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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Between
CIT GROUP/EQUIPMENT FINANCING, INC.
and
RESORTS INTERNATIONAL HOTEL, INC.
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Dated as of June 24, 2002
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TABLE OF CONTENTS
PAGE
1. GRANT OF SECURITY INTEREST; DESCRIPTION OF COLLATERAL; OBLIGATIONS THE COLLATERAL SECURES...............1
1.1 Grant of Security Interest.....................................................................1
1.2 Cross-Collateralization........................................................................2
1.3 Cross Default..................................................................................2
2. PROMISE TO PAY; TERMS AND PLACE OF PAYMENT; OTHER TERMS RELATING TO PAYMENTS; PAYMENT OF
FEES AND EXPENSES.......................................................................................2
2.1 Debtor's Promise to Pay........................................................................2
2.2 Interest Rate..................................................................................2
2.3 Timing of Payment of Interest..................................................................3
2.4 Payment of Principal...........................................................................3
2.5 Prepayments....................................................................................3
2.6 Payment of Fees and Expenses...................................................................4
2.7 No Setoff......................................................................................5
2.8 Other Matters Concerning Payments..............................................................5
3. LOANS...................................................................................................5
3.1 Maximum Amount of Loans........................................................................5
3.2 Amount of Loans; Promissory Notes..............................................................5
3.3 Minimum Borrowings.............................................................................6
3.4 No Obligation To Lend After the End of the Equipment Loan Period...............................6
3.5 Termination of the Equipment Loan Facility.....................................................6
3.6 Certain Obligations of Debtor Regarding the Loans..............................................6
3.7 No Lending Against Fixtures....................................................................7
3.8 Secured Party's Right to Elect to Make a Loan..................................................8
3.9 Provisions Relating to the Implementation of the Loans.........................................8
3.10 Certain Determinations to be Made by Secured Party.............................................8
3.11 Amount of Non-Gaming Loans.....................................................................8
3.12 Storage of Equipment...........................................................................8
3.13 Timing of Loans Relating to Non-Gaming Equipment...............................................9
3.14 Debtor to First Request Loans from Secured Party...............................................9
4. CONDITIONS PRECEDENT TO LOANS...........................................................................9
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TABLE OF CONTENTS
(continued)
PAGE
4.1 Conditions to Initial Loan.................................................................... 9
4.2 Conditions to All Loans....................................................................... 9
4.3 Continuing Representation and Warranty By Debtor..............................................10
5. DEBTOR'S WARRANTIES AND REPRESENTATIONS................................................................10
5.1 Indebtedness..................................................................................11
5.2 Absence of Liens..............................................................................11
5.3 Absence of Financing Statements...............................................................11
5.4 Information Supplied..........................................................................11
5.5 Organization; Authority; No Conflicts.........................................................11
5.6 No Governmental Consent Necessary.............................................................11
5.7 No Claims.....................................................................................11
5.8 Financial Statements..........................................................................12
5.9 No Material Adverse Change....................................................................12
5.10 Compliance With Laws..........................................................................12
5.11 Taxes and Assessments.........................................................................12
5.12 Books and Records.............................................................................12
5.13 Title and Liens...............................................................................12
5.14 Other Matters.................................................................................13
5.15 Representations and Warranties Applicable To Debtor Group.....................................13
6. AFFIRMATIVE COVENANTS..................................................................................13
6.1 Defense of Claims.............................................................................13
6.2 Compliance with Laws..........................................................................13
6.3 No Liens......................................................................................14
6.4 Maintenance Of Licenses.......................................................................14
6.5 Payment of Reasonable Expenses................................................................14
6.6 Payment of Taxes..............................................................................14
6.7 Preservation of Security Interests............................................................14
6.8 Access; Inspection............................................................................14
6.9 Maintain Priority of Security Interests.......................................................14
6.10 Maintenance of Existence and Qualifications...................................................14
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TABLE OF CONTENTS
(continued)
PAGE
6.11 Payment of Taxes and Other Obligations........................................................14
6.12 Maintenance of Assets and Records.............................................................14
6.13 Notice of Adverse Events......................................................................15
6.14 Information and Documents to be Furnished to Secured Party....................................15
6.15 Compliance with Senior Debt Documents.........................................................16
6.16 Debtor Group..................................................................................17
7. NEGATIVE COVENANTS.....................................................................................17
7.1 No Consolidation, Merger, Acquisition, Liquidation; State of Incorporation....................17
7.2 Disposition of Collateral.....................................................................17
7.3 Incurrence of Other Liens.....................................................................17
7.4 Incurrence of Debt............................................................................17
7.5 Fixed Charge Covenant.........................................................................17
7.6 Maximum Senior Indebtedness/EBITDA............................................................18
7.7 Guaranties; Contingent Liabilities............................................................18
7.8 Restricted Payments...........................................................................19
7.9 Transactions with Affiliates..................................................................19
7.10 Removal and Use of Collateral.................................................................19
7.11 Change in Business; Accounting Practices, Name, Etc...........................................19
7.12 Inconsistent Agreement........................................................................19
8. INSURANCE AND RISK OF LOSS.............................................................................20
8.1 Debtor's Obligation to Obtain Certain Insurance, Etc..........................................20
8.2 Other Documents...............................................................................20
8.3 Assignment of Policies........................................................................20
8.4 Secured Party's Rights to Obtain Insurance....................................................20
9. EVENTS OF DEFAULT; ACCELERATION........................................................................21
9.1 Event of Default..............................................................................21
9.2 Acceleration..................................................................................23
9.3 No Required Payment of Interest in Violation of Applicable Law................................23
10. SECURED PARTY'S REMEDIES AFTER DEFAULT; CONSENT TO ENTER PREMISES......................................23
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TABLE OF CONTENTS
(continued)
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10.1 Remedies Under the UCC........................................................................23
10.2 Other Remedies................................................................................24
10.3 Compliance with Casino Control................................................................24
11. WAIVER OF DEFAULTS; AGREEMENT INCLUSIVE................................................................24
11.1 Waivers.......................................................................................24
12. FINANCING STATEMENTS; CERTAIN EXPENSES.................................................................24
12.1 Financing Statements; Other Matters...........................................................24
13. DEFINITIONS............................................................................................25
13.1 Defined Terms.................................................................................25
13.2 Other Definitional Provisions.................................................................30
14. WAIVER OF DEFENSES; ACKNOWLEDGMENT.....................................................................30
14.1 Waiver, Defenses, Acknowledgment..............................................................30
15. OTHER PROVISIONS.......................................................................................31
15.1 Completion of Documents; Irrevocability; Other Matters........................................31
15.2 Waiver of Trial By Jury/Receipt of Agreement..................................................31
15.3 Limitation of Liability.......................................................................31
15.4 Various Provisions............................................................................31
15.5 Interest Rate and Similar Matters.............................................................31
15.6 Entire Agreement..............................................................................32
15.7 Costs; Expenses and Taxes.....................................................................32
15.8 Indemnification By Debtor.....................................................................32
15.9 Governing Law.................................................................................33
15.10 Successors and Assigns; Counterparts..........................................................33
15.11 Further Assurances............................................................................33
15.12 Terminology...................................................................................33
15.13 Joint Efforts.................................................................................33
15.14 Cumulative Remedies...........................................................................33
15.15 Powers of Attorney............................................................................34
15.16 No Partnership or Similar Matters.............................................................35
16. SPECIAL PROVISIONS.....................................................................................35
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TABLE OF CONTENTS
(continued)
PAGE
16.1 Original Agreement............................................................................35
16.2 Effect of New Jersey Gaming Laws..............................................................36
Exhibit A - Form of Schedule of Indebtedness and Non-Exclusive Collateral
Exhibit B - Form of Note
Exhibit C - Documents to be Produced in Connection with the Initial Loan
Exhibit D - Form of Guaranty and Suretyship Agreement
Exhibit E - Form of Opinions
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement (as amended,
supplemented, restated or otherwise modified from time to time, this
"Agreement") made as of the 24th day of June 2002 between CIT Group/Equipment
Financing, Inc. ("Secured Party") and Resorts International Hotel, Inc.
("Debtor") amends and restated in its entirety that certain Master Security
Agreement dated August 17, 2001 between Secured Party and Debtor (the "Original
Agreement"). All capitalized terms used in this Agreement and not defined in the
body of this Agreement, are defined in Section 13 of this Agreement.
This Agreement provides a set of terms and conditions that the parties
hereto (the "Parties") intend to be applicable to various loan transactions
secured by personal property. Each such loan shall from time to time at the
option of the Secured Party be evidenced by a schedule of indebtedness and
non-exclusive collateral in the form of Exhibit A executed by Secured Party and
Debtor (each a "Schedule"). Whether or not stated, each Schedule shall be and is
hereby deemed to incorporate the provisions of this Agreement and each Schedule
may set forth more specified terms as to that particular loan. Where the
provisions of a Schedule conflict with the terms hereof, the provisions of this
Agreement shall prevail except to the extent set forth in Section 2.1 hereof.
One originally executed copy of a Schedule shall be denominated "Originally
Executed Copy No. __ of __ originally executed copies" and such copy shall be
retained by Secured Party. If more than one copy of a Schedule is executed by
Secured Party and Debtor, all such other copies shall be numbered consecutively.
Unless and only to the extent otherwise expressly provided in a Schedule, no
Schedule shall replace any previous Schedule but shall be supplementary to all
previous Schedules.
1. GRANT OF SECURITY INTEREST; DESCRIPTION OF COLLATERAL; OBLIGATIONS THE
COLLATERAL SECURES.
1.1 Grant of Security Interest. Subject to Section 1.2, as security for
the full and punctual payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of all of the Obligations, Debtor hereby
grants to Secured Party a security interest in and to each of the following
assets (collectively, the "Collateral"): (i) (A) all gaming equipment of every
kind and nature whatsoever described in each Schedule ("Gaming Equipment"), (B)
all furniture, machinery, and equipment of every kind and nature whatsoever
described in each Schedule other than Gaming Equipment ("Non-Gaming Equipment"),
and (C) all present and future attachments and accessions and other additions to
any such items described in subclauses (A) and (B) immediately preceding and all
substitutions therefor, it being acknowledged that only certain substitutions
are permitted hereunder as to the equipment (all the foregoing described in this
clause (i) being referred to herein as "Equipment"), (ii) all property and
assets of every kind and nature whatsoever otherwise related to the Equipment,
including related software and other intellectual property rights, (iii) all
rights and remedies of Debtor in or relating to the Equipment Documents, (iv)
all proceeds and products of any of the items
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described in clauses (i), (ii) and (iii) immediately preceding, including
amounts payable under any insurance policy, and (v) any books and records
relating thereto.
1.2 Cross-Collateralization. Each item of Collateral shall secure not
only the specific amount which Debtor promises to pay in any Obligation
(including, any Loan) corresponding to the Schedule listing such item of
Collateral, but also all other Obligations, including all principal and interest
of each other Loan (such security of such other Obligations being referred to
herein a "cross-collateralization"); provided, that if and to the extent such
cross-collateralization conflicts with or violates Section 4.09 of the First
Mortgage Indenture by reason of an assignment, syndication or other similar
transfer by Secured Party of a portion of the Obligations thereby resulting in
more than a single lender having rights in respect of the same Collateral, then
the cross-collateralization hereunder shall be correspondingly limited and/or
released to the extent (and only to such extent) necessary such that the
security interests granted pursuant to this Agreement constitute "Permitted
Liens" under the First Mortgage Indenture (as the same exists on the date hereof
and assuming for the purposes of this Section 1.2 no restatement,
supplementation or other modification of any applicable provision to the same).
1.3 Cross Default. If any Event of Default shall occur, then, in addition
to any other rights or remedies available to Secured Party hereunder of law or
equity or otherwise. Secured Party shall have the right to accelerate the entire
outstanding principal balance of all Loans and other Obligations and to
terminate the Equipment Loan Facility.
2. PROMISE TO PAY; TERMS AND PLACE OF PAYMENT; OTHER TERMS RELATING TO
PAYMENTS; PAYMENT OF FEES AND EXPENSES.
2.1 Debtor's Promise to Pay. Debtor promises to pay Secured Party the
principal, interest and other amounts set forth on each Schedule at the rate and
upon such terms as provided in this Agreement. The only times in which any
terms, including the payment terms for principal and interest, specified in a
Schedule shall supersede the provisions of this Agreement shall be where (i) it
is expressly stated in such Schedule that such specific terms specified in such
Schedule is intended to and does supersede the corresponding terms provided for
in this Agreement and (ii) the Secured Party expressly acknowledges and accepts
such provision in such Schedule, and signs such Schedule.
2.2 Interest Rate. All loans made by Secured Party to Debtor pursuant to
this Agreement (the "Loans" and each a "Loan") shall bear interest at a
fluctuating interest rate from time to time per annum equal at all times to
three and one-half percent (3 1/2%) above LIBOR in effect from time to time (the
"Interest Rate"), each change in such fluctuating rate to take effect
simultaneously with the corresponding change in LIBOR, without notice to Debtor;
provided that, subject to Section 9.2(a), if the Secured Party declares one or
more Events of Default, then the Loans shall bear interest at a fluctuating
interest rate from time to time per annum equal to five and one-half percent
(5 1/2%) above LIBOR in effect from time to time (the "Default Rate") for the
entire period during which any such Event of Default occurs and remains
continuing.
