BORROWER IN SECTION 12.1.
12.4 INVALID PROVISIONS. If any provision of this Agreement or any of
the other Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws effective during the term thereof, such provision shall
be fully severable, this Agreement and the other Loan Documents shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof or thereof, and the remaining provisions
hereof or thereof shall remain in full force and effect.
12.5 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signature thereto and hereto were on the same instrument. This
Agreement shall become effective upon the Lender's receipt of one or more
counterparts hereof signed by Borrower, Guarantor and Lender. The parties agree
that any copy of this Agreement or any Loan Documents signed the parties who are
signatories, and transmitted by telecopier or otherwise for delivery to the
Lender, shall be admissible in evidence as the original itself in any judicial,
bankruptcy or administrative proceeding, whether or not the original is in
existence.
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12.6 LENDER NOT FIDUCIARY. The relationship between Borrower,
Guarantor, and Lender is solely that of debtor and creditor, and Lender has no
fiduciary or other special relationship with Borrower or Guarantor, and no term
or provision of any of the Loan Documents shall be construed so as to deem the
relationship between Borrower or Guarantor and Lender to be other than that of
debtor and creditor.
12.7 ENTIRE AGREEMENT. This Agreement, including the Exhibits,
Schedules, and addenda, and the other Loan Documents and agreements referred to
herein embody the entire agreement between the parties hereto with respect to
the Loan, supersedes all prior agreements and understandings between the parties
whether written or oral relating to the Loan provided for hereunder, and may not
be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no oral agreements between Lender and
Borrower. This Agreement may be modified or changed only in a writing executed
by all of Lender, Borrower, and Guarantor.
12.8 HEADINGS. Section headings have been inserted in the Agreement as
a matter of convenience of reference only; such section headings are not a part
of the Agreement and shall not be used in the interpretation of this Agreement.
12.9 COSTS. Borrower hereby agrees to pay (a) any excise tax,
documentary stamp taxes or other taxes payable in connection with the
transactions provided for herein, (b) reasonable legal fees and disbursements
incurred by Lender in connection with the preparation, negotiation and closing
under this Agreement and (c) any other reasonable fees, costs or expenses
incurred by Lender in consummating the transactions contemplated hereby, all of
which shall be included in Loan Costs. In any action between the parties, the
prevailing party shall be entitled to reasonable attorneys' and paralegals' fees
and costs, including those in pretrial, trial, appellate and bankruptcy
proceedings.
12.10 ACCOUNTING PRINCIPLES. Where the character or amount of any asset
or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be determined or made in accordance
with GAAP consistently applied at the time in effect, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement, in which event the provisions of this Agreement and not GAAP shall
apply.
12.11 TIME. Time is of the essence as to all Obligations of Borrower
pursuant to this Agreement.
12.12 INCORPORATION. This Agreement, together with all addenda,
Exhibits and Schedules hereto, constitute one document and agreement which is
referred to herein by the use of the defined term "Agreement." Such addenda,
Exhibits and Schedules are incorporated herein as to fully set out in this
Agreement. The definitions contained in any part of this Agreement shall apply
to all parts of this Agreement.
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12.13 JURY TRIAL WAIVER. BORROWER, GUARANTOR AND LENDER HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. BORROWER,
GUARANTOR AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER,
GUARANTOR AND LENDER WARRANT AND REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF
REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
12.14 GAMING AUTHORITIES. The Administrative Agent, Lender, Borrower
and Guarantor agree to use their best efforts to cooperate with the Gaming
Authorities in connection with the administration of their regulatory
jurisdiction over Borrower and Guarantor, including by providing in a timely
manner such documents or other information as may be requested by any such
Gaming Authorities relating to Borrower and Guarantor or to the Loan Documents.
The Borrower and Guarantor hereby consent to any such disclosure by the Lender
and Administrative Agent to any Gaming Board and release such parties from any
liability for any such disclosure.
12.15 GAMING REGULATIONS. Each party to this Agreement hereby
acknowledges that the consummation of the transactions contemplated by the Loan
Documents is subject to applicable Gaming Laws, including but not limited to any
licensing or qualification requirements imposed on the Lender, and in the event
a Lender fails to meet such licensing, qualification or waiver the Lender will
be deemed to be a Disqualified Lender. The Borrower and Guarantor represent and
warrant that it will use their best efforts to obtain all requisite approvals
necessary in connection with the transactions contemplated hereby and in the
other Loan Documents and in connection with the exercise of remedies under the
Loan Documents.
12.16 REGISTRATION; OWNERSHIP OF NOTE. The ownership of an interest in
the Note shall be registered on a record of ownership maintained by Borrower or
its agent. Notwithstanding anything else in the Note to the contrary, the right
to the principal of, and stated interest on, the Note may be transferred only if
the transfer is registered on such record of ownership and the transferee is
identified as the owner of an interest in the obligation. Borrower shall be
entitled to treat the registered holder of the Note (as recorded on such record
of ownership) as the owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in the Note on
the part of any other person entity.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
have caused the same to be executed by their duly authorized representatives,
and delivered, as of the date set forth above.
BORROWER:
ATLANTIC COAST ENTERTAINMENT
HOLDINGS, INC., a Delaware corporation
By:/s/ George Toth
Name: George Toth
Title: President
Atlantic Coast Entertainment Holdings, Inc.
c/o Sands Hotel & Casino
Indiana Avenue & Brighton Park
Atlantic City, New Jersey 08401
GUARANTOR:
ACE GAMING, LLC, a New Jersey limited
liability company
By:/s/ George Toth
Name: George Toth
Title: President
ACE Gaming, LLC
c/o Sands Hotel & Casino
Indiana Avenue & Brighton Park
Atlantic City, New Jersey 08401
LENDER:
FORTRESS CREDIT CORP., a
Delaware corporation
By:/s/ Constantine Dakolias
Name: Constantine Dakolias
Title: Chief Credit Officer
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