"LIBOR" means the London Interbank Offered Rate (in U.S. dollar deposits)
for a term of three months, as determined by Secured Party by reference to
Telerate page 3750 (or any
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successor page) or by any other means used by Secured Party in the ordinary
course of its business. Interest on each Loan shall begin to accrue on the day
each such Loan is made.
2.3 Timing of Payment of Interest. Subject to the provisions of Article
9, the accrued interest with respect to each Loan shall be payable to Secured
Party (i) in arrears on each Payment Date, commencing in the month following the
making of such Loan, (ii) on any day in which any prepayment of principal is
made with regard to such Loan, and (iii) on any day such Loan is paid or is
payable in full.
2.4 Payment of Principal.
(a) Payment of Principal on Gaming Loans. Subject to the provisions
of Article 9 hereof and the next sentence, the principal amount of all Gaming
Loans shall be fully amortized in up to sixty (60) equal monthly installments
commencing on the Payment Date in the month following the making of such Loan.
The amortization for each Gaming Loan shall be set forth in the applicable
Schedule, and if the Parties cannot agree as to same, the Loan shall not be
made; provided further, if the Loan is made but the corresponding Schedule does
not contain an amortization, the principal of such Loan shall be amortized in
forty-eight (48) equal monthly installments.
(b) Payment of Principal on Non-Gaming Loans. On the first Banking
Day of the month following expiration of the One-Hundred Twenty Day Period (the
"Conversion Date"), all Non-Gaming Loans made under the Expansion Loan Facility
will be combined into a fully amortizing loan at the Interest Rate, and subject
to the provisions of Article 9 hereof, the principal of each such Non-Gaming
Loan shall thereafter be fully amortized in thirty-six (36) monthly
installments, commencing on the Payment Date in the month following the
Conversion Date (unless Secured Party and Debtor, each in their sole discretion,
in writing agree to a different amortization). Subject to the provisions of
Article 9 hereof, the principal amount of all Non-Gaming Loans under the
Landmark Facility shall be fully amortized in thirty-six (36) equal monthly
installments commencing on the Payment Date in the month following the making of
each such Loan (unless Secured Party and Debtor, each in their sole discretion,
in writing agree to a different amortization).
2.5 Prepayments. Each prepayment of any Loan shall be accompanied by
payment in full of all accrued interest thereon to and including the date of
such prepayment. No prepayment is allowed during the first year after the making
of any Loan. During the one year period (a) beginning on the first anniversary
of any Loan, Debtor may prepay the unamortized Loan balance in whole or in part
plus 2% of the principal prepaid and (b) beginning on the second anniversary of
the making of a Loan, Debtor may prepay the unamortized Loan balance in whole or
in part plus 1% of the principal prepaid. After the third anniversary of the
making of a Loan, Debtor may prepay the unamortized Loan balance in whole or in
part without premium or penalty.
Notwithstanding the preceding provisions, all prepayments shall be in
amounts of not less than $100,000 (and shall be in multiples thereof) except
that after the first year of the making of a Loan, Debtor shall have the right
to prepay the remaining balance in full on any Loan. Substitutions of Equipment
will not be considered a prepayment event and will be
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permitted so long as, in Secured Party's sole discretion (a) substitute
Equipment in which Debtor grants Secured Party a first priority security
interest is of equal or greater value and of a substantially similar nature and
function than the Equipment disposed of and (b) all of the conditions precedent
applicable to a Loan have been met as of the date of substitution.
2.6 Payment of Fees and Expenses. Debtor shall pay Secured Party the
following non-refundable fees and expenses:
(a) Funding Fees. With respect to each Loan, Debtor shall pay Secured
Party a funding fee equal to 50 basis points, payable on or before the date
Secured Party makes such Loan to Debtor. At Secured Party's sole discretion,
Secured Party may offset such funding fee against the Loan made to Debtor. For
all purposes of this Agreement, Loans paid directly to an Equipment
Manufacturer/Dealer in respect of Equipment shall be deemed to be made to
Debtor.
(b) Unused Equipment Facility Fees. During the Equipment Loan Period,
Debtor shall pay to Secured Party an unused equipment facility fee at the rate
of one-half of one percent (1/2%) per annum on the amount equal to the
difference, if any, between (i) Twenty Million Dollars ($20,000,000) and (ii)
the sum of (A) the Loans made and (B) the outstanding principal amount of the
Existing Debt. The unused equipment facility fee shall be payable quarterly in
arrears on the first Banking Day after the end of each quarter; it being agreed
that the first payment of the unused equipment facility fee shall take into
account the period commencing on the date hereof and ending on September 30,
2002.
(c) Late Fees. Any payment not made when due shall (in addition to
any interest otherwise accruing on such payment) bear late charges thereon,
payable monthly on the Payment Date and calculated at the rate of one and
one-half percent (1 1/2%) per month on the amount of such payment from the date
due until paid, but in no event shall any interest, late fees or other amounts
individually (or in the aggregate to the extent such amounts are aggregated
under applicable law) be greater than the highest rate permitted by relevant
law. The payment of late fees shall not reduce or otherwise affect Secured
Party's right to accelerate the obligations. Anything in this Agreement to the
contrary notwithstanding, if Secured Party elects to make the monetary
Obligations become immediately due and payable hereunder pursuant to Section
9.2, then the foregoing late charges shall not be applicable to any payments
that become due exclusively on account of such election; it being agreed that
any such late charges shall apply (and shall continue to apply) to any payments
not made and due prior to such election.
(d) Returned Check Fee. Debtor shall be responsible for and pay to
Secured Party a returned check fee, not to exceed the maximum permitted by law,
which fee will be equal to the sum of (i) the actual bank charge incurred by
Secured Party plus (ii) all other actual costs and expenses incurred by Secured
Party. The returned check fee is payable upon demand as indebtedness secured by
the Collateral under this Agreement.
(e) Reasonable Expenses. Debtor agrees to pay to Secured Party,
within five days of request therefor, any and all reasonable legal and other
fees and expenses incurred by or on behalf of Secured Party in connection with
Secured Party's investigation of Debtor, its assets and its business and
preparation, negotiation and execution of this Agreement and the Relevant
Documents, including field examination audits, filing fees and search fees
provided that all such
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fees and expenses which have been incurred by Secured Party to date shall be
paid on the date hereof (and any failure to so present same by Secured Party or
to pay by Debtor shall not relieve Debtor of its obligations to pay and
reimburse Secured Party therefor).
2.7 No Setoff. All payments (including prepayments) to be made by Debtor
hereunder on account of principal, interest, fees or otherwise shall be made to
Secured Party without deduction, set-off or counterclaim of any kind or nature
whatsoever for any reason whatsoever and shall be free and clear of, and without
reduction for, any present or future income, stamp, documentary, excise or other
taxes (which shall be paid by Debtor).
2.8 Other Matters Concerning Payments. Other matters concerning payments
are as follows:
(a) Invoices. On or about the first day of each month so long as
Loans are outstanding, Secured Party shall present a monthly invoice to Debtor
reflecting the interest and principal due on the next Payment Date, but any
failure or delay from time to time by Secured Party in submitting invoices for
payments shall not discharge or relieve Debtor of the obligation to timely make
such payments.
(b) Interest Calculation; Lawful Rate; Non-Banking Days. Interest on
the Loans shall be calculated on a daily basis upon the unpaid principal
balance, with each day representing 1/360th of a year. If the interest rate
calculated in accordance with any provision of this Agreement for any Loan
(including, to the extent relevant, any application of the late fee) would at
any time exceed the maximum permitted by any applicable law then for such period
as such rate would exceed the maximum permitted by such law (and no longer) the
rate of interest payable on the applicable Loan shall be reduced to the maximum
permitted by such law. If any payment pursuant to this Agreement or any of the
Relevant Documents shall be stated to be due on a day other than a Banking Day,
such payment may be made on the next succeeding Banking Day and in each such
case such extension of time shall be included in computation of the interest due
or other payment due.
3. LOANS.
3.1 Maximum Amount of Loans. Subject to the terms and conditions of this
Agreement, during the Equipment Loan Period, Secured Party will lend to Debtor
from time to time (a) a principal sum up to an aggregate of Fifteen Million
Dollars ($15,000,000) (the "Expansion Loan Facility") to be used by Debtor
solely to acquire machinery, furniture and/or equipment in connection with the
Expansion Project (the "Expansion Equipment"), and (b) a principal sum up to an
aggregate of Five Million Dollars ($5,000,000) less the principal amount
outstanding from time to time under the Existing Debt (the "Landmark Loan
Facility"), to be used by Debtor solely to acquire machinery, furniture and/or
equipment to be used in the business of Debtor other than in connection with the
Expansion Project (the "Landmark Equipment").
3.2 Amount of Loans; Promissory Notes. Each Loan shall be used to pay not
more than one hundred percent (100%) of the actual purchase price for the
machinery, furniture and/or equipment (after taking into account applicable
discounts, allowances and rebates). Further, not more than fifteen percent (15%)
of any Loan shall be used to pay for freight, delivery, taxes,
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installation, set-up, other labor, other similar services and other similar
costs. Each Loan shall be, if Secured Party requires (but otherwise need not
be), evidenced by Debtor's promissory notes in the form of Exhibit B to this
Agreement with appropriate insertions thereon made by Secured Party, payable to
the order of Secured Party (as each such Note is amended, supplemented, restated
or otherwise modified from time to time, the "Notes").
3.3 Minimum Borrowings. Any borrowings by Debtor hereunder shall be for
not less than Five Hundred Thousand Dollars ($500,000) at one time.
3.4 No Obligation To Lend After the End of the Equipment Loan Period.
Notwithstanding anything to the contrary in this Agreement, Secured Party shall
have no obligation to make any Loans after the earlier of (a) the end of the
Equipment Loan Period or (b) the date the Equipment Loan Facility terminates.
3.5 Termination of the Equipment Loan Facility. Notwithstanding any other
provision of this Agreement, all of the Loans shall be immediately due and
payable, with all accrued interest, and the Equipment Loan Facility shall
terminate, upon the occurrence of an Event of Default and acceleration of all of
the Loans by Secured Party.
3.6 Certain Obligations of Debtor Regarding the Loans. Secured Party's
obligations to make the Loans are subject to Debtor providing to Secured Party
Documents which evidence, in form and substance reasonably satisfactory to
Secured Party that:
(a) Debtor has acquired good and valid title to (and possession of)
the Equipment from the manufacturer thereof or authorized dealer thereof,
whichever is the seller (the "Equipment Manufacturer/Dealer") within that period
of time necessary so that (i) the corresponding Loan shall constitute a Purchase
Money Obligation (as defined in and for the purposes of the First Mortgage
Indenture) and (ii) Secured Party will have a Purchase Money Security Interest
(as defined in and for the purposes of the UCC) in such Equipment;
(b) the Equipment Manufacturer/Dealer is a seller in the ordinary
course of its business, and the proceeds of the Loan will be used to pay the
Equipment Manufacturer/Dealer or in the sole discretion of Secured Party,
reimburse Debtor for its payment to the Equipment Manufacturer/Dealer and that
Debtor has paid the Equipment Manufacturer/Dealer;
(c) such Equipment is free and clear of all Liens except Liens in
favor of Secured Party and Permitted Liens, including that no Liens thereon have
been filed of record by a creditor of the Equipment Manufacturer/Dealer or any
other Person;
(d) such Equipment consists only of new machinery, furniture and/or
equipment;
(e) (i) as to all Gaming Equipment, such Equipment has been (A)
delivered to Debtor to the Debtor's Atlantic City Property and (B) fully
installed and is operational; and
(ii) as to all Non-Gaming Equipment, such Equipment (A) is in its
finished form and (B) has been (I) delivered to and placed in the Debtor's
Atlantic City Property or (II) has been delivered for storage to Debtor at
Debtor's Warehouse (III) or has been stored in a location and with a Person and
on terms reasonably satisfactory to (and pre-approved by)
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Secured Party, including that the Person storing such Equipment has executed an
agreement waiving any Liens and permitting Secured Party to have access to the
Equipment.
(f) (i) as to all Expansion Equipment, such Equipment has been
acquired solely in connection with the Expansion Project; and
(ii) as to all Landmark Equipment, such Equipment has been
acquired solely in connection with Debtor's Atlantic City Property (but not the
Expansion Project).
(g) Debtor has obtained insurance of the types and in the amounts
required hereunder relating to such Equipment and all such insurance otherwise
complies with the provisions of Article 8 hereof;
(h) no such Equipment is, or could in any manner be or be reasonably
asserted to be, a fixture under applicable state law; and;
(i) Debtor has provided to Secured Party a financing statement (or at
the sole discretion of Secured Party, an amendment to an existing financing
statement), in form and substance reasonably satisfactory to Secured Party,
covering the Equipment.
Each Loan is subject to Secured Party's receipt of a Note therefor, the Schedule
therefor and other Documents reasonably satisfactory to Secured Party relating
to the transactions contemplated by the purchase of the Equipment. If Secured
Party elects to make any Loan hereunder, Secured Party shall have the right, as
Secured Party may elect from time to time in its sole discretion, to make
advances to Debtor, reimburse Debtor after it pays the Equipment
Manufacturer/Dealer or make one or more such Loans by paying the purchase price
of the Equipment directly to the Equipment Manufacturer/Dealer of the Equipment.
Without limiting the generality of Section 4.3 hereof, each of the request for
and the acceptance of any Loan (including any Loan paid directly to an Equipment
Manufacturer/Dealer) constitutes Debtor's representations and warranties that
all of Debtor's rights and remedies in and under the Equipment Documents may be
assigned to Secured Party, and Debtor is not as of the date thereof and will not
as of the date of the acquisition of the Equipment be precluded from obtaining a
security interest in the Equipment free and clear of any Liens other than the
Liens of Secured Party and Permitted Liens.
If requested by Secured Party, Debtor shall as a precondition to a Loan
confirm the foregoing matters in this Section and any other matters reasonably
requested by Secured Party by delivery of a certificate dated the day of the
Loan, signed by a duly authorized officer of Debtor.
Secured Party shall have no obligation to make any Loan during any period
that there exists a material breach under or relating to this Agreement, any
Relevant Document or any Senior Debt Document. Debtor shall remit to Secured
Party the proceeds (after deducting selling expenses) of any disposition of
Equipment, and Secured Party shall accept such proceeds as a prepayment of the
Loan secured by such Equipment.
3.7 No Lending Against Fixtures. Debtor does not intend any Equipment to
be a fixture to real estate under applicable law or an accession to other
property. Debtor covenants that all Equipment shall at all times remain personal
property and not fixtures. Further, Debtor and
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Secured Party agree that regardless of the manner of affixation, the Equipment
shall remain personal property and not become part of the real estate. Without
limiting the generality of the preceding sentence, Debtor acknowledges that
Secured Party does not intend to lend with respect to any Equipment which will
be or could reasonably be asserted to be a fixture and, accordingly and by way
of example only, Secured Party does not intend to lend with respect to
carpeting, air conditioning units, heating units or any other item which may be
construed to be permanently installed.
3.8 Secured Party's Right to Elect to Make a Loan. With respect to each
item of equipment, it shall be within the sole discretion of Secured Party
whether Secured Party elects to make a Loan with respect to such equipment.
3.9 Provisions Relating to the Implementation of the Loans. Debtor shall
request a Loan under the Equipment Loan Facility during the Equipment Loan
Period on any Business Day by giving Secured Party irrevocable written notice
(including by facsimile) prior to 11:30 a.m. EST at least five (5) Banking Days
prior to the proposed borrowing date, specifying the requested loan amount and
borrowing date (which must be a Banking Day), together with the invoice for and
other Documents related to the corresponding Equipment. Subject to the terms and
conditions contained herein, including Sections 3.5 and 3.7, Secured Party shall
make such Loan to Debtor by transferring the amount of any Loan approved by
Secured Party in immediately available funds to the account of Debtor not later
than 5:00 p.m. EST on the requested borrowing date.
3.10 Certain Determinations to be Made by Secured Party. Secured Party is
hereby authorized (but not obligated) to record the amount of each Loan made by
Secured Party and the date and amount of each payment or prepayment of principal
thereof on a schedule annexed to and constituting a part of the applicable Note;
provided that failure by Secured Party to obtain any one or more Notes or make
any such recordation on any Notes obtained shall not in any manner impair or
otherwise affect Debtor's obligations to repay any such Loans and interest
thereon on the terms and conditions contained in this Agreement or the other
obligations of Debtor under this Agreement, such Notes or any other Relevant
Document. Each Note shall (i) be dated the date of execution and delivery
thereof, and (ii) bear interest at the Interest Rate, payable as specified in
Article 2 for the period from the date the Loan is made (including any Loans
paid directly to an Equipment Manufacturer/Dealer) until paid in full, on the
unpaid principal amount thereof from time to time outstanding.
3.11 Amount of Non-Gaming Loans. Except to the extent Secured Party
otherwise elects to make any such Loans, the aggregate amount of Non-Gaming
Loans made under (a) the Expansion Loan Facility shall not constitute more than
50% of the Loans made under the Expansion Loan Facility and (b) under the
Landmark Facility shall not exceed One Million Five Hundred Thousand Dollars
($1,500,000.00).
3.12 Storage of Equipment. Secured Party agrees that Debtor may store
Non-Gaming Equipment at the Debtor's Warehouse in accordance with Section 3.6,
but in each case for not more than ninety (90) calendar days.
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3.13 Timing of Loans Relating to Non-Gaming Equipment. Subject to the
other terms and conditions of this Agreement, Secured Party shall have no
obligation to make Non-Gaming Loans under the Expansion Loan Facility except
during the One Hundred and Twenty Day Period. For the avoidance of doubt Secured
Party shall have no obligation to lend with respect to Non-Gaming Equipment
under the Expansion Loan Facility unless it receives, and concurs with, the
architect's certificate referenced in the definition of "Projected Opening of
the Expansion Project."
3.14 Debtor to First Request Loans from Secured Party. Debtor agrees not
to directly or indirectly in any manner borrow any funds from any Person in
order to purchase any equipment (the purchase of which is financable under the
Loan and Security Agreement) during the Equipment Loan Period without first
entitling Secured Party to make the applicable Loan pursuant to this Agreement;
provided, that, subject to the terms and conditions of the First Mortgage
Indenture, Debtor may use the proceeds of the issuance by Guarantor of the First
Mortgage Notes to purchase equipment without first entitling Secured Party to
make a loan secured by such equipment pursuant to this Agreement.
4. CONDITIONS PRECEDENT TO LOANS.
4.1 Conditions to Initial Loan. The obligation of Secured Party to make
the initial Loan hereunder is subject to its obtaining the documents, in form
and substance reasonably satisfactory to it, listed on Exhibit C hereto and
Secured Party having obtained any Licenses of or from any Governmental Authority
regulating gaming in the State of New Jersey that Secured Party, in its sole
discretion determines is necessary or advisable, it being understood and agreed
that Secured Party shall have no obligation of any kind or nature whatsoever to
apply for or otherwise seek any such Licenses.
In addition, simultaneously with the execution and delivery of this
Agreement, Secured Party shall have (a) obtained an executed and fully
enforceable guaranty issued by Guarantor for the benefit of Secured Party in the
form of Exhibit D and (b) caused the delivery to the Secured Party legal
opinions in substantially the form of Exhibit E from counsel to the Debtor.
4.2 Conditions to All Loans. The following conditions are conditions
precedent to (i) Debtor's requesting approval of each Loan and (ii) the
obligation of Secured Party to make each Loan (including the initial Loan), with
all such conditions being applied on each such date.
(a) Material Accuracy of Representations and Warranties. The
representations and warranties made by Debtor in or pursuant to this Agreement
and any Relevant Document shall be true and correct in all material respects on
and as of the dates the Loan is requested to be made and is to be made (or if
expressly applicable only to an earlier date, such as financial statements, as
of such date).
(b) No Material Defaults. No member of the Debtor Group shall have
committed a material breach of or other material default under (including any
material non-compliance with) any provisions contained in this Agreement and in
each Relevant Document to which it is a party, whether or not notice has been
given to any member of the Debtor Group provided further that as of the end of
each preceding fiscal quarter, Debtor must be in compliance with the
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Financial Covenants. As to the Financial Covenants, at each of the times a Loan
(i) is requested to be made and (ii) is to be funded, the period for measuring
compliance with the Financial Covenants shall be the end of the then most recent
preceding fiscal quarter.
(c) No Material Breach of Any Senior Debt or Any Revolving Debt. No
member of the Debtor Group shall have committed any material breach of or other
material default under (including any material non-compliance with) any
provisions contained in any Senior Debt Documents or any Revolving Debt
Documents whether or not notice has been given to any member of the Debtor
Group, and no portion of any principal constituting Senior Debt or any Revolving
Debt shall have been accelerated and/or the holders having the right to make a
determination as to acceleration shall not have given notice that they will
accelerate.
(d) No Material Adverse Change. There shall not have occurred, with
respect to any member of the Debtor Group, any material adverse change from and
after March 31, 2002 with respect to its business, operations, properties or
other assets, results of operations or condition (financial or otherwise) (a
"Material Adverse Change").
(e) First Priority Lien. The liens of Secured Party in the Equipment
shall at all times be a first priority lien and neither Debtor nor any of its
representatives shall have taken any position in writing or before any court or
other governmental authority that is inconsistent with Secured Party having a
first priority lien in all Equipment.
(f) No Event of Default or Material Default. No (i) Event of Default
or (ii) material default which, with the giving of notice, the lapse of time or
both, would constitute an Event of Default and/or no other condition which would
constitute an Event of Default shall have occurred and be continuing on either
the date the Loan is requested to be made or (after giving effect to the Loan)
the date the Loan is to be made.
(g) No Change of Control; Change of State of Incorporation. No Change
of Control shall have occurred with respect to any member of the Debtor Group;
and Debtor shall not have changed the jurisdiction (i.e., the State of New
Jersey) in which it is incorporated.
(h) Schedule; Compliance Certificates. (i) the Schedule corresponding
to such Loan shall have been fully completed (to the reasonable satisfaction of
Secured Party), executed and delivered to Secured Party; and (ii) Debtor shall
have given to Secured Party a certificate from its chief financial officer or
chief executive officer, in form and substance reasonably satisfactory to
Secured Party, confirming that at the time of the request for approval of each
Loan and the making of each Loan, each of the conditions set forth above are
satisfied.
4.3 Continuing Representation and Warranty By Debtor. Debtor agrees that
each borrowing by Debtor hereunder shall without any further action on Debtor's
part conclusively constitute a representation and warranty by Debtor as of the
date of such request for borrowing and the date of the actual borrowing that the
conditions in Section 4.2 of this Agreement have been satisfied.
5. DEBTOR'S WARRANTIES AND REPRESENTATIONS.
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Debtor warrants and represents to Secured Party:
5.1 Indebtedness. Upon the execution of each Schedule and the making by
Secured Party of the Loan corresponding to such Schedule, Debtor is justly
indebted to Secured Party for the full amount of the indebtedness set forth on
each Schedule, and such indebtedness is not subordinated in any respect to any
other indebtedness of the Debtor.
5.2 Absence of Liens. Except for the security interests granted hereby
and the Permitted Liens, the Collateral is free from, and Debtor covenants that
the Collateral will be kept free from, all Liens.
5.3 Absence of Financing Statements. Without limiting the generality of
Section 5.2, no financing statement covering the Collateral or any proceeds
thereof is on file in favor of anyone other than Secured Party (and, without
limiting the rights of Secured Party, if any such other financing statement is
on file, it will be terminated or subordinated on terms and conditions
satisfactory to Secured Party).
5.4 Information Supplied. All information previously and hereafter
supplied and all statements previously and hereafter made, as applicable, by or
on behalf of any member of the Debtor Group to or for Secured Party in any
financial, credit or accounting statement has been and shall be, as applicable,
materially correct, valid and genuine, including in any balance sheet, income
statement or statement of changes in financial position or application for
credit.
5.5 Organization; Authority; No Conflicts. Debtor (i) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction (it being represented and warranted that Debtor is incorporated in
the State of New Jersey), and (ii) Debtor has the power and authority, and all
necessary licenses or other authorizations, to own, lease, operate and encumber
its properties and to carry on its business as now conducted. Debtor has full
authority to enter into this Agreement and each of the Relevant Documents to
which it is a party and in so doing it is not breaching or otherwise violating
Law (including any Laws relating to its gaming operations), Organizational
Documents, or any Contract or other Document to which it is a party, subject or
bound (any consents required thereby having previously been obtained), and it
has taken all such action as may be necessary or appropriate to make this
Agreement and the Relevant Documents binding upon it.
5.6 No Governmental Consent Necessary. Other than any approval or consent
necessary from the CCC (if any), no consent, authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by Debtor of, or the
validity or enforceability of, this Agreement, any Note or any other Relevant
Document to which it is a party.
5.7 No Claims. There are no pending or, to Debtors' knowledge, threatened
Claims that may, individually or in the aggregate, have a material adverse
effect on (a) the validity or enforceability of this Agreement, any Note or any
other Relevant Document (including the rights and remedies of Secured Party
hereunder and thereunder), or the ability of Debtor to perform any of its
Obligations, or (b) the business, operations, properties or other assets,
results of operations or condition (financial or otherwise) of Debtor.
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5.8 Financial Statements. All consolidated and consolidating balance
sheets, income statements, statement of changes in cash flow and other financial
data that have been provided to Secured Party by or on behalf of Debtor (a) are,
and all of same which shall hereafter be furnished to Secured Party shall be,
complete and correct in all material respects, and (b) do (and as to such
financial statements and other financial data to be delivered hereafter will)
truly and fairly present the financial condition of the Debtor Group as at the
respective dates thereof and the results of its operations and changes in cash
flow for the periods ended on such dates, all in accordance with generally
accepted accounting principles consistently applied during all periods. All
other information, reports, and other Documents (a) heretofore furnished to
Secured Party are, and (b) hereafter furnished will be at the time the same are
so furnished, true, accurate and complete in all material respects. Except as
shown on the most recent consolidated balance sheet of the Debtor Group, no
member of the Debtor Group has any liabilities except those incurred in the
ordinary course of business since the date of such balance sheet, which
additional liabilities do not have an adverse effect on the Collateral or on the
business, operations, properties or other assets, results of operations or
condition (financial or otherwise) of any member of the Debtor Group.
5.9 No Material Adverse Change. There has been no Material Adverse Change
since March 31, 2002.
5.10 Compliance With Laws. Debtor is in compliance with all Laws,
including those applicable to its ownership, lease or use of properties and its
other assets, the conduct of its business and otherwise, except for violations
which do not, individually or in the aggregate, have or would reasonably be
expected to have a material adverse effect on Debtor. Debtor has not received
any notice of violation of any of the foregoing. Without limiting the generality
of the preceding provisions of this Section, Debtor is not in violation of any
judgment, order or decree of any Governmental Authority or any arbitrator.
5.11 Taxes and Assessments. Debtor has filed all federal, state and local
tax returns and other reports (other than any immaterial ones) it is required to
file (or has obtained valid, written extensions which are in full force and
effect as to any not so filed). Debtor has paid all taxes, assessments and other
governmental charges due and payable, and has made adequate provision for the
payment of such taxes, assessments and charges accrued but not yet payable,
which provisions are reflected in the balance sheets referred to in Section 5.8.
Debtor has no knowledge of any deficiency or additional assessment in connection
with any taxes, assessments or other governmental charges.
5.12 Books and Records. Debtor maintains its books and records relative to
the Collateral and will, subject to the Debtor's right to store Equipment as
permitted under this Agreement, maintain the Collateral at Debtor's Atlantic
City Property. In addition, the Debtor's Atlantic City Property has been the
principal place of business and chief executive office of Debtor since May 2001.
5.13 Title and Liens. Upon acquiring any Collateral, Debtor will have good
and marketable title to all of the Collateral as sole owner thereof, free and
clear of any Lien, except the Liens created by this Agreement and Permitted
Liens.
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Upon the proper filing and indexing of UCC-1 financing statements in the
office of the State of New Jersey Department of Treasury, Division of Revenue,
the Liens granted in favor of Secured Party pursuant to this Agreement and
pursuant to any Relevant Document shall constitute perfected Liens in the
Collateral in favor of Secured Party, which are prior to all other Liens on such
Collateral and which are enforceable as such against all creditors of Debtor,
against any owner or occupier of the real property where any of the Equipment is
located and against any present or future creditor obtaining a Lien on such real
property or personal property and against any other Person.
5.14 Other Matters. Debtor has no actual or contingent liabilities in any
material respect arising out of or otherwise relating to any laws or other
matters of any kind or nature whatsoever relating to the environment.
Debtor is not an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, nor is Debtor
controlled by any such company.
Debtor owns the existing hotel and casino buildings where the Equipment
will be used at Debtor's Atlantic City Property.
There are no provisions in any Document to which Debtor is a party, subject
or bound, including any Senior Debt Document or any Revolving Debt Document,
that precludes Secured Party from exercising its remedies under this Agreement.
Debtor owns, or has a valid license or sublicense in, all know-how,
licenses, inventions, technology permits, trademarks, trade secrets, copyrights,
product designs, applications, formulae, processes and other intellectual
property rights necessary in the operation of its business in the manner in
which it is currently being conducted.
5.15 Representations and Warranties Applicable To Debtor Group. All of the
foregoing representations and warranties made by Debtor with respect to itself
also apply in full (as fully as if repeated herein), to the extent applicable,
to each other member of the Debtor Group; it being represented and warranted by
Debtor that the Debtor Group consists of Guarantor, Debtor, New Pier Operating
Company, Inc. and no other Persons.
6. AFFIRMATIVE COVENANTS.
Debtor covenants and agrees that, until the later of (i) the full, final
and indefeasible payment and performance of the Loans and all other Obligations
under this Agreement and the Relevant Documents, and (ii) the expiration of the
Equipment Loan Facility, Debtor shall:
6.1 Defense of Claims. Defend at Debtor's sole cost any Claim affecting
the Collateral.
6.2 Compliance with Laws. Comply with all applicable Laws (other than
gaming Laws) except for any non-compliance that would not reasonably be expected
to result in a material adverse effect on Debtor, and comply with all applicable
gaming Laws except for any non-compliance when the effect, individually or in
the aggregate, is insignificant.
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6.3 No Liens. Not place or suffer the placing of any Lien on any of the
Collateral other than the Lien of this Agreement and Permitted Liens.
6.4 Maintenance Of Licenses. Maintain in good standing any Licenses
required to operate its gaming operation and other material operations.
6.5 Payment of Reasonable Expenses. Pay all reasonable attorneys' fees
and expenses and other fees and expenses incurred by Secured Party in enforcing
its rights against any member of the Debtor Group under this Agreement and/or
under any Relevant Document.
6.6 Payment of Taxes. Pay promptly all taxes, assessments, license fees
and other public or private charges when levied or assessed against the
Collateral or this Agreement.
6.7 Preservation of Security Interests. Do everything necessary or
expedient or as reasonably requested by Secured Party to preserve or perfect the
security interest of Secured Party and obtain, if a certificate of title be
required or permitted by Law, such certificate with respect to the Collateral,
showing the security interest of Secured Party thereon.
6.8 Access; Inspection. Permit Secured Party and or its representatives
to enter upon Debtor's premises after providing Debtor with at least forty-eight
(48) hours prior notice that Secured Party wishes to inspect the Collateral and
Debtor's books and records pertaining to the Collateral, and to examine, copy
and make abstracts from any and all books, records and Documents in its
possession or the possession of any independent contractor relating to its
finances or the Collateral (including its federal income tax returns), and
Debtor shall assist Secured Party in making such inspection and copying but
Secured Party's inspection shall not materially interfere with Debtor's business
operations.
6.9 Maintain Priority of Security Interests. Cause the security interests
granted by Debtor to Secured Party to continue effective irrespective of any
retaking or redelivery of any Collateral and irrespective of the payment of the
amount described in any Schedule so long as there are any Obligations owed by
Debtor to Secured Party, provided, however, upon any assignment in whole of this
Agreement, the assignee shall thereafter be deemed for the purposes of this
Section the Secured Party under this Agreement.
6.10 Maintenance of Existence and Qualifications. Maintain and preserve in
full force and effect its existence and good standing and all other rights,
powers, franchises, licenses and qualifications (including proprietary rights)
necessary for its ownership, lease or use of assets or the conduct of its
business.
6.11 Payment of Taxes and Other Obligations. Pay (a) before they become
delinquent, all taxes, assessments and governmental charges imposed upon it or
any of its property or required to be collected by it, and (b) when due, all
other indebtedness and liabilities of any kind or nature now or hereafter owing
by it.
6.12 Maintenance of Assets and Records. Maintain (a) its properties, the
Collateral and its other assets in overall good working order and condition and
(b) complete and accurate books and records of all of its operations and assets.
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6.13 Notice of Adverse Events. Promptly notify Secured Party in writing of
the occurrence or existence of any of the following: (a) any Event of Default or
any event which, with the giving of notice, lapse of time or both, or the
occurrence of any other condition, would become an Event of Default; (b) any
matter or event which has resulted in, or may reasonably be expected to result
in, a Material Adverse Change, (c) any material Claim filed or made against any
member of the Debtor Group or relating to its operations, or any adverse
determination in or regarding any material Claim; (d) any loss from casualty or
theft in excess of Five Hundred Thousand Dollars ($500,000) if not insured, or
in excess of One Million Dollars ($1,000,000) even if insured affecting its
assets; (e) whether or not otherwise reportable under this Section 6.13, any
violation by it of any environmental Law, or any complaint, citation, order or
other notice of a violation or a Claim involving any environmental Law, if the
cost of cleanup or remediation, liability or penalty relating thereto may exceed
Five Hundred Thousand Dollars ($500,000) singly or in the aggregate (the notice
to Secured Party to include, along with other relevant information, the name of
any complainant or claimant and the nature and, if known, potential amount of
the claim); (f) any material Claim relating to ERISA; or (g) if any of the
representations and warranties contained in this Agreement or in any Relevant
Documents ceases to be materially true, correct and complete. With respect to
any such matters, Debtor shall provide to Secured Party promptly after receipt,
a copy of any complaint, citation, order or other notice of a material violation
or material Claim required to be reported pursuant to this Section.
6.14 Information and Documents to be Furnished to Secured Party. Furnish
to Secured Party in form and substance reasonably satisfactory to Secured Party:
(a) Annual Financial Statements. As soon as available, but in no
event later than one hundred twenty (120) days after the end of each fiscal year
of the Debtor Group, a consolidated and consolidating balance sheet of the
Debtor Group as of the end of such year and the prior fiscal year, consolidated
and consolidating statements of income for such year and the prior fiscal year,
and consolidated statements of changes in cash flows and changes in
stockholders' equity for such year and the prior fiscal year (all in reasonable
detail and with footnotes), audited by an independent certified public
accountant reasonably satisfactory to Secured Party and certified by such
independent certified public accountant, without qualification or exception, as
presenting fairly the consolidated financial condition of the Debtor Group as of
the dates and the consolidated results of operations, consolidated changes in
cash flow and consolidated changes in stockholders equity of the Debtor Group
for the periods indicated and as having been prepared in accordance with
generally accepted accounting principles consistently applied; provided, however
in the event Debtor (or any member of the Debtor Group) is subject to the
reporting requirements of the Exchange Act, Debtor shall provide to Secured
Party each annual Form 10-K (or its equivalent) of Debtor (or such member of the
Debtor Group) as filed under Section 13 or 15(d) of the Exchange Act within two
business days of such filing, and Secured Party shall accept such Form 10-K (or
its equivalent) in satisfaction of the reporting requirements otherwise provided
in this Section 6.14(a).
(b) Quarterly Financial Statements. As soon as available, but in no
event later than forty-five (45) days after the end of each of the first, second
and third quarters of each fiscal year of Debtor, (i) a consolidated and
consolidating balance sheet of Debtor as of the end of such quarter and the
corresponding quarter for the prior fiscal year and (ii) consolidated and
consolidating statements of income and consolidated statements of changes in
cash flows and
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changes in stockholders' equity, each for (A) such quarter, (B) the
corresponding quarter for the prior fiscal year, (C) the period commencing at
the end of the previous fiscal year and ending with the end of such quarter and
(D) the corresponding fiscal period for the prior fiscal year (all in reasonable
detail and with footnotes), certified by the chief financial officer of Debtor
as presenting fairly the consolidated financial condition of Debtor as of the
dates and the consolidated results of operations, changes in cash flow and
changes in stockholders equity of Debtor for the periods indicated and as having
been prepared in accordance with generally accepted accounting principles
consistently applied, except for normal year end adjustments, which individually
and in the aggregate are not material; provided, however, in the event the
Debtor (or any member of the Debtor Group) is subject to the reporting
requirements under the Exchange Act, Debtor shall provide to Secured Party the
each quarterly Form 10-Q (or its equivalent) of Debtor (or such member of the
Debtor Group) as filed under Section 13 or 15(d) of the Exchange Act within two
business days of such filing, and Secured Party shall accept such Form 10-K (or
its equivalent) in satisfaction of the reporting requirements otherwise provided
in this Section 6.14(b).
(c) Certificates Regarding Financial Statements. Concurrently with
the delivery of the financial statements referred to (i) in Subsection 6.14(a),
Debtor shall provide a certificate of the independent certified public
accountant stating that, in making the examination necessary for such
certification, no knowledge was obtained of any Event of Default or any default
or other event which, with the giving of notice, or lapse of time or both, or
the occurrence of any other condition, would become an Event of Default, except
as specified in such certificate; and (ii) in Subsections 6.14(a) and 6.14(b),
Debtor shall provide a certificate of the chief financial officer of Debtor (A)
stating that to his or her actual knowledge no Event of Default or any material
breach or material default or other material event which, with the giving of
notice, or lapse of time or both, or the occurrence of any other condition,
would become an Event of Default has occurred except as specified in such
certificate, (B) stating that all such financial statements are complete and
correct in all material respects (subject, in the case of interim statements, to
normal year-end audit adjustments which individually and in the aggregate are
not material) and have been prepared in reasonable detail and in accordance with
generally accepted accounting principles applied consistently throughout the
periods reflected therein, and (C) showing in detail the calculations supporting
compliance with the Financial Covenants.
(d) Compliance Certificate. Promptly after delivery to any Person
respecting Senior Debt, copies of certificates in whole or in part relating to
compliance with Senior Debt Documents.
Promptly upon demand, Debtor shall provide to Secured Party a certificate
executed by a senior officer of Debtor satisfactory to Secured Party stating
that, to his or her actual knowledge after due inquiry, there then exists (i) no
Event of Default hereunder and (ii) no default (or other event or the occurrence
of any other condition) which, with the giving of notice, or lapse of time or
both, would constitute an Event of Default; and such other Documents or
information as Secured Party may reasonably request, including financial
projections, cash flow analysis and information respecting Senior Debt.
6.15 Compliance with Senior Debt Documents. Comply in all material
respects with the provisions of all the Senior Debt Documents.
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6.16 Debtor Group. Cause each other member of the Debtor Group to comply
with the covenants stated in this Section 6, to the extent relevant to such
member of the Debtor Group, as fully if repeated with reference to all such
members of the Debtor Group.
7. NEGATIVE COVENANTS
Debtor covenants and agrees that, until the later of (i) full, final and
indefeasible payment of the Loans, and all other Obligations under this
Agreement and the Related Documents and (ii) the Equipment Loan Facility is no
longer in effect, Debtor shall not (and shall cause each other member of the
Debtor Group not to), directly or indirectly:
7.1 No Consolidation, Merger, Acquisition, Liquidation; State of
Incorporation. (a) Enter into any merger, consolidation, reorganization or
recapitalization (without the prior written consent of Secured Party, which will
not be unreasonably withheld or delayed) or take any steps in contemplation of
dissolution or liquidation; or (b) change the state in which it is incorporated.
7.2 Disposition of Collateral. Other than the substitution of Equipment
in the normal course of operations, sell, lease or otherwise transfer or dispose
of any or all of the Collateral.
7.3 Incurrence of Other Liens. Incur, create or permit to exist any Lien
upon or with respect to any of the Collateral, whether now owned or hereafter
acquired, except for (a) the Liens created by this Agreement, and (b) Permitted
Liens.
7.4 Incurrence of Debt. Except as permitted by the Senior Debt Documents
(as same exists on the date hereof and assuming for this Section 7.4, no
modification, restatement, supplementation, termination or waiver of any
applicable provision of the same), Debtor shall not, and shall cause its
Subsidiaries not to, incur hereafter any indebtedness.
7.5 Fixed Charge Covenant. Fail to maintain for the Debtor Group on a
consolidated basis a minimum fixed charge coverage ("Minimum Fixed Charge
Covenant") of 1.0:1 for the period commencing on the date hereof and ending
March 31, 2004 and 1.2:1 for all periods thereafter on a rolling four-quarter
basis from the date hereof through the date on which all principal and interest
on all Loans are indefeasibly paid in full. "Minimum Fixed Charge Coverage"
means: (i) EBITDA divided by (ii) the aggregate of all Fixed Charges. For the
purposes of this Agreement, "Fixed Charges" means all principal payments and
interest expense relating to any loans or other debt (including the Loans,
Senior Debt and capitalized leases), all capital expenditures and all lease
payments under operating leases; provided, that in determining Fixed Charges,
the following conventions shall apply:
. Principal and interest arising under that certain amended and
restated Credit Agreement dated as of May 18, 2001, amending and
restating the Credit Agreement dated April 5, 2001 among
Guarantor, the guarantors party thereto, Xxxxxxx Xxxxx & Co.,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Secured Party
and Bankers Trust Company shall be excluded so long as such Credit
Agreement has been terminated and the indebtedness thereunder has
been paid in full.
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. Principal payments and interest expense in respect of any
Permitted Revolving Debt shall be excluded.
. Interest expense shall be calculated in accordance with GAAP;
provided that, to the extent such interest expense calculation
would result in double counting an expense item included in
another component of the Fixed Charges, then such item shall only
be counted once.
. Non-cash expenses attributable to amortization of deferred finance
fees and accretion of original issue discount of debt shall be
excluded.
. From the period commencing on the date hereof and ending March 31,
2003, all payments under all operating leases up to $1,000,000 per
quarter shall be excluded, and for all periods thereafter, all
payments under all operating leases up to $1,500,000 per quarter
shall be excluded.
. Capital expenditures of up to $120,000,000 in connection with the
Expansion Project shall be excluded.
7.6 Maximum Senior Indebtedness/EBITDA. From the period beginning on the
date hereof through the date on which all principal and interest on all Loans
are indefeasibly paid in full, fail to maintain a ratio, as determined on a
Debtor Group consolidated basis, between Senior Debt and EBITDA ("Senior
Debt/EBITDA Maximum Leverage Covenant") that does not exceed the following:
Rolling 4 Quarters Ending: Maximum Leverage Ratio
-------------------------------------------------------------------------------------------
Inception (June __, 2002) through 12/31/02 6.75:1.0
03/31/03 - 12/31/03 6.75:1.0
03/31/04 6:00:1.0
06/30/04 5.50:1.0
09/30/04 - 12/31/04 5.00:1.0
03/31/05 - 12/31/05 4.00:1.0
03/31/06 - 12/31/06 3.75:1.0
03/31/07 - 12/31/07, and thereafter 3.50:1.0
In the event Secured Party agrees to extend the Equipment Loan Period beyond
June 30, 2004 for any period of time, then the foregoing dates shall be deemed
extended by a like period of time.
7.7 Guaranties; Contingent Liabilities. Except as permitted by the First
Mortgage Indenture (as the same exists on the date hereof and assuming for the
purposes of this Section 7.7, no modification, restatement, supplementation,
termination or waiver of any applicable provision of the same), (a) assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
upon any obligations of any Person except by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, or (b) agree to maintain the working capital or net worth of
any Person, to make
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investments in any Person or to take any similar action or permit any Subsidiary
to do any of the foregoing.
7.8 Restricted Payments. Except as permitted by the First Mortgage
Indenture (as the same exists on the date hereof and assuming for the purposes
of this Section 7.8, no modification, restatement, supplementation, termination
or waiver of any applicable provision of the same), declare or pay any cash
dividend or make any distribution on, or redeem, retire or otherwise acquire,
directly or indirectly, any share of its stock, or make any distribution of
assets to its stockholders or enter into any similar transaction (except as may
be required to service Senior Debt.
7.9 Transactions with Affiliates. Enter, into any transaction with a
Person directly or indirectly controlling, controlled by or under the direct or
indirect common control of any member of the Debtor Group or any officer or
director thereof, on a basis less favorable in any material respect to such
member of the Debtor Group than if such transactions were an arm's length
transaction with a third-party and not with such a Person provided that this
Section shall not apply to executive compensation.
7.10 Removal and Use of Collateral. (i) Remove, or cause or permit to be
removed, any of the Collateral from the Debtor's Atlantic City Property (other
than removal from Debtor's Warehouse or other storage facility approved by
Secured Party for delivery to Debtor's Atlantic City Property), except for the
substitution of Equipment no longer used in Debtor's operations, each in the
ordinary course of business or (ii) misuse or fail to keep in good repair, the
Collateral; provided however, Debtor can substitute all or any part of the
Collateral with like-kind collateral of equal or greater value, such value to be
determined and approved by Secured Party within its sole discretion (at which
time such new collateral will be deemed to be Collateral under this Security
Agreement) if (i) Debtor provides ten (10) days' prior written notice to Secured
Party of such proposed substitution of Collateral and (ii) Debtor executes
and/or delivers to Secured Party all Documents and takes all other actions that
Secured Party, in its sole discretion, determines to be necessary or advisable
to provide Secured Party with a valid and perfected first priority security
interest in such new Collateral. Except for substitutions described in the
proviso clause in the immediately preceding sentence, upon the disposition or
loss of any Equipment, the amount of any then outstanding principal balance
originally relating to such Equipment shall be immediately paid by Debtor to
Secured Party.
7.11 Change in Business; Accounting Practices, Name, Etc. Cause or permit
(a) a material change in the nature of its business or that of its Related
Entities as conducted on the date of this Agreement, (b) a change in the present
accounting principles or practices in any material respect of it or any other
member of the Debtor Group, except as may be required by changes in generally
accepted accounting principles or (c) a change its name or jurisdiction of
incorporation.
7.12 Inconsistent Agreement. Enter into any Document containing any
provision that would be violated by the performance of any of Debtors'
obligations under this Agreement or any Relevant Document.
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8. INSURANCE AND RISK OF LOSS.
8.1 Debtor's Obligation to Obtain Certain Insurance, Etc. All risk of
loss, damage to or destruction of the Collateral shall at all times be the sole
risk of Debtor. In addition, Debtor will, at Debtor's expense, procure forthwith
and maintain, until all Loans have been indefeasibly paid insurance against all
risks of loss or physical damage to the Collateral for the full insurable value
thereof and such other insurance, including general comprehensive liability
insurance, business interruption insurance and other insurance relating to other
hazards and risks reasonably required to be insured against by Secured Party, in
amounts and against such risks and with such deductibles and other terms as is
reasonably satisfactory to Secured Party. Debtor shall promptly deliver evidence
of each policy to Secured Party with a standard long-form mortgage endorsement
attached thereto showing loss payable to Secured Party. Each such policy shall
be in form, terms and amount, and with insurance carriers reasonably
satisfactory to Secured Party. Each such policy shall (i) designate Secured
Party and its assigns as additional insureds, or loss payees, as their interests
may appear from time to time, with acceptable endorsements; (ii) contain a
"breach of warranty clause" whereby the insurer agrees that a breach of the
insuring conditions or any warranties or any negligence of Debtor or any other
Person or any other action or omission (including any by Debtor or any of its
officers, agents, employees or representatives) shall not invalidate the
insurance as to Secured Party and its assigns, and (iii) require at least thirty
(30) days' prior written notice to Secured Party and its assigns before
cancellation, expiration or any material change shall be effective. Secured
Party's acceptance of policies that do not satisfy any one or more of the
foregoing provisions shall not be a waiver of Debtor's foregoing obligations.
8.2 Other Documents. Upon demand, Debtor shall deliver to Secured Party a
Certificate of Insurance evidencing insurance required by Section 8.1, together
with evidence of payment of all premiums therefor. In the event of material loss
or damage to the Equipment, Debtor shall promptly notify Secured Party and file
proofs of loss reasonably satisfactory to Secured Party with the appropriate
insurer, but without limiting the rights of Secured Party hereunder. In no event
shall Secured Party be required either to (i) ascertain the existence of or
examine any insurance policy, or (ii) advise Debtor in the event such insurance
coverage shall not comply with the requirements of this Agreement.
8.3 Assignment of Policies. To the extent such insurance insures the
Collateral, Debtor hereby (a) assigns to Secured Party any monies which may
become payable under any such policy of insurance and (b) irrevocably
constitutes and appoints Secured Party as Debtor's attorney in fact (i) to hold
each original insurance policy, (ii) to make, settle and adjust claims under
each policy of insurance, (iii) to make claims for any monies which may become
payable under such insurance on the Collateral including returned or unearned
premiums, and (iv) to endorse Debtor's name on any check, draft or other
instrument received in payment of claims and to apply the funds to the payment
of the indebtedness owing to Secured Party; provided, however, Secured Party is
under no obligation to do any of the foregoing.
8.4 Secured Party's Rights to Obtain Insurance. Should Debtor fail to
furnish any one or more such insurance policies to Secured Party, or to obtain
or maintain any one or more such policies in full force, or to pay any premium
in whole or in part relating thereto, then Secured
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Party, without waiving or releasing any default or obligation by Debtor, may
(but shall be under no obligation to) obtain and maintain insurance and pay the
premium therefor on behalf of Debtor. The full amount of any such premium paid
by Secured Party shall be payable by Debtor upon demand, together with interest
at the Interest Rate (or Default Rate or the rate set forth in Section 9.2, if
applicable) and, without limiting the generality of Article 9, failure to pay
same shall constitute an Event of Default under this Agreement.
9. EVENTS OF DEFAULT; ACCELERATION.
9.1 Event of Default. The following are events of default (each an "Event
of Default") under this Agreement which will allow Secured Party to take action
under this Article and under Article Ten as it deems necessary or advisable:
(a) Non-Timely Payment. Any of Debtor's obligations to Secured Party
under this Agreement or any Relevant Document to pay principal, interest or
other amounts is not paid within 10 calendar days after the same becomes due.
(b) Breach. Debtor breaches or defaults in any material respect any
warranty, covenant, agreement, indemnity or other provision hereof or in any
Relevant Document and fails to cure or remedy such breach or default within 30
calendar days of notice of such breach or default. Without limiting the
generality of the preceding sentence, a material breach shall occur if there is
any representation, warranty or statement by Debtor that is contained in this
Agreement or any of the Relevant Documents, reaffirmed or hereby deemed
reaffirmed that is or was when made, reaffirmed or hereby deemed reaffirmed, as
applicable, incorrect in any material respect, including if Debtor prior or
subsequent to the execution of this Agreement gave or gives, as applicable,
Secured Party materially misleading information regarding its financial
condition.
(c) Cessation of Business. Debtor or any other member of the Debtor
Group ceases to do business as a going concern; or the termination, suspension
or loss of any License or leasehold interest occurs which results in Debtor
having to cease any material part of its operations at its facility by reason of
such loss for a period of more than ten (10) consecutive days.
(d) Material Adverse Change. There occurs any Material Adverse
Change.
(e) Inability to Pay Debts; Bankruptcy or Insolvency. Any one or more
of the following occur: (i) any Debtor and/or any other member of the Debtor
Group shall commence any case, proceeding or other action (collectively,
"Proceeding") (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition with
creditors or other similar relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or any Debtor or any
other member of the Debtor Group shall make a general assignment for the benefit
of its creditors or a bulk sale; (ii) there shall be commenced against Debtor or
any other member of the
-21-
Debtor Group any Proceeding of a nature referred to in clause (i) above which
(A) results either in the entry of an order for relief ("Order") or an
appointment and any such Order or appointment remains undismissed in a manner
reasonably satisfactory to Secured Party ("Undismissed") for a period of sixty
(60) days; the foregoing shall include the commencement against Debtor or any
other member of the Debtor Group of any Proceeding seeking issuance of a warrant
of attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an Order for any
such relief which remains Undismissed in a manner reasonably satisfactory to
Secured Party for 60 days; or (iii) Debtor or any other member of the Debtor
Group takes any action substantially in furtherance of, or expressly authorizing
or indicating its consent to, approval of or acquiescence in or expressly
proposes to take any of the acts set forth in clause (i) or (ii) above; or (iv)
Debtor or any other member of the Debtor Group shall generally not be able to or
fail to, or shall expressly admit in writing its inability to, pay its debts
generally as they become due.
(f) Judgments; Attachments. One or more final judgments or orders for
the payment of money exceeding $2 million in the aggregate are rendered against
Debtor or any other member of the Debtor Group, and any such judgment or order
continues unsatisfied and not effectively and continuously stayed within sixty
(60) days of such judgment or order or any substantial part of the assets of
Debtor or any other member of the Debtor Group becomes subject to attachment,
execution, levy or like process which shall not have been effectively and
continuously stayed within sixty (60) days of such attachment, etc.
(g) Loss of Collateral. More than 10% of the value of the Collateral
in the aggregate is lost or destroyed and the insurance proceeds are either not
timely received by Secured Party or are less than 80% of the amount necessary to
repair or replace, as necessary, the lost or destroyed Equipment unless a
satisfactory amount of the Loans are paid in full in an amount reasonably
satisfactory to Secured Party and such payment and loss do not, individually or
together with other events or circumstances cause there to be a material adverse
change in the business, operations, properties or other assets, results of
operations or condition (financial or otherwise ) of Debtor.
(h) Cross Default; Default on Other Debt. Any other material default
by Debtor or any Subsidiary on or with respect to any of the Obligations or
under any of the Relevant Documents occurs, or any payment default or other
material default occurs under any Senior Debt Documents of Debtor or any
Subsidiary or any Revolving Debt Document of Debtor or any Subsidiary or any
other event occurs relating to such Senior Debt or Revolving Debt or that
entitles any Person or Persons to declare any material part of such Senior Debt
or Revolving Debt due prior to its date of maturity or any material portion of
any Senior Debt or Revolving Debt is accelerated.
(i) Security; Enforceability of Documents. If any of the following
occurs: (i) Secured Party shall not have as of the date hereof or shall at any
time hereafter cease to have a valid and perfected first priority Lien in all of
the Collateral, including that the grant of the security interests in this
Agreement shall never have been effective or shall cease to be effective to
grant to Secured Party (or Secured Party shall otherwise not have obtained or
cease to have) a first priority lien in all of the Collateral, (ii) this
Agreement or any Relevant Document shall not have been, as of the date hereof or
ceases to be, valid, effective and enforceable in any material
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respect, as reasonably determined by Secured Party; or (iii) Debtor or any other
member of the Debtor Group or its counsel asserts that this Agreement or any
Relevant Document shall not have been as of the date hereof, or shall have
ceased to be, valid, effective and enforceable in any material respect.
(j) Change of Control. If a Change of Control of any member of the
Debtor Group occurs.
9.2 Acceleration. If an Event of Default shall have occurred, the
indebtedness described in each Schedule now existing or heretofore created and
all other indebtedness or other monetary Obligations then owing by Debtor to
Secured Party under this Agreement and under any Relevant Document
(collectively, the "Indebtedness"), and all interest thereon, shall, if Secured
Party shall so elect, become immediately due and payable. With respect to the
rate of interest payable after acceleration:
(a) Acceleration of Loans. The unpaid principal balance of the
indebtedness or other monetary Obligations described in any Schedule in which
interest has been precomputed (exclusive of late fees) shall bear interest at
the lesser of (i) the greater of (a) the rate of 18% per annum or (b) the
Default Rate provided for in this Agreement, and (ii) the maximum rate permitted
by law from time to time until paid in full.
(b) Other. The unpaid principal balance of the indebtedness described
in any Schedule in which interest has not been precomputed (exclusive of late
fees) shall bear interest at the same rate as before acceleration until paid in
full.
9.3 No Required Payment of Interest in Violation of Applicable Law. In no
event shall Debtor be obligated to pay any interest in excess of the amount
permitted by law upon demand by Secured Party for payment of the Indebtedness,
by acceleration of the maturity thereof or otherwise. Any acceleration of the
Indebtedness, if elected by Secured Party, shall be subject to all applicable
laws, including laws relating to rebates and refunds of unearned charges.
10. SECURED PARTY'S REMEDIES AFTER DEFAULT; CONSENT TO ENTER PREMISES.
10.1 Remedies Under the UCC. Upon an Event of Default and at any time
thereafter, Secured Party shall have all the rights and remedies of a secured
party under the UCC and any other applicable laws, including all rights to any
deficiencies remaining after disposition of the Collateral, for which Debtor
hereby agrees to remain fully liable. Subject to Section 10.3, Debtor agrees
that Secured Party, by itself or its agent, may without notice to any Person and
without judicial process of any kind (and with judicial process if Secured Party
elects to or must use judicial process), enter into any premises or upon any
land owned, leased or otherwise under the actual or apparent control of any
member of the Debtor Group (or any their respective affiliates or agents) where
the Collateral may be or where Secured Party reasonably believes the Collateral
may be, and disassemble, render unusable and/or repossess all or any item of the
Collateral, disconnecting and separating all Collateral from any other property.
Debtor expressly waives all further rights to possession of the Collateral after
an Event of Default and all claims for injuries suffered through or loss caused
by such entering and/or repossession. Secured Party
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may require Debtor to assemble the Collateral and return it to Secured Party at
a place to be designated by Secured Party which is reasonably convenient to both
parties.
10.2 Other Remedies. After an Event of Default, Secured Party may sell or
lease the Collateral from time to time at one or more times and at one or more
locations of its choosing. In connection with the activities in the preceding
sentence, Secured Party agrees to act in good faith and in a commercially
reasonable manner. Secured Party will give to Debtor not less than ten days
notice (as described in the next sentence) of the time and place of any public
sale of the Collateral or of the time after which any private sale or any other
intended disposition of the Collateral is to be made. Unless otherwise provided
by law, any requirement of law relating to reasonable notice shall be met if
such notice is mailed, postage prepaid, to the address of Debtor shown herein at
least ten days before the time of the sale or disposition. Expenses of retaking,
holding, preparing for sale, selling and the like shall include reasonable
attorneys' fees and expenses and all other fees and expenses. Debtor understands
that Secured Party's rights are cumulative and not alternative.
10.3 Compliance with Casino Control. Notwithstanding anything contained
herein to the contrary, in exercising any right or remedy granted in this
Section 10 with respect to Gaming Equipment, Secured Party will at all times
comply in all material respects with all applicable provisions of the New Jersey
Casino Control Act; it being agreed that Debtor shall (and shall cause each
other member of the Debtor Group to) take such actions as may be reasonably
requested by Secured Party (or any of its authorized agents or representatives)
or the applicable Governmental Authorities at any time or from time to time to
effect such compliance so that Secured Party can fully realize on its rights and
remedies under this Section 10 with respect to Gaming Equipment.
11. WAIVER OF DEFAULTS; AGREEMENT INCLUSIVE.
11.1 Waivers. Secured Party may in its sole discretion waive in writing a
default, or cure, at Debtor's expense, a default. Any such written waiver in a
particular instance or of a particular default shall not be a waiver of other
defaults or the same kind of default at another time. Each waiver shall be
strictly construed. No modification or change in this Agreement or in any
Relevant Document shall bind Secured Party unless in a writing signed by Secured
Party, including that oral agreements shall not be binding.
12. FINANCING STATEMENTS; CERTAIN EXPENSES.
12.1 Financing Statements; Other Matters. Debtor authorizes Secured Party
to file financing statements and any other Documents with respect to the
Collateral, including to file a carbon, photograph or other reproduction of this
Agreement or of a financing statement. At the request of Secured Party, Debtor
will execute any financing statements, and other Documents, in form and
substance satisfactory to Secured Party which Secured Party may deem necessary
or advisable to establish and maintain a perfected first priority security
interest in the Collateral and will pay the cost of filing or recording the same
in all public offices, deemed necessary or advisable by Secured Party. Debtor
also agrees to pay all fees and expenses incurred by Secured
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Party from time to time in conducting UCC, tax or other lien searches against
Debtor or otherwise relating to the Collateral and such other fees as may be
agreed.
13. DEFINITIONS.
13.1 Defined Terms. As used herein, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Agreement" has the meaning set forth in the first paragraph.
"Banking Day" means any day other than Saturday, Sunday or holiday on which
banks in New Jersey are closed.
"CCC" has the meaning set forth in Section 16.2 of this Agreement.
"CCC Termination" has the meaning set forth in Section 16.2 of this
Agreement.
"CCC Termination Date" has the meaning set forth in Section 16.2 of this
Agreement.
"Change of Control" means such time as: (1) a "person" or "group" (within
the meaning of Section 13(d) of the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of, other than any of the Permitted Holders, has become, directly
or indirectly, the "beneficial owner," of 35% or more of the voting power of the
equity interests (as most broadly construed) of such member of the Debtor Group,
provided that the Permitted Holders do not, directly or indirectly, beneficially
own a greater percentage of the voting power of the equity interests of such
member of the Debtor Group; or (2) during any period of two consecutive calendar
years, individuals who at the beginning of such period constituted the Board of
Directors of such member of the Debtor Group (together with any new directors
whose election by the Board of Directors of such member of the Debtor Group or
whose nomination for election by the stockholders of such member of the Debtor
Group was approved by a vote of a majority of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the directors of the Company, as the case may be, then
in office; or (3) the adoption of a plan of liquidation or dissolution of such
member of the Debtor Group.
"Claim" or "claims" means any claim, actions, proceedings or investigations
of any kind or nature.
"Conversion Date" has the meaning set forth in Section 2.4 (b) of this
Agreement.
"Cure Period" has the meaning set forth in Section 16.2 of this Agreement.
"Contract" means any agreement, instrument or other contract, written or
oral, formal or informal, of any kind or nature.
"cross-collateralization" has the meaning set forth in Section 1.2 of this
Agreement.
"Debtor" has the meaning set forth in the first paragraph.
"Debtor Group" means Guarantor and its consolidated Subsidiaries
(including, Debtor).
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"Debtor's Atlantic City Property" means that real property and improvements
located at 0000 Xxxxxxxxx, Xxxxxxxx Xxxx, Xxx Xxxxxx 00000-0000 and also known
as Lots 4-15, 17-38, 39.01 (as to a portion only) and 39.02 (as to a portion
only) in Block 60; and Xxxx 0, 0 xxx 00 xx Xxxxx 310, all as reflected on the
tax maps of Atlantic City, New Jersey.
"Debtor's Warehouse" means the warehouse facility owned and operated by
Debtor located at 000 X. Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxx Xxxxxx.
"Default Rate" has the meaning set forth in Section 2.2 of this Agreement.
"Disbursement Agreement" shall have the meaning ascribed to such term in
the First Mortgage Indenture.
"Document" means any Contract, note, other instrument, certificate,
undertaking, other paper or writing or other document.
"EBITDA" means earnings before interest, taxes, depreciation, and
amortization.
"Equipment" has the meaning set forth in Section 1.1 of this Agreement.
"Equipment Documents" means all of the Documents relating to Debtor's
rights regarding the Equipment, including any amendments, restatements,
supplements or other modifications thereof.
"Equipment Loan Facility" means the Secured Party's obligation to make
Loans under the Expansion Loan Facility and the Landmark Loan Facility.
"Equipment Loan Period" means the period beginning on the date hereof and
ending on the earlier of (i) June 30, 2004 provided that, in Secured Party's
sole discretion, Secured Party may extend such period for an additional six (6)
months if Secured Party in its reasonable discretion concludes that there has
been a justifiable delay in the construction of the Expansion Project, or (ii)
the date on which the Equipment Loan Facility terminates pursuant to the terms
of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning set forth in Section 9.1 of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Debt" has the meaning set forth in Section 16.1 of this
Agreement.
"Expansion Equipment" has the meaning set forth in Section 3.1 of this
Agreement.
"Expansion Loan Facility" has the meaning set forth in Section 3.1 of this
Agreement.
"Expansion Project" means the construction and expansion of the Debtor's
Atlantic City Property in accordance with the drawings, plans and specifications
prepared for the Guarantor, which are attached to the Disbursement Agreement.
"Financial Covenants" means the Minimum Fixed Charge Covenant and the
Senior Debt/EBITDA Maximum Leverage Covenant.
"First Mortgage Indenture" means the Indenture, dated as of March 22, 2002,
among Guarantor, Debtor, New Pier Operating Company, Inc. and Bankers Trust
Company, as trustee.
-26-
"First Mortgage Notes" means the 11 1/2% First Mortgage Notes due 2009
issued by Guarantor pursuant to the First Mortgage Indenture.
"Fixed Charges" has the meaning set forth in Section 7.5 of this Agreement.
"Gaming Equipment" has the meaning set forth in Section 1.1.
"Gaming Loans" means Loans secured by Gaming Equipment.
"Governmental Authority" means any governmental authority of any kind or
nature.
"Guarantor" means Resorts International Hotel and Casino, Inc.
"Indebtedness" has the meaning set forth in Section 9.2 of this Agreement.
"Interest Rate" has the meaning set forth in Section 2.2 of this Agreement.
"Landmark Equipment" has the meaning set forth in Section 3.1 of this
Agreement.
"Landmark Loan Facility" has the meaning set forth in Section 3.1 of this
Agreement.
"Law" or "law" any federal, state and local statute, ordinance, judicial
decision, rule, order, regulation or any other law of any kind or nature
whatsoever.
"LIBOR" has the meaning set forth in Section 2.2 of this Agreement.
"Licenses" means licenses, permits, authorizations or other approvals
issued or granted by a Governmental Authority.
"Lien" means any security interest, lien, pledge, hypothecation,
assignment, mortgage, right, conditional sale or other title retention
agreement, financing lease having substantially the same effect as any of the
foregoing, other preferential arrangement or other encumbrance of any kind or
nature whatsoever.
"Loan" or "Loans" has the meaning set forth in Section 2.2 of this
Agreement.
"Material Adverse Change" has the meaning set forth in Section 4.2(d) of
this Agreement.
"Minimum Fixed Charge Covenant" has the meaning set forth in Section 7.5
this Agreement.
"Minimum Fixed Charge Coverage" has the meaning set forth in Section 7.5 of
this Agreement.
"New Jersey Casino Control Act" means the New Jersey Casino Control Act
(N.J.S.A. 5:12-1 et. Seq.) and all regulations promulgated thereunder.
"Non-Gaming Equipment" has the meaning set forth in Section 1.1 of this
Agreement.
"Non-Gaming Loans" means Loans secured by Non-Gaming Equipment.
"Notes" has the meaning set forth in Section 3.2 of this Agreement.
"Obligations" means all indebtedness and all or other obligations of Debtor
to Secured Party of every kind and nature whatsoever, whether then existing or
thereafter created or incurred, including any returned check fee and all
principal and interest of each Loan.
-27-
"One Hundred Twenty Day Period" means that one hundred twenty (120) day
period commencing ninety (90) calendar days prior to the Projected Opening of
the Expansion Project, whether or not the Expansion Project in fact opens on
such date or opens prior to the end of such One Hundred Twenty Day Period.
"Order" has the meaning set forth in Section 9.1 (e) of this Agreement.
"Organizational Documents" means the certificate of incorporation or
articles of incorporation, as applicable, and by-laws of a Person, or other
corresponding governing documents, each as amended and/or restated.
"Original Agreement" has the meaning set forth in the first paragraph of
this Agreement.
"Original Rate" has the meaning set forth in Section 16.1 of this
Agreement.
"Parties" has the meaning set forth in the second paragraph of this
Agreement.
"Payment Date" means the first Banking Day following the fourteenth
calendar day of each calendar month.
"Permitted Holder" means Colony Investors IV, L.P. and any affiliates
thereof and Xxxxxx X. Xxxxxxx, Xx., Xxxxxxxx X. Xxxxx, Colony RIH Voteco, LLC,
Colony XX XX, Inc., Colony Capital IV, L.P. and any investment fund, partnership
or other person sponsored by or formed at the direction of Colony Capital LLC, a
Delaware limited liability company, or any successor organization (unless such
investment fund, partnership or other person is not managed by a person that is
an affiliate or Related Person of any of the foregoing). As used herein, the
term "Related Person" means (a) any controlling stockholder, 80% (or more)
directly or indirectly owned subsidiary, or immediate family member (in the case
of an individual), of any Permitted Holder, or (b) any trust, corporation,
partnership or other entity if (x) the beneficiaries, stockholders, partners,
members, owners or other persons beneficially owning (as defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act) in the aggregate 80% or more of the
voting stock of such trust, corporation, partnership or entity consist of any
one or more Permitted Holders or such other Permitted Holders referred to in
clause (a), or (y) a general partner or managing member or person otherwise
controlling or having the power to direct or cause the direction of the
management and policies of such trust, corporation, partnership or entity is any
one or more of the Permitted Holders or such other persons referred to in clause
(a).
"Permitted Liens" means (a) inchoate Liens for taxes, assessments or
governmental charges or levies not yet due and payable or delinquent and Liens
for taxes, assessments or governmental charges or levies, which are being
contested in good faith as permitted by the Senior Debt Documents and for which
adequate reserves have been made; (b) Liens in respect of property of the Debtor
imposed by law, which were incurred in the ordinary course of business and do
not secure indebtedness for borrowed money, and (c) Liens arising under
applicable gaming Laws, provided that no such Lien constitutes a Lien securing
repayment of indebtedness.
"Permitted Revolving Debt" means the Revolving Debt arising from one or
more Revolving Credit Facilities so long as (i) the aggregate maximum principal
amount available under all such Revolving Credit Facilities does not exceed $10
million; and (ii) all such Debt is otherwise permitted under the Senior Debt
Documents.
"Person" means an individual, partnership, corporation, limited liability
company, joint venture, Governmental Authority or other entity of any kind or
nature.
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"Proceeding" has the meaning set forth in Section 9.1 (e) of this
Agreement.
"Projected Opening of the Expansion Project" means the date that the
Expansion Project is expected to be open to the public and fully operational for
commercial purposes; provided that the determination of such date shall be valid
for purposes of this Agreement only if (a) such determination is made by the
independent architect that is the principal architect responsible for the
completion of the Expansion Project and set forth in a certificate executed by
such architect and delivered to the Secured Party, and (b) Secured Party, in its
reasonable judgment, concurs with such determination by such architect.
"Relevant Documents" means this Agreement, any and all Notes, and any and
all other Contracts and other Documents executed by a member of the Debtor Group
evidencing the Loans and the security interest of Secured Party under this
Agreement, as each such Note, Contract and other Document is amended,
supplemented, restated or otherwise modified from time to time.
"Revolving Credit Facility" means one or more revolving lines of credit
providing for working capital of Debtor and other ordinary course financing of
Debtor.
"Revolving Debt" means any debt arising out of the Revolving Credit
Facility and/or the Revolving Debt Documents.
"Revolving Debt Documents" means any of the Documents relating to or
otherwise executed in connection with any Revolving Credit Facility.
"Schedule" has the meaning set forth in the second paragraph of this
Agreement.
"Schedule No. 1" has the meaning set forth in Section 16.1 of this
Agreement.
"Secured Party" has the meaning set forth in the first paragraph of this
Agreement.
"Senior Debt" means with duplication:
(i) (A) the First Mortgage Notes and (B) all other indebtedness
evidenced by any and all Documents related to such First Mortgage
Indenture;
(ii) the indebtedness (including, the Loans) evidenced by this
Agreement and the Related Documents;
(iii) capital leases;
(iv) any other loans or debt (other than loans or debt existing on
the date hereof) that individually or in the aggregate in connection with a
series of related transactions, exceeds more than Two Million Dollars
($2,000,000) in aggregate principal amount and as to which any member of
the Debtor Group is directly or indirectly obligated, as a party, guarantor
or otherwise; and
(vi) any renewals, extensions, substitutions, refundings,
refinances, or replacements of the foregoing;
provided, that Permitted Revolving Debt shall not constitute Senior
Debt.
"Senior Debt Documents" means any of the Documents (other than this
Agreement) relating to or otherwise executed in connection with Senior Debt.
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"Senior Debt/EBITDA Maximum Leverage Covenant" has the meaning set forth in
Section 7.6 of this Agreement.
"Subsidiary" means, with respect to any specified person: (1) any
corporation, limited liability company, association or other business entity of
which more than 50% of the total voting power of shares of equity interests
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such person or one or more of the other
Subsidiaries of such person (or a combination thereof); and (2) any partnership
(a) the sole general partner or the managing general partner of which is such
person or a subsidiary of such person or (b) the only general partners of which
are such person or one or more subsidiaries of such person (or any combination
thereof).
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of New Jersey; provided, however, that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any item or portion of the Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State
of New Jersey, "UCC" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"Undismissed" has the meaning set forth in Section 9.1 (e) of this
Agreement.
13.2 Other Definitional Provisions. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Section, Subsection, Schedule and Exhibit references are to this
Agreement unless otherwise specified. "Including", "includes," and "include"
means "including, without limitation," "includes, without limitation," and
"include, without limitation," whether or not specified herein. Amendments and
modifications include extensions, consolidations, renewals or replacements.
14. WAIVER OF DEFENSES; ACKNOWLEDGMENT.
14.1 Waiver, Defenses, Acknowledgment. If Secured Party assigns this
Agreement to a third party ("Assignee"), then after such assignment: (a) Debtor
will make all payments directly to such Assignee at such place as Assignee may
from time to time designate in writing; (b) Debtor agrees that, subject to
Section ___, it will settle all claims, defenses, and counterclaims it has the
right to assert against Secured Party directly with Secured Party and will not
set up any such claim, defense, or counterclaim against Assignee, Secured Party
hereby agreeing to remain responsible therefor to the extent provided in this
Agreement; (c) Secured Party shall not be Assignee's agent for any purpose and
shall have no authority to change or modify this Agreement or any Relevant
Document; and (d) Assignee shall have all of the rights and remedies of Secured
Party hereunder (except any relating to the matters referred to in clause (b)
but, as to obligations prior to such assignment, none of Secured Party's
obligations.)
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15. OTHER PROVISIONS.
15.1 Completion of Documents; Irrevocability; Other Matters. Secured Party
may correct patent errors herein. Secured Party may also fill in this Agreement
and in the Schedules and any Relevant Documents blanks (such as serial numbers),
date of payments and the like. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, then (a) such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein and (b) any
provision which is enforceable in part but is not enforceable in whole shall be
enforced to the maximum extent permitted by law.
15.2 Waiver of Trial By Jury/Receipt of Agreement. Debtor and Secured
Party each hereby waive any right to a trial by jury in any action or proceeding
with respect to, in connection with, or arising out of this Agreement or any
Relevant Document. Debtor acknowledges receipt of a true copy of this Agreement
and waives acceptance hereof.
15.3 Limitation of Liability. No claim may be made by Debtor or any other
Person against Secured Party or any Assignee and/or any director, officer,
employee, attorney, or agent of Secured Party or any Assignee for any special,
indirect or consequential damages in respect of any claim for breach of contract
arising out of or relating to the transactions contemplated by this Agreement,
any Note or any other Relevant Document, or any act, omission or event occurring
in connection herewith or therewith; and Debtor hereby waives and releases any
and all such claims which it would otherwise be entitled to make in the future
and agrees not to xxx upon any claim for any such damages
15.4 Various Provisions. This Agreement is executed pursuant to authority
of Debtor's Board of Directors. Except where the context otherwise requires,
"Debtor" and "Secured Party" include the successors and permitted assigns of
those parties; nothing herein shall authorize Debtor to assign this Agreement or
its rights in and to the Collateral. If more than one debtor executes this
Agreement, their obligations under this Agreement shall be joint and several.
15.5 Interest Rate and Similar Matters. If at any time this transaction
would be usurious under applicable law, then regardless of any provision
contained in this Agreement or in any other Relevant Document, it is agreed
that:
(a) Interest Not to Exceed Maximum Permitted By Law. The total of all
consideration which constitutes interest under applicable law that is contracted
for, charged or received upon this Agreement or any Relevant Document shall
under no circumstances exceed the maximum rate of interest authorized by
applicable law and any excess shall be credited to Debtor.
(b) Effect of Acceleration. If Secured Party is entitled to and
elects to accelerate the maturity of any Loan, or if Secured Party permits
Debtor to prepay the indebtedness described herein, any amounts which because of
such action would constitute interest may never include more than the maximum
rate of interest authorized by applicable law and any such
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excess interest, if any, provided for in this Agreement or otherwise, shall be
credited to Debtor automatically as of the date of acceleration or prepayment.
15.6 Entire Agreement. This Agreement, together with the Notes and the
Schedules and other Related Documents, constitutes the entire agreement between
the Parties with regard to the subject matter hereof and supersedes all prior
written and oral statements, discussions and agreements relating to the subject
matter hereof. This Agreement may not be amended without the prior written
agreement of the Parties.
15.7 Costs; Expenses and Taxes.
Debtor agrees to pay on demand:
(a) Costs and Expenses. All reasonable costs and expenses in
connection with or otherwise related to the preparation, execution, delivery and
administration of this Agreement, the Notes, the other Relevant Documents or any
amendments, restatements, supplements or other modifications to any of the
foregoing and the consummation of the transactions contemplated hereby and
thereby (including the reasonable fees and out-of-pocket expenses of counsel for
Secured Party, the cost of appraisals and reappraisals of Collateral, the cost
of all searches and all recording and filing fees).
(b) Enforcement and Preservation of Rights. All losses, costs and
expenses (including reasonable fees and expenses of attorneys and accountants
and court costs) from time to time incurred by Secured Party in connection with
the enforcement of and/or in the preservation of any rights (including remedies)
under this Agreement, each Note and any other Relevant Documents, including in
connection with (i) legal advice relating to the rights or responsibilities of
Secured Party hereunder and thereunder and (ii) Secured Party providing any
consents, waivers, subordinations and similar writings hereunder or thereunder.
(c) Taxes. Any and all stamp, excise and other taxes (other than
taxes generally assessed against Secured Party's income or assets) payable or
determined to be payable in connection with the execution, delivery or
performance of this Agreement, each Note, or any of the other Relevant
Documents, and all liabilities relating thereto.
(d) Interest Payable on Funds Advanced. With respect to any amount
advanced or expended by Secured Party and required to be reimbursed by Debtor
pursuant to the foregoing provisions of this Section interest on such amount at
the Interest Rate, such interest to commence from the date of advance or
expenditure. Debtor's obligations under this Section 15.7 shall survive
termination of all and/or any other provisions of this Agreement.
15.8 Indemnification By Debtor. Debtor hereby covenants and agrees to
indemnify, defend and hold harmless Secured Party and its officers, directors,
employees and agents and participants from and against any and all claims,
demands, damages, liabilities, costs and expenses (including reasonable fees and
out-of-pocket expenses of counsel) and losses of any kind or nature whatsoever
which may be incurred by or asserted against Secured Party or any such other
Person arising out of, in connection with or otherwise relating to this
Agreement and/or any Relevant Document Debtor's obligations under this Section
15.8 shall survive the termination of all and/or any provisions of this
Agreement.
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15.9 Governing Law. This Agreement and each other Relevant Document shall
be governed by, and construed in accordance with, the laws of the State of New
Jersey without giving effect to the principles of conflicts of laws.
15.10 Successors and Assigns; Counterparts. Debtor may not assign its
rights or obligations under this Agreement to any Person and any such purported
assignment without the prior written consent of Secured Party shall be void.
Subject to the potential limitations (if any) described in the proviso in
Section 1.2, Secured Party may assign this Agreement and the other Related
Documents, in whole or in part, to any Person (an "assignee") with the prior
written consent of Debtor, which consent shall not be unreasonably withheld,
delayed or conditioned; provided that (a) no consent shall be necessary if the
assignee is a lending institution which, at the time of such assignment, has a
lending relationship with Debtor, (b) if Debtor fails respond in writing to any
request for a consent within ten business days after receipt of the same,
consent shall be deemed have been given by Debtor (it being agreed that any
withholding of consent shall be accompanied with a written explanation by Debtor
setting out in reasonable detail the reason for such withholding), and (c) if
the proposed assignee is not permitted under the New Jersey Casino Control Act
to take such an assignment, then such fact shall constitute a reasonable basis
for Secured Party to withhold its consent under this Section 15.10. Subject to
the potential limitations (if any) described in the proviso in Section 1.2,
Secured Party may provide for participations in any one or more Loans, and the
granting of such participations will not require Debtor's consent.
Notwithstanding the foregoing, any such assignment or participation must be no
less than One Million Dollars ($1,000,000) in aggregate principal amount. This
Agreement may be executed via fax and in several counterparts with the same
effect as if the Parties executing the several counterparts had all executed one
counterpart.
15.11 Further Assurances. Debtor agrees to perform all further acts,
including to execute, acknowledge and deliver any Documents (in form and
substance reasonably satisfactory to Secured Party), that Secured Party deems
necessary or advisable to create, perfect or continue the security interests and
other Liens provided for in this Agreement and to otherwise carry out the
provisions of this Agreement.
15.12 Terminology. Section and other headings contained in this Agreement
are for reference purposes only and are not intended to describe, interpret,
define or limit the scope or intent of this Agreement or any provision hereof.
All of the existing and future Exhibits and Schedules to this Agreement are
hereby incorporated by reference herein and made a part hereof. The word
covenants include all agreements herein, including agreements to indemnify. All
pronouns shall be deemed to include all other pronouns and genders, and the
singular shall include the plural and the vice versa.
15.13 Joint Efforts. All of the provisions of this Agreement shall for all
purposes be deemed to be the joint efforts of each of the parties and no
provision of this Agreement shall be construed more severely or strictly against
any one party.
15.14 Cumulative Remedies. Except to the extent, if any, otherwise
expressly provided in this Agreement, all rights and remedies provided for in
this Agreement shall be independent and cumulative, and may, to the extent not
prohibited hereby, be exercised concurrently or
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separately, and the exercise of any one right or remedy shall not be deemed (a)
to be an election of such right or remedy or (b) to preclude or waive the
exercise of any other right or remedy.
15.15 Powers of Attorney. Debtor hereby constitutes and appoints Secured
Party (and any employee or agent of Secured Party, with full power of
substitution) its true and lawful attorney and agent in fact to take any or all
of the actions described below in Secured Party's or Debtor's name and at
Debtor's expense.
(a) Evidence of Liens. Secured Party may execute such financing
statements and other Documents and take such other actions as are reasonably
necessary or proper in order to create, perfect or continue the security
interests and other Liens provided for by this Agreement or any of the Relevant
Documents, and Secured Party may file the same (or a photocopy of this Agreement
or of any financing statement signed by Debtor) in any appropriate governmental
office.
(b) Preservation of Collateral. Secured Party may take any and all
reasonably actions that are necessary or proper to preserve its interest in the
Collateral, including the payment of debts of Debtor that might impair any of
the Collateral or Secured Party's security interest therein (including the
priority of Secured Party's security interest therein), the purchase of
insurance on any Collateral, the repair or safeguarding of any Collateral,
payments to Equipment Manufacturers/Dealers, and the payment of taxes,
assessments or other Liens on any Collateral. Debtor shall reimburse Secured
Party for same on demand. All sums so expended by Secured Party under this
Section 15.15(b) and Section 15.15 (c) shall constitute Obligations, shall be
secured by the Collateral, and shall be payable on demand with interest at the
Interest Rate from the respective dates such sums are expended.
(c) Secured Party's Right to Cure. If Debtor fails to perform any of
its Obligations within ten (10) days following notice from Secured Party (or, if
such Obligations are not reasonably susceptible of cure within such ten (10) day
period, if Debtor fails to commence to cure same within such ten (10) day period
and/or after the commencement of such cure fails to continue to complete such
cure with reasonable diligence but no later than thirty (30) days after notice
is given), then Secured Party may perform the same but shall not be obligated to
do so (including any Obligations which are the same type or character as any
which Secured Party hereafter elects to perform) and all amounts paid by Secured
Party in connection with the preceding provisions of this Section shall be
repaid by Debtor.
(d) Modification of Terms. Upon the occurrence and during the
continuance of any Event of Default, Secured Party may (i) make any compromises
it deems necessary or proper relating to any of the Collateral, including
extending the time of payment, permitting payment in installments, or otherwise
modifying the terms or rights relating to any of the Collateral, all of which
may be effected without notice to or consent by Debtor and without otherwise
discharging or affecting the Obligations, the Collateral or the Liens granted
hereunder, and (ii) take any other actions Secured Party reasonably elects
relating to or otherwise in connection with each item Collateral.
(e) Irrevocability; Secured Party's Discretion. Debtor covenants and
agrees that any action described in this Section may be taken at Secured Party's
sole and absolute discretion,
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at any time and from time to time, and (except as may be stated specifically to
the contrary in this Section with respect to any power) whether prior or
subsequent to an Event of Default, and Debtor hereby ratifies and confirms all
actions so taken. Debtor further covenants and agrees that the powers of
attorney granted by this Section are coupled with an interest and shall be
irrevocable until the full, final and indefeasible payment of the Loans and all
other monetary Obligations under this Agreement and the Relevant Documents; that
said powers are granted solely for the protection of Secured Party's interest
and Secured Party shall have no duty to exercise any thereof; that the decision
whether to exercise any of such powers, and the manner of exercise, shall be
solely within Secured Party's discretion; and that neither Secured Party nor any
of its directors, officers, employees or agents shall be liable for any act or
omission or commission, or for any mistake or error of judgment, in connection
with any such powers; provided that, as to any mistake, same shall only apply to
Secured Party prior to written notice of such alleged mistake from any Debtor to
Secured Party.
15.16 No Partnership or Similar Matters. In no event shall the Parties be
deemed to be partners, joint ventures or have any agency or similar relationship
of any kind or nature whatsoever.
16. SPECIAL PROVISIONS.
16.1 Original Agreement. Debtor acknowledges and agrees that under the
Original Agreement, on August 17, 2001 Debtor and Secured Party executed
Schedule No. 1 thereto, which Schedule was accepted August 23, 2001 and
thereafter amended by Rider to Schedule No. 1 dated August 17, 2001 (as amended
"Schedule No. 1"). Schedule No. 1 evidences a loan in the initial principal
amount of $2,084,077.34, and Debtor and Secured Party acknowledge and agree that
the outstanding principal due Secured Party under Schedule No. 1 is
$1,505,166.94. as of June 18, 2002 (the "Existing Debt").
The parties acknowledge and agree that (a) except to the extent modified
pursuant to the terms of this Section 16.1, Schedule No. 1 constitutes a
Schedule for purposes of this Agreement, (b) the collateral described in
Schedule No. 1 constitutes Collateral for purposes of this Agreement, (c) the
loan evidenced by Schedule No. 1 constitutes a Gaming Loan under the Landmark
Loan Facility for the purposes of this Agreement, and (d) the terms and
conditions of this Agreement shall control with respect to the indebtedness
evidenced by Schedule No. 1.
To the extent any provision in Schedule No. 1 conflicts with or is
otherwise inconsistent with the terms and conditions of this Agreement, the
terms and conditions of this Agreement shall control; except, that (i) the
indebtedness evidenced by Schedule No 1 shall bear interest at a fluctuating
interest rate from time to time per annum equal at all times to three and
one-quarter percent (3 1/4%) above LIBOR in effect from time to time (so long as
an Event of Default has not been declared by Secured Party in which case the
other terms and condition of this Agreement shall control) (the "Original Rate")
and (ii) Debtor's obligation under Schedule No. 1 to pay to Secured Party
principal payments of $57,891.04 on or before the 15th day of each month (plus
interest thereon at the Original Rate) shall continue until the Existing Debt is
indefeasibly paid in full.
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16.2 Effect of New Jersey Gaming Laws. This Agreement and all Schedules
shall comply with the requirements of all governmental authorities having
jurisdiction with regard to this subject matter including the New Jersey Casino
Control Commission (the "CCC"). The terms and conditions of this Agreement and
all Schedules shall be conditioned upon approval by the CCC, if such approval is
required. Secured Party and Debtor agree that if, at any time, whether prior to
or subsequent to the commencement of this Agreement, the CCC shall render a
final determination either (i) disapproving any terms and conditions of this
Agreement, the Schedules, or any Relevant Document or (ii) not permitting The
CIT Group/Equipment Financing, Inc., to be the Secured Party hereunder without
being licensed by the CCC (or any other appropriate New Jersey regulatory
agency) as a casino service industry or (iii) not permitting The CIT
Group/Equipment Financing, Inc. to be the Secured Party hereunder without making
a regulatory application which The CIT Group/Equipment Financing, Inc. is
unwilling to make including an application for a waiver or for casino service
industry status, then, if any one of the aforesaid events occur, this Agreement
and all Schedules hereunder shall be deemed terminated 90 days after the date of
such regulatory disapproval or determination by the CCC (such 90-day period
hereinafter referred to as the "Cure Period"). The aforesaid termination due to
CCC regulatory action shall hereinafter be referred to the "CCC Termination" and
the 90th day after such regulatory disapproval or determination by the CCC shall
hereinafter be referred to as the "CCC Termination Date" provided that if
Secured Party decides in its sole discretion not to seek any such License then
the CCC Termination Date shall be ten (10) days after such decision by the
Secured Party. If the CCC does render a disapproval or determination as
aforesaid, and if during the Cure Period, as the case may be, either (i) Secured
Party changes the terms and conditions of this Agreement and the Schedules so as
to be acceptable to the CCC and Debtor or (ii) Secured Party sells 100% of its
interest in this Agreement and Schedules to a lender acceptable to the CCC and
Debtor, then the Termination shall be void ab initio and this Agreement and
Schedules shall remain in full force and effect. However, if Secured Party does
not accomplish either (i) or (ii) during the Cure Period, then on the CCC
Termination Date, Debtor shall pay to Secured Party, in immediately available
funds, all indebtedness due under this Agreement and all Schedules including all
principal, accrued interest, late charges and all other amounts due under this
Agreement and Schedules but, notwithstanding anything to the contrary in this
Agreement, in any Schedule or elsewhere, Debtor shall not be required to pay any
prepayment fee. If any governmental authority, including the CCC or the New
Jersey Division of Gaming Enforcement, requests from either party, their counsel
or other representatives a copy of this Agreement or any other Relevant
Document, such party is hereby authorized to deliver such document to such
governmental authority and such party will promptly notify the other party to
such effect. Secured Party agrees to provide to the CCC and/or the New Jersey
Division of Gaming Enforcement all documentation reasonably requested by such
Governmental Authorities with respect to its qualification as a "financial
source."
[signature page follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed, all as of the day and year first above written.
Debtor:
Resorts international hotel, inc.
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name/Title: Xxxxxx Xxxxxx - President and
Chief Operating Officer
Secured party:
CIT Group/Equipment Financing, Inc.
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name/Title: Xxxx Xxxxxxx
Senior Vice President of Credit
